An approval would certainly be a big deal for both companies. An approval would mark the first time that TESARO has officially brought a drug to market, and it would trigger some sweet milestone payments for Opko. Opko is currently poised to receive up to $110 million dollars if the drug is successfully approved and commercialized. In addition, if the drug proves to be a hit in the marketplace, then Opko could earn double-digit royalty payments from the product's sales, as well as a share of the profits if the product also makes its way to Japan. Opko also has the right to market the compound in Latin America if it so chooses.
The market opportunity for this drug appears to be huge, as an estimated 6.6 million patients get diagnosed with CINV each year in the U.S. alone, and Opko believes this drug has an addressable market worth $1.25 billion per year. While it's seriously unlikely that the drug would ever capture 100% market share, analyst do seem excited about its potential to grab market share away from Merck's CINV treatment, EMEND, and peak sales estimates are running as high as $850 million.
For TESARO investors, an approval would be a major milestone for the company. Recall that TESARO has yet to bring a single product to market, so this represents a real opportunity to start showing a top-line number on its income statement.
Opko Health, on the other hand, has been pulling in revenue for a while now, but not nearly enough to fully cover its expenses. Through the first six months of the year, the company generated $72 million in revenue and yet still managed to lose more than $159 million, so seeing the company develop another revenue stream and bring in some juicy milestone payments would surely be a welcome development.
Investors certainly have been excited by this drug's potential, and shares in both companies have been bid up over the last few years, placing their returns well ahead of the market average.
Will Rolapitant receive the regulatory nod this week? Investors will have their answer soon enough.
Brian Feroldi has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.