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What: Shares of Opko Health (NASDAQ:OPK) are trading 11% higher this morning after starting the trading day with a 13% pop. These gains follow news that Opko has entered an agreement with pharmaceutical giant Pfizer (NYSE:PFE) to develop and commercialize Opko's growth hormone product hGH-CTP.
So what: According to Opko's press release, it will receive a $295 million payment upfront and is eligible for an additional $275 million in payments pending hGH-CTP's clearance of certain regulatory hurdles. Pfizer will be the exclusive licensor of this growth hormone treatment around the world, with royalties and/or profit sharing payments accruing to Opko. The treatment is in Phase 3 trials around the world for use in adults and is also in Phase 2 trials for young children. Additionally, it has orphan drug designation in the U.S. and Europe for growth hormone deficiency in adults and children.
Now what: Opko's hGH-CTP has been touted as a once-weekly alternative to the current daily regimen of growth hormone treatments required to combat growth hormone deficiencies. Opko CEO Phillip Frost believes that the global growth hormone market is worth more than $3 billion per year, which is almost as much as Opko's market cap after its pop today. Since Opko's agreement includes the potential for profit sharing in Pfizer's existing growth hormone treatment Genotropin once hGH-CTP is approved for pediatric use, this deal could eventually include a fairly large chunk of the global growth hormone market. It seems that biotech investors may want to watch this drug's progress now that it has the support of the world's largest pharmaceutical company.
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