Form S-4 Amendment No. 2
Table of Contents

As filed with the Securities and Exchange Commission on July 15, 2013

Registration No. 333-189640

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Pre-Effective

Amendment No. 2

to

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

OPKO HEALTH, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Delaware   2834   75-2402409

(State or Other Jurisdiction of

Incorporation or Organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

4400 Biscayne Boulevard

Miami, Florida 33137

(305) 575-4100

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Kate Inman, Esq.

Deputy General Counsel and Secretary

OPKO Health, Inc.

4400 Biscayne Boulevard

Miami, Florida 33137

(305) 575-4100

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

 

 

Copies to:

 

Teddy D. Klinghoffer, Esq.

Esther L. Moreno, Esq.

Akerman Senterfitt

One S.E. Third Avenue

25th Floor

Miami, Florida 33131

Telephone: (305) 374-5600

Fax: (305) 374-5095

 

Shai Novik

President

PROLOR Biotech, Inc.

7 Golda Meir Street

Weizmann Science Park

Nes-Ziona, Israel L3 74140

Telephone: (866) 644-7811

Fax: (305) 500-2104

 

Robert L. Grossman, Esq.

Greenberg Traurig, P.A.

333 Avenue of the Americas

Suite 4400

Miami, Florida 33131

Telephone: (305) 579-0500

Fax: (305) 579-0717

   Jacqueline Hodes, Esq.

Michael P. Reed, Esq.

DLA Piper LLP (US)

200 S. Biscayne Boulevard

Suite 2500

Miami, Florida 33131

Telephone: (305) 423-8500

Fax: (305) 437-8131

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable following the effective date of this registration statement and the effective time of the merger of POM Acquisition, Inc., a Nevada corporation and a wholly owned subsidiary of OPKO Health, Inc., with and into PROLOR Biotech, Inc., a Nevada corporation, as described in the Agreement and Plan of Merger, dated as of April 23, 2013, attached as Annex A to the joint proxy statement/prospectus forming part of this registration statement.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

(Check one):

 

Large accelerated filer   ¨    Accelerated filer   þ
Non-accelerated filer   ¨  (Do not check if a smaller reporting company)    Smaller reporting company   ¨

 

If applicable, place an “X” in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ¨

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ¨

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

 

 


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The information in this joint proxy statement/prospectus is not complete and may be changed. OPKO Health, Inc. may not offer these securities until the registration statement filed with the Securities and Exchange Commission, of which this joint proxy statement/prospectus is a part, is effective. This joint proxy statement/prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION, DATED JULY 15, 2013

PRELIMINARY JOINT PROXY STATEMENT/PROSPECTUS

 

LOGO   LOGO

PROPOSED MERGER—YOUR VOTE IS VERY IMPORTANT

On April 23, 2013, OPKO Health, Inc., or OPKO, a Delaware corporation, POM Acquisition, Inc., or POM, a Nevada corporation and a wholly owned subsidiary of OPKO, and PROLOR Biotech, Inc., or PROLOR, a Nevada corporation, entered into an Agreement and Plan of Merger, or the Merger Agreement, pursuant to which, subject to the satisfaction of the terms and conditions contained in the Merger Agreement, POM will merge with and into PROLOR with PROLOR surviving as a wholly owned subsidiary of OPKO, which we refer to as the Merger. The Board of Directors of each of PROLOR and OPKO (with Phillip Frost, M.D., Jane H. Hsiao, Ph.D. and Steven D. Rubin, each of whom serves as a director of both PROLOR and OPKO, abstaining) have approved and adopted the Merger Agreement and the transactions contemplated thereby, including the Merger.

If the Merger is completed, holders of PROLOR’s common stock, par value $0.00001 per share, or the PROLOR common stock, will be entitled to receive 0.9951 of a share of OPKO’s common stock, par value $0.01 per share, or the OPKO common stock, for each share of PROLOR common stock they own, which we refer to as the Exchange Ratio. This Exchange Ratio will not be adjusted for changes in the price per share of PROLOR’s or OPKO’s common stock before the Merger is completed. Based on the number of shares of PROLOR common stock outstanding and the number of shares of PROLOR common stock that may be issued pursuant to outstanding stock options and warrants as of                 , 2013, the latest practicable date before the printing of this joint proxy statement/prospectus, OPKO estimates that an aggregate of                 shares of OPKO common stock will be issued in connection with the Merger. The OPKO common stock is listed on the New York Stock Exchange, or the NYSE, and trades under the symbol “OPK.” The PROLOR common stock is listed on the NYSE MKT and the Tel Aviv Stock Exchange and trades under the symbol “PBTH.” Upon completion of the Merger, shares of PROLOR common stock will be delisted from the NYSE MKT and the Tel Aviv Stock Exchange and there will no longer be a public trading market for the PROLOR common stock. In addition, promptly following the closing of the Merger, the PROLOR common stock will be deregistered under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and PROLOR will no longer file periodic reports with the Securities and Exchange Commission, or the SEC. Following the completion of the Merger, the OPKO common stock will continue to be traded on the NYSE under the symbol “OPK.” Additionally, OPKO intends to apply to list its shares on the Tel Aviv Stock Exchange prior to the closing of the Merger.

Based on the closing price of the OPKO common stock on April 23, 2013, the date prior to the announcement of the Merger Agreement, the Exchange Ratio represented an implied value of approximately $7.00 per share of PROLOR common stock, as compared to the closing price of the PROLOR common stock of $5.83 per share on that date. Based on the closing price of the OPKO common stock on                 , 2013, the latest practicable date before the printing of this joint proxy statement/prospectus, the Exchange Ratio represented an implied value of approximately $         per share of PROLOR common stock, as compared to the closing price of the PROLOR common stock of $         per share on that date. You are urged to obtain current market quotations for the OPKO common stock and the PROLOR common stock.

OPKO is soliciting proxies for use at its 2013 annual meeting of stockholders, or the OPKO annual meeting, at which OPKO’s stockholders will be asked to consider and vote upon: (1) a proposal to elect as directors the ten nominees named in this joint proxy statement/prospectus for a term of office expiring at the 2014 annual meeting of stockholders and until their respective successors are duly elected and qualified; (2) a proposal to approve an amendment to the OPKO Health, Inc. 2007 Equity Incentive Plan, or the 2007 Plan, to increase the aggregate number of shares of OPKO common stock authorized for issuance pursuant to the 2007 Plan from 35 million shares to 55 million shares of OPKO common stock, which we refer to as the OPKO Plan Amendment Proposal; (3) a proposal to approve an amendment to OPKO’s amended and restated certificate of incorporation, or the OPKO Charter, to increase the authorized number of shares of the OPKO common stock that OPKO may issue from 500 million shares to 750 million shares, which we refer to as the OPKO Authorized Share Increase Proposal; (4) a proposal to approve the issuance of shares of OPKO common stock and other securities exercisable for shares of OPKO common stock to PROLOR’s stockholders in connection with the Merger, which we refer to as the OPKO Share Issuance Proposal; and (5) a proposal to adjourn the OPKO annual meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the foregoing proposals, which we refer to the OPKO Adjournment Proposal. OPKO’s Board of Directors recommends that OPKO’s stockholders vote “FOR” the election of the ten director nominees named in this joint proxy statement/prospectus and “FOR” each of the other proposals described above. The approval of the OPKO Share Issuance Proposal is required for the completion of the Merger.

PROLOR is soliciting proxies for use at a special meeting of PROLOR’s stockholders, or the PROLOR special meeting, at which PROLOR’s stockholders will be asked to: (1) consider and vote upon a proposal to approve and adopt the Merger Agreement and the transactions contemplated thereby, including the Merger, which we refer to as the PROLOR Merger Proposal, (2) cast an advisory vote to approve the “golden parachute” compensation that PROLOR’s named executive officers may potentially receive in connection with the Merger, which we refer to as the PROLOR Compensation Advisory Vote Proposal, and (3) consider and vote upon a proposal to adjourn the PROLOR special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the proposal to approve and adopt the Merger Agreement and the transactions contemplated thereby, including the Merger, which we refer to as the PROLOR Adjournment Proposal. PROLOR’s Board of Directors recommends that PROLOR’s stockholders vote “FOR” each of the foregoing proposals. The adoption and approval by PROLOR’s stockholders of the PROLOR Merger Proposal is required for the completion of the Merger.

YOUR VOTE IS VERY IMPORTANT. The Merger cannot be completed unless OPKO’s stockholders approve the issuance of OPKO common stock in connection with the Merger and PROLOR’s stockholders approve and adopt the Merger Agreement and the transactions contemplated thereby, including the Merger. Whether or not you plan to attend the OPKO annual meeting or the PROLOR special meeting, as applicable, please submit your proxy as soon as possible to make sure that your shares are represented at the applicable meeting.

This joint proxy statement/prospectus provides you with detailed information about the OPKO annual meeting, the PROLOR special meeting, the Merger Agreement and the Merger and the other business to be considered by each company’s stockholders. In addition to being a proxy statement for the meetings to be held by OPKO and PROLOR, this document is also a prospectus to be used by OPKO when offering shares of OPKO common stock to PROLOR’s stockholders in connection with the Merger. OPKO and PROLOR encourage you to read this entire document carefully. Please pay particular attention to the section titled “Risk Factors,” beginning on page 36, for a discussion of the risks related to the Merger and to the ownership of OPKO common stock after the Merger is completed.

 

Phillip Frost, M.D.   Abraham Havron, Ph.D.
Chairman and Chief Executive Officer   Chief Executive Officer
OPKO Health, Inc.   PROLOR Biotech, Inc.

Neither the SEC nor any state securities commission has approved or disapproved of the securities to be issued in connection with the Merger or determined if this joint proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated                 , 2013 and, together with the accompanying proxy card, is first being mailed to stockholders of OPKO and PROLOR on or about                 , 2013.


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REFERENCES TO ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates by reference important business and financial information about OPKO and PROLOR from other documents that each company has filed with the SEC, but that have not been included in or delivered with this joint proxy statement/prospectus. For a listing of the documents incorporated by reference into this joint proxy statement/prospectus, see the section titled “Where You Can Find Additional Information” beginning on page 176. You can obtain the documents incorporated by reference into this joint proxy statement/prospectus through the SEC’s website at www.sec.gov or by requesting them in writing or by telephone at the appropriate address below.

OPKO will provide you with copies of such documents relating to OPKO, without charge, upon written or oral request to:

OPKO Health, Inc.

4400 Biscayne Boulevard

Miami, Florida 33137

Attn: Secretary

(305) 575-4100

PROLOR will provide you with copies of such documents relating to PROLOR, without charge, upon written or oral request to:

PROLOR Biotech, Inc.

7 Golda Meir Street

Weizmann Science Park

Nes-Ziona, Israel L3 74140

Attn: Finance Director

(866) 644-7811

In order for you to receive timely delivery of the documents in advance of the OPKO annual meeting or the PROLOR special meeting, you must request the information no later than August 23, 2013.

ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

This joint proxy statement/prospectus, which forms a part of a registration statement on Form S-4 filed with the SEC by OPKO (File No. 333-189640), constitutes a prospectus of OPKO under Section 5 of the Securities Act of 1933, as amended, or the Securities Act, with respect to the shares of OPKO common stock to be issued to PROLOR’s stockholders in connection with the Merger.

This joint proxy statement/prospectus also constitutes a notice of meeting and a proxy statement under Section 14(a) of the Exchange Act with respect to (1) the OPKO annual meeting, at which OPKO stockholders will be asked to consider and vote upon certain proposals, including a proposal to approve the issuance of shares of OPKO common stock in connection with the Merger, and (2) the PROLOR special meeting, at which PROLOR stockholders will be asked to consider and vote upon certain proposals, including a proposal to approve and adopt the Merger Agreement and the transactions contemplated thereby, including the Merger, and a proposal to approve, on an advisory basis, the compensation that PROLOR’s named executive officers may potentially receive in connection with the Merger.


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OPKO HEALTH, INC.

4400 Biscayne Boulevard

Miami, FL 33137

NOTICE OF 2013 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD AUGUST 28, 2013

To the Stockholders of OPKO Health, Inc.:

You are invited to attend the 2013 annual meeting of stockholders of OPKO Health, Inc., or OPKO, a Delaware corporation, or the OPKO annual meeting, which will be held on Wednesday, August 28, 2013, at 10:00 a.m., local time, at OPKO’s headquarters located at 4400 Biscayne Boulevard, Miami, FL 33137, for the following purposes:

 

  1. To consider and vote on a proposal to elect as directors the ten nominees named in this joint proxy statement/prospectus for a term of office expiring at the 2014 annual meeting of stockholders and until their respective successors are duly elected and qualified.

 

  2. To consider and vote on a proposal to approve an amendment to the OPKO Health, Inc. 2007 Equity Incentive Plan, or the 2007 Plan, to increase the aggregate number of shares of common stock, par value $0.01 per share, of OPKO, or the OPKO common stock, authorized for issuance pursuant to the 2007 Plan from 35 million shares to 55 million shares of OPKO common stock, which we refer to as the OPKO Plan Amendment Proposal.

 

  3. To consider and vote on a proposal to approve an amendment to OPKO’s amended and restated certificate of incorporation, to increase the authorized number of shares of the OPKO common stock that OPKO may issue from 500 million shares to 750 million shares, which we refer to as the OPKO Authorized Share Increase Proposal.

 

  4. To consider and vote on a proposal to approve the issuance of shares of OPKO common stock and other securities exercisable for shares of OPKO common stock to the stockholders of PROLOR Biotech, Inc., or PROLOR, a Nevada corporation, in connection with the transactions contemplated by the Agreement and Plan of Merger, or the Merger Agreement, dated as of April 23, 2013, among PROLOR, OPKO and POM Acquisition, Inc., or POM, a Nevada corporation and a wholly owned subsidiary of OPKO formed for the purpose of facilitating the merger of POM with and into PROLOR, or the Merger, which we refer to as the OPKO Share Issuance Proposal.

 

  5. To consider and vote on a proposal to approve the adjournment of the OPKO annual meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the foregoing proposals.

 

  6. To conduct any other business as may properly come before the OPKO annual meeting or any adjournment or postponement thereof.

OPKO’s Board of Directors recommends that OPKO’s stockholders vote “FOR” the election of the ten director nominees named in this joint proxy statement /prospectus and “FOR” each of the other proposals described above. The approval of the OPKO Share Issuance Proposal is required for the completion of the Merger.

OPKO’s Board of Directors has fixed July 22, 2013 as the record date for the determination of stockholders entitled to notice of, and to vote at, the OPKO annual meeting and any adjournment or postponement thereof. Only holders of record of shares of OPKO common stock at the close of business on the record date are entitled to notice of, and to vote at, the OPKO annual meeting. At the close of business on the record date, there were issued and outstanding                  shares of OPKO common stock. A list of the holders of OPKO common stock entitled to vote at the OPKO annual meeting will be available for examination by any OPKO stockholder, for any purpose germane to the OPKO annual meeting, at OPKO’s principal executive offices at 4400 Biscayne Blvd., Miami, Florida 33137, for ten days before the OPKO annual meeting, during normal business hours, and at the time and place of the OPKO annual meeting as required by law.


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Your vote is important. All OPKO stockholders are cordially invited to attend the OPKO annual meeting in person. However, even if you plan to attend the OPKO annual meeting in person, OPKO requests that you sign and return the enclosed proxy card or vote over the Internet or by telephone as instructed on the enclosed proxy card to ensure that your shares of OPKO common stock will be represented at the OPKO annual meeting if you are unable to attend. If you fail to return your proxy card or to vote by telephone or over the Internet, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the OPKO annual meeting. Such action will also have the same effect as a vote “AGAINST” the OPKO Authorized Share Increase Proposal but will have no effect on the outcome of any of the other proposals to be voted on at the OPKO annual meeting, except to the extent that there are insufficient shares voted at the meeting to meet the New York Stock Exchange requirements applicable to the approval of the OPKO Share Issuance Proposal and the OPKO Plan Amendment Proposal. None of the proposals to be considered at the OPKO annual meeting can be approved unless a quorum is present at the meeting.

OPKO is first mailing these proxy solicitation materials on or about                 , 2013 to all stockholders of record entitled to vote at the OPKO annual meeting.

This joint proxy statement/prospectus provides you with detailed information about the OPKO annual meeting, the Merger Agreement and the Merger and the other business to be considered by the OPKO stockholders at the OPKO annual meeting. OPKO encourages you to read this entire document carefully, including the Merger Agreement, a copy of which is attached as Annex A to this joint proxy statement/prospectus and is incorporated by reference into this joint proxy statement/prospectus. Please pay particular attention to the section titled “Risk Factors,” beginning on page 36, for a discussion of the risks related to the Merger and to ownership of OPKO common stock after the Merger is completed.

By Order of the OPKO Board of Directors,

Kate Inman

Secretary

                    , 2013


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PROLOR BIOTECH, INC.

7 Golda Meir Street

Weizmann Science Park

Nes-Ziona, Israel L3 74140

NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS TO BE HELD AUGUST 28, 2013

To the Stockholders of PROLOR Biotech, Inc.:

You are invited to attend the special meeting of stockholders of PROLOR Biotech, Inc., or PROLOR, a Nevada corporation, or the PROLOR special meeting, which will be held on Wednesday, August 28, 2013, at 10:00 a.m., local time, at PROLOR’s headquarters located at 7 Golda Meir Street, Weizmann Science Park, Nes-Ziona, Israel L3 74140 for the following purposes:

 

  1. To consider and vote on a proposal to approve and adopt the Agreement and Plan of Merger, or the Merger Agreement, dated as of April 23, 2013, among PROLOR, OPKO Health, Inc., or OPKO, a Delaware corporation, and POM Acquisition, Inc., a wholly owned subsidiary of OPKO formed for the purpose of facilitating the merger of POM Acquisition, Inc. with and into PROLOR, or the Merger, and the transactions contemplated by such agreement, including the Merger, which we refer to as the PROLOR Merger Proposal.

 

  2. To consider and vote on a proposal to approve, on an advisory basis, the “golden parachute” compensation that PROLOR’s named executive officers may potentially receive in connection with the Merger.

 

  3. To consider and vote on a proposal to approve the adjournment of the PROLOR special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the PROLOR Merger Proposal.

 

  4. To conduct any other business as may properly come before the PROLOR special meeting or any adjournment or postponement thereof.

PROLOR’s Board of Directors recommends that PROLOR stockholders vote “FOR” each of the foregoing proposals. The approval by PROLOR’s stockholders of the PROLOR Merger Proposal is required for the completion of the Merger.

PROLOR’s Board of Directors has fixed July 22, 2013 as the record date for the determination of stockholders entitled to notice of, and to vote at, the PROLOR special meeting and any adjournment or postponement thereof. Only holders of record of shares of PROLOR common stock at the close of business on the record date are entitled to notice of, and to vote at, the PROLOR special meeting. At the close of business on the record date, PROLOR had outstanding and entitled to vote                 shares of common stock.

Your vote is important. All PROLOR stockholders are cordially invited to attend the PROLOR special meeting in person. However, even if you plan to attend the PROLOR special meeting in person, PROLOR requests that you sign and return the enclosed proxy card or vote over the Internet or by telephone as instructed on the enclosed proxy card and thus ensure that your shares of PROLOR common stock will be represented at the PROLOR special meeting if you are unable to attend. If you fail to return your proxy card or to vote by telephone or over the Internet, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the PROLOR special meeting. Such action will also have the same effect as a vote “AGAINST” the approval of the PROLOR Merger Proposal but will have no effect on the outcome of any of the other proposals to be voted on at the PROLOR special meeting. None of the proposals to be considered at the PROLOR special meeting can be approved unless a quorum is present at the meeting.

PROLOR is first mailing these proxy solicitation materials on or about                 , 2013 to all stockholders of record entitled to vote at the PROLOR special meeting.


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This joint proxy statement/prospectus provides you with detailed information about the PROLOR special meeting, the Merger Agreement and the Merger and the other business to be considered by PROLOR’s stockholders at the PROLOR special meeting. PROLOR encourages you to read this entire document carefully, including the Merger Agreement, a copy of which is attached as Annex A to this joint proxy statement/prospectus and is incorporated by reference into this joint proxy statement/prospectus. Please pay particular attention to the section titled “Risk Factors,” beginning on page 36, for a discussion of the risks related to the Merger and to ownership of common stock, par value $0.01 per share, of OPKO, after the Merger is completed.

By Order of the PROLOR Board of Directors,

Abraham Havron

Chief Executive Officer

                , 2013


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TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS ABOUT THE MERGER, THE OPKO ANNUAL MEETING AND THE PROLOR SPECIAL MEETING

     1   

SUMMARY

     12   

The Companies

     12   

The Merger

     13   

What PROLOR Stockholders Will Receive in the Merger

     13   

Ownership of OPKO After the Completion of the Merger

     13   

Treatment of PROLOR Stock Options and Warrants

     14   

What OPKO Stockholders Will Receive in the Merger

     15   

Treatment of OPKO Equity Awards

     15   

Board of Directors and Executive Officers of OPKO After the Completion of the Merger

     15   

PROLOR Severance Arrangements

     15   

Recommendation of OPKO’s Board of Directors and its Reasons for the Merger

     16   

Recommendation of PROLOR’s Board of Directors and its Reasons for the Merger

     16   

Opinion of Financial Advisor to OPKO’s Board of Directors

     16   

Opinion of Financial Advisor to the Special Committee of PROLOR’s Board of Directors

     16   

Interests of OPKO and PROLOR Directors and Executive Officers in the Merger

     17   

Anticipated Accounting Treatment of the Merger

     17   

Material United States Federal Income Tax Consequences of the Mergers

     18   

No Appraisal Rights

     18   

Regulatory Approvals

     18   

Conditions to the Completion of the Merger

     19   

Restrictions on Solicitation

     21   

Termination of the Merger Agreement

     22   

Termination Fees and Expenses

     23   

Rights of PROLOR Stockholders Will Change as a Result of the Merger

     24   

Risk Factors

     24   

Matters to Be Considered at the OPKO Annual Meeting and PROLOR Special Meeting

     24   

Legal Proceedings Related to the Merger

     26   

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF OPKO

     27   

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF PROLOR

     29   

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

     30   

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

     31   

COMPARATIVE MARKET PRICE DATA AND DIVIDEND INFORMATION

     32   

Stock Prices

     32   

Dividends

     32   

Comparative Per Share Market Value Data

     33   

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     34   

RISK FACTORS

     36   

Risks Related to the Merger

     36   

Risks Related to the Combined Company if the Merger Is Completed

     41   

Other Risks Related to OPKO and PROLOR

     45   

THE MERGER

     46   

Structure of the Merger

     46   

What PROLOR Stockholders Will Receive in the Merger

     46   

Ownership of OPKO After the Completion of the Merger

     47   

Treatment of PROLOR Stock Options and Warrants

     47   

What OPKO Stockholders Will Receive in the Merger

     48   


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Treatment of OPKO Stock Options and Restricted Stock

     48   

Background of the Merger

     48   

Recommendation of OPKO’s Board of Directors and its Reasons for the Merger

     53   

Recommendation of PROLOR’s Board of Directors and its Reasons for the Merger

     56   

Opinion of Financial Advisor to OPKO’s Board of Directors

     58   

Opinion of Financial Advisor to the Special Committee of PROLOR’s Board of Directors

     64   

Certain Financial Forecasts Utilized by PROLOR in Connection with the Merger

     70   

Board of Directors and Executive Officers of OPKO After the Completion of the Merger

     73   

Interests of OPKO and PROLOR Directors and Executive Officers in the Merger

     73   

Anticipated Accounting Treatment

     74   

U.S. Federal Income Tax Treatment of the Merger

     74   

Israeli Income Tax Treatment of the Merger

     74   

Regulatory Approvals Required for the Merger

     74   

Restrictions on Sales of Shares of OPKO Common Stock Received in the Merger

     75   

Appraisal Rights

     75   

Listing of OPKO Common Stock; Delisting and Deregistration of PROLOR Common Stock

     75   

Legal Proceedings Related to the Merger

     75   

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGERS

     77   

ISRAELI INCOME TAX TREATMENT OF THE MERGER

     80   

THE MERGER AGREEMENT

     82   

Terms of the Merger

     82   

Completion of the Merger

     82   

Merger Consideration

     82   

Treatment of PROLOR Stock Options and Warrants

     83   

Exchange of PROLOR Stock Certificates

     84   

Representations and Warranties

     85   

Certain Covenants of the Parties

     89   

Restrictions on Solicitation

     92   

Recommendation of PROLOR’s Board of Directors; Change of Recommendation

     93   

Preparation of Joint Proxy Statement/Prospectus and Registration Statement on Form S-4

     94   

Stockholder Meetings

     94   

Regulatory Approvals

     94   

Employee Benefits

     95   

Indemnification and Insurance for Directors and Officers

     95   

Israeli Income Tax Ruling

     96   

Conditions to the Completion of the Merger

     96   

Termination of the Merger Agreement

     98   

Termination Fees and Expenses

     99   

Amendments

     101   

Governing Law

     101   

SEVERANCE ARRANGEMENTS WITH EXECUTIVE OFFICERS OF PROLOR

     102   

INFORMATION ABOUT THE COMPANIES

     104   

OPKO Health, Inc.

     104   

PROLOR Biotech, Inc.

     106   

POM Acquisition, Inc.

     107   

OPKO EXECUTIVE OFFICERS AND DIRECTORS

     108   

OPKO CORPORATE GOVERNANCE

     109   

Director Independence

     109   

Board of Directors Voting

     110   

 

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Board Leadership Structure

     110   

Board Role in Risk Oversight

     110   

Meetings and Committees of the Board of Directors

     111   

Executive Sessions; Presiding Director

     111   

Standing Committees of the Board of Directors

     111   

Audit Committee

     111   

Compensation Committee

     112   

Corporate Governance and Nominating Committee

     113   

Director Selection Criteria

     113   

Stockholder Nominations

     114   

Stockholder Communications with OPKO’s Board of Directors

     114   

Employee Communications with the Audit Committee

     114   

Certain Relationships and Related Party Transactions of OPKO

     114   

OPKO’s Policies Regarding Related Party Transactions

     117   

Section 16(a) Beneficial Ownership Reporting Compliance

     118   

OPKO COMPENSATION DISCUSSION AND ANALYSIS

     119   

Benchmarking of Cash and Equity Compensation

     119   

Elements of Compensation

     120   

Advisory Vote on Executive Compensation

     121   

Section 162(m) of the Internal Revenue Code

     122   

Compensation Committee Interlocks and Insider Participation

     122   

OPKO COMPENSATION COMMITTEE REPORT

     123   

OPKO EXECUTIVE COMPENSATION

     124   

Summary Compensation Table for 2010-2012

     124   

Grants of Plan-Based Awards

     125   

Outstanding Equity Awards at Fiscal Year-End for 2012

     125   

Option Exercises and Stock Vested

     126   

Pension Benefits

     126   

Nonqualified Deferred Contribution and Other Nonqualified Deferred Compensation Plan

     126   

Employment Agreements and Change in Control Arrangements

     126   

Compensation Policies and Practices as Related to Risk Management

     127   

OPKO DIRECTOR COMPENSATION

     128   

Fiscal 2012 Director Compensation

     128   

OPKO SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     129   

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF OPKO

     131   

Audit Committee Policy for Pre-approval of Independent Auditor Services

     131   

OPKO AUDIT COMMITTEE REPORT

     132   

THE 2013 ANNUAL MEETING OF OPKO STOCKHOLDERS

     133   

Date, Time and Place

     133   

OPKO Record Date; Shares Entitled to Vote

     133   

Quorum

     133   

Required Vote

     134   

Counting of Votes; Treatment of Abstentions and Incomplete Proxies; Broker Non-Votes

     134   

Principal Share Ownership

     135   

Revocability of Proxies and Changes to an OPKO Stockholder’s Vote

     137   

Delivery of Proxy Materials to Households Where Two or More OPKO Stockholders Reside

     137   

Attending the OPKO Annual Meeting

     137   

Other Matters

     138   

 

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OPKO PROPOSALS

     139   

OPKO Proposal No. 1: Election of Directors

     139   

OPKO Proposal No. 2: Approval of Amendment to the OPKO 2007 Equity Incentive Plan

     143   

OPKO Proposal No. 3: Approval of an Amendment to the OPKO Charter, to Increase the Authorized Number of Shares of Common Stock that OPKO May Issue from 500 Million Shares to 750 Million Shares

     148   

OPKO Proposal No. 4: Approval of the Issuance of OPKO Common Stock in Connection with the Merger

     149   

OPKO Proposal No. 5: Approval of the Adjournment of the OPKO Annual Meeting, if Necessary, to Solicit Additional Proxies if There Are Not Sufficient Votes in Favor of the Foregoing Proposals

     150   

THE SPECIAL MEETING OF PROLOR STOCKHOLDERS

     151   

General

     151   

PROLOR Record Date and Principal Share Ownership

     151   

Quorum

     151   

Required Vote

     152   

Counting of Votes; Treatment of Abstentations and Incomplete Proxies; Broker Non-Votes

     152   

Principal Share Ownership

     153   

Voting

     153   

Counting Votes

     154   

Revocability of Proxies

     154   

Delivery of Proxy Materials to Households Where Two or More PROLOR Stockholders Reside

     155   

Attending the PROLOR Special Meeting

     155   

Other Matters

     155   

PROLOR PROPOSALS

     156   

PROLOR Proposal No. 1: Approval and Adoption of the Merger Agreement and the Transactions Contemplated Thereby, Including the Merger

     156   

PROLOR Proposal No.  2: Approval, on an Advisory Basis, of the “Golden Parachute” Compensation that PROLOR Named Executive Officers May Potentially Receive in Connection With the Merger

     156   

PROLOR Proposal No.  3: Approval of the Adjournment of the PROLOR Special Meeting, if Necessary, to Solicit Additional Proxies if There Are Not Sufficient Votes in Favor of the PROLOR Merger Proposal

     156   

COMPARISON OF RIGHTS OF HOLDERS OF OPKO COMMON STOCK AND PROLOR COMMON STOCK

     157   

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS

     166   

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS

     171   

LEGAL MATTERS

     173   

EXPERTS

     174   

FUTURE STOCKHOLDER PROPOSALS

     175   

OPKO

     175   

PROLOR

     175   

WHERE YOU CAN FIND ADDITIONAL INFORMATION

     176   

Annex A – Agreement and Plan of Merger

     A-1   

Annex B – Opinion of Barrington Research Associates, Inc.

     B-1   

Annex C – Opinion of Oppenheimer & Co. Inc.

     C-1   

Annex D – Form of Amendment to the OPKO Health, Inc. 2007 Equity Incentive Plan

     D-1   

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER,

THE OPKO ANNUAL MEETING AND THE PROLOR SPECIAL MEETING

The following are some questions that you, as a stockholder of OPKO and/or PROLOR, may have regarding the Merger, the OPKO annual meeting and/or the PROLOR special meeting, together with brief answers to those questions. OPKO and PROLOR urge you to carefully read this joint proxy statement/prospectus in its entirety, including the annexes and other documents attached and/or referred to in this joint proxy statement/prospectus, because the information in this section does not provide all of the information that will be important to you with respect to the Merger, the OPKO annual meeting and/or the PROLOR special meeting.

 

Q: Why am I receiving these materials?

 

A: OPKO and PROLOR are sending these materials to their respective stockholders to help them decide how to vote their shares of OPKO common stock and/or PROLOR common stock, as the case may be, with respect to the proposed Merger and the other matters to be considered at their respective stockholder meetings.

This document constitutes both a joint proxy statement of OPKO and PROLOR and a prospectus of OPKO. It is a joint proxy statement because the boards of directors of both companies are soliciting proxies from their respective stockholders. It is a prospectus of OPKO because OPKO will use it in connection with the offering of shares of OPKO common stock to PROLOR stockholders in exchange for their shares of PROLOR common stock in connection with the Merger. You should read this document carefully as it contains important information about the Merger Agreement and the Merger, the OPKO annual meeting and the PROLOR special meeting.

 

Q: What will happen in the Merger?

 

A: OPKO and PROLOR entered into the Merger Agreement on April 23, 2013. The Merger Agreement contains the terms and conditions of the proposed business combination of OPKO and PROLOR. Under the Merger Agreement, POM, a wholly owned subsidiary of OPKO, will merge with and into PROLOR, with PROLOR surviving as a wholly owned subsidiary of OPKO. As promptly as practicable after the completion of the Merger, PROLOR will merge with and into a Delaware limited liability company, wholly owned by OPKO, with the Delaware limited liability company surviving as a wholly owned subsidiary of OPKO, which we refer to as the PROLOR-LLC Merger. We refer to the Merger and the PROLOR-LLC Merger collectively as the Mergers. A complete copy of the Merger Agreement is attached as Annex A to this joint proxy statement/prospectus and is incorporated by reference into this joint proxy statement/prospectus.

 

Q: Why are OPKO and PROLOR proposing to effect the Merger?

 

A: OPKO’s and PROLOR’s respective Boards of Directors each believe that the Merger will provide strategic and financial benefits to their respective stockholders. The transaction also will deliver value to PROLOR’s stockholders, who will receive merger consideration representing a 40% premium over the trading price of PROLOR common stock on April 8, 2013 and will have an opportunity to participate in the growth and opportunities of the combined company through their ownership of OPKO common stock received in connection with the Merger. To review the reasons for the Merger in greater detail, see “The Merger— Recommendation of OPKO’s Board of Directors and its Reasons for the Merger” and “The Merger— Recommendation of PROLOR’s Board of Directors and its Reasons for the Merger” beginning on pages 53 and 56, respectively.

 

Q: What will PROLOR stockholders receive in the Merger?

 

A:

As a result of the Merger, holders of PROLOR common stock will have the right to receive 0.9951 of a share of OPKO common stock in exchange for each share of PROLOR common stock they own, rounded up to the nearest whole share number. For example, if you own 1,000 shares of PROLOR common stock, upon completion of the Merger, you will have the right to receive 996 shares of OPKO common stock (995.1 shares, rounded up to the nearest share). Based on the number of shares of OPKO common stock and

 

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  PROLOR common stock outstanding as of             , 2013, the latest practicable date before the printing of this joint proxy statement/prospectus, if the Merger had been completed on such date, the holders of PROLOR common stock would have been entitled to receive shares of OPKO common stock representing approximately     % of all shares of OPKO common stock outstanding immediately following the completion of the Merger. OPKO stockholders would have continued to own their existing shares, which would not have been affected by the Merger, and such shares would have represented approximately     % of all shares of OPKO common stock outstanding immediately following the completion of the Merger. For a more complete discussion of what PROLOR’s stockholders will receive in connection with the Merger, see the sections titled “The Merger—What PROLOR Stockholders Will Receive in the Merger” and “The Merger—Ownership of OPKO After the Completion of the Merger” beginning on pages 46 and 47, respectively.

 

Q: Is the Exchange Ratio subject to adjustment based on changes in the prices of OPKO and/or PROLOR common stock?

 

A: No. The Exchange Ratio is fixed and no adjustments to the Exchange Ratio will be made based on changes in the price of either OPKO common stock or PROLOR common stock prior to the completion of the Merger. As a result of any such changes in stock price, the aggregate market value of the shares of OPKO common stock that a PROLOR stockholder is entitled to receive at the time that the Merger is completed could vary significantly from the value of such shares on the date of this joint proxy statement/prospectus, the date of the OPKO annual meeting, the date of the PROLOR special meeting or the date on which such PROLOR stockholder actually receives its shares of OPKO common stock. For a more complete discussion of the Exchange Ratio, see the section titled “The Merger—What PROLOR Stockholders Will Receive in the Merger” beginning on page 46.

 

Q: How does the Exchange Ratio impact the ownership of OPKO after the completion of the Merger?

 

A: Because the Exchange Ratio is fixed, to the extent that the number of shares of outstanding OPKO common stock or PROLOR common stock changes prior to the completion of the Merger, whether due to any new issuance of shares of OPKO common stock or PROLOR common stock, any exercise of any outstanding options or warrants to purchase shares of OPKO common stock or PROLOR common stock, or otherwise, there will automatically occur a corresponding change in the relative ownership percentages of the combined company by the current OPKO stockholders and the current PROLOR stockholders.

For a more complete discussion of the ownership of OPKO after the completion of the Merger, see the section titled “The Merger—Ownership of OPKO After the Completion of the Merger” beginning on page 47.

 

Q: What will holders of PROLOR stock options and warrants receive in the Merger?

 

A:

Upon completion of the Merger, each option to purchase one share of PROLOR common stock that is outstanding and unexercised immediately prior to the effective time of the Merger, or the Effective Time, will be converted into an option to purchase OPKO common stock and (1) the number of shares of OPKO common stock subject to such option will be adjusted to an amount equal to the product of (a) the number of shares of PROLOR common stock subject to such option immediately before the Effective Time and (b) the Exchange Ratio, rounded down to the nearest whole share, and (2) the per share exercise price of such option will be adjusted to a price equal to the quotient of (a) the per share exercise price of such option and (b) the Exchange Ratio, rounded up to the nearest whole cent. OPKO will assume each such stock option in accordance with the terms and conditions of the applicable PROLOR equity incentive plan and stock option agreement relating to such PROLOR stock option, subject to the adjustments described in the preceding sentence and the substitution of OPKO and its Compensation Committee for PROLOR and its Compensation Committee with respect to the administration of each PROLOR equity incentive plan. In addition, pursuant to the stock option agreements governing PROLOR’s outstanding stock option awards, each PROLOR stock option will become fully vested and exercisable upon the consummation of the Merger. Abraham Havron, Ph.D., PROLOR’s Chief Executive Officer and a Director, Shai Novik,

 

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  PROLOR’s President and a Director, and Eyal Fima, PROLOR’s Chief Operating Officer, have each executed waiver agreements with PROLOR whereby they have waived their right to the acceleration of the vesting of the stock options that were granted to each of them in February 2013 upon the closing of the Merger.

For example, if you hold an option to purchase up to 1,000 shares of PROLOR common stock at an exercise price of $2.00 per share, upon completion of the Merger, such option will be converted into an option to purchase up to 995 shares of OPKO common stock (995.1 shares rounded down to the nearest whole share) at an exercise price of $2.01 per share ($2.009 rounded up to the nearest whole cent).

Similarly, upon completion of the Merger and subject to the consent of the holder thereof, each warrant to purchase one share of PROLOR common stock that is outstanding and unexercised immediately prior to the Effective Time will be converted into a warrant to purchase OPKO common stock and (1) the number of shares of OPKO common stock subject to such warrant will be adjusted to an amount equal to the product of (a) the number of shares of PROLOR common stock subject to such warrant immediately before the Effective Time and (b) the Exchange Ratio, rounded up to the nearest whole share, and (2) the per share exercise price of such warrant will be adjusted to a price equal to the quotient of (a) the per share exercise price of such warrant and (b) the Exchange Ratio, rounded up to the nearest whole cent. OPKO will assume each such warrant in accordance with the terms and conditions thereof, subject to the conditions and adjustments described in the preceding sentence.

For example, if you hold a warrant to purchase up to 1,000 shares of PROLOR common stock at an exercise price of $2.00 per share, upon completion of the Merger, such warrant will be converted into a warrant to purchase up to 996 shares of OPKO common stock (995.1 shares rounded up to the nearest whole share) at an exercise price of $2.01 per share ($2.009 rounded up to the nearest whole cent).

For a more complete discussion of what holders of PROLOR stock options and warrants will receive in connection with the Merger, see the section titled “The Merger—Treatment of PROLOR Stock Options and Warrants” beginning on page 47.

 

Q: What is required to complete the Merger?

 

A: In order for the Merger to be completed:

 

   

OPKO’s stockholders must approve the OPKO Share Issuance Proposal;

 

   

PROLOR’s stockholders must approve the PROLOR Merger Proposal; and

 

   

each of the other conditions to the completion of the Merger contained in the Merger Agreement (including the receipt of required regulatory approvals) must be satisfied or waived on or prior to the completion of the Merger.

For a more complete discussion of the conditions to the completion of the Merger under the Merger Agreement, see the section titled “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 96.

 

Q: How will OPKO’s stockholders be affected by the Merger and the issuance of shares of OPKO common stock to PROLOR’s stockholders in connection with the Merger?

 

A: Immediately after the completion of the Merger, each OPKO stockholder will have the same number of shares of OPKO common stock that such stockholder held immediately prior to the completion of the Merger. However, upon issuance of the shares of OPKO common stock to PROLOR stockholders in connection with the Merger, each share of OPKO common stock outstanding immediately prior to the completion of the Merger will represent a smaller percentage of the aggregate number of shares of OPKO common stock (and therefore a smaller percentage of the outstanding voting power and equity value) outstanding after the completion of the Merger than it did immediately prior to completion of the Merger.

 

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Q: When do OPKO and PROLOR expect to complete the Merger?

 

A: OPKO and PROLOR currently expect to complete the Merger in the second half of 2013. Completion of the Merger will only be possible, however, if all conditions to the completion of the Merger contained in the Merger Agreement are satisfied or waived, including approval of the OPKO Share Issuance Proposal and the PROLOR Merger Proposal and receipt of the required regulatory approvals. Therefore, factors outside of either company’s control could delay or prevent the completion of the Merger.

 

Q: What risks should I consider in deciding whether to vote in favor of the proposals described herein, including if applicable the OPKO Share Issuance Proposal and/or the PROLOR Merger Proposal?

 

A: You should carefully review the section of this joint proxy statement/prospectus titled “Risk Factors” beginning on page 36, which presents risks and uncertainties related to the Merger, the combined company and the business and operations of each of OPKO and PROLOR.

 

Q: If I am a PROLOR stockholder, what are the material U.S. federal income tax consequences of the Merger to me?

 

A: OPKO and PROLOR intend for the Mergers to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, or the Code. Assuming the Mergers qualify as a “reorganization,” PROLOR’s stockholders will not recognize gain or loss for U.S. federal income tax purposes upon the exchange of their shares of PROLOR common stock for shares of OPKO common stock in connection with the Merger or upon the closing of the PROLOR-LLC Merger.

Tax matters are very complicated, and the tax consequences of the Mergers to a particular stockholder will depend on such stockholder’s individual circumstances. Accordingly, OPKO and PROLOR urge you to consult your tax advisor for a full understanding of the tax consequences of the Mergers to you, including the applicability and effect of federal, state, local and foreign income and other tax laws. For a more complete discussion of the material U.S. federal income tax consequences of the Mergers, see the section titled “Material United States Federal Income Tax Consequences of the Mergers” beginning on page 77.

 

Q: If I am a PROLOR stockholder, what are the material Israeli income tax consequences of the Merger to me?

 

A: As a condition to the obligations of PROLOR to consummate the Merger, PROLOR is seeking a ruling from the Israeli Income Tax Authority, or the ITA, whereby the Merger will be treated as a tax-exempt transaction under Israeli law. Pursuant to the Merger Agreement, PROLOR may waive such condition and, absent an interim arrangement with the ITA, the consideration paid to PROLOR stockholders that are Israeli tax payors will be subject to Israeli tax. For a more complete discussion of the anticipated effects of such tax ruling, if received, see “Israeli Income Tax Treatment of the Merger” beginning on page 80.

 

Q: Do I have appraisal rights in connection with the Merger?

 

A: No. Neither OPKO stockholders nor PROLOR stockholders will be entitled to exercise any appraisal rights in connection with the Merger under Delaware law, Nevada law or otherwise.

 

Q: When and where will the OPKO annual meeting take place?

 

A: The OPKO annual meeting will be held on August 28, 2013, at 10:00 a.m., local time, at OPKO’s headquarters located at 4400 Biscayne Boulevard, Miami FL 33137.

 

Q: When and where will the PROLOR special meeting take place?

 

A: The PROLOR special meeting will be held on August 28, 2013, at 10:00 a.m., local time, at PROLOR’s headquarters located at 7 Golda Meir Street, Weizmann Science Park, Nes-Ziona, Israel L3 74140.

 

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Q: Who can attend and vote at the OPKO annual meeting?

 

A: All holders of record of OPKO’s common stock as of the close of business on July 22, 2013, the record date for the OPKO annual meeting, are entitled to receive notice of and to vote at the OPKO annual meeting.

 

Q: Who can attend and vote at the PROLOR special meeting?

 

A: All holders of record of PROLOR’s common stock as of the close of business on July 22, 2013, the record date for the PROLOR special meeting, are entitled to receive notice of and to vote at the PROLOR special meeting.

 

Q: If I am an OPKO stockholder, what am I being asked to vote on at the OPKO annual meeting?

 

A: If you are a holder of record of OPKO common stock as of the close of business on July 22, 2013, you will be asked to consider and vote upon the following proposals at the OPKO annual meeting:

 

   

a proposal to elect as directors the ten nominees named in this joint proxy statement/prospectus for a term of office expiring at the 2014 annual meeting of stockholders and until their respective successors are duly elected and qualified;

 

   

the OPKO Plan Amendment Proposal;

 

   

the OPKO Authorized Share Increase Proposal;

 

   

the OPKO Share Issuance Proposal;

 

   

the OPKO Adjournment Proposal; and

 

   

such other matters as may properly come before the OPKO annual meeting or any adjournment or postponement thereof.

OPKO’s Board of Directors recommends that OPKO’s stockholders vote “FOR” the election of the ten director nominees named in this joint proxy statement/prospectus and “FOR” each of the other proposals described above. The approval of the OPKO Share Issuance Proposal is required for the completion of the Merger.

 

Q: What vote is required for the approval of each of the proposals to be voted on at the OPKO annual meeting?

 

A: If a quorum is present, the following votes will be required for the approval of the proposals to be voted on at the OPKO annual meeting:

 

   

Election of directors. A nominee for director will be elected to OPKO’s Board of Directors if the votes cast in favor of such nominee by the holders of shares of OPKO common stock present in person or represented by proxy and entitled to vote at the OPKO annual meeting exceed the votes cast against such nominee.

 

   

OPKO Plan Amendment Proposal. The OPKO Plan Amendment Proposal will be approved if the votes cast in favor of such proposal by the holders of shares of OPKO common stock present in person or represented by proxy and entitled to vote at the OPKO annual meeting exceed the votes cast against such proposal; provided that, pursuant to the NYSE’s shareholder approval policy, the total votes cast on the proposal must represent over 50% of all securities entitled to vote on the proposal.

 

   

OPKO Authorized Share Increase Proposal. The OPKO Authorized Share Increase Proposal will be approved if the holders of a majority of the shares of OPKO common stock outstanding and entitled to vote at the OPKO annual meeting vote in favor of the proposal.

 

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OPKO Share Issuance Proposal. The OPKO Share Issuance Proposal will be approved if the votes cast in favor of such proposal by the holders of shares of OPKO common stock present in person or represented by proxy and entitled to vote at the OPKO annual meeting exceed the votes cast against such proposal; provided that, pursuant to the NYSE’s shareholder approval policy, the total votes cast on the proposal must represent over 50% of all securities entitled to vote on the proposal.

 

   

OPKO Adjournment Proposal. The OPKO Adjournment Proposal will be approved if the votes cast in favor of such proposal by the holders of shares of OPKO common stock present in person or represented by proxy and entitled to vote at the OPKO annual meeting exceed the votes cast against such proposal.

 

Q: Do OPKO’s or PROLOR’s officers and directors own shares of OPKO common stock that are entitled to be voted at the OPKO annual meeting?

 

A: Yes. At the close of business on July 22, 2013, OPKO’s directors and executive officers and their affiliates had the right to vote approximately         million shares of the then-outstanding OPKO common stock (excluding any shares of OPKO common stock deliverable upon exercise of outstanding stock options or warrants or underlying unvested restricted stock awards) at the OPKO annual meeting, which shares represented approximately         % of the OPKO common stock outstanding and entitled to vote at the OPKO annual meeting. Excluding shares of OPKO common stock held by PROLOR officers and directors who are also directors and executive officers of OPKO, at the close of business on July 22, 2013, PROLOR’s directors and executive officers and their affiliates had the right to vote approximately             million shares of the then-outstanding OPKO common stock, which shares represented approximately         % of the OPKO common stock outstanding and entitled to vote at the OPKO annual meeting. OPKO expects that its and PROLOR’s directors and executive officers will vote their shares “FOR” approval of each of the proposals to be voted on at the OPKO annual meeting, including the OPKO Share Issuance Proposal. As a result, the OPKO Share Issuance Proposal and the other proposals to be voted on at the OPKO annual meeting may be approved even if a majority of OPKO’s unaffiliated stockholders vote against such proposal.

 

Q: If I am a PROLOR stockholder, what am I being asked to vote on at the PROLOR special meeting?

 

A: If you are a holder of record of PROLOR common stock as of the close of business on July 22, 2013, you will be asked to consider and vote upon the following proposals at the PROLOR special meeting:

 

   

the PROLOR Merger Proposal;

 

   

the PROLOR Compensation Advisory Vote Proposal;

 

   

the PROLOR Adjournment Proposal; and

 

   

such other matters as may properly come before the PROLOR special meeting or any adjournment or postponement thereof.

PROLOR’s Board of Directors recommends that PROLOR stockholders vote “FOR” each of the foregoing proposals. The approval by PROLOR’s stockholders of the PROLOR Merger Proposal is required for the completion of the Merger.

 

Q: What vote is required for the approval of each of the proposals to be voted on at the PROLOR special meeting?

 

A: If a quorum is present, the following votes will be required for the approval of the proposals to be voted on at the PROLOR special meeting:

 

   

PROLOR Merger Proposal. The PROLOR Merger Proposal will be approved if the holders of a majority of the shares of PROLOR common stock outstanding and entitled to vote at the PROLOR special meeting vote in favor of the proposal.

 

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PROLOR Compensation Advisory Vote Proposal. The PROLOR Compensation Advisory Vote Proposal will be approved if the holders of a majority of the shares of PROLOR common stock present in person or represented by proxy and entitled to vote at the PROLOR special meeting vote in favor of the proposal. The PROLOR Compensation Advisory Vote Proposal is advisory in nature and will not be binding on PROLOR or PROLOR’s Board of Directors and will not impact whether or not the compensation is paid.

 

   

PROLOR Adjournment Proposal. The PROLOR Adjournment Proposal will be approved if the holders of a majority of the shares of PROLOR common stock present in person or represented by proxy and entitled to vote at the PROLOR special meeting vote in favor of the proposal.

 

Q: Do PROLOR’s or OPKO’s officers and directors own shares of PROLOR common stock that are entitled to be voted at the PROLOR special meeting?

 

A: Yes. At the close of business on July 22, 2013, PROLOR’s directors and executive officers and their affiliates had the right to vote approximately             million shares of the then-outstanding PROLOR common stock (excluding any shares of PROLOR common stock deliverable upon exercise of outstanding stock options or warrants) at the PROLOR special meeting, which shares represented approximately         % of the PROLOR common stock outstanding and entitled to vote at the PROLOR special meeting. Excluding shares of PROLOR common stock held by OPKO officers and directors who are also directors and executive officers of PROLOR, at the close of business on July 22, 2013, OPKO’s directors and executive officers and their affiliates had the right to vote approximately         million shares of the then-outstanding PROLOR common stock, which shares represented approximately         % of the PROLOR common stock outstanding and entitled to vote at the PROLOR special meeting. PROLOR expects that its and OPKO’s directors and executive officers will vote their shares “FOR” approval of each of the PROLOR Merger Proposal and the PROLOR Compensation Advisory Vote Proposal. As a result, the PROLOR Merger Proposal and the PROLOR Compensation Advisory Vote Proposal may be approved even if a majority of PROLOR’s unaffiliated stockholders vote against such proposals.

 

Q: Why is PROLOR asking its stockholders to vote on the PROLOR Compensation Advisory Vote Proposal?

 

A: PROLOR is asking its stockholders to cast an advisory (non-binding) vote to approve the PROLOR Compensation Advisory Vote Proposal because SEC rules require a company that is being acquired to seek an advisory (non-binding) vote of its stockholders with respect to certain compensation that its named executive officers may potentially receive as a result of the acquisition.

 

Q: What will happen if PROLOR’s stockholders do not approve the PROLOR Compensation Advisory Vote Proposal?

 

A: The advisory approval by PROLOR’s stockholders of the PROLOR Compensation Advisory Vote Proposal is not a condition to the completion of the Merger. Because the vote is advisory in nature, it will not be binding on either PROLOR or OPKO and will have no effect on whether the Merger is completed or whether the compensation subject to such vote is paid.

 

Q: What do I need to do now and how do I vote?

 

A: OPKO and PROLOR urge you to carefully read this joint proxy statement/prospectus in its entirety, including the annexes and other documents attached and/or referred to in this joint proxy statement/prospectus, and to consider how the Merger may affect you.

If you are an OPKO stockholder, you may vote your shares in any of the following ways:

 

   

by completing, executing and mailing your signed OPKO proxy card in the enclosed postage paid return envelope;

 

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by calling the toll-free number listed on the enclosed OPKO proxy card and following the instructions provided;

 

   

by accessing the website indicated on the enclosed OPKO proxy card and following the instructions provided; or

 

   

by attending the OPKO annual meeting and voting in person.

If you are a PROLOR stockholder, you may vote your shares in any of the following ways:

 

   

by completing, executing and mailing your signed PROLOR proxy card in the enclosed postage paid return envelope;

 

   

by calling the toll-free number listed on the enclosed PROLOR proxy card and following the instructions provided;

 

   

by accessing the website indicated on the enclosed PROLOR proxy card and following the instructions provided; or

 

   

by attending the PROLOR special meeting and voting in person.

If you elect to vote by telephone or on the Internet, please have your OPKO proxy card or PROLOR proxy card (as applicable) available when you submit your vote.

 

Q: What procedures must I follow if I wish to vote in person?

 

A: If your shares of OPKO common stock or PROLOR common stock are registered directly in your name with OPKO’s or PROLOR’s transfer agent, respectively, you are considered, with respect to those shares, the “stockholder of record,” and you will receive your proxy materials and proxy card directly from OPKO and/or PROLOR, as applicable. If you are an OPKO or PROLOR stockholder of record, you will be permitted to attend the meeting and vote in person upon presentation of a valid government-issued identification verifying your identity.

If your shares of OPKO common stock or PROLOR common stock are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in “street name,” and you will receive your proxy materials and proxy card from the broker or nominee holding your shares. As the beneficial owner, you are also invited to attend the OPKO annual meeting and/or the PROLOR special meeting, as applicable. However, because a beneficial owner is not the stockholder of record, you may not vote these shares in person at the OPKO annual meeting or PROLOR special meeting, as applicable, unless you obtain a “legal proxy” from the broker or other nominee that holds your shares giving you the right to vote the shares in person at the applicable meeting.

 

Q: May I revoke or change my vote after I have provided proxy instructions?

 

A: Yes. You may revoke or change your vote at any time before your proxy is voted at the OPKO annual meeting or the PROLOR special meeting, as applicable. If you are a stockholder of record, you may revoke or change your vote by:

 

   

sending a written notice stating that you would like to revoke your proxy to the address specified below;

 

   

submitting new proxy instructions on a new proxy card with a later date;

 

   

granting a subsequent proxy by telephone or over the Internet; or

 

   

attending the meeting and voting in person.

 

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Your attendance alone at the applicable stockholder meeting will not revoke your proxy. If you wish to revoke or change your vote by providing written notice to the applicable company, such notice should be addressed as follows:

 

   

with respect to votes relating to matters to be voted on at the OPKO annual meeting: 4400 Biscayne Boulevard, Miami, Florida 33137, Attn: Secretary.

 

   

with respect to votes relating to matters to be voted on at the PROLOR special meeting: 7 Golda Meir Street, Weizmann Science Park, Nes-Ziona, Israel 74140, Attn: Finance Director.

If you have instructed a broker or other nominee to vote your shares, you must follow directions received from your broker or other nominee in order to change those instructions.

 

Q: What happens if I do not return a proxy card or otherwise provide proxy instructions?

 

A: If you are an OPKO stockholder and you do not submit a proxy card, provide proxy instructions by telephone or over the Internet or vote in person at the OPKO annual meeting, your shares will not be counted as present for the purpose of determining the presence of a quorum, which is required to transact business at the OPKO annual meeting. If a quorum is present, your actions will have the same effect as a vote “AGAINST” the OPKO Authorized Share Increase Proposal but will have no effect on the outcome of any of the other proposals to be voted on at the OPKO annual meeting, except to the extent that there are insufficient shares voted at the meeting to meet the NYSE requirements applicable to the approval of the OPKO Share Issuance Proposal and the OPKO Plan Amendment Proposal.

If you are a PROLOR stockholder and you do not submit a proxy card, provide proxy instructions by telephone or over the Internet or vote in person at the PROLOR special meeting, your shares will not be counted as present for the purpose of determining the presence of a quorum, which is required to transact business at the PROLOR special meeting. If a quorum is present, your actions will have no effect on the outcomes of the PROLOR Adjournment Proposal and the PROLOR Compensation Advisory Vote Proposal. However, because the approval of the PROLOR Merger Proposal requires the affirmative vote of a majority of the shares of PROLOR common stock outstanding and entitled to vote at the PROLOR special meeting, your failure to submit a proxy card or otherwise vote your shares at the meeting will have the same effect as a vote “AGAINST” the PROLOR Merger Proposal.

 

Q: What happens if I submit a proxy without indicating how I wish to vote or abstain from voting with respect to any matter?

 

A: If you are an OPKO stockholder and you sign, date and mail your proxy card without indicating how you wish to vote, your proxy will be counted as present for the purpose of determining the presence of a quorum for the OPKO annual meeting and all of your shares will be voted “FOR” the election of each of the director nominees named in this joint proxy statement/prospectus and “FOR” the approval of each of the other proposals to be voted on at the OPKO annual meeting. However, if you submit a proxy card or provide proxy instructions by telephone or over the Internet and affirmatively elect to abstain from voting, your proxy will be counted as present for the purpose of determining the presence of a quorum for the OPKO annual meeting, but will not be voted at the OPKO annual meeting. Your abstention will have the same effect as a vote “AGAINST” the OPKO Authorized Share Increase Proposal. In addition, under guidance issued by the NYSE, your abstention will have the same effect as a vote “AGAINST” the OPKO Plan Amendment Proposal and the OPKO Share Issuance Proposal. Your abstention will have no effect on the outcome of any of the other proposals to be voted on at the OPKO annual meeting.

If you are a PROLOR stockholder and you sign, date and mail your proxy card without indicating how you wish to vote, your proxy will be counted as present for the purpose of determining the presence of a quorum for the PROLOR special meeting and all of your shares will be voted “FOR” each of the proposals to be voted on at the PROLOR special meeting. However, if you submit a proxy card or provide proxy instructions by telephone or over the Internet and affirmatively elect to abstain from voting, your proxy will

 

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be counted as present for the purpose of determining the presence of a quorum for the PROLOR special meeting, but will not be voted at the PROLOR special meeting. As a result, your abstention will have the same effect as a vote “AGAINST” each of the PROLOR Merger Proposal, the PROLOR Adjournment Proposal and the PROLOR Compensation Advisory Vote Proposal.

 

Q: If a broker or other nominee holds my shares in “street name,” will my broker or nominee vote my shares for me?

 

A: If your shares are held in “street name” in a stock brokerage account or by another nominee, you must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by your broker or other nominee. Please note that you may not vote shares held in street name by returning a proxy card directly to OPKO or PROLOR or by voting in person at your special meeting, as the case may be, unless you provide a “legal proxy,” which you must obtain from your broker or other nominee.

 

Q: What happens if I hold my shares in “street name” but do not provide voting instructions to my broker or other nominee?

 

A: Brokers or other nominees who hold shares in street name for a beneficial owner typically have the authority to vote in their discretion on “routine” proposals, even when they have not received instructions from the beneficial owner. However, brokers or other nominees are not allowed to exercise their voting discretion on matters that are determined to be “non-routine” without specific instructions from the beneficial owner. A broker non-vote occurs when a broker or other nominee does not receive such voting instructions from its customer on “non-routine” matters. Broker non-votes will not be counted for purposes of determining the presence of a quorum at the OPKO annual meeting, but will be counted for purposes of determining the presence of a quorum at the PROLOR special meeting.

OPKO and PROLOR believe that, other than the OPKO Authorized Share Increase Proposal, the OPKO Adjournment Proposal and the PROLOR Adjournment Proposal, each of the matters presented by it in this joint proxy statement/prospectus are “non-routine” matters. For this reason, OPKO and PROLOR urge you to give voting instructions to your broker or other nominee. If any “routine” matters are properly brought before the OPKO annual meeting or the PROLOR special meeting, then brokers and other nominees holding shares in street name will be permitted to vote those shares in their discretion for any such routine matters.

Broker non-votes will have the same effect as a vote “AGAINST” the PROLOR Merger Proposal. In addition, pursuant to the NYSE’s interpretations of its shareholder approval policies, broker non-votes will also have the effect of votes against each of the OPKO Plan Amendment Proposal and the OPKO Share Issuance Proposal unless holders of more than 50% of the shares of OPKO common stock entitled to vote on such proposal cast votes, in which case, broker non-votes will have no effect on the result of the vote. Broker non-votes will not have any effect on any of the OPKO director election proposal, the OPKO Authorized Share Increase Proposal, the OPKO Adjournment Proposal, the PROLOR Compensation Advisory Vote Proposal and the PROLOR Adjournment Proposal.

 

Q: What constitutes a quorum for the OPKO annual meeting and the PROLOR special meeting?

 

A: Stockholders who hold a majority of the voting power of all the outstanding shares of OPKO common stock entitled to vote, present in person or represented by proxy at the OPKO annual meeting, constitute a quorum to conduct business at the meeting.

Stockholders who hold a majority of the shares of PROLOR common stock entitled to vote, present in person or represented by proxy at the PROLOR special meeting, constitute a quorum to conduct business at the meeting.

 

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Q: Who is paying for this proxy solicitation?

 

A: Each of OPKO and PROLOR will bear its own expenses under the Merger Agreement, except that OPKO and PROLOR have agreed to share equally the expenses associated with the printing, filing and mailing of this joint proxy statement/prospectus, and any amendments or supplements to this joint proxy statement/prospectus.

OPKO and PROLOR may reimburse brokerage houses and other custodians, nominees and fiduciaries for their costs of soliciting and obtaining proxies from beneficial owners, including the costs of forwarding this joint proxy statement/prospectus and other solicitation materials to beneficial owners.

Each of OPKO and PROLOR may also retain the services of a professional proxy solicitor and, if so, will pay for the fees and expenses of its respective proxy solicitor’s services.

 

Q: Whom should I contact if I have any questions about the Merger, the OPKO annual meeting or the PROLOR special meeting?

 

A: If you have any questions about the Merger, the OPKO annual meeting or the PROLOR special meeting, or if you need assistance in submitting your proxy or voting your shares or need additional copies of this joint proxy statement/prospectus or the enclosed proxy card, you should contact:

 

OPKO Health, Inc.

4400 Biscayne Boulevard

Miami, Florida 33137

Attn: Secretary

(305) 575-4100

  

PROLOR Biotech, Inc.

7 Golda Meir Street

Weizmann Science Park

Nes-Ziona, Israel 74140

Attn: Finance Director

(866) 644-7811

 

Q: What do I do if I receive more than one joint proxy statement/prospectus or set of voting instructions?

 

A: If you hold shares directly as a record holder and also in “street name” or otherwise through a nominee, or if you hold both shares of OPKO common stock and PROLOR common stock, you may receive more than one joint proxy statement/prospectus and/or set of voting instructions relating to the OPKO annual meeting or PROLOR special meeting, as applicable. These should each be voted and/or returned separately in order to ensure that all of your shares are voted. A vote as a PROLOR stockholder will not constitute a vote as an OPKO stockholder on any matter, nor will a vote as an OPKO stockholder constitute a vote as a PROLOR stockholder on any matter.

 

Q: What happens if I sell my shares after the applicable record date, but before the OPKO annual meeting or the PROLOR special meeting, as applicable?

 

A: If you transfer your OPKO common stock or PROLOR common stock after the applicable record date, but before the date of the applicable meeting, you will retain your right to vote at the OPKO annual meeting or the PROLOR special meeting, as applicable. However, if you are a PROLOR stockholder, you will not have the right to receive any shares of OPKO common stock in exchange for your former shares of PROLOR common stock if and when the Merger is completed. In order to receive shares of OPKO common stock in exchange for your shares of PROLOR common stock, you must hold your PROLOR common stock through the completion of the Merger.

 

Q: Should I send in my stock certificates now?

 

A: No. Please do not send any stock certificates with your proxy card.

If you are a holder of PROLOR common stock, after the Merger is completed you will receive written instructions from American Stock Transfer & Trust Company, LLC, the exchange agent for the Merger, regarding how to exchange your PROLOR stock certificates for certificates representing shares of OPKO common stock.

OPKO stockholders will not be required to exchange their stock certificates in connection with the Merger and should not send in their stock certificates for exchange either now or after the Merger is completed.

 

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SUMMARY

This summary highlights selected information from this joint proxy statement/prospectus. It does not contain all of the information that is important to you with respect to the OPKO Share Issuance Proposal, the PROLOR Merger Proposal, the PROLOR Compensation Advisory Vote Proposal or any other matter described in this joint proxy statement/prospectus. OPKO and PROLOR urge you to carefully read this joint proxy statement/prospectus in its entirety, including the annexes and other documents attached and/or referred to in this joint proxy statement/prospectus, to fully understand the Merger. In particular, you should read the Merger Agreement, which is described elsewhere in this joint proxy statement/prospectus and attached as Annex A hereto. In addition, OPKO and PROLOR encourage you to read the information incorporated by reference into this joint proxy statement/prospectus, which includes important business and financial information about OPKO and PROLOR that has been filed with the SEC. You may obtain the information incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions in the section titled “Where You Can Find Additional Information” beginning on page 176.

When this joint proxy statement/prospectus refers to the “combined company,” it means OPKO and its subsidiaries and PROLOR and its subsidiaries, collectively.

The Companies

OPKO Health, Inc.

OPKO is a multi-national biopharmaceutical and diagnostics company that seeks to establish industry-leading positions in large and rapidly growing medical markets by leveraging its discovery, development and commercialization expertise and its novel and proprietary technologies. OPKO is developing a range of solutions to diagnose, treat and prevent various conditions, including molecular diagnostics tests, laboratory developed tests, or LDTs, point-of-care tests and proprietary pharmaceuticals and vaccines. OPKO plans to commercialize these solutions on a global basis in large and high growth markets, including emerging markets.

OPKO is headquartered in Miami, Florida. OPKO’s principal offices are located at 4400 Biscayne Boulevard, Miami, Florida 33137 and its phone number is (305) 575-4100. OPKO’s principal website is www.opko.com. The information contained on OPKO’s website is not deemed part of this joint proxy statement/prospectus. OPKO common stock is listed on the NYSE and trades under the symbol “OPK”. Additionally, OPKO intends to apply to list its shares on the Tel Aviv Stock Exchange prior to the closing of the Merger.

For a more complete discussion of OPKO’s business, see the section titled “Information About the Companies—OPKO Health, Inc.” beginning on page 104. Additional information about OPKO and its subsidiaries is also included in documents incorporated by reference into this joint proxy statement/prospectus. See the section titled “Where You Can Find Additional Information” beginning on page 176.

PROLOR Biotech, Inc.

PROLOR is a development stage biopharmaceutical company utilizing patented technology to develop longer-acting, proprietary versions of already-approved therapeutic proteins that currently generate billions of dollars in annual global sales. PROLOR has obtained certain exclusive worldwide rights from Washington University in St. Louis, Missouri to use a short, naturally-occurring amino acid sequence (peptide) that has the effect of slowing the removal from the body of the therapeutic protein to which it is attached. This Carboxyl Terminal Peptide, or CTP, can be readily attached to a wide array of existing therapeutic proteins, stabilizing the therapeutic protein in the bloodstream and extending its life span without additional toxicity or loss of desired biological activity. PROLOR is using the CTP technology to develop new, proprietary versions of certain existing therapeutic proteins that have longer life spans than therapeutic proteins without CTP. PROLOR believes that its products will have greatly improved therapeutic profiles and distinct market advantages.

 

 

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PROLOR is headquartered in Nes-Ziona, Israel. Its principal office address is 7 Golda Meir Street, Weizmann Science Park, Nes-Ziona, Israel 74140 and its phone number is (866) 644-7811. PROLOR’s principal website is www.prolor-biotech.com. The information contained on PROLOR’s website is not deemed part of this joint proxy statement/prospectus. PROLOR’s common stock is listed on the NYSE MKT and the Tel Aviv Stock Exchange and trades under the symbol “PBTH”.

For a more complete discussion of PROLOR’s business, see the section titled “Information About the Companies—PROLOR Biotech, Inc.” beginning on page 106. Additional information about PROLOR and its subsidiaries is also included in documents incorporated by reference into this joint proxy statement/prospectus. See the section titled “Where You Can Find Additional Information” beginning on page 176.

POM Acquisition, Inc.

POM is a wholly owned subsidiary of OPKO and was incorporated in Nevada in April 2013, solely for the purpose of facilitating the Merger. POM has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the Merger Agreement.

The Merger

OPKO, POM and PROLOR entered into the Merger Agreement, which provides that, subject to the terms and conditions of the Merger Agreement and in accordance with the Nevada Revised Statutes, or the NRS, upon completion of the Merger, POM will merge with and into PROLOR, with PROLOR continuing as the surviving entity and as a wholly owned subsidiary of OPKO. Each of the boards of directors of OPKO and PROLOR (with Dr. Frost, Dr. Hsiao and Mr. Rubin, each of whom serves as a director of both PROLOR and OPKO, abstaining) approved the combination of the businesses of OPKO and PROLOR. As promptly as practicable after the completion of the Merger, PROLOR will merge with and into a Delaware limited liability company, wholly owned by OPKO, with the Delaware limited liability company surviving as a wholly owned subsidiary of OPKO.

What PROLOR Stockholders Will Receive in the Merger

At the Effective Time, by virtue of the Merger and without any action on the part of the holders of PROLOR common stock, each share of PROLOR common stock that is issued and outstanding as of the Effective Time (other than any shares of PROLOR common stock held by OPKO, POM, PROLOR or any subsidiary of OPKO or PROLOR, which will be cancelled and retired at the Effective Time) will be converted into the right to receive 0.9951of a share of OPKO common stock, rounded up to the nearest whole share number. The Exchange Ratio is fixed and will not be adjusted based upon changes in the price of PROLOR common stock or OPKO common stock prior to the completion of the Merger. As a result, the value of the shares of OPKO common stock that PROLOR stockholders will receive in connection with the Merger will not be known before the Merger is completed and will fluctuate as the price of OPKO common stock fluctuates.

For a more complete discussion of what PROLOR stockholders will receive in connection with the Merger, see the section titled “The Merger—What PROLOR Stockholders Will Receive in the Merger” beginning on page 46.

Ownership of OPKO After the Completion of the Merger

Based on the number of shares of OPKO common stock and PROLOR common stock outstanding as of                 , 2013, the latest practicable date before the printing of this joint proxy statement/prospectus, if the Merger had been completed on such date, the holders of PROLOR common stock would have been entitled to receive shares of OPKO common stock representing approximately     % of all shares of OPKO common stock outstanding immediately following the completion of the Merger. OPKO stockholders would have continued to own their existing shares, which would not have been affected by the Merger, and such shares would have

 

 

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represented approximately     % of all shares of OPKO common stock outstanding immediately following the completion of the Merger. However, because the Exchange Ratio is fixed, to the extent that the number of shares of outstanding OPKO common stock or PROLOR common stock changes prior to the completion of the Merger, there will automatically occur a corresponding change in the relative ownership percentages of the combined company by the current OPKO stockholders and the current PROLOR stockholders. Such changes may occur due to, among other reasons, any new issuance of shares of OPKO common stock or PROLOR common stock, any exercise of any outstanding options or warrants to purchase shares of OPKO common stock or PROLOR common stock, or otherwise. Although the Merger Agreement imposes limits on the ability of each of OPKO and PROLOR to issue additional shares of Common Stock, OPKO may issue shares or equity rights representing up to 20% of the outstanding shares of OPKO common stock outstanding as of the date of the Merger Agreement.

For a more complete discussion of the ownership of OPKO after the completion of the Merger, see the section titled “The Merger—Ownership of OPKO After the Completion of the Merger” beginning on page 47.

Treatment of PROLOR Stock Options and Warrants

Upon completion of the Merger, each option to purchase one share of PROLOR common stock that is outstanding and unexercised immediately prior to the Effective Time will be converted into an option to purchase OPKO common stock and (1) the number of shares of OPKO common stock subject to such option will be adjusted to an amount equal to the product of (a) the number of shares of PROLOR common stock subject to such option immediately before the Effective Time and (b) the Exchange Ratio, rounded down to the nearest whole share, and (2) the per share exercise price of such option will be adjusted to a price equal to the quotient of (a) the per share exercise price of such option and (b) the Exchange Ratio, rounded up to the nearest whole cent. OPKO will assume each such stock option in accordance with the terms and conditions of the applicable PROLOR equity incentive plan and stock option agreement relating to such PROLOR stock option, subject to the adjustments described in the preceding sentence and the substitution of OPKO and its Compensation Committee for PROLOR and its Compensation Committee with respect to the administration of each PROLOR equity incentive plan. In addition, pursuant to the stock option agreements governing PROLOR’s outstanding stock option awards, each PROLOR stock option will become fully vested and exercisable upon the consummation of the Merger. Dr. Havron and Messrs. Novik and Fima have each executed waiver agreements with PROLOR whereby they have waived their right to acceleration of the vesting of the stock options that were granted to each of them in February 2013 upon the closing of the Merger.

For example, if you hold an option to purchase up to 1,000 shares of PROLOR common stock at an exercise price of $2.00 per share, upon completion of the Merger, such option will be converted into an option to purchase up to 995 shares of OPKO common stock (995.1 shares rounded down to the nearest whole share) at an exercise price of $2.01 per share ($2.009 rounded up to the nearest whole cent).

Similarly, upon completion of the Merger and subject to the consent of the holder thereof, each warrant to purchase one share of PROLOR common stock that is outstanding and unexercised immediately prior to the Effective Time will be converted into a warrant to purchase OPKO common stock and (1) the number of shares of OPKO common stock subject to such warrant will be adjusted to an amount equal to the product of (a) the number of shares of PROLOR common stock subject to such warrant immediately before the Effective Time and (b) the Exchange Ratio, rounded up to the nearest whole share, and (2) the per share exercise price of such warrant will be adjusted to a price equal to the quotient of (a) the per share exercise price of such warrant and (b) the Exchange Ratio, rounded up to the nearest whole cent. OPKO will assume each such warrant in accordance with the terms and conditions thereof, subject to the conditions and adjustments described in the preceding sentence.

For example, if you hold a warrant to purchase up to 1,000 shares of PROLOR common stock at an exercise price of $2.00 per share, upon completion of the Merger, such warrant will be converted into a warrant to

 

 

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purchase up to 996 shares of OPKO common stock (995.1 shares rounded up to the nearest whole share) at an exercise price of $2.01 per share ($2.009 rounded up to the nearest whole cent).

For a more complete discussion of what holders of PROLOR stock options and warrants will receive in connection with the Merger, see the section titled “The Merger—Treatment of PROLOR Stock Options and Warrants” beginning on page 47.

What OPKO Stockholders Will Receive in the Merger

OPKO stockholders will not receive any additional shares of OPKO common stock as a result of the Merger, and the rights associated with their shares of OPKO common stock will remain unchanged, except insofar as the relative voting power associated with such shares will be diluted as a result of the issuance of additional shares of OPKO common stock to PROLOR stockholders in connection with the Merger such that each share of OPKO common stock outstanding immediately prior to the completion of the Merger will represent a smaller percentage of the aggregate number of shares of OPKO common stock (and therefore a smaller percentage of the outstanding voting power and equity value) outstanding after the completion of the Merger than it did prior to completion of the Merger.

Treatment of OPKO Equity Awards

Equity awards previously issued by OPKO will remain outstanding and will not be affected by the Merger.

Board of Directors and Executive Officers of OPKO After the Completion of the Merger

The Merger will not have any effect on the composition of the Board of Directors and executive officers of OPKO, who shall remain the same following the completion of the Merger.

PROLOR Severance Arrangements

PROLOR has entered into an employment agreement with Mr. Novik, PROLOR’s President, that provides for severance benefits upon a qualifying termination of employment within twelve months of the Merger. Pursuant to the stock option agreements governing PROLOR’s outstanding stock option awards, each PROLOR stock option that is not currently vested (including stock options held by PROLOR’s named executive officers) will become fully vested and exercisable upon the consummation of the Merger; provided that Dr. Havron and Messrs. Novik and Fima have each executed waiver agreements with PROLOR whereby they have waived their right to acceleration of the vesting of the stock options that were granted to each of them in February 2013 upon the closing of the Merger. Except as provided in Mr. Novik’s employment agreement, and the acceleration of unvested stock options, PROLOR’s executive officers will not receive any additional compensation in connection with the closing of the Merger. Because the only compensation that any of PROLOR’s executive officers may potentially receive in connection with the Merger is pursuant to existing contractual obligations, such compensation will be payable regardless of the outcome of this advisory vote, subject only to the conditions thereto contained in Mr. Novik’s employment agreement.

In accordance with Section 14A of the Exchange Act, PROLOR is providing its stockholders with the opportunity to cast an advisory vote on the “golden parachute” compensation that PROLOR’s named executive officers may potentially receive in connection with the Merger, as reported on the table included under the caption “Severance Arrangements with Executive Officers of PROLOR—PROLOR’s Named Executive Officer Golden Parachute Compensation” on page 102. PROLOR’s Board of Directors unanimously recommends that you vote “FOR” the PROLOR Compensation Advisory Vote Proposal.

 

 

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For a more complete discussion of the potential severance payments payable to PROLOR executive officers upon a qualifying termination in connection with the Merger, see the section titled “Severance Arrangements with Executive Officers of PROLOR” beginning on page 102.

Recommendation of OPKO’s Board of Directors and its Reasons for the Merger

OPKO’s Board of Directors (with Dr. Frost, Dr. Hsiao and Mr. Rubin, each of whom serves as a director of both PROLOR and OPKO, abstaining) approved and adopted the Merger Agreement and the transactions contemplated thereby, including the Merger, and therefore recommends that OPKO’s stockholders vote “FOR” the OPKO Share Issuance Proposal. In reaching these decisions, the OPKO Board of Directors considered a number of factors. See the section titled “The Merger—Recommendation of OPKO’s Board of Directors and its Reasons for the Merger” beginning on page 53.

Recommendation of PROLOR’s Board of Directors and its Reasons for the Merger

PROLOR’s Board of Directors (with Dr. Frost, Dr. Hsiao and Mr. Rubin, each of whom serves as a director of both PROLOR and OPKO, abstaining) approved and adopted the Merger Agreement and the transactions contemplated thereby, including the Merger. PROLOR’s Board of Directors, based on the unanimous recommendation of a strategic alternatives committee thereof consisting solely of disinterested directors of PROLOR, or the Special Committee, determined that the Merger is fair to, and in the best interests of, PROLOR and its stockholders, and therefore recommends that PROLOR’s stockholders vote “FOR” the PROLOR Merger Proposal. In reaching these decisions, the PROLOR Board of Directors considered a number of factors. See the section titled “The Merger—Recommendation of PROLOR’s Board of Directors and its Reasons for the Merger” beginning on page 56.

Opinion of Financial Advisor to OPKO’s Board of Directors

Barrington Research Associates, Inc., or Barrington, delivered its written opinion to OPKO’s Board of Directors that, as of April 23, 2013, and based upon and subject to the factors, procedures, assumptions, qualifications and limitations set forth therein, the consideration to be paid by OPKO in the proposed transaction was fair, from a financial point of view, to OPKO.

The full text of Barrington’s written opinion, dated April 23, 2013, is attached as Annex B to this joint proxy statement/prospectus and is incorporated herein by reference. Barrington’s opinion sets forth, among other things, the assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken in connection with its opinion. Barrington provided its opinion for the benefit of OPKO’s Board of Directors (in its capacity as such) in connection with, and for the purposes of, its evaluation of the transactions contemplated by the Merger Agreement. Barrington’s opinion addresses only the fairness to OPKO of the consideration to be paid by OPKO in the proposed transaction and does not address any other matter. The opinion does not constitute a recommendation to any stockholder as to how to vote or act with respect to the merger.

For a more complete discussion of Barrington’s opinion, see the section titled “The Merger—Opinion of Financial Advisor to OPKO’s Board of Directors” beginning on page 58. See also Annex B to this joint proxy statement/prospectus, which includes the full text of Barrington’s opinion.

Opinion of Financial Advisor to the Special Committee of PROLOR’s Board of Directors

In connection with the Merger, the Special Committee received a written opinion, dated April 23, 2013, from Oppenheimer & Co., or Oppenheimer, the independent financial adviser to the Special Committee, as to the fairness, from a financial point of view and as of the date of such opinion, of the Exchange Ratio to the holders of

 

 

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PROLOR common stock (excluding OPKO, its subsidiaries and any of their respective affiliates). Holders of PROLOR common stock are encouraged to read Oppenheimer’s opinion carefully in its entirety for a description of the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Oppenheimer. Oppenheimer’s opinion was provided for the benefit of the Special Committee in connection with, and for the purpose of, its evaluation of the Exchange Ratio from a financial point of view and does not address any other aspect of the Merger. The opinion does not address the relative merits of the Merger as compared to other business strategies or transactions that might be available with respect to PROLOR or PROLOR’s underlying business decision to effect the Merger. The opinion does not constitute a recommendation to any PROLOR stockholder as to how to vote or act with respect to the Merger.

For a more complete discussion of Oppenheimer’s opinion, see the section titled “The Merger—Opinion of Financial Advisor to the Special Committee of PROLOR’s Board of Directors” beginning on page 64. See also Annex C to this joint proxy statement/prospectus, which includes the full text of Oppenheimer’s opinion.

Interests of OPKO and PROLOR Directors and Executive Officers in the Merger

You should be aware that certain directors and executive officers of OPKO and PROLOR have interests in the Merger that are different from, or in addition to, the interests of the stockholders of OPKO and PROLOR generally.

Interests of the PROLOR directors and executive officers include (i) the existing employment agreement with Mr. Novik, PROLOR’s President, that provides for severance benefits upon a qualifying termination within 12 months following the completion of the Merger, (ii) the acceleration of the vesting of certain stock options held by PROLOR’s executive officers and directors and (iii) the right to continued indemnification and insurance coverage for directors and executive officers of PROLOR after the Merger is completed pursuant to the terms of the Merger Agreement.

In addition, certain of PROLOR’s directors, executive officers and stockholders are directors and stockholders of OPKO. Dr. Frost, the Chairman of the Board of Directors of PROLOR and the holder of approximately     % of the outstanding shares of PROLOR common stock as of the date of this joint proxy statement/prospectus, is OPKO’s Chairman and Chief Executive Officer and the holder of approximately     % of the outstanding shares of OPKO common stock as of the date of this joint proxy statement/prospectus. Dr. Hsiao, a stockholder of PROLOR and a member of the Board of Directors of PROLOR, is OPKO’s Vice Chairman of its Board of Directors and Chief Technical Officer and the holder of approximately     % of the outstanding shares of OPKO common stock as of the date of this joint proxy statement/prospectus, and Mr. Rubin, a stockholder of PROLOR and a member of the Board of Directors of PROLOR, is OPKO’s Executive Vice President—Administration, a member of the Board of Directors of OPKO, and a less than 5% stockholder of OPKO and PROLOR. The foregoing directors recused themselves from all deliberations of the Board of Directors of each of OPKO and PROLOR relating to the Merger and abstained from the vote of the Board of Directors of each such company with respect to the approval and adoption of the Merger Agreement and the transactions contemplated thereby, including the Merger.

For a more complete discussion of the interests of the directors and executive officers of PROLOR and OPKO in the Merger, see the sections titled “The Merger—Interests of OPKO and PROLOR Directors and Executive Officers in the Merger” and “Severance Arrangements with Executive Officers of PROLOR” beginning on pages 73 and 102, respectively.

Anticipated Accounting Treatment of the Merger

The Merger will be accounted for under the acquisition method of accounting in conformity with U.S. generally accepted accounting principles (which we refer to as GAAP), for accounting and financial reporting purposes.

 

 

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Material United States Federal Income Tax Consequences of the Mergers

OPKO and PROLOR intend for the Mergers to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and it is a condition to the completion of the Merger that OPKO and PROLOR each receive written opinions from their respective outside legal counsel, dated as of the closing date of the Merger, to the effect that the Merger will be treated as a “reorganization” within the meaning of Section 368(a) of the Code. We intend to take the position that the Merger and the PROLOR-LLC Merger are two parts of the same integrated transaction. Assuming the Mergers qualify as a “reorganization,” PROLOR stockholders will not recognize gain or loss for U.S. federal income tax purposes upon the exchange of their shares of PROLOR common stock for shares of OPKO common stock in connection with the Merger or upon the closing of the PROLOR-LLC Merger.

Tax matters are very complicated, and the tax consequences of the Mergers to a particular stockholder will depend on such stockholder’s circumstances. Accordingly, OPKO and PROLOR urge you to consult your tax advisor for a full understanding of the tax consequences of the Mergers to you, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws. For more information, see the section titled “Material United States Federal Income Tax Consequences of the Mergers” beginning on page 77.

No Appraisal Rights

Neither OPKO stockholders nor PROLOR stockholders will be entitled to exercise any appraisal rights in connection with the Merger under Delaware law, Nevada law or otherwise.

Regulatory Approvals

Under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, or the HSR Act, and the rules and regulations promulgated thereunder, the Merger may not be completed until the required information and materials have been furnished to the Antitrust Division of the U.S. Department of Justice, or the Antitrust Division, and the U.S. Federal Trade Commission, or the FTC, and until certain waiting period requirements have expired or been earlier terminated. OPKO and PROLOR each filed notification and report forms under the HSR Act with the FTC and the Antitrust Division on June 12, 2013, and the waiting period applicable to the Merger was terminated on June 26, 2013. There are no further U.S. antitrust conditions to consummation of the Merger.

The period of time for completion of the Merger is subject to the grant by the Israel Securities Authority, in accordance with its authority under the Israeli Securities Law 5728-1968, to OPKO of an exemption from publishing a prospectus in Israel in respect to the conversion of PROLOR securities traded on the Tel Aviv Stock Exchange Ltd. into OPKO securities or a clearance. In the event that such exemption or clearance is withheld, the Merger is expected to be delayed for the period of time required for the preparation, approval and publication of a prospectus.

As a condition to the obligations of PROLOR to consummate the Merger, PROLOR is seeking a ruling from the ITA whereby the Merger will be treated as a tax-exempt transaction under Israeli law. Pursuant to the Merger Agreement, PROLOR may waive such condition and, absent an interim arrangement with the ITA, the consideration paid to PROLOR stockholders that are Israeli tax payors will be subject to Israeli tax. For a more complete discussion of the tax ruling, see “Israeli Tax Treatment of the Merger” beginning on page 80. For a more complete discussion of the anticipated effects of such tax ruling, if received, see “Israeli Income Tax Treatment of the Merger” beginning on page 80.

For a more complete discussion of the regulatory approvals relating to the Merger, see the section titled “The Merger—Regulatory Approvals Required for the Merger” beginning on page 74.

 

 

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Conditions to the Completion of the Merger

OPKO and PROLOR currently expect to complete the Merger in the second half of 2013. However, completion of the Merger will be possible only if all of the conditions to the completion of the Merger contained in the Merger Agreement, including the approval of the OPKO Share Issuance Proposal and the PROLOR Merger Proposal and receipt of the required regulatory approvals, have been satisfied or waived. Therefore, factors outside of either company’s control could delay or prevent the completion of the Merger.

The obligations of OPKO and PROLOR to complete the Merger are each subject to the satisfaction of the following conditions. Pursuant to the Merger Agreement, other than the approval by the PROLOR stockholders of the PROLOR Merger Proposal, any of the following conditions may be waived by the parties if not satisfied on or prior to the closing date of the Merger:

 

   

approval by the PROLOR stockholders of the PROLOR Merger Proposal;

 

   

absence of any statute, rule, regulation, executive order, decree, ruling, temporary restraining order, preliminary or permanent injunction or other order issued by a court or other United States governmental authority of competent jurisdiction that has the effect of making the Merger or the other transactions contemplated by the Merger Agreement illegal or otherwise prohibiting consummation of the Merger or the other transactions contemplated thereby;

 

   

expiration or termination of the waiting period applicable to the consummation of the Merger under the HSR Act and the expiration or termination of any waiting period under, and the receipt of all consents, clearances, waivers, licenses, orders, registrations, approvals, permits and authorizations necessary or advisable under, applicable foreign antitrust laws;

 

   

receipt of certain governmental or regulatory consents, waivers, authorizations and approvals required in connection with the execution, delivery and performance of the Merger Agreement and the other transactions contemplated thereby;

 

   

approval of the OPKO common stock to be issued in the Merger for quotation or listing, as the case may be, on the NYSE (or any successor inter-dealer quotation system or stock exchange thereto) subject to official notice of issuance;

 

   

effectiveness under the Securities Act of the registration statement on Form S-4, of which this joint proxy statement/prospectus is a part, the absence of a stop order issued by the SEC suspending the effectiveness of such registration statement and the absence of a proceeding seeking a stop order or any similar proceeding with respect to this joint proxy statement/prospectus initiated or threatened by the SEC;

 

   

approval by the OPKO stockholders of the OPKO Share Issuance Proposal; and

 

   

clearance by the ISA or an exemption with respect to the delivery of prospectuses in connection with the offering of OPKO common stock offered by OPKO in Israel in connection with the Merger.

The obligations of OPKO and POM to complete the Merger are subject to the satisfaction or waiver of the following additional conditions:

 

   

accuracy in all respects as of the date of the Merger Agreement and as of the closing date of the Merger of a limited number of specified representations and warranties made by PROLOR in the Merger Agreement (except, with respect to certain representations and warranties, for inaccuracies that are de minimis in the aggregate);

 

   

accuracy in all material respects as of the date of the Merger Agreement and as of the closing date of a limited number of specified representations and warranties made by PROLOR in the Merger Agreement;

 

 

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accuracy in all respects as of the date of the Merger Agreement and as of the closing date of the balance of the representations and warranties made by PROLOR in the Merger Agreement, except for such breaches as have not had, and would not reasonably be expected to have, a material adverse effect on PROLOR;

 

   

compliance with and performance by PROLOR, in all material respects, of all agreements and covenants required to be performed or complied with by it under the Merger Agreement on or prior to the closing date of the Merger;

 

   

receipt of an opinion from Akerman Senterfitt, or Akerman, OPKO’s outside legal counsel, that is reasonably acceptable to OPKO and dated as of the closing date of the Merger, to the effect that the Merger will be treated for U.S. federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Code; provided that if Akerman does not render such opinion, this condition may be satisfied if DLA Piper LLP (US), or DLA Piper, renders such opinion;

 

   

the amendment of PROLOR’s outstanding warrants to permit the modifications thereto required in connection with the Merger; and

 

   

the absence of any material restrictions pursuant to the ruling from the ITA required as a condition to PROLOR’s obligation to complete the Merger on (1) any person that is a stockholder of OPKO as of immediately prior to or following the closing of the Merger or (2) the transfer of assets, business or operations of OPKO, any of its material subsidiaries or PROLOR, in each case pursuant to Section 103(k) to Israeli Income Tax Ordinance [New Version] 5721-1961, or the Ordinance.

The obligations of PROLOR to complete the Merger are subject to the satisfaction or waiver of the following additional conditions:

 

   

accuracy in all respects as of the date of the Merger Agreement and as of the closing date of the Merger of a limited number of specified representations and warranties made by OPKO and POM in the Merger Agreement (except, with respect to certain representations and warranties, for inaccuracies that are de minimis in the aggregate);

 

   

accuracy in all material respects as of the date of the Merger Agreement and as of the closing date of a limited number of specified representations and warranties made by OPKO and POM in the Merger Agreement;

 

   

accuracy in all respects as of the date of the Merger Agreement and as of the closing date of the balance of the representations and warranties made by OPKO and POM in the Merger Agreement, except for such breaches as have not had, and would not reasonably be expected to have, a material adverse effect on OPKO and POM;

 

   

compliance with and performance by OPKO, in all material respects, of all agreements and covenants required to be performed or complied with by it under the Merger Agreement on or prior to the closing date of the Merger;

 

   

receipt of an opinion from DLA Piper, outside counsel to the Special Committee, that is reasonably acceptable to PROLOR and dated as of the closing date of the Merger, to the effect that the Merger will be treated for U.S. federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Code; provided that if DLA Piper does not render such opinion, this condition may be satisfied if Akerman renders such opinion; and

 

   

receipt of a ruling from the ITA with respect to certain Israeli tax matters relating to the Merger. Pursuant to the Merger Agreement, PROLOR may waive such condition and, absent an interim arrangement with the ITA, the consideration paid to PROLOR stockholders that are Israeli tax payors will be subject to Israeli tax. For a more complete discussion of the tax ruling, see “Israeli Tax Treatment of the Merger” beginning on page 80.

 

 

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Restrictions on Solicitation

Pursuant to the Merger Agreement, during the period beginning on April 23, 2013 and continuing until 11:59 p.m. (New York City time) on June 2, 2013, PROLOR, its subsidiaries and their respective representatives (acting under the supervision of the Special Committee) were permitted to solicit, initiate, facilitate and encourage from any third party a competing proposal to acquire at least 15% of the assets of, equity interest in, or business of PROLOR and its subsidiaries taken as a whole, or a Company Acquisition Proposal, including by way of providing access to information pursuant to one or more confidentiality agreements meeting certain parameters specified in the Merger Agreement. In addition, during such “go-shop” period, PROLOR, its subsidiaries and their respective representatives (acting under the supervision of the Special Committee) were permitted to enter into or otherwise participate in discussions and negotiations with respect to a Company Acquisition Proposal. PROLOR solicited offers from 24 third parties during the go-shop period, but no such party requested access to information regarding PROLOR or made a Company Acquisition Proposal. Had any third party made a Company Acquisition Proposal on or prior to June 2, 2013 that PROLOR’s Board of Directors and the Special Committee determined in good faith would reasonably be expected to result in a Superior Proposal (as defined below), PROLOR would have been permitted to continue discussions with the proponent of such proposal through June 22, 2013.

Pursuant to the Merger Agreement, on June 2, 2013, PROLOR was required to and did, and instructed its subsidiaries and representatives to, immediately cease all discussions and negotiations that may be ongoing with respect to a Company Acquisition Proposal. In addition, PROLOR agreed that, from June 2, 2013 through the Effective Time or the date of the termination of the Merger Agreement, it will not solicit competing acquisition proposals or, subject to certain exceptions, enter into discussions or negotiations concerning, or furnish nonpublic information in connection with, any Company Acquisition Proposal.

PROLOR further agreed that, subject to certain exceptions, its Board of Directors will not: (1) withdraw or propose to publicly withdraw or modify in a manner that is adverse to OPKO and POM its recommendation to PROLOR’s stockholders that they vote in favor of the PROLOR Merger Proposal and (2) adopt, approve or recommend, or allow PROLOR to execute or enter into, any definitive agreement with respect to a Company Acquisition Proposal (other than a confidentiality agreement meeting certain parameters specified in the Merger Agreement), or (3) fail to recommend against acceptance of any tender offer or exchange offer with respect to a Company Acquisition Proposal. However, if after June 2, 2013 and prior to the time of any approval by PROLOR’s stockholders of the PROLOR Merger Proposal, PROLOR receives a written Company Acquisition Proposal, then:

 

   

if, after consultation with PROLOR’s outside legal advisors, including its outside counsel, the Special Committee determines in good faith that failure to do so would likely be inconsistent with the Special Committee’s exercise of its fiduciary duties under applicable law, PROLOR’s Board of Directors may withdraw or propose to publicly withdraw or modify in a manner that is adverse to OPKO and POM its recommendation to PROLOR’s stockholders that they vote in favor of the PROLOR Merger Proposal; and

 

   

if, after consultation with PROLOR’s outside financial and legal advisors, PROLOR’s Board of Directors determines that such a Company Acquisition Proposal constitutes a Superior Proposal, PROLOR may execute or enter into any definitive agreement with respect to such Company Acquisition Proposal and/or approve, endorse or recommend a tender offer or exchange offer for shares of PROLOR common stock in connection with such Company Acquisition Proposal.

For purposes of the Merger Agreement, a Superior Proposal is a Company Acquisition Proposal that:

 

   

if consummated would result in a person or group owning, directly or indirectly,

 

  ¡    

50% or more of all classes of outstanding equity securities of PROLOR or of the surviving entity in a merger involving PROLOR or the resulting direct or indirect parent of PROLOR or such surviving entity, or

 

 

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  ¡    

50% or more (based on the fair market value thereof) of the assets of PROLOR and its subsidiaries (including capital stock of PROLOR’s subsidiaries) taken as a whole, and

 

   

PROLOR’s Board of Directors or the Special Committee determines in good faith (after consultation with its outside legal counsel and financial advisor) is superior, from a financial point of view, to the transactions contemplated by the Merger Agreement, taking into account all financial, legal, regulatory and other aspects of such proposal and of the Merger Agreement (including the relative risks of non-consummation and any changes to the terms of the Merger Agreement proposed by OPKO to PROLOR).

For further discussion of the prohibition on solicitation of acquisition proposals from third parties and on changes to the recommendation of PROLOR’s Board of Directors with respect to the approval of the Merger, see the section titled “The Merger Agreement—Restrictions on Solicitation” and “The Merger Agreement—Recommendation of PROLOR’s Board of Directors; Change of Recommendation” beginning on pages 92 and 93, respectively.

Termination of the Merger Agreement

Generally and except as specified below, the Merger Agreement may be terminated and the Merger may be abandoned at any time prior to the completion of the Merger, including after the required OPKO stockholder approval and/or PROLOR stockholder approval is obtained:

 

   

by mutual written consent of OPKO and PROLOR;

 

   

by either party, if:

 

  ¡    

the Merger has not been consummated on or before February 23, 2014, subject to extension for a period of 60 days under certain circumstances;

 

  ¡    

a court of competent jurisdiction or other governmental entity issues a final and non-appealable order, or has taken any other action having the effect of permanently restraining, enjoining or otherwise prohibiting or making illegal the transactions contemplated by the Merger Agreement; or

 

  ¡    

the required approval of the PROLOR Merger Proposal by the PROLOR stockholders has not been obtained at the PROLOR special meeting (or at any adjournment or postponement thereof);

 

   

by OPKO if:

 

  ¡    

PROLOR has breached or failed to perform in any respect any of its representations, warranties, covenants or agreements contained in the Merger Agreement, which breach or failure to perform (1) is not cured within thirty (30) days following receipt by PROLOR of written notice of such breach or failure to perform from OPKO (or, if earlier, February 23, 2014) and (2) would result in a failure of any condition to the obligations of OPKO and POM to consummate the Merger; provided, that such termination right shall not be available if OPKO or POM is in material breach of any of its representations, warranties, covenants or agreements under the Merger Agreement that would result in the failure of any conditions to the obligations of PROLOR to consummate the Merger; or

 

  ¡    

PROLOR’s Board of Directors fails to recommend that PROLOR’s stockholders approve the PROLOR Merger Proposal, PROLOR’s Board of Directors fails to publicly reaffirm its recommendation that PROLOR’s stockholders approve the PROLOR Merger Proposal in the absence of a publicly announced Company Acquisition Proposal within five business days after OPKO so requests in writing (provided that OPKO may only make one such request in any 30 day period), PROLOR enters into a written agreement in respect of a Company Acquisition Proposal or PROLOR, its Board of Directors or the Special Committee publicly announces its intention to do any of the foregoing;

 

 

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by PROLOR if:

 

  ¡    

OPKO or POM has breached or failed to perform in any respect any of its respective representations, warranties, covenants or agreements contained in the Merger Agreement, which breach or failure to perform (1) is not cured within thirty (30) days following receipt by OPKO of written notice of such breach or failure to perform from PROLOR (or, if earlier, February 23, 2014) and (2) would result in a failure of any condition to the obligations of PROLOR to consummate the Merger; provided that such termination right shall not be available if PROLOR is in material breach of any of its representations, warranties, covenants or agreements under the Merger Agreement that would result in the failure of any conditions to the obligations of OPKO or POM to consummate the Merger;

 

  ¡    

PROLOR’s Board of Directors (1) withdraws (or modifies in a manner adverse to OPKO or POM) its recommendation that PROLOR’s stockholders approve the PROLOR Merger Proposal or (2) adopts, approves or recommends, or proposes publicly to adopt, approve or recommend, any Company Acquisition Proposal;

 

  ¡    

PROLOR enters into a written agreement with respect to a Superior Proposal and concurrently with such termination pays to OPKO the applicable termination fee;

 

  ¡    

all conditions to the obligations of OPKO and POM to complete the Merger have been satisfied or waived and OPKO and POM fail to complete the closing within six business days thereof;

 

  ¡    

there is a termination of the employment of, or change in, the chief executive officer of OPKO as of the date of the Merger Agreement prior to the closing of the Merger;

 

  ¡    

OPKO’s Board of Directors fails to recommend or changes its recommendation that OPKO’s stockholders approve the OPKO Share Issuance Proposal; or

 

  ¡    

the required approval of the OPKO Share Issuance Proposal by the OPKO stockholders has not been obtained at the OPKO annual meeting (or at any adjournment or postponement thereof).

For further discussion of termination of the Merger Agreement, see the section titled “The Merger Agreement—Termination of the Merger Agreement” beginning on page 98.

Termination Fees and Expenses

Generally, all fees and expenses incurred in connection with the Merger will be paid by the party incurring such expenses. However, OPKO and PROLOR will share equally all out-of-pocket fees and expenses, other than accountants’ and attorneys’ fees, incurred in connection with (i) the filing, printing and mailing of the registration statement on Form S-4 and this joint proxy statement/prospectus and any amendments or supplements thereto and (ii) the filing by the parties of any notice or other document under the HSR Act (so long as the acquisition valuation under the HSR Act is between $141,100,000 and $709,100,000) or applicable foreign antitrust laws.

A termination fee of $9,600,000 may be payable by PROLOR to OPKO or OPKO to PROLOR upon the termination of the Merger Agreement under certain circumstances and a termination fee of $14,400,000 may be payable by PROLOR to OPKO upon the termination of the Merger Agreement under certain circumstances.

For a more complete discussion of termination fees and expenses, see the section titled “The Merger Agreement—Termination Fees and Expenses” beginning on page 99.

 

 

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Rights of PROLOR Stockholders Will Change as a Result of the Merger

Due to differences between the governing documents of OPKO and PROLOR, PROLOR stockholders receiving OPKO common stock in connection with the Merger will have different rights once they become OPKO stockholders. The material differences are described in detail under the section titled “Comparison of Rights of Holders of OPKO Common Stock and PROLOR Common Stock” beginning on page 157.

Risk Factors

In evaluating the Merger Agreement and the Merger, you should consider certain risks discussed in the section titled “Risk Factors” beginning on page 36.

Matters to Be Considered at the OPKO Annual Meeting and PROLOR Special Meeting

OPKO annual meeting

Date, Time and Place. The OPKO annual meeting will be held on August 28, 2013, at 10:00 a.m., local time, at OPKO’s headquarters located at 4400 Biscayne Boulevard, Miami FL 33137.

Matters to be Considered at the OPKO annual meeting. At the OPKO annual meeting, and any adjournments or postponements thereof, OPKO stockholders will be asked to:

 

   

elect as directors the ten nominees named in this joint proxy statement/prospectus for a term of office expiring at the 2014 annual meeting of stockholders and until their respective successors are duly elected and qualified;

 

   

approve the OPKO Plan Amendment Proposal;

 

   

approve the OPKO Authorized Share Increase Proposal;

 

   

approve the OPKO Share Issuance Proposal;

 

   

approve the OPKO Adjournment Proposal; and

 

   

conduct any other business as may properly come before the OPKO annual meeting or any adjournment or postponement thereof.

Record Date. The OPKO Board of Directors has fixed the close of business on July 22, 2013 as the record date for determination of OPKO stockholders entitled to notice of and to vote at the OPKO annual meeting and any adjournment thereof.

Required Vote.

If a quorum is present, the following votes will be required for the approval of the proposals to be voted on at the OPKO annual meeting:

 

   

Election of Directors. A nominee for director will be elected to OPKO’s Board of Directors if the votes cast in favor of such nominee by the holders of shares of OPKO common stock present in person or represented by proxy and entitled to vote at the OPKO annual meeting exceed the votes cast against such nominee.

 

   

OPKO Plan Amendment Proposal. The OPKO Plan Amendment Proposal will be approved if the votes cast in favor of such proposal by the holders of shares of OPKO common stock present in person or represented by proxy and entitled to vote at the OPKO annual meeting exceed the votes cast against such proposal; provided that, pursuant to the NYSE’s shareholder approval policy, the total votes cast on the proposal must represent over 50% of all securities entitled to vote on the proposal.

 

 

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OPKO Authorized Share Increase Proposal. The OPKO Authorized Share Increase Proposal will be approved if the holders of a majority of the shares of OPKO common stock outstanding and entitled to vote at the OPKO annual meeting vote in favor of the proposal.

 

   

OPKO Share Issuance Proposal. The OPKO Share Issuance Proposal will be approved if the votes cast in favor of such proposal by the holders of shares of OPKO common stock present in person or represented by proxy and entitled to vote at the OPKO annual meeting exceed the votes cast against such proposal; provided that, pursuant to the NYSE’s shareholder approval policy, the total votes cast on the proposal must represent over 50% of all securities entitled to vote on the proposal.

 

   

OPKO Adjournment Proposal. The OPKO Adjournment Proposal will be approved if the votes cast in favor of such proposal by the holders of shares of OPKO common stock present in person or represented by proxy and entitled to vote at the OPKO annual meeting exceed the votes cast against such proposal.

Shares Outstanding and Entitled to Vote. As of the close of business on the record date for the OPKO annual meeting, there were issued and outstanding                 shares of OPKO common stock.

For additional information about the OPKO annual meeting, see the section titled “The 2013 Annual Meeting of OPKO Stockholders” beginning on page 133.

PROLOR Special Meeting

Date, Time and Place. The PROLOR special meeting will be held on August 28, 2013, at 10:00 a.m., local time, at PROLOR’s headquarters located at 7 Golda Meir Street, Weizmann Science Park, Nes-Ziona, Israel L3 74140.

Matters to be Considered at the PROLOR Special Meeting. At the PROLOR special meeting, and any adjournments or postponements thereof, PROLOR stockholders will be asked to:

 

   

approve the PROLOR Merger Proposal;

 

   

approve, on an advisory basis, the PROLOR Compensation Advisory Vote Proposal;

 

   

approve the PROLOR Adjournment Proposal; and

 

   

conduct any other business as may properly come before the PROLOR special meeting or any adjournment or postponement thereof.

Record Date. The PROLOR Board of Directors has fixed the close of business on July 22, 2013 as the record date for determination of PROLOR stockholders entitled to notice of and to vote at the PROLOR special meeting and any adjournment thereof.

Required Vote. If a quorum is present, the following votes will be required for the approval of the proposals to be voted on at the PROLOR special meeting:

 

   

PROLOR Merger Proposal. The PROLOR Merger Proposal will be approved if the holders of a majority of the shares of PROLOR common stock outstanding and entitled to vote at the PROLOR special meeting vote in favor of the proposal.

 

   

PROLOR Compensation Advisory Vote Proposal. The PROLOR Compensation Advisory Vote Proposal will be approved if the holders of a majority of the shares of PROLOR common stock present in person or represented by proxy and entitled to vote at the PROLOR special meeting vote in favor of the proposal. The PROLOR Compensation Advisory Vote Proposal is advisory in nature and will not be binding on PROLOR or PROLOR’s Board of Directors and will not impact whether or not the Merger is completed or the compensation is paid.

 

 

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PROLOR Adjournment Proposal. The PROLOR Adjournment Proposal will be approved if the holders of a majority of the shares of PROLOR common stock present in person or represented by proxy and entitled to vote at the PROLOR special meeting vote in favor of the proposal.

Shares Outstanding and Entitled to Vote. As of the close of business on the record date, there were issued and outstanding                  shares of PROLOR common stock.

For additional information about the PROLOR special meeting, see the section titled “The Special Meeting of PROLOR Stockholders” beginning on page 151.

Legal Proceedings Related to the Merger

Six putative class action lawsuits have been filed in connection with the Merger: (1) Peter Turkell v. PROLOR Biotech, Inc., et al. (Case No. A-13-680860-B), filed April 29, 2013 in the Eighth Judicial District Court in and for Clark County, Nevada; (2) Floyd A. Fried v. PROLOR Biotech, Inc., et al., (Case No. A-13-681060), filed May 1, 2013 in the Eighth Judicial District Court in and for Clark County, Nevada; (3) Marc Henzel v. PROLOR Biotech, Inc., et al. (Case No. A-13-681020-C), filed May 1, 2013, in the Eighth Judicial District Court in and for Clark County, Nevada; (4) Bradford W. Baer, et al., v. PROLOR Biotech, Inc. et al. (Case No. A-13-681218-B, filed May 3, 2013 in the Eighth Judicial District Court in and for Clark County, Nevada; (5) James Hegarty v. PROLOR Biotech, Inc., et al (Case No. A-13-681250-C), filed May 6, 2013 in the Eighth Judicial District Court in and for Clark County, Nevada; and (6) Jorge L. Salas, et al. v. PROLOR Biotech, Inc., et al. (Case No. A-13-681279-C), filed May 6, 2013 in the Eighth Judicial District Court in and for Clark County, Nevada.

All six suits name PROLOR, the members of PROLOR’s Board of Directors and OPKO as defendants and the Fried and Salas suits also name POM as a defendant. All six lawsuits are brought by purported holders of PROLOR’s common stock, both individually and on behalf of a putative class of PROLOR’s stockholders, alleging that PROLOR’s Board of Directors breached its fiduciary duties in connection with the proposed Merger by purportedly failing to maximize stockholder value, and that PROLOR and OPKO aided and abetted the alleged breaches and the Fried and Salas suits also allege that POM aided and abetted the alleged breaches. All six lawsuits seek equitable relief, including, among other things, to enjoin consummation of the Merger, rescission of the Merger Agreement and (in all of the suits other than the Turkell suit) an award of all costs, including reasonable attorneys’ fees. Certain of the complaints additionally seek compensatory and/or rescissionary damages, and/or imposition of a constructive trust for any benefits improperly received by the defendants.

Each of PROLOR, OPKO and POM believes that the claims made in these lawsuits are without merit and intends to defend such claims vigorously; however, there can be no assurance that any of the companies will prevail in its defense of any of these lawsuits to which it is a party. Due to the preliminary nature of all six suits, none of PROLOR, OPKO or POM is able at this time to estimate their outcome.

 

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF OPKO

The following table shows selected historical consolidated financial data for OPKO for the periods indicated. The selected financial data as of December 31, 2012, 2011, 2010, 2009, and 2008 and for each of the five years then ended were derived from the audited historical consolidated financial statements and related footnotes of OPKO. The selected historical financial data for the three month periods ended March 31, 2013 and 2012 were derived from the unaudited condensed consolidated financial statements of OPKO. Detailed historical financial information included in the audited consolidated balance sheets as of December 31, 2012 and 2011, and the consolidated statements of operations, comprehensive loss, shareholders’ equity, cash flows and related notes for each of the years in the three-year period ended December 31, 2012, are included in OPKO’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and incorporated by reference in this joint proxy statement/prospectus.

You should read the following selected historical consolidated financial data together with OPKO’s historical consolidated financial statements, including the related notes, and the other information contained or incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find Additional Information.” The selected consolidated balance sheet data as of December 31, 2010, 2009 and 2008 and the selected consolidated financial and operating data for the years ended December 31, 2009 and 2008 have been derived from OPKO’s audited consolidated financial statements and related notes for such years, which have not been incorporated by reference into this joint proxy statement/prospectus.

 

 

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    For the three months ended
March 31,
    For the years ended December 31,  

(In thousands, except share and per
share data)

  2013     2012     2012     2011     2010     2009     2008  

Statement of operations data:

             

Revenues

  $ 31,376      $ 8,777      $ 47,044      $ 27,979      $ 28,494      $ 4,418      $ —     

Costs and expenses:

             

Cost of revenues

    11,757        4,987        27,878        17,243        13,495        2,876        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Selling, general and administrative

    12,424        4,671        27,795        19,169        18,133        10,372        9,644   

Research and development

    9,910        4,831        19,520        11,352        5,949        10,836        19,960   

Other operating expenses

    4,058        3,135        9,120        3,404        2,053        2,481        1,398   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

    38,149        17,624        84,313        51,168        39,630        26,565        31,002   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss from continuing operations

    (6,773     (8,847     (37,269     (23,189     (11,136     (22,147     (31,002

Fair value changes of derivative instruments, net

    (23,549     1,117        1,340        —          —          —          —     

Other income and (expense), net

    (507     (143     (1,284     (1,044     (844     (1,916     (1,311
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations before income taxes and investment losses

    (30,829     (7,873     (37,213     (24,233     (11,980     (24,063     (32,313

Income tax (provision) benefit

    (43     (215     9,626        19,358        18        25        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations before investment losses and net loss attributable to non-controlling interests

    (30,872     (8,088     (27,587     (4,875     (11,962     (24,038     (32,313

Loss from investments in investees

    (3,890     (523     (2,062     (1,589     (714     (353     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations and net loss attributable to non-controlling interests

    (34,762     (8,611     (29,649     (6,464     (12,676     (24,391     (32,313

Income (loss) from discontinued operations, net of tax

    —          —          109        5,181        (6,250     (5,722     (7,521
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss and net loss attributable to non-controlling interests

    (34,762     (8,611     (29,540     (1,283     (18,926     (30,113     (39,834

Less: Net loss attributable to non-controlling interests

    (547     —          (492     —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to common shareholders

    (34,215     (8,611     (29,048     (1,283     (18,926     (30,113     (39,834

Preferred stock dividend

    (420     (560     (2,240     (2,379     (2,624     (4,718     (217
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to common shareholders after preferred stock dividend

  $ (34,635   $ (9,171   $ (31,288   $ (3,662   $ (21,550   $ (34,831   $ (40,051
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income per share, basic and diluted:

             

Loss from continuing operations

  $ (0.11   $ (0.03   $ (0.11   $ (0.03   $ (0.06   $ (0.12   $ (0.17
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from discontinued operations

  $ —        $ —        $ 0.00      $ 0.02      $ (0.02   $ (0.03   $ (0.04
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share

  $ (0.11   $ (0.03   $ (0.11   $ (0.01   $ (0.08   $ (0.15   $ (0.21
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding basic and diluted

    312,932,561        297,543,066        295,750,077        280,673,122        255,095,586        233,191,617        187,713,041   

Balance sheet data:

             

Total assets

  $ 653,935      $ 231,570      $ 289,830      $ 229,489      $ 77,846      $ 87,430      $ 21,764   

Working capital

  $ 179,459      $ 69,706      $ 26,275      $ 80,804      $ 29,793      $ 50,795      $ 5,754   

Long-term liabilities

  $ 275,933      $ 22,499      $ 34,168      $ 25,443      $ 7,908      $ 11,932      $ 11,867   

Series D Preferred Stock

  $ —        $ 24,386      $ 24,386      $ 24,386      $ 26,128      $ 26,128      $ —     

Shareholders’ equity

  $ 320,817      $ 154,980      $ 179,386      $ 160,882      $ 23,052      $ 31,599      $ 359   

Total equity

  $ 319,778      $ 154,980      $ 178,894      $ 160,882      $ 23,052      $ 31,599      $ 359   

 

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF PROLOR

The following table shows selected historical financial data for PROLOR for the periods indicated. The selected financial data as of December 31, 2012, 2011, 2010, 2009, and 2008 and for each of the five years then ended were derived from the audited historical consolidated financial statements and related footnotes of PROLOR. The selected historical financial data for the three month periods ended March 31, 2013 and 2012 were derived from the unaudited condensed consolidated financial statements of PROLOR. Detailed historical financial information included in the audited consolidated balance sheets as of December 31, 2012 and 2011, and the consolidated statements of operations, comprehensive loss, shareholders’ equity, cash flows and related notes for each of the years in the three-year period ended December 31, 2012 are included in PROLOR’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and incorporated by reference in this joint proxy statement/prospectus.

You should read the following selected financial data together with PROLOR’s historical consolidated financial statements, including the related notes, and the other information contained or incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find Additional Information.” The selected consolidated balance sheet data as December 31, 2010, 2009 and 2008 and the selected consolidated financial and operating data for the years ended December 31, 2009 and 2008 have been derived from PROLOR’s audited consolidated financial statements and related notes for such years, which have not been incorporated by reference into this joint proxy statement/prospectus.

 

    For the three months
ended March 31,
    For the years ended December 31,  
(In thousands, except share and
per share data)
  2013     2012     2012     2011     2010     2009     2008  

Statement of operations data:

             

Revenues

  $ —        $ —        $ —        $ —        $ —        $ —        $ —     

Cost and expenses:

             

Cost of revenues

    —          —          —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Selling, general and administrative

    1,531        790        3,356        3,226        2,362        1,902        2,410   

Research and development

    3,198        4,304        15,033        11,621        5,315        5,555        4,781   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

    4,729        5,094        18,389        14,847        7,677        7,457        7,191   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

    (4,729     (5,094     (18,389     (14,847     (7,677     (7,457     (7,191

Other income and (expense), net

    (16     95        118        (216     118        (28     157   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations before income taxes

    (4,745     (4,999     (18,271     (15,063     (7,559     (7,485     (7,034

Income tax (provision) benefit

    —          —          —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

  $ (4,745   $ (4,999   $ (18,271   $ (15,063   $ (7,559   $ (7,485   $ (7,034
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss per share, basic and diluted

  $ (0.07   $ (0.09   $ (0.30   $ (0.29   $ (0.19   $ (0.21   $ (0.20
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding basic and diluted

    63,420,545        54,730,050        60,244,754        51,960,929        40,030,008        35,549,083        35,530,378   

Balance sheet data:

             

Total assets

  $ 31,723      $ 10,805      $ 35,917      $ 15,025      $ 27,205      $ 4,109      $ 8,355   

Working capital

  $ 28,471      $ 7,446      $ 32,110      $ 11,610      $ 24,669      $ 2,859      $ 7,573   

Long-term liabilities

  $ 459      $ 334      $ 381      $ 285      $ 221      $ 140      $ 91   

Shareholders’ equity

  $ 29,454      $ 8,400      $ 33,200      $ 12,521      $ 24,995      $ 3,129      $ 7,868   

 

 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

The following Selected Unaudited Pro Forma Condensed Combined Financial Data is based on the historical financial data of OPKO and PROLOR, and has been prepared to illustrate the effects of the Merger. In addition, the Selected Unaudited Pro Forma Condensed Combined Statements of Operations from Continuing Operations Data include pro forma adjustments to reflect OPKO’s acquisition of certain net assets of Cytochroma Canada Inc., or Cytochroma. The Selected Unaudited Pro Forma Condensed Combined Financial Data does not give effect to any anticipated synergies, operating efficiencies or costs savings that may be associated with the Merger. The Selected Unaudited Pro Forma Condensed Combined Financial Data also does not include any integration costs the companies may incur related to the Merger as part of combining the operations of the companies. The Selected Unaudited Pro Forma Condensed Combined Statements of Income Operations from Continuing Operations Data below is presented as if the Merger were completed on January 1, 2012, and the Selected Unaudited Pro Forma Condensed Combined Balance Sheet Data below is presented as if the Merger were completed on March 31, 2013. The unaudited pro forma financial data included in this joint proxy statement/prospectus is based on the historical financial statements of OPKO and PROLOR, and on publicly available information and certain assumptions that we believe are reasonable, which are described in the notes to the Unaudited Pro Forma Condensed Combined Consolidated Financial Statements included in this joint proxy statement/prospectus. This data should be read in conjunction with OPKO’s and PROLOR’s historical consolidated financial statements, including the related notes, and the other information contained or incorporated by reference in this joint proxy statement/prospectus. OPKO has not performed a detailed valuation analysis necessary to determine the fair market values of PROLOR’s assets to be acquired and liabilities to be assumed. Accordingly, the pro forma financial statements include only a preliminary allocation of the purchase price, which will be finalized after closing. The preliminary purchase price allocation is primarily based on the carrying value of PROLOR’s assets and liabilities. See also the Unaudited Pro Forma Condensed Combined Consolidated Financial Statements and notes thereto beginning on page 166.

 

     For the three months
ended March 31, 2013
    For the Year Ended
December 31, 2012
 
     (In thousands, except share and
per share data)
 

RESULTS OF CONTINUING OPERATIONS:

    

Total revenue

   $ 31,376      $ 53,595   

Operating loss

     (13,352     (62,479

Loss from continuing operations before estimated nonrecurring charges related to the transaction attributable to the combined company

     (41,252     (56,521

Loss from continuing operations before estimated nonrecurring charges related to the transaction per common share attributable to the combined company

   $ (0.11   $ (0.15

Loss per common share, basic and diluted

   $ (0.11   $ (0.15

Weighted average shares outstanding, basic and diluted:

     398,888,845        388,089,437   

 

     As of
March 31, 2013
 
     (In thousands)  

BALANCE SHEET DATA:

  

Current assets

   $ 267,964   

Current liabilities

     60,035   

Total assets

     1,163,989   

Total long-term liabilities

     276,392   

Total liabilities

     336,427   

Total shareholders’ equity

   $ 828,601   

 

 

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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

The following table sets forth certain selected per share data for each of OPKO and PROLOR separately on a historical basis as of and for the three months ended March 31, 2013 and as of and for the year ended December 31, 2012. It also includes unaudited pro forma combined per share data for OPKO, which combines the data of OPKO and PROLOR on a pro forma basis giving effect to the Merger. This data does not give effect to any anticipated synergies, operating efficiencies or costs savings that may be associated with the Merger. This data also does not include any integration costs the companies may incur related to the Merger as part of combining the operations of the companies. This data should be read in conjunction with OPKO’s and PROLOR’s historical consolidated financial statements and accompanying notes in their respective Annual Reports for the year ended December 31, 2012 and Quarterly Reports for the quarter ended March 31, 2013, which are incorporated by reference into this joint proxy statement/prospectus.

 

     As of and for the
three months ended
March 31, 2013
    As of and for the
year ended
December 31, 2012
 

OPKO Historical Per Share Data:

    

Loss from continuing operations per share, basic and diluted

   $ (0.11   $ (0.11

Cash dividends per share

     —          —     

Book value per diluted share

     1.02        0.61   

OPKO Unaudited Pro Forma Combined Per Share Data:

    

Loss from continuing operations per share, basic and diluted

   $ (0.11   $ (0.15

Cash dividends per share

     —          —     

Book value per diluted share

     2.14        1.77   

Prolor Historical Per Share Data:

    

Loss from continuing operations per share, basic and diluted

   $ (0.07   $ (0.30

Cash dividends per share

     —          —     

Book value per diluted share

     0.46        0.55   

 

 

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COMPARATIVE MARKET PRICE DATA AND DIVIDEND INFORMATION

Stock Prices

The table below sets forth, for the periods indicated, the high and low sales prices per share of OPKO common stock, which trades on the NYSE under the symbol “OPK,” and PROLOR common stock, which trades on the NYSE MKT under the symbol “PBTH.”

 

     OPKO      PROLOR  
     Price Range of
Common Stock
     Price Range of
Common Stock
 
Fiscal Year Ended    High      Low      High      Low  

December 31, 2011:

           

First Quarter

   $ 5.03       $ 3.43       $ 6.75       $ 4.55   

Second Quarter

     4.12         3.15         6.40         4.06   

Third Quarter

     4.74         3.49         6.50         3.95   

Fourth Quarter

     5.85         4.00         5.14         3.11   

December 31, 2012:

           

First Quarter

   $ 5.53       $ 4.63       $ 6.69       $ 4.36   

Second Quarter

     5.05         4.22         6.07         4.64   

Third Quarter

     4.80         4.00         5.32         4.66   

Fourth Quarter

     4.84         4.10         5.36         4.25   

December 31, 2013:

           

First Quarter

   $ 7.83       $ 4.83       $ 5.32       $ 4.54   

Second Quarter (through                     )

           

Dividends

OPKO has never paid cash dividends on its common stock and does not anticipate paying cash dividends in fiscal year 2013. OPKO currently intends to retain earnings, if any, for use in its business. Prior to March 8, 2013, OPKO had shares of Series D Preferred Stock outstanding that had preferential dividend rights over any dividend payments to holders of OPKO common stock. On March 1, 2013, OPKO’s Board of Directors declared a cash dividend to all holders of its Series D Preferred Stock as of March 8, 2013. The total cash dividend was approximately $3.0 million. In addition, on March 1, 2013, OPKO’s Board of Directors also exercised its option to convert all 1,129,032 shares of OPKO’s outstanding Series D Preferred Stock into 11,290,320 shares of OPKO common stock, effective on March 8, 2013. Following the conversion, there are no outstanding shares of OPKO Series D Preferred Stock.

PROLOR has never paid cash dividends on its common stock. PROLOR currently intends to retain earnings, if any, for use in its business and does not anticipate paying any cash dividends in the foreseeable future.

 

 

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Comparative Per Share Market Value Data

The following table presents the closing per share price of OPKO common stock and PROLOR common stock as reported on the NYSE and the NYSE MKT, respectively, on each of April 23, 2013, the last trading day before OPKO and PROLOR announced that they had entered into the Merger Agreement, and                     , 2013, the latest practicable date before the printing of this joint proxy statement/prospectus. The table also includes the equivalent closing per share price of PROLOR common stock on those dates. These equivalent closing per share prices reflect the fluctuating value of the OPKO common stock that PROLOR stockholders would receive in exchange for each share of PROLOR common stock if the Merger had been completed on either of these dates, applying the Exchange Ratio of 0.9951 shares of OPKO common stock for each share of PROLOR common stock.

 

     OPKO
Common Stock
     PROLOR
Common Stock
     Equivalent PROLOR
Price Per Share
 

April 23, 2013

   $ 7.06       $ 5.83       $ 7.03   

                    , 2013

   $         $         $     

The above table shows only historical comparisons. These comparisons may not provide meaningful information to PROLOR stockholders in determining whether to approve the PROLOR Merger Proposal. PROLOR stockholders are urged to obtain current market quotations for OPKO common stock and PROLOR common stock and to review carefully the other information contained in this joint proxy statement/prospectus or incorporated by reference into this joint proxy statement/prospectus. Historical stock prices are not indicative of future stock prices.

 

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This joint proxy statement/prospectus and the other documents incorporated by reference into this proxy statement/prospectus contain or may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. Statements that include words such as “may,” “will,” “project,” “might,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” “continue,” or “pursue” or the negative of these words or other words or expressions of similar meaning may identify forward-looking statements. These forward-looking statements are found at various places throughout this joint proxy statement/prospectus and the other documents incorporated by reference and relate to a variety of matters, including: (1) the timing and anticipated completion of the proposed Merger, (2) the benefits and synergies expected to result from the proposed Merger and (3) other statements that are not purely statements of historical fact. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of OPKO and PROLOR, are not guarantees of performance and are subject to significant risks and uncertainty. These forward-looking statements should, therefore, be considered in light of various important factors, including those set forth in this joint proxy statement/prospectus and those that are incorporated by reference into this joint proxy statement/prospectus. In addition to the risk factors identified elsewhere, important factors that could cause actual results to differ materially from those described in forward-looking statements contained herein include:

 

   

the effect of changes in the price of either OPKO’s or PROLOR’s common stock prior to the completion of the Merger on the consideration to be received by PROLOR’s stockholders;

 

   

the effect of changes in the number of shares of outstanding common stock of either OPKO or PROLOR prior to the completion of the Merger;

 

   

the potential adverse effects of the announcement and pendency of the Merger on OPKO’s or PROLOR’s stock price, business, financial condition, results of operations, reputation and business prospects;

 

   

restrictions on the business activities of OPKO and PROLOR while the Merger Agreement is in effect;

 

   

the potential adverse effects of the failure to complete the Merger on OPKO’s and PROLOR’s respective businesses, financial condition, results of operations or stock prices;

 

   

the effect of provisions in the Merger Agreement that could discourage or make it difficult for a third party to acquire PROLOR prior to the completion of the Merger;

 

   

litigation or adverse judgments relating to the proposed Merger;

 

   

the ability and timing of the parties to obtain required governmental approvals necessary to satisfy the conditions to the completion of the Merger;

 

   

tax matters relating to the proposed treatment of the Merger as a “reorganization” within the meaning of Section 368(a) of the Code, and the recognition by the Internal Revenue Service, or the IRS, of such treatment;

 

   

the Israeli tax consequences to PROLOR stockholders who are Israeli tax payors if PROLOR is not successful in obtaining the requested tax ruling from the ITA, or if such ruling is issued after the Effective Date of the Merger;

 

   

risks relating to the successful integration of OPKO’s and PROLOR’s respective businesses and to realize the intended benefits of the Merger;

 

   

risks relating to the ability of the combined company to effectively manage its expanded operations following the Merger;

 

   

the expectation that the combined company will incur losses for the foreseeable future and will not become profitable in the near future;

 

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the dilutive effect on OPKO’s current stockholders of the issuance of shares of OPKO common stock to PROLOR’s stockholders in connection with the Merger;

 

   

the risks related to loss of personnel in connection with or as a result of the Merger or the announcement of the Merger;

 

   

risks relating to the ability of the combined company to maintain OPKO’s and PROLOR’s preexisting business relationships and to establish new business relationships after the Merger is completed;

 

   

expenses relating to the Merger;

 

   

risks relating to the ability of the combined company to achieve the results described in the unaudited pro forma financial statements presented in this joint proxy statement/prospectus and the financial forecasts prepared by OPKO and PROLOR in connection with discussions concerning the Merger;

 

   

the effect of the completion of the Merger on the combined company’s stock price;

 

   

the risk of a decline in the market price of OPKO common stock if PROLOR stockholders sell the shares of OPKO common stock received in the Merger;

 

   

risks relating to the ability of the combined company to utilize OPKO’s and PROLOR’s net operating loss carryforwards after the Merger is completed;

 

   

differences in the rights associated with the OPKO common stock to be received by PROLOR stockholders in exchange for their shares of PROLOR common stock and the rights associated with the PROLOR common stock;

 

   

the effects of charges to earnings that may result from the accounting treatment of the Merger; and

 

   

risks relating to the substantial indebtedness of the combined company following the completion of the Merger.

Additional factors that could cause actual results to differ materially from those described in the forward-looking statements are set forth in “Part I—Item 1A—Risk Factors” of OPKO’s Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the SEC on March 18, 2013, “Part I—Item 1A—Risk Factors” of PROLOR’s Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the SEC on March 15, 2013, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by each of OPKO and PROLOR.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this joint proxy statement/prospectus or, in the case of documents incorporated by reference, as of the date of those documents. Neither OPKO nor PROLOR undertakes any obligation to publicly update or release any revisions to these forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this joint proxy statement/prospectus or to reflect the occurrence of unanticipated events, except as required by law.

 

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RISK FACTORS

In addition to the other information included and incorporated by reference into this joint proxy statement/prospectus, including the matters addressed in the section titled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 34, you should carefully consider the following risk factors before deciding how to vote your shares of OPKO common stock at the OPKO annual meeting and/or your shares of PROLOR common stock at the PROLOR special meeting. These factors should be considered in conjunction with the other information included by OPKO and PROLOR in this joint proxy statement/prospectus. If any of the risks described below or in the documents incorporated by reference into this joint proxy statement/prospectus actually materializes, the businesses, financial condition, results of operations, prospects or stock prices of OPKO, PROLOR and/or the combined company could be materially and adversely affected. See the section titled “Where You Can Find Additional Information” beginning on page 176.

Risks Related to the Merger

Because the Exchange Ratio is fixed and will not be adjusted in the event of changes in the price of either OPKO’s or PROLOR’s common stock, the market value of the shares of OPKO common stock to be received by the PROLOR stockholders in connection with the Merger is subject to change prior to the completion of the Merger.

The Exchange Ratio is fixed such that each share of PROLOR common stock will be converted into the right to receive 0.9951 of a share of OPKO common stock in connection with the Merger. No adjustments to this Exchange Ratio will be made pursuant to the Merger Agreement based on changes in the price of either the OPKO common stock or the PROLOR common stock prior to the completion of the Merger. Changes in stock prices may result from a variety of factors, including, among others, general market and economic conditions, changes in OPKO’s or PROLOR’s respective businesses, operations and prospects, market assessment of the likelihood that the Merger will be completed as anticipated or at all and regulatory considerations. Many of these factors are beyond OPKO’s or PROLOR’s control.

As a result of any such changes in stock prices, the market value of the shares of OPKO common stock that a PROLOR stockholder will receive at the time that the Merger is completed could vary significantly from the value of such shares on the date of this joint proxy statement/prospectus, the date of the OPKO annual meeting, the date of the PROLOR special meeting or the date on which such PROLOR stockholder actually receives its shares of OPKO common stock. For example, based on the range of closing prices of OPKO common stock during the period from April 23, 2013, the last trading day before OPKO and PROLOR announced that they had entered into the Merger Agreement, through             , 2013, the latest practicable date before the printing of this joint proxy statement/prospectus, the Exchange Ratio represented a market value ranging from a low of $         to a high of $         for each share of PROLOR common stock. Accordingly, at the time of the OPKO annual meeting or the PROLOR special meeting, as the case may be, neither the OPKO stockholders nor the PROLOR stockholders, as the case may be, will know or be able to calculate the exact market value of the consideration the PROLOR stockholders will receive upon completion of the Merger.

Changes in the number of shares of outstanding common stock of either OPKO or PROLOR prior to the completion of the Merger would result in a corresponding change to the relative ownership percentages of the current OPKO stockholders and the current PROLOR stockholders in the combined company.

Based on the number of shares of OPKO common stock and PROLOR common stock outstanding as of             , 2013, the latest practicable date before the printing of this joint proxy statement/prospectus, if the Merger had been completed on such date, the holders of PROLOR common stock would have been entitled to receive shares of OPKO common stock representing approximately     % of all shares of OPKO common stock outstanding immediately following the completion of the Merger. OPKO stockholders would have continued to own their existing shares, which would not have been affected by the Merger, and such shares would have represented approximately     % of all shares of OPKO common stock outstanding immediately following the completion of the Merger. However, because the Exchange Ratio is fixed, to the extent that the number of shares of outstanding

 

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OPKO common stock or PROLOR common stock changes prior to the completion of the Merger, whether due to any new issuance of shares of OPKO common stock or PROLOR common stock, any exercise of any outstanding options or warrants to purchase shares of OPKO common stock or PROLOR common stock, or otherwise, there will automatically occur a corresponding change in the relative ownership percentages of the combined company by the current OPKO stockholders and the current PROLOR stockholders.

The announcement and pendency of the Merger could have an adverse effect on OPKO’s and/or PROLOR’s stock price, business, financial condition, results of operations, reputation and business prospects.

The parties’ efforts to complete the Merger could cause substantial disruptions in OPKO’s and/or PROLOR’s respective businesses, which could have an adverse effect on their respective financial results. Among other things, uncertainty as to whether the Merger will be completed may affect the ability of OPKO and/or PROLOR to recruit prospective employees or to retain and motivate existing employees. Employee retention may be particularly challenging while the Merger is pending because employees may experience uncertainty about their future roles with the combined company.

Uncertainty as to the future could adversely affect OPKO’s or PROLOR’s respective businesses, reputation and relationships with potential customers. For example, vendors and others that deal with OPKO or PROLOR could defer decisions concerning working with such company, or seek to change existing business relationships with such company. Further, a substantial amount of the attention of management and employees of OPKO and PROLOR is being directed toward the completion of the Merger and thus is being diverted from such company’s day-to-day operations because matters related to the Merger (including integration planning) require substantial commitments of time and resources.

While the Merger Agreement is in effect, OPKO and PROLOR are subject to restrictions on their business activities.

While the Merger Agreement is in effect, each of OPKO and PROLOR is subject to restrictions on its business activities and must generally operate its business in the ordinary course consistent with past practice (subject to certain exceptions). These restrictions could prevent each of OPKO and PROLOR from pursuing attractive business opportunities (if any) that arise prior to the completion of the Merger and are generally outside the ordinary course of its business, and otherwise have a material adverse effect on its future results of operations or financial condition.

Failure to complete the Merger could negatively impact OPKO’s and PROLOR’s respective businesses, financial condition, results of operations or stock prices.

Completion of the Merger is conditioned upon PROLOR and OPKO satisfying certain closing conditions as set forth in the Merger Agreement, including: (i) the approval of the OPKO Share Issuance Proposal by the OPKO stockholders; (ii) the approval of the PROLOR Merger Proposal by the PROLOR stockholders; (iii) the termination or expiration of the waiting period and any extension applicable to the Merger under the HSR Act; (iv) receipt of the required approvals/clearances from the Israeli Securities Authority and the Israeli Income Tax Commission; (v) the absence of any temporary restraining order, preliminary or permanent injunction or other order by a court or other governmental entity having the effect of making illegal or otherwise prohibiting the consummation of the Merger; and (vi) the approval for listing on the NYSE of the shares of OPKO common stock issuable in connection with the Merger. The required conditions to closing may not be satisfied in a timely manner, if at all, or, if permissible, waived. If the Merger is not consummated for these or any other reasons, the ongoing business of PROLOR and OPKO may be adversely affected and will be subject to a number of risks including:

 

   

The risk that the pursuit of the Merger could lead to PROLOR’s and OPKO’s failure to pursue other beneficial opportunities as a result of the focus of PROLOR’s and OPKO’s management on the Merger;

 

   

Under the Merger Agreement, each of OPKO and PROLOR is subject to certain restrictions on the conduct of its business prior to completing the Merger, which restrictions could adversely affect its ability to realize certain of its respective business strategies;

 

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The market price of PROLOR’s and OPKO’s common stock may decline to the extent that the current market price reflects a market assumption that the Merger will be completed;

 

   

PROLOR and OPKO may experience negative reactions to the termination of the Merger from suppliers, strategic partners, vendors, investors or analysts;

 

   

Neither OPKO nor PROLOR would realize any of the anticipated benefits of having completed the Merger;

 

   

PROLOR may be required to pay a termination fee of $14,400,000 or $9,600,000 to OPKO if the Merger Agreement is terminated under certain circumstances;

 

   

OPKO may be required to pay a termination fee of $9,600,000 to PROLOR if the Merger Agreement is terminated under certain circumstances; and

 

   

The expenses of each of PROLOR and OPKO incurred related to the Merger, such as legal and accounting fees, must be paid even if the Merger is not completed and may not, except in certain circumstances, be recovered from the other party.

In addition, any delay in the consummation of the Merger, or any uncertainty about the consummation of the Merger, may adversely affect either or both companies’ respective future businesses, growth, revenue and results of operations.

The Merger Agreement contains provisions that could discourage or make it difficult for a third party to acquire PROLOR prior to the completion of the Merger.

The Merger Agreement contains provisions that make it difficult for PROLOR to entertain a third-party proposal for an acquisition of PROLOR. These provisions include the general prohibition on PROLOR’s soliciting or engaging in discussions or negotiations regarding any alternative acquisition proposal after the completion of the go-shop period, and the requirement that PROLOR pay a termination fee of $14,400,000 or $9,600,000 (as applicable) to OPKO if the Merger Agreement is terminated in specified circumstances. See the sections titled “The Merger Agreement—Restrictions on Solicitation,” “The Merger Agreement— Recommendation of PROLOR’s Board of Directors; Change of Recommendation” and “The Merger Agreement—Termination Fees and Expenses” beginning on pages 92, 93 and 99, respectively. These provisions might discourage an otherwise-interested third party from considering or proposing an acquisition of PROLOR, even one that may be deemed of greater value to PROLOR’s stockholders than the Merger. Furthermore, even if a third party elects to propose an acquisition, the termination fee may result in that third party’s offering of a lower value to PROLOR’s stockholders than such third party might otherwise have offered.

Several lawsuits have been filed against PROLOR, the members of PROLOR’s Board of Directors, OPKO and POM challenging the Merger, and an adverse judgment in any such lawsuit may prevent the Merger from becoming effective or from becoming effective within the expected timeframe.

Six putative class action lawsuits have been filed in connection with the Merger: (1) Peter Turkell v. PROLOR Biotech, Inc., et al. (Case No. A-13-680860-B), filed April 29, 2013 in the Eighth Judicial District Court in and for Clark County, Nevada; (2) Floyd A. Fried v. PROLOR Biotech, Inc., et al., (Case No. A-13-681060), filed May 1, 2013 in the Eighth Judicial District Court in and for Clark County, Nevada; (3) Marc Henzel v. PROLOR Biotech, Inc., et al. (Case No. A-13-681020-C), filed May 1, 2013, in the Eighth Judicial District Court in and for Clark County, Nevada; (4) Bradford W. Baer, et al., v. PROLOR Biotech, Inc. et al. (Case No. A-13-681218-B, filed May 3, 2013 in the Eighth Judicial District Court in and for Clark County, Nevada; (5) James Hegarty v. PROLOR Biotech, Inc., et al (Case No. A-13-681250-C), filed May 6, 2013 in the Eighth Judicial District Court in and for Clark County, Nevada; and (6) Jorge L. Salas, et al. v. PROLOR Biotech, Inc., et al. (Case No. A-13-681279-C), filed May 6, 2013 in the Eighth Judicial District Court in and for Clark County, Nevada.

 

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All six suits name PROLOR, the members of PROLOR’s Board of Directors and OPKO as defendants and the Fried and Salas suits also name POM as a defendant. All six lawsuits are brought by purported holders of PROLOR’s common stock, both individually and on behalf of a putative class of PROLOR’s stockholders, alleging that PROLOR’s Board of Directors breached its fiduciary duties in connection with the proposed Merger by purportedly failing to maximize stockholder value, and that PROLOR and OPKO aided and abetted the alleged breaches and the Fried and Salas suits also allege that POM aided and abetted the alleged breaches. All six lawsuits seek equitable relief, including, among other things, to enjoin consummation of the Merger, rescission of the Merger Agreement and (in all of the suits other than the Turkell suit) an award of all costs, including reasonable attorneys’ fees. Certain of the complaints additionally seek compensatory and/or rescissionary damages, and/or imposition of a constructive trust for any benefits improperly received by the defendants.

Each of PROLOR, OPKO and POM believes that the claims made in these lawsuits are without merit and intends to defend such claims vigorously; however, there can be no assurance that any of the companies will prevail in its defense of any of these lawsuits to which it is a party. Further, additional claims beyond those that have already been filed may be brought by the current plaintiffs or by others in an effort to enjoin the proposed Merger or seek monetary relief from PROLOR, OPKO or POM. An unfavorable resolution of any such litigation surrounding the proposed Merger could delay or prevent the consummation of the Merger. In addition, the cost of defending the litigation, even if resolved favorably, could be substantial. Such litigation could also substantially divert the attention of OPKO’s and PROLOR’s management and their resources in general. Due to the preliminary nature of all six suits, none of PROLOR, OPKO or POM is able at this time to estimate their outcome.

Certain directors and executive officers of OPKO and PROLOR may have interests that may be different from, or in addition to, interests of OPKO and PROLOR stockholders generally.

Certain of OPKO’s and PROLOR’s directors, executive officers and stockholders have conflicts of interest that may influence them to support or approve the Merger without regard to the interests of other stockholders. Specifically, PROLOR is subject to an employment agreement with Mr. Novik, PROLOR’s President, that provides for severance benefits upon a qualifying termination within 12 months following the completion of the Merger. In addition, certain of PROLOR’s officers and directors hold unvested options to purchase shares of PROLOR common stock, which will become fully vested and exercisable upon the consummation of the Merger pursuant to the stock option agreements between PROLOR and such officers and directors governing their stock options. As described in greater detail in the section titled “The Merger Agreement—Indemnification and Insurance for Directors and Officers,” PROLOR’s current and past officers and directors are also entitled to continued indemnification and insurance coverage after the Merger is completed. Furthermore, certain directors of PROLOR are also executive officers, directors and stockholders of OPKO. Dr. Frost, the Chairman of the Board of Directors of PROLOR and the holder of approximately     % of the outstanding shares of PROLOR common stock as of the date of this joint proxy statement/prospectus, is OPKO’s Chairman and Chief Executive Officer and the holder of approximately     % of the outstanding shares of OPKO common stock, as of the date of this joint proxy statement/prospectus. Dr. Hsiao, a stockholder of PROLOR and a member of the Board of Directors of PROLOR, is OPKO’s Vice Chairman of its Board of Directors and Chief Technical Officer and the holder of approximately     % of the outstanding shares of OPKO common stock as of the date of this joint proxy statement/prospectus, and Mr. Rubin, a stockholder of PROLOR and a member of the Board of Directors of PROLOR, is OPKO’s Executive Vice President—Administration, a member of the Board of Directors of OPKO, and a less than 5% stockholder of OPKO and PROLOR. These interests, among others, may influence such directors, executive officers and stockholders to support or approve the Merger. Stockholders of both companies should be aware of these interests when considering the PROLOR and OPKO board of directors’ recommendations that they vote in favor of the PROLOR Merger Agreement Proposal, or the OPKO Share Issuance Proposal, as the case may be. See “The Merger—Interests of OPKO and PROLOR Directors and Executive Officers in the Merger” beginning on page 73.

 

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Obtaining required governmental approvals necessary to satisfy the conditions to the completion of the Merger may delay or prevent completion of the Merger.

The completion of the Merger is conditioned upon the receipt of certain governmental authorizations, consents, orders, rulings or other approvals, including the expiration or termination of the waiting period under the HSR Act and receipt of the required approvals/clearances from the ISA and a tax ruling from the ITA. OPKO and PROLOR intend to pursue all required approvals and rulings in accordance with the Merger Agreement. These approvals and rulings may impose conditions on or require divestitures relating to the operations or assets of OPKO or PROLOR as well as conditions on the timing of payment of taxes and the rates applicable to the share exchange and such conditions or divestitures may jeopardize or delay the completion of the Merger or may reduce the anticipated benefits of the Merger. Further, no assurance can be given that the required approvals will be obtained and, even if all such approvals are obtained, no assurance can be given as to the terms, conditions and timing of the approvals or whether they will satisfy the terms of the Merger Agreement. See the sections titled “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 96 for a discussion of the conditions to the completion of the Merger, and “The Merger—Regulatory Approvals Required for the Merger” beginning on page 74.

If the Mergers do not qualify as a “reorganization” within the meaning of Section 368(a) of the Code, the stockholders of PROLOR may be required to pay substantial U.S. federal income taxes.

OPKO and PROLOR intend, and each will receive an opinion from its respective tax counsel to the effect, that the Mergers will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. The opinions of such respective tax counsel will be based on certain assumptions, representations and covenants made by OPKO, POM and PROLOR. If any of those representations, covenants and assumptions is inaccurate, the conclusions reached by counsel in such opinions may not apply. Moreover, the opinions of such tax counsel do not bind the IRS, nor do they prevent the IRS from adopting a contrary position. Neither OPKO nor PROLOR has requested, or intends to request, a ruling from the IRS with respect to the tax consequences of the Mergers, and there can be no assurance that the companies’ position would be sustained by a court if challenged by the IRS. If the Mergers do not qualify as a “reorganization” within the meaning of Section 368(a) of the Code, PROLOR stockholders who will realize a gain will generally be subject to income tax on such gain on their receipt of OPKO common stock in connection with the Mergers. For a more complete discussion of the tax consequences of the Mergers, see the section titled “Material United States Federal Income Tax Consequences of the Mergers” beginning on page 77.

If PROLOR is not successful in obtaining the requested tax ruling from ITA, or if such ruling is issued after the Effective Date of the Merger, the stockholders of PROLOR that are Israeli tax payors may be subject to substantial Israeli taxes.

PROLOR has filed a request with the ITA for a ruling that, among other things: (i) the exchange of securities held by Israeli tax payors (who became stockholders of PROLOR after the date PROLOR became a public company) will be exempt from Israeli tax at the time of the Merger and such tax will be deferred until the time that such Israeli stockholder sells the shares of OPKO common stock received in the Merger; and (ii) options to purchase shares of OPKO common stock and shares of OPKO common stock that are granted or issued in respect of options, shares issued upon the exercise of such options or restricted stock of PROLOR shall maintain the same tax treatment as prior to the Merger and the Merger shall not be deemed a tax event with respect to such options or shares. Pursuant to the Merger Agreement, the obtaining of such ruling in such form and on such conditions as is reasonably acceptable to PROLOR is a condition to the obligations of PROLOR to consummate the Merger and, therefore, PROLOR may elect not to consummate the Merger if such ruling is not issued or contains conditions that are not reasonably satisfactory to PROLOR.

Alternatively, if PROLOR elects to waive this condition, then unless PROLOR and the ITA agree on an alternative interim arrangement whereby the consideration to be paid in connection with the Merger will be withheld until such ruling is obtained, PROLOR stockholders that are Israeli tax payors will be subject to Israeli taxes on the exchange of securities in the Merger. Pursuant to Israeli law, in the absence of a ruling, OPKO will

 

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be obligated to withhold the amount of such taxes from the consideration paid to Israeli tax payors in connection with the Merger and remit such amounts to the ITA. In addition, in the absence of such ruling, following the Merger, the holders of options, shares issued upon the exercise of such options or restricted stock of PROLOR will lose the preferential tax treatment for which they are currently eligible. No assurance can be given that the tax ruling will be issued on terms reasonably acceptable to PROLOR in a timely manner, or at all, or that an interim arrangement will be reached with the ITA. For a more complete discussion of the Israeli tax consequences of the Merger, see the section titled “Israeli Income Tax Treatment of the Merger” beginning on page 80.

Risks Related to the Combined Company if the Merger Is Completed

The failure to integrate successfully the businesses of OPKO and PROLOR in the expected timeframe would adversely affect the combined company’s future results and the market price of the combined company’s common stock following the completion of the Merger.

The success of the Merger will depend, in large part, on the ability of the combined company to realize the anticipated benefits of the Merger. To realize such benefits, the combined company must successfully integrate OPKO’s and PROLOR’s respective businesses. This integration will be complex and time-consuming. The failure to successfully integrate and manage the challenges presented by the integration process may result in the combined company’s failure to achieve some or all of the anticipated benefits of the Merger. Potential difficulties that may be encountered in the integration process include the following:

 

   

Complexities associated with managing the larger, more complex, combined business;

 

   

Integrating personnel from the two companies;

 

   

The loss of key employees;

 

   

Potential issues with respect to the Phase 3 clinical trials for PROLOR’s long-acting version of human growth hormone, hGH-CTP, including the risk that such trials will not be completed on a timely basis or at all, that earlier clinical results may not be reproducible or indicative of future results;

 

   

Potential issues with respect to hGH-CTP and/or any of PROLOR’s compounds under development, including the risk that any such compound may fail, may not achieve the expected results or effectiveness and may not generate data that would support the approval or marketing of products for the indications being studied or for other indications and that currently available products, as well as products under development by others, may prove to be as or more effective than PROLOR’s products for the indications being studied;

 

   

Potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the Merger; and

 

   

Performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by completing the Merger and integrating the companies’ operations.

If any of these events were to occur, the ability of the combined company to maintain relationships with customers, suppliers and employees or the combined company’s ability to achieve the anticipated benefits of the Merger could be adversely affected, the combined company’s earnings could be reduced or the combined company’s business and financial results could be adversely affected, any of which could adversely affect the market price of the combined company’s common stock.

The combined company’s future results will suffer if the combined company does not effectively manage its expanded operations following the Merger.

Following the Merger, the size of the combined company’s business will be larger than the current businesses of OPKO and PROLOR. The combined company’s future success depends, in part, upon its ability to manage this expanded business, which will pose substantial challenges for the combined company’s management, including

 

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challenges related to the management and monitoring of new operations and associated increased costs and complexity. Neither OPKO nor PROLOR can assure you that the combined company will be successful or that the combined company will realize the expected operating efficiencies, annual net operating synergies, revenue enhancements and other benefits currently anticipated to result from the Merger.

OPKO and PROLOR expect the combined company to incur losses for the foreseeable future and do not expect the combined company to become profitable in the near future.

Each of OPKO and PROLOR has a limited operating history, neither is profitable and each has incurred losses since its inception. Consequently, OPKO and PROLOR expect that the combined company will incur losses for the foreseeable future, and these losses will likely increase as the combined company continues OPKO’s and PROLOR’s combined research activities and conducts development of, and seeks regulatory approvals and clearances for, its product candidates, and prepares for and begins to commercialize any approved or cleared products. If the combined company’s product candidates fail in clinical trials or do not gain regulatory approval or clearance, or if such product candidates do not achieve market acceptance, the combined company may never become profitable. In addition, if the U.S. Food and Drug Administration, or the FDA, requires the combined company to perform studies in addition to those currently anticipated, its expenses will increase beyond current expectations and the timing of any potential product approval may be delayed. Even if the combined company achieves profitability in the future, it may not be able to sustain profitability in subsequent periods.

The issuance of shares of OPKO common stock to PROLOR stockholders in connection with the Merger will substantially dilute the voting power of current OPKO stockholders.

Pursuant to the terms of the Merger Agreement, and based on the number of shares of PROLOR common stock outstanding as of the date of the Merger Agreement, OPKO and PROLOR anticipate that, in connection with the Merger, OPKO will issue shares of OPKO common stock to PROLOR stockholders representing approximately     % of the shares of OPKO common stock outstanding immediately following the completion of the Merger. Accordingly, the issuance of shares of OPKO common stock to PROLOR stockholders in connection with the Merger will significantly reduce the relative voting power of each share of OPKO common stock currently held by OPKO stockholders.

The loss of key personnel could have a material adverse effect on the combined company’s business, financial condition or results of operations.

The success of the Merger will depend in part on the combined company’s ability to retain key OPKO and PROLOR employees who continue employment with the combined company after the Merger is completed. These employees might decide not to remain with the combined company after the Merger is completed. If these key employees terminate their employment, the combined company’s activities might be adversely affected, management’s attention might be diverted from successfully integrating PROLOR’s operations to recruiting suitable replacements and the combined company’s business, financial condition or results of operations could be adversely affected. In addition, the combined company might not be able to locate suitable replacements for any such key employees who leave the combined company or offer employment to potential replacements on reasonable terms.

The success of the combined company will also depend on relationships with third parties and pre-existing customers of OPKO and PROLOR, which relationships may be affected by customer preferences or public attitudes about the Merger. Any adverse changes in these relationships could adversely affect the combined company’s business, financial condition or results of operations.

The combined company’s success will be dependent on the ability to maintain and renew pre-existing business relationships of both OPKO and PROLOR and to establish new business relationships. There can be no assurance that the business of the combined company will be able to maintain pre-existing customer contracts of OPKO and

 

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other business relationships of OPKO or PROLOR, or enter into or maintain new customer contracts and other business relationships, on acceptable terms, if at all. The failure to maintain important customer and other business relationships could have a material adverse effect on the business, financial condition or results of operations of the combined company.

In the event the Merger is completed, the combined company may incur significant expenses in connection with the integration of the two companies.

In the event the Merger is completed, the combined company may incur significant expenses in connection with the integration of the two companies, including integrating personnel, information technology systems, accounting systems, vendors and strategic partners of each company and implementing consistent standards, policies, and procedures.

Future results of the combined company may differ materially from the unaudited pro forma condensed combined consolidated financial statements presented in this joint proxy statement/prospectus and the financial forecasts prepared by PROLOR in connection with discussions concerning the Merger.

The future results of the combined company may be materially different from those shown in the unaudited pro forma condensed combined consolidated financial statements presented in this joint proxy statement/prospectus, which show only a combination of the historical results of OPKO and PROLOR, and the financial forecasts prepared by PROLOR in connection with discussions concerning the Merger. OPKO expects to incur significant costs associated with the completion of the Merger and combining the operations of the two companies, the exact magnitude of which is not yet known. Furthermore, these costs may decrease capital that could be used by OPKO to fund research and development, to fund clinical trials and to fund the commercialization and marketing of products in the future, as well as its ability to pursue acquisitions of products, technologies or companies.

The market price of the combined company’s common stock may decline as a result of the Merger.

The market price of the combined company’s common stock may decline as a result of the Merger for a number of reasons, including if:

 

   

the combined company does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated;

 

   

the effect of the Merger on the combined company’s business and prospects is not consistent with the expectations of financial or biotechnology industry analysts; or

 

   

investors react negatively to the effect of the Merger on the combined company’s business and prospects.

If PROLOR stockholders sell the shares of OPKO common stock received in the Merger, they could cause a decline in the market price of the combined company’s common stock.

OPKO’s issuance of common stock in the Merger will be registered with the SEC. As a result, those shares will be immediately available for resale in the public market, except that shares of OPKO common stock received by PROLOR stockholders who are or become affiliates of OPKO for purposes of Rule 144 under the Securities Act may be resold by them only in transactions permitted by Rule 144, or as otherwise permitted under the Securities Act. If PROLOR stockholders sell significant amounts of the OPKO common stock received by them in the Merger or holders of the combined company’s common stock sell significant amounts of common stock immediately after the Merger is completed, the market price of the combined company’s common stock may decline.

The price of OPKO common stock after the Merger is completed may be affected by factors different from those currently affecting the shares of OPKO or PROLOR, individually, prior to the completion of the Merger.

Upon completion of the Merger, holders of PROLOR common stock will become holders of OPKO common stock. The business of OPKO differs from the business of PROLOR in important respects and, accordingly, the

 

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results of operations of the combined company and the price of its common stock following the completion of the Merger may be affected by factors different from those currently affecting the independent results of operations of OPKO and PROLOR. For a discussion of the businesses of OPKO and PROLOR and of certain factors to consider in connection with those businesses, see the documents incorporated by reference into this joint proxy statement/prospectus referred to under the section titled “Where You Can Find Additional Information” beginning on page 176.

The combined company’s ability to utilize its net operating loss carryforwards in the future may be substantially limited by Section 382 of the Code.

In general, under Section 382 of the Code, a corporation that undergoes an “ownership change” within the meaning of Section 382 of the Code is subject to limitations on its ability to utilize net operating loss carryforwards generated prior to such ownership change to offset future taxable income. In general, an ownership change occurs if the aggregate stock ownership of certain stockholders increases by more than 50 percentage points over such stockholders’ lowest percentage ownership during the testing period (which is generally three years). If an ownership change occurs, Section 382 imposes an annual limitation on the amount of income against which pre-ownership change net operating loss carryforwards may be offset generally equal to the value of the stock of the corporation immediately prior to the ownership change, multiplied by the adjusted federal tax-exempt rate set by the IRS.

As a result of the Merger, each of OPKO and PROLOR may undergo an “ownership change” for purposes of Section 382 of the Code. Accordingly, the combined company’s ability to utilize OPKO’s and PROLOR’s net operating loss carryforwards may be limited as described in the preceding paragraph. These limitations could in turn result in increased future tax payments for the combined company, which could have a material adverse effect on the business, financial condition or results of operations of the combined company.

The rights associated with the OPKO common stock to be received by PROLOR stockholders as a result of the Merger will be different than the rights associated with the PROLOR common stock.

The rights associated with PROLOR common stock are different from the rights associated with OPKO common stock. See the section of this joint proxy statement/prospectus titled “Comparison of Rights of Holders of OPKO Common Stock and PROLOR Common Stock” for a discussion of the different rights associated with PROLOR common stock.

Charges to earnings resulting from the application of the acquisition method of accounting may adversely affect the market value of OPKO common stock following the Merger.

In accordance with GAAP, OPKO will be considered the acquiror of PROLOR for accounting purposes. OPKO will account for the Merger using the acquisition method of accounting. As a result, there may be charges related to the acquisition that are required to be recorded to OPKO’s earnings that could adversely affect the market value of OPKO common stock following the completion of the Merger. Under the acquisition method of accounting, OPKO will allocate the total purchase price to the assets acquired, including identifiable intangible assets, and liabilities assumed from PROLOR based on their fair values as of the date of the completion of the Merger, and record any excess of the purchase price over those fair values as goodwill. For certain tangible and intangible assets, revaluing them to their fair values as of the completion date of the Merger may result in OPKO’s incurring additional depreciation and amortization expense that may exceed the combined amounts recorded by OPKO and PROLOR prior to the Merger. This increased expense will be recorded by OPKO over the useful lives of the underlying assets. In addition, to the extent the value of goodwill or intangible assets become impaired after the Merger, OPKO may be required to incur charges relating to the impairment of those assets.

 

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The combined company will have substantial indebtedness following the Merger, which may limit its financial flexibility.

Following the completion of the Merger, the combined company is expected to have approximately $219.1 million in pro-forma total debt outstanding, all of which is associated with OPKO. This amount of indebtedness may limit the combined company’s flexibility as a result of its debt service requirements, and may limit the combined company’s ability to access additional capital and make capital expenditures and other investments in its business, to withstand economic downturns and interest rate increases and to plan for or react to changes in its business and its industry.

There can be no assurance that additional capital will be available to the combined company on acceptable terms, or at all, and any such failure to secure additional capital on acceptable terms or at all could adversely impact its business, results of operations, liquidity, capital resources and financial condition. If the combined company is not able to secure additional funding when needed, it may have to delay, reduce the scope of, or eliminate one or more of its clinical trials or research and development programs. To the extent that the combined company raises additional funds by issuing equity securities, its stockholders may experience additional significant dilution, and debt financing, if available, may involve restrictive covenants. To the extent that the combined company raises additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to its technologies or product candidates or grant licenses on terms that may not be favorable to the combined company. The combined company may seek to access the public or private capital markets whenever conditions are favorable, even if it does not have an immediate need for additional capital at that time.

Other Risks Related to OPKO and PROLOR

In addition to the foregoing risks, OPKO and PROLOR are, and will continue to be, subject to the risks described under “Part I—Item 1A—Risk Factors” in OPKO’s Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the SEC on March 18, 2013; under “Part I—Item 1A—Risk Factors” of PROLOR’s Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the SEC on March 15, 2013; and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by each of OPKO and PROLOR.

 

 

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THE MERGER

Structure of the Merger

In accordance with the Merger Agreement and the NRS, at the Effective Time, POM, a wholly owned subsidiary of OPKO formed solely for the purpose of facilitating the Merger, will merge with and into PROLOR, with PROLOR continuing as the surviving corporation, or the Surviving Corporation, and a wholly owned subsidiary of OPKO. The Merger will become effective when articles of merger are filed with the Secretary of State of the State of Nevada or at such later time as agreed to by the parties and specified in the articles of merger (not to be later than 90 days after the filing of the articles of merger). At the Effective Time, the articles of incorporation of the Surviving Corporation shall be the articles of incorporation of POM in effect immediately prior to the Effective Time, and the bylaws of the Surviving Corporation shall be the bylaws of POM in effect immediately prior to the Effective Time, except that each will be amended to change the name of the company therein to “PROLOR Biotech, Inc.” As promptly as practicable after the completion of the Merger, PROLOR will merge with and into a Delaware limited liability company, wholly owned by OPKO, with the Delaware limited liability company surviving as a wholly owned subsidiary of OPKO.

If the OPKO stockholders approve the OPKO Share Issuance Proposal and the PROLOR stockholders approve the PROLOR Merger Proposal, then OPKO and PROLOR expect the Merger to be completed as soon as practicable following the OPKO annual meeting and PROLOR special meeting. Upon completion of the Merger, shares of PROLOR common stock will be delisted from the NYSE MKT and the Tel Aviv Stock Exchange and there will no longer be a public trading market for the PROLOR common stock. In addition, the PROLOR common stock will be deregistered under the Exchange Act and PROLOR will cease to file periodic reports with the SEC. Following the completion of the Merger, the OPKO common stock will continue to be traded on the NYSE under the symbol “OPK.” Additionally, OPKO intends to apply to list its shares on the Tel Aviv Stock Exchange prior to the closing of the Merger.

What PROLOR Stockholders Will Receive in the Merger

Upon completion of the Merger, by virtue of the Merger and without any action on the part of the holders of PROLOR common stock, each share of PROLOR common stock outstanding as of the Effective Time (other than any shares of PROLOR common stock held by OPKO, PROLOR, POM or any other subsidiaries of OPKO or PROLOR, which will be cancelled upon completion of the Merger) will be converted into the right to receive 0.9951 of a share of OPKO common stock.

If PROLOR’s common stock is changed into, or exchanged for, a different number of shares or a different class prior to the Effective Time, by reason of any stock dividend, subdivision, reclassification, reorganization, recapitalization, split, combination, contribution or exchange of shares, then the Exchange Ratio will be adjusted to provide the holders of PROLOR’s common stock, warrants, and, to the extent required under PROLOR’s 2005 Stock Incentive Plan, 2007 Equity Incentive Plan and 2007 Israeli Sub Plan for the 2007 Equity Incentive Plan, stock options and other equity awards issued under such plans, the same economic effect as contemplated by the Merger Agreement. However, the Exchange Ratio is otherwise fixed and no adjustments to the Exchange Ratio will be made based on changes in the price of either the OPKO common stock or PROLOR common stock prior to the completion of the Merger. Changes in stock price may result from a variety of factors, including, among others, general market and economic conditions, changes in OPKO’s or PROLOR’s respective businesses, operations and prospects, the market assessment of the likelihood that the Merger will be completed as anticipated or at all and regulatory considerations. Many of these factors are beyond OPKO’s or PROLOR’s control.

As a result of any changes in the price of either the OPKO common stock or PROLOR common stock, the market value of the shares of OPKO common stock that PROLOR’s stockholders will receive at the time that the Merger is completed could vary significantly from the value of such shares on the date of this joint proxy statement/prospectus, the date of the OPKO annual meeting, the date of the PROLOR special meeting or the date on which the PROLOR stockholders actually receive their shares of OPKO common stock. For example, based

 

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on the range of closing prices of OPKO common stock during the period from April 23, 2013, the last trading day before the public announcement of the Merger, through                 , 2013, the latest practicable date before the printing of this joint proxy statement/prospectus, the Exchange Ratio represented a market value ranging from a low of $          to a high of $         for each share of PROLOR common stock. Accordingly, at the time of the OPKO annual meeting or the PROLOR special meeting, as the case may be, neither the OPKO stockholders nor the PROLOR stockholders, as the case may be, will know or be able to calculate the exact market value of the consideration the PROLOR stockholders will receive upon completion of the Merger.

No fractional shares of OPKO common stock will be issued to PROLOR stockholders in connection with the Merger. Instead, a PROLOR stockholder who would otherwise be entitled to a fractional share (after taking into account all certificates delivered by such stockholder) will receive one full share of OPKO common stock in lieu of such fractional share.

For an additional description of what PROLOR stockholders will receive in connection with the Merger, see the section titled “The Merger Agreement—Merger Consideration” beginning on page 82.

Ownership of OPKO After the Completion of the Merger

Based on the number of shares of OPKO common stock and PROLOR common stock outstanding as of             , 2013, the latest practicable date before the printing of this joint proxy statement/prospectus, if the Merger had been completed on such date, the holders of PROLOR common stock would have been entitled to receive shares of OPKO common stock representing approximately         % of all shares of OPKO common stock outstanding immediately following the completion of the Merger. OPKO stockholders would have continued to own their existing shares, which would not have been affected by the Merger, and such shares would have represented approximately         % of all shares of OPKO common stock outstanding immediately following the completion of the Merger. However, because the Exchange Ratio is fixed, to the extent that the number of shares of outstanding OPKO common stock or PROLOR common stock changes prior to the completion of the Merger, there will automatically occur a corresponding change in the relative ownership percentages of the combined company by the current OPKO stockholders and the current PROLOR stockholders. Such changes may occur due to, among other reasons, any new issuance of shares of OPKO common stock or PROLOR common stock, any exercise of outstanding options or warrants to purchase shares of OPKO common stock or PROLOR common stock, or otherwise. Although the Merger Agreement imposes limits on the ability of each of OPKO and PROLOR to issue additional shares of Common Stock, OPKO may issue shares or equity rights representing up to 20% of the outstanding shares of OPKO common stock outstanding as of the date of the Merger Agreement.

Treatment of PROLOR Stock Options and Warrants

Stock Options

Upon completion of the Merger, each option to purchase one share of PROLOR common stock that is outstanding and unexercised immediately prior to the Effective Time will be converted into an option to purchase OPKO common stock and (1) the number of shares of OPKO common stock subject to such option will be adjusted to an amount equal to the product of (a) the number of shares of PROLOR common stock subject to such option immediately before the Effective Time and (b) the Exchange Ratio, rounded down to the nearest whole share, and (2) the per share exercise price of such option will be adjusted to a price equal to the quotient of (a) the per share exercise price of such option and (b) the Exchange Ratio, rounded up to the nearest whole cent. OPKO will assume each such stock option in accordance with the terms and conditions of the applicable PROLOR equity incentive plan and stock option agreement relating to such PROLOR stock option, subject to the adjustments described in the preceding sentence and the substitution of OPKO and its Compensation Committee for PROLOR and its Compensation Committee with respect to the administration of each PROLOR equity incentive plan. In addition, pursuant to the stock option agreements governing PROLOR’s outstanding stock option awards, each PROLOR stock option will become fully vested and exercisable upon the consummation of the Merger. Dr. Havron and

 

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Messrs. Novik and Fima have each executed waiver agreements with PROLOR whereby they have waived their right to acceleration of the vesting of the stock options that were granted to each of them in February 2013 upon the closing of the Merger.

For example, if you hold an option to purchase up to 1,000 shares of PROLOR common stock at an exercise price of $2.00 per share, upon completion of the Merger, such option will be converted into an option to purchase up to 995 shares of OPKO common stock (995.1 shares rounded down to the nearest whole share) at an exercise price of $2.01 per share ($2.009 rounded up to the nearest whole cent).

As of                 , 2013, the latest practicable date before the printing of this joint proxy statement/prospectus, there were outstanding options to purchase                 shares of PROLOR common stock.

Warrants

Upon completion of the Merger and subject to the consent of the holder thereof, each warrant to purchase one share of PROLOR common stock that is outstanding and unexercised immediately prior to the Effective Time will be converted into a warrant to purchase OPKO common stock and (1) the number of shares of OPKO common stock subject to such warrant will be adjusted to an amount equal to the product of (a) the number of shares of PROLOR common stock subject to such warrant immediately before the Effective Time and (b) the Exchange Ratio, rounded up to the nearest whole share, and (2) the per share exercise price of such warrant will be adjusted to a price equal to the quotient of (a) the per share exercise price of such warrant and (b) the Exchange Ratio, rounded up to the nearest whole cent. OPKO will assume each such warrant in accordance with the terms and conditions thereof, subject to the conditions and adjustments described in the preceding sentence.

For example, if you hold a warrant to purchase up to 1,000 shares of PROLOR common stock at an exercise price of $2.00 per share, upon completion of the Merger, such warrant will be converted into a warrant to purchase up to 996 shares of OPKO common stock (995.1 shares rounded up to the nearest whole share) at an exercise price of $2.01 per share ($2.009 rounded up to the nearest whole cent).

As of                 , 2013, the latest practicable date before the printing of this joint proxy statement/prospectus, there were outstanding warrants to purchase                 shares of PROLOR common stock.

What OPKO Stockholders Will Receive in the Merger

OPKO stockholders will not receive any additional shares of OPKO common stock as a result of the Merger, and the rights associated with their shares of OPKO common stock will remain unchanged, except insofar as the relative voting power associated with such shares will be diluted as a result of the issuance of additional shares of OPKO common stock to PROLOR stockholders in connection with the Merger such that each share of OPKO common stock outstanding immediately prior to the completion of the Merger will represent a smaller percentage of the aggregate number of shares of OPKO common stock outstanding after the completion of the Merger than it did prior to completion of the Merger.

Treatment of OPKO Stock Options and Restricted Stock

Equity awards previously issued by OPKO will remain outstanding and will not be affected by the Merger.

Background of the Merger

As part of their ongoing management of the business and affairs of their respective companies, the PROLOR Board of Directors and the OPKO Board of Directors periodically evaluate available strategic alternatives and consider ways to enhance their respective company’s performance and prospects. For each company, as part of these reviews, and to enhance and maximize stockholder value, the reviews have included consideration of potential strategic transactions with other companies in the biopharmaceuticals industry and the potential benefits

 

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and risks of such transactions. In particular, PROLOR and OPKO each considered the potential benefits of a combination of the two companies and, on a few occasions during the past four years, OPKO and PROLOR engaged in informal, exploratory discussions regarding possible licensing arrangements, strategic alliances and joint ventures, including a potential strategic business combination. These discussions, however, remained exploratory and informal and did not result in any negotiations, agreement, arrangement, or understanding between the parties with respect to a business combination.

The PROLOR Board of Directors, together with PROLOR’s senior management and advisors, has periodically reviewed and considered various strategic opportunities available to PROLOR, including whether the continued execution of PROLOR’s strategy as a stand-alone company, equity offerings or the possible sale of PROLOR to, or a combination of PROLOR with, a third party offered the best avenue to enhance stockholder value. In the last four years, representatives of PROLOR held conversations from time to time with representatives of potential merger partners or purchasers in connection with potential business combination transactions. None of these conversations, negotiations or activities, other than those with OPKO, ultimately resulted in an agreement.

During the period from October 2012 through December 2012, PROLOR engaged in extensive discussions and negotiations with a pharmaceutical company, which we refer to as “Bidder A”, regarding a potential acquisition of PROLOR by Bidder A. Dr. Frost is a director of and deemed an affiliate of Bidder A. In the course of the discussions with Bidder A, and in consideration of certain potential conflicts of interest relating to Dr. Frost’s positions with PROLOR and Bidder A and his ownership interest in PROLOR, the PROLOR Board of Directors established the Special Committee, consisting of Mr. Stern and Dr. Gorecki. The Special Committee was charged by the PROLOR Board of Directors with the responsibility to, among other things, evaluate and negotiate a potential strategic transaction with Bidder A. The PROLOR Board of Directors authorized the Special Committee to engage its own outside advisors, including legal counsel and a financial advisor, to assist the Special Committee with its evaluation and negotiation of a potential strategic transaction between PROLOR and Bidder A.

In connection with its authority, and to assist with the exercise of its duties and responsibilities to evaluate and negotiate a potential strategic transaction between PROLOR and Bidder A, the Special Committee engaged DLA Piper as its outside legal counsel. In addition, the Special Committee considered several potential financial advisors to assist the Special Committee with its evaluation of a potential strategic transaction. After discussing and deliberating its various options, the Special Committee determined to engage Jefferies LLC, or Jefferies, which has provided financial advisory and other investment banking services to PROLOR and certain of its affiliates as well as other companies with which Dr. Frost is affiliated (but not including Bidder A), to act as financial advisor to the Special Committee in connection with a potential transaction involving all or a material portion of the equity or assets of PROLOR and its subsidiaries given, among other things, Jefferies’ familiarity with the business of PROLOR and its subsidiaries.

In December 2012, PROLOR entered into a confidentiality agreement with Bidder A to facilitate the exchange of confidential information relating to the parties’ respective businesses so that PROLOR and Bidder A could evaluate a potential strategic transaction between the two companies. During the course of December 2012, PROLOR and Bidder A discussed the potential terms of a transaction between the two companies, exchanged preliminary drafts of a merger agreement involving a merger of PROLOR with and into a subsidiary of Bidder A, and worked to negotiate the terms of a possible merger. Among other things, PROLOR and Bidder A engaged in negotiations regarding the specific value and amount of the per share consideration that Bidder A was prepared to offer to PROLOR stockholders, which was expected to consist of (i) a cash amount payable by Bidder A upon the closing of a potential transaction with Bidder A and (ii) one contingent value right representing the right to receive additional future cash payments from Bidder A upon PROLOR’s achievement of certain milestones. Following extensive due diligence by Bidder A, including site visits at the facilities of PROLOR and its suppliers, Bidder A determined not to proceed with an acquisition of PROLOR and suggested to PROLOR that the parties focus their future discussions on the licensing by PROLOR to Bidder A of specific applications of PROLOR’s technology. Over the following months, Bidder A’s and PROLOR’s respective management teams engaged in continued discussions regarding potential licensing arrangements; however, PROLOR and Bidder A did not reach a definitive agreement regarding any such arrangement.

 

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In mid-March, Mr. Novik and Dr. Frost discussed, among other strategic transactions, the possibility of a business combination between PROLOR and OPKO. Mr. Novik and Dr. Frost discussed in general the potential structure of a transaction during the course of their discussion but did not engage in specific price discussions. Following their discussion, Mr. Novik contacted Dr. Gorecki and Mr. Stern, both members of the Special Committee, to inform them of the discussions with Dr. Frost, including with respect to a potential business combination between PROLOR and OPKO.

On April 2, 2013, Mr. Novik and Dr. Havron met with Dr. Frost and Mr. Rubin to discuss the terms of a potential business combination between PROLOR and OPKO. At that meeting, Mr. Novik, Dr. Havron, Dr. Frost and Mr. Rubin discussed the possible terms and structure upon which a transaction between OPKO and PROLOR could proceed. After extensive negotiations, Dr. Frost proposed to Mr. Novik and Dr. Havron that OPKO acquire PROLOR through a stock-for-stock merger transaction involving a fixed exchange ratio that would value PROLOR common stock at $7.00 per share.

Following the meeting between Mr. Novik, Dr. Havron and Dr. Frost, and in light of the potential conflicts of interest in Dr. Frost’s, Dr. Hsaio’s, and Mr. Rubin’s positions with OPKO and shareholdings in PROLOR and their membership on the PROLOR Board of Directors, the PROLOR Board of Directors charged the previously established Special Committee with evaluating and negotiating the terms under which a potential transaction between OPKO and PROLOR could occur and the PROLOR Board of Directors authorized PROLOR’s management to continue its discussions with OPKO regarding a potential business combination and to assist the Special Committee with its evaluation of a potential business combination between PROLOR and OPKO and negotiations with OPKO in connection with any such potential transaction.

On April 6, 2013, Mr. Novik met with Mr. Stern to discuss the terms of a potential business combination with OPKO, as proposed by Dr. Frost at the April 2nd meeting, including the structure of the transaction and the form and amount of consideration payable to PROLOR stockholders. Mr. Novik discussed the same matters with Dr. Gorecki on April 8, 2013.

During the following week, the Special Committee and members of PROLOR’s management, including Mr. Novik, held various discussions with DLA Piper, outside counsel to the Special Committee, and Greenberg Traurig, P.A., or Greenberg, outside counsel to PROLOR, regarding the potential terms under which OPKO would acquire PROLOR.

On April 9, 2013, the Special Committee verbally engaged Oppenheimer to deliver an opinion to the Special Committee as to the fairness, from a financial point of view, of the consideration to be received by the holders of PROLOR common stock (excluding OPKO, its subsidiaries and any of their respective affiliates) pursuant to the Merger Agreement. In addition, given Jefferies’ prior involvement in December 2012 in connection with a potential transaction involving PROLOR and Bidder A, it was determined that Jefferies would serve as financial advisor to PROLOR in connection with a potential transaction involving PROLOR and OPKO.

On April 10, 2013, the Special Committee met with representatives of DLA Piper and Oppenheimer to review in detail the potential transaction with PROLOR, including the premium of the Exchange Ratio over the then-current price of PROLOR common stock and structural aspects of the potential transaction. During the meeting, the Special Committee and representatives of DLA Piper reviewed the Special Committee’s fiduciary duties and discussed at length the impact of the proposed transaction on PROLOR stockholders, the nature of any potential conflicts of interest resulting from certain of PROLOR’s executives and members of the PROLOR Board of Directors having interests in both PROLOR and OPKO, and the existence of certain parties with large share positions in both PROLOR and OPKO, including Dr. Frost.

Following further discussions among PROLOR, OPKO and their respective counsel, on April 11, 2013, PROLOR and OPKO executed a confidentiality agreement and, OPKO and PROLOR, together with their respective management and counsel, commenced a due diligence review of the companies’ respective businesses and operations.

 

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On April 16, 2013, the Special Committee, through its counsel, DLA Piper, submitted a draft of the Merger Agreement to OPKO and Akerman, outside counsel to OPKO, for review by the OPKO Board of Directors. Through discussions with its outside counsel, DLA Piper, between April 11, 2013 and April 16, 2013, the members of the Special Committee reviewed and discussed the terms of the Merger Agreement that was submitted to OPKO.

On April 16, 2013, after extensive discussions between the Special Committee and Oppenheimer during the period between April 10, 2013 and April 16, 2013, the Special Committee entered into an engagement letter with Oppenheimer which confirmed the terms of the Special Committee’s verbal engagement of Oppenheimer to deliver an opinion to the Special Committee as to the fairness, from a financial point of view, of the consideration to be received by the holders of PROLOR common stock (excluding OPKO, its subsidiaries and any of their respective affiliates) pursuant to the Merger Agreement.

On April 16, 2013, OPKO engaged Barrington to deliver an opinion as to the fairness, from a financial point of view, to OPKO of the consideration to be paid by OPKO in connection with the potential acquisition by OPKO of all or substantially all of the business, assets or capital stock of PROLOR.

On April 17, 2013, OPKO, through Akerman, submitted a revised draft of the Merger Agreement to the Special Committee through DLA Piper.

On April 18, 2013, the Special Committee met with Mr. Novik and representatives of DLA Piper, Oppenheimer and Jefferies to review the terms of the proposed transaction with OPKO, including the terms of the Merger Agreement and the proposed structure of the transaction. Representatives of DLA Piper discussed with the Special Committee the terms of the revised draft of the Merger Agreement from OPKO, the progress made with respect to due diligence and strategy for the negotiations of the terms of a definitive Merger Agreement. During the course of this meeting, Oppenheimer updated the Special Committee on the status of the work performed by it in connection with its fairness opinion analyses.

On April 19, 2013, the OPKO Board of Directors met with representatives of OPKO management and representatives of Akerman to review the terms of the proposed transaction with PROLOR, including the terms of the Merger Agreement and the proposed structure of the transaction. Representatives of OPKO management reviewed with the OPKO Board of Directors the engagement of Barrington, a corporate overview of PROLOR and a presentation of PROLOR’s hGH-CTP program, and the material relationships between OPKO and PROLOR, specifically relating to Dr. Frost, Dr. Hsiao and Mr. Rubin. Representatives of Akerman discussed with the OPKO Board of Directors the progress made with respect to due diligence and negotiation of the terms of a definitive Merger Agreement. Representatives of Akerman reviewed for the OPKO Board of Directors their fiduciary duties. Dr. Frost and Dr. Hsiao did not attend the meeting of the OPKO Board of Directors. Mr. Rubin attended the meeting of the OPKO Board of Directors and was present for the presentation of PROLOR’s business and the terms of the Merger Agreement and the proposed structure of the transaction, but recused himself from the Board’s discussion of the transaction.

Also on April 19, 2013, following the meeting of the OPKO Board of Directors, the Audit Committee of the OPKO Board of Directors met with representatives of OPKO management and representatives of Akerman to discuss the material relationships between OPKO and PROLOR, specifically relating to Dr. Frost, Dr. Hsiao and Mr. Rubin, and the standard of review for related party transactions under OPKO’s related party transaction policy.

Over the course of the following five days, PROLOR management and DLA Piper discussed with OPKO management and Akerman the terms of a potential transaction, exchanged drafts of the Merger Agreement and negotiated the terms and conditions of the Merger Agreement. During this period, PROLOR management and DLA Piper communicated with the Special Committee, Oppenheimer and Jefferies regarding the potential transaction.

 

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Also on April 22, 2013, the Special Committee met with Mr. Novik and representatives of DLA Piper, Oppenheimer and Jefferies to continue the Special Committee’s consideration of a potential Merger with OPKO. Jefferies updated the Special Committee on the parties’ discussions with respect to the proposed price protection and go-shop provisions being negotiated with respect to the Merger. DLA Piper reported to the Special Committee that, through extensive negotiations, the parties had made significant progress on a definitive merger agreement. The Special Committee then discussed certain remaining open points to be resolved before a definitive agreement could be reached, including the negotiation of the proposed break-up fee, the circumstances in which higher and lower break-up fees would be payable, the possibility of a collar on the fixed Exchange Ratio and the length of the go-shop period.

During the course of April 22, 2013, and into the early morning hours of April 23, 2013, PROLOR management, with the assistance of DLA Piper and Jefferies, continued to negotiate the terms of the proposed Merger with OPKO management and Akerman.

On the morning of April 23, 2013, the Special Committee met to consider further the proposed transaction with OPKO. Also present at the meeting were Mr. Novik and representatives of DLA Piper, Oppenheimer and Jefferies. The Special Committee discussed in detail with representatives of DLA Piper the progress of the negotiations with OPKO over the past several weeks and reviewed in detail the terms of the proposed definitive merger agreement. Representatives of Oppenheimer orally delivered its opinion to the Special Committee that, as of April 23, 2013, and subject to certain assumptions, limitations and qualifications to be set forth in Oppenheimer’s written opinion to be subsequently delivered to the Special Committee, the Exchange Ratio was fair, from a financial point of view, to the holders of PROLOR common stock (excluding OPKO, its subsidiaries and any of their respective affiliates). Representatives of DLA Piper reviewed for the Special Committee their fiduciary duties and responsibilities and duties as members of the Special Committee. The Special Committee approved, and recommended that the PROLOR Board of Directors approve and adopt, the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, and unanimously recommended that PROLOR stockholders approve and adopt the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger.

After the Special Committee’s meeting on April 23, 2013, the PROLOR Board of Directors, including the Special Committee, met to consider the Merger Agreement and the proposed Merger. Also present for some or all of the meeting were representatives of DLA Piper, Greenberg, Oppenheimer and Jefferies. Dr. Frost, Mr. Rubin and Dr. Hsiao did not attend the meeting. The Special Committee discussed with the PROLOR Board of Directors the process and procedures followed in connection with the negotiation of the Merger Agreement and the proposed Merger and delivered its recommendation to the PROLOR Board of Directors regarding the Merger Agreement and the Merger. Representatives of DLA Piper described the terms and conditions of the Merger Agreement to the PROLOR Board of Directors. Representatives of Oppenheimer orally delivered its opinion to the PROLOR Board of Directors that, subject to certain assumptions, limitations and qualifications to be set forth in Oppenheimer’s written opinion to be subsequently delivered to the Special Committee, as of April 23, 2013, the Exchange Ratio was fair, from a financial point of view, to the holders of PROLOR common stock (excluding OPKO, its subsidiaries and any of their respective affiliates) pursuant to the Merger Agreement. Greenberg reviewed and discussed with the PROLOR Board of Directors its fiduciary duties. Jefferies discussed with the PROLOR Board of Directors the proposed process and procedures for the go-shop period. The PROLOR Board of Directors then discussed the terms and conditions of the Merger Agreement. The PROLOR Board of Directors approved and adopted the Merger Agreement, and approved the Merger and the other transactions contemplated by the Merger Agreement and unanimously recommended that PROLOR stockholders approve and adopt the Merger Agreement and approve the Merger and the other transactions contemplated thereby.

On April 23, 2013, the OPKO Board of Directors met with representatives of OPKO management, Akerman and Barrington to consider further the proposed transaction with PROLOR. Representatives of OPKO’s management and representatives of Akerman reviewed with the Board the terms and conditions of the Merger Agreement and the proposed Merger. Representatives of Barrington reviewed with the OPKO Board of Directors its financial

 

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analysis of the proposed merger consideration and orally delivered its opinion to the OPKO Board of Directors that, as of April 23, 2013, the merger consideration was fair, from a financial point of view, to OPKO. Representatives of Akerman discussed with the OPKO Board of Directors, its fiduciary duties and the process and procedures for PROLOR’s go-shop period. The OPKO Board of Directors then discussed the terms and conditions of the Merger Agreement. Dr. Frost did not attend the meeting of the OPKO Board of Directors. Mr. Rubin and Dr. Hsiao attended the meeting of the OPKO Board of Directors and were present for the presentation of the terms of the Merger Agreement and the fairness opinion, but recused themselves from the Board’s discussion and deliberations relating to the transaction. The OPKO Board of Directors approved and adopted the Merger Agreement, and approved the Merger and the other transactions contemplated by the Merger Agreement and unanimously recommended (excluding Dr. Frost, Dr. Hsiao and Mr. Rubin) that OPKO stockholders approve the OPKO Share Issuance Proposal. Following the approval and recommendation of the OPKO Board of Directors, Barrington delivered its individual written opinion, dated April 23, 2013, a copy of which is attached hereto as Annex B.

During the course of April 23, 2013, PROLOR and OPKO, with the assistance of their respective legal and financial advisors, continued to negotiate and finalize the terms and conditions of the Merger Agreement and proposed Merger.

Late in the evening of April 23, 2013, OPKO and PROLOR executed the Merger Agreement. Early in the morning of April 24, 2013, OPKO and PROLOR issued a press release announcing the execution of the Merger Agreement.

On June 27, 2013, OPKO filed the registration statement with the SEC to register the OPKO common stock to be issued as consideration in the Merger, which registration statement included a preliminary version of this joint proxy statement/prospectus. On July 10, 2013, OPKO filed pre-effective amendment number 1 to the registration statement with the SEC, which pre-effective amendment included a revised joint proxy statement/prospectus. On July 15, 2013, OPKO filed pre-effective amendment number 2 to the registration statement with the SEC, which pre-effective amendment included this revised joint proxy statement/prospectus.

Recommendation of OPKO’s Board of Directors and its Reasons for the Merger

In evaluating the Merger and the Merger Agreement, the OPKO Board of Directors consulted with OPKO’s management and legal, financial and other advisors; and in reaching its decision to approve the Merger and enter into the Merger Agreement, the OPKO Board of Directors considered a number of factors, including the following factors which the OPKO Board of Directors viewed as generally supporting its decision to approve the Merger and the Merger Agreement.

 

   

The belief that the combination of OPKO’s and PROLOR’s businesses should result in significant strategic benefits to the combined company, which would benefit OPKO and its stockholders, including a late stage clinical product candidate and a more diversified pre-clinical product pipeline than OPKO currently has alone.

 

   

The OPKO Board of Directors and management’s analyses and understanding of the business, operations, financial performance and condition, strategy and future prospects of PROLOR, as well as economic and market conditions and trends in the markets in which PROLOR competes.

 

   

The belief that PROLOR’s core CTP technology could lead to development of new, proprietary versions of existing therapeutic proteins with longer life spans, offering greatly improved therapeutic profiles and distinct market advantages, including significant reduction in the number of injections required to achieve the same therapeutic effect from the same dosage and faster commercialization and lower costs than those associated with new therapeutic proteins.

 

   

The belief that the Merger will enable OPKO to advance its objective of broadening its portfolio of market-transforming therapies in selected specialty markets. With the inclusion of PROLOR’s pipeline,

 

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OPKO will have four significant products in Phase III clinical development and a robust pipeline of important therapeutic and unique diagnostic products in various stages of development.

 

   

By combining PROLOR’s late stage and early stage product candidates with OPKO’s own late stage and early stage product candidates, along with OPKO’s existing operational and financial capabilities, OPKO believes the Merger will further advance OPKO’s strategy of creating a multinational pharmaceutical company that seeks to establish industry leading positions in large, rapidly growing markets by leveraging its discovery, development and commercialization expertise and novel and proprietary technologies.

 

   

Expectations regarding the broad applicability of PROLOR’s technology platforms and the commercial potential of its drug-product candidates for growth hormone deficiency, hemophilia, obesity and diabetes.

 

   

OPKO’s easier access and lower costs of capital, as well as OPKO management’s significant drug development and commercialization expertise, should improve the speed and cost of bringing PROLOR’s clinical products to market.

 

   

The fact that PROLOR’s CTP technology has been previously validated in the clinic. Specifically, Merck & Co. markets a drug called ELONVA®, a fertility drug follicle stimulating hormone (FSH) which uses CTP technology to extend the drug’s half-life from daily to weekly administration.

 

   

The expectation that the transaction allows OPKO to better leverage its sales channel to endocrinologists and other physicians with additional potential therapeutic products.

 

   

The oral opinion, subsequently confirmed in writing, of OPKO’s financial advisor Barrington, that, as of April 23, 2013, the Merger Consideration to be paid by OPKO to PROLOR is fair from a financial point of view to OPKO. The full text of the written opinion of Barrington, which sets forth the assumptions made, matters considered and limits on the review undertaken by Barrington, in rendering its opinion, are attached as Annex B to this joint proxy statement/prospectus. A summary of the presentation and opinion of Barrington appears in the section below titled “Opinion of Financial Advisor to OPKO’s Board of Directors.”

 

   

The Exchange Ratio is fixed and will not be adjusted for fluctuations in the market price of OPKO common stock or PROLOR common stock, and the fact that because the Exchange Ratio is fixed, the per share value of the Merger Consideration to be paid to PROLOR stockholders upon completion of the Merger could be significantly more or less than its implied value immediately prior to the announcement of the Merger Agreement.

 

   

Historical and current information concerning PROLOR’s business, financial condition, management, and product pipeline, and the results of a due diligence investigation of PROLOR conducted by OPKO’s management and advisors.

 

   

The fact that senior executive officers of PROLOR, particularly Dr. Havron and Mr. Novik, who have an in-depth knowledge of PROLOR, its business and who were responsible for overseeing PROLOR’s product development efforts, will continue in senior executive roles after the Merger.

 

   

The fact that each of Mr. Novik and Dr. Havron agreed to waive accelerated vesting of a significant portion of the equity awards each would otherwise be entitled to in connection with the Merger.

 

   

The structure of the Merger and the terms and conditions of the Merger Agreement, including without limitation, the following:

 

  ¡    

The probability that the conditions to the Merger will be satisfied.

 

  ¡    

The provisions of the Merger Agreement that limit the ability of PROLOR to solicit and respond to offers for alternative transactions.

 

  ¡    

That PROLOR may be required to pay a termination fee of $14,400,000 or $9,600,000 to OPKO if the Merger Agreement is terminated under certain circumstances.

 

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The OPKO Board of Directors weighed the factors described above which the OPKO Board of Directors viewed generally as supporting the decision to approve the Merger and Merger Agreement against a number of other factors identified in its deliberations weighing negatively against the Merger, including without limitation, the following:

 

   

The fact that the shares of OPKO common stock to be issued in the Merger will represent         % of the outstanding common stock of the combined company immediately after completion of the Merger; thus causing OPKO’s stockholders as of immediately prior to completion of the Merger to experience immediate and significant dilution in their equity interests and voting power of OPKO upon completion of the Merger.

 

   

The amount of time required to complete the Merger, the possibility that the Merger may not be completed, and the potential adverse consequences to OPKO if the Merger is not completed, including the potential adverse effect on the reputation of OPKO, among other factors.

 

   

The possible negative effect of the public announcement of the Merger on OPKO’s stock price and the possible volatility in OPKO common stock that may occur during the pendency of the Merger.

 

   

The possibility that the anticipated benefits of the Merger may not be realized within the expected time period or at all or that they may be less significant than expected.

 

   

The risk that sales of substantial amounts of OPKO common stock immediately after the closing of the Merger could adversely affect the market price for OPKO’s common stock.

 

   

The risk of stockholder lawsuits that may be filed against OPKO or the OPKO Board of Directors in connection with the Merger Agreement.

 

   

The provisions of the Merger Agreement that require OPKO to pay PROLOR $9,600,000 if the Merger Agreement is terminated by PROLOR under certain circumstances.

 

   

The risk of diverting the attention of OPKO’s senior management from other strategic priorities to implement the Merger and make arrangements for integration of each company’s operations and infrastructure following the Merger.

 

   

The potential impact of the restrictions under the Merger Agreement on OPKO’s ability to take certain actions during the period prior to the completion of the Merger (which may delay or prevent OPKO from undertaking business opportunities that may arise pending completion of the Merger.

 

   

The fees and expenses associated with completing the Merger.

 

   

The risks described in the section titled “Risk Factors” beginning on page 36.

The factors set forth above do not represent an exhaustive list of the factors given consideration by the OPKO Board. In view of the wide variety of factors considered in connection with its evaluation of the Merger and the complexity of these matters, the OPKO Board of Directors did not find it useful, and did not attempt, to quantify, rank or otherwise assign any relative or specific weights to the factors that it considered in reaching its determination to approve the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger. In addition, individual members of the OPKO Board of Directors may have given differing weights to differing factors. The OPKO Board of Directors conducted an overall analysis of the factors described above as well as other factors, including through discussions with, and inquiry of, OPKO management and outside legal and financial advisors regarding certain of the matters above.

For the reasons set forth above, the OPKO Board of Directors determined that the issuance of shares of OPKO common stock to PROLOR’s stockholders in connection with the Merger is advisable and in the best interests of OPKO and its stockholders. The OPKO Board of Directors recommends that OPKO stockholders vote “FOR” the OPKO Share Issuance Proposal.

This explanation of OPKO’s reasons for the Merger and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors described under “Cautionary Statement Regarding Forward-Looking Statements” on page 34.

 

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Recommendation of PROLOR’s Board of Directors and its Reasons for the Merger

The PROLOR Board of Directors believes that the Merger Agreement, the Merger and the other transactions contemplated thereby are advisable and in the best interests of PROLOR and its stockholders. Accordingly, the PROLOR Board of Directors has approved the Merger Agreement, the Merger and the other transactions contemplated thereby and unanimously recommended that PROLOR stockholders approve and adopt the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger.

As described above under “—Background of the Merger,” the PROLOR Board of Directors, prior to and in reaching its decision at its meeting on April 23, 2013, to approve the Merger Agreement, the Merger and the other transactions contemplated thereby, consulted with PROLOR management and PROLOR’s and the Special Committee’s financial and legal advisors, considered the recommendation of the Special Committee and considered a variety of factors weighing positively in favor of the Merger, including, but not limited to, the following:

 

   

PROLOR Board of Directors’ understanding of the business, operations, financial performance and condition and future prospects of PROLOR as an independent entity;

 

   

PROLOR’s business, future prospects and financial performance and condition and current industry, economic and market conditions and trends in the markets in which PROLOR competes;

 

   

PROLOR Board of Directors’ understanding of OPKO’s business, operations, financial performance and condition and prospects;

 

   

the effects of the Merger on PROLOR’s employees, customers and community;

 

   

the value to be received by holders of PROLOR common stock in the Merger, including the fact that the consideration to be paid to holders of PROLOR common stock represented a 40% premium over the trading price of PROLOR common stock on April 8, 2013;

 

   

PROLOR Board of Directors’ belief that the Merger is likely to increase value to PROLOR stockholders, in part due to the opportunity that PROLOR stockholders will have to participate in the growth and opportunities of the combined company by virtue of the OPKO common stock to be received by PROLOR’s stockholders in connection with the Merger;

 

   

the opportunity, because the Exchange Ratio is fixed, for PROLOR stockholders to benefit from any increase in the trading price of OPKO common stock between the announcement of the Merger Agreement and the completion of the Merger;

 

   

the current and historical prices of PROLOR’s common stock and the fact that the Merger consideration represented a premium over the closing share price of PROLOR common stock on April 23, 2013, the day prior to the announcement of the Merger;

 

   

the PROLOR Board of Directors’ analysis of alternative means of creating stockholder value and pursuing PROLOR’s strategic goals (including pursuing PROLOR’s long-term business plan as an independent public company) and the risks and uncertainties of these alternatives to achieve PROLOR’s strategic goals;

 

   

the advantages that the combined entity will have over PROLOR as a standalone company, especially in the current economic environment;

 

   

the belief that the terms of the Merger Agreement and the other transaction documents, taken as a whole, provide a significant degree of certainty that the Merger will be completed, including the facts that (i) the conditions required to be satisfied prior to completion of the Merger, such as the receipt of PROLOR stockholder consent are expected to be satisfied, (ii) the Merger Agreement does not include a financing condition to OPKO’s obligation to consummate the Merger, and (iii) there are limited circumstances in which OPKO may terminate the Merger Agreement;

 

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the fact the Merger Agreement contains a go-shop provision pursuant to which PROLOR had the right to solicit, encourage, facilitate and engage in discussions and negotiations with third parties with respect to competing proposals through June 2, 2013, and would have been permitted to continue discussions until June 22, 2013, with any party that had submitted, by June 2, 2013, a competing proposal that the PROLOR Board of Directors and the Special Committee determined in good faith would reasonably be expected to result in a Superior Proposal;

 

   

the ability of the PROLOR Board of Directors, subject to certain conditions, including the payment of a termination fee under certain circumstances, to exercise its fiduciary duties to consider and enter into potential superior alternative transactions, terminate the Merger Agreement or to change its recommendation to PROLOR’s stockholders to approve the Merger Agreement;

 

   

the review by the Special Committee, the PROLOR Board of Directors and the Special Committee’s legal advisor, DLA Piper, of the provisions of the Merger Agreement, including the go-shop provisions and the provisions of the Merger Agreement designed to enhance the probability that the Merger will be completed;

 

   

the Special Committee’s review and discussions with PROLOR’s management and outside advisors concerning the due diligence examination of the operations, financial condition, legal and regulatory compliance and prospects of OPKO;

 

   

the belief that the terms of the Merger Agreement, including the parties’ representations, warranties and covenants and the conditions to their respective obligations, are reasonable; and

 

   

the analysis and the oral opinion of Oppenheimer, subsequently confirmed in writing, as to the fairness of the Exchange Ratio (subject, in each case, to certain assumptions, limitations and qualifications to be set forth in Oppenheimer’s written opinion). The full text of the written opinion of Oppenheimer, which set forth the assumptions made, matters considered and limits on the review undertaken by Oppenheimer, in rendering its opinion, are attached as Annex C to this joint proxy statement/prospectus. A summary of the opinion of Oppenheimer appears in the section below titled “—Opinion of Financial Advisor to the Special Committee of PROLOR’s Board of Directors” beginning on page 64.

In addition to these factors, the PROLOR Board of Directors also considered the potential adverse impacts of other factors weighing negatively against the Merger, including, without limitation, the following:

 

   

the risk that, because the Exchange Ratio is fixed, PROLOR stockholders could be adversely affected by a decrease in the trading price of OPKO common stock after the date of execution of the Merger Agreement, and the fact that the Merger Agreement does not provide PROLOR with a price-based termination right or other similar protection, such as a “collar” with respect to OPKO’s stock price, for PROLOR or its stockholders;

 

   

the fact that, while the PROLOR Board of Directors expects that the Merger will be consummated, the Merger might not be completed in a timely manner or at all, due to a failure of certain conditions;

 

   

the risks and costs to PROLOR if the Merger does not close, including the diversion of management and employee attention, potential impediments to PROLOR executing an alternative business plan, and the lack of management employees to execute such a plan;

 

   

the fact that some of PROLOR’s directors and executive officers may have interests in the Merger that are different from, or in addition to, those of PROLOR stockholders generally, including those interests that are a result of employment and compensation arrangements with PROLOR executive officers and the manner in which they would be affected by the Merger, as described more fully in the section titled “The Merger— Interests of OPKO and PROLOR Directors and Executive Officers in the Merger” beginning on page 73;

 

   

the restrictions on the conduct of PROLOR’s business prior to the completion of the Merger, which may delay or prevent PROLOR from undertaking business opportunities that may arise during the term of the Merger Agreement, whether or not the Merger is completed;

 

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that PROLOR will no longer exist as an independent company and that PROLOR stockholders may have less influence with OPKO after consummation of the Merger than they may have with PROLOR currently;

 

   

the risk that potential benefits and synergies sought in the Merger may not be realized or may not be realized within the expected time period, and the risks associated with the integration of PROLOR and OPKO;

 

   

that PROLOR would be prohibited from affirmatively soliciting acquisition proposals after execution of the Merger Agreement, and the possibility that the $14.4 million termination fee payable by PROLOR following the termination of the Merger Agreement under certain circumstances could discourage other potential acquirers from making a competing bid to acquire PROLOR;

 

   

the risks that the financial results and the stock price of the combined company might decline, including the possible adverse effects on the stock price and financial results of the combined company if the benefits expected are not obtained on a timely basis or at all; and

 

   

the risks described in the section titled “Risk Factors” beginning on page 36.

The foregoing discussion of the factors considered by the PROLOR Board of Directors is not intended to be exhaustive, but, rather, includes the material factors considered by the PROLOR Board of Directors. In reaching its decision to approve and adopt the Merger Agreement and determine that the Merger is in the best interests of PROLOR and PROLOR stockholders, and, in approving the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, the PROLOR Board of Directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The PROLOR Board considered all these factors as a whole, including discussions with, and questioning of, PROLOR management, PROLOR financial and legal advisors and the Special Committee’s financial and legal advisors, and overall considered the factors to be favorable to, and to support, its decision.

For the reasons set forth above, the PROLOR Board of Directors approved and adopted the Merger Agreement advisable and determined that the Merger is in the best interests of PROLOR and its stockholders, approved the Merger and the other transactions contemplated by the Merger Agreement and recommended that PROLOR stockholders approve and adopt the Merger Agreement and approve the Merger and the other transactions contemplated thereby.

This explanation of PROLOR’s reasons for the Merger and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors described under “Cautionary Statement Regarding Forward-Looking Statements” on page 34.

Opinion of Financial Advisor to OPKO’s Board of Directors

In connection with its review and analysis of the Merger, OPKO’s Board of Directors retained Barrington to furnish an opinion as to the fairness, from a financial point of view, of the consideration to be paid by OPKO in connection with the proposed transaction. At a meeting of OPKO’s Board of Directors on April 23, 2013 held to evaluate the proposed Merger, Barrington rendered its oral opinion to the independent members of OPKO’s Board of Directors (which opinion was subsequently confirmed in writing by delivery of Barrington’s written opinion dated the same date) that, as of such date and based upon and subject to the factors, procedures, assumptions, qualifications, and limitations set forth in its opinion, the merger consideration to be paid by OPKO to the holders of PROLOR common stock in the proposed transaction was fair, from a financial point of view, to OPKO.

The full text of the written opinion of Barrington, dated April 23, 2013 (as amended), which sets forth, among other things, the assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken in connection with its opinion, is attached as Annex B to this joint proxy statement/prospectus and is incorporated herein by reference. OPKO’s stockholders are urged to read the opinion in its entirety. Barrington’s opinion was provided to the OPKO Board of Directors (in its capacity as such) in

 

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connection with and for the purposes of its evaluation of the transactions contemplated by the Merger Agreement, is directed only to the fairness of the consideration to be paid in the proposed transaction and does not constitute a recommendation to any stockholder as to how such stockholder should vote with respect to the Merger. The summary of the opinion of Barrington set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion.

In arriving at its opinion, among other things, Barrington:

 

   

Discussed with certain members of the senior management of OPKO and PROLOR the past and current operations and financial condition and the prospects of OPKO and PROLOR, respectively, including information relating to certain strategic, financial and operational benefits anticipated from the transaction and projected operations and performance of OPKO and PROLOR, respectively;

 

   

Reviewed certain financial projections relating to PROLOR that Barrington prepared based on a composite of financial forecasts included in certain publicly available equity analyst reports regarding PROLOR, as adjusted for assumptions, input and guidance provided to Barrington by management for PROLOR and OPKO, all as reviewed and approved as reasonable by management for PROLOR and OPKO;

 

   

Reviewed information relating to certain strategic, financial and operational benefits anticipated from the transaction, prepared by the managements of OPKO and PROLOR, respectively;

 

   

Reviewed certain publicly available financial statements and other business and financial information of OPKO and PROLOR, respectively;

 

   

Reviewed certain internal financial statements and other financial and operating data concerning OPKO and PROLOR, respectively;

 

   

Reviewed a draft, dated April 22, 2013, of the Merger Agreement;

 

   

Reviewed the reported prices and trading activity of shares of PROLOR common stock and OPKO common stock;

 

   

Compared the prices and trading activity of PROLOR common stock with that of certain other publicly-traded companies comparable with PROLOR;

 

   

Reviewed the pro forma impact of the transaction on OPKO’s earnings, cash flow, consolidated capitalization and financial ratios; and

 

   

Conducted such other studies, analyses and inquiries, reviewed such other information, and considered such other factors as Barrington deemed appropriate.

Barrington relied upon and assumed, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to it by OPKO and PROLOR and formed a substantial basis for its opinion. In addition, Barrington did not conduct any physical inspection of the properties or facilities of OPKO or PROLOR and Barrington did not make any determination as to the solvency of any party to the Merger. Barrington assumed that the market value of OPKO common stock of $7.10 per share as of April 22, 2013 reflected the fair value of OPKO common stock, and Barrington expressed no view with respect to the reasonableness of that assumption or value. Barrington also expressed no opinion as to what the value of OPKO common stock would be when issued pursuant to the Merger or the prices at which OPKO common stock or PROLOR common stock would trade at any future time. With respect to the financial projections relating to PROLOR, including information relating to certain strategic, financial and operational benefits anticipated from the transaction, Barrington relied upon the forecasts included in certain publicly available equity analyst reports regarding PROLOR and the assumptions, input and guidance provided to Barrington by senior management for PROLOR and for OPKO with respect to a compilation of such forecasts prepared by Barrington, and Barrington assumed that such forecasts, assumptions, input and guidance were reasonable and reflected the best currently available estimates and judgments of the management of OPKO and

 

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of PROLOR, and that such management were not aware of any information or facts that would make the information provided to Barrington incomplete or misleading. Barrington expressed no view as to any such analyses, projections or forecasts, or the assumptions on which they were based, and Barrington expressly disclaims any responsibility for the accuracy or reasonableness of such analyses, projections, forecasts and assumptions and of any reliance placed thereon. Barrington also assumed that the final form of the Merger Agreement would be substantially similar to the last draft reviewed by Barrington. No limitations were imposed by OPKO’s Board of Directors upon Barrington with respect to the investigations made or procedures followed by it in rendering its opinion.

Barrington relied upon and assumed, without independent verification, the assessment by the managements of OPKO and PROLOR of: (i) the strategic, financial, and other benefits expected to result from the transaction; (ii) the timing and risks associated with the integration of OPKO and PROLOR; (iii) their ability to retain key employees of OPKO and PROLOR, respectively and (iv) the validity of, and risks associated with, OPKO’s and PROLOR’s existing and future technologies, intellectual property, products, services and business models. In addition, Barrington assumed that the transaction will be consummated in accordance with the terms set forth in the Merger Agreement without any waiver, amendment or delay of any terms or conditions, including, among other things, that the transaction will have the tax consequences described in discussions with, and materials furnished to Barrington by, representatives of OPKO and PROLOR. Barrington assumed that, in connection with the receipt of all necessary governmental, regulatory or other approvals and consents required for the proposed transaction, no delays, limitations, conditions or restrictions will be imposed that would have a material adverse effect on the contemplated benefits expected to be derived in the proposed transaction. Barrington did not provide any legal, tax or regulatory advice and relied upon, without independent verification, the assessment of OPKO and PROLOR and their legal, tax and regulatory advisors with respect to legal, tax and regulatory matters. Barrington expressed no opinion with respect to the fairness of the amount or nature of the compensation to any of PROLOR’s officers, directors or employees, or any class of such persons, relative to the consideration to be paid to the holders of shares of PROLOR common stock in the transaction. Barrington did not make any independent valuation or appraisal of the assets or liabilities of OPKO or PROLOR, nor was Barrington furnished with any such valuations or appraisals.

With respect to financial statements and other business and financial information, Barrington relied upon and assumed, without independent verification, that there was no material change in the assets, financial condition, business or prospects of OPKO or PROLOR since the date of the most recent financial statements or information made available to Barrington. Barrington’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Barrington as of, the date thereof. Events occurring after the date of the opinion may affect Barrington’s opinion and the assumptions used in preparing it, and Barrington does not have any obligation to update, revise or reaffirm the opinion.

In accordance with customary investment banking practice, Barrington employed generally accepted valuation methods in reaching its opinion, and Barrington’s opinion was approved by an authorized committee of Barrington. The following is a summary of the material financial analyses utilized by Barrington in connection with providing its opinion. Certain of the financial analyses summarized below include information presented in tabular format. In order to fully understand Barrington’s financial analyses, the table must be read together with the text of the related summary. The table alone does not constitute a complete description of the financial analyses. Considering the data described below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Barrington’s financial analyses. Mathematical analysis, such as determining the arithmetic median, or the high or low, is not in itself a meaningful method of using selected company data.

 

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Selected Companies Analysis

Using publicly available information, Barrington compared selected financial data of PROLOR with similar data for selected publicly traded companies that Barrington deemed relevant. These companies were selected because Barrington deemed them to be analogous to PROLOR’s business or circumstances, or aspects thereof, including the nature and developmental stage of the business, research and development expenditures and size. The companies selected by Barrington were:

 

Sarepta Therapeutics, Inc.

   Rigel Pharmaceuticals, Inc.

ACADIA Pharmaceuticals, Inc.

   AVANIR Pharmaceuticals, Inc.

Keryx Biopharmaceuticals, Inc.

   Novavax, Inc.

Achillion Pharmaceuticals, Inc.

   Raptor Pharmaceutical Corp.

Orexigen Therapeutics, Inc.

   Coronado Biosciences, Inc.

Dynavax Technologies Corp.

  

None of the companies selected is identical or directly comparable to PROLOR and certain of the companies may have characteristics that are materially different from those of PROLOR. Accordingly, Barrington made judgments and assumptions concerning differences between PROLOR and the selected companies concerning financial and operating characteristics and other factors that could affect the public trading value of the selected companies.

The data reviewed by Barrington with respect to the selected companies included the market value based on the closing stock prices on April 22, 2013, the technology value (equity market value plus debt less cash), debt, cash, last twelve months’ EBITDA, total invested capital, average daily trading value of common stock, number and stage of products in FDA clinical trials, cumulative revenue for 2010 through 2012, number of employees, number of equity analysts covering the company’s common stock, percentage of institutional ownership, last twelve months’ research and development expenditures, estimated revenue for 2016 and 2017 and the ratios of estimated enterprise value to sales for 2016 and 2017. The following table sets forth that information for PROLOR and the mean and median for the selected companies as a group.

 

Company Name

  Mkt
Val
($M)
    Entrprs
(Tech)
Value
($M)
    Debt
($M)
    Cash     LTM
EBITDA
($M) 
    Total
Invested
Capital
($M) 
    ADTV
($000)
    # of
Products by
Phase
    Reve
nues
(2010-
2012
Cumu
lative)
    # of
Emplo
yees
    # of
Analysts
Covering 
    Institu
tional
Ownership
(%)
    LTM
R&D
Exp.
($M)
    Estimated
Revenue ($M)
    FY
2016E
EV/S
    FY
2017E
EV/S
 
                Ph
    Ph
II 
    Ph
III
              2016     2017      

PROLOR Biotech, Inc.

    353        329        —          24        (19     33        59        —          2        —          —          19        4        12        16        28        62        11.8x        5.3x   

Comprehensive Mean

    549        447        4        101        (48     88        899        2        2        1        42        56        8        63        39        125        197        23.5x        4.0x   

Comprehensive Median

    427        354        0        65        (42     74        1,058        1        2        1        37        42        8        67        26        136        180        3.7x        2.4x   

Barrington derived an implied valuation for PROLOR based on this analysis as ranging from PROLOR’s then-current market value to that of the median value of the comparable companies selected. Barrington found that the average of the market capitalization and enterprise value approaches produced an implied market value range (before application of a control premium) for PROLOR of $353 million to $402 million, or $5.13 to $5.84 on a per share basis. After giving effect to a 40% control premium, Barrington found that the average of the market capitalization and enterprise value approaches produced an implied market value for PROLOR of $494 million to $563 million, or $7.18 to $8.18 on a per share basis.

Selected Transactions Analysis/M&A Premiums Paid Analysis

Using publicly available information, Barrington also considered the financial terms of certain business combinations and other transactions Barrington deemed relevant. These transactions were selected because the target companies were deemed by Barrington to be analogous to PROLOR’s business or circumstances, or aspects thereof, including the nature and developmental stage of the business, nature of the transaction, and size.

 

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The transactions considered, or the Selected Transactions, and the month and year each transaction was completed are as follows:

 

Target  

Acquiror

 

Completed

MAP Pharmaceuticals, Inc.

  Allergan, Inc.   March 2013

BioMimetic Therapeutics, Inc.

  Wright Medical Group, Inc.   March 2013

YM BioSciences, Inc.

  Gilead Sciences, Inc.   February 2013

Medicis Pharmaceutical Corporation

  Valeant Pharmaceuticals
International, Inc.
  December 2012

Proximagen Group Ord

  Upsher-Smoth Laboratories   August 2012

Ardea Biosciences Inc.

  AstraZeneca Plc   June 2012

Ista Pharmaceuticals, Inc.

  Warburg Pincus & Co.   June 2012

Micromet, Inc.

  Amgen, Inc.   March 2012

Inhibitex, Inc.

  Bristol-Myers Squibb Co.
  February 2012

Adolor Corp.

  Cubist Pharmaceuticals, Inc.   December 2011

Facet Biotech Corp.

  Abbott Laboratories   April 2010

Cougar Biotechnology, Inc.

  Johnson & Johnson   July 2009

Indevus Pharmaceuticals, Inc.

  Endo Pharmaceuticals Holdings,
Inc.
  March 2009

OMRIX Biopharmaceuticals, Inc.

  Johnson & Johnson   December 2008

Lev Pharmaceuticals, Inc.

  ViroPharma, Inc.   October 2008

Third Wave Technologies, Inc.

  Hologic, Inc.   July 2008

Encysive Pharmaceuticals, Inc.

  Pfizer Inc.   June 2008

Using publicly available estimates, Barrington reviewed the base equity value and the enterprise value implied by the Selected Transactions as a multiple of the target company’s sales, EBITDA and book value, in each case for the twelve-month period immediately preceding announcement of the Selected Transactions. Barrington found that those transaction multiples are inconclusive as to valuation because the early stage of development of the subject companies results in insufficient data from which to determine those multiples. Barrington also found that the high levels and wide variance indicate that the Selected Transactions were based on the future prospects of the respective target’s business that will derive from the level of success of clinical products. For the Selected Transactions, Barrington noted that these analyses showed that the market is willing to pay significant consideration for potential sales with little history of commercialization.

Barrington also considered the transaction price paid in precedent transactions as compared to the historic closing price of the target company stock one day, one week, one month, 60 days, 90 days and 180 days prior to the announcement of the transaction to determine the premium paid in those transactions for those periods. Using publicly available information, Barrington examined the premiums paid in transactions announced between April 15, 2008 and April 15, 2013 where both the acquirer and target were publicly traded and where 100% of the target was acquired for three separate categories of transactions: (1) 23 industry agnostic transactions with all stock consideration where transaction equity value was between $200 million and $650 million, or the General Market Premiums, (2) 217 industry agnostic transactions involving a small-capitalization target where the transaction equity value was between $200 million and $1.5 billion, or the Small Cap Target Premiums, and (3) the Selected Transactions, or the Sector Specific Premiums. Barrington excluded from all three categories transactions with negative premiums because those transactions tended to reflect anomalies that are inconsistent with PROLOR’s profile, including, but not limited to, extreme price volatility, poor fundamentals, dire capital positions, and going concern risk.

 

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The following table sets forth the mean and median premiums paid for the General Market Premiums category, the Small Cap Target Premiums category and the Sector Specific Premiums category for each of the periods indicated, in addition to the consolidated average of those three categories.

 

Period Prior to

Announcement

   General Market
Premiums Paid 
    Small Cap Target
Premiums Paid 
    Sector Specific
Premiums Paid 
    Consolidated
Average
 
   Mean     Median     Mean     Median     Mean     Median     Mean     Median  

One Day

     43.3     26.5     43.5     33.6     57.0     48.6     47.9     33.6

One Week

     46.5     29.9     45.8     35.8     63.3     56.7     51.9     35.8

One Month

     49.6     29.9     49.3     41.5     76.5     61.6     58.5     41.5

60 Days

     59.6     33.9     57.4     46.7     114.4     65.7     77.1     46.7

90 Days

     66.6     31.4     63.2     48.2     131.3     76.9     87.0     48.2

180 Days

     108.6     53.4     131.3     60.2     117.9     71.9     119.3     60.2

The following table sets forth the implied value per share of PROLOR common stock based on the mean and median premiums paid for the General Market Premiums category, the Small Cap Target Premiums category and the Sector Specific Premiums category for each of the periods indicated, in addition to the consolidated average of those three categories.

 

Period Prior to

Announcement

   General Market
Premiums Paid
     Small Cap Target
Premiums Paid
     Sector Specific
Premiums Paid
     Consolidated
Average
 
   Mean      Median      Mean      Median      Mean      Median      Mean      Median  

One Day

   $ 8.06       $ 7.11       $ 8.06       $ 7.51       $ 8.82       $ 8.35       $ 8.31       $ 7.51   

One Week

   $ 8.13       $ 7.21       $ 8.09       $ 7.54       $ 9.06       $ 8.70       $ 8.43       $ 7.54   

One Month

   $ 7.63       $ 6.62       $ 7.61       $ 7.22       $ 9.00       $ 8.24       $ 8.08       $ 7.22   

60 Days

   $ 7.97       $ 6.68       $ 7.85       $ 7.32       $ 10.70       $ 8.27       $ 8.84       $ 7.32   

90 Days

   $ 7.88       $ 6.21       $ 7.72       $ 7.01       $ 10.94       $ 8.37       $ 8.85       $ 7.01   

180 Days

   $ 10.43       $ 7.67       $ 11.57       $ 8.01       $ 10.90       $ 8.59       $ 10.96       $ 8.01   

Barrington determined that this premiums paid analysis implied a range of value in an acquisition of PROLOR of between $7.01 and $8.01 per share of PROLOR common stock.

Discounted Cash Flow Analysis

Barrington performed a discounted cash flow analysis of PROLOR. A discounted cash flow analysis is a method of evaluating an asset using estimates of the future unlevered free cash flows generated by the asset and taking into consideration the time value of money with respect to those future cash flows by calculating their “present value.” “Present value” refers to the current value of one or more future cash payments from the asset, which is referred to as that asset’s cash flows, and is obtained by discounting those cash flows back to the present using a discount rate that takes into account macro-economic assumptions and estimates of risk, the opportunity cost of capital, capitalized returns and other appropriate factors. “Terminal value” refers to the capitalized value of all cash flows from an asset for periods beyond the final forecast period. Management of PROLOR did not provide forecasts for PROLOR to OPKO or Barrington. Barrington performed the discounted cash flow analysis using a financial forecast for PROLOR prepared by Barrington based on a compilation of forecasts included in publicly available equity analyst reports relating to PROLOR, which compilation was adjusted based on conversations with PROLOR’s management, and based on input and guidance provided by management for each of PROLOR and OPKO, or (as adjusted) the Forecast. The Forecast was reviewed and deemed reasonable by management of each PROLOR and OPKO, and was used by Barrington to determine the revenues and free cash flows of PROLOR for 2013 to 2026.

In this analysis, Barrington used the Capital Asset Pricing Model to derive a discount rate range of 16% to 18% and Barrington estimated PROLOR’s terminal value by assuming that PROLOR’s free cash flows decreased at an annual rate ranging from 30% to 100% beginning in 2026 (given the patent expiration on PROLOR’s primary product). This discounted cash flow analysis resulted in an implied present value ranging from $7.19 to $8.34 per share of PROLOR common stock.

 

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Miscellaneous

The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data presented by Barrington. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Barrington believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses and its opinion. Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or made by Barrington are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, Barrington’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be bought or sold. None of the selected companies reviewed as described in the above summary is identical to PROLOR and none of the Selected Transactions reviewed was identical to the proposed transaction. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies compared to PROLOR and the transactions compared to the proposed transaction.

Barrington has acted as financial advisor to the OPKO Board of Directors in connection with the transaction and received an aggregate cash fee of $400,000, $50,000 of which became payable upon OPKO’s request for a fairness opinion, and the remainder of which became payable upon the completion of Barrington’s evaluation of the fairness, from a financial point of view, of the consideration to be paid by OPKO in the Merger to the holders of PROLOR’s common stock. Barrington’s compensation is not contingent upon the successful consummation of the Merger, and it will not receive any other significant payment or compensation. In addition, OPKO has agreed to reimburse Barrington for its reasonable expenses and to indemnify Barrington for certain liabilities arising out of its engagement. In the two years prior to the date hereof, neither Barrington nor any of Barrington’s affiliates had any material financial advisory or other material commercial or investment banking relationships with either OPKO or PROLOR. Barrington is a financial services firm engaged in securities brokerage, investment research, asset management and investment banking. As such, in the ordinary course of its business, Barrington may, and its affiliates, directors and officers may, at any time invest on a principal basis or manage funds that invest, hold long or short positions, finance positions and may trade or otherwise structure and effect transactions, for their own account or the accounts of their customers, in debt or equity securities or loans of OPKO, PROLOR, any of their affiliates or any other company, or any currency or commodity, that may be involved in this transaction, or any related derivative instrument. Barrington also may provide investment banking, advisory, brokerage or other services to clients that may be competitors or suppliers to, or customers or security holders of, OPKO, PROLOR, or any of their affiliates or that may otherwise participate or be involved in the same or similar business or industry as OPKO or PROLOR.

Opinion of Financial Advisor to the Special Committee of PROLOR’s Board of Directors

On April 9, 2013, the Special Committee verbally engaged Oppenheimer to deliver an opinion to the Special Committee as to the fairness, from a financial point of view, of the consideration to be received by the holders of PROLOR common stock (excluding OPKO, its subsidiaries and any of their respective affiliates) pursuant to the Merger Agreement. On April 16, 2013, after extensive discussions between the Special Committee and Oppenheimer during the period between April 10, 2013 and April 16, 2013, the Special Committee entered into an engagement letter with Oppenheimer which confirmed the terms of the Special Committee’s verbal engagement of Oppenheimer to deliver an opinion to the Special Committee as to the fairness, from a financial point of view, of the consideration to be received by the holders of PROLOR common stock (excluding OPKO, its subsidiaries and any of their respective affiliates) pursuant to the Merger Agreement. On April 23, 2013, at a meeting held by the Special Committee to evaluate the Merger, Oppenheimer rendered to the Special Committee an oral opinion, confirmed by delivery of a written opinion dated April 23, 2013, to the effect that, as of that date and based on and subject to the matters described in its opinion, the Exchange Ratio was fair, from a financial point of view, to the holders of PROLOR common stock (excluding OPKO, its subsidiaries and any of their respective affiliates).

 

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The full text of Oppenheimer’s written opinion, dated April 23, 2013, which describes the assumptions made, procedures followed, matters considered and limitations on the review undertaken, is attached to this joint proxy statement/prospectus as Annex C and is incorporated by reference in its entirety. Oppenheimer’s opinion was provided for the use of the Special Committee (in its capacity as such) in connection with its evaluation of the Exchange Ratio from a financial point of view and did not address any other terms, aspects or implications of the Merger, including, without limitation, the form or structure of the Merger or any term, aspect or implication of any agreement, arrangement or understanding entered into in connection with the Merger or otherwise. Oppenheimer expressed no view as to, and its opinion did not address, the underlying business decision of PROLOR to proceed with or effect the Merger or the relative merits of the Merger as compared to any alternative business strategies that might exist for PROLOR or the effect of any other transaction in which PROLOR might engage. Oppenheimer’s opinion does not constitute a recommendation to any PROLOR or OPKO stockholder as to how such stockholder should vote or act with respect to any matters relating to the Merger or otherwise. This summary of Oppenheimer’s opinion is qualified in its entirety by reference to the full text of its opinion.

In arriving at its opinion, Oppenheimer:

 

   

reviewed the draft, dated April 22, 2013, of the Merger Agreement;

 

   

reviewed (i) publicly available audited financial statements of PROLOR for the fiscal years ended December 31, 2011 and 2012 and (ii) unaudited draft interim financial statements of PROLOR for the three months ended March 31, 2013;

 

   

reviewed publicly available audited financial statements of OPKO for the fiscal years ended December 31, 2011 and 2012;

 

   

reviewed financial forecasts and estimates relating to PROLOR prepared by the management of PROLOR;

 

   

reviewed financial forecasts and estimates relating to OPKO prepared by the management of PROLOR with review and input from OPKO;

 

   

held discussions with the senior managements of PROLOR and OPKO with respect to the businesses and prospects of PROLOR and OPKO, respectively;

 

   

reviewed the historical market prices and trading volumes of PROLOR common stock and OPKO common stock;

 

   

analyzed the estimated present value of the future cash flows of certain product candidates in development by PROLOR identified by the management of PROLOR based on financial forecasts and estimates prepared by the management of PROLOR;

 

   

analyzed the estimated present value of the future cash flows of OPKO based on financial forecasts and estimates prepared by the management of PROLOR with review and input from OPKO;

 

   

reviewed other public information concerning PROLOR and OPKO; and

 

   

performed such other analyses, reviewed such other information and considered such other factors as Oppenheimer deemed appropriate.

In rendering its opinion, Oppenheimer relied upon and assumed, without independent verification or investigation, the accuracy and completeness of all of the financial and other information provided by or discussed with PROLOR, OPKO and their respective employees, representatives and affiliates or publicly available to or otherwise reviewed by Oppenheimer. With respect to the respective financial forecasts and estimates relating to PROLOR and OPKO referred to above, Oppenheimer assumed, at the direction of the respective managements of each of PROLOR and OPKO and with the consent of the Special Committee, without independent verification or investigation, that such forecasts and estimates were reasonably prepared on bases reflecting the best available information, estimates and judgments of the respective managements of PROLOR and OPKO as to the future

 

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financial condition and operating results of PROLOR and OPKO and the other matters covered thereby and that the financial results reflected in such forecasts and estimates would be achieved at the times and in the amounts projected. Oppenheimer expressed no opinion or views as to any such forecasts or estimates or the assumptions on which they were based. At the direction of representatives of PROLOR, Oppenheimer also assumed that the final terms of the Merger Agreement would not vary materially from those set forth in the draft it reviewed. Oppenheimer further assumed, with the consent of the Special Committee, that the Merger would qualify for federal income tax purposes as a “reorganization” under Section 368(a) of the Code. Oppenheimer also assumed, with the consent of the Special Committee, that the Merger would be consummated in accordance with its terms without waiver, modification or amendment of any material term, condition or agreement and in compliance with all applicable laws and other requirements and that, in the course of obtaining the necessary regulatory or third party approvals, consents and releases with respect to the Merger, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on PROLOR, OPKO or the contemplated benefits of the Merger. Oppenheimer has neither made nor obtained any independent evaluations or appraisals of the assets or liabilities, contingent or otherwise, of PROLOR or OPKO. Oppenheimer expressed no view as to, and its opinion did not address, PROLOR’s underlying business decision to proceed with or effect the Merger nor did its opinion address the relative merits of the Merger as compared to any alternative business strategies that might exist for PROLOR or the effect of any other transaction in which PROLOR might engage. In connection with its engagement, Oppenheimer was not requested to, and it did not, solicit third party indications of interest in the possible acquisition of all or any part of PROLOR.

Oppenheimer is not a legal, tax, regulatory or accounting advisor and relied on the assessments made by PROLOR and its advisors with respect to such issues. The opinion of Oppenheimer did not constitute a solvency opinion or a fair value opinion, and Oppenheimer did not evaluate the solvency or fair value of PROLOR under any federal or state laws relating to bankruptcy, insolvency or similar matters. Oppenheimer neither made nor obtained any independent evaluations or appraisals of the assets or liabilities (contingent or otherwise) of PROLOR or OPKO. Oppenheimer expressed no view as to, and its opinion did not address, any terms or other aspects or implications of the Merger (other than the Exchange Ratio to the extent expressly specified in its opinion) or any aspect or implication of any other agreement, arrangement or understanding entered into in connection with the Merger or otherwise, including, without limitation, the fairness of the amount or nature of the compensation resulting from the Merger to any individual officers, directors or employees of PROLOR, or class of such persons, relative to the Exchange Ratio.

The opinion of Oppenheimer was based on the information available to it and general economic, financial and stock market conditions and circumstances as they existed and could be evaluated by Oppenheimer on the date of delivery of such opinion. Although subsequent developments may affect its opinion, Oppenheimer does not have any obligation to update, revise or reaffirm the opinion.

This summary is not a complete description of Oppenheimer’s opinion or the financial analyses performed and factors considered by Oppenheimer in connection with its opinion, but is a description of their material terms. The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to summary description. Oppenheimer arrived at its ultimate opinion based on the results of all analyses undertaken by it and assessed as a whole, and did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis for purposes of its opinion. In addition, Oppenheimer may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described below should not be taken to be Oppenheimer’s view of the actual value of PROLOR or OPKO. Accordingly, Oppenheimer believes that its analyses and this summary must be considered as a whole and that selecting portions of its analyses and factors or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying Oppenheimer’s analyses and opinion.

 

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In performing its analyses, Oppenheimer considered industry performance, general business, economic, market and financial conditions and other matters existing as of the date of its opinion, many of which are beyond PROLOR and OPKO’s control. No company or business used in the analyses is identical to PROLOR or OPKO, and an evaluation of the results of those analyses is not entirely mathematical. Rather, the analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the companies or business segments or transactions analyzed.

The assumptions and estimates contained in Oppenheimer’s analyses and the ranges of valuations resulting from any particular analysis are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than those suggested by its analyses. In addition, analyses relating to the value of businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold or acquired. Accordingly, the assumptions and estimates used in, and the results derived from, Oppenheimer’s analyses are inherently subject to substantial uncertainty.

Oppenheimer was not requested to, and it did not, recommend the specific consideration payable in the Merger. The type and amount of consideration payable in the Merger was determined through negotiation between PROLOR and OPKO and was approved by the PROLOR Board of Directors. Oppenheimer provided advice to the Special Committee during these negotiations. Oppenheimer did not, however, recommend any specific consideration to PROLOR or the Special Committee or that any specific consideration constituted the only appropriate consideration for the Merger. The decision to enter into the Merger Agreement was solely that of the Special Committee and the Board of Directors of PROLOR. Oppenheimer’s opinion and financial analysis were only one of many factors considered by the Special Committee in its evaluation of the Merger and should not be viewed as determinative of the views of Special Committee, PROLOR’s Board of Directors or PROLOR’s management with respect to the Merger or the Exchange Ratio or of whether the Special Committee and the Board of Directors would have been willing to agree to different consideration.

The following is a summary of the material financial analyses reviewed with the Special Committee in connection with Oppenheimer’s opinion dated April 23, 2013. The financial analyses summarized below include information presented in tabular format. In order to fully understand Oppenheimer’s financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Oppenheimer’s financial analyses.

Historical Stock Trading Analysis

Oppenheimer analyzed the 10-day volume weighted average closing price of OPKO common stock as of April 22, 2013. The table below represents the analysis.

 

     Weighted Average Price      Exchange Ratio      Implied per share
Consideration to holders of
PROLOR Common Shares
 

Past 10 Days

   $ 7.03         0.9951       $ 7.00   

Oppenheimer also analyzed the trading performance of PROLOR common stock and OPKO common stock as of April 10, 2013 and April 22, 2013. The tables below represent the analysis.

 

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PROLOR

(Average Daily Trading Volume (ADTV) in thousands of shares)

 

     Prior to 4/11      Prior to 4/23  
     Price      ADTV      Price      ADTV  

Share Price

   $ 5.02         85.2       $ 5.62         177.4   

3 Month Intraday Low

   $ 4.54         79.9       $ 4.60         121.3   

3 Month Intraday High

   $ 5.32         79.9       $ 6.38         121.3   

52 Week Intraday Low

   $ 4.25         84.7       $ 4.25         96.4   

52 Week Intraday High

   $ 5.96         84.7       $ 6.38         96.4   

10 Day Volume Weighted Average Price

   $ 4.98         64.4       $ 5.43         375.5   

Low Price Since 04/11/13

         $ 5.15         442.6   

High Price Since 04/11/13

         $ 6.38         442.6   

OPKO

(ADTV in thousands of shares)

 

     Prior to 4/11      Prior to 4/23  
     Price      ADTV      Price      ADTV  

Share Price

   $ 7.10         1,880.5       $ 7.10         854.3   

3 Month Intraday Low

   $ 5.18         2,600.5       $ 5.87         2,458.8   

3 Month Intraday High

   $ 7.83         2,600.5       $ 7.83         2,458.8   

52 Week Intraday Low

   $ 4.00         1,560.8       $ 4.00         1,529.6   

52 Week Intraday High

   $ 7.83         1,560.8       $ 7.83         1,529.6   

10 Day Volume Weighted Average Price

   $ 7.23         2,231.6       $ 7.03         1,668.4   

Low Price Since 04/11/13

         $ 6.91         1,257.3   

High Price Since 04/11/13

         $ 7.33         1,257.3   

PROLOR Net Present Value Analysis

Oppenheimer performed a net present value analysis on PROLOR’s assets using the financial projections for PROLOR prepared by the management of PROLOR and by applying the following methodologies: (i) net present value analysis of hGH-CTP, Factor VIIa, and GLP1/6030; (ii) net present value analysis of net operating loss carry forwards; (iii) cash and equivalents as of March 31, 2013 and (iv) debt as of March 31, 2013. The value of items (i) through (iii) was summed and the value of item (iv) was subtracted to calculate the implied equity value range. The low and high values of the equity value range were then divided by the fully diluted shares outstanding adjusted for in-the-money options, warrants and restricted shares to calculate a low and high equity value range per share.

The net present value analysis with respect to hGH-CTP, Factor VIIa, GLP1/6030 was performed by estimating the present value of the unlevered after-tax free cash flows that the products were forecasted to generate during the fiscal years ending December 31, 2013 through 2034. The valuation of the net operating loss carry forwards was calculated by estimating the present value of the tax obligations foregone based on PROLOR’s forecasted pre-tax income and the benefit of utilizing the deferred tax asset. The after-tax cash flows were then discounted to present value as of March 31, 2013 using discount rates ranging from 12.5% to 14.5%, reflecting estimates of PROLOR’s weighted average cost of capital calculated using the capital asset pricing model.

 

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The table below shows the analysis as to the illustrative value range based on the net present value analysis.

(In millions of U.S. dollars, except per share data)

 

Source of Value

   Value  

hGH-CTP

     $130.5—$173.9   

Factor VIIa

     $18.6—$23.9   

GLP 1/6030

     $29.6—$41.0   

Net Operating Loss Carry Forwards

     $13.0—$15.0   

Cash & Equivalents

     $29.9—$29.9   

Total Debt

     $0.0—$0.0   

Equity Value

     $221.6—$283.7   

Fully Diluted Shares Outstanding

     66.7—67.1   
  

 

 

 

Implied Equity Value per Share

     $3.32—$4.23   

OPKO Discounted Cash Flow Analysis

Oppenheimer performed a discounted cash flow analysis of OPKO by calculating the estimated present value of the standalone unlevered, after-tax free cash flows that OPKO was forecasted to generate for the fiscal years ending December 31, 2013 through 2024. OPKO’s projections were prepared by the management of PROLOR with review and input from OPKO’s management. Oppenheimer calculated terminal values for OPKO by applying a range of perpetuity growth rates to OPKO’s fiscal year 2024 estimated free cash flow of 0%to 2% and a range of discount rates of 9.6% to 11.6%. The cash flows and terminal values were then discounted to present value as of March 31, 2013 using discount rates ranging from 9.6% to 11.6%, reflecting estimates of OPKO’s weighted average cost of capital calculated using the capital asset pricing model and assuming that the selected companies’ average capital structure represents the optimal capital structure. The table below shows the implied per share equity value reference range for OPKO.

 

     Per Share Value  

Illustrative Equity Value

   $ 8.61—$13.37   

OPKO Discounted Equity Value Analysis

Oppenheimer performed an illustrative discounted equity value analysis using certain financial projections for OPKO prepared by the management of PROLOR with review and input from the management of OPKO. Oppenheimer calculated implied 2021 through 2024 equity values for OPKO common stock by applying price to earnings per share multiples ranging from 15.0x to 20.0x to earnings estimates of OPKO for the fiscal years ending 2021 through 2024. Oppenheimer then calculated the present value of the implied equity values for OPKO common stock using a discount rate of 10.6% reflecting an estimate of OPKO’s cost of equity capital. The equity values were then divided by the fully diluted shares outstanding to calculate the per share equity value. The per share equity values based on the earnings per share multiple of 15.0x and for the fiscal years ended December 31, 2021 through 2024 were then averaged to calculate the low end of the discounted equity value analysis range. The per share equity values based on the earnings per share multiple of 20.0x and for the fiscal years ended December 31, 2021 through 2024 were then averaged to calculate the high end of the discounted equity value analysis range. Using this analysis, Oppenheimer calculated the following range of equity values per share of OPKO common stock:

 

     Per Share Value  

Illustrative Equity Value

   $ 9.57—$12.68   

Miscellaneous

In connection with the review by the Special Committee of the Merger, Oppenheimer performed a variety of financial and comparative analyses for purposes of rendering its opinion. Oppenheimer conducted the analyses described above solely as part of its analysis of the fairness, from a financial point of view, of the Exchange Ratio pursuant to the Merger to the holders of PROLOR common stock (excluding OPKO, its subsidiaries and

 

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any of their respective affiliates) and in connection with the delivery of its opinion dated April 23, 2013 to the Special Committee. These analyses do not purport to be appraisals or to reflect the prices at which shares of PROLOR common stock might trade. The foregoing summary describes the material analyses performed by Oppenheimer but does not purport to be a complete description of the analyses performed by Oppenheimer.

The Special Committee selected Oppenheimer to act as its financial advisor in connection with the Merger based on Oppenheimer’s reputation and experience. Oppenheimer is an internationally recognized investment banking firm and, as a part of its investment banking business, is regularly engaged in valuations of businesses and securities in connection with acquisitions and mergers, underwritings, secondary distributions of securities, private placements and valuations for other purposes. In the ordinary course of business, Oppenheimer and its affiliates may actively trade securities of PROLOR or OPKO for Oppenheimer’s and its affiliates’ own accounts and for the accounts of customers and, accordingly, at any time may hold a long or short position in such securities.

PROLOR has agreed to pay Oppenheimer a fee of $575,000 for its financial advisory services in connection with the Merger, $75,000 of which was payable upon its engagement and $500,000 of which was payable upon delivery of Oppenheimer’s opinion regardless of the conclusions reached therein and irrespective of whether PROLOR entered into the Merger Agreement or consummated the Merger. PROLOR also has agreed to reimburse Oppenheimer for its expenses, including fees and expenses of its legal counsel, and to indemnify Oppenheimer and related parties against liabilities, including liabilities under the federal securities laws, relating to, or arising out of, its engagement. Oppenheimer in the past has performed investment banking services for PROLOR unrelated to the Merger, for which services Oppenheimer has received compensation, including acting as co-manager of a public offering of shares of PROLOR common stock in 2012. Oppenheimer may also seek to provide financial advisory services to PROLOR or OPKO in the future and would expect to receive compensation for the rendering of these services.

The issuance of Oppenheimer’s opinion was approved by an authorized committee of Oppenheimer. Oppenheimer has consented to the use of its written opinion in this joint proxy statement/prospectus and such consent is an exhibit to the registration statement of which this joint proxy statement/prospectus is a part.

Certain Financial Forecasts Utilized by PROLOR in Connection with the Merger

PROLOR does not, as a matter of course, make publicly available forecasts or projections due to their inherent unpredictability, which is predominantly due to the necessary use of numerous underlying assumptions and estimates. However, in connection with its due diligence process and evaluation of the Merger, PROLOR’s management prepared certain non-public projections regarding PROLOR and OPKO, referred to as the Projections, which were provided to the Special Committee and Oppenheimer. The Projections were based on PROLOR’s management’s estimates of PROLOR’s and OPKO’s future financial performance as of the date the Projections were prepared. The Projections were not prepared by OPKO. OPKO reviewed and provided input on the assumptions relating to the Projections. OPKO also does not, as a matter of course, make publicly available forecasts or projections due to their inherent unpredictability, which is predominantly due to the necessary use of numerous underlying assumptions and estimates.

In order to provide PROLOR’s stockholders access to this previously non-public information, which PROLOR prepared solely for purposes of considering and evaluating the Merger, we have set forth below the material portions of the Projections. The inclusion of this information should not be regarded as an indication that PROLOR’s management, the Special Committee, the PROLOR Board of Directors or Oppenheimer considered, or now considers, this information a reliable prediction of actual future results, and such data should not be relied upon as such. The inclusion of this information should not be regarded as an indication that OPKO’s management or OPKO’s Board of Directors considered, or now considers, this information a reliable prediction of actual future results, and such data should not be relied upon as such. Neither PROLOR nor any of its affiliates or representatives has made or makes any representations to any person regarding the ultimate performance of PROLOR and/or OPKO as compared to the Projections, and none of them intends to update or revise the Projections due to any changes in facts or circumstances, or if all or any of the assumptions underlying the Projections are shown to be in error.

 

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PROLOR projections with respect to PROLOR

PROLOR Adjusted Projections

 

    Fiscal Year Ending December 31,  
    2013     2014     2015     2016     2017     2018     2019     2020     2021     2022     2023     2024     2025     2026     2027     2028     2029     2030     2031     2032     2033     2034     2035  
    (in millions)  

Total Revenue(1)

  $ —        $ —        $ —        $ 6      $ 24      $ 56      $ 112      $ 213      $ 320      $ 425      $ 519      $ 612      $ 704      $ 768      $ 805      $ 840      $ 868      $ 889      $ 563      $ 407      $ 119      $ 60      $ —     

Total Operating Expenses

  $ 20      $ 27      $ 26      $ 19      $ 6      $ 9      $ 10      $ 13      $ 3      $ 2      $ 2      $ 2      $ 2      $ 2      $ 1      $ 1      $ 1      $ 1      $ 1      $ 1      $ 0      $ 0      $ —     

Operating Income

  ($ 20   ($ 27   ($ 26   ($ 18   $ 1      $ 8      $ 24      $ 47      $ 87      $ 114      $ 137      $ 160      $ 187      $ 204      $ 205      $ 210      $ 213      $ 221      $ 140      $ 101      $ 30      $ 15      $ —     

Unlevered FCF(2)

  ($ 20   ($ 27   ($ 26   ($ 18   $ 0      $ 5      $ 17      $ 35      $ 64      $ 84      $ 102      $ 119      $ 138      $ 151      $ 153      $ 156      $ 158      $ 163      $ 104      $ 75      $ 22      $ 11      $ —     

 

(1) Assumes the following probabilities of success for PROLOR’s product candidates: hCG-CTP (adult): 70% (U.S.) and 60% (E.U.); hCG-CTP (pediatric): 40% (U.S.) and 30% (E.U.); hGH-CTP (other pediatric GH related diseases): 40% (U.S. only); Factor VIIa-CTP: 7.5%; MOD-6030: 7.5%.
(2) Unlevered Free Cash Flow, which is a non-GAAP financial measure, was provided to Oppenheimer by PROLOR management and was calculated as projected operating income plus depreciation and amortization minus the sum of (i) estimated tax (at an assumed effective rate of 26%), (ii) estimated capital expenditures and (iii) projected changes in net working capital. Set forth below is a reconciliation of projected Unlevered Free Cash Flow to projected net income for the periods indicated.

 

    Fiscal Year Ending December 31,  
    2013     2014     2015     2016     2017     2018     2019     2020     2021     2022     2023     2024     2025     2026     2027     2028     2029     2030     2031     2032     2033     2034     2035  
   

(in millions)

 

Unlevered Free Cash Flow

  ($ 20   ($ 27   ($ 26   ($ 18   $ 0      $ 5      $ 17      $ 35      $ 64      $ 84      $ 102      $ 119      $ 138      $ 151      $ 153      $ 156      $ 158      $ 163      $ 104      $ 75