Transcript of OPK earnings conference call
Mar 1, 2016 11:44:03 GMT
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Edited Transcript of OPK earnings conference call or presentation 29-Feb-16 9:30pm GMT
Q4 2015 OPKO Health Inc Earnings Call
MIAMI Mar 1, 2016 (Thomson StreetEvents) -- Edited Transcript of OPKO Health Inc earnings conference call or presentation Monday, February 29, 2016 at 9:30:00pm GMT
TEXT version of Transcript
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Corporate Participants
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* Anne Marie Fields
OPKO Health Inc - IR
* Steve Rubin
OPKO Health Inc - EVP
* Adam Logal
OPKO Health Inc - CFO
* Phillip Frost
OPKO Health Inc - Chairman and CEO
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Conference Call Participants
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* Dana Flanders
JPMorgan - Analyst
* Kevin DeGeeter
Ladenburg Thalmann & Company Inc. - Analyst
* Yale Jen
Laidlaw & Company - Analyst
* Rohit Vanjani
Oppenheimer & Company - Analyst
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Presentation
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Operator [1]
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Welcome to the OPKO Health Inc fourth quarter 2015 conference call.
(Operator Instructions)
As a reminder, this conference call is being recorded today, February 29, 2016. I would now like to turn the conference over to Anne Marie Fields. Please go ahead, ma'am.
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Anne Marie Fields, OPKO Health Inc - IR [2]
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Thank you, Doris. Before we begin, I'd like to remind you that any statements made during this call which are historical will be considered forward-looking, and as such, will be subject to risks and uncertainties, which could materially affect the Company's expected results, including, without limitation, the various risks described in the Company's annual report on Form 10-K, for the year ended December 31, 2015, and its subsequent filings with the SEC.
Now, I'd like to discuss the format for today's call. First, Steve Rubin, OPKO's Executive Vice President, will provide an update on the Company's business operations, followed by Adam Logal, OPKO's Chief Financial Officer, who will provide a financial review. Then, Dr. Frost, OPKO's Chairman and CEO, will provide closing remarks. And then, Dr. Frost will follow with answering any questions you might have. I would now like to turn the call over to Mr. Rubin. Steve?
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Steve Rubin, OPKO Health Inc - EVP [3]
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Thank you all for joining us this afternoon. During Q4, we continued to build on the business momentum we have gathered, following a transformational third quarter. We're already beginning to realize the synergies we anticipated with our acquisition of Bio-Reference Laboratories. This acquisition has significantly enhanced our P&L, and brought us a leadership position in the diagnostics sector, while also providing critical strategic value, as we ramp our sales and marketing for the 4Kscore test, and prepare for the launch of the Claros 1 point of care product.
Of note, a fully trained BRL sales force is now behind 4Kscore, which is available as a simple blood test from our Bio-Reference facilities, following the recent approval by the New York State Department of Health. We also continued to advance a number of important clinical programs during Q4. Let me provide an overview of our progress in diagnostics, therapeutics; and biologics, and with certain partnered programs.
Starting with diagnostics, the integration of BRL is progressing well, and much of our focus is on the commercialization of new test products. BRL's reimbursement team has done a great job with spear-heading our efforts to gain reimbursement coverage for our 4Kscore test, which, as you know, is the only blood test that accurately identifies a man's risk for aggressive prostate cancer.
During the quarter, the American Medical Association announced the granting of a CPT 1 code for 4Kscore. This will be published in August, and be effective as of January 1, 2017. In the meantime, we've had a number of positive payer meetings, and we are making great progress in increasing the number of payers reimbursing for the test.
This is where we really see the strategy of the acquisition coming together, as BRL has 13 staff members dedicated to this effort. We have validated performance of 4Kscore tests in using serum rather than plasma, and are running the test from our BRL facility in New Jersey, which is an important milestone in our commercialization progress, because we can now fully benefit from BRL's expansive logistics and operational infrastructure. Additionally, running the test on serum rather than plasma provides significant advantages to improve patient care.
When an elevated PSA result suggests further valuation, the physician can now simply reflex to the 4Kscore on the same blood sample. This follows the Q3 recommendation from the National Comprehensive Cancer Network Guidelines for prostate cancer early detection. Recall that this panel determined that the 4Kscore, as a blood test with greater specificity than the PSA test, is indicated for use prior to a first prostate biopsy, or after a negative biopsy, to assist patients and physicians in further defining the probability of high-grade cancer.
Significantly, a study demonstrating the 4Kscore test's clinical utility in reducing the number of prostate biopsies performed, while increasing the probability detecting aggressive prostate cancer in men with elevated PSA levels, was published in the January 2016 edition of the peer-reviewed journal, Reviews in Urology. This study included 611 patients, seen by 35 academic and community urologists across the United States, and indicated that consideration of results from the 4Kscore test led to approximately 65% fewer prostate biopsies being performed, among participating patients, and influenced approximately 89% of decisions about performing a prostate biopsy.
This study is important evidence for payers, and supports 4Kscore adoption, given the peer-reviewed evidence of the efficacy and cost-effectiveness of the 4Kscore test. Ongoing progress in obtaining support of clinical trial data, and the support of BRL's commercial organization, particularly with reimbursement efforts, well positions us to achieve our goal of making the 4Kscore test the new statement of care for prostate risk assessment.
We continue to make significant progress with GeneDx, our higher-margin genetic testing business. The GeneDx business further underscores the financial rationale for the Bio-Reference Lab transaction, and enhances expectations for growth.
During the recently ended fourth quarter of 2015, we formed an important alliance with one of the largest healthcare systems in the country, the Northwell Healthcare System, formally known as North Shore-LIJ Health System, to provide genomic testing, molecular diagnostic testing, and ancillary support services such as genetic counseling. This alliance represents a new approach to provider cooperation, and an opportunity for diagnostics to play a critical role in the improvement of patient care. We intend to seek similar opportunities throughout the country.
As a reminder, Claros 1 is a novel multiplex instrument system, to provide rapid high-performance blood test results at the point of care. Using a single droplet of blood, Claros 1 can run multiple tests in the physician's office or hospital nurses' station, to provide quick results to the physician and patient. We have made significant progress in our efforts to advance Claros 1 through the regulatory pathway toward commercialization.
We expect to commence clinical trials for our Claros PSA and testosterone tests this year, with a modular P&A for PSA, and a 510(k) for testosterone expected to be submitted to the FDA towards the end of this year, or early 2017. We expect to launch both products in 2017, using BRL's expansive marketing sales and distribution resources.
Now, I will turn to therapeutics. Turning to progress with Rayaldee, which is FDA pending approval for the prevention and treatment of secondary hyperparathyroidism in patients with stage three or four chronic kidney disease with vitamin D insufficiency.
As you know, our NDA was filed on July 28, 2015, and we have a March 29, 2016 PDUFA date. We expect that the FDA will adhere to this date. Our dialogue with the FDA has been active throughout the NDA review process, and initially focused primarily on issues related to chemistry, manufacturing and controls, or CMC, but has recently focused on product labeling and the proposed package insert.
During Q4, and into 2016, we have been initiating certain pre-commercial activities. We're conducting research on product pricing, reimbursement and messaging, validating manufacturing processes and preparing for inventory build, planning for key hires and sales force build-out as commercialization nears, developing reimbursement strategies and planning for meeting with payers, and establishing national product distribution capabilities. We expect to be able to cover the United States with approximately 75 sales representatives and 20 clinical support specialists, also known as medical science liaisons.
The target for commercial launch is the second half of 2016. We believe Rayaldee will be the first drug in the US to address secondary hyperparathyroidism arising from vitamin D insufficiency.
Most healthcare professionals currently consider renal, rather than vitamin D insufficiency, to be the primary cause of SHPT in pre-dialysis patients. However, the latest published research suggests that vitamin D insufficiency is the primary driver of SHPT in this patient population, and that the requirement for vitamin D is much higher than for healthy normal individuals. Currently, there is no vitamin D repletion therapy that can reliably, sufficiently raise vitamin D status to prevent or control SHPT, leaving a large market opportunity open for Rayaldee.
I'll now turn biologics. Last weekend -- last week, we announced that we have begun dosing patients in a Phase 2a evaluating the safety of a long-acting Factor VIIa in hemophilia patients. Our Phase 2a study is a 24 patient dose escalation study, to determine safety and explore efficacy endpoints.
Our novel long-acting Factor VIIa product uses the same naturally occurring peptide, CTP, as used in our long-acting human growth hormone, to extend the circulatory half-life of Factor VIIa. The market for Factor VII treatment is approximately $1.7 billion, and growing at a rate of about 7% a year, and only 25% of the patients are currently treated. Current treatment options with Factor VII may require multiple infusions to treat a bleeding episode, because of its short half-life.
It also requires frequent infusions, are onerous when used as preventative prophylactic therapy, especially for children. Our product has been granted orphan drug designation in the US and Europe.
Our efforts to develop a long-acting subcutaneous oxyntomodulin, a natural appetite suppressor, for the once-weekly treatment of obesity and type 2 diabetes, are also advancing, and we expect to commence human studies by the end of this quarter. Pre-clinical data indicate that our compound reduces food consumption and body weight, and leads to improvements in glycemic control and lipid profile.
Pharmacokinetic studies showed extended activity compared to native oxyntomodulin. We believe oxyntomodulin has the potential to be a safe, long-term therapy for obese and type 2 diabetics, both of which represent significant market opportunities.
More than 380 million people are living with diabetes worldwide, of which approximately 90% have type 2 diabetes. According to the World Health Organization, there are more than 500 million severely overweight or obese people. You can see the market opportunities with this product.
We turn to our partner products. First to VARUBI, our partner, TESARO, commercially launched VARUBI in the United States in November, for the treatment of chemotherapy-induced nausea and vomiting. In accordance with our agreement, we have received $20 million in milestone payments, and are eligible to receive an additional $95 million if certain regulatory and commercial milestones are reached.
In addition, there are tiered double-digit royalties on net sales in the United States and the EU. TESARO's goal is to submit an NDA for an intravenous formulation this quarter, and apply for approval in Europe for oral VARUBI in Q2.
We have also made significant advances with our long-acting human growth hormone product, hGH-CTP, which is partnered worldwide with Pfizer. We completed enrollment of the Phase 3 clinical trial in adults in late June, and top-line data from that trial is expected by year end. We have been presenting data from our Phase 2 pediatric hGH-CTP clinical trial at various scientific conferences.
Our Phase 3 pediatric study is expected to initiate before the end of this year. This agreement with Pfizer is worth a total of a $570 million in milestone payments, to be followed first by royalties, and any profit share. To date, we have received $295 million.
To close, 2015 was a transformational year for OPKO Health, and these activities have positioned us for significant revenue growth this year and beyond. We expect 2016 to be even more transformative, as we advance towards full reimbursement of our 4Kscore test, and we continue to leverage the expansion of resources of Bio-Reference Labs. We will launched Rayaldee, and we will advance our late and early stage clinical pipeline.
Before I turn the call over to Adam, for a review of our financial performance, I would like to note that we will be holding an Analyst Day event in New York City, likely on the afternoon of June 15. I realize that's a ways off, and we will be providing details as we get closer to the event. But for now, I encourage you to pencil in that date on your calendar. Adam?
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Adam Logal, OPKO Health Inc - CFO [4]
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Thank you, Steve, and good afternoon, everyone. During the quarter ended December 31, 2015, we saw an improvement of our overall financial performance, which for the first time included a full quarter of activity after our combination with Bio-Reference. Revenue in the fourth quarter 2015 increased to $276 million, from $25 million in the 2014 period. Our bottom line also improved for the fourth quarter of 2015, as we had net income of $3 million, compared to a loss of $53 million for the comparable period of 2014.
The fourth quarter of 2015 includes an income tax benefit of $26 million. Our operating loss for the fourth quarter decreased to $8 million, from $32 million compared to the 2014 period. There were several items for this improvement. Importantly, we received a milestone payment from TESARO related to their launch of VARUBI, the revenue recognized from our collaboration with Pfizer, and the positive results from our acquisitions of EirGen and Bio-Reference.
Revenue for the year ended December 31, 2015, increased to $492 million, up from 2014 revenue of $91 million, an increase of over $400 million, as a result of our acquisition of Bio-Reference, revenue recognized from our collaboration with Pfizer, our acquisition of EirGen, and milestone payments received from TESARO. Operating loss decreased to $99 million, reflecting our continued investment in our research and development programs during the period ended December 31, 2015.
Net loss for the full year 2015 decreased to $30 million, compared to a net loss of $171 million for the 2014 year. This improvement was principally the result of a $115 million income tax benefit, as well as the positive impacts of our Pfizer transaction, our VARUBI milestone payment, and the acquisitions of Bio-Reference and EirGen.
Our cash position remains strong, at $193 million. We believe our balance sheet provides us with the ability to fund our ongoing development programs, and the commercial launch of Rayaldee. I would now like to turn the call over to Dr. Frost, our Chairman and CEO. Phillip?
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Phillip Frost, OPKO Health Inc - Chairman and CEO [5]
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I will be brief. I am satisfied with what is happening at OPKO. I'm satisfied with our results, financial and operational. I'm satisfied with the Bio-Reference Laboratories acquisition. As Steve mentioned, their reimbursement and marketing and sales teams are doing a remarkable job at helping make our 4Kscore test a real contribution to men's health the commercial success it deserves to be.
I'm most, though, optimistic that the Bio-Reference traditional laboratory business, as well as their genomics division, GeneDx, are capable of significant growth. I am pleased with the progress all of our development projects, and thrilled about the second of our projects, hopefully to be approved by the FDA soon, Rayaldee. This is after VARUBI, or Rolapitant, was recently approved for our partner, TESARO.
TESARO held their fourth-quarter conference call last Thursday, and they indicated that VARUBI represents a $1 billion market opportunity. They also reported significant progress with payers, noting that during their first 60 days of launch, an estimated 120 million covered lives gained access to VARUBI under insurance plans.
Most of our foreign units are doing well, particularly our API company in Israel, FineTech. Also, EirGen in Ireland and OPKO Spain. I look forward, with really great anticipation, to continued progress on all fronts. Thank you. We'll take questions now.
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Questions and Answers
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Operator [1]
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(Operator Instructions)
Our first question is from the line of Dana Flanders, JPMorgan.
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Dana Flanders, JPMorgan - Analyst [2]
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Hi, thanks for the questions. I have a couple that I will just ask up front. First -- and sorry if I missed this -- can you provide any usage metrics for the 4Kscore this quarter? How many physicians used it in 4Q versus 3Q? And any early feedback from the expanded sales force now marketing the product?
Two, in light of some of the positive news around the 4Kscore reimbursement landscape, how should we think about the net price per test in 2016? And then, how do you expect that to progress over the next several years, as that reimbursement access improves?
And then thirdly, what were the legacy Bio-Reference sales in the quarter? And now that you've had this for a couple of months, is it still fair to think about this business as a double-digit top line growth business for the next couple of years? Thank you.
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Steve Rubin, OPKO Health Inc - EVP [3]
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Dana, thanks for the questions. I will start on the bottom -- the last question first. Revenue from Bio-Reference for the quarter was just about $220 million, or revenue from our services was just about $220 million, which is, from a patient perspective, we've continued to see that double-digit growth. We have -- expect that patient growth will continue on the Bio-Reference base business.
From the others -- the other questions that you asked, on the metrics for physicians utilizing the 4Kscore test, we continued to see similar quarter-over-quarter growth on the number of positions. We think we -- with the Bio-Reference sales force introduction, they are targeting now -- they are continuing to target the urologists, but they are also expanding that into primary care. So we expect that ramp to start to increase pretty drastically, once that Bio-Reference sales force is out promoting that test actively.
From a net price perspective, we continue to work with the insurers, on obtaining pricing that we hope to be in the midpoint of our $1,900 list price, where we are expecting to try to get as close to that number as we can. We haven't -- certainly, as we get more contracts in place, will be able to address that more directly in the future.
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Operator [4]
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Our next question is from the line of Kevin DeGeeter, Ladenburg.
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Kevin DeGeeter, Ladenburg Thalmann & Company Inc. - Analyst [5]
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Steve, can you comment, with regard to the Phase 3 pediatrics study for human growth hormone? Is that going to a study that might support global registration, or at least US and EU? Or should we think about separate Phase 3 programs for each jurisdiction?
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Steve Rubin, OPKO Health Inc - EVP [6]
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No, it's going to be -- the only separate will be Japan, but it will be a global study that will surely encompass registrations throughout the EU and the United States.
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Kevin DeGeeter, Ladenburg Thalmann & Company Inc. - Analyst [7]
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Great, and then maybe one or two more quick ones for me. With regard to Rayaldee, how should we think about, generally speaking, the medical education component of the initial launch? Obviously, a very novel mechanism of action here. And as a side note to that, should we expect additional clinical trials, plus approvals, being an important part of that education effort?
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Steve Rubin, OPKO Health Inc - EVP [8]
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Kevin, we will be considering doing additional clinical studies with Rayaldee. And we do view the data coming from those studies as being an important part of the [med-ed] component of launch.
One of the things that we did not mention is that we have intentions of developing Rayaldee for the haemodialysis market, starting probably no later than the first half of next year. So those data will also feed into the med-ed effort, as we continue to expand the use the of Rayaldee in the non-dialysis population.
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Kevin DeGeeter, Ladenburg Thalmann & Company Inc. - Analyst [9]
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then just maybe one more for me, staying on Rayaldee. As we think about the initial addressable market for stage 2 and stage -- excuse me, stage 3 and stage 4 patients, and CKD population, specifically, how should we think about bifurcation of that market and segmentation? Who do you envision as the early adopters for Rayaldee, for the balance of 2016? Thanks, that's all for me.
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Steve Rubin, OPKO Health Inc - EVP [10]
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Kevin, could you clarify your question, please?
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Kevin DeGeeter, Ladenburg Thalmann & Company Inc. - Analyst [11]
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My question really pertains to the initial launch out of Rayaldee. Who exactly are you targeting, with regard to group practices versus more of the hospital setting? Just where, on the distribution channel, are you initially going to be targeting?
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Steve Rubin, OPKO Health Inc - EVP [12]
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Right. So Kevin, we see this as pretty much a blend between typical retail and specialty pharma. We don't see the hospital market as being a big target, early on, in the launch of Rayaldee. So about 75% of our distribution will go out through retail, according to our current estimates. About 25% will go out through specialty pharma.
And that, of course, could adjust, depending on how we set pricing, as we get a little closer to launch. As Steve mentioned, we are currently thinking of launch in second half of this year, and we will make that as soon as we can during second half, but it will be dependent on our manufacturing being able to support pipeline fill.
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Kevin DeGeeter, Ladenburg Thalmann & Company Inc. - Analyst [13]
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Thanks, that's all for me.
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Operator [14]
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Our next question is from the line of with Yale Jen, Laidlaw.
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Yale Jen, Laidlaw & Company - Analyst [15]
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First of all, you just said that this quarter seems to -- you have net earnings. Do you anticipate, for 2016, you will start becoming cash positive or potential to be earning positive, and going forward?
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Steve Rubin, OPKO Health Inc - EVP [16]
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Yale, at this point, we're not providing financial guidance. I think one of the things that we've talked about is that the important driver for us to become cash flow positive is going to be obtaining widespread -- in 2016 will be getting widespread reimbursement for the 4Kscore, coupled with the fourth quarter beginning looks at the launch of Rayaldee. So until we get those further behind us, I think we're not in a position where we'll provide any more specific guidance.
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Yale Jen, Laidlaw & Company - Analyst [17]
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Okay, great. And a follow-up on an earlier question, in terms of 4Kscore. I know the Bio-Reference Lab sales force start to promoting to general practitioner. Do you anticipate this efforts start to more intensify, maybe in the second half of this year? Or how should we think about that effort?
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Steve Rubin, OPKO Health Inc - EVP [18]
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Yes, you should. We just started with the Bio-Reference sales group launch earlier this month. So they have been fully trained, but their efforts are two to three weeks old. And we are already, ourselves, seeing significant ramps. We expect that to continue to grow, over time. And when you add in more and more reimbursement, we are --have very high expectations.
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Yale Jen, Laidlaw & Company - Analyst [19]
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Okay, and the last question I have is that you have mentioned that the expected sales force for the Rayaldee, probably up to 75. Would that be added sequentially -- is that a one step, in second half of this year? And so how should we think about, at this point, in terms of modeling the expenses for 2016? Thanks.
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Steve Rubin, OPKO Health Inc - EVP [20]
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So we will probably start with a number closer to 25, and 75 is -- we expect [about] peak sales. But how to ramp up depends, quite honestly, on how sales are progressing. If they progress very rapidly, as we would hope, then we will add sales people quicker, but it won't be 75 this year. We will start with a number closer to 25.
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Yale Jen, Laidlaw & Company - Analyst [21]
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Okay, great. Thank you very much.
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Operator [22]
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Our final question comes from Rohit Vanjani, Oppenheimer.
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Rohit Vanjani, Oppenheimer & Company - Analyst [23]
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Thanks for taking the questions. On the 4Kscore, I think you said that you were awarded the Category 1 CPT code. I thought you had been saying that -- originally, you were saying it was going to be 2017, it was going to become active. And then in December, you said it would become active in January 2016, but in press release, it switched back to 2017. Do you know what that switch was about?
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Steve Rubin, OPKO Health Inc - EVP [24]
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We got differ guidance from the American Medical Association. So we have written letters that gave us an earlier date, and then they changed their procedure back to the latter date. But it doesn't really make a huge difference for us, because we already, as you know, billing, and it is really a question of coming up with pricing. So even for Medicare, you are allowed to bill as far back as a year back. So the fact that we -- the big factor is the fact that we were awarded the code. When we actually get their true number isn't as important as the fact that it was awarded Level 1.
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Rohit Vanjani, Oppenheimer & Company - Analyst [25]
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But then -- so when you are billing Medicare, you are billing under MAAA CPT code? And then you have to go back?
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Steve Rubin, OPKO Health Inc - EVP [26]
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Preliminarily, yes, that's correct.
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Rohit Vanjani, Oppenheimer & Company - Analyst [27]
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Okay. And then are there any -- sorry, go ahead.
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Steve Rubin, OPKO Health Inc - EVP [28]
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On payers, we can either use an administrative code or the Level 3.
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Rohit Vanjani, Oppenheimer & Company - Analyst [29]
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Okay. And so is there any metric on the insurance or the reimbursement for 4Kscore? How is that panning out, or how many lives do you have under coverage? Or how many plans that you've grown?
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Steve Rubin, OPKO Health Inc - EVP [30]
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So Rohit, I think, from that perspective, we are continuing to see excitement from the payers around the test. We are spending time working with them, showing the benefits, the cost benefits, to their health programs. And that's principally to make sure that our reimbursement price is as we would hope.
So we are working hard on that. We don't have a covered lives number that we are ready to talk about today. Obviously, the big one will be once we have CMS, which we hope to have a coverage decision mid-year.
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Rohit Vanjani, Oppenheimer & Company - Analyst [31]
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Is that when you expect the real ramp to take off, then, is after the CMS coverage decision mid-year?
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Steve Rubin, OPKO Health Inc - EVP [32]
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Once we have reimbursement for CMS, yes.
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Rohit Vanjani, Oppenheimer & Company - Analyst [33]
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Okay. And then, I think you said you started using the Bio-Reference sales force to promote4Kscore. I think originally, you said you were going to use 100, right? Have you started using the whole 100? And then you are eventually going to move to 200 people from Bio-Reference promoting it? And when do you -- first of all, have you started using the whole 100? And then, when do you anticipate going to 200 to promote?
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Phillip Frost, OPKO Health Inc - Chairman and CEO [34]
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This is Phillip Frost. We started using their sales force a few weeks ago, and we're starting with 200.
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Rohit Vanjani, Oppenheimer & Company - Analyst [35]
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Okay.
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Phillip Frost, OPKO Health Inc - Chairman and CEO [36]
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They have a total of 400 sales people, but we've trained 200 so far. And the remarkable thing is that, without specifying the exact number, whereas we had been selling it with our 10 man sales force for over a year, within two weeks of their 200 men coming on, they doubled the daily number that were being ordered. So what we are seeing is a truly remarkable effect of the Bio-Reference addition to our effort.
And not only has the number doubled, but it continues to increase very rapidly. I won't say on a daily basis, but certainly each week. So we couldn't be more optimistic or more pleased than we are, at the effect of our bio-reference strategy that we thought would be useful, and is turning out to be so in spades.
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Rohit Vanjani, Oppenheimer & Company - Analyst [37]
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And so, did I get that right from the prepared commentary, and then obviously what you said right there, that you're still seeing double-digit volume growth every month?
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Phillip Frost, OPKO Health Inc - Chairman and CEO [38]
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That's right, Rohit.
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Rohit Vanjani, Oppenheimer & Company - Analyst [39]
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Okay. And then for Claros 1, it was second half 2016 or 2017 launch for testosterone and PSA. And then vitamin D, what is the timeline there? Or what is the plan there?
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Steve Rubin, OPKO Health Inc - EVP [40]
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So that will be probably the next in the pipeline, unless we go something in the women's health panel, which Bio-Reference Lab, of course, has an expertise in. So the plan is, this will be the first time that the device and the cards go before FDA. And as you know, PSA is actually a PMA. It takes -- [modular] takes a little longer. So once we get -- clear a waiver for the device and the panel, we expect to add more. So the testosterone is a little more involved in development, but the plan is certainly to work on that, pretty focused, in 2017.
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Rohit Vanjani, Oppenheimer & Company - Analyst [41]
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Okay, and then last one for me. I think you said that Rayaldee, you're having a back-and-forth with the FDA, right, on labeling? Or you had those conversations within the last month? Is that correct?
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Steve Rubin, OPKO Health Inc - EVP [42]
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That's correct.
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Rohit Vanjani, Oppenheimer & Company - Analyst [43]
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Okay, great. Thank you.
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Operator [44]
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And there are no further questions. Dr. Frost, do you have any closing remarks?
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Phillip Frost, OPKO Health Inc - Chairman and CEO [45]
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I just want to thank everybody for participating.
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Steve Rubin, OPKO Health Inc - EVP [46]
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Okay, thank you.
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Operator [47]
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Ladies and gentlemen, that concludes your conference for today. We thank you for your participation, and ask that you please disconnect your lines.
Q4 2015 OPKO Health Inc Earnings Call
MIAMI Mar 1, 2016 (Thomson StreetEvents) -- Edited Transcript of OPKO Health Inc earnings conference call or presentation Monday, February 29, 2016 at 9:30:00pm GMT
TEXT version of Transcript
================================================================================
Corporate Participants
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* Anne Marie Fields
OPKO Health Inc - IR
* Steve Rubin
OPKO Health Inc - EVP
* Adam Logal
OPKO Health Inc - CFO
* Phillip Frost
OPKO Health Inc - Chairman and CEO
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Conference Call Participants
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* Dana Flanders
JPMorgan - Analyst
* Kevin DeGeeter
Ladenburg Thalmann & Company Inc. - Analyst
* Yale Jen
Laidlaw & Company - Analyst
* Rohit Vanjani
Oppenheimer & Company - Analyst
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Presentation
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Operator [1]
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Welcome to the OPKO Health Inc fourth quarter 2015 conference call.
(Operator Instructions)
As a reminder, this conference call is being recorded today, February 29, 2016. I would now like to turn the conference over to Anne Marie Fields. Please go ahead, ma'am.
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Anne Marie Fields, OPKO Health Inc - IR [2]
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Thank you, Doris. Before we begin, I'd like to remind you that any statements made during this call which are historical will be considered forward-looking, and as such, will be subject to risks and uncertainties, which could materially affect the Company's expected results, including, without limitation, the various risks described in the Company's annual report on Form 10-K, for the year ended December 31, 2015, and its subsequent filings with the SEC.
Now, I'd like to discuss the format for today's call. First, Steve Rubin, OPKO's Executive Vice President, will provide an update on the Company's business operations, followed by Adam Logal, OPKO's Chief Financial Officer, who will provide a financial review. Then, Dr. Frost, OPKO's Chairman and CEO, will provide closing remarks. And then, Dr. Frost will follow with answering any questions you might have. I would now like to turn the call over to Mr. Rubin. Steve?
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Steve Rubin, OPKO Health Inc - EVP [3]
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Thank you all for joining us this afternoon. During Q4, we continued to build on the business momentum we have gathered, following a transformational third quarter. We're already beginning to realize the synergies we anticipated with our acquisition of Bio-Reference Laboratories. This acquisition has significantly enhanced our P&L, and brought us a leadership position in the diagnostics sector, while also providing critical strategic value, as we ramp our sales and marketing for the 4Kscore test, and prepare for the launch of the Claros 1 point of care product.
Of note, a fully trained BRL sales force is now behind 4Kscore, which is available as a simple blood test from our Bio-Reference facilities, following the recent approval by the New York State Department of Health. We also continued to advance a number of important clinical programs during Q4. Let me provide an overview of our progress in diagnostics, therapeutics; and biologics, and with certain partnered programs.
Starting with diagnostics, the integration of BRL is progressing well, and much of our focus is on the commercialization of new test products. BRL's reimbursement team has done a great job with spear-heading our efforts to gain reimbursement coverage for our 4Kscore test, which, as you know, is the only blood test that accurately identifies a man's risk for aggressive prostate cancer.
During the quarter, the American Medical Association announced the granting of a CPT 1 code for 4Kscore. This will be published in August, and be effective as of January 1, 2017. In the meantime, we've had a number of positive payer meetings, and we are making great progress in increasing the number of payers reimbursing for the test.
This is where we really see the strategy of the acquisition coming together, as BRL has 13 staff members dedicated to this effort. We have validated performance of 4Kscore tests in using serum rather than plasma, and are running the test from our BRL facility in New Jersey, which is an important milestone in our commercialization progress, because we can now fully benefit from BRL's expansive logistics and operational infrastructure. Additionally, running the test on serum rather than plasma provides significant advantages to improve patient care.
When an elevated PSA result suggests further valuation, the physician can now simply reflex to the 4Kscore on the same blood sample. This follows the Q3 recommendation from the National Comprehensive Cancer Network Guidelines for prostate cancer early detection. Recall that this panel determined that the 4Kscore, as a blood test with greater specificity than the PSA test, is indicated for use prior to a first prostate biopsy, or after a negative biopsy, to assist patients and physicians in further defining the probability of high-grade cancer.
Significantly, a study demonstrating the 4Kscore test's clinical utility in reducing the number of prostate biopsies performed, while increasing the probability detecting aggressive prostate cancer in men with elevated PSA levels, was published in the January 2016 edition of the peer-reviewed journal, Reviews in Urology. This study included 611 patients, seen by 35 academic and community urologists across the United States, and indicated that consideration of results from the 4Kscore test led to approximately 65% fewer prostate biopsies being performed, among participating patients, and influenced approximately 89% of decisions about performing a prostate biopsy.
This study is important evidence for payers, and supports 4Kscore adoption, given the peer-reviewed evidence of the efficacy and cost-effectiveness of the 4Kscore test. Ongoing progress in obtaining support of clinical trial data, and the support of BRL's commercial organization, particularly with reimbursement efforts, well positions us to achieve our goal of making the 4Kscore test the new statement of care for prostate risk assessment.
We continue to make significant progress with GeneDx, our higher-margin genetic testing business. The GeneDx business further underscores the financial rationale for the Bio-Reference Lab transaction, and enhances expectations for growth.
During the recently ended fourth quarter of 2015, we formed an important alliance with one of the largest healthcare systems in the country, the Northwell Healthcare System, formally known as North Shore-LIJ Health System, to provide genomic testing, molecular diagnostic testing, and ancillary support services such as genetic counseling. This alliance represents a new approach to provider cooperation, and an opportunity for diagnostics to play a critical role in the improvement of patient care. We intend to seek similar opportunities throughout the country.
As a reminder, Claros 1 is a novel multiplex instrument system, to provide rapid high-performance blood test results at the point of care. Using a single droplet of blood, Claros 1 can run multiple tests in the physician's office or hospital nurses' station, to provide quick results to the physician and patient. We have made significant progress in our efforts to advance Claros 1 through the regulatory pathway toward commercialization.
We expect to commence clinical trials for our Claros PSA and testosterone tests this year, with a modular P&A for PSA, and a 510(k) for testosterone expected to be submitted to the FDA towards the end of this year, or early 2017. We expect to launch both products in 2017, using BRL's expansive marketing sales and distribution resources.
Now, I will turn to therapeutics. Turning to progress with Rayaldee, which is FDA pending approval for the prevention and treatment of secondary hyperparathyroidism in patients with stage three or four chronic kidney disease with vitamin D insufficiency.
As you know, our NDA was filed on July 28, 2015, and we have a March 29, 2016 PDUFA date. We expect that the FDA will adhere to this date. Our dialogue with the FDA has been active throughout the NDA review process, and initially focused primarily on issues related to chemistry, manufacturing and controls, or CMC, but has recently focused on product labeling and the proposed package insert.
During Q4, and into 2016, we have been initiating certain pre-commercial activities. We're conducting research on product pricing, reimbursement and messaging, validating manufacturing processes and preparing for inventory build, planning for key hires and sales force build-out as commercialization nears, developing reimbursement strategies and planning for meeting with payers, and establishing national product distribution capabilities. We expect to be able to cover the United States with approximately 75 sales representatives and 20 clinical support specialists, also known as medical science liaisons.
The target for commercial launch is the second half of 2016. We believe Rayaldee will be the first drug in the US to address secondary hyperparathyroidism arising from vitamin D insufficiency.
Most healthcare professionals currently consider renal, rather than vitamin D insufficiency, to be the primary cause of SHPT in pre-dialysis patients. However, the latest published research suggests that vitamin D insufficiency is the primary driver of SHPT in this patient population, and that the requirement for vitamin D is much higher than for healthy normal individuals. Currently, there is no vitamin D repletion therapy that can reliably, sufficiently raise vitamin D status to prevent or control SHPT, leaving a large market opportunity open for Rayaldee.
I'll now turn biologics. Last weekend -- last week, we announced that we have begun dosing patients in a Phase 2a evaluating the safety of a long-acting Factor VIIa in hemophilia patients. Our Phase 2a study is a 24 patient dose escalation study, to determine safety and explore efficacy endpoints.
Our novel long-acting Factor VIIa product uses the same naturally occurring peptide, CTP, as used in our long-acting human growth hormone, to extend the circulatory half-life of Factor VIIa. The market for Factor VII treatment is approximately $1.7 billion, and growing at a rate of about 7% a year, and only 25% of the patients are currently treated. Current treatment options with Factor VII may require multiple infusions to treat a bleeding episode, because of its short half-life.
It also requires frequent infusions, are onerous when used as preventative prophylactic therapy, especially for children. Our product has been granted orphan drug designation in the US and Europe.
Our efforts to develop a long-acting subcutaneous oxyntomodulin, a natural appetite suppressor, for the once-weekly treatment of obesity and type 2 diabetes, are also advancing, and we expect to commence human studies by the end of this quarter. Pre-clinical data indicate that our compound reduces food consumption and body weight, and leads to improvements in glycemic control and lipid profile.
Pharmacokinetic studies showed extended activity compared to native oxyntomodulin. We believe oxyntomodulin has the potential to be a safe, long-term therapy for obese and type 2 diabetics, both of which represent significant market opportunities.
More than 380 million people are living with diabetes worldwide, of which approximately 90% have type 2 diabetes. According to the World Health Organization, there are more than 500 million severely overweight or obese people. You can see the market opportunities with this product.
We turn to our partner products. First to VARUBI, our partner, TESARO, commercially launched VARUBI in the United States in November, for the treatment of chemotherapy-induced nausea and vomiting. In accordance with our agreement, we have received $20 million in milestone payments, and are eligible to receive an additional $95 million if certain regulatory and commercial milestones are reached.
In addition, there are tiered double-digit royalties on net sales in the United States and the EU. TESARO's goal is to submit an NDA for an intravenous formulation this quarter, and apply for approval in Europe for oral VARUBI in Q2.
We have also made significant advances with our long-acting human growth hormone product, hGH-CTP, which is partnered worldwide with Pfizer. We completed enrollment of the Phase 3 clinical trial in adults in late June, and top-line data from that trial is expected by year end. We have been presenting data from our Phase 2 pediatric hGH-CTP clinical trial at various scientific conferences.
Our Phase 3 pediatric study is expected to initiate before the end of this year. This agreement with Pfizer is worth a total of a $570 million in milestone payments, to be followed first by royalties, and any profit share. To date, we have received $295 million.
To close, 2015 was a transformational year for OPKO Health, and these activities have positioned us for significant revenue growth this year and beyond. We expect 2016 to be even more transformative, as we advance towards full reimbursement of our 4Kscore test, and we continue to leverage the expansion of resources of Bio-Reference Labs. We will launched Rayaldee, and we will advance our late and early stage clinical pipeline.
Before I turn the call over to Adam, for a review of our financial performance, I would like to note that we will be holding an Analyst Day event in New York City, likely on the afternoon of June 15. I realize that's a ways off, and we will be providing details as we get closer to the event. But for now, I encourage you to pencil in that date on your calendar. Adam?
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Adam Logal, OPKO Health Inc - CFO [4]
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Thank you, Steve, and good afternoon, everyone. During the quarter ended December 31, 2015, we saw an improvement of our overall financial performance, which for the first time included a full quarter of activity after our combination with Bio-Reference. Revenue in the fourth quarter 2015 increased to $276 million, from $25 million in the 2014 period. Our bottom line also improved for the fourth quarter of 2015, as we had net income of $3 million, compared to a loss of $53 million for the comparable period of 2014.
The fourth quarter of 2015 includes an income tax benefit of $26 million. Our operating loss for the fourth quarter decreased to $8 million, from $32 million compared to the 2014 period. There were several items for this improvement. Importantly, we received a milestone payment from TESARO related to their launch of VARUBI, the revenue recognized from our collaboration with Pfizer, and the positive results from our acquisitions of EirGen and Bio-Reference.
Revenue for the year ended December 31, 2015, increased to $492 million, up from 2014 revenue of $91 million, an increase of over $400 million, as a result of our acquisition of Bio-Reference, revenue recognized from our collaboration with Pfizer, our acquisition of EirGen, and milestone payments received from TESARO. Operating loss decreased to $99 million, reflecting our continued investment in our research and development programs during the period ended December 31, 2015.
Net loss for the full year 2015 decreased to $30 million, compared to a net loss of $171 million for the 2014 year. This improvement was principally the result of a $115 million income tax benefit, as well as the positive impacts of our Pfizer transaction, our VARUBI milestone payment, and the acquisitions of Bio-Reference and EirGen.
Our cash position remains strong, at $193 million. We believe our balance sheet provides us with the ability to fund our ongoing development programs, and the commercial launch of Rayaldee. I would now like to turn the call over to Dr. Frost, our Chairman and CEO. Phillip?
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Phillip Frost, OPKO Health Inc - Chairman and CEO [5]
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I will be brief. I am satisfied with what is happening at OPKO. I'm satisfied with our results, financial and operational. I'm satisfied with the Bio-Reference Laboratories acquisition. As Steve mentioned, their reimbursement and marketing and sales teams are doing a remarkable job at helping make our 4Kscore test a real contribution to men's health the commercial success it deserves to be.
I'm most, though, optimistic that the Bio-Reference traditional laboratory business, as well as their genomics division, GeneDx, are capable of significant growth. I am pleased with the progress all of our development projects, and thrilled about the second of our projects, hopefully to be approved by the FDA soon, Rayaldee. This is after VARUBI, or Rolapitant, was recently approved for our partner, TESARO.
TESARO held their fourth-quarter conference call last Thursday, and they indicated that VARUBI represents a $1 billion market opportunity. They also reported significant progress with payers, noting that during their first 60 days of launch, an estimated 120 million covered lives gained access to VARUBI under insurance plans.
Most of our foreign units are doing well, particularly our API company in Israel, FineTech. Also, EirGen in Ireland and OPKO Spain. I look forward, with really great anticipation, to continued progress on all fronts. Thank you. We'll take questions now.
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Questions and Answers
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Operator [1]
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(Operator Instructions)
Our first question is from the line of Dana Flanders, JPMorgan.
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Dana Flanders, JPMorgan - Analyst [2]
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Hi, thanks for the questions. I have a couple that I will just ask up front. First -- and sorry if I missed this -- can you provide any usage metrics for the 4Kscore this quarter? How many physicians used it in 4Q versus 3Q? And any early feedback from the expanded sales force now marketing the product?
Two, in light of some of the positive news around the 4Kscore reimbursement landscape, how should we think about the net price per test in 2016? And then, how do you expect that to progress over the next several years, as that reimbursement access improves?
And then thirdly, what were the legacy Bio-Reference sales in the quarter? And now that you've had this for a couple of months, is it still fair to think about this business as a double-digit top line growth business for the next couple of years? Thank you.
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Steve Rubin, OPKO Health Inc - EVP [3]
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Dana, thanks for the questions. I will start on the bottom -- the last question first. Revenue from Bio-Reference for the quarter was just about $220 million, or revenue from our services was just about $220 million, which is, from a patient perspective, we've continued to see that double-digit growth. We have -- expect that patient growth will continue on the Bio-Reference base business.
From the others -- the other questions that you asked, on the metrics for physicians utilizing the 4Kscore test, we continued to see similar quarter-over-quarter growth on the number of positions. We think we -- with the Bio-Reference sales force introduction, they are targeting now -- they are continuing to target the urologists, but they are also expanding that into primary care. So we expect that ramp to start to increase pretty drastically, once that Bio-Reference sales force is out promoting that test actively.
From a net price perspective, we continue to work with the insurers, on obtaining pricing that we hope to be in the midpoint of our $1,900 list price, where we are expecting to try to get as close to that number as we can. We haven't -- certainly, as we get more contracts in place, will be able to address that more directly in the future.
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Operator [4]
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Our next question is from the line of Kevin DeGeeter, Ladenburg.
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Kevin DeGeeter, Ladenburg Thalmann & Company Inc. - Analyst [5]
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Steve, can you comment, with regard to the Phase 3 pediatrics study for human growth hormone? Is that going to a study that might support global registration, or at least US and EU? Or should we think about separate Phase 3 programs for each jurisdiction?
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Steve Rubin, OPKO Health Inc - EVP [6]
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No, it's going to be -- the only separate will be Japan, but it will be a global study that will surely encompass registrations throughout the EU and the United States.
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Kevin DeGeeter, Ladenburg Thalmann & Company Inc. - Analyst [7]
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Great, and then maybe one or two more quick ones for me. With regard to Rayaldee, how should we think about, generally speaking, the medical education component of the initial launch? Obviously, a very novel mechanism of action here. And as a side note to that, should we expect additional clinical trials, plus approvals, being an important part of that education effort?
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Steve Rubin, OPKO Health Inc - EVP [8]
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Kevin, we will be considering doing additional clinical studies with Rayaldee. And we do view the data coming from those studies as being an important part of the [med-ed] component of launch.
One of the things that we did not mention is that we have intentions of developing Rayaldee for the haemodialysis market, starting probably no later than the first half of next year. So those data will also feed into the med-ed effort, as we continue to expand the use the of Rayaldee in the non-dialysis population.
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Kevin DeGeeter, Ladenburg Thalmann & Company Inc. - Analyst [9]
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then just maybe one more for me, staying on Rayaldee. As we think about the initial addressable market for stage 2 and stage -- excuse me, stage 3 and stage 4 patients, and CKD population, specifically, how should we think about bifurcation of that market and segmentation? Who do you envision as the early adopters for Rayaldee, for the balance of 2016? Thanks, that's all for me.
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Steve Rubin, OPKO Health Inc - EVP [10]
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Kevin, could you clarify your question, please?
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Kevin DeGeeter, Ladenburg Thalmann & Company Inc. - Analyst [11]
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My question really pertains to the initial launch out of Rayaldee. Who exactly are you targeting, with regard to group practices versus more of the hospital setting? Just where, on the distribution channel, are you initially going to be targeting?
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Steve Rubin, OPKO Health Inc - EVP [12]
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Right. So Kevin, we see this as pretty much a blend between typical retail and specialty pharma. We don't see the hospital market as being a big target, early on, in the launch of Rayaldee. So about 75% of our distribution will go out through retail, according to our current estimates. About 25% will go out through specialty pharma.
And that, of course, could adjust, depending on how we set pricing, as we get a little closer to launch. As Steve mentioned, we are currently thinking of launch in second half of this year, and we will make that as soon as we can during second half, but it will be dependent on our manufacturing being able to support pipeline fill.
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Kevin DeGeeter, Ladenburg Thalmann & Company Inc. - Analyst [13]
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Thanks, that's all for me.
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Operator [14]
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Our next question is from the line of with Yale Jen, Laidlaw.
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Yale Jen, Laidlaw & Company - Analyst [15]
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First of all, you just said that this quarter seems to -- you have net earnings. Do you anticipate, for 2016, you will start becoming cash positive or potential to be earning positive, and going forward?
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Steve Rubin, OPKO Health Inc - EVP [16]
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Yale, at this point, we're not providing financial guidance. I think one of the things that we've talked about is that the important driver for us to become cash flow positive is going to be obtaining widespread -- in 2016 will be getting widespread reimbursement for the 4Kscore, coupled with the fourth quarter beginning looks at the launch of Rayaldee. So until we get those further behind us, I think we're not in a position where we'll provide any more specific guidance.
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Yale Jen, Laidlaw & Company - Analyst [17]
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Okay, great. And a follow-up on an earlier question, in terms of 4Kscore. I know the Bio-Reference Lab sales force start to promoting to general practitioner. Do you anticipate this efforts start to more intensify, maybe in the second half of this year? Or how should we think about that effort?
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Steve Rubin, OPKO Health Inc - EVP [18]
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Yes, you should. We just started with the Bio-Reference sales group launch earlier this month. So they have been fully trained, but their efforts are two to three weeks old. And we are already, ourselves, seeing significant ramps. We expect that to continue to grow, over time. And when you add in more and more reimbursement, we are --have very high expectations.
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Yale Jen, Laidlaw & Company - Analyst [19]
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Okay, and the last question I have is that you have mentioned that the expected sales force for the Rayaldee, probably up to 75. Would that be added sequentially -- is that a one step, in second half of this year? And so how should we think about, at this point, in terms of modeling the expenses for 2016? Thanks.
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Steve Rubin, OPKO Health Inc - EVP [20]
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So we will probably start with a number closer to 25, and 75 is -- we expect [about] peak sales. But how to ramp up depends, quite honestly, on how sales are progressing. If they progress very rapidly, as we would hope, then we will add sales people quicker, but it won't be 75 this year. We will start with a number closer to 25.
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Yale Jen, Laidlaw & Company - Analyst [21]
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Okay, great. Thank you very much.
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Operator [22]
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Our final question comes from Rohit Vanjani, Oppenheimer.
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Rohit Vanjani, Oppenheimer & Company - Analyst [23]
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Thanks for taking the questions. On the 4Kscore, I think you said that you were awarded the Category 1 CPT code. I thought you had been saying that -- originally, you were saying it was going to be 2017, it was going to become active. And then in December, you said it would become active in January 2016, but in press release, it switched back to 2017. Do you know what that switch was about?
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Steve Rubin, OPKO Health Inc - EVP [24]
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We got differ guidance from the American Medical Association. So we have written letters that gave us an earlier date, and then they changed their procedure back to the latter date. But it doesn't really make a huge difference for us, because we already, as you know, billing, and it is really a question of coming up with pricing. So even for Medicare, you are allowed to bill as far back as a year back. So the fact that we -- the big factor is the fact that we were awarded the code. When we actually get their true number isn't as important as the fact that it was awarded Level 1.
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Rohit Vanjani, Oppenheimer & Company - Analyst [25]
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But then -- so when you are billing Medicare, you are billing under MAAA CPT code? And then you have to go back?
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Steve Rubin, OPKO Health Inc - EVP [26]
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Preliminarily, yes, that's correct.
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Rohit Vanjani, Oppenheimer & Company - Analyst [27]
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Okay. And then are there any -- sorry, go ahead.
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Steve Rubin, OPKO Health Inc - EVP [28]
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On payers, we can either use an administrative code or the Level 3.
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Rohit Vanjani, Oppenheimer & Company - Analyst [29]
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Okay. And so is there any metric on the insurance or the reimbursement for 4Kscore? How is that panning out, or how many lives do you have under coverage? Or how many plans that you've grown?
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Steve Rubin, OPKO Health Inc - EVP [30]
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So Rohit, I think, from that perspective, we are continuing to see excitement from the payers around the test. We are spending time working with them, showing the benefits, the cost benefits, to their health programs. And that's principally to make sure that our reimbursement price is as we would hope.
So we are working hard on that. We don't have a covered lives number that we are ready to talk about today. Obviously, the big one will be once we have CMS, which we hope to have a coverage decision mid-year.
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Rohit Vanjani, Oppenheimer & Company - Analyst [31]
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Is that when you expect the real ramp to take off, then, is after the CMS coverage decision mid-year?
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Steve Rubin, OPKO Health Inc - EVP [32]
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Once we have reimbursement for CMS, yes.
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Rohit Vanjani, Oppenheimer & Company - Analyst [33]
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Okay. And then, I think you said you started using the Bio-Reference sales force to promote4Kscore. I think originally, you said you were going to use 100, right? Have you started using the whole 100? And then you are eventually going to move to 200 people from Bio-Reference promoting it? And when do you -- first of all, have you started using the whole 100? And then, when do you anticipate going to 200 to promote?
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Phillip Frost, OPKO Health Inc - Chairman and CEO [34]
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This is Phillip Frost. We started using their sales force a few weeks ago, and we're starting with 200.
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Rohit Vanjani, Oppenheimer & Company - Analyst [35]
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Okay.
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Phillip Frost, OPKO Health Inc - Chairman and CEO [36]
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They have a total of 400 sales people, but we've trained 200 so far. And the remarkable thing is that, without specifying the exact number, whereas we had been selling it with our 10 man sales force for over a year, within two weeks of their 200 men coming on, they doubled the daily number that were being ordered. So what we are seeing is a truly remarkable effect of the Bio-Reference addition to our effort.
And not only has the number doubled, but it continues to increase very rapidly. I won't say on a daily basis, but certainly each week. So we couldn't be more optimistic or more pleased than we are, at the effect of our bio-reference strategy that we thought would be useful, and is turning out to be so in spades.
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Rohit Vanjani, Oppenheimer & Company - Analyst [37]
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And so, did I get that right from the prepared commentary, and then obviously what you said right there, that you're still seeing double-digit volume growth every month?
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Phillip Frost, OPKO Health Inc - Chairman and CEO [38]
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That's right, Rohit.
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Rohit Vanjani, Oppenheimer & Company - Analyst [39]
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Okay. And then for Claros 1, it was second half 2016 or 2017 launch for testosterone and PSA. And then vitamin D, what is the timeline there? Or what is the plan there?
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Steve Rubin, OPKO Health Inc - EVP [40]
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So that will be probably the next in the pipeline, unless we go something in the women's health panel, which Bio-Reference Lab, of course, has an expertise in. So the plan is, this will be the first time that the device and the cards go before FDA. And as you know, PSA is actually a PMA. It takes -- [modular] takes a little longer. So once we get -- clear a waiver for the device and the panel, we expect to add more. So the testosterone is a little more involved in development, but the plan is certainly to work on that, pretty focused, in 2017.
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Rohit Vanjani, Oppenheimer & Company - Analyst [41]
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Okay, and then last one for me. I think you said that Rayaldee, you're having a back-and-forth with the FDA, right, on labeling? Or you had those conversations within the last month? Is that correct?
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Steve Rubin, OPKO Health Inc - EVP [42]
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That's correct.
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Rohit Vanjani, Oppenheimer & Company - Analyst [43]
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Okay, great. Thank you.
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Operator [44]
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And there are no further questions. Dr. Frost, do you have any closing remarks?
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Phillip Frost, OPKO Health Inc - Chairman and CEO [45]
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I just want to thank everybody for participating.
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Steve Rubin, OPKO Health Inc - EVP [46]
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Okay, thank you.
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Operator [47]
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Ladies and gentlemen, that concludes your conference for today. We thank you for your participation, and ask that you please disconnect your lines.
