Checking in on OPKO Long After J.P. Morgan Ends

The health-care conference might be over, but you can still watch presentations from OPKO Health and others.

Jan 27, 2014 at 6:30PM

J.P. Morgan's Healthcare Conference, the annual kickoff for biotechs, is in the books. But long after executives and investors abandon the Westin St. Francis Hotel, the conference continues to live on.

On the Internet, at least.

Most of the companies' presentations are still available to view here, and you can find a link to their slides on the company/presentation info pages.

It's an easy way to get introduced to a company you're thinking of putting on your watchlist. After all of the news-driven presentations are done, each year, I try to go back and listen to at least one presentation by a company I haven't followed closely.

This year's pick? OPKO Health (NYSE:OPK).

I'm not sure how OPKO Health has managed to fly under my radar considering how much the biotech has going on. The company is developing a diagnostic platform, has a pipeline of drugs, and has made quite a few equity investments in other biotechs.

On the diagnostic side, OPKO is developing its Claros immunoassay that would allow doctors to do laboratory testing in-house. The tabletop-sized machine reads a sample on a card and can potentially perform up to 10 tests off one sample.

While doing the tests in the office should be more convenient for patients, the big driver for sales will come from doctor's ability to make more money. If the tests can provide results that are as accurate as the ones done by Laboratory Corporation of America (NYSE: LH) or Quest Diagnostics (NYSE:DGX), doctors can bill insurers directly for the test and pocket the difference. The Claros isn't going to put Laboratory Corp. or Quest out of business, but it could take a small chunk of some of their routine tests.

OPKO is also developing a separate test called the 4Kscore to determine patient's risk of developing prostate cancer. A whopping 60% of prostate biopsies are negative. If the 4Kscore can predict which of those biopsies will be negative, they won't have to be performed, producing a compelling value proposition. OPKO estimates eliminating the unnecessary biopsies could save about $1 billion a year, which insurers would presumably be willing to pay to OPKO to run the 4Kscore tests considering a blood test is substantially less invasive than a biopsy.

On the pharmaceutical side, OPKO has five drugs in late-stage development.

A phase 3 trial testing Rayaldy in patients with secondary hyperparathyroidism with chronic kidney disease and vitamin D insufficiency is scheduled to read out in the middle of this year. OPKO worked out a special protocol assessment with the FDA before the trial began, so if the results are positive, an approval toward the end of 2015 or early 2016 seems likely.

OPKO's most advanced drug, Rolapitant, is licensed to Tesaro (NASDAQ:TSRO). Rolapitant, which treats nausea and vomiting associated with chemotherapy and surgical operations, has already passed two phase 3 trials. A third trial is expected to read out early this year, putting Tesaro on target to submit a marketing application in the middle of this year.

Finally Tesaro has a basket of investments in nine different biotechs, including its partner, Tesaro. As Phillip Frost, OPKO's Chairman and CEO put it, the company likes to have "fingers in many pies."

The only problem is that can be very messy, figuratively and literally.

A Foolish challenge
From what I heard on the webcast, OPKO isn't my cup of tea. With so much going on, it's very difficult to determine a fair value for the company. If you like companies with multiple shots on goal, I encourage you to listen to the webcast; there's even more going on at the company than I was able to cover here.

Or listen to a presentation of a different company you'd like to know more about. Just don't let the resource go to waste.

The Fool has another resource for finding companies to add to your watchlist. Check out what stock The Motley Fool's chief investment officer has selected as his No. 1 stock for 2014 in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Fool contributor Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends Laboratory of America and Quest Diagnostics. The Motley Fool owns shares of JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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