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Opko Health's (OPK 0.70%) billionaire CEO, Phillip Frost, has been busy. The legendary healthcare entrepreneur -- best known for selling his IVAX Labs to Teva Pharmaceutical for $7.4 billion in 2006 --  is on a spending spree that he hopes will make Opko Health into a major player in biopharma and specialty diagnostics. Investors should start enjoying the benefits of his efforts next year, so let's take a closer look at this company.

Delivering a payoff

Over the past five years, Frost has orchestrated a series of deals to acquire the rights to medicines that he thinks could be needle-movers.

The first of those drugs, Varubi, won approval last fall and in 2017, Opko Health may begin receiving its first meaningful royalties on Varubi's sales.

Frost bought Varubi, a drug that treats chemotherapy-induced nausea and vomiting (CINV), from Schering-Plough in 2009 and shortly thereafter, he licensed rights to Varubi to Tesaro, Inc. (NASDAQ: TSRO), a fledgling biotech run by Lonnie Moulder, the person behind the CINV top-seller Aloxi.

As part of that deal, Moulder agreed that Tesaro would pay Opko Health up to $121 million in milestone payments, plus tiered double-digit royalties on any sales.

So far, Varubi sales aren't all that meaningful, but there's reason to think Varubi could have nine-figure potential. Initially, Varubi's approval was for an oral dose, however, CINV drugs that work similarly to Varubi are dosed via IV most of the time. An IV formulation of Varubi could win a FDA green light next spring, so there's a chance that revenue from that formulation begins benefiting Opko Health's financials beginning next summer.

Opko Health thinks that the addressable market for Varubi is worth $1 billion, and given that Emend -- a drug that competes head-to-head against Varubi -- hauled in $535 million last year, there's reason for optimism.

An even bigger opportunity for Opko Health next year may be the launch of its wholly owned vitamin D prohormone, Rayaldee. Rayaldee notched an FDA go-ahead for use in chronic kidney disease (CKD) patients this past summer and Frost plans to begin selling it this quarter. 

The market for vitamin D replacement in CKD patients is potentially massive. The Centers for Disease Control estimates that 20 million Americans may have CKD and given that cases typically occur in patients over 60, aging baby boomers mean that many patients are going to require treatment that could result in vitamin D insufficiency.

Initially, Rayaldee can be used in patients with stage 3 or 4 CKD, but studies are ongoing evaluating its potential in stage 5 patients, too. Only time will tell if Rayaldee resonates with prescribers, but if it does, it could move Opko Health's needle. Zemplar, a vitamin D boosting drug used to treat CKD patients, saw peak sales of more than $1 billion before losing patent protection.

Rayaldee could similarly be a big success overseas. Opko Health licensed ex-U.S. rights to Vifor Fresenius Medical Care Renal Pharma in May and as part of that arrangement, VFMCRP could pay Opko Health up to $282 million, plus tiered double-digit royalties, if Rayaldee is approved in Europe, and elsewhere. 

The coming year should also give investors greater insight into the potential to leverage Frost's $1.4 billion acquisition of Bio-Reference Labs last year. In Q2, Bio-Reference Labs sales totaled $260 million and Frost hopes Bio-Reference Labs' relationships can drive demand for Opko Health's 4KScore prostate cancer test and its Claros 1 in-office diagnostic system. The 4KScore is the only blood test proven to accurately identify risk for aggressive prostate cancer, but demand for it has so far been unimpressive. Bio-Reference could also help boost demand for Opko Health's Claros 1 in-office diagnostic system. A PSA and testosterone test for Claros 1 could launch by the end of 2017 and early in 2018, respectively.

Looking forward

Investors will also find out soon if Opko Health's hGH-CTP could be a big seller. The drug is a long-lasting version of human growth hormone that can be dosed weekly, rather than daily. The market for human growth hormone is worth $3 billion annually and growing, and results from a phase 3 trial evaluating hGH-CTP in adults are expected soon. 

Opko Health has already licensed rights to hGH-CTP to Pfizer (PFE 1.38%), and if the phase 3 results are positive, then an FDA filing for approval could be in the works next year. If eventually approved, Pfizer could pay Opko Health milestones, plus royalties. Importantly, a success in adults could indicate hGH-CTP could similarly benefit children. If studies already under way show it benefits younger patients, then Pfizer has agreed to split profits with Opko Health on both hGH-CTP and Genotropin, Pfizer's own best-selling human growth hormone.

Overall, there are a number of reasons why Opko Health's shares could move higher or lower next year, so investors will want to pay particularly close attention to this company over the coming quarters.