So what: On January 12, Opko Health offered up insight into its business strategy, including an update on a slate of drugs in various stages of development and how it hopes to leverage last year's acquisition of the specialty lab services company Bio-Reference Labs.
Here are the highlights:
- In November, Tesaro (NASDAQ:TSRO) launched Varubi an anti-nausea cancer drug it licensed from Opko Health. Varubi competes in a $1 billion market and Opko Health can collect $95 million in milestones, plus double digit royalties on sales.
- On March 29, the FDA is expected to decide whether or not to approve Opko Health's Rayaldee, a vitamin D prohormone for use in chronic kidney disease patients. Opko Health estimates this market to be worth as much as $12 billion.
- In the second half of the year, Opko Health expects to report phase 3 data for hGH-CTP, a human growth hormone that it's developing in collaboration with Pfizer Inc. (NYSE:PFE). If approved, Opko Health could collect up to $275 million in milestone payments plus royalties from Pfizer; and
- This year will mark the first full year owning Bio-Reference Labs, a specialty lab with over $800 million in fiscal '14 sales and valuable partnerships with insurers and doctors that could allow it to boost demand for its 4Kscore prostate cancer test.
Now what: It looks to be a busy year for Opko Health and last month's sell-off shows that many investors aren't convinced (yet) that all that activity will pan out and justify the company's multi-billion dollar market cap.
Philip Frost, however, is one investor who is unwavering in his optimism. Frost, one of the most well-known biotech billionaires and the former CEO of Teva Pharmaceuticals, is Opko Health's CEO and its biggest shareholder. Importantly, he's been steadily buying Opko Health shares for more than a year.
Because Frost has achieved notable success in the past, it may be worth giving him and Opko Health the benefit of the doubt this time around too. If so, then picking up shares at these levels may prove profit-friendly.