NEW YORK (360Dx) – Opko Health reported after the close of the market on Wednesday that its fourth quarter revenues grew 38 percent year over year.
For the three months ended Dec. 31, 2018, the company posted total revenues of $221.9, up from $161.0 million in the year-ago period, but below the consensus Wall Street estimate of $245.3 million.
Product revenues declined 25 percent year over year to $25.4 million from $33.8 million in Q4 2017, while service revenues grew 53 percent to $183.1 million from $119.4 million. Revenues from licensing and intellectual property rose 72 percent to $13.4 million from $7.8 million.
On a conference call following the release of the firm's financial results, Opko CFO Adam Logal said that reimbursement for its lab business remains "challenging" within esoteric testing, including GeneDx, as the rate of denials by payors is ticking up due to increased prior authorization requirements.
"Our payor team is identifying ways for us to prevent those denials in the first instance, and our billing team is working diligently on improving our overall appeal success rate," Logal said.
During the recently completed quarter, the 4Kscore test was performed almost 20,000 times, Opko said. Opko Executive Vice President Steven Rubin said on the call that year over year, the number of 4Kscore tests processed declined 5 percent.
Using levels of four kallikrein protein markers — total prostate specific antigen (PSA), free PSA, intact PSA, and hK2 — combined with patient age and digital rectal exam, the test determines the likelihood of a patient having aggressive prostate cancer.
Opko said it is pursuing approval from the US Food and Drug Administration for the test and expects to file a submission in the first half of this year. On Jan. 31, 2019, Medicare administrator Novitas Solutions issued a notice of future non-coverage determination of the test, effective March 20, 2019. Opko said it is working toward having the determination rescinded or reversed.
Opko Chairman and CEO Philip Frost said on the call that in the meantime, Opko will rely on other payors, cash sales, and foreign sales. In particular, he said that Israel has begun "distributing" 4Kscore recently "and the growth has been dramatic."
Rubin also noted that in June GeneDx completed 100,000 additional individual exome sequences, "representing one of the largest cohorts of sequenced exomes by an independent clinical laboratory in the world." GeneDx has now sequenced more than 140,000 exomes.
"This work is important because the information that we gather from the body of sequences can be used to diagnose and, therefore, better manage disease," in particular metabolic, neurologic, and other disorders. GeneDx plans to launch more than 40 tests this year, which would enable it to enter several new clinical markets, Rubin added.
Earlier this month the FDA approved Opko's point-of-care Sangia Total PSA Test using the Claros I Analyzer, and the company is making efforts to obtain CLIA waiver for the test and analyzer, it said, adding it plans to scale up manufacturing capacity during the year.
It also expects to expand the testing menu with the next test being developed for testosterone. Clinical trials for the test are expected to begin in mid-2019.
In late December, the company and its Chairman and CEO Phillip Frost settled with the US Securities and Exchange Commission over allegations of a stock pump-and-dump scheme.
Last month, Jon Cohen joined Opko as executive chairman of the firm's BioReference Laboratories, while Geoff Monk was promoted to president of BioReference.
Opko's R&D spending for Q4 2018 retreated 3 percent year over year to $33.3 million from $34.2 million, and its SG&A costs were trimmed almost 1 percent to $95.1 million from $95.9 million.
It added that it recorded a $28.3 million income tax benefit primarily as a result of valuation allowances releases in foreign jurisdictions. In the year-ago period, Opko had a $61.2 million income tax provision due to changes in US tax law and a valuation allowance against US-based deferred tax assets, it said.
For Q4 2018, Opko posted a net loss of $76.1 million, or $.13 per share, compared to a net loss of $217.9 million, or $.39 per share, in Q4 2017. The analysts' average estimate for net loss per share was $.09.
For full-year 2018, Opko's total revenues were up 3 percent to $990.3 million from $966.0 million, but short of the consensus Wall Street estimate of $1.01 billion.
Its product revenues were down slightly to $107.1 million from $107.8 million. Service revenues grew 4 percent to $813.3 million from $782.7 million, but licensing and intellectual property revenues slid 7 percent to $69.9 million from $75.5 million.
In 2018, Opko processed more than 79,000 4Kscore tests, a growth of 4 percent from 2017, Rubin said.
Its R&D costs were down a fraction of 1 percent to $125.6 million from $126.4 million. Its SG&A costs were down 14 percent to $358.4 million from $414.6 million.
Opko's net loss for 2018 was $153.0 million, or $.27 per share, down from a net loss of $305.3 million, or $.55 per share, in 2017.
The company finished the year with $96.5 million in cash, cash equivalents, and marketable securities.
Subsequent to the end of 2018, Opko completed the sale of $200 million of 4.5 percent convertible senior notes due in 2025.
Looking to Q1 2019, Opko expects service revenues to be between $175 million and $190 million, Logal said. This compares to $211.3 million from Q1 2018, a decline that he attributed to the firm's continuing reimbursement decline.
Product revenues are anticipated to be in the range of $25 million to $28 million, and revenues from the transfer of intellectual property are expected to be between $15 million and $20 million, Logal said.