What happened

Shares of drug and diagnostics company OPKO Health (OPK -1.60%) closed 8% higher Wednesday following news of a collaboration agreement with pharmaceutical giant Merck (MRK -0.11%). While down from an intraday rally of more than 24%, the remaining gain still offers a glimmer of hope to shareholders who've watched their OPKO stake crumble since early 2021.

Nevertheless, it's not enough to make this ticker a prospect most investors will want to risk stepping into.

So what

The target is Epstein-Barr, a virus linked to mononucleosis that's vexed the healthcare industry since it was first identified in 1964. There are some generalized treatments for symptoms of infections, but there is no therapy purpose-built to combat the disease, nor are there any vaccines approved to prevent infections.

Merck and OPKO Health hope to change that.

Per a press release posted early Wednesday, OPKO's ModeX Therapeutics will begin working with Merck to continue the development of ModeX's vaccine MDX-2201 as a means of preventing Epstein-Barr infections. Merck will share exclusive licensing rights to the drug, if approved, in exchange for $50 million worth of immediate funding. OPKO Health is eligible for up to $872.5 million worth of cash payments as the vaccine moves toward a potential approval and then -- hopefully -- commercialization.

At stake is control of a mononucleosis/Epstein-Barr vaccine market that could be worth an estimated $2 billion per year. But since there is no existing Epstein-Barr vaccine market to use as a starting, comparative basis, it's possible the opportunity could be much bigger.

Now what

It's an encouraging development to be sure and one that holds promise for consistently unprofitable OPKO.

Given the sheer number of unknowns and the degree of risk still on the table, this isn't a reason to buy the stock...at least not yet. Merck's $50 million upfront payment is a pittance, staking its licensing claim on the mere chance that MDX-2201 works as hopes. The pharmaceutical giant can afford it should the continued development of the vaccine not pan out. OPKO doesn't have that same fiscal flexibility.

Nevertheless, it's a development worth keeping on your radar. Should this vaccine start showing real promise, it's possible Merck may find it more cost effective to simply acquire the entirety of OPKO.

Just bear in mind that prospect is a longshot and not a great basis for a long-term investment.