Shares of Opko Health (NASDAQ:OPK) had another poor showing in November, with its stock shedding a whopping 19.5% of its value last month, according to data from S&P Global Market Intelligence. Opko's shares have now lost a stunning 43.4% of their value so far this year.
Opko's chronic woes stem mainly from the poor commercial performance of its two core value drivers: prostate cancer test 4K Score and the chronic kidney disease drug Rayaldee. In fact, these two key products were a major reason why Opko whiffed on third-quarter revenue by a worrisome 17.5% -- compared to Wall Street's consensus estimate -- last month.
Despite the sizable commercial opportunities for both 4K Score and Rayaldee, Opko simply hasn't been able to deliver on its promise to shareholders to become a cash-flow positive, growth-oriented company. As a result, Opko's stock has attracted a significant number of short-sellers this year, as evidenced by its short interest sitting at an unsightly 18.8% of the float at last count. In other words, investor sentiment is overwhelmingly negative toward Opko right now.
Perhaps the bigger problem is that Opko arguably lacks a surefire franchise-level drug in its clinical portfolio. As a result, Opko may need to make an acquisition or cut a licensing deal in order to bring in new blood, so to speak. Unfortunately, Opko appears to be throwing good money after bad by deciding to plow even more cash into the commercialization of 4K Score and Rayaldee.
Making matters worse, Opko is staring down a possible cash crunch in 2018. The company exited the most recent quarter with only $100.4 million in cash and equivalents, with an average quarterly burn rate of $15.97 million over the past 12 months. So while this beaten-down biotech stock might look like a compelling bargain based on its rock bottom price-to-sales ratio of 2.56, Opko is facing a number of financial and commercial headwinds that it might not be able to overcome at the end of the day. And that's why investors may want to stick to the sidelines with this falling knife right now.