Welcome to the OPKO Health Inc Business Update Conference Call. At this time all participants are in a listen-only mode. Following management’s prepared remarks, we’ll hold a Q&A session. [Operator Instructions] As a reminder, this conference is being recorded, November 9, 2018. I would now like to turn the conference over to Miriam Miller. Please go ahead, ma’am.

Thank you, operator. Good afternoon. This is Miriam Miller with LHA. Thank you all for joining today’s call. I’d like to remind you that any statements made during this call by management other than statements of historical fact will be considered forward-looking and as such, will be subject to risks and uncertainties that could materially affect the company’s expected results. Those forward-looking statements include, without limitation, the various risks described in the company’s annual report on Form 10-K for the year ended December 31, 2017, and subsequent quarterly report on Form 10-Q. Importantly, this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, November 9, 2018. Except as required by law, OPKO undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. Before we begin, let me review the format for the call. Dr. Philip Frost, Chairman and Chief Executive Officer, will open the call; followed by Steve Rubin, OPKO’s Executive Vice President, who will provide an update on the company’s various business and clinical programs. After that, Adam Logal, OPKO’s Chief Financial Officer, will review the company’s third quarter financial performance. Dr. Frost will provide closing remarks, and then we’ll open up the call to questions. Now let me turn the call over to Dr. Frost.

Good afternoon. I would like to thank everyone for participating in today’s call. The business of OPKO continues to progress. We have made significant commercial progress as well as with our clinical programs during this past quarter. We have seen month over month growth in RAYALDEE sales throughout 2018. We saw commercial approval for RAYALDEE in Canada through our marketing partner Vifor Fresenius and we initiated a Phase II clinical trial evaluating RAYALDEE in dialysis patients, which opens up the potential for a major expansion beyond the currently approved indication here in the U.S. We also completed enrollment in our Phase III weekly growth hormone trial for the treatment of pediatric growth hormone deficiency. We’re looking forward to continued positive momentum in all aspects of our business. I will now turn it over to Steve Rubin, who will go into additional detail on our progress.

Thank you, Phil. Good afternoon everyone and thank you for joining us today. Before I delve more deeply into the business side of things, I will make some remarks about the SEC complaint filed on September 7, that named both the company and Dr. Frost. Most of you know we had no warning that such a complaint was coming. The SEC did not provide us with a Wells notice or any other indication of its intent to file the action. We disagree with the SEC’s allegations as we’ve said publicly. We have spent considerable time over the past two months working closely with our advisors to address the allegations in the complaint. We have always prided ourselves on adhering to a high standard of excellence at every level. We are particularly frustrated that this incident has impacted our investors so deeply. Even worse, it came at a time when we were seeing quarter-over-quarter momentum on many fronts. From improved efficiencies at BRL to impressive prescription growth with RAYALDEE to significant clinical progress across multiple therapeutic candidates. To all of you who have maintained your support of the company, we extend our thanks, and we know it hasn’t been easy. I want to assure you that we are actively working to address the matter. I also want to assure you that the business of OPKO has continued to advance during these challenging times. Our sales force continues to sell products, our clinical trials continue to enroll patients. BRL and GeneDx continue to make strides. Taken together, this means that we have remained focused on the creation of shareholder value. After we’ve gone through our prepared remarks, we will be opening this call up to your questions, but I ask that you refrain from inquiring about the situation with the SEC. This…

Thanks, Steve. As we continue to make significant progress on our R&D and commercial activities, we also continue to make improvements in our financial performance. We are pleased to report financial results that were in line with the guidance provided during our call in August. Overall, our net loss during the third quarter of 2018 decreased by $8.3 million to $27.7 million or $0.05 per share compared to a net loss of $35.9 million or $0.06 per share for the comparable period of 2017. Net revenues improved by $3.8 million to $279.8 million for the third quarter 2018, compared to the quarter of 2017, which had $246 million of revenue. Moving to cost and expenses. We have made significant progress in our efforts to improve our operating efficiency. During the third quarter of 2018, we reduced our cost of revenue as well as selling, general and administrative expenses by 8% for almost $20 million compared to the third quarter of 2017. And on a sequential basis, we took out an additional $3 million of cost. Our investments in R&D were $30.2 million for the third quarter of 2018, compared to $32.5 million for the 2017 period. During 2018, R&D expense was offset by a $5.3 million related to research and development credits we received in Ireland, which we expect to receive in cash during 2019 related to the construction of our R&D center in Waterford, Ireland. Moving to diagnostics revenues, as Steve mentioned we continue to see improvements in our overall volumes within our clinical laboratory testing and double-digit growth within our genomics testing. On a comparative basis, revenue from services saw its first year-over-year growth since the first quarter of 2017, a trend we’re encouraged by as we continue to see opportunities to regain volumes lost during 2017 and…

Thanks, Adam. Overall, we were pleased with our progress this past quarter as we advanced sales of our commercial products, continued to work to streamline our BioReference Laboratories unit and to define a urology franchise focused on men’s health. We made significant progress with our clinical programs. We are also pleased to have met our financial guidance for a third consecutive quarter. At this point, I’d like to express my appreciation to all of our employees for their hard work and dedication to building a great company. Once again, I’d like to thank you all for participating in today’s call. With that, operator, we’re ready to take questions.

[Operator Instructions] Our first question is from Louise Chen with Cantor Fitzgerald.

Thank you so much. This is Sudan Loganathan in for Louise. So I had a few quick questions. So, basically what are the company’s thoughts about the diagnostics business and its performance over the year for the rest of 2018? And then going into 2019, how much room is there left for growth? What’s the company’s plan to extract maximum value for the business? And what are the biggest drivers for growth? And then, regarding the hGH-CTP program, what updates do you have for the remainder of this year? And then what supports your confidence that the pediatric study will be positive?

This is Adam, I’ll try to jump in on the BioReference side. So certainly, the business has continued to improve throughout the year. We have continued to improve the operating margins, and we do think there is room for our operating margins to improve significantly in 2019. Of course, there’s headwinds in front of us, and we’re still working through our plans. But we are encouraged where Jeff and the team are bringing the business and see great prospects on the pure clinical lab but also within the genomics segment there. So we feel like there is real opportunity to get into the mid double digits – mid-teen – double digits to mid-teen EBIT margins.

For hGH, I mean it’s a blinded study so we’re not going to have a lot of data to talk about – if any data to talk about until we see our topline results. But we obviously feel really good about it, we had very strong Phase II results. Our Phase III is designed – uses one of the dosages we studied in the Phase II. Safety metrics from our open label is continued to be strong, and we’ve had probably more patients on our drug with our ongoing open label Phase II studies than anybody else studying long-acting growth hormone. So we feel probably about as good as you can feel in a blinded clinical study.

Okay, great. Thank you.

Our next question comes from Yale Jen with Laidlaw & Company.

Good afternoon and thanks for taking the question. We noticed that the third quarter BioReference Lab revenue was slightly lower than the prior quarters and – is there any seasonality toward this? Or there’s other sort of factors that will be depressing the revenue and that that could be a norm going forward?

So thanks for the question. It’s Adam again. So we – we gave guidance for BioReference to be between $200 million and $220 million during the quarter. Obviously, we came in at the lower end of that range but certainly within where we thought it would be. There’s kind of assumptions around volumes and volume growth and also, I think just across the industry all the other large clinical labs saw some softness in the third quarter. Typically, there’s not a large degree of seasonality, it’s dependent on a number of business days in the quarter and that’s one of the reasons why our fourth quarter is guided between $185 million and $205 million. Just the kind of actual business there.

Okay. That’s very helpful. And then maybe one more question here, which is that, it seems that your GeneDx operation [indiscernible] revenue side as well as from the new product development side, it seems to both are moving well. So is there a time that eventually you would talk this from a revenue perspective going forward? Or you think that still will blend in the entire BioReference revenue mix?

Yes. I mean, we manage the business as one, so that’s the reason why we don’t break it out. In the past, we’ve said that it represents between 17% and 20% of the overall revenue. So to give you an indication of where that is. So overall, it’s managed as one business, and we’ll continue to consider it that way.

Okay. Great. Thanks a lot. That’s really appreciated.

Sure.

There are no further questions at this time. Please proceed with your closing presentation.

Okay. If there are no other questions, we’ll thank you once again for participation, everyone on the call.

Thank you, Phil.

Ladies and gentlemen that concludes your conference call for today. We thank you for your participation and ask that you please disconnect your lines.