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Opko Revenues Down Slightly in Q4

NEW YORK (360Dx) – Diagnostics and pharmaceuticals developer Opko Health reported after the close of the market on Wednesday that its fourth quarter revenues slipped by a fraction of 1 percent.

For the three months ended Dec. 31, 2016, the company posted $275.5 million in revenues, down from $276.2 million in the year-ago period and well short of the consensus Wall Street estimate of $310.8 million.

Service revenues for the fourth quarter were $234.6 million, up from $221.8 million a year ago, while product revenues were $20.2 million, down from $21.1 million. Intellectual property transfer revenues came in at $20.7 million in Q4 2016, down from $33.3 million in the year-ago period.

The company increased its R&D costs 8 percent to $27.6 million from $25.5 million in Q4 2015, while its SG&A costs rose 17 percent to $120.5 million from $102.9 million.

Opko had a net loss of $13.7 million, or $.04 per share, matching the consensus Wall Street estimate. It posted a profit of $1.6 million, or $.00 per share, in Q4 2015.

The firm said that during the quarter, service revenues from its BioReference Laboratories business increased by $12.8 million compared to the year-ago period. That was offset, however, by a nonrecurring $15.0 million milestone payment received in Q4 2015 related to Varubi, which is licensed by Tesaro from Opko. Varubi is an anti-nausea medication for chemotherapy patients.

Opko also said that in Q4 about 18,000 4Kscore prostate cancer tests were ordered, representing growth of more than 12 percent compared to Q3 2016. 

The 4KScore test, launched several years ago, measures four prostate-specific kallikreins in blood — total prostate-specific antigen, free PSA, intact PSA, and human kallikrein — to identify men who have a high likelihood of developing an aggressive form of prostate cancer.

During 2016 the firm secured positive coverage and pricing for the test from a number of payors including a national health plan, Opko said, and added that its Medicare administrator Novitas continues to pay for a majority of 4Kscore tests performed.

For full-year 2016, Opko Health's revenues rose nearly 150 percent to $1.22 billion from $491.7 million in 2015, but still fell short of analysts' average estimate of $1.25 billion.

Revenues from services increased to $1.01 billion in 2016 from $329.7 million in 2015, while revenues from products increased to $83.5 million from $80.1 million. IP transfer revenues grew to $126.1 million from $81.9 million. 

On a conference call following the release of the firm's financial results, Opko Executive Vice President Steven Rubin said that BioReference provided Opko with more than $1 billion in revenues last year, and added that the bulk of it came from traditional reference lab testing, "along with modest sequential growth with 4Kscore."

On the Medicare front, the company reported no meaningful progress on getting reimbursement for the 4Kscore test.

Last year, the American Medical Association granted 4Kscore a CPT level 1 code, which became effective this past Jan. 1. As previously reported, the test has a national reimbursement rate of $602.10 from the Centers for Medicare and Medicaid Services for 2017, but two different contractors have provided opposing coverage determinations, putting its reimbursement status in jeopardy.

Initially, Novitas Solutions, the Medicare contractor for New Jersey, where an Opko facility is located, issued a positive coverage decision for 4KScore. Palmetto GBA then issued a negative coverage determination, leading Novitas to pull its positive determination.

While Novitas is paying for most of 4Kscore tests performed, and Opko expected Novitas to include the test in its February review cycle for draft local coverage determination, "to date, Novitas has not announced LCDs for any diagnostic tests in the February review cycle," Rubin said on the call.

Nevertheless, "[w]e remain confident in our value proposition for the 4Kscore test as there is ample clinical validation in peer-reviewed articles and the inclusion in" National Comprehensive Cancer Network and European Association of Urology guidelines, he added.

The firm said that its R&D expenses increased 12 percent year over year to $111.2 million from $99.5 million, and its SG&A costs shot up to $490.9 million from $196.6 million.

Opko posted a net loss of $25.1 million, or $.05 per share, beating the consensus Wall Street estimate of a loss of $.07 per share.

In 2015, the company saw a net loss of $31.4 million, or $.06 per share. Net loss attributable to common shareholders in 2015 was $30.0 million.

The company finished 2016 with $168.7 million in cash, cash equivalents and marketable securities.

The firm is in the midst of preparing its Claros 1 point-of-care platform for the quantitative immunodiagnostics market, and it said on Wednesday that it anticipates filing a premarket approval submission for the platform and a PSA test that would run on Claros 1 with the US Food and Drug Administration in the first half of this year.

In early morning trading on the Nasdaq, shares of Opko were down about 9 percent at $7.59.