Biotech Values

[DewDiligence]

Barron’s skeptical of OPK-BRLI merger:

http://online.barrons.com/articles/two-risky-health-care-companies-become-one-1434768602

When two odd people find their way to each other, it’s a small marvel. So it is with companies. See, for example, this month’s merger agreement between Opko Health and Bio-Reference Laboratories.

Opko (ticker: OPK) is a grab bag of development-stage medical projects overseen by billionaire drug entrepreneur Phillip Frost. Bio-Reference (BRLI) is a clinical lab that survived financings from a who’s who of penny-stock rogues, and years of competition against the larger Laboratory Corp. (LH) and Quest Diagnostics (DGX), to approach a billion dollars in annual revenue without free cash flow in a business where its rivals generate loads of it. The uncertain quality of Bio-Reference’s earnings has made its shares hard to value, and Frost’s venture is as yet unprofitable. We’ve been wrongly negative on the direction of both stocks, but we still advise against the shares of the combined company. Only those who believe that Frost can work miracles should own Opko stock.

The OPK-BRLI CC on 6/11/15 is worth a listen, if only for the banality (#msg-114525831).