OPKO HEALTH, INC.
For the period ended Mar 31, 2025. Filed May 1, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 1, 2025
OPK$1.73-1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001437749-24-033931
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-01.
0001437749-25-014086
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 116 previous paragraphs and 77 current paragraphs.
29 unchanged; 27 reworded; 21 added; 48 removed; 12 previous and 0 current paragraphs rearranged.
Tables are not compared: 18 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
Tariffs and Trading Relationships.
Current report
In April 2025, the U.S. government announced a baseline tariff of 10% on products imported from all countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits, including China. Increased tariffs by the United States have led and may continue to lead to the imposition of retaliatory tariffs by foreign jurisdictions. Additionally, the U.S. government has announced and rescinded multiple tariffs on several foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of the tariffs on economic conditions. Current uncertainties about tariffs and their effects on trading relationships may affect costs for and availability of raw materials or contribute to inflation in the markets in which we operate. Although we are continuing to monitor the economic effects of such announcements, as well as opportunities to mitigate their related impacts, costs and other effects associated with the tariffs remain uncertain.
Current report
On April 4, 2025, the Company announced that its Board of Directors had authorized an increase of $100.0 million to the Company's existing Common Stock repurchase program, originally established on July 18, 2024, bringing the aggregate capacity of the program to $200.0 million. As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2024, the Company had repurchased 25,825,785 shares at an average price per share of $1.56, for a total cost of approximately $40.2 million under this program through that date. No shares were repurchased during the three months ended March 31, 2025.
Current report
Convertible Note Exchange
Current report
On April 1, 2025, the Company completed privately negotiated exchange transactions pursuant to agreements entered into in late March 2025. Pursuant to these agreements, the Company exchanged an aggregate of $159.2 million principal amount of its 2029 Convertible 144A Notes for an aggregate of 121,437,998 shares of its Common Stock and approximately $63.5 million in cash, inclusive of accrued and unpaid interest. Upon closing, the exchanged 2029 Convertible 144A Notes were retired and are no longer outstanding.
Current report
Collaboration Agreement with Entera Bio Ltd.
Current report
On March 16, 2025, the Company and Entera Bio Ltd. ("Entera") entered into a collaboration and license agreement to develop an oral dual agonist GLP-1/glucagon peptide as a potential treatment for obesity, metabolic, and fibrotic disorders, combining OPKO’s proprietary long-acting oxyntomodulin analog (OPK-88006) and Entera’s proprietary N-Tab™ technology.
Current report
Under the terms of the agreement, the Company and Entera hold 60% and 40% pro-rata ownership interests in the development program, respectively, and are responsible for 60% and 40% of the program's development costs, respectively. In connection with the agreement, the Company purchased 3,685,226 ordinary shares of Entera at a price of $2.17 per share, for an aggregate purchase price of approximately $8.0 million.
Current report
Entera has agreed to utilize the proceeds from this share purchase to fund its 40% share of the program's development costs through the completion of Phase 1. Following Phase 1, Entera has the option to continue funding its 40% share to maintain its pro-rata ownership. Should Entera elect not to continue funding, its ownership interest will be reduced to 15%, with the Company holding the remaining 85% interest and becoming responsible for all ongoing development funding and activities.
Current report
Agreement to Sell BioReference Oncology Assets
Current report
On March 10, 2025, the Company and BioReference entered into an agreement with Labcorp (the “Labcorp Oncology Purchase Agreement”) for Labcorp to acquire BioReference's oncology and related clinical testing services assets (the “Oncology Transaction”). The Oncology Transaction is expected to close in the second half of 2025, with Labcorp paying up to $225 million in consideration, including $192.5 million in cash at closing and up to $32.5 million in cash in performance-based contingent consideration, as described in the Labcorp Oncology Purchase Agreement.
Current report
Cost of revenue. Cost of revenue for the three months ended March 31, 2025 decreased $25.4 million, a decrease of 23.1% compared to the three months ended March 31, 2024. The decrease related to the previously mentioned divestiture of certain lab operations from the BioReference Transaction. These divested operations had incurred $24.5 million in cost of revenue for the three months ended March 31, 2024, costs which did not recur for the comparable 2025 period. The remaining decrease primarily reflects lower employee headcount, resulting from both the divestiture and ongoing cost-reduction initiatives at BioReference, as well as changes in the testing mix for the ongoing operations.
Current report
Selling, general and administrative expenses. Selling, general and administrative expenses for the three months ended March 31, 2025 and 2024 were $38.0 million and $45.8 million, respectively, representing a decrease of 17.1% from the prior period. The decrease was primarily driven by the absence of $10.0 million in costs associated with divested operations (which had been incurred for the three months ended March 31, 2024), and lower employee-related expenses resulting from continued cost-reduction initiatives. These favorable impacts, which reduced ongoing expenses, were partially offset by $4.7 million in one-time costs recorded for the three months ended March 31, 2025 related to adjustments to the useful life of certain operating leases.
Current report
Selling, general and administrative expenses. Selling, general and administrative expenses (SG&A) for the three months ended March 31, 2025 and 2024 were $12.7 million and $15.0 million, respectively, a decrease of 15.5% from the prior year period. The decrease was primarily driven by lower employee-related expenses, mainly associated withRayaldee commercial operations and also from our international operations. Additionally, SG&A benefited from a $0.4 million favorable impact from foreign currency exchange fluctuations and a $0.1 million decrease in equity-based compensation expense compared to the prior year period.
Current report
Interest expense. Interest expense increased to $15.5 million for the three months ended March 31, 2025, compared to $7.7 million in the same period of 2024. The increase in interest expense primarily reflects the addition of interest expense and related amortization for the 2044 Notes, which were not outstanding during the prior year period.
Current report
Other income, net. Other income, net decreased by $16.5 million to $4.9 million for the three months ended March 31, 2025, compared to $21.3 million in the prior year period. This decrease related primarily to our GeneDx (as defined in Note 6 to our condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q) investment; we recognized $22.7 million of income from this investment in the first quarter of 2024 reflecting an increase in the fair value of our investment (primarily unrealized gains), compared to a $3.9 million realized gain upon selling our remaining shares in the first quarter of 2025. Partially offsetting this decrease was a $2.8 million favorable swing in foreign currency exchange effects, moving from a $2.7 million expense in the first quarter of 2024 to $0.1 million income in the first quarter of 2025.
Current report
On April 1, 2025, the Company consummated exchange transactions related to its 2029 Convertible 144A Notes. Agreements were entered into with certain institutional holders on March 27 and March 28, 2025, and the exchange transactions closed on April 1, 2025. In total, the Company exchanged $159,221,000 aggregate principal amount of the 2029 Convertible 144A Notes for 121,437,998 shares of Common Stock and cash payments totaling approximately $63.5 million, inclusive of accrued and unpaid interest. The exchanged 2029 Convertible 144A Notes were subsequently retired.
Current report
On March 10, 2025, the Company and BioReference entered into an agreement with Labcorp to acquire BioReference's oncology and related clinical testing services assets. The transaction is expected to close in the second half of 2025, with Labcorp paying up to $225 million in cash consideration, including $192.5 million in cash at closing and up to $32.5 million in cash in performance-based contingent consideration.
Current report
During the first quarter of 2025, the Company sold its entire holding of 620 thousand shares of GeneDx common stock at various prices per share for approximately $51.7 million in aggregate proceeds. As a result of these sales, the Company no longer holds any shares in GeneDx.
Current report
In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses is effective prospectively to financial statements issued for reporting period after the effective date or retrospectively to any or all prior periods presented in the financial statements, for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.
Current report
In November 2024, the FASB issued ASU 2024-04, Debt (Subtopic 470-20): Debt with Conversion and Other Options. (“ASU 2024-04”) clarifies the assessment of whether a transaction should be accounted for as an induced conversion or extinguishment of convertible debt when changes are made to conversion features as part of an offer to settle the instrument. ASU 2024-04 is effective for reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods. Early adoption is permitted for entities that have adopted ASU 2020-06. We adopted ASU 2024-04 prospectively effective January 1, 2025. The adoption of ASU 2024-04 did not have a material impact on our Condensed Consolidated Financial Statements.
Removed paragraphs (48)
Previous report
ModeX Expands BARDA Collaboration
Previous report
In September 2024, ModeX entered into two amendments (the "BARDA Amendments") to modify the scope and funding with our existing contract with the Biomedical Advanced Research and Development Authority (BARDA), part of the Administration for Strategic Preparedness and Response at the U.S. Department of Health and Human Services. The BARDA Amendment increased the total contract value to $110.0 million, with a potential value of $205 million if BARDA exercises all options thereunder to expand ModeX's services. The BARDA Amendment includes a $26.9 million supplement to accelerate the development of our COVID-19 program, including a Phase 1 clinical trial for a next-generation multispecific antibody with broad neutralizing activity against SARS-CoV-2 variants. Additionally, BARDA exercised a $24.1 million option to initiate the development of a multispecific antibody for influenza or another pathogen.
Previous report
Completion of Disposition of Select BioReference Assets
Previous report
On September 16, 2024, the Company completed the sale of certain assets of BioReference (the “BioReference Transaction”) to Labcorp. Labcorp paid to the Company aggregate consideration of $237.5 million in cash, which is subject to certain adjustments as set forth in the Labcorp Asset Purchase Agreement (as defined in Note 1 to our condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q (our "Quarterly Financial Statements")). The assets acquired by Labcorp include BioReference's laboratory testing businesses focused on clinical diagnostics, reproductive health, and women's health across the United States, excluding New York and New Jersey operations. We retained our oncology and urology diagnostic services nationwide. The BioReference assets were formerly part of our diagnostics segment. We recognized a gain of $121.5 million from the BioReference Transaction for the three and nine months ended September 30, 2024.
Previous report
$250 Million Note Purchase Agreement Secured by NGENLA’s Profit Share Payments
Previous report
On July 17, 2024, the Company completed a private offering of $250 million aggregate principal amount of senior secured notes (the “2044 Notes”), pursuant to a note purchase agreement dated July 17, 2024 (the “2044 Note Purchase Agreement), by and among the Company, certain purchasers party thereto, the Company’s wholly-owned subsidiaries OPKO Biologics Limited (“OPKO Biologics”) and EirGen Pharma Ltd. (“EirGen”) as guarantors (OPKO Biologics and EirGen collectively, the “2044 Note Guarantors”), and HCR Injection SPV, LLC, as agent (“Agent”). The 2044 Notes mature on July 17, 2044 and bear interest at the 3-month Secured Overnight Financing Rate (“SOFR”) subject to a 4.0% per annum floor, plus 7.5% per annum. Interest is payable on the 2044 Notes on a quarterly basis determined by profit share payments received by EirGen pursuant to the profit share arrangement with Pfizer, Inc. (the “Royalty Payments”) set forth in the Restated Pfizer Agreement (as described in Note 4 to our Quarterly Financials). In the event that the aggregate amount of the Royalty Payments received by EirGen during the quarter preceding any quarterly interest payment date are less than the accrued and unpaid interest payable on such date, the excess interest payable on such date shall be paid-in-kind and added to the outstanding principal amount of the 2044 Notes. The Company will be required to pay the noteholders a 3% exit fee in connection with any repayment in full of the 2044 Notes, whether at maturity or otherwise. In addition, in the event that the Company repays the 2044 Notes in full prior to the maturity date, the Company will be required to pay the noteholders a make whole payment in an amount necessary such that the noteholders shall have received aggregate payments of principal, interest and fees in respect of the 2044 Notes equal to at least 150% of the initial principal amount of the 2044 Notes, in the event that such prepayment shall occur on or prior to July 17, 2029, or 200% of the initial principal amount of the 2044 Notes, in the event that such prepayment shall occur following July 17, 2029. The Company may authorize up to an additional $50,000,000 in additional 2044 Notes to the purchasers on the same terms and conditions of the initial 2044 Notes.
Previous report
Offering of 3.75% Convertible Senior Notes due 2029
Previous report
In January 2024, we completed a private offering of $230.0 million aggregate principal amount of our 3.75% Convertible Senior Notes due 2029 (the “2029 Convertible 144A Notes”) in accordance with the terms of a note purchase agreement (the “144A Note Purchase Agreement”) entered into by and between the Company and J.P. Morgan Securities LLC (the “Initial Purchaser”). The $230.0 million aggregate principal amount of 2029 Convertible 144A Notes included $30.0 million aggregate principal amount of 2029 Convertible 144A Notes purchased on the Closing Date by the Initial Purchaser in accordance with its overallotment option.
Previous report
Net proceeds from the 2029 Convertible 144A Notes issuance totaled approximately $222.0 million after deducting fees and estimated offering expenses payable by us. We allocated approximately $50.0 million of these net proceeds to repurchase shares of our Common Stock. These repurchases were from purchasers of the 2029 Convertible 144A Notes in privately negotiated transactions effected with or through the Initial Purchaser or its affiliate. The purchase price per share of the Common Stock in these transactions equaled the closing sale price of $0.9067 per share of Common Stock on January 4, 2024.
Previous report
Contemporaneously with the closing of the offering of the 2029 Convertible Notes on January 9, 2024, we issued and sold approximately $71.1 million aggregate principal amount of our 3.75% Convertible Senior Notes due 2029 (the “2029 Convertible Affiliate Notes” and, together with the 2029 Convertible 144A Notes, the “2029 Convertible Notes”) pursuant to the terms of a note purchase agreement entered into on January 4, 2024 (the “Affiliate Note Purchase Agreement”) by and among the Company and certain investors including, Frost Gamma Investments Trust, a trust controlled by Phillip Frost, M.D., our Chairman and Chief Executive Officer, and Jane H. Hsiao, Ph.D., MBA, our Vice-Chairman and Chief Technical Officer (collectively, the “Affiliate Purchasers”). Pursuant to the Affiliate Note Purchase Agreement, we issued and sold the 2029 Convertible Affiliate Notes to the Affiliate Purchasers in exchange for the entirety of the $55.0 million aggregate principal amount of our outstanding 2023 Convertible Notes held by the affiliate Purchasers, together with approximately $16.1 million of accrued but unpaid interest thereon.
Previous report
Furthermore, in connection with the closing of our offering of the 2029 Convertible Notes, we repurchased approximately $144.4 million aggregate principal amount of the 2025 Notes for cash, using $146.3 million of the net proceeds from our issuance and sale of the 2029 Convertible 144A Notes.
Previous report
Termination of Share Lending Agreement
Previous report
On January 22, 2024, we terminated our share lending agreement, dated February 4, 2019, with Jefferies Capital Services, LLC (“Share Borrower”). Through this agreement, we had lent the Share Borrower approximately 30 million shares of our common stock related to our 2019 issuance of the $200.0 million in 2025 Notes. We had since reduced the number of outstanding borrowed shares by approximately 8.313 million. With the termination of this agreement, all remaining shares have been returned to us and are now held as treasury shares.
Previous report
Cost of revenue. Cost of revenue for the three months ended September 30, 2024 increased $2.5 million, an increase of 2.3% compared to the three months ended September 30, 2023. The increase is primarily due to $4.2 million in accruals set aside to cover volume shortfalls on contracts as a result of the Labcorp transaction.
Previous report
Selling, general and administrative expenses. Selling, general and administrative expenses for the three months ended September 30, 2024 and 2023 were $71.0 million and $48.8 million, respectively, representing an increase of 45.4% from the prior period. The increase in selling, general and administrative expenses was primarily due to severance expense of $26.3 million, offset by a decrease in employee-related expenses, reflecting continued cost-reduction initiatives.
Previous report
Gain on sale of assets. Gain on sale of assets for the three months ended September 30, 2024, was $121.5 million which reflects the gain on sale from the BioReference Transaction.
Previous report
Revenue from products. Revenue from products for the three months ended September 30, 2024 decreased $1.5 million or 3.8%, compared to the three months ended September 30, 2023. This decrease was largely attributable to lower Rayaldee sales, which generated $5.8 million of revenue for the three months ended September 30, 2024, compared to $7.3 million for the same period in 2023. In addition, demand for our products in international operations increased, foreign currency fluctuations also negatively impacted revenue.
Previous report
Selling, general and administrative expenses. Selling, general and administrative expenses for the three months ended September 30, 2024 and 2023 were $15.2 million and $13.5 million, respectively, an increase of 12.3% from the prior year period. This increase was primarily driven by higher professional fees. Additionally, employee-related expenses also contributed to the increase in SG&A in our international operations.
Previous report
Contingent consideration. Contingent consideration for the three months ended September 30, 2024 was zero, as compared to $1.1 million reversal of expense for the three months ended September 30, 2023. Contingent consideration for the three months ended September 30, 2023 was primarily attributable to changes in assumptions regarding the timing of achievement of future milestones for OPKO Renal, and potential amounts payable to former stockholders of OPKO Renal in connection therewith, pursuant to our acquisition agreement in 2013.
Previous report
Interest expense. Interest expense increased to $17.4 million for the three months ended September 30, 2024, compared to $3.4 million in the same period of 2023. The increase in interest expense was primarily driven by $14.6 million interest incurred on the 2029 Convertible Notes and the 2044 Notes, including amortization of deferred financing and debt issuance costs. This increase was partially offset by the extinguishment of our outstanding 2023 Convertible Notes and the repurchase of the 2025 Convertible Notes.
Previous report
Other income (expense), net. Other income (expense), net for the three months ended September 30, 2024, resulted in $48.6 million of income compared to $11.7 million of expense for the 2023 period. This was primarily driven by changes in the fair value of our investment in GeneDx Holdings (as defined in Note 6 to our Quarterly Financials). During the three months ended September 30, 2024, we recorded income of $35.4 million related to this investment, compared to an expense of $8.3 million in the prior-year period. Additionally, we realized a gain of $10.5 million from the sale of 1,386,929 shares of GeneDx during the three months ended September 30, 2024. Foreign currency income of $4.1 million was recorded for the 2024 period, compared with a $3.8 million expense in the 2023 period.
Previous report
FOR THEnine months ended September 30, 2024 and 2023
Previous report
Our consolidated loss from operations for the nine months ended September 30, 2024 and 2023 was as follows:
Previous report
Diagnostics
Previous report
Revenue. Revenue from services for the nine months ended September 30, 2024 decreased by approximately $13.5 million, a decrease of 3.5% compared to the nine months ended September 30, 2023. This decrease was primarily due to a $6.5 million reduction in clinical test reimbursement rates and an $7.0 million decrease in clinical test volume, of which $3.3 million was attributable to the BioReference Transaction.
Previous report
Cost of revenue. Cost of revenue for the nine months ended September 30, 2024 decreased $7.7 million, a decrease of 2.3% compared to the nine months ended September 30, 2023. Cost of revenue decreased primarily due to lower employee headcount, reflecting our continued cost-reduction initiatives implemented at BioReference, changes in the mix of testing ordered during the period, and by a decrease in consumption reflecting the timing of the BioReference Transaction.
Previous report
Selling, general and administrative expenses. Selling, general and administrative expenses for the nine months ended September 30, 2024 and 2023 were $161.2 million and $154.0 million, respectively, representing a decrease of 4.7% from the prior period. The increase in selling, general and administrative expenses was primarily due to severance expense of $26.3 million, offset by a decrease in employee-related expenses, reflecting continued cost-reduction initiatives.
Previous report
Amortization of intangible assets. Amortization of intangible assets was $12.9 million and $15.2 million, respectively, for the nine months ended September 30, 2024 and 2023. The decrease is primarily attributable to the BioReference Transaction, which impacted the amount of amortizable intangible assets.
Previous report
Gain on sale of assets. Gain on sale of assets for the nine months ended September 30, 2024, was $121.5 million due to the BioReference Transaction that closed during the third quarter of 2024.
Previous report
Pharmaceuticals
Previous report
Revenue from transfer of intellectual property and other.For the nine months ended September 30, 2024, revenue from the transfer of intellectual property and other was $34.3 million compared to $165.9 million for the prior period. This decrease was primarily due to one-time milestone payments received in 2023, including a $90.0 million payment triggered by the FDA approval of NGENLA (Somatrogon), a $50.0 million payment from Merck for rights granted under the Merck Agreement (as defined and described in Note 14 to our Quarterly Financials), a $7.0 million payment from VFMCRP triggered by the German price approval forRayaldee (as described in Note 14 to our Quarterly Financials) and a $2.5 million payment from Nicoya due to Nicoya’s submission of the investigational new drug application to China's Center for Drug Evaluation pursuant to the Nicoya Agreement (as described in Note 14 to our Quarterly Financials). For the nine months ended September 30, 2024, revenue from the transfer of intellectual property and other reflects $18.9 million in gross profit share and royalty payments for NGENLA (Somatrogon) and Pfizer's Genotropin® (Somatropin), compared with $11.8 million received in the same period in 2023. Furthermore, revenue for the nine months ended September 30, 2024 included $12.8 million from the BARDA Contract (as defined and described in Note 14 to our Quarterly Financials).
Previous report
Cost of revenue. Cost of revenue for the nine months ended September 30, 2024 decreased $4.9 million, a decrease of 6.5% compared to the nine months ended September 30, 2023 which was primarily driven by favorable foreign exchange fluctuations. Despite increased sales volumes during the period, which typically increases cost of revenue, we were able to achieve this decrease due to a combination of factors. Favorable foreign currency fluctuations positively impacted cost of revenue, and we also realized a $2.6 million reduction in Rayaldee cost of revenue resulting from a lower standard cost per bottle.
Previous report
Selling, general and administrative expenses. Selling, general and administrative expenses for the nine months ended September 30, 2024 and 2023 were $44.3 million and $41.9 million, respectively, an increase of 5.7% from the prior year period. The increase in selling, general and administrative expenses was due to higher employee-related and professional expenses related to our international operations.
Previous report
Research and development expenses for the nine months ended September 30, 2024, increased primarily to growth in our BARDA collaboration and higher employee-related expenses. These increases were partially offset by a one-time payment to Sanofi of $12.5 million made in 2023 pursuant to the Sanofi In-License Agreement, which was triggered as a result of the Merck Agreement, and lower costs related to Somatrogon (hGH-CTP) following the closure of open-label extension studies in countries where it has received marketing authorization.
Previous report
Contingent consideration. Contingent consideration for the nine months ended September 30, 2024 was zero, as compared to a $1.0 million reversal of expense for the nine months ended September 30, 2023. Contingent consideration for the nine months ended September 30, 2023 was primarily attributable to changes in assumptions regarding the timing of achievement of future milestones for OPKO Renal, and potential amounts payable to former stockholders of OPKO Renal in connection therewith, pursuant to our acquisition agreement in 2013.
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Corporate
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Other
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Interest income. Interest income for the nine months ended September 30, 2024 and 2023 was $4.1 million and $3.1 million, respectively. The increase is driven by higher average cash and investment balances as a result of the cash received from the BioReference Transaction and the issuance of the 2044 Notes.
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Interest expense. Interest expense increased to $33.2 million for the nine months ended September 30, 2024, compared to $10.1 million in the same period of 2023. The increase was primarily driven by interest incurred on the 2029 Convertible Notes and the 2044 Senior Secured Notes, including amortization of deferred financing and debt issuance costs. This increase was partially offset by the extinguishment of our outstanding 2023 Convertible Notes in connection with their exchange for 2029 Convertible Notes and the repurchase of a portion of the 2025 Convertible Notes.
Previous report
Other income (expense), net. Other income (expense), net for the nine months ended September 30, 2024, was $128.8 million of income, compared to $16.1 million of expense for the 2023 period. Other income (expense), net for the nine months ended September 30, 2024 and 2023, included $118.6 million of income and $19.9 million of expense, respectively, as a result of the change in the fair value of our investment in GeneDx Holdings (as defined in Note 6 to our Quarterly Financials). Furthermore, the nine months ended September 30, 2023, reflected $8.5 million of income due to GeneDx Holdings reaching specific revenue targets for the fiscal year ending December 31, 2022. Finally, a foreign currency gain of $0.1 million was recorded for the 2024 period, compared with a $1.8 million loss in the 2023 period.
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Reworded paragraphs (27)
Previous wording
We are a diversified healthcare company that seeks to establish industry leading positions in large and rapidly growing medical markets. Our pharmaceutical business featuresRayaldee, a U.S. Food and Drug Administration (“FDA”) approved treatment for secondary hyperparathyroidism (“SHPT”) in adults with stage 3 or 4 chronic kidney disease (“CKD”) and vitamin D insufficiency, and Somatrogon (hGH-CTP), a once-weekly human growth hormone injection. We have partnered with Pfizer Inc. (“Pfizer”) for the development and commercialization of Somatrogon (hGH-CTP). Regulatory approvals for Somatrogon (hGH-CTP) for the treatment of growth hormone deficiency in children and adolescents have been secured in all major markets, including the United States, European Union (“EU") Member States, Japan, Canada, and Australia, where it is marketed under the brand name NGENLA®. Our 2022 acquisition of ModeX Therapeutics, Inc. (“ModeX”) has expanded our pharmaceutical pipeline with early-stage immune therapies targeting cancer and infectious diseases.
Current wording
We are a diversified healthcare company that seeks to establish industry leading positions in large and rapidly growing medical markets. Our pharmaceutical business features Somatrogon (hGH-CTP), a once-weekly human growth hormone injection. We have partnered with Pfizer Inc. (“Pfizer”) for the development and commercialization of Somatrogon (hGH-CTP). Regulatory approvals for Somatrogon (hGH-CTP) for the treatment of growth hormone deficiency in children and adolescents have been secured in more than 50 markets, including the United States, European Union ("EU") Member States, Japan, Canada, and Australia, where it is marketed under the brand name NGENLA®. We also manufacture and sellRayaldee, an FDA approved treatment for secondary hyperparathyroidism ("SHPT") in adults with stage 3 or 4 chronic kidney disease ("CKD") and vitamin D insufficiency, through our pharmaceutical division. We have also expanded our pharmaceutical pipeline with early-stage immune therapies targeting cancer and infectious diseases through our 2022 acquisition of ModeX Therapeutics, Inc. ("ModeX").
Previous wording
Our diagnostics business, BioReference Health, LLC (“BioReference”), is a highly specialized laboratory in the United States, with a sales and marketing team focused on growth and new product integration, including the 4Kscore® prostate cancer test. BioReference® offers a broad spectrum of diagnostic testing services for oncology, urology (4Kscore), and corrections nationwide, setting new standards with our industry-leading turnaround times. BioReference also provides comprehensive clinical and women’s health testing in New York and New Jersey. Our test offerings are backed by a team of board-certified medical professionals and driven by the latest healthcare guidelines and standards- marketed directly to physicians, geneticists, hospitals, clinics, correctional facilities, and other healthcare providers. On September 16, 2024 we completed an agreement to sell select assets of BioReference to Laboratory Corporation of America Holdings ("Labcorp"), as described below.
Current wording
Our diagnostics business, BioReference Health, LLC (“BioReference”), is a highly specialized laboratory in the United States, with a sales and marketing team focused on growth and new product integration, including the 4Kscore® prostate cancer test. BioReference® offers a broad spectrum of diagnostic testing services for oncology, urology (4Kscore), and corrections nationwide, setting new standards with our industry-leading turnaround times. BioReference also provides comprehensive clinical and women’s health testing in New York and New Jersey. Our test offerings are backed by a team of board-certified medical professionals and driven by the latest healthcare guidelines and standards- marketed directly to physicians, geneticists, hospitals, clinics, correctional facilities, and other healthcare providers. As described below, we entered into agreements with Laboratory Corporation of America Holdings (“Labcorp”) in 2024 and 2025 for the sale of certain BioReference assets, including its oncology testing services.
Previous wording
The Company maintains established, revenue-generating pharmaceutical platforms in Spain, Ireland, Chile, and Mexico, contributing to positive cash flow and facilitating market entry for our development pipeline. In addition to these platforms, we operate a global pharmaceutical development and commercial supply company, a global supply chain operation, and manufacture specialty active pharmaceutical ingredients (API) in Israel through our subsidiary, FineTech.
Current wording
The Company maintains established, revenue-generating pharmaceutical platforms in Spain, Ireland, Chile, and Mexico, contributing to positive cash flow and facilitating market entry for our development pipeline. In addition to these platforms, we operate a global pharmaceutical development and commercial supply company, and a global supply chain operation.
Previous wording
Approximately 22.3% of our revenue for the nine months ended September 30, 2024, was denominated in currencies other than the U.S. Dollar (USD). This compares to 30.7% for the same period in 2023. Our financial statements are reported in USD; therefore, fluctuations in exchange rates affect the translation of foreign-denominated revenue and expenses. During the second quarter of 2024 and the year ended December 31, 2023, our most significant currency exchange rate exposures were to the Euro and the Chilean Peso. Gross accumulated currency translation adjustments, recorded as a separate component of shareholders’ equity, totaled $36.2 million and $34.6 million at September 30, 2024 and December 31, 2023, respectively.
Current wording
Approximately 22.3% of our revenue for the three months ended March 31, 2025, was denominated in currencies other than the U.S. Dollar (USD). This compares to 21.5% for the same period in 2024. Our financial statements are reported in USD; therefore, fluctuations in exchange rates affect the translation of foreign-denominated revenue and expenses. During the three months ended March 31, 2025 and the year ended December 31, 2024, our most significant currency exchange rate exposures were to the Chilean Peso and Euro. Gross accumulated currency translation adjustments, recorded as a separate component of shareholders’ equity, totaled $41.6 million and $52.7 million at March 31, 2025 and December 31, 2024, respectively.
Previous wording
We are subject to foreign currency transaction risk due to fluctuations in exchange rates between the time a transaction is initiated and settled. To mitigate this risk, we use foreign currency forward contracts. These contracts fix an exchange rate, allowing us to offset potential losses (or gains) caused by exchange rate changes at the settlement date. As of September 30, 2024, we held no open foreign exchange forward contracts related to inventory purchases on letters of credit. As of December 31, 2023, we held 52 open foreign exchange forward contracts related to inventory purchases on letters of credit. These contracts matured monthly through January 2024 with a total notional value of approximately $2.9 million.
Current wording
We are subject to foreign currency transaction risk due to fluctuations in exchange rates between the time a transaction is initiated and settled. To mitigate this risk, we use foreign currency forward contracts. These contracts fix an exchange rate, allowing us to offset potential losses (or gains) caused by exchange rate changes at the settlement date. As of March 31, 2025 and December 31, 2024, we held 60 and zero open foreign exchange forward contracts, respectively, related to inventory purchases on letters of credit.
Previous wording
Revenue. Revenue from services for the three months ended September 30, 2024 decreased by approximately $10.4 million, a decrease of 7.9% compared to the same period in 2023. This decrease was primarily due to a $2.0 million reduction in clinical test reimbursement rates and an $8.4 million decrease in clinical test volume, of which $3.3 million was attributable to the BioReference Transaction.
Current wording
Revenue. Revenue from services for the three months ended March 31, 2025 decreased by approximately $24.1 million, a decrease of 19.0% compared to the same period in 2024. The decrease resulted from revenue reductions totaling $35.4 million (composed of $26.9 million due to the absence of revenue following the sale of certain of BioReference's lab operations to Labcorp in September 2024 (the "BioReference Transaction") and $8.5 million from lower clinical test volume in continuing operations). These decreases were partially offset by a $11.4 million increase attributed to higher clinical test reimbursement rates.
Previous wording
Estimated collection amounts are subject to the complexities and ambiguities of billing, reimbursement regulations and claims processing, as well as considerations unique to Medicare and Medicaid programs, and require us to consider the potential for retroactive adjustments when estimating variable consideration in the recognition of revenue in the period the related services are rendered. For the nine months ended September 30, 2024 and 2023, we recorded $2.2 million and $19.8 million, respectively, of negative revenue adjustments due to changes in estimates of implicit price concessions for performance obligations satisfied in prior periods mainly due to the composition of patient pay mix.
Current wording
Estimated collection amounts are subject to the complexities and ambiguities of billing, reimbursement regulations and claims processing, as well as considerations unique to Medicare and Medicaid programs, and require us to consider the potential for retroactive adjustments when estimating variable consideration in the recognition of revenue for the period during which the related services are rendered. For the three months ended March 31, 2025, we recorded $1.5 million of negative revenue adjustments due to changes in estimated implicit price concessions for services provided in prior periods, primarily due to shifts in the composition of our client mix. For the three months ended March 31, 2024, we recorded $0.5 million of positive revenue adjustments due to changes in estimates of implicit price concessions for performance obligations satisfied in prior periods mainly due to the composition of client pay mix.
Previous wording
Amortization of intangible assets. Amortization of intangible assets was $3.9 million and $5.1 million, respectively, for the three months ended September 30, 2024 and 2023. The decrease is primarily attributable to the BioReference Transaction, which impacted the amount of amortizable intangible assets.
Current wording
Amortization of intangible assets. Amortization of intangible assets was $3.8 million and $5.0 million, respectively, for the three months ended March 31, 2025 and 2024. This decrease is primarily due to the removal of amortizable intangible assets associated with the lab operations divested in September 2024.
Previous wording
Revenue from products. Revenue from products for nine months ended September 30, 2024 decreased $6.9 million or 5.5%, compared to the nine months ended September 30, 2023. While we experienced higher sales volumes in 2024 compared to 2023, this increase was more than offset by unfavorable foreign exchange fluctuations of approximately $6.7 million from our international operations, resulting in an overall decrease in revenue. Additionally, revenue from sales ofRayaldee for the nine months ended September 30, 2024, was $19.9 million compared to $21.7 million recorded in the same period in 2023.
Current wording
Revenue from products. Revenue from products for the three months ended March 31, 2025 decreased $3.2 million or 8.4%, compared to the three months ended March 31, 2024. The decrease was primarily driven by unfavorable foreign exchange fluctuations impacting our international operations by approximately $1.9 million, a $0.6 million reduction inRayaldee sales, and unfavorable impacts from the timing of customer orders and product mix. While we experienced higher sales volumes for certain other products compared to 2024, the positive impact of this volume increase was more than offset by these combined negative factors, leading to the overall decrease.
Previous wording
*Revenue from transfer of intellectual property and other.*For the three months ended September 30, 2024, revenue from the transfer of intellectual property and other was $13.2 million compared to $6.3 million for the prior year period. This increase was primarily attributable to $5.5 million from the BARDA Contract (as defined and described in Note 14 to our Quarterly Financials). Gross profit share and royalty payments for NGENLA (Somatrogon) and Pfizer's Genotropin® (Somatropin) also increased to $7.0 million, compared with $4.9 million for the same period in 2023.
Current wording
*Revenue from transfer of intellectual property and other.*For the three months ended March 31, 2025, revenue from the transfer of intellectual property and other was $12.3 million compared to $8.7 million for the prior year period, an increase of $3.5 million. This increase was primarily attributable to $7.0 million recognized under the BARDA Contract (as defined and described in Note 14 to our condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q) compared to $2.2 million in the 2024 period. This positive contribution was partially offset by a decrease in gross profit share and royalty payments for NGENLA (Somatrogon) and Pfizer's Genotropin® (Somatropin), which totaled $4.5 million compared with $5.6 million for the same period in 2024.
Previous wording
Cost of revenue. Cost of revenue for the three months ended September 30, 2024 increased $0.1 million, an increase of 0.5%, compared to the three months ended September 30, 2023. Cost of revenue increased primarily due to a shift in product mix offset by favorable foreign currency exchange, which had a positive impact on cost of revenue, reducing it by $1.5 million.
Current wording
Cost of revenue. Cost of revenue for the three months ended March 31, 2025 increased $1.1 million, an increase of 4.9%, compared to the three months ended March 31, 2024. Cost of revenue increased primarily due to an unfavorable shift in product mix. This increase was partially offset by favorable foreign currency exchange rates, which reduced costs by $0.6 million compared to the prior year period.
Previous wording
Research and development expenses. Research and development expenses for the three months ended September 30, 2024 and 2023 were $28.2 million and $18.9 million, respectively, an increase of 49.6% from the prior year period. Research and development expenses include external and internal expenses, partially offset by third-party grants and funding arising from collaboration agreements. External expenses include clinical and non-clinical activities performed by contract research organizations, lab services, purchases of drug and diagnostic product materials and manufacturing development costs. We track external research and development expenses by individual program for phase 3 clinical trials for drug approval and premarket approval for diagnostics tests, if any. Internal expenses include employee-related expenses such as salaries, benefits and equity-based compensation expense. Other internal research and development expenses are incurred to support overall research and development activities and include expenses related to general overhead and facilities.
Current wording
Research and development expenses. Research and development expenses for the three months ended March 31, 2025 and 2024 were $30.2 million and $21.3 million, respectively, an increase of 42.3% from the prior year period. Research and development expenses include external and internal expenses, partially offset by third-party grants and funding arising from collaboration agreements. External expenses include clinical and non-clinical activities performed by contract research organizations, lab services, purchases of drug and diagnostic product materials and manufacturing development costs. We track external research and development expenses by individual program for phase 3 clinical trials for drug approval and premarket approval for diagnostics tests, if any. Internal expenses include employee-related expenses such as salaries, benefits and equity-based compensation expense. Other internal research and development expenses are incurred to support overall research and development activities and include expenses related to general overhead and facilities.
Previous wording
Amortization of intangible assets. Amortization of intangible assets was $16.5 million and $16.5 million, respectively, for the three months ended September 30, 2024 and 2023. Amortization expense reflects the amortization of acquired intangible assets with defined useful lives. Our indefinite lived IPR&D assets will not be amortized until the underlying development programs are completed. Upon obtaining regulatory approval by the FDA, the IPR&D assets will be accounted for as a finite-lived intangible asset and amortized on a straight-line basis over its estimated useful life. The assets will be amortized on a straight-line basis over their estimated useful life of approximately 12 years.
Current wording
Amortization of intangible assets. Amortization of intangible assets was $16.1 million and $16.4 million, respectively, for the three months ended March 31, 2025 and 2024. Amortization expense reflects the amortization of acquired intangible assets with defined useful lives. Our indefinite lived IPR&D assets will not be amortized until the underlying development programs are completed. Upon obtaining regulatory approval by the FDA, the IPR&D assets will be accounted for as a finite-lived intangible asset and amortized on a straight-line basis over its estimated useful life. The assets will be amortized on a straight-line basis over their estimated useful life of approximately 12 years.
Previous wording
Operating loss for our unallocated corporate operations for the three months ended September 30, 2024 and 2023 was $12.1 million and $10.0 million, respectively, and principally reflect general and administrative expenses incurred in connection with our corporate operations. The increase in operating loss for our unallocated corporate operations was primarily due to an increase in employee-related expenses.
Current wording
Operating loss for our unallocated corporate operations for the three months ended March 31, 2025 and 2024 was $8.5 million and $9.4 million, respectively, and principally reflects general and administrative expenses incurred in connection with our corporate operations. The decrease in operating loss for our unallocated corporate operations was primarily due to a decrease in professional fees expenses.
Previous wording
Interest income. Interest income for the three months ended September 30, 2024 and 2023 was $2.9 million and $1.0 million, respectively. The increase in interest income is driven by the yield obtained in our larger cash investment.
Current wording
Interest income. Interest income for the three months ended March 31, 2025 and 2024 was $4.7 million and $0.8 million, respectively. The increase in interest income is driven by interest earned on our larger cash investment.
Previous wording
Fair value changes of derivative instruments, net. Fair value changes of derivative instruments, net for the nine months ended September 30, 2024 and 2023, was $26.2 million and $0.8 million of expense, respectively. Derivative expense was principally related to the change in fair value on the 2029 Convertible Notes and on foreign currency forward exchange contracts at OPKO Chile.
Current wording
Fair value changes of derivative instruments, net. Fair value changes of derivative instruments, net for the three months ended March 31, 2025 and 2024, was $0.3 million and $26.2 million of expense, respectively. Derivative expense was principally related to the change in fair value on the 2029 Convertible Notes (see Note 7 for further information) and on foreign currency forward exchange contracts at OPKO Chile.
Previous wording
Income tax provision. Our income tax provision for the three months ended September 30, 2024 and 2023 was $23.5 million and $6.1 million, respectively. This significant increase was primarily driven by a discrete expense related to the BioReference Transaction. While the U.S. federal statutory rate is 21%, our effective tax rate for the three months ended September 30, 2024 and 2023 differed from this rate primarily due to the relative mix in earnings and losses in the U.S. versus foreign tax jurisdictions and operating results in tax jurisdictions which do not result in a tax benefit.
Current wording
Income tax benefit. Our income tax benefit for the three months ended March 31, 2025 and 2024 was $5.8 million and $1.4 million, respectively. For the three months ended March 31, 2025 and 2024, the tax rate differed from the U.S. federal statutory rate of 21% primarily due to the relative mix in earnings and losses in the U.S. versus foreign tax jurisdictions, and operating results in tax jurisdictions which do not result in a tax benefit.
Previous wording
Loss from investments in investees. We have invested in certain early-stage companies that we perceive to have valuable proprietary technology and significant potential to create value for us as an equity holder. We account for these investments under the equity method of accounting, resulting in the recording of our proportionate share of their losses until our share of their loss exceeds our investment. Until the investees’ technologies are commercialized, if ever, we anticipate they will report net losses Loss from investments in investees was $3.0 thousand and $20.0 thousand for the three months ended September 30, 2024 and 2023, respectively.
Current wording
Loss from investments in investees. We have invested in certain early-stage companies that we perceive to have valuable proprietary technology and significant potential to create value for us as an equity holder. We account for these investments under the equity method of accounting, resulting in the recording of our proportionate share of their losses until our share of their loss exceeds our investment. Until the investees’ technologies are commercialized, if ever, we anticipate they will report net losses Loss from investments in investees was $8.7 thousand and $2.7 thousand for the three months ended March 31, 2025 and 2024, respectively.
Previous wording
On September 30, 2024, we had cash, cash equivalents and restricted cash of approximately $420.1 million. Cash used in operations of $139.1 million for the nine months ended September 30, 2024 was primarily driven by a $121.5 million gain on the sale of assets related to the BioReference Transaction and $94.6 million change in fair value from equity securities. We also incurred general and administrative expenses related to our corporate operations and research and development activities. Cash from investing activities was $236.2 million for the nine months ended September 30, 2024 primarily reflected both the proceeds from the BioReference Transaction and the sale of equity securities, offset by capital expenditures. Cash provided by financing activities for the nine months ended September 30, 2024 of $224.6 million primarily reflected net borrowings on our lines of credit, the issuance of our 2029 Convertible Notes, the issuance of the 2044 Notes, the redemption of the 2025 Notes, and repurchase of shares of our Common Stock. We have historically not generated sustained positive cash flow sufficient to offset our operating and other expenses, and our primary sources of cash have been from the public and private placement of equity and debt, as well as credit facilities available to us.
Current wording
On March 31, 2025, we had cash, cash equivalents and restricted cash of approximately $449.7 million. Cash used in operations of $34.6 million for the three months ended March 31, 2025 principally reflects general and administrative expenses related to our corporate operations, research and development activities and sales and marketing activities related to our pharmaceutical and diagnostic business. Cash from investing activities was $40.5 million for the three months ended March 31, 2025 primarily reflected proceeds from the sale of equity securities, offset by an $8.0 million investment in Entera and capital expenditures. Cash provided by financing activities for the three months ended March 31, 2025 of $4.0 million primarily reflected net borrowings on our lines of credit. We have historically not generated sustained positive cash flow sufficient to offset our operating and other expenses, and our primary sources of cash have been from the public and private placement of equity and debt, as well as credit facilities available to us.
Previous wording
On July 18, 2024, our Board of Directors authorized the repurchase of up to $100 million of our Common Stock. Under this program, we may repurchase shares through various methods, including open market purchases, block trades, privately negotiated transactions and accelerated share repurchases, as well as pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1(c) of the Exchange Act, and otherwise in compliance with applicable laws. The timing and volume of repurchases will depend on market conditions, our capital management, investment opportunities, and other factors. The program does not obligate us to repurchase any specific number of shares, has no set expiration date, and may be modified, suspended, or discontinued at our discretion. The Company repurchased 14,893,026 shares for approximately $23.8 million during the three months ended September 30, 2024.
Current wording
On April 4, 2024, the Company announced that its Board of Directors has authorized an increase of $100.0 million to the Company’s existing Common Stock repurchase program, bringing the aggregate capacity of the program to $200.0 million. Approximately $40.2 million of OPKO’s Common Stock has been repurchased under the existing program since its authorization in July 2024. Under this program, the Company may repurchase shares from time to time through various methods, including open market purchases, block trades, privately negotiated transactions, accelerated share repurchases, as well as pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1(c) of the Exchange Act, and otherwise in compliance with applicable laws. The timing and amount of any repurchases will be subject to general market conditions, the Company's capital management, investment opportunities, and other factors. The repurchase program does not obligate the Company to repurchase any specific number of shares, has no time limit, and may be modified, suspended, or discontinued at any time at the Company's discretion.
Previous wording
On March 8, 2023, ModeX, the Company (with respect to certain sections), and Merck entered into the Merck Agreement pursuant to which Merck obtained a license to certain patent rights and know-how in connection with the development of ModeX’s preclinical nanoparticle vaccine candidate targeting the Epstein -Barr Virus.
Current wording
On January 7th, 2025, ModeX announced the dosing of the first participant in a Phase 1 study of an EBV vaccine candidate being developed in collaboration with Merck. This achievement triggered a $12.5 million cash milestone payment from Merck to ModeX under the Merck Agreement. Related revenue of $12.5 million was recognized in the fourth quarter of 2024 upon satisfaction of the underlying performance obligation. Pursuant to the Merck Agreement, Merck obtained a license to certain patent rights and know-how in connection with the development of ModeX’s preclinical nanoparticle vaccine candidate targeting the Epstein-Barr Virus. 1 Under the terms of the Merck Agreement, ModeX is eligible to receive up to an additional $860.0 million upon the achievement of certain commercial and development milestones.
Previous wording
ModeX and Merck have established a strategic collaboration with a detailed research plan to guide the development of such a vaccine or related product. This plan includes the creation of a joint steering committee and the potential use of third-party contract development and manufacturing organization carry out such activities unless otherwise agreed. Merck will reimburse ModeX for development costs incurred as part of this research plan. To date, we have incurred $24.5 million of development costs related to the Epstein -Barr Virus, for which Merck has provided reimbursement in full.
Current wording
ModeX and Merck have established a strategic collaboration with a detailed research plan to guide the development of such a vaccine or related product. This plan includes the creation of a joint steering committee, and the potential use of third-party contract development and manufacturing organization carry out such activities unless otherwise agreed. Merck will reimburse ModeX for development costs incurred as part of this research plan. To date, we have incurred $26.1 million of development costs related to the Epstein-Barr Virus, which Merck has reimbursed in full.
Previous wording
In September 2024, ModeX entered into the BARDA Amendment which increased funding by $26.9 million, for the ongoing development, manufacturing, and execution of a Phase 1 clinical trial for a next-generation MSTAR multispecific antibody with broad neutralizing activity against known variants of SARS-CoV-2. The BARDA Amendment also included BARDA's exercise of an option for the development of a multispecific protein antibody for influenza or another pathogen, with the additional funding allocated to cover the expanded work. These modifications increased the total value of the BARDA Contract to $110.0 million, with a potential value, of $205.0 million if BARDA exercises all options thereunder thereunder to expand MOdeX's services. The BARDA Contract covers a five-year period through February 2028. We expect this funding will support the development of a second novel multispecific antibody to SARS-CoV-2, from preclinical through Phase 1 trials, as well as preclinical work on gene-based expression of multispecific antibodies to SARS-CoV-2, including mRNA and/or DNA vectors. In addition, ModeX will begin development of influenza multispecifics with gene and/or protein delivery modalities. As of September 30, 2024, the aggregate amount remaining to be funded by BARDA, which is subject to performance obligations and excluding unexercised contract options, is $96.0 million.
Current wording
In September 2024, ModeX entered into the BARDA Amendment which increased funding by $26.9 million, for the ongoing development, manufacturing, and execution of a Phase 1 clinical trial for a next-generation MSTAR multispecific antibody with broad neutralizing activity against known variants of SARS-CoV-2. The BARDA Amendment also included BARDA's exercise of an option for the development of a multispecific protein antibody for influenza or another pathogen, with the additional funding allocated to cover the expanded work. These modifications increased the total value of the BARDA Contract to $110.0 million, with a potential value, of $205.0 million if BARDA exercises all options thereunder thereunder to expand MOdeX's services. The BARDA Contract covers a five-year period through February 2028. We expect this funding will support the development of a second novel multispecific antibody to SARS-CoV-2, from preclinical through Phase 1 trials, as well as preclinical work on gene-based expression of multispecific antibodies to SARS-CoV-2, including mRNA and/or DNA vectors. In addition, ModeX will begin development of influenza multispecifics with gene and/or protein delivery modalities. As of March 31, 2025, the aggregate amount remaining to be funded by BARDA, which is subject to performance obligations and excluding unexercised contract options, was $78.0 million.
Previous wording
As of September 30, 2024, the total commitments under our lines of credit with financial institutions in Chile and Spain were $30.0 million, of which $11.7 million was drawn as of September 30, 2024. On September 30, 2024, the weighted average interest rate on these lines of credit was approximately 5.4%. These lines of credit are short-term and are used primarily as a source of working capital. The highest aggregate principal balance at any time outstanding during the nine months ended September 30, 2024 was $23.6 million. We intend to continue to draw under these lines of credit as needed. There is no assurance that these lines of credit or other funding sources will be available to us on acceptable terms, or at all, in the future.
Current wording
As of March 31, 2025, the total commitments under our lines of credit with financial institutions in Chile and Spain were $30.9 million, of which $10.7 million was drawn as of March 31, 2025. On March 31, 2025, the weighted average interest rate on these lines of credit was approximately 5.5%. These lines of credit are short-term and are used primarily as a source of working capital. The highest aggregate principal balance at any time outstanding during the three months ended March 31, 2025 was $14.3 million. We intend to continue to draw under these lines of credit as needed. There is no assurance that these lines of credit or other funding sources will be available to us on acceptable terms, or at all, in the future.
Previous wording
In connection with our agreements with Merck, Pfizer, VFMCRP, Nicoya and CAMP4, we are eligible to receive various milestone payments and royalty considerations. Under the terms of the Merck Agreement, we received an initial payment of $50.0 million and are also eligible to receive up to an additional $872.5 million upon the achievement of certain commercial and development milestones under several indications. We are also eligible to receive tiered royalty payments ranging from high single digits to low double digits upon achievement of certain sales targets of the Product (as defined in the Merck Agreement). Under the terms of the Restated Pfizer Agreement, we have received or are eligible to receive up to an additional $275.0 million upon the achievement of certain regulatory milestones, including $90 million triggered by the FDA approval in the United States and $85 million due to the commencement of sales of NGENLA (Somatrogon) in Europe and Japan, which we received in 2022. In addition, we are eligible to receive regional, tiered gross profit sharing for both Somatrogon (hGH-CTP) and Pfizer’s Genotropin®. Under the terms of the VFMCRP Agreement, we are entitled to receive up to an additional $15 million in regulatory milestones and $200 million in milestone payments tied to the launch, pricing and sales ofRayaldee, including a $7 million regulatory milestone payment we recorded in the first quarter of 2023 triggered by the German price approval forRayaldee and $3 million regulatory milestone payment we recognized in 2022 following the first sale ofRayaldee in Europe. In addition, we are eligible to receive tiered, double-digit royalty payments. Under the terms of the Nicoya Agreement, we received an initial upfront payment of $5 million and are eligible to receive an aggregate of $5 million tied to the first anniversary of the effective date of the Nicoya Agreement, of which we have received $2.5 million. Furthermore, we received the additional $2.5 million upon Nicoya’s submission of the investigational new drug application to the Center for Drug Evaluation of China in March 2023. We are also eligible to receive up to an additional aggregate amount of $115 million upon the achievement of certain development, regulatory and sales-based milestones by Nicoya for the Nicoya Product in the Nicoya Territory. We are also eligible to receive tiered, double digit royalty payments at rates in the low double digits on net product sales within the Nicoya Territory and in the Nicoya Field. Under the terms of the CAMP4 Agreement, we received an initial upfront payment of $1.5 million.
Current wording
In connection with our agreements with Merck, Pfizer, VFMCRP, and Nicoya, we are eligible to receive various milestone payments and royalty considerations. Under the terms of the Merck Agreement, we received an initial payment of $50.0 million and are also eligible to receive up to an additional $860.0 million upon the achievement of certain commercial and development milestones under several indications. We are also eligible to receive tiered royalty payments ranging from high single digits to low double digits upon achievement of certain sales targets of the Product (as defined in the Merck Agreement). On January 7, 2025, ModeX announced the dosing of the first participant in a Phase 1 study for an EBV vaccine candidate being developed in collaboration with Merck which triggered a $12.5 million milestone payment from Merck under the Merck Agreement. Under the terms of the Restated Pfizer Agreement, we have received or are eligible to receive up to an additional $275.0 million upon the achievement of certain regulatory milestones, including $90 million triggered by the FDA approval in the United States and $85 million due to the commencement of sales of NGENLA (Somatrogon) in Europe and Japan, which we received in 2022. In addition, we are eligible to receive regional, tiered gross profit sharing for both Somatrogon (hGH-CTP) and Pfizer’s Genotropin®. Under the terms of the VFMCRP Agreement, we are entitled to receive up to an additional $15 million in regulatory milestones and $200 million in milestone payments tied to the launch, pricing and sales ofRayaldee, including a $7 million regulatory milestone payment we recorded in the first quarter of 2023 triggered by the German price approval forRayaldee and $3 million regulatory milestone payment we recognized in 2022 following the first sale ofRayaldee in Europe. In addition, we are eligible to receive tiered, double-digit royalty payments. Under the terms of the Nicoya Agreement, we received an initial upfront payment of $5 million and are eligible to receive an aggregate of $5 million tied to the first anniversary of the effective date of the Nicoya Agreement, of which we have received $2.5 million. Furthermore, we received the additional $2.5 million upon Nicoya’s submission of the investigational new drug application to the Center for Drug Evaluation of China in March 2023. We are also eligible to receive up to an additional aggregate amount of $115 million upon the achievement of certain development, regulatory and sales-based milestones by Nicoya for the Nicoya Product in the Nicoya Territory. We are also eligible to receive tiered, double digit royalty payments at rates in the low double digits on net product sales within the Nicoya Territory and in the Nicoya Field.
Previous wording
We believe that the cash, cash equivalents and restricted cash on hand at September 30, 2024, which includes the amounts received from the sale of the 2044 Notes and the BioReference Transaction, are sufficient to meet our anticipated cash requirements for operations and debt service beyond the next 12 months. We based this estimate on assumptions that may prove to be wrong or are subject to change, and we may be required to use our available cash resources sooner than we currently expect. If we acquire additional assets or companies, accelerate our product development programs or initiate additional clinical trials, we will need additional funds. Our future cash requirements, and the timing of those requirements, will depend on a number of factors, including the approval and success of our products and products in development, particularly our long acting Somatrogon (hGH-CTP) for which we have received approval in over 50 markets, including the United States, Europe, Japan, Australia and Canada, the commercial success ofRayaldee, BioReference’s financial performance, possible acquisitions and dispositions, the continued progress of research and development of our product candidates, the timing and outcome of clinical trials and regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing patent claims and other intellectual property rights, the status of competitive products, the availability of financing, our success in developing markets for our product candidates and results of government investigations, payor claims, existing legal proceedings (including the ITA litigation) and those that may arise in the future. We have historically not generated sustained positive cash flow and if we are not able to secure additional funding when needed, we may have to delay, reduce the scope of, or eliminate one or more of our clinical trials or research and development programs or possible acquisitions or reduce our marketing or sales efforts or cease operations.
Current wording
We believe that the cash, cash equivalents and restricted cash on hand on March 31, 2025 are sufficient to meet our anticipated cash requirements for operations and debt service beyond the next 12 months. We based this estimate on assumptions that may prove to be wrong or are subject to change, and we may be required to use our available cash resources sooner than we currently expect. If we acquire additional assets or companies, accelerate our product development programs or initiate additional clinical trials, we will need additional funds. Our future cash requirements, and the timing of those requirements, will depend on a number of factors, including the approval and success of our products and products in development, particularly our long acting Somatrogon (hGH-CTP) for which we have received approval in over 50 markets, including the United States, Europe, Japan, Australia and Canada, the commercial success ofRayaldee, BioReference’s financial performance, possible acquisitions and dispositions, the continued progress of research and development of our product candidates, the timing and outcome of clinical trials and regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing patent claims and other intellectual property rights, the status of competitive products, the availability of financing, our success in developing markets for our product candidates and results of government investigations, payor claims, existing legal proceedings (including the ITA litigation) and those that may arise in the future. We have historically not generated sustained positive cash flow and if we are not able to secure additional funding when needed, we may have to delay, reduce the scope of, or eliminate one or more of our clinical trials or research and development programs or possible acquisitions or reduce our marketing or sales efforts or cease operations.
Previous wording
In November 2023, the FASB issued ASU No 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 enhances disclosures for significant segment expenses for all public entities required to report segment information in accordance with ASC 280. ASC 280 requires a public entity to report for each reportable segment a measure of segment profit or loss that its chief operating decision maker (“CODM”) uses to assess segment performance and to make decisions about resource allocations. The ASU is effective for fiscal years beginning after December 15, 2024 with updates to be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.
Current wording
In November 2023, the FASB issued ASU No 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 enhances disclosures for significant segment expenses for all public entities required to report segment information in accordance with ASC 280. ASC 280 requires a public entity to report for each reportable segment a measure of segment profit or loss that its CODM uses to assess segment performance and to make decisions about resource allocations. The Company adopted ASU 2023-07 in the fourth quarter of fiscal year 2024. This guidance was applied prospectively. The adoption of ASU 2023-07 did not have a material impact on our Condensed Consolidated Financial Statements.
Rearranged previous paragraphs (12)
Previous report — wording carried elsewhere
Estimated collection amounts are subject to the complexities and ambiguities of billing, reimbursement regulations and claims processing, as well as considerations unique to Medicare and Medicaid programs, and require us to consider the potential for retroactive adjustments when estimating variable consideration in the recognition of revenue in the period the related services are rendered. For the three months ended September 30, 2024 and 2023, we recorded $0.7 million and $1.5 million, respectively. These adjustments reflect changes in estimated implicit price concessions for services provided in prior periods, primarily due to shifts in the composition of our client mix
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Fair value changes of derivative instruments, net. Fair value changes of derivative instruments, net for the three months ended September 30, 2024 and 2023, was $1.0 thousand and $88.0 thousand of expense, respectively. Derivative expense was principally related to foreign currency forward exchange contracts at OPKO Chile.
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The composition of revenue from services by payor for the nine months ended September 30, 2024 and 2023 was as follows:
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Research and development expenses. The following table summarizes the components of our research and development expenses:
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The decrease in research and development expenses for the nine months ended September 30, 2024 was primarily due to a decrease in employee-related expenses as a result of the continued cost-reduction initiatives implemented at BioReference.
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Research and development expenses. Research and development expenses for the nine months ended September 30, 2024 and 2023 were $73.2 million and $68.3 million, respectively, an increase of 7.1% from the prior year period. Research and development expenses include external and internal expenses, partially offset by third-party grants and funding arising from collaboration agreements. External expenses include clinical and non-clinical activities performed by contract research organizations, lab services, purchases of drug and diagnostic product materials and manufacturing development costs. We track external research and development expenses by individual program for phase 3 clinical trials for drug approval and premarket approval for diagnostics tests, if any. Internal expenses include employee-related expenses such as salaries, benefits and equity-based compensation expense. Other internal research and development expenses are incurred to support overall research and development activities and include expenses related to general overhead and facilities.
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The following table summarizes the components of our research and development expenses:
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Amortization of intangible assets. Amortization of intangible assets was $49.4 million for both for the nine months ended September 30, 2024 and 2023. Amortization expense reflects the amortization of acquired intangible assets with defined useful lives. Our indefinite lived IPR&D assets will not be amortized until the underlying development programs are completed. Upon obtaining regulatory approval by the FDA, the IPR&D assets will be accounted for as a finite-lived intangible asset and amortized on a straight-line basis over its estimated useful life. The assets will be amortized on a straight-line basis over their estimated useful life of approximately 12 years.
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Operating loss for our unallocated corporate operations for the nine months ended September 30, 2024 and 2023 was $31.8 million and $31.8 million, respectively, and principally reflect general and administrative expenses incurred in connection with our corporate operations.
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Income tax provision. Our income tax provision for the nine months ended September 30, 2024 and 2023 was a $21.9 million and $10.5 million, respectively. For the nine months ended September 30, 2024 and 2023, the tax rate differed from the U.S. federal statutory rate of 21% primarily due to the relative mix in earnings and losses in the U.S. versus foreign tax jurisdictions, a discrete expense impact related to the BioReference Transaction, the impact of the payments under Merck Agreement, and operating results in tax jurisdictions which do not result in a tax benefit.
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Loss from investments in investees. We have invested in certain early stage companies that we perceive to have valuable proprietary technology and significant potential to create value for us as an equityholder. We account for these investments under the equity method of accounting, resulting in the recording of our proportionate share of their losses until our share of their loss exceeds our investment. Until the investees’ technologies are commercialized, if ever, we anticipate they will report net losses. Loss from investments in investees was $7.0 thousand and $99.0 thousand for the nine months ended September 30, 2024 and 2023, respectively.
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On July 18, 2024, our Board of Directors authorized the repurchase of up to $100 million of our Common Stock. Under this program, we may repurchase shares through various methods, including open market purchases, block trades, privately negotiated transactions and accelerated share repurchases, as well as pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1(c) of the Exchange Act, and otherwise in compliance with applicable laws. The timing and volume of repurchases will depend on market conditions, our capital management, investment opportunities, and other factors. The program does not obligate us to repurchase any specific number of shares, has no set expiration date, and may be modified, suspended, or discontinued at our discretion. In connection with this new authorization, the Company repurchased 14,893,026 shares for $23.8 million during the three months ended September 30, 2024.