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OPKO Letter to Shareholders

MIAMI--(BUSINESS WIRE)--OPKO Health, Inc. (NYSE:OPK) today released the following open letter from Phillip Frost, M.D., its Chairman and Chief Executive Officer, to its shareholders:

Dear Shareholder,

I want to take the occasion of OPKO’s recently announced acquisition of Bio-Reference Laboratories (Bio-Reference) to present a general overview of the company’s present activities. They are many and while, in some respects, they differ greatly from one another, all share a common theme. They all deal with products for large markets in which OPKO has an opportunity to be a leader, and all have potential for long-term growth. We hope to achieve this growth by providing an ever increasing spectrum of medicines and tests, some new and novel, others of already established value, to help physicians provide better care for their patients.

Diagnostics

The strategy behind the recent Bio-Reference acquisition is twofold. First, it is a business whose revenues and profits have grown consistently since its launch by Dr. Marc Grodman in the 1980’s, primarily through organic growth, to become the third largest full service reference laboratory in the United States. It has built a reputation of innovation with recognized franchises in women’s health, cancer and, more recently, genetics, helping physicians worldwide to diagnose rare genetic disorders and to identify special features of a patient’s genetic material to select more effective chemotherapy. Second, it provides an infrastructure for marketing and sales that reaches approximately 10 million patients a year.

Reimbursement is an important factor for the success of diagnostic products and Bio-Reference has a large team of experts who can complement our efforts to be sure that payors recognize the value of our tests for reimbursement purposes.

4KScore® Test. Because the PSA test is associated with frequent false positive results, many men with elevated PSA values are subjected to unnecessary prostate biopsies and, if an indolent, non-life threatening form of prostate cancer is discovered, may be subjected to over treatment. The 4Kscore test is a blood test used to identify men who are at risk for aggressive prostate cancer and are most likely to benefit from a prostate biopsy and treatment, while avoiding prostate biopsies in men who are at low risk of having aggressive disease. Men determined to be at low risk by the 4Kscore have a 98-99% chance to be metastasis free after 20 years of long-term follow up while being monitored. The 4Kscore test has been extensively studied and validated with the results of 12 prospective and retrospective studies involving over 22,000 patients from both the United States and Europe published in peer-reviewed journals.

The 4Kscore test is now recommended in the 2015 National Comprehensive Cancer Network (NCCN) Prostate Cancer Early Detection Guidelines for men with an elevated PSA and/or abnormal digital rectal examination who require additional information about their risk for high-grade, aggressive prostate cancer prior to performing a first prostate biopsy or a repeat biopsy after a prior negative prostate biopsy.

The reduced costs of eliminating approximately 40% of prostate biopsies resulting from the use of the 4Kscore test to confirm elevated PSA tests has been estimated at $1 billion and, if the costs of downstream treatment interventions are also considered, there could be $2.5 billion additional annual savings to the U.S. health care system.

The OPKO marketing and sales efforts have so far focused primarily on urologists. Over 25% of U.S. urologists who evaluate men for prostate cancer have now ordered the 4Kscore test to help further evaluate a PSA test prior to prostate biopsy. As the 4Kscore test is intended to be used in situations in which a PSA result is suspicious for cancer, we can now, with the much larger Bio-Reference sales force, expand our marketing efforts to primary care physicians and internists who are responsible for prostate cancer screening and who order 93% of all PSA tests. The groundwork for reimbursement for the 4Kscore test has been put into place. We now have an active CPT code for the test, the test is included in the NCCN guidelines, and we are billing Medicare and commercial payors.

Among the many compelling reasons for the acquisition, we believe Bio-Reference will greatly accelerate the commercial success of the 4Kscore test. Bio-Reference has the capacity to dramatically increase the number of 4Kscore tests done each day. They provide national marketing and distribution with a large client services group and a large dedicated sales force that already have strong relationships with primary care physicians. Bio-Reference has over 1,200 phlebotomists and 180 blood-draw centers around the country that can facilitate patient access. Finally, Bio-Reference has robust billing operations and a seasoned national reimbursement team that participates in almost every major commercial insurance plan. Bio-Reference has the expertise and extensive infrastructure to help make the 4Kscore test the new standard for identifying aggressive prostate cancer in men with a suspicious PSA.

Claros Point-of-Care Systems. We have been working on perfecting this point-of-care technology prior to product submission for regulatory approval and the test for PSA is our most advanced candidate. This test, short term, is most important as it complements our plans to expand the utilization of the 4Kscore test. The several hundred man sales force at Bio-Reference who regularly call on primary care physicians and specialists will sell the PSA test and, when a PSA result raises suspicion, the physician can then order a 4Kscore test to help formulate a decision to refer the patient to an urologist.

Following approval of the PSA test, we intend to continue the development and approval of other important diagnostic panels utilizing the Claros 1 platform, including panels focused on renal and men’s and women’s health, to further expand the menu of laboratory tests and services performed by Bio-Reference.

Renal Disease Products

Rayaldee™. In late July, we announced that the U.S. Food and Drug Administration (FDA) had accepted our New Drug Application (NDA) for Rayaldee™ for full review and set a Prescription Drug User Fee Act (PDUFA) target date of March 29, 2016. As previously reported, this NDA is supported by data from two randomized, double-blind, placebo-controlled studies and one open-label extension study conducted in the targeted patient population at a total of 105 U.S. sites. These studies met all primary efficacy and safety endpoints.

Rayaldee has been developed for the prevention and treatment of secondary hyperparathyroidism (SHPT) in patients with stage 3 or 4 chronic kidney disease (CKD) and vitamin D insufficiency. Rayaldee is a proprietary modified-release prohormone formulation designed to gradually correct vitamin D insufficiency while avoiding upregulation of an enzyme which breaks down vitamin D and limits its desired serum parathyroid hormone lowering effect. Gradual elevation of serum total 25-hydroxyvitamin D is intended to prevent excessive elevation of serum calcium and related vascular and renal calcification which contributes heavily to morbidity and mortality in CKD patients. No previous product has been approved for this indication. CKD afflicts over 26 million people in the U.S., including more than 20 million patients with moderate (stages 3 or 4) and severe (stage 5) forms. I believe that Rayaldee will be warmly welcomed by healthcare professionals who care for CKD patients.

Fermagate. Patients with chronic kidney disease also frequently have elevated levels of phosphorus in their blood as a result of decreased kidney excretion capacity. As excess blood phosphorus tends to deposit in soft tissues such as blood vessels, making them more rigid, it is important to normalize blood phosphorus levels. Phosphorus binders are commonly administered orally to bind dietary phosphorus in the GI tract to limit absorption, but a frequent side effect of these “binders” is diarrhea. Our Fermagate is a new “binder” which has successfully completed Phase 2 clinical trials, and has demonstrated a lower...


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