Image Source: Opko Health 

Four price swings of 20% or more in just six months: That's what Opko Health, (NYSE: OPK) shareholders have gone through recently. You might say the stock is just a tad volatile. But just how risky is Opko? Here are three factors that are key in answering that question.

1. Rayaldee results
Nothing looms larger for Opko than the fate of Rayaldee. The FDA is scheduled to announce its verdict on the secondary hyperparathyroidism treatment on March 29. While anything can happen with regulatory decisions, the chances of Rayaldee winning approval seem to be pretty good.

Assuming the FDA gives its thumbs-up, the next big hurdle for Rayaldee is succeeding in the marketplace. Opko is ramping up for a product launch in the second half of 2016. The company thinks Rayaldee's addressable market size could be as large as $12 billion. Some analysts remain skeptical, however, questioning if the drug will even hit $500 million in peak annual sales.

2. Varubi's vigor
Though Rayaldee still awaits FDA approval, Opko has one drug already generating revenue. Varubi, which helps prevent chemotherapy-induced nausea and vomiting, launched last November. There's a wrinkle, though: Tesaro (NASDAQ: TSRO) licensed rights to the drug back in 2010.

Opko received a $15 million milestone payment from Tesaro in 2015, but the real money should begin to pour in this year. Another $95 million in milestone payments is up for grabs, along with double-digit percentage tiered royalties.

Varubi is important for Opko's success, but it remains to be seen how high its sales will be. Opko states the U.S. market alone could top $1 billion, but more conservative estimates are for the drug to reach peak global sales of around $400 million. If that happens, Opko stands to receive over $50 million annually.

3. Testing triumphs
Opko shelled out $1.47 billion last year to buy Bio-Reference Laboratories. The market didn't like the deal when it was announced, and Opko's stock dropped 15%. Can Opko prove the naysayers wrong?

Bio-Reference generated revenue of $832 million in fiscal 2014. Its revenue is already making a significant impact on Opko's finances. The company has set its sights on boosting sales of its 4Kscore prostate cancer test, which would further improve its payoff for the acquisition. 

One critical step in that regard will  be convincing insurers to reimburse for the test. Bio-Reference's resources should help tremendously on this front, and also in its ability to market the test to urologists and general practitioners. Investors will watch Opko's quarterly results in 2016 closely to see just how much the Bio-Reference deal pays off.  

Adding it all up
All three above factors could greatly reduce the riskiness of Opko' stock -- or greatly increase the risk associated with the stock. Results from clinical trials of other drugs in the company's pipeline will also make a difference, particularly human growth hormone deficiency drug hGH-CTP.

So just how risky is Opko's stock? On a scale from one to 10, with 10 being the highest level of risk, I'd say Opko rates a 7. That's probably a lower score than some would assign, considering that more than 30% of its shares are sold short right now.

I'm not too worried about Rayaldee winning regulatory approval, but there are valid concerns about how big of a commercial success the drug will be. I don't have serious qualms about Varubi either, but there are some risks associated with the launch of any new drug. And while the Bio-Reference acquisition and 4Kscore will no doubt boost earnings, it remains to be seen if Opko overpaid.

All that being said, there's still a decent chance that Opko succeeds on all these fronts. If it does, the rewards for investors will make any risks seem quite manageable.

Editor's note: This article has been edited to remove a mistaken reference to Amgen's etalcalcetide as a potential direct competitor to Rayaldee.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.