What happened

According to data from S&P Global Market Intelligence, Opko Health (NASDAQ:OPK), a multinational pharma and diagnostics company, saw its shares rise by 3.39% last month. Although the diversified healthcare company posted strong second-quarter results early in the month, the real catalyst behind this move higher appears to be the positive sentiment surrounding pharma stocks in general. Opko, after all, traded hand in hand with the iShares Nasdaq Biotechnology ETF (NASDAQ:IBB) in August, and even slightly underperformed this broad-based pharma fund last month. 

A man drawing dollar signs in a ladder-like fashion.

Image source: Getty Images.

So what

While Opko's positive move higher is undoubtedly welcome news for shareholders, the fact remains that this stock remains one of the cheapest within the mid-cap pharma landscape with a trailing price-to-sales ratio of 2.9. Long story short, the market has yet to put much faith in the commercialization of Opko's advanced prostate cancer test 4K Score -- even though the test's sales reportedly grew by a healthy 58% in the first half of 2017 compared to the same period a year ago. Put simply, 4K Score has struggled to live up to its megablockbuster commercial opportunity (estimated $2 billion peak sales opportunity), and that's recently weighed heavily on Opko's valuation.  

Now what

Not surprisingly, Opko seemed to deemphasize 4K Score's value proposition during its second-quarter earnings report with the advanced prostate cancer diagnostic still lagging from a commercial standpoint. Management, instead, clearly attempted to focus investors' attention on the more impressive commercialization of the company's new chronic kidney disease drug Rayaldee, along with its fairly diverse pipeline that could create tremendous value for shareholders in the coming years. 

All told, Opko's shares appear set to continue to trade in tandem with the broader IBB, given that it lacks a clear-cut near-term catalyst. However, patient investors who are willing to let the company's near- and longer-term value drivers mature could be buying a diamond in the rough. Opko, after all, does have an unusually strong clinical pipeline for a biopharma of its size, and Rayaldee is addressing a $12 billion market that's only going to continue to grow moving forward.