Opko Health Inc (OPK)

[WiseFool]

Todd Campbell E.B. Capital Markets ‘Opko Health, This is one Company that Investors Ought Not Ignore’

3 Reasons Why Opko Health’s Stock Could Soar
By Investopedia | July 01, 2015 AAA |

Opko Health’s (NYSE: OPK) CEO Phillip Frost has a proven track-record of building and growing successful biopharma companies, and his serial deal-making approach has saddled Opko Health with a stable of promising therapies and products.

However, it’s these three healthcare products that could have the biggest positive impact on its share price over the coming year.

No. 1: Becoming a standard of care
Frost isn’t shy about his goal to improve care and cut costs from the healthcare system. After all, he spent over 25 years spearheading advances in generic medicine at IVAX and later at Teva Pharmaceutical.

Today, Frost is focusing on improving healthcare by focusing on next generation diagnostics, and the 4Kscore prostate cancer test is his first foray into this market.

The 4Kscore test is a blood test that is designed to identify biomarkers associated with advanced prostate cancer, and if Opko Health can convince doctors to prescribe it and insurers to pay for it, then it could end up becoming a standard test that is used prior to subjecting patients to a biopsy, which can be expensive, painful, and cause complications.

Elevated PSA tests lead to more than 1 million prostate cancer biopsies in the U.S. every year, so 4Kscore sales could prove to be significant. So far, sales have been tepid, but that could change in the coming months.

In June, Opko Health announced that the 4Kscore will become part of prostate cancer early detection recommendations from the National Comprehensive Cancer Network, or NCCN, a non-profit made up of 26 of the nation’s leading cancer centers.

NCCN’s nod should results in more doctors prescribing the 4Kscore test, but Opko Health’s $1.49 billion acquisition of Bio-Reference Labs, a national testing laboratory, is equally important to 4kscore’s success. That’s because Bio-Reference Labs has pre-existing agreements with most of the major healthcare payers that could speed along negotiations that allow for 4Kscore reimbursement.

No. 2 New kid on the block
Opko Health acquired the rights to the nausea and vomiting drug Rolapitant back in 2009 from Schering-Plough, and a pending FDA decision on Rolapitant in September could lead to that investment finally paying off.

In 2010, Opko Health licensed Rolapitant’s rights to Tesaro, a biotech company run by Lonnie Moulder, the person behind the successful commercialization of the chemotherapy-induced nausea and vomiting drug Aloxi.

If Rolapitant gets the FDA green light this fall, then Moulder can leverage his prior experience marketing Aloxi to help win market share away from Emend, a competitor that posted sales of $553 million last year. If Tesaro gets FDA approval and Rolapitant captures market share, then Opko Health could receive up to $121 million in milestones, as well as double digit royalties on any Rolapitant sales.

No. 3 Solving a big problem
Vitamin D deficiency is a major problem for patients diagnosed with late stage chronic kidney disease, or CKD, and Opko Health could have a new treatment available to these patients as early as next year.

Between 70% and 90% of all CKD patients have vitamin D deficiency, and that deficiency can lead to secondary hyperparathyroidism and debilitating bone diseases in 40% to 60% of patients — an addressable patient pool that Opko Health estimates to be as big as 4 million people.

In May, Opko Health filed for FDA approval of Rayaldee, a prohormone for vitamin D, and if Rayaldee gets past regulators, it will vie for share in a market that Opko Health pegs at $12 billion. To hit the ground running, Opko Health is hiring between 30 and 40 sales reps by the end of this year so that it can officially launch Rayaldee within three months following its potential approval.

Looking ahead
Opko Health has a lot of catalysts that could help support its shares, but investors ought to bear in mind that a lot of the upside from these catalysts could already be priced into shares given that the company already boasts a market cap of more than $7 billion. For that reason, it may make more sense for investors to add Opko Health to their watch lists and take advantage pullbacks, rather than jump in and buy it up here at these pricey levels. Regardless, given the size of the market opportunity ahead of Opko Health, this is one company that investors ought not ignore.

Disclosure:

Todd Campbell has no position in any stocks mentioned.

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