WEBVTT - OPKO's Frost: BioReference Was a Tremendous Acquisition (Audio) 0:00:03.080 --> 0:00:06.400 Global business news twenty four hours a day at Bloomberg 0:00:06.480 --> 0:00:09.560 dot com, the Radio plus Mobile Act and on your radio. 0:00:09.840 --> 0:00:14.240 This is a Bloomberg Business Flash Strom, Bloomberg World Headquarters. 0:00:14.280 --> 0:00:17.440 I'm Charlie Pelota. A mixed picture for stocks. The SMP 0:00:17.600 --> 0:00:20.840 five hundred index is fluctuating right now. It is up 0:00:20.880 --> 0:00:23.599 by less than one half of one percent. We have 0:00:23.640 --> 0:00:27.440 got the Dow Jones Industrial Average up forty seven points, 0:00:27.440 --> 0:00:30.640 advancing by three tens of one percent. Nestack down ten 0:00:30.720 --> 0:00:32.800 and drop there of two tens of one percent. 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You're listening to 0:01:15.000 --> 0:01:18.800 Taking Stock with Kathleen and pin Box on Bloomberg Radio. 0:01:19.880 --> 0:01:24.160 Dr Philip Frost is a physician a dermatologist who has 0:01:24.240 --> 0:01:28.640 become a billionaire investor as the chairman and CEO of 0:01:28.840 --> 0:01:33.080 UPco Health, one of the most respected entrepreneurs in healthcare. 0:01:33.680 --> 0:01:36.240 He sat down with taking Stock to discuss his company's 0:01:36.240 --> 0:01:39.039 product pipeline, his views on drug pricing, and what his 0:01:39.080 --> 0:01:43.039 current outlook is for the pharmaceutical industry. I think we're 0:01:43.040 --> 0:01:47.039 living in a very special time in the history of 0:01:47.120 --> 0:01:49.760 the pharmaceutical industry and then the history of man for 0:01:49.840 --> 0:01:54.920 that matter. For the less one years, we've been accumulating 0:01:55.000 --> 0:02:00.360 the technological infrastructure that has permitted the stepwise the helpment 0:02:00.600 --> 0:02:07.360 of more and more specific, more and more effective drugs. 0:02:07.680 --> 0:02:11.160 And we're at the point now where there's enough critical 0:02:11.240 --> 0:02:15.800 mass of technology with enough people working in the field 0:02:16.280 --> 0:02:20.960 so that they can bring together these new resources to 0:02:21.120 --> 0:02:24.400 create all kinds of therapy. So within the next ten 0:02:24.520 --> 0:02:28.679 twenty years, I imagine that a lot of the conditions 0:02:28.720 --> 0:02:32.040 that were not approachable will all of a sudden be 0:02:32.240 --> 0:02:37.480 treatable and curable. We see little by little that happening. 0:02:38.080 --> 0:02:41.080 So from our point of view, we are very excited 0:02:41.120 --> 0:02:44.080 to be able to participate that in whatever way we can, 0:02:45.120 --> 0:02:49.000 even if it's a small part, but there is a 0:02:49.000 --> 0:02:53.120 lot to be done and we're excited. Well, give us 0:02:53.120 --> 0:02:55.760 an update on some of the drugs that you have developed, 0:02:55.800 --> 0:02:59.800 and I'd like to start with four key score because 0:03:00.360 --> 0:03:05.359 is potentially a game changer for anyone who is unfortunate 0:03:05.400 --> 0:03:08.679 to come down with aggressive prostate cancer. You're absolutely right. 0:03:09.000 --> 0:03:12.200 The four case square was developed in large measure right 0:03:12.240 --> 0:03:15.720 here in New York at Memorial Slumpcuttering Hospital by Peter 0:03:15.800 --> 0:03:18.880 Scardino and his team. Peter was at the time the 0:03:18.960 --> 0:03:22.560 head of the urology section. Now he's the head of surgery, 0:03:22.600 --> 0:03:26.600 but he, working with a team in Finland who had 0:03:26.639 --> 0:03:30.760 been added for at least a dozen years, perfected the test, 0:03:31.200 --> 0:03:35.760 which involves using four different enzymes that a man produces 0:03:35.800 --> 0:03:40.440 in his g US system, one of which is the 0:03:40.520 --> 0:03:45.000 p s A, a test that has been maligned recently, 0:03:45.520 --> 0:03:49.080 but the other three are in the same category called 0:03:49.160 --> 0:03:53.000 calicrons as the p s A. Two of them are 0:03:53.120 --> 0:03:58.240 proprietary to OpCo and occur in the blood primarily when 0:03:58.280 --> 0:04:01.800 there is a serious prostate cancer present, unlike the p 0:04:02.000 --> 0:04:06.119 s A, which is more associated with a benign conditions. 0:04:06.160 --> 0:04:10.120 So the bottom line is that the four case score, 0:04:10.200 --> 0:04:13.240 a simple blood test that we can perform in our laboratories, 0:04:13.680 --> 0:04:18.080 will permit you to identify a man who has a 0:04:18.200 --> 0:04:23.240 serious cancer in the making, a serious press cancer, and 0:04:23.320 --> 0:04:26.400 so that that's the man that you want to watch 0:04:26.440 --> 0:04:30.240 carefully and possibly treat. And the problem, of course is 0:04:30.279 --> 0:04:35.200 that the p s A results in over seventy false 0:04:35.320 --> 0:04:37.839 positives in the sense that they either have no disease 0:04:37.920 --> 0:04:42.520 on biopsy or a benign indolent form that doesn't need 0:04:42.560 --> 0:04:46.280 to be treated. So this net effective. This is that 0:04:46.360 --> 0:04:49.560 we can avoid more than fifty of the biopsies that 0:04:49.600 --> 0:04:52.240 are now done. And I'm told that this is one 0:04:52.240 --> 0:04:54.880 of the most unpleasant experiences a man will ever go through, 0:04:55.480 --> 0:04:59.799 and at the same time pick up the important cancers 0:05:00.120 --> 0:05:03.760 if they're present, and at the same time save the 0:05:03.800 --> 0:05:07.000 health system a lot of money from the needless biopsies 0:05:07.040 --> 0:05:09.800 and the consequences of bleeding and infection and so forth. 0:05:10.000 --> 0:05:12.680 So there's the physician talking, the scientists talking. What about 0:05:12.680 --> 0:05:16.040 the businessman. Because you can have the best drug, the 0:05:16.080 --> 0:05:19.240 best test in the world, and if you can't get 0:05:19.320 --> 0:05:22.560 something like a local coverage determination, if you can't get 0:05:22.640 --> 0:05:24.800 Medicare to say we'll pay for this so that other 0:05:24.880 --> 0:05:28.480 physicians and hospitals will pay for it, it's tough to 0:05:28.520 --> 0:05:29.880 get it to the people who need it, and it's 0:05:29.960 --> 0:05:33.640 tough to make money. So that's very, very true. But 0:05:33.720 --> 0:05:37.279 we're extremely confident because the data is so compelling. There 0:05:37.320 --> 0:05:42.120 are over a dozen UH publications in peer review journals 0:05:42.360 --> 0:05:45.640 from all over the world. It's been given the stamp 0:05:45.640 --> 0:05:49.239 of approval by the A m A, by the NCC 0:05:49.520 --> 0:05:54.520 and the National Cancer Board that determines these matyrs and 0:05:54.680 --> 0:06:00.000 other prestigious groups. The data is so overwhelming that we've 0:06:00.040 --> 0:06:03.960 think that the re that the payers will up for reapprosement, 0:06:04.040 --> 0:06:07.200 and we are already getting payment for many of the 0:06:07.240 --> 0:06:11.560 important payers. Just recently, there were a few missteps one 0:06:11.600 --> 0:06:15.120 of the so called max of which there is more. 0:06:15.160 --> 0:06:17.720 There are perhapsimately a dozen around the country. These are 0:06:17.839 --> 0:06:23.600 the agents that are contracted by Medicare to evaluate new tests. 0:06:23.800 --> 0:06:27.520 One of them came up with a positive opinion A 0:06:27.520 --> 0:06:30.560 AN L C D, and the next day another one 0:06:30.600 --> 0:06:33.520 came with a negative, after which the first positive one 0:06:33.600 --> 0:06:36.920 was withdrawn. This is what I consider a misstep or 0:06:37.080 --> 0:06:40.000 not necessarily in our part, because we never really submitted 0:06:40.160 --> 0:06:44.000 the data for them to consider. So everyone is aware 0:06:44.000 --> 0:06:47.560 of this and we're in the process of dealing with that. Eventually, 0:06:47.920 --> 0:06:50.240 it has the opportunity, I think, to become, from an 0:06:50.240 --> 0:06:53.279 economic point of view, one of the more important tests 0:06:53.320 --> 0:06:55.840 in the history of the diagnostics business. So what does 0:06:55.880 --> 0:06:58.880 it do for your bottom line? Eventually? I think it 0:06:58.920 --> 0:07:02.440 will be a very important contributor, a very important acquisition 0:07:02.520 --> 0:07:07.320 for you. Last year, bio Reference the third largest full 0:07:07.400 --> 0:07:11.400 service reference laboratory in the United States. How it's doing 0:07:11.440 --> 0:07:13.200 since you acquired it, and how it fits into the 0:07:13.280 --> 0:07:17.840 overall strategy and growth plan for OpCo Health. Well, this 0:07:17.920 --> 0:07:21.400 is a perfect example of the type of acquisition that 0:07:21.680 --> 0:07:25.200 we're interested in doing any day of the week. It 0:07:25.320 --> 0:07:29.240 added over a billion dollars of annual sales and it's 0:07:29.280 --> 0:07:32.400 going to add a lot of profit. But even more important, 0:07:32.440 --> 0:07:35.320 from a strategic point of view, it's going to permit 0:07:35.480 --> 0:07:39.480 the more rapid marketing and sales and uptake of the 0:07:39.560 --> 0:07:43.120 four case score, which, as I had mentioned, has the 0:07:43.120 --> 0:07:45.800 opportunity for being one of the most important tests in 0:07:45.920 --> 0:07:49.960 the history of the industry. And it will become an 0:07:49.960 --> 0:07:53.200 outlet for many of the new diagnostic products that we have. 0:07:53.680 --> 0:07:57.239 While on its own, it's growing with their normal business, 0:07:57.360 --> 0:08:01.720 one part of which is particularly exciting, and that's genomic testing. 0:08:02.320 --> 0:08:06.920 They are probably doing more gene sequencing than any company 0:08:06.920 --> 0:08:09.120 in the industry right now, and that part of the 0:08:09.160 --> 0:08:12.000 business is growing more quickly, and it's a more profitable 0:08:12.000 --> 0:08:15.120 part of the business than the rest of it. In retrospect, 0:08:15.280 --> 0:08:19.120 was a tremendous acquisition, both from a straight economic point 0:08:19.120 --> 0:08:22.280 of view as well as a long term strategic point 0:08:22.320 --> 0:08:24.800 of view. Revenue of two fifty million dollars in the 0:08:24.800 --> 0:08:26.360 first quarter of this year, you say, if you get 0:08:26.440 --> 0:08:30.520 much bigger, well we're going hours. We anticipate that it 0:08:30.520 --> 0:08:33.920 will be well over a billion dollars for the calendar year. 0:08:34.360 --> 0:08:39.000 Just switching gears a bit, but certainly pricing, selling, marketing. 0:08:39.280 --> 0:08:43.760 Valiant Pharmaceuticals a poster child now for a predatory pricing 0:08:43.880 --> 0:08:47.479 model using that to boost growth. Has that hurt the industry? 0:08:47.559 --> 0:08:49.800 Has it? How does it affect what you do or 0:08:49.840 --> 0:08:51.720 don't do? You know, I've been giving that a lot 0:08:51.720 --> 0:08:55.040 of thought lately because there's so much discussion about pricing 0:08:55.240 --> 0:08:58.840 in the industry, and you know that there are always 0:08:58.960 --> 0:09:05.520 opportunities to exploit a given a situation to the disadvantage 0:09:05.559 --> 0:09:10.559 of the patient and and payers. My experience and observation 0:09:10.840 --> 0:09:14.640 is that in general the industry is highly ethical and 0:09:14.880 --> 0:09:18.560 very very much sensitive to the needs of patients and 0:09:18.720 --> 0:09:22.400 the players and the health system in general. But my 0:09:22.520 --> 0:09:26.240 thought was that looking at our product, for example, it 0:09:26.320 --> 0:09:29.319 costs a hell of a lot to develop a drug, 0:09:29.600 --> 0:09:32.600 both in human terms the time and energy of a 0:09:32.679 --> 0:09:35.880 large number of people and a lot of money, and 0:09:36.720 --> 0:09:40.079 there's a lot of risk associated with it. We all 0:09:40.160 --> 0:09:43.600 know that of the drugs that are started in development, 0:09:43.760 --> 0:09:47.360 a tiny percentage point up coming to market. So taking 0:09:47.480 --> 0:09:51.360 all that into account, if the companies are to be 0:09:51.440 --> 0:09:54.319 profitable so that they can continue to do the research 0:09:54.400 --> 0:09:57.120 and turn out these good products that are going to 0:09:57.360 --> 0:10:01.560 be breakthroughs in medicine and future, they need to make 0:10:01.600 --> 0:10:05.880 a profit. So the prices that I'll admit seemed very 0:10:05.960 --> 0:10:10.480 high for many products most often have a tremendous justification 0:10:10.559 --> 0:10:14.280 behind him. That was Dr Philip Frosty is the chairman 0:10:14.320 --> 0:10:17.679 and the chief executive of up Go Health. Up Go 0:10:17.840 --> 0:10:20.640 Health that shares down a little bit more than seven 0:10:20.640 --> 0:10:24.040 and a half percent so far this year. And Kathleen, 0:10:24.080 --> 0:10:27.120 I know in speaking with the Dr Frost, he's got, 0:10:27.120 --> 0:10:29.600 of course, of major interest in the success of the 0:10:29.679 --> 0:10:34.000 company because he owns nearly thirty percent of the stock 0:10:34.040 --> 0:10:36.560 of UPco Health. You know him. He is such an 0:10:36.600 --> 0:10:42.360 impressive man, uh well along in life and so focused 0:10:42.600 --> 0:10:47.280 and so innovative and and looking for the next successful, 0:10:47.640 --> 0:10:52.079 profitable and very helpful to mankind treatment and drug whatever 0:10:52.120 --> 0:10:55.719 it is. He's well, very interesting conversation about the new 0:10:55.800 --> 0:11:00.800 test for prostate cancer and his thoughts on drug some issues. 0:11:01.120 --> 0:11:03.560 You're listening to taking Stock. I'm Pim Fox my co 0:11:03.640 --> 0:11:06.920 host Kathleen Hayes, and you're listening to Bloomberg Radio.