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Shares of Opko Health (NASDAQ:OPK), a mid-cap drug and diagnostic developer, were slammed in September to the tune of 22% based on data from S&P Capital IQ.

There were a multitude of catalysts weighing on Opko's stock last month. Here's a brief rundown.

For starters, Wall Street and investors aren't certain that Rayaldee will sell particularly well as a treatment for secondary hyperparathyroidism in patients with stage 3 or 4 chronic kidney disease and vitamin D insufficiency. Once believed to have blockbuster peak sales potential, some analysts question whether it'll even make it to $500 million in peak annual sales.

Also, there are questions surrounding the integration of Bio-Reference Laboratories, whose diagnostic tests are expected to provide an instant top- and bottom-line boost to Opko. Integrating a $1.5 billion acquisition could take time, and investors sometimes aren't the most patient when it comes to waiting for results.

Opko Health has also witnessed its short interest rise dramatically in recent months. After hitting a low of 40.6 million shares held by short-sellers (traders who make money when stock prices fall), Opko's most recent short interest reading shows that 52.8 million shares are held by pessimists. It can be difficult for Opko's stock to rally if this many traders have rallied against the company.

And, of course, as we've witnessed with the entirety of the biotech sector last month, comments from presidential hopeful Hillary Clinton hurt Opko. I wouldn't personally expect Opko's drug or diagnostic prices to draw the ire of consumers, however there is still concern that prescription drug reform at some point in the future could somewhat hinder the profitability of drug developers like Opko.

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Source: Opko Health.

But the big question on everyone's minds is whether or not Opko has the tools to rebound from its recent weakness.

After essentially giving back the entirety of its gains over the past year, and despite ongoing concerns about Bio-Reference's integration, the total sales potential of its 4K Score prostate cancer diagnostic, and sales concerns for Rayaldee, I do believe there could be modest long-term upside to be had with Opko.

An important aspect to consider is that stocks with high levels of short interest tend to be driven by emotions and short-term news rather than reason and long-term thinking. Thus, a reasonable case could be made that the selling in Opko has been a bit overdone. The company is still projected to deliver nearly $2 billion in sales by 2018, placing it at a current valuation of about 2.5 times 2018's sales. To me, this is a figure that could expand given Opko's penchant for forging partnerships, buying growth, and delivering organic growth vis-à-vis drug and device approvals.

Given Opko's recent collaboration with Pfizer geared at developing its long-acting human growth hormone that supplied it with $295 million upfront, cash concerns are also a non-factor.

I'd certainly suggest that seasoned biotech investors that are looking for an above-average (but high-risk) growth opportunity should consider diving more deeply into Opko Health.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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