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What happened

After the company released its third-quarter financials, launched Rayaldee, and updated investors on its clinical-drug pipeline, shares in Opko Health (OPK -1.63%) climbed 9% in November, according to S&P Global Market Intelligence.

So what

Opko Health's legendary CEO Phillip Frost is beginning to reap the benefit of a multiyear string of mergers and acquisitions designed to position the company as a diversified healthcare leader.

In the third quarter, ongoing demand for specialty lab services at its Bio-Reference Laboratories, which Frost acquired in 2015, resulted in consolidated revenue of $298 million and a net loss of $15 million. Opko Health finished the quarter with $145 million in cash.

The company also reported on Nov. 23 that Rayaldee, a vitamin D prohormone, would become commercially available on Nov. 30. The launch of Rayaldee could prove significant, given that it could become a standard of care used to treat vitamin D deficiency in millions of patients with chronic kidney disease.

Opko Health also told industry-watchers that it remains on track to deliver data for its long-acting human growth hormone, hGH-CTP, before the end of this year. The drug is licensed to Pfizer; if it's successful, it could end up competing in a market valued in the hundreds of millions of dollars annually.

Now what

Bio-Reference Labs is a big driver of revenue, but Rayaldee could begin contributing sales next year, and success for hGH-CTP could lead to milestone revenue and an FDA application for approval in 2017.

The size of Rayaldee's addressable market, and the historical sales figures for other drugs such as Hectorol used in the same indication, suggest that Rayaldee could have nine-figure sales potential.

Opko Health could also receive up to $275.0 million in regulatory milestone payments from Pfizer, and royalty rates ranging from the high teens to mid-twenties. If hGH-CTP is eventually launched for use in children, then those royalties will transition to profit-sharing on hGH-CTP and Pfizer's Genotropin, a commonly prescribed human growth hormone with Q3 2015 sales of $147 million.

Given all the needle-moving developments at Opko Health, it's not surprising that investors are starting to get a bit more enthusiastic. However, investors should remember that there's no guarantee of Rayaldee's commercial success, nor of success in hGH-CTP's trials. For these reasons, some caution is warranted.