OVERVIEW


You should read this discussion together with the unaudited Condensed
Consolidated Financial Statements, related notes, and other financial
information included elsewhere in this Quarterly Report on Form 10-Q together
with our audited consolidated financial statements, related notes, and other
information contained in our Annual Report on Form 10-K for the year ended
December 31, 2020 (the "Form 10-K"). The following discussion contains
assumptions, estimates and other forward-looking statements that involve a
number of risks and uncertainties, including those discussed under "Risk
Factors," in Part I, Item 1A of the Form 10-K and as described from time to time
in our other filings with the Securities and Exchange Commission. These risks
could cause our actual results to differ materially from those anticipated in
these forward-looking statements.
We are a diversified healthcare company that seeks to establish industry-leading
positions in large and rapidly growing medical markets. Our diagnostics business
includes BioReference Laboratories, Inc. ("BioReference"), one of the nation's
largest full service laboratories with a core genetic testing business and an
almost 300-person sales and marketing team to drive growth and leverage new
products, including the 4Kscore test. Our pharmaceutical business features
Rayaldee, a U.S. Food and Drug Administration ("FDA") approved treatment for
secondary hyperparathyroidism ("SHPT") in adults with stage 3 or 4 chronic
kidney disease ("CKD") and vitamin D insufficiency (launched in November 2016)
and a pipeline of products in various stages of development. Our leading product
in development is Somatrogon (hGH-CTP), a once-weekly human growth hormone for
which we have partnered with Pfizer, Inc. ("Pfizer") and successfully completed
a phase 3 study in August 2019, and for which the FDA has accepted the initial
Biologics License Application ("BLA") for filing. We have also submitted a New
Drug Application (an "NDA") with the Ministry of Health, Labour and Welfare in
Japan and a Marketing Authorization Application with the European Medicines
Agency.We are incorporated in Delaware, and our principal executive offices are
located in leased offices in Miami, Florida.
Through BioReference, we provide laboratory testing services, primarily to
customers in the larger metropolitan areas in New York, New Jersey, Florida,
Texas, Maryland, California, Pennsylvania, Delaware, Washington, DC, Illinois
and Massachusetts, as well as to customers in a number of other states. We offer
a comprehensive test menu of clinical diagnostics for blood, urine and tissue
analysis. This includes hematology, clinical chemistry, immunoassay,
infectious diseases, serology, hormones, and toxicology assays, as well as Pap
smear, anatomic pathology (biopsies) and other types of tissue analysis. We
market our laboratory testing services directly to physicians, geneticists,
hospitals, clinics, correctional and other health facilities.
We operate established pharmaceutical platforms in Ireland, Chile, Spain, and
Mexico, which are generating revenue and from which we expect to generate
positive cash flow and facilitate future market entry for our products currently
in development. In addition, we have a development and commercial supply
pharmaceutical company and a global supply chain operation and holding company
in Ireland. We own a specialty active pharmaceutical ingredients manufacturer in
Israel, which we expect will facilitate the development of our pipeline of
molecules and compounds for our proprietary molecular diagnostic and therapeutic
products.

RECENT DEVELOPMENTS

On July 6, 2021, we entered into the CAMP4 Agreement with CAMP4, pursuant to
which we granted to CAMP4 an exclusive license to develop, manufacture,
commercialize or improve therapeutics utilizing the AntagoNAT technology, an
oligonucleotide platform developed under OPKO CURNA, which includes the molecule
for the treatment of Dravet syndrome, together with any derivative or
modification thereof (the "Licensed Compound") and any pharmaceutical product
that comprises or contains a Licensed Compound, alone or in combination with one
or more other active ingredients ("Licensed Product"), worldwide. The License
grant covers human pharmaceutical, prophylactic, and therapeutic and certain
diagnostic uses.
We received an initial upfront payment of $1.5 million and 3,373,008 shares of
CAMP4's Series A Prime Preferred Stock ("Preferred Stock"), which equates to
approximately 5% of the outstanding shares of CAMP4, and are eligible to receive
up to $3.5 million in development milestone payments for Dravet syndrome
products, and $4 million for non-Dravet syndrome products, as well as sales
milestones of up to $90 million for Dravet syndrome products and up to $90
million for non-Dravet syndrome products. We may also receive double digit
royalty payments on the net sales of royalty bearing products, subject to
adjustment. In addition, upon achievement of certain development milestones, we
will be eligible to receive equity consideration of up to 5,782,299 shares of
Preferred Stock in connection with Dravet syndrome products and up to 1,082,248
shares of Preferred stock in connection with non-Dravet syndrome products.

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Unless earlier terminated, the CAMP4 Agreement will remain in effect on a
Licensed Product-by-Licensed Product and country by-country basis until such
time as the royalty term expires for a Licensed Product in a country, and
expires in its entirety upon the expiration of the royalty term for the last
Licensed Product in the last country. CAMP4's royalty obligations expire on the
later of (i) the expiration, invalidation or abandonment date of the last patent
right in connection with the royalty bearing product, or (ii) ten (10) years
after a royalty bearing product's first commercial sale in a country. In
addition to termination rights for material breach and bankruptcy, CAMP4 is
permitted to terminate the Agreement after a specified notice period.
On June 18, 2021, EirGen and Nicoya entered into the Nicoya Agreement granting
Nicoya the exclusive rights for the development and commercialization of the
Nicoya Product in Greater China the Nicoya Territory. Extended release
calcifediol is marketed in the U.S. under the tradename Rayaldee by OPKO.
EirGen received an initial upfront payment of $5 million and is eligible to
receive an additional $5 million upon the first to occur of (A) a certain
predetermined milestone, or (B) the first anniversary of the effective date.
EirGen is also eligible to receive up to an additional aggregate amount of
$115 million upon the achievement of certain development, regulatory and
sales-based milestones by Nicoya for the Nicoya Product in the Nicoya Territory.
EirGen will also receive tiered, double digit royalty payments at rates in the
low double digits on net product sales within the Nicoya Territory and in the
Nicoya Field.
In June 2021, we announced that EirGen entered into a definitive agreement to
sell one of its facilities in Waterford, Ireland to Horizon Therapeutics plc for
$65 million in cash less certain assumed and accrued liabilities relating to
transferred employees. The facility houses EirGen's sterile-fill-finish business
and is no longer a core component of our ongoing operations and business
strategy. The transaction closed in the third quarter of 2021.
In June 2021, we terminated the credit agreement with an affiliate of Dr. Frost,
pursuant to which the lender committed to provide us with an unsecured line of
credit in the amount of $100 million was terminated and as of June 30, 2021, no
amount was outstanding thereunder.
Effective May 23, 2021, we entered into an amendment to our agreement with
VFMCRP for the development and commercialization of Rayaldee, pursuant to which
the parties agreed to include Japan as part of the VFMCRP Territory.
On May 17, 2021, JT delivered to the Company a notice of termination of the JT
Agreement pursuant to Section 16.1(a) thereof, which permits termination by JT
for any reason, indicating its decision to discontinue development of Rayaldee
for the Japanese market based on a comprehensive review of its development
pipeline.
In May 2021, we entered into exchange agreements with certain holders of the
2025 Notes pursuant to which the holders exchanged $55.4 million of the
outstanding 2025 Notes for 19,051,270 shares of our Common Stock. We recorded an
$11.1 million non-cash loss related to the Exchange.


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RESULTS OF OPERATIONS
Impact of COVID-19
As the disease caused by SARS-CoV-2, a novel strain of coronavirus, COVID-19
continues to spread and severely impact the U.S. economy and economies of other
countries around the world, we are committed to being a part of the coordinated
public and private sector response to this unprecedented challenge. In response
to the COVID-19 pandemic, BioReference is providing COVID-19 solutions,
including diagnostic molecular testing and serology antibody testing, to meet
the testing needs of its numerous customer verticals, including physicians,
health systems, long-term care facilities, governments, schools, employers,
professional sports teams and entertainment venues, as wells as the general
public through relationships with retail pharmacy chains.
Revenue from services for the six months ended June 30, 2021 increased by $482.3
million as compared to 2020 due to COVID-19 testing volumes; however we are
unable to predict how long the demand will continue for our COVID-19 related
testing, or whether pricing and reimbursement policies for testing will sustain,
and accordingly, the sustainability of our COVID-19 testing volumes is
uncertain. Additionally, beginning in March 2020, BioReference experienced a
decline in testing volumes due to the COVID-19 pandemic; however as stay at home
orders and other restrictions have been lifted, we have seen our routine
clinical and genomic testing volumes trending towards normalization with prior
periods. Should stay at home orders or other restrictions be reenacted, we could
see our routine testing levels decline. Excluding COVID-19 test volumes, for the
six months ended June 30, 2021, genomic and routine clinical test volume
increased 39.0% and 13.4% as compared to volumes for the six months ended June
30, 2020. Additionally, sales of Rayaldee have not increased in accordance with
its expected growth trajectory as a result of challenges in onboarding new
patients due to the COVID-19 pandemic. Federal, state and local governmental
policies and initiatives designed to reduce the transmission of COVID-19 have
resulted in, among other things, a significant reduction in physician office
visits, the cancellation of elective medical procedures, customers closing or
severely curtailing their operations (voluntarily or in response to government
orders), and the adoption of work-from-home or shelter-in-place policies. We
also continue to see a substantial need for COVID-19 testing by our existing
clients and expect new clients as infections for the virus continue.
In March 2020, in response to the COVID-19 pandemic, the Coronavirus Aid,
Relief, and Economic Security (CARES) Act was signed into law. The CARES Act
provides numerous tax provisions and other stimulus measures, including
temporary changes regarding the prior and future utilization of net operating
losses, temporary changes to the prior and future limitations on interest
deductions, temporary suspension of certain payment requirements for the
employer portion of Social Security taxes, technical corrections from prior tax
legislation for tax depreciation of certain qualified improvement property, and
the creation of certain payroll tax credits associated with the retention of
employees.
We have received, or expect to receive a number of benefits under the CARES Act
including, but not limited to:
•During the second quarter of 2020, we received approximately $14 million under
The Centers for Medicare & Medicaid Services (CMS) Accelerated and Advance
Payment Program, which provides accelerated payments to Medicare
providers/suppliers working to provide treatment to patients and combat the
COVID-19 pandemic, and the amounts advanced are loans which will be offset
against future claims and must be repaid in 2021. These loans are initially
recorded as contract liabilities included in Accrued expenses and are reduced as
the amounts are recouped by CMS;
•We were eligible to defer depositing the employer's share of Social Security
taxes for payments due from March 27, 2020 through December 31, 2020,
interest-free and penalty-free;
•We received approximately $16.2 million during 2020 from the funds that were
distributed to healthcare providers for related expenses or lost revenues that
are attributable to the COVID-19 pandemic;
•U.S. Department of Health and Human Services (HHS), will provide claims
reimbursement to healthcare providers generally at Medicare rates for testing
uninsured patients; and
•Clinical laboratories are provided a one-year reprieve from the reporting
requirements under the Protecting Access to Medicare Act ("PAMA") as well as a
one-year delay of reimbursement rate reductions for clinical laboratory services
provided under Medicare that were scheduled to take place in 2021.
Since the pandemic began in the U.S., we have invested in testing capabilities
and infrastructure to meet demand for our molecular and antibody testing for
COVID-19.
Three vaccines for COVID-19 have received approval or emergency authorization
and have had increasingly widespread acceptance. However, we believe that, based
on our experience with the pandemic, the high medical need for efficient and

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widespread testing for COVID-19 will extend beyond the current phase of the
pandemic. Our belief is supported by the unprecedented healthcare and economic
impact of the pandemic thus far, the uneven and incomplete rollout of vaccines
and the fact that significant portions of the U.S. population may never be
vaccinated, and the continued likelihood of surges of COVID-19 including from
new strains of SARS-CoV-2 with uncertain susceptibility to the current vaccines.
We believe that these factors have greatly magnified the need for more effective
therapeutics, with properties targeted to the disease processes caused by
serious viral infections.

FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
Our consolidated income (loss) from operations for the three months ended June
30, 2021 and 2020 is as follows:
                                           For the three months ended
                                                    June 30,
(In thousands)                                 2021          2020              Change               % Change
Revenues:
Revenue from services                      $  397,197    $ 250,971          $ 146,226                        58  %
Revenue from products                          35,663       29,356              6,307                        21  %
Revenue from transfer of intellectual
property and other                              9,548       20,880            (11,332)                      (54) %
Total revenues                                442,408      301,207            141,201                        47  %
Costs and expenses:
Cost of revenue                               292,908      162,651            130,257                        80  %
Selling, general and administrative           113,236       77,721             35,515                        46  %
Research and development                       18,222       17,608                614                         3  %
Contingent Consideration                         (103)       1,111             (1,214)                     (109) %
Amortization of intangible assets              12,574       14,937             (2,363)                      (16) %

Total costs and expenses                      436,837      274,028            162,809                        59  %
Income (loss) from operations                   5,571       27,179            (21,608)                      (80) %


Diagnostics
                                           For the three months ended
                                                    June 30,
(In thousands)                                 2021          2020              Change               % Change
Revenues
Revenue from services                      $  397,197    $ 250,971          $ 146,226                        58  %
Revenue from transfer of intellectual
property and other                                  -        6,194             (6,194)                     (100) %
Total revenues                                397,197      257,165            140,032                        54  %
Costs and expenses:
Cost of revenue                               267,806      144,783            123,023                        85  %
Selling, general and administrative            87,809       57,712             30,097                        52  %
Research and development                        4,023        3,785                238                         6  %
Contingent Consideration                            -           35                (35)                     (100) %
Amortization of intangible assets               7,559        9,915             (2,356)                      (24) %

Total costs and expenses                      367,197      216,230            150,967                        70  %
Income (loss) from operations                  30,000       40,935            (10,935)                      (27) %



Revenue. Revenue from services for the three months ended June 30, 2021
increased by approximately $146.2 million compared to the three months ended
June 30, 2020. BioReference recognized an increase in revenue for the three
months ended June 30, 2021 compared to the three months ended June 30, 2020 due
to an increase in clinical test volume and genomic test

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volume of $33.9 million and $13.1 million, respectively. This was partially
offset by the negative impact of a reduction in clinical test reimbursement and
genomic test reimbursement of $5.3 million and $7.1 million, respectively.
BioReference also recognized an increase in revenue for the three months ended
June 30, 2021 compared to the three months ended June 30, 2020 due to an
increase in COVID-19 testing volume and improvement in COVID-19 test
reimbursement of $35.4 million and $70.1 million, respectively. BioReference
performed 2.8 million diagnostic molecular tests for COVID-19 and 0.1 million
serology antibody tests during the three months ended June 30, 2021, which
represented 56.4% of total volume for that period. In comparison, the three
months ended June 30, 2020 included 2.2 million molecular tests for COVID-19 and
0.3 million serology antibody tests.
Estimated collection amounts are subject to the complexities and ambiguities of
billing, reimbursement regulations and claims processing, as well as
considerations unique to Medicare and Medicaid programs, and require us to
consider the potential for retroactive adjustments when estimating variable
consideration in the recognition of revenue in the period the related services
are rendered. For the three months ended June 30, 2021 and 2020, positive
revenue adjustments due to changes in estimates of implicit price concessions
for performance obligations satisfied in prior periods of $0.5 million and $9.0
million were recognized, respectively. Revenue adjustments for the three months
ended June 30, 2021 were primarily due to an improvement in COVID-19 test
reimbursement estimates.
The composition of Revenue from services by payor for the three months ended
June 30, 2021 and 2020 was as follows:
                            Three months ended June 30,
(In thousands)                  2021                  2020
Healthcare insurers   $      109,084               $  84,082
Government payers             57,611                  15,886
Client payers                225,936                 141,090
Patients                       4,566                   9,913
Total                 $      397,197               $ 250,971


Client payors include cities, states and companies for which BioReference
provides COVID-19 testing services.
Revenue from the transfer of intellectual property and other for the three
months ended June 30, 2020 are the result of grants received under the CARES Act
totaling $6.2 million.
Cost of revenue. Cost of revenue for the three months ended June 30, 2021
increased $123.0 million compared to the three months ended June 30, 2020. Cost
of revenue increased primarily due to labor and material costs for COVID-19
testing and the significant volume of tests performed during the three months
ended June 30, 2021. Cost of revenue for the three months ended June 30, 2021
also increased due to changes in the product mix of items sold during the
period.
Selling, general and administrative expenses. Selling, general and
administrative expenses for the three months ended June 30, 2021 and 2020 were
$87.8 million and $57.7 million, respectively. Selling, general and
administrative expenses in our diagnostics segment increased primarily due to
higher variable billing and compensation costs from an increase in volume and
collections during the three months ended June 30, 2021, and in marketing costs
and other administrative costs directly associated with COVID-19 testing
volumes. Selling, general and administrative expenses for the three months ended
June 30, 2021 also include $6.1 million of expense incurred in connection with
certain legal matters.
Research and development expenses. The following table summarizes the components
of our research and development expenses:
Research and Development Expenses                                   Three months ended June 30,
                                                                    2021                   2020
External expenses:
PMA studies                                                   $           31          $         57
Research and development employee-related expenses                     2,742                 2,163
Other internal research and development expenses                       1,250                 1,565
Total research and development expenses                       $        4,023          $      3,785



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Research and development expenses for the three months ended June 30, 2021 were
consistent with research and development expenses for the three months ended
June 30, 2020. Research and development expenses for the three months ended June
30, 2021 are primarily related to the development of clinical and genomics
testing services.
Contingent consideration. Contingent consideration for the three months ended
June 30, 2021 and 2020 was $0.0 thousand and $35.0 thousand of expense,
respectively. Contingent consideration for the three months ended June 30, 2020
was attributable to changes in assumptions regarding the timing of achievement
of future milestones for OPKO Diagnostics, and potential amounts payable to
former stockholders of OPKO Diagnostics in connection therewith, pursuant to our
acquisition agreement in October 2011.
Amortization of intangible assets. Amortization of intangible assets was $7.6
million and $9.9 million, respectively, for the three months ended June 30, 2021
and 2020. Amortization expense reflects the amortization of acquired intangible
assets with defined useful lives. Amortization expense declined during the three
months ended June 30, 2021 due to acquired intangible assets becoming fully
amortized.

Pharmaceuticals
                                           For the three months ended
                                                    June 30,
(In thousands)                                  2021          2020              Change               % Change
Revenues:

Revenue from products                      $    35,663    $  29,356          $   6,307                        21  %
Revenue from transfer of intellectual
property and other                               9,548       14,686             (5,138)                      (35) %
Total revenues                                  45,211       44,042              1,169                         3  %
Costs and expenses:
Cost of revenue                                 25,111       17,882              7,229                        40  %
Selling, general and administrative             14,120       12,007              2,113                        18  %
Research and development                        14,778       14,051                727                         5  %
Contingent Consideration                          (103)       1,076             (1,179)                     (110) %
Amortization of intangible assets                5,015        5,022                 (7)                        -  %

Total costs and expenses                        58,921       50,038              8,883                        18  %
Loss from operations                           (13,710)      (5,996)            (7,714)                      129  %



Revenue. The increase in revenue from products for the three months ended June
30, 2021 compared to the three months ended June 30, 2020 was primarily
attributable to an increase in sales at most of our international operating
companies. Revenue from sales of Rayaldee for the three months ended June 30,
2021 and 2020 was $5.0 million and $8.6 million, respectively. Sales of Rayaldee
have been negatively impacted as a result of challenges in onboarding new
patients due to the COVID-19 pandemic. Revenue from transfer of intellectual
property for the three months ended June 30, 2021 and 2020 principally reflected
$2.8 million and $13.9 million, respectively, of revenue related to the Pfizer
Transaction. Revenue from transfer of intellectual property for the three months
ended June 30, 2021 also includes a $5.0 million non-refundable upfront payment
we will receive under the license agreement with Nicoya Agreement.
Cost of revenue. Cost of revenue for the three months ended June 30, 2021
increased $7.2 million compared to the three months ended June 30, 2020
primarily due to an increase in inventory and material costs at most of our
international operating companies, which was due to the increase in sales at our
international operating companies. This was partially offset by a decrease in
sales of Rayaldee for the three months ended June 30, 2021 compared to the three
months ended June 30, 2020.
Selling, general and administrative expenses. Selling, general and
administrative expenses for the three months ended June 30, 2021 and 2020 were
$14.1 million and $12.0 million, respectively. The increase in selling, general
and administrative expenses was primarily due to an increase in selling, general
and administrative expenses for most of our international operating companies
primarily due to higher variable costs from an increase in sales volume during
the three months ended June 30, 2021. Selling, general and administrative
expenses for the pharmaceutical segment for the three months ended June 30, 2021
and 2020 included equity-based compensation expense of $0.4 million and $0.2
million, respectively.

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Research and development expenses. Research and development expenses for the
three months ended June 30, 2021 and 2020 were $14.8 million and $14.1 million,
respectively. Research and development expenses include external and internal
expenses, partially offset by third-party grants and funding arising from
collaboration agreements. External expenses include clinical and non-clinical
activities performed by contract research organizations, lab services, purchases
of drug and diagnostic product materials and manufacturing development costs. We
track external research and development expenses by individual program for phase
3 clinical trials for drug approval and premarket approval for diagnostics
tests, if any. Internal expenses include employee-related expenses such as
salaries, benefits and equity-based compensation expense. Other internal
research and development expenses are incurred to support overall research and
development activities and include expenses related to general overhead and
facilities.
The following table summarizes the components of our research and development
expenses:
Research and Development Expenses                                  Three 

months ended June 30,


                                                                   2021                    2020
External expenses:
Manufacturing expense for biological products                $          912          $        (309)
Phase III studies                                                     2,660                  2,297
Post-marketing studies                                                   22                    282
Earlier-stage programs                                                4,841                  3,964
Research and development employee-related expenses                    4,927                  4,886
Other internal research and development expenses                      1,430                  2,931
Third-party grants and funding from collaboration agreements            (14)                     -
Total research and development expenses                      $       14,778

$ 14,051




The increase in research and development expenses for the three months ended
June 30, 2021 was primarily due to an increase in research and development
expenses for Somatrogon, a once-weekly human growth hormone injection for which
we have partnered with Pfizer and successfully completed a phase 3 study in
August 2019. Ongoing expenses on the Somatrogon program support open label
extension studies that will continue until market launch of Somatrogon in
certain countries, as well as the preparation of applications for marketing
approvals. Research and development expenses for the pharmaceutical segment for
the three months ended June 30, 2021 and 2020 included equity-based compensation
expense of $0.3 million and $0.3 million, respectively.
Contingent consideration. Contingent consideration for the three months ended
June 30, 2021 and 2020 was $0.1 million reversal of expense and $1.1 million of
expense, respectively. Contingent consideration for the three months ended June
30, 2021 was primarily attributable to changes in assumptions regarding the
timing of achievement of future milestones for OPKO Renal and OPKO CURNA, and
potential amounts payable to former stockholders of OPKO Renal and OPKO CURNA in
connection therewith, pursuant to our acquisition agreements in March 2013 and
January 2011, respectively. Contingent consideration for the three months ended
June 30, 2020 was primarily attributable to changes in assumptions regarding the
timing of achievement of future milestones for OPKO Renal, and potential amounts
payable to former stockholders of OPKO Renal.
Amortization of intangible assets. Amortization of intangible assets was $5.0
million and $5.0 million, respectively, for the three months ended June 30, 2021
and 2020. Amortization expense reflects the amortization of acquired intangible
assets with defined useful lives. Our indefinite lived IPR&D assets will not be
amortized until the underlying development programs are completed. Upon
obtaining regulatory approval by the FDA, the IPR&D assets will be accounted for
as a finite-lived intangible asset and amortized on a straight-line basis over
its estimated useful life.

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Corporate
                                            For the three months ended June
                                                          30,
(In thousands)                                    2021              2020                Change                % Change

Costs and expenses:
Cost of revenue                            $             (9)   $       (14)         $         5                       (36) %
Selling, general and administrative                  11,307          8,002                3,305                        41  %
Research and development                               (579)          (228)                (351)                      154  %
Total costs and expenses                             10,719          7,760                2,959                        38  %
Loss from operations                                (10,719)        (7,760)              (2,959)                       38  %



Operating loss for our unallocated corporate operations for the three months
ended June 30, 2021 and 2020 was $10.7 million and $7.8 million, respectively,
and principally reflects general and administrative expenses incurred in
connection with our corporate operations. The increase in operating loss for the
three months ended June 30, 2021 was primarily attributable to an increase in
legal and accounting fees incurred for the three months ended June 30, 2021,
compared to the three months ended June 30, 2020.
Other
Interest income. Interest income for the three months ended June 30, 2021 and
2020 was not significant as our cash investment strategy emphasizes the security
of the principal invested and fulfillment of liquidity needs.
Interest expense. Interest expense for the three months ended June 30, 2021 and
2020 was $4.9 million and $5.5 million, respectively. Interest expense was
principally related to interest incurred on the 2025 Notes, the 2023 Convertible
Notes, the 2033 Senior Notes, and BioReference's outstanding debt under the
Credit Agreement.
Fair value changes of derivative instruments, net. Fair value changes of
derivative instruments, net for the three months ended June 30, 2021 and 2020,
was $272 thousand and $13 thousand of expense, respectively. Derivative expense
for the three months ended June 30, 2021, was principally related to the change
in fair value on foreign currency forward exchange contracts at OPKO Chile.
Other income (expense), net. Other income (expense), net for the three months
ended June 30, 2021 and 2020, was $11.8 million of expense and $18.2 million of
income, respectively. Other expense for the three months ended June 30, 2021
primarily consisted of a $11.1 million non-cash loss related to the exchange of
$55.4 million of the outstanding 2025 Notes for 19,051,270 shares of our Common
Stock. Other income for the three months ended June 30, 2020 primarily consisted
of net unrealized gains recognized during the period on our investment in VBI.
Income tax provision. Our income tax provision for the three months ended June
30, 2021 and 2020 was $4.8 million and $6.0 million, respectively, and reflects
quarterly results using our expected effective tax rate.  For the three months
ended June 30, 2021, the tax rate differed from the U.S. federal statutory rate
of 21% primarily due to the relative mix in earnings and losses in the U.S.
versus foreign tax jurisdictions, the impact of certain discrete tax events and
operating results in tax jurisdictions which do not result in a tax benefit.
Loss from investments in investees. We have made investments in certain early
stage companies that we perceive to have valuable proprietary technology and
significant potential to create value for us as a shareholder or member. We
account for these investments under the equity method of accounting, resulting
in the recording of our proportionate share of their losses until our share of
their loss exceeds our investment. Until the investees' technologies are
commercialized, if ever, we anticipate they will report net losses. Loss from
investments in investees was $0.1 million and $0.2 million for the three months
ended June 30, 2021 and 2020, respectively.

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020
Our consolidated income (loss) from operations for the six months ended June 30,
2021 and 2020 is as follows:

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                                            For the six months ended
                                                    June 30,
(In thousands)                                 2021          2020              Change               % Change
Revenues:
Revenue from services                      $  904,149    $ 421,811          $ 482,338                       114  %
Revenue from products                          69,608       60,430              9,178                        15  %
Revenue from transfer of intellectual
property and other                             13,816       30,433            (16,617)                      (55) %
Total revenues                                987,573      512,674            474,899                        93  %
Costs and expenses:
Cost of revenue                               656,414      302,909            353,505                       117  %
Selling, general and administrative           225,522      153,852             71,670                        47  %
Research and development                       37,537       39,369             (1,832)                       (5) %
Contingent Consideration                       (1,059)         251             (1,310)                     (522) %
Amortization of intangible assets              25,151       29,874             (4,723)                      (16) %

Total costs and expenses                      943,565      526,255            417,310                        79  %
Income (loss) from operations                  44,008      (13,581)            57,589                      (424) %


Diagnostics
                                            For the six months ended
                                                    June 30,
(In thousands)                                 2021          2020              Change               % Change
Revenues
Revenue from services                      $  904,149    $ 421,811          $ 482,338                       114  %
Revenue from transfer of intellectual
property and other                                  -        6,194             (6,194)                     (100) %
Total revenues                                904,149      428,005            476,144                       111  %
Costs and expenses:
Cost of revenue                               607,233      267,689            339,544                       127  %
Selling, general and administrative           177,127      110,436             66,691                        60  %
Research and development                        7,654        7,178                476                         7  %
Contingent Consideration                            -           68                (68)                     (100) %
Amortization of intangible assets              15,121       19,831             (4,710)                      (24) %

Total costs and expenses                      807,135      405,202            401,933                        99  %
Income from operations                         97,014       22,803             74,211                       325  %



Revenue. Revenue from services for the six months ended June 30, 2021 increased
by approximately $482.3 million compared to the six months ended June 30, 2020.
BioReference recognized an increase in revenue for the six months ended June 30,
2021 compared to the six months ended June 30, 2020 due to an improvement in
clinical test reimbursement, and an increase in clinical test volume and genomic
test volume of $14.0 million, $28.7 million and $14.7 million, respectively.
This was partially offset by the negative impact of a reduction in genomic test
reimbursement of $17.6 million.
BioReference also recognized an increase in revenue for the six months ended
June 30, 2021 compared to the six months ended June 30, 2020 due to an increase
in COVID-19 testing volume and improvement in COVID-19 test reimbursement of
$278.7 million and $157.9 million, respectively. BioReference performed 6.9
million diagnostic molecular tests for COVID-19 and 0.3 million serology
antibody tests during the six months ended June 30, 2021, which represented
61.6% of total volume for that period. In comparison, the six months ended June
30, 2020 included 2.3 million molecular tests for COVID-19 and 0.3 million
serology antibody tests.
Estimated collection amounts are subject to the complexities and ambiguities of
billing, reimbursement regulations and claims processing, as well as
considerations unique to Medicare and Medicaid programs, and require us to
consider the potential for retroactive adjustments when estimating variable
consideration in the recognition of revenue in the period the

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related services are rendered. For the six months ended June 30, 2021 and 2020,
positive revenue adjustments due to changes in estimates of implicit price
concessions for performance obligations satisfied in prior periods of $28.5
million and $0.2 million were recognized, respectively. Revenue adjustments for
the six months ended June 30, 2021 were primarily due to an improvement in
COVID-19 test reimbursement estimates.
The composition of Revenue from services by payor for the six months ended June
30, 2021 and 2020 was as follows:
                            Six months ended June 30,
(In thousands)                 2021                 2020
Healthcare insurers   $      273,913             $ 183,232
Government payers            131,269                42,784
Client payers                488,845               180,191
Patients                      10,122                15,604
Total                 $      904,149             $ 421,811


Client payors include cities, states and companies for which BioReference
provides COVID-19 testing services.
Revenue from the transfer of intellectual property and other for the six months
ended June 30, 2020 are the result of grants received under the CARES Act
totaling $6.2 million.
Cost of revenue. Cost of revenue for the six months ended June 30, 2021
increased $339.5 million compared to the six months ended June 30, 2020. Cost of
revenue increased primarily due to labor and material costs for COVID-19 testing
and the significant volume of tests performed during the six months ended June
30, 2021. Cost of revenue for the six months ended June 30, 2021 also increased
due to changes in the product mix of items sold during the period..
Selling, general and administrative expenses. Selling, general and
administrative expenses for the six months ended June 30, 2021 and 2020 were
$177.1 million and $110.4 million, respectively. Selling, general and
administrative expenses in our diagnostics segment increased primarily due to
higher variable billing and compensation costs from an increase in volume and
collections during the six months ended June 30, 2021, and in marketing costs
and other administrative costs directly associated with COVID-19 testing
volumes. Selling, general and administrative expenses for the six months ended
June 30, 2021 also include $6.1 million of expense incurred in connection with
certain legal matters. As a percentage of net revenue, selling, general and
administrative expenses for the diagnostic segment decreased to 20% from 26% for
the six months ended June 30, 2021 and 2020, respectively, as a result of per
requisition efficiencies and continued execution of appropriate expense
management during the period.
Research and development expenses. The following table summarizes the components
of our research and development expenses:
Research and Development Expenses                                   Six months ended June 30,
                                                                    2021                  2020
External expenses:
PMA studies                                                   $          31          $        111
Research and development employee-related expenses                    4,936                 4,373
Other internal research and development expenses                      2,687                 2,694
Total research and development expenses                       $       7,654

$ 7,178




The increase in research and development expenses for the six months ended June
30, 2021 resulted primarily from an increased research and development expenses
related to the development of clinical and genomics testing services.
Contingent consideration. Contingent consideration for the six months ended June
30, 2021 and 2020 was $0 thousand and $68 thousand of expense, respectively.
Contingent consideration for the six months ended June 30, 2020 was attributable
to changes in assumptions regarding the timing of achievement of future
milestones for OPKO Diagnostics, and potential amounts payable to former
stockholders of OPKO Diagnostics in connection therewith, pursuant to our
acquisition agreement in October 2011.
Amortization of intangible assets. Amortization of intangible assets was $15.1
million and $19.8 million, respectively, for the six months ended June 30, 2021
and 2020. Amortization expense reflects the amortization of acquired intangible
assets

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with defined useful lives. Amortization expense declined during the three months
ended June 30, 2021 due to acquired intangible assets becoming fully amortized.

Pharmaceuticals
                                            For the six months ended
                                                    June 30,
(In thousands)                                  2021          2020              Change                % Change
Revenues:

Revenue from products                      $    69,608    $  60,430          $    9,178                        15  %
Revenue from transfer of intellectual
property and other                              13,816       24,239             (10,423)                      (43) %
Total revenues                                  83,424       84,669              (1,245)                       (1) %
Costs and expenses:
Cost of revenue                                 49,201       35,292              13,909                        39  %
Selling, general and administrative             27,525       26,670                 855                         3  %
Research and development                        30,595       32,602              (2,007)                       (6) %
Contingent Consideration                        (1,059)         183              (1,242)                     (679) %
Amortization of intangible assets               10,030       10,043                 (13)                        -  %

Total costs and expenses                       116,292      104,790              11,502                        11  %
Loss from operations                           (32,868)     (20,121)            (12,747)                       63  %



Revenue. The increase in revenue from products for the six months ended June 30,
2021 compared to the six months ended June 30, 2020 was primarily attributable
to an increase in sales at most of our international operating companies.
Revenue from sales of Rayaldee for the six months ended June 30, 2021 and 2020
was $8.6 million and $18.6 million, respectively. Sales of Rayaldee have been
negatively impacted as a result of challenges in onboarding new patients due to
the COVID-19 pandemic. Revenue from transfer of intellectual property for the
six months ended June 30, 2021 and 2020 principally reflected $5.6 million and
$22.7 million, respectively, of revenue related to the Pfizer Transaction.
Revenue from transfer of intellectual property for the three months ended June
30, 2021 also includes a $5.0 million non-refundable upfront payment we will
receive under the license agreement with Nicoya Therapeutics.
Cost of revenue. Cost of revenue for the six months ended June 30, 2021
increased $13.9 million compared to the six months ended June 30, 2020. Cost of
product revenue increased primarily due to an increase in inventory and material
costs at most of our international operating companies, which was due to the
increase in sales at our international operating companies and to a $3.0 million
inventory reserve recognized for Rayaldee inventory for the six months ended
June 30, 2021. This was partially offset by a decrease in sales of Rayaldee for
the six months ended June 30, 2021 compared to the six months ended June 30,
2020.
Selling, general and administrative expenses. Selling, general and
administrative expenses for the six months ended June 30, 2021 and 2020 were
$27.5 million and $26.7 million, respectively. The increase in selling, general
and administrative expenses was primarily due to an increase in selling, general
and administrative expenses for most of our international operating companies
primarily due to higher variable costs from an increase in sales volume during
the three months ended June 30, 2021. Selling, general and administrative
expenses for the pharmaceutical segment for the six months ended June 30, 2021
and 2020 included equity-based compensation expense of $0.7 million and $0.5
million, respectively.
Research and development expenses. Research and development expenses for the six
months ended June 30, 2021 and 2020 were $30.6 million and $32.6 million,
respectively. Research and development expenses include external and internal
expenses, partially offset by third-party grants and funding arising from
collaboration agreements. External expenses include clinical and non-clinical
activities performed by contract research organizations, lab services, purchases
of drug and diagnostic product materials and manufacturing development costs. We
track external research and development expenses by individual program for phase
3 clinical trials for drug approval and premarket approval for diagnostics
tests, if any. Internal expenses include employee-related expenses such as
salaries, benefits and equity-based compensation expense. Other internal
research and development expenses are incurred to support overall research and
development activities and include expenses related to general overhead and
facilities.

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The following table summarizes the components of our research and development
expenses:
Research and Development Expenses                                   Six 

months ended June 30,


                                                                   2021                    2020
External expenses:
Manufacturing expense for biological products                $        2,479          $       2,728
Phase III studies                                                     5,011                  5,339
Post-marketing studies                                                   27                  1,122
Earlier-stage programs                                               10,034                  7,568
Research and development employee-related expenses                   10,255                 11,268
Other internal research and development expenses                      2,813                  4,577
Third-party grants and funding from collaboration agreements            (24)                     -
Total research and development expenses                      $       30,595

$ 32,602




The decrease in research and development expenses for the six months ended June
30, 2021 was primarily due to a decrease in research and development expenses
related to Somatrogon, a once-weekly human growth hormone injection for which we
have partnered with Pfizer and successfully completed a phase 3 study in August
2019. Ongoing expenses on the Somatrogon program support open label extension
studies that will continue until market launch of Somatrogon in certain
countries, as well as the preparation of applications for marketing approvals.
Research and development expenses for the pharmaceutical segment for the six
months ended June 30, 2021 and 2020 included equity-based compensation expense
of $0.7 million and $0.9 million, respectively.
Contingent consideration. Contingent consideration for the six months ended June
30, 2021 and 2020 was $1.1 million reversal of expense and $0.2 million of
expense, respectively. Contingent consideration for the six months ended June
30, 2021 was primarily attributable to changes in assumptions regarding the
timing of achievement of future milestones for OPKO Renal and OPKO CURNA, and
potential amounts payable to former stockholders of OPKO Renal and OPKO CURNA in
connection therewith, pursuant to our acquisition agreements in March 2013 and
January 2011, respectively. Contingent consideration for the six months ended
June 30, 2020 was primarily attributable to changes in assumptions regarding the
timing of achievement of future milestones for OPKO Renal, and potential amounts
payable to former stockholders of OPKO Renal.
Amortization of intangible assets. Amortization of intangible assets was $10.0
million and $10.0 million, respectively, for the six months ended June 30, 2021
and 2020. Amortization expense reflects the amortization of acquired intangible
assets with defined useful lives. Our indefinite lived IPR&D assets will not be
amortized until the underlying development programs are completed. Upon
obtaining regulatory approval by the FDA, the IPR&D assets will be accounted for
as a finite-lived intangible asset and amortized on a straight-line basis over
its estimated useful life.
Corporate
                                           For the six months ended June
                                                        30,
(In thousands)                                  2021           2020               Change                % Change

Costs and expenses:
Cost of revenue                            $        (20)   $      (72)         $       52                       (72) %
Selling, general and administrative              20,870        16,746               4,124                        25  %
Research and development                           (712)         (411)               (301)                       73  %
Total costs and expenses                         20,138        16,263               3,875                        24  %
Loss from operations                            (20,138)      (16,263)             (3,875)                       24  %



Operating loss for our unallocated corporate operations for the six months ended
June 30, 2021 and 2020 was $20.1 million and $16.3 million, respectively, and
principally reflects general and administrative expenses incurred in connection
with our corporate operations. The increase in operating loss for the six months
ended June 30, 2021 was primarily attributable to an increase in legal and
accounting fees incurred for the six months ended June 30, 2021, compared to the
six months ended June 30, 2020.

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Other
Interest income. Interest income for the six months ended June 30, 2021 and 2020
was not significant as our cash investment strategy emphasizes the security of
the principal invested and fulfillment of liquidity needs.
Interest expense. Interest expense for the six months ended June 30, 2021 and
2020 was $10.3 million and $11.0 million, respectively. Interest expense was
principally related to interest incurred on the 2025 Notes, the 2023 Convertible
Notes, the 2033 Senior Notes, and BioReference's outstanding debt under its
credit facility.
Fair value changes of derivative instruments, net. Fair value changes of
derivative instruments, net for the six months ended June 30, 2021 and 2020, was
$0.7 million of expense and $0.6 million reversal of expense, respectively.
Derivative income (expense) for the six months ended June 30, 2021 and 2020, was
principally related to the change in fair value on foreign currency forward
exchange contracts at OPKO Chile.
Other income (expense), net. Other income (expense), net for the six months
ended June 30, 2021 and 2020, was $12.7 million of expense and $5.9 million of
income, respectively. Other expense for the six months ended June 30, 2021
primarily consisted of a $11.1 million non-cash loss related to the exchange of
$55.4 million of the outstanding 2025 Notes for 19,051,270 shares of our Common
Stock. Other income for the six months ended June 30, 2020 primarily consisted
of net unrealized gain recognized during the period on our investment in VBI,
offset by a net unrealized loss recognized during the period on our investment
in Eloxx.
Income tax provision. Our income tax provision for the six months ended June 30,
2021 and 2020 was $5.3 million and $7.2 million, respectively, and reflects
quarterly results using our expected effective tax rate.  For the six months
ended June 30, 2021, the tax rate differed from the U.S. federal statutory rate
of 21% primarily due to the relative mix in earnings and losses in the U.S.
versus foreign tax jurisdictions, the impact of certain discrete tax events and
operating results in tax jurisdictions which do not result in a tax benefit.
Loss from investments in investees. We have made investments in certain early
stage companies that we perceive to have valuable proprietary technology and
significant potential to create value for us as a shareholder or member. We
account for these investments under the equity method of accounting, resulting
in the recording of our proportionate share of their losses until our share of
their loss exceeds our investment. Until the investees' technologies are
commercialized, if ever, we anticipate they will report net losses. Loss from
investments in investees was $110 thousand and $323 thousand for the six months
ended June 30, 2021 and 2020, respectively.


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LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2021, we had cash and cash equivalents of approximately $65.8
million. Cash provided by operations of $10.6 million for the six months ended
June 30, 2021 principally reflects cash generated by our diagnostics segment due
to the positive impact of COVID-19 testing volumes, which was partially offset
by general and administrative expenses related to our corporate operations and
research and development activities. Cash used in investing activities for the
six months ended June 30, 2021 primarily reflects capital expenditures of $18.2
million, which was partially offset by proceeds from the sale of equity
securities of $8.1 million. Cash used in financing activities of $6.9 million
primarily reflects net repayments on our lines of credit. We have historically
not generated sustained positive cash flow sufficient to offset our operating
and other expenses, and our primary sources of cash have been from the public
and private placement of equity, the issuance of the 2033 Senior Notes, 2023
Convertible Notes and 2025 Notes and credit facilities available to us. However,
as a result of the significant increase in testing volumes resulting from the
COVID-19 pandemic, we have generated positive cash flow from operations; however
we are unable to predict how long the demand will continue for our COVID-19
related testing, or whether pricing and reimbursement policies for testing will
sustain, and accordingly, the sustainability of our cash flows from operations.
We are unable to predict how long the demand will continue for our COVID-19
related testing, whether pricing and reimbursement policies for testing will
sustain, or whether further restrictions will be placed on elective procedures
or if stay at home orders will be reinstated and accordingly, the sustainability
of the cash flow is uncertain.
In June 2021, we announced that EirGen Pharma Limited ("EirGen"), our wholly
owned subsidiary, entered into a definitive agreement to sell one of its
facilities in Waterford, Ireland to Horizon Therapeutics plc for $65 million in
cash less certain assumed and accrued liabilities relating to transferred
employees. The facility houses EirGen's sterile-fill-finish business and is no
longer a core component of our ongoing operations and business strategy. The
transaction closed in the third quarter of 2021.
On February 25, 2020, we entered into a credit agreement with an affiliate of
Dr. Frost, pursuant to which the lender committed to provide us with an
unsecured line of credit in the amount of $100 million. The line of credit
called for a commitment fee equal to 0.25% per annum of the unused portion of
the line. We terminated the credit agreement in June 2021 and as of June 30,
2021, no amount was outstanding thereunder.
In February 2019, we issued $200.0 million aggregate principal amount of the
2025 Notes in an underwritten public offering. The 2025 Notes bear interest at a
rate of 4.50% per year, payable semiannually in arrears on February 15 and
August 15 of each year. The notes mature on February 15, 2025, unless earlier
repurchased, redeemed or converted.
Holders may convert their 2025 Notes into shares of Common Stock at their option
at any time prior to the close of business on the business day immediately
preceding November 15, 2024, subject to the satisfaction of certain conditions.
Upon conversion, we will pay or deliver, as the case may be, cash, shares of our
Common Stock, or a combination of cash and shares of our Common Stock, at our
election.
The current conversion rate for the 2025 Notes is 236.7424 shares of Common
Stock per $1,000 principal amount of 2025 Notes (equivalent to a conversion
price of approximately $4.22 per share of Common Stock). The conversion rate for
the 2025 Notes is subject to adjustment in certain events but will not be
adjusted for any accrued and unpaid interest.
In May 2021, we entered into exchange agreements with certain holders of the
2025 Notes pursuant to which the holders exchanged $55.4 million in aggregate
principal amount of the outstanding 2025 Notes for 19,051,270 shares of our
Common Stock. Upon consummation of the Exchange, we paid the holders of the
exchanged notes an aggregate of approximately
$0.6 million in accrued and unpaid interest on the exchanged notes. We recorded
an $11.1 million non-cash loss related to the Exchange.
As of June 30, 2021, the total commitments under our Credit Agreement with CB
and our lines of credit with financial institutions in Chile and Spain were
$95.6 million, of which $16.2 million was drawn as of June 30, 2021. At June 30,
2021, the weighted average interest rate on these lines of credit was
approximately 5.4%. These lines of credit are short-term and are used primarily
as a source of working capital. The highest aggregate principal balance at any
time outstanding during the six months ended June 30, 2021 was $17.2 million. We
intend to continue to draw under these lines of credit as needed. There is no
assurance that these lines of credit or other funding sources will be available
to us on acceptable terms, or at all, in the future.
In November 2015, BioReference and certain of its subsidiaries entered into the
Credit Agreement with CB, as lender. The Credit Agreement provides for a $75.0
million secured revolving credit facility and includes a $20.0 million
sub-facility for swingline loans and a $20.0 million sub-facility for the
issuance of letters of credit. The Credit Agreement matures on November 5, 2021
and is guaranteed by all of BioReference's domestic subsidiaries. The Credit
Agreement is also secured by substantially all assets of BioReference and its
domestic subsidiaries, as well as a non-recourse pledge by us of our equity
interest in BioReference. Availability under the Credit Agreement is based on a
borrowing base composed of eligible accounts

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receivables of BioReference and certain of its subsidiaries, as specified
therein. As of June 30, 2021, $64.3 million remained available for borrowing
under the Credit Agreement.
In February 2018, in a transaction exempt from registration under the Securities
Act, we issued the 2023 Convertible Notes in the aggregate principal amount of
$55.0 million maturing in February 2023. Each holder of a 2023 Convertible Note
has the option, from time to time, to convert all or any portion of the
outstanding principal balance of such 2023 Convertible Note, together with
accrued and unpaid interest thereon, into shares of our Common Stock, par value
$0.01 per share, at a conversion price of $5.00 per share of Common Stock. We
may redeem all or any part of the then issued and outstanding 2023 Convertible
Notes, together with accrued and unpaid interest thereon upon no fewer than 30
days, and no more than 60 days, notice to the holders. The 2023 Convertible
Notes contain customary events of default and representations and warranties of
OPKO.
On July 6, 2021, we entered into the CAMP4 Agreement with CAMP4, pursuant to
which we granted to CAMP4 an exclusive license to develop, manufacture,
commercialize or improve therapeutics utilizing the AntagoNAT technology, an
oligonucleotide platform developed under OPKO CURNA, which includes the Licensed
Compound and the Licensed Product, worldwide. The License grant covers human
pharmaceutical, prophylactic, and therapeutic and certain diagnostic uses.
We received an initial upfront payment of $1.5 million and 3,373,008 shares of
CAMP4's Preferred Stock, which equates to approximately 5% of the outstanding
shares of CAMP4, and are eligible to receive up to $3.5 million in development
milestone payments for Dravet syndrome products, and $4 million for non-Dravet
syndrome products, as well as sales milestones of up to $90 million for Dravet
syndrome products and up to $90 million for non-Dravet syndrome products. We may
also receive double digit royalty payments on the net sales of royalty bearing
products, subject to adjustment. In addition, upon achievement of certain
development milestones, we will be eligible to receive additional equity
consideration of up to 5,782,299 shares of Preferred Stock in connection with
Dravet syndrome products and up to 1,082,248 shares of Preferred stock in
connection with non-Dravet syndrome products.
Unless earlier terminated, the CAMP4 Agreement will remain in effect on a
Licensed Product-by-Licensed Product and country by-country basis until such
time as the royalty term expires for a Licensed Product in a country, and
expires in its entirety upon the expiration of the royalty term for the last
Licensed Product in the last country. CAMP4's royalty obligations expire on the
later of (i) the expiration, invalidation or abandonment date of the last patent
right in connection with the royalty bearing product, or (ii) ten (10) years
after a royalty bearing product's first commercial sale in a country. In
addition to termination rights for material breach and bankruptcy, CAMP4 is
permitted to terminate the Agreement after a specified notice period.
On June 18, 2021, EirGen and Nicoya entered into the Nicoya Agreement granting
Nicoya the exclusive rights for the development and commercialization of the
"Nicoya Product in Greater China the Nicoya Territory. Extended release
calcifediol is marketed in the U.S. under the tradename Rayaldee by OPKO.
EirGen received an initial upfront payment of $5 million and is eligible to
receive an additional $5 million upon the first to occur of (A) a certain
predetermined milestone, or (B) the first anniversary of the effective date.
EirGen is also eligible to receive up to an additional aggregate amount of
$115 million upon the achievement of certain development, regulatory and
sales-based milestones by Nicoya for the Nicoya Product in the Nicoya Territory.
EirGen will also receive tiered, double digit royalty payments at rates in the
low double digits on net product sales within the Nicoya Territory and in the
Nicoya Field.
On October 12, 2017, EirGen and JT entered into the JT Agreement granting JT the
exclusive rights for the development and commercialization of Rayaldee in Japan.
On May 17, 2021, JT delivered to the Company a notice of termination of the
Development Agreement pursuant to Section 16.1(a) thereof, which permits
termination by JT for any reason, indicating its decision to discontinue
development of Rayaldee for the Japanese market based on a comprehensive review
of its development pipeline.
In May 2016, EirGen, partnered with VFMCRP through the VFMCRP Agreement for the
development and commercialization of Rayaldee in the VFMCRP Territory. The
license to VFMCRP potentially covers all therapeutic and prophylactic uses of
the product in human patients, provided that initially the license is for the
use of the product for the treatment or prevention of SHPT related to patients
with CKD and vitamin D insufficiency/deficiency ("VFMCRP Initial Indication").
Effective May 23, 2021, we entered into an amendment to our agreement with
VFMCRP for the development and commercialization of Rayaldee, pursuant to which
the parties thereto agreed to include Japan as part of the VFMCRP Territory.
Effective May 5, 2020, we entered into the VFMCRP Amendment, pursuant to which
the parties agreed to exclude Mexico, South Korea, the Middle East and all of
the countries of Africa from the VFMCRP Territory. In addition, the parties
agreed to certain amendments to the milestone structure and to reduce minimum
royalties payable.

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We have received non-refundable and non-creditable payments of $55 million to
date and are eligible to receive up to an additional $227 million pursuant to
the terms of the VFMCRP Amendment upon the achievement of certain regulatory and
sales-based milestones tied to sales and reimbursement levels. In addition, we
are eligible to receive tiered royalties on sales of the product at percentage
rates that range from the mid-teens to the mid-twenties or a minimum royalty,
whichever is greater, upon commencement of sales of the product.
As part of the arrangement, the companies will share responsibility for the
conduct of trials specified within an agreed-upon development plan, with each
company leading certain activities within the plan. For the initial development
plan, the companies have agreed to certain cost sharing arrangements. VFMCRP
will be responsible for all other development costs that VFMCRP considers
necessary to develop the product for the VFMCRP Initial Indication in the VFMCRP
Territory except as otherwise provided in the VFMCRP Agreement. EirGen also
granted to VFMCRP an option to acquire an exclusive license to use, import,
offer for sale, sell, distribute and commercialize the product in the U.S. for
treatment of SHPT in dialysis patients with stage 5 CKD and vitamin D
insufficiency (the "Dialysis Indication"). Upon exercise of the Option, VFMCRP
will reimburse EirGen for all of the development costs incurred by EirGen with
respect to the product for the Dialysis Indication in the U.S. VFMCRP would also
pay EirGen up to an additional aggregate amount of $555 million upon the
achievement of certain milestones and would be obligated to pay royalties on
sales of the product at percentage rates that range from the mid-teens to the
mid-twenties or a minimum royalty, whichever is greater, upon commencement of
sales of the product.
In October 2019, we and Pfizer announced that the global phase 3 trial
evaluating Somatrogon (hGH-CTP) dosed once-weekly in prepubertal children with
GHD met its primary endpoint of non-inferiority to daily Genotropin®
(somatropin) for injection, as measured by annual height velocity at 12 months.
In June 2020, we announced that the Japan phase 3 clinical trial met its primary
and secondary objectives, and demonstrated that the efficacy and safety of
Somatrogon administered weekly was comparable to GENOTROPIN® for injection
administered once-daily as measured by annual height velocity after 12 months of
treatment in treatment-naïve Japanese pre-pubertal children with GHD.
In 2014, Pfizer and OPKO entered into a worldwide agreement for the development
and commercialization of our long-acting Somatrogon for the treatment of GHD in
adults and children, as well as for the treatment of growth failure in children
born small for gestational age. In May 2020, we entered into a Restated
Agreement with Pfizer which was effective as of January 1, 2020, pursuant to
which the parties agreed to share all costs for Manufacturing Activities, as
defined in the Restated Agreement, for developing a licensed product for the
three indications included in the Restated Agreement. Under the terms of the
agreements with Pfizer, we received non-refundable and non-creditable upfront
payments of $295 million in 2015 and are eligible to receive up to an additional
$275 million upon the achievement of certain regulatory milestones. Pfizer
received the exclusive license to commercialize Somatrogon worldwide. In
addition, we are eligible to receive initial tiered royalty payments associated
with the commercialization of Somatrogon for Adult GHD with percentage rates
ranging from the high teens to mid-twenties. Upon the launch of Somatrogon for
Pediatric GHD in certain major markets, the royalties will transition to
regional, tiered gross profit sharing for both Somatrogon and Pfizer's
Genotropin®. During the first quarter of 2021, regulatory submissions in the
major global markets for Somatrogan have been accepted including, the U.S.,
European Medicines Agency, and Ministry of Health, Labour, and Welfare in Japan
for Somatrogon for the treatment of pediatric patients with GHD.
In connection with our acquisitions of CURNA, OPKO Diagnostics and OPKO Renal,
we agreed to pay future consideration to the sellers upon the achievement of
certain events, including up to an additional $19.1 million in shares of our
Common Stock to the former stockholders of OPKO Diagnostics upon and subject to
the achievement of certain milestones; and up to an additional $125.0 million in
either shares of our Common Stock or cash, at our option subject to the
achievement of certain milestones, to the former shareholders of OPKO Renal.
We believe that the cash and cash equivalents on hand at June 30, 2021, cash
from operations, the cash received from the sale of one of our facilities in
Waterford, Ireland to Horizon Therapeutics plc and the amounts available to be
borrowed under our lines of credit are sufficient to meet our anticipated cash
requirements for operations and debt service beyond the next 12 months. We based
this estimate on assumptions that may prove to be wrong or are subject to
change, and we may be required to use our available cash resources sooner than
we currently expect. If we acquire additional assets or companies, accelerate
our product development programs or initiate additional clinical trials, we will
need additional funds. Our future cash requirements, and the timing of those
requirements, will depend on a number of factors, including the impact of the
COVID-19 pandemic on our business, the approval and success of our products in
development, particularly our long acting Somatrogon for which we have submitted
for approval in the U.S., Europe and Japan, the commercial success of Rayaldee,
including the launch of Rayaldee by Vifor expected in 2022, BioReference's
financial performance, possible acquisitions, the continued progress of research
and development of our product candidates, the timing and outcome of clinical
trials and regulatory approvals, the costs involved in preparing, filing,
prosecuting, maintaining, defending, and enforcing patent claims and other
intellectual property rights, the status of competitive products, the
availability of financing, our success in developing markets for our product
candidates and results of government investigations, payor claims, and legal
proceedings that may arise, including, without limitation class action and
derivative litigation to which we are subject, and our ability to obtain
insurance

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coverage for such claims. We have historically not generated sustained positive
cash flow and if we are not able to secure additional funding when needed, we
may have to delay, reduce the scope of, or eliminate one or more of our clinical
trials or research and development programs or possible acquisitions or reduce
our marketing or sales efforts or cease operations.
Additionally, the rapid development and fluidity of the COVID-19 pandemic and
new variants of the virus makes it very difficult to predict its ultimate impact
on our business, results of operations and liquidity. The pandemic presents a
significant uncertainty that could materially and adversely affect our results
of operations, financial condition and cash flows, including a negative impact
on non-COVID-related diagnostics testing services provided by BioReference in
our diagnostics segment, notwithstanding that our results of operations have
been positively impacted by our provision of COVID-19 testing services. Further,
deteriorating economic conditions globally have resulted in a challenging
capital raising environment, which could materially limit our access to capital,
whether through the issuance and sale of our Common Stock, debt securities or
otherwise, as well as through bank facilities and lines of credit. Events
resulting from the effects of COVID-19 or new variants of the virus could
negatively impact our ability to comply with certain covenants in the Credit
Agreement or require that we pursue alternative financing. We can provide no
assurance that any such alternative financing, if required, could be obtained on
acceptable terms or at all. The combination of potential disruptions to our
business resulting from COVID-19 together with and volatile credit and capital
markets could adversely impact our future liquidity, which could have an adverse
effect on our business and results of operations. We will continue to monitor
and assess the impact COVID-19 and new variants of the virus may have on our
business and financial results.
The following table provides information as of June 30, 2021, with respect to
the amounts and timing of our known contractual obligation payments due by
period.
                                       Remaining
Contractual obligations            six months ending
(In thousands)                     December 31, 2021           2022              2023              2024               2025             Thereafter            Total
Open purchase orders              $        134,832          $    660          $      -          $      -          $       -          $         -          $ 135,492
Operating leases                             4,501            10,457             7,076             4,926              3,013               10,734             40,707
Finance leases                               1,183             1,573               997               680                210                    -              4,643
2033 Senior Notes, 2025 and
2023 Convertible Notes                           -                 -            58,050                 -            116,009                    -            174,059

Mortgages and other debts
payable                                        599             1,016               815               723                241                  193              3,587
Lines of credit                             16,197                 -                 -                 -                  -                    -             16,197

Interest commitments                         3,516             6,638       

    20,048             6,535                573                    -             37,310
Total                             $        167,825          $ 22,297          $ 86,986          $ 12,864          $ 120,047          $    10,927          $ 420,946


The preceding table does not include information where the amounts of the
obligations are not currently determinable, including the following:
•Contractual obligations in connection with clinical trials, which span over two
years, and that depend on patient enrollment. The total amount of expenditures
is dependent on the actual number of patients enrolled and as such, the
contracts do not specify the maximum amount we may owe.
•Product license agreements effective during the lesser of 15 years or patent
expiration whereby payments and amounts are determined by applying a royalty
rate on uncapped future sales.
•Contingent consideration that includes payments upon achievement of certain
milestones including meeting development milestones such as the completion of
successful clinical trials, NDA approvals by the FDA and revenue milestones upon
the achievement of certain revenue targets all of which are anticipated to be
paid within the next seven years and are payable in either shares of our Common
Stock or cash, at our option, and that may aggregate up to $144.1 million.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There were no material changes to our critical accounting policies and estimates
described in our Annual Report on Form 10-K for the fiscal year ended December
31, 2020, that have a material impact on our Condensed Consolidated Financial
Statements and related notes.
RECENT ACCOUNTING PRONOUNCEMENTS
Pending accounting pronouncements.
In August 2020, the FASB issued ASU No. 2020-06, "Debt-Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in
Entity's Own Equity (Subtopic 815-40)." ASU 2020-06 will simplify the accounting
for convertible instruments by reducing the number of accounting models for
convertible debt instruments and convertible preferred stock. The ASU is
effective for public entities for fiscal years beginning after December 15,
2021, with early adoption permitted. We are currently evaluating the impact of
this new guidance on our Condensed Consolidated Financial Statements.

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