PROLOR Biotech, Inc. (PBTH)

[investora2z]

The benefits of the acquisition may take time to translate into revenue and profits, but the spurt in price of OPKO over the last few months has made it a better deal for PROLOR shareholders. A recent article on SA has recommended to buy OPKO due to its innovation pipeline, backing of Dr. Phillip Frost, and a huge short interest which may lead to a surge in demand for the stock. The acquisition is expected to broaden OPKO's portfolio, and strengthen the pipeline of therapeutic and unique diagnostic products. PROLOR's technology platforms and R&D infrastructure are expected support OPKO's growth strategy. However, it is important to remember that the stock is now trading at high valuations, mostly based on future expectations. It is true that the revenues have grown exponentially over the years, but the bottom-line has remained negative. The debt is also a bit high. On the positive side, OPKO's 4KScore diagnostic test could generate significant annual revenues (estimated at $1.8 billion) in due course, which could easily take care of the negatives in the balance sheet. Dr. Frost's active presence on the board and as an investor is a major reason to remain confident about the company's prospects. Frost looks for synergies between his various companies. For example, OPKO has an agreement with Biozone (BZNE), another company where he has a stake, to use / explore the possibilities related to Biozone's proprietary drug delivery technology (QuSomes). The delivery technology can help in reducing cost of manufacture of formulations. QuSomes are likely to be in great demand from pharmaceuticals companies who are looking for more cost effective methods of manufacture of formulations / injectables. So OPKO has a lot of potential, but the huge run up in price is surely a reason to remain a bit cautious.