Welcome to the OPKO Health Third Quarter Conference Call. At this time, all participants are in a listen-only mode. Following management’s prepared remarks, we will hold a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded today, November 5, 2019. 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 facts 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, 2018 and subsequent filings with the SEC. Importantly, this conference call contains time sensitive information that is accurate only as of the date of the live broadcast, November 5, 2019. 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. Phillip Frost, Chairman and Chief Executive Officer will open the call; then, Steve Rubin OPKO’s Executive Vice President will provide a business update and pipeline review; and Dr. Jon Cohen will discuss BioReference Laboratories. After that Adam Logal OPKO’s CFO will review the Company’s third quarter financial results. And then, we’ll open the call to questions. Now, let me turn the call over to Dr. Frost.

Good afternoon, and thank you for joining the call today. We’ve had an eventful quarter with important progress across several business units. I’ll start by saying, we’re pleased to announce jointly with Pfizer, positive topline results from our pediatric global Phase 3 trial comparing once weekly somatrogon to once daily GENOTROPIN. Steve will share more detail about the data later in the call, but I want to say that we’re optimistic about the potential of somatrogon to positively impact the lives of children with growth hormone deficiency, as well as their families. It’s clear that once weekly dosing is a more acceptable way to manage the condition and improve compliance. We’re grateful to the healthcare professionals and patients who participated in this trial and clinical trial sites around the world. We also appreciate the support we’ve received from our partner, Pfizer, over the past five years. And we look forward to the presentation of detailed data in an upcoming scientific conference. BioReference Laboratories continues to progress under the leadership of Jon Cohen and Geoff Monk. Recently, we received a new proposed local coverage determination from Novitas for the 4kscore test. The final coverage determination is still pending. But, if issued, it will once again provide reimbursement for Medicare patients who meet specific criteria. It’s been a long road for the 4kscore test, but our conviction of the potential importance of this test and the diagnostic paradigm for caring for prostate cancer is solid. And we appreciate the support of physicians and patients who have continued to champion the value of the 4kscore test. Our drug RAYALDEE continued to boost sales in the third quarter. Total prescriptions reported by increased 83% this quarter compared with the 2018 quarter. And again, Steve will get into the sales numbers in a little more detail. But, I want to point out that we continued to increase RAYALDEE revenue and prescriber penetration quarter-over-quarter, making crucial progress in product adoption. I’m going to turn the call over to Steve now to expand on these themes. Steve?

Thanks, Phil. Good afternoon, everyone. And thank you for joining us today. As Phil indicated, it’s been an eventful quarter. We achieved progress across multiple programs and reached important milestones, particularly on the somatrogon project. We were very pleased with results in our global Phase 3 trial evaluating somatrogon dosed once weekly in pre-pubertal children with growth hormone deficiency. The trial successfully met its primary endpoint of non-inferiority to GENOTROPIN injected daily with respect to height velocity after 12 months. Various sensitivity analyses show that weekly somatrogon was consistently higher and non-inferior to daily GENOTROPIN with respect to height velocity. Key secondary endpoints were also achieved. Change in height standard deviation scores or SDS at six and 12 months were higher in somatrogon compared to GENOTROPIN. At six months, change in height velocity was also higher with somatrogon compared to GENOTROPIN. These common measures of growth are employed in the clinical setting to measure the potential level of catchup growth that children may experience relative to height per age and gender match peers. Finally, as to safety, somatrogon was generally well-tolerated and comfortable to GENOTROPIN dosed daily with respect to the type, number and severity of adverse events. We are concluding immunogenicity testing and analysis of additional data and we look forward to presentation of the full results of the study at our future scientific meeting. Recall that we have over four years of safety and efficacy data in growth hormone deficiency, pediatric patients from our Phase 2 extension study, in children with growth hormone deficiency. 48 children with growth hormone deficiencies that completed the main Phase 2 study continued an open label expansion or OLE Phase 2 study. 40 subjects are still continuing in the OLE study with the GLP, the pen device using the same dose 0.66 milligrams…

Thanks, Steve, and good afternoon, everyone. I’m pleased to report that BioReference Laboratories continues to make progress towards its goal to improve both, top line and bottom line results. When I first spoke with you six months ago, we committed to improving BRL’s performance with a plan to improve operational efficiencies, increase access to health plans, improve billing operations, identify and implement opportunistic cost cutting measures, and increasing testing volume and revenue growth through a focused commercial strategy. We continue to execute against this plan and are making measurable progress. We have recently recruited new leaders for women’s health and cancer services and are moving aggressively to pursue a focused strategy in these areas of our expertise. In addition, our plan to develop a vigorous process to identify and pursue new strategic partnerships to deliver large books of business is beginning to bear fruit. From a numbers perspective, BRL posted sequential quarter growth in revenues. BRL again met its revenue targets for the quarter, and we continue to see growth and improved efficiency from the laboratory. The third quarter is a second full quarter in which 4kscore was not covered by Medicare. Despite this issue, we processed nearly 18,000 4kscores for the quarter. As previously discussed in, late June, we announced that the Medicare administrative contractor with jurisdiction over New Jersey issued a new proposed local coverage determination for the 4kscore. Under this newly issued proposal by Novitas, Medicare would reimburse the test for patients who need to define coverage criteria. With regard to GeneDx, this quarter saw volume increases of 6% compared to the 2018 third quarter. As was the case in Q2, institutional hospital and health system based ordering was especially strong with a 21% year-over-year accession growth. GeneDx continues to leverage strong relationships with leading children’s hospitals and academic centers throughout the country to drive increases in growth and revenue. We’ve also appointed a new commercial leader for GeneDx sales force with the goal of restructuring the sales force to provide a more focused strategy to address this rapidly evolving market. In addition, we’re seeing significant interest in the portfolio of tests offered by GeneDx, as several new payer contracts were signed in the past quarter. GeneDx has also increased its focus on advanced bioinformatics techniques to provide further test differentiation as well as improved efficiency. GeneDx continues to impact the risk assessment and diagnostic paradigm for illness and disease. As an example, in the third quarter, the medical journal JAMA Oncology published data from GeneDx study addressing cancer risk estimates in patients with pathogenic variants in the gene CDH1 for gastric cancer. These results will directly impact patients with the rare form of hereditary stomach cancer by providing a more personalized risk assessment and allowing for better informed decision making. With that overview, let me turn it over to Adam for a discussion of our third quarter financial performance. Adam?

Thank you, Jon. Before I go into the detailed numbers, I want to reiterate what Steve and John have mentioned. We are pleased with the progress that we have made within our overall financial performance. Our laboratory business is beginning to benefit from the structural changes we have made in its operations. Geoff and his team continue to improve the overall cost structure. And overall, we saw a decrease of approximately $17 million in the cost of service and SG&A within that business line, compared to the third quarter of 2018. The sequential revenue and margin improvements do not include these associated contributions from the 4kscore test, as Jon mentioned. A final positive coverage decision could immediately contribute to increased margins and sequential revenue growth. The reimbursement environment is a challenging one. However, with the team we have in place, we believe we are positioned for continued improvement in the financial results. Turning to RAYALDEE, the third quarter saw the benefit of robust revenue growth in both units and dollars in comparison to the 2018 period as well as sequentially. Our long-term strategy has been to use the cash flow from our commercial businesses to fund our investments in research and development. Now, I’ll go into more of the detailed historical results before providing fourth quarter guidance. Net revenues were $228.8 million for the third quarter of 2019, compared to $249.8 million for the 2018 period. Revenue from services for the three months ended September 30, 2019 were $181.1 million compared to $202.3 million for the 2018 period. Consistent with the first half of the year, revenue from services has been impacted by challenges within the payer environment, specifically the compounding of the PAMA rate decreases along with prior authorization requirements and enhanced denial rates on both our clinical laboratory…

[Operator instructions] Your first question comes from the line of Maury Raycroft with Jefferies.

Hi, everyone. Good afternoon and thanks for taking my questions, and congrats on the progress on the progress too. So, first question is for the somatrogon pediatric growth hormone study. Just wondering if you could talk more about when patients came in for the IGF-1 measures, the importance of timing and getting that IGF-1 measure. And do you have any perspective on how you’re IGF-1 data compares to the Ascendis’ TransCon data?

Hi, Maury, it’s Tony Cruz. To interpret the IGF-1 SDS, you need to understand patient [indiscernible] analyzed, because as you know when you take a weekly therapy, the IGF-1 in our case, the Phase 2 data was indicated and also it’s consistent in the Phase 3 that after 48 hours it peaks. And then, at the average or the mean IGF-1 SDS occurs around 96 hours. And yes, patients tend to have it analyzed at various time points. So, what you do is you evaluate those patients and normalize it to 96 hours to properly interpret the data that. That’s what we did. Now, just to give you some background in the Phase 2 data. In the Phase 2, we had very good IGF-1 SDS level where I think there was only one patient that was above 2, for example, in that patient population, in the first year of treatment. Now, we haven’t obviously released the data yet, because we’re planning to present it at the ENDO meetings and that will be analyzed in depth at that meeting.

Got it. And any perspective on how that compares to competitor weekly growth hormone data out there? And just wondering also…

Yes, I agree. It’s a little bit difficult, because we know what our data is. And we haven’t -- but generally speaking, our data for the Phase 3 was similar to Phase 2, and when we do further analysis, not identical but similar. And in terms of Ascendis data, they had -- they measured day five plus or minus one day -- or day six plus or minus one day -- sorry, five to seven, I think it was five to seven, but their percentage of IGF-1 was higher, but it’s hard to understand or correlate with our data.

Got it. And it’s interesting, and just wondering if FDA would eventually normalize the Ascendis in the Pfizer OPKO datasets for IGF-1 when they’re reviewing data and the filings? Do you have any perspective into that?

The mean IGF-1 SDS levels is what’s used to make medical decisions about dosing. And so, if you are going to do an analysis, I think you’d have to convert all the data to the mean value, mean IGF-1 SDS value, I think, that would be likely. I know, we’re doing that in preparation for the FDA and also for the -- especially also for the European regulatory body.

Got it. Okay. And then, for the Phase 3, just wondering if you can give a breakdown on geographies, and where patients came from and how this could have affected data in both arms of the study? And any perspective on how this compares to Ascendis Phase 3 as well?

We had strategically brought in additional countries, particularly from Asia, where we wanted to achieve approximately 10% of the patients from Korea as part of the criteria to meet that number of patients to be able to receive approval there or to apply there for approval. We also wanted to have approximately 15% to 20% of Latino patient population in our study. So, we have a large population from South America and Mexico, Chile, Colombia and so forth. And so, that is a little bit different than I think what Ascendis. In addition, we had patients approximately 10% -- over 10%, maybe 12% from India, which again, is a different population I think then they had, and then the rest is always the East and Western Europe and North America, where the remaining population of patients came from, which is more in similar to what Ascendis did.

Maury, I think, a telling factor is the way -- the difference in patient growth, if you want to compare our studies that you really can’t it. So, the GENOTROPIN for the Ascendis study, which is the same -- we used GENOTROPIN in ours, grew almost a full centimeter taller in their study than they did in ours. And obviously that’s the same drug. So, it just shows when you have a range of populations in a different genetics, some population grow taller than others, so you can’t really compare the trials. Now no one did a head to head for one. And two, as I mentioned in my remarks, the goal isn’t to increase the height, the goal is to match the height that they would have achieved in nature, or to match the height in the daily. And I think we achieved that.

That’s helpful. And then, the other question I had on the study was just -- actually, if you can provide any more perspective on advisors plans to file for approval and their plans for introducing somatrogon on top of GENOTROPIN. Do you think they’re going to push GENOTROPIN in the same way or could that program sort of turn over to the weekly option with somatrogon?

Well, I think Pfizer’s goal is to grab a different market share. There’s over seven players in the daily growth hormone market today. It’s a fairly split-on market. I mean, Pfizer, I think is number two or number three, or maybe even dropped a little bit, but fairly close towards the top with Novo being the highest. And so, clearly if you go down from 7 to 1, 2 or 3, your goal is to grab additional market share. So, they’re heavily incentivized to do just that, so to go out and promote somatrogon.

Okay. And any perspective into filings and timelines for filing for approval?

So, we believe it will be second half, we’re hoping in this next summer.

Got it. Okay. And then, separately on RAYALDEE. Just a quick question there for the Phase 2 in CKD 5 hemodialysis patients. What are the plans to use the data from that study? And then, also, from the head to head data that we’re expect in 2Q, what are the plans to use those data sets to expand the RAYALDEE label? I guess, what are next steps and what else would you have to do get the label expansion?

So, for the Phase 2, and dialysis patients, sort of two points. One is, we’re obviously picking the dosage. And to some degree, it’s a little bit of proof of concept to show that our product, which is a pro-hormone still will work in the patients with very little of any kidney function. So, that will serve two functions. One, assuming successful, we’ll roll into a Phase 2, the second part of our cohort of our Phase 2, but it will also help us drive sales of our existing stage 3 and 4 chronic kidney disease are the current reality that’s on market because there remain skepticism that our salesmen have to overcome in the field like why would it work any different than nutritional vitamin D if you no kidney function, because it’s a pro hormone. Now, we -- based upon our study for RAYALDEE in stage 3 and 4, we have a high level of confidence because of the exact same dosage levels for stage 3 and 4. In other words, stage 4 having a higher -- less kidney function than a 3, we got the exact same results. And with the lower PTH, at the same levels and safely increase levels of vitamin D. So, that will be a useful tool for our existing sales team on stage 3 and 4. But more importantly, that will allow us to roll into the stage, second cohort stage 2 and then probably a subsequent Phase 3. Now, we power that or design that second cohort to we believe be able to allow to argue with FDA that will count as one of our Phase 3s. Maybe we could -- depending on the quality of the data, maybe that will even suffice. If not, we would have an additional Phase 3 to get it on label, and we would expect that to be a six-month trial, not too dissimilar from what we did for RAYALDEE itself. Now, the head to head is really a large part driven by our European partner, Vifor, for pricing. So, to achieve premium pricing over the existing therapeutics, you need to show that you’re superior drug. So, that’s the purpose of that trial. So, so assuming that that is accessible in the head to head, then it will us to tell Vifor to ask for a premium pricing in the European market.

Just to clarify, it is -- primarily, the kidney is involved in activating the vitamin D to the active form. And it’s something that occurs only in the kidney. And the fact that as Steve pointed out, we got the same results irrespective of to what extent the kidney was not functional shows that there must be extra renal production of the active form 2. And that’s the uniqueness of our product. And it lends itself to being converted to the active form even outside of the kidney.

Got it. That’s very helpful. Okay. Thank you for taking my questions. And I’ll hop back in the queue.

Your next question comes from the line of Ted Tenthoff with Piper Jaffray.

Just a quick question if I may on the status of some somatrogon in Japan, and when we could expect data and sort of what you see as steps towards filing in that territory? Thank you.

So, for Japan, it’s about six months behind. So, we expect about sometime to finish the trial middle of next year and then hopefully submit [Indiscernible] about six to eight months later.

We say the top-line data will be available end of next year. From filing point of view, PMDA, Japanese health authority has specifically asked to see the switching data. So, our submission will now occur in 2020, a little bit later.

Okay. Thank you very much.

The switching data is going on now, as we’ve enrolled 66 -- 65% have rolled on to somatrogon.

And that market is important to us, because Pfizer has a significant part of the market now and we expect that they will continue to lead once they have once a week product.

Pricing is…

Absolutely.

I don’t know whether you heard that, but Dr. Hsiao said that the pricing is exceptionally good in Japan also.

Great. Thank you for that.

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

I just want to thank everybody for participating, and let you all know that we look forward to meeting with you by phone next year at the end of our first -- at the end of the year to give you our yearly results, and of course then again at the end of the first quarter. So, we look forward to that. And happy holidays between now and then. Thank you.

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