Welcome to the OPKO Health Third Quarter 2016 Financial Results. At this time, all participants are in a listen-only mode. Following management’s prepared remarks, we’ll hold a Q&A session. [Operator Instructions] As a reminder, this conference is being recorded today Monday November 7, 2016. I would like to turn the call over to Mr. Bruce Voss. Sir, please go ahead.

Thank you. Good afternoon. This is Bruce Voss with LHA. Thank you all for joining today’s call. Before we begin, I’d like to remind you that any statements made during this call other than statements of historical fact will be considered forward-looking and as such will be subject to risks and uncertainties that 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. Before we begin, let me review the format for today’s call. Dr. Phillip Frost, Chairman and Chief Executive Officer of OPKO, will provide opening remarks, Steven Rubin, OPKO’s Executive Vice President, will then provide an update on the company’s various businesses and clinical programs, and Adam Logal, Chief Financial Officer, will provide an overview of the company’s financial performance during the quarter. We will then open the call up to your questions, after which Dr. Frost will close the call with some final remarks. Now, I’d like to turn the call over to Dr. Phillip Frost. Dr. Frost?

Good afternoon and welcome to our conference call. This has been a really busy quarter and there is a lot to talk about. So I’m going to immediately turn this over to Steven Rubin to begin the session.

Thanks, Phil. And thank you all for joining us this afternoon. The third quarter was another productive period for OPKO as we made significant progress with numerous programs. In addition to growing our core diagnostic business, we closed our acquisition of Transition Therapeutics, announced our entry into the Companion Animal Health Market with a formation of a specialty business unit and continued preparing for the commercial launch of RAYALDEE in the coming weeks. We also made progress advancing a number of important clinical programs. Turning first to Therapeutics, let me begin with an update on RAYALDEE. Our preparations for the upcoming launch of RAYALDEE are nearing completion. We have hired top level talent for our senior sales, marketing, market access and medical science liaison teams to support the upcoming launch. We have successfully hired and trained 10 telemarketing sales representatives and 35 regionally based sales representatives who will be fully dedicated to selling RAYALDEE. We expect to continue building the sales team to mature size around 70 to 80 reps most likely by mid-2017. We’ve also hired and trained a team of 11 regionally based medical science liaisons who will support medical education efforts related solely to RAYALDEE. Our marketing and market access teams are fully staffed and are working on pricing strategy, favorable listings in key compendia and formularies, and a comprehensive portfolio of appropriate patient assistant programs. Our marketing team has also assembled a large group of nationally-recognized key opinion leaders into a trained speakers’ bureau which will educate [targeting] nephrologist and endocrinologist on the appropriate use of RAYALDEE. As a reminder, the FDA approved indication for RAYALDEE is for the treatment of secondary hyperparathyroidism or SHPT in adult patients with stage three or four chronic kidney disease and vitamin D insufficiency. The FDA defined vitamin D insufficiency…

Thank you, Steve and good afternoon, everyone. During the quarter ended September 30, 2016 revenue increased to $298 million from $143 million for the comparable period of 2015. This increase in revenue was the result of revenue generated by our diagnostics business at Bio-Reference. During the quarter we continue to make improvements in the financial performance at Bio-Reference through a revenue cycle management program that was initiated during the second quarter of 2016. The most critical component of this program was the successful implementation of the new billing system, which occurred on October 1. This system will provide us with the power to more effectively manage our billing process, as well as our payer relationships while improving our collection timeline and effectively appeal coverage denials. We believe our revenue cycle management program has the potential to significantly improve the profitability of our diagnostics business and look forward to providing further updates of our progress on future calls. The RCM program resulted in an increase in investment in our diagnostics business and resulted in non-recurring SG&A expense of approximately $7 million. We continue to invest in our pharmaceutical and diagnostic research and development programs and had approximately $24 million of R&D expense during the quarter, compared to $19 million for the 2015 period. Loss from operations for the three months ended September 2016 was $23.6 million compared to $8 million for the comparable period of 2015. In addition to the increased investments in R&D in our RCM program, operating loss was impacted by a $10 million increase in amortization of intangible assets principally related to the amortization of our RAYALDEE assets as a result of our FDA approval. Prior to approval RAYALDEE’s intangible assets were classified as non-amortizing in process R&D assets. Net loss for the quarter ended September 2016 was…

Thank you, Adam. Well as you heard me say in previous session of the story, the most important part of the company is its people. And during this last period, we have added several people that will be important going forward. One is in the Bio-Reference GeneDx unit which needed a new director and we've hired Dr. Ben Solomon to head this unit. As you know GenDx has been a rapidly growing, successful part of Bio-Reference and under Ben Solomon's guidance we think that we have a good shot and continuing the growth that we've enjoyed in the past. We've also had the benefit of adding Jane Pine Wood to our staff. Jane has been largely known around the country as a consultant to other diagnostic companies for her expertise in dealing with compliance issues. As you know, compliance is a very important part of that business because it's very easy to get into trouble not because you are intending to do anything wrong, but because of it's so easy to make a mistake in your billing practices. And so it's very important to us to be very strong and having a good record with the payers in that regard and Jane will help us immensely. On the marketing and sales side, we brought in Tom Nusbickel who in my opinion is one of the best marketing people I have come across in the industry. But more important he's thoroughly familiar with the nephrology business, knows the important players, knows the distribution channels and knows the subtleties of making a business like that successful and helping him to achieve that success we’ve hired James DeMarco, who has also had strong experience primarily in selling products for the nephrology market. So together, they have succeeded in putting together a significant team,…

[Operator Instructions]. And our first question is from the line of Dana Flanders with JPMorgan.

Hi, thank you for the questions. Just my first one on the 4Kscore, so just with the local covers decision from Palmetto now finalized just what are your steps forward there? Is that just you are going to try to provide additional data to try to get them to reverse the decision or just some additional clarity on what you can actually do? And then secondarily would you expect that decision to impact Novitas at all or are those relatively independent in your eyes? And then I have a follow-up.

Hi Dana, this is Dave Okrongly I’ll take the question. So, with Palmetto the idea is to provide them with new information the literature is continuing to evolve on 4K in a very positive way. As you recall one of their issues was PSAs greater than 10. In the journal of urology in September this year there was a fine paper published about the 4Kscore and it’s used in men with a positive DRE or PSA between 10 and 25. And obviously the conclusion of that paper was that the test performed very well there as it had in our prospective clinical trial in the United States. We also have another paper that came out it’s a retrospective study, but it’s a very important cohort it’s the prostate long colorectal ovarian group and again the 4Kscore test preformed exceeding well in this group of men which was actually coincidently a group of men that was part of the invention arm of that study and it was a very import study for looking at PSA as a screening test. We performed very well on that study as well, all this new data is going to be presented to Palmetto so that we can continue to provide additional evidence to get them to overturn the negative coverage decision. With Novitas we’re working with them and as Steve mentioned we expect the February review cycle to be the next time we’ll hear from Novitas and we’ve provided them with lots of information that we think more than adequately demonstrates the reason why Medicare is and should continue to pay for the 4Kscore test.

Okay, great. And then just my second one in terms of just the 3Q revenues can you just talk about the pushes and pulls there? I think we were expecting a little bit of a stronger quarter from BRL services, so was that just seasonality or something else we weren’t factoring in? Thank you.

Hey Dana its Adam. So I think from a quarter-over-quarter basis BRL was -- went from $266 million last quarter to $260 million this quarter. not a substantial swing one way or the other I think we did see lighter volumes, but I don’t think there is a trend forming there it’s just more of a late summer seasonality issue more than anything. And I think as we continue to think about Bio-Reference going forward the double-digit patient volume growth is on an annual basis is really what we’re expecting to see going forward.

Okay, thanks.

And our next question is from the line of Yale Jen from Laidlaw & Company.

Good afternoon and thanks for taking the questions. First question is that giving your new endeavor in animal health space could you elaborate more in your strategic intent and sometime more specifically regarding what you anticipate this operation to potentially achieve let’s say in two or three year timeframe? And I have another one follow-up.

So we have Jane Hsiao to respond.

OPKO Spain we have roughly about 50 different products for the companion animal use. So this first wave in first quarter next year that we have work out order labeling things like that for the U.S. market that will be introduced it’s only portion of that 50 plus products. So we’ll continue to import directly from OPKO Spain to the U.S. market. And continue on that the opportunity with the oncology product coming from EirGen actually is kind of interesting situation the oncology product for the veterinary use FDA have a system it’s very similar to orphan drug, but the beauty of that FDA’s regulation, as long as you have shown that the molecule by the way all these molecule are generic of pattern molecule. So once you show that there is use, a utility in the animal healthcare you can apply for minor species minor use. It’s basically once you get FDA to agree it is indeed a minor use meaning orphan you can actually start selling the product while you are doing the clinical efficacy trial. So we have identified couple of products like that that we’re planning to have clinical study initiated next year and possibly selling it at the same time. So those are the type of opportunity we see there. And the market or the product portfolio from the OPKO Spain actually cover different area. There are group of products for joint, there are group of products for dermatological use and then there are group of products for general supplement. So plenty of opportunities for us in the older DVN product line and basically we can recreate it overnight. The way the business work in the United States basically relying on the distributors they’ll have their sales force which we still maintain the close relationship with them that’s why we were able to introduce the product in a relatively short time.

Okay. Thanks that’s very helpful. Maybe I wonder whether there is any comment potentially regarding what do you think from revenue perspective that what will be more optimal outcome let’s say in two, three years' timeframe?

Well it’s too early to tell though but we’re looking at the millions of dollars for sure. To give you an example there is a product in the market for oncology is for companion anymore. If the size is in the tens or millions like $20 million is a big product. And we do see opportunities like that.

Okay, thanks. And just last follow-up question on the drug development side that for the Transition acquired two products from Transitions. Could you give us a little bit more color in terms of the timeline to start these clinical studies and maybe more specifically on the indication and expected endpoints -- of the studies.

I'll ask Jane to respond there. Yeah thank you.

We can ask Tom to do that.

Okay I'll take that, thanks. Well the TT701 is a diabetes which is dual agonist. That as mentioned earlier went through a Phase 2 where it showed good data in terms of weight loss as well as HP1C. The plan now is to take it to a phase 2b study where we're going to look at a dose escalation, which is traditionally used with this class of molecules to improve weight loss and also HP1C but as well as also reduce things like nausea and vomiting in this particular class of molecules. And so we expect that right now we’re manufacturing material, as well as also looking at the device that we would use. And we expect that work to be done by mid-2017. And so we do expect that to move into the clinic around that time, although we're just now initiating the manufacturing. For SARM, similarly we did work on the Phase 2 in elderly males where we showed significant increases in muscle as well as in physical function and the loss in fat and really with no changes in PSA or slight decreases. And the key to this molecule is that it also shows the relatively potent antagonistic feature towards the prostate. And so the plan here is to develop a Phase 2 or to start the Phase 2 study for to examine its selective antagonistic effects to reduce prostate hypertrophy, as well as at the same time provide the anabolic therapeutic effects that aging males often have, which is the decrease in muscle as well as increase in fat. This study is also expected to begin in mid-2017.

Okay, thanks a lot. Appreciate it.

[Operator Instructions]. We do have a question from the line of Kevin DeGeeter with Ladenburg.

Good afternoon guys, congratulations on the progress. I want to follow-up on the earlier question with regard to volume trends at Bio-Reference. And did you see generally similar type of growth trends throughout the third quarter. Did you see different level of activity and say July and August perhaps a return closer to trend line in September. And just general thoughts of what kind of volume trend you're seeing as we move into Q4?

Kevin so we did definitely see a rebound in volumes in October compared to July and August timeframe. It was the slight pickup in September. But we're turning back to our kind of expectations for that to support that double-digit patient volume growth.

Okay great. And then maybe one for Charlie and his team. Charlie as we begin to think about potential mechanism to payers can use to at least initially control access to RAYALDEE. Should we think if those as primarily relating to step therapy where patients will have had to failed a given therapy. And if so what therapy should we think is more sort of remain to building out a step therapy, or should we think about other mechanisms for prior authorization other tools for controlling initial access?

Hi Kevin, thank you for your question. We think the mostly likely type of control that payers would use would be a step edit with the requirement that patients fail on nutritional vitamin D prior to moving to RAYALDEE. We don't think this is going to be a significant barrier for RAYALDEE because survey show that about 75% of patients for stage 3 or four chronic kidney disease are on nutritional vitamin D. and we know that almost the whole of these patients have failed quickly or failed eventually. So we don’t think this is going to be a significant barrier for us. Our research with the payers would indicate that prior authorization may not be imposed, but we won’t know until we lowered our pricing [indiscernible].

Great, thanks so much. I’ll get back in the queue.

And we have no more questions in queue. Dr. Frost, do you have any closing remarks.

This is actually Steve Rubin. So, I just want to thank again everyone for attending the conference and we’re extremely excited as you could tell by the OPKO RAYALDEE launch and stay tuned.