Opko Health Inc. (NASDAQ:OPK) reports operating and financial results for the three months ended March 31, 2017.

Business Highlights

  • U.S. commercial launch of RAYALDEE underway:  RAYALDEE was launched by our experienced commercial marketing and sales teams and substantial progress has been made in obtaining formulary access for RAYALDEE, with more than 60% of potential patient lives now covered under insurance plans.  Obtaining broad insurance coverage is a critical step in the adoption of the use of RAYALDEE.
  • Forthcoming revisions to the Kidney Disease Improving Global Outcomes (or KDIGO) Clinical Practice Guidelines for Chronic Kidney Disease – Mineral and Bone Disorder CKD-MBD) are expected to recommend against the routine use of vitamin D receptor activators (VDRAs) for the treatment of SHPT in this population.  This guideline is also expected to highlight the unproven effectiveness of nutritional vitamin D as a treatment for SHPT and is anticipated to greatly enhance the adoption of RAYALDEE therapy by physicians and patients.
  • Dr. Akhtar Ashfaq, a board certified nephrologist with significant industry experience, has joined OPKO as Senior Vice President, Clinical Research & Development and Medical Affairs.  Dr. Ashfaq will support commercial and scientific development strategies for RAYALDEE.
  • 4Kscore test utilization continues to grow; Level 1 CPT code and CMS pricing in place, negotiations with payors continue.  Level 1 CPT code and CMS pricing became effective on January 1, 2017, and the Company is actively working to secure coverage with additional payors.  During the quarter ended March 31, 2017 approximately 18,600 4Kscore tests were ordered which represents growth of more than 100% from the first three months of 2016.
  • Phase 3 pediatric trial for hGH-CTP initiated; Analyses of data from long acting hGH-CTP trial in adults continue and BLA preparation for FDA submission underway:  OPKO will complete a statistical outlier analysis of data from its Phase 3 trial study in adults and, together with Pfizer, is preparing a BLA for FDA submission.
  • Phase 2a trial for intravenously administered Factor VII-CTP and Phase 1 trial for subcutaneously administered Factor VII-CTP are ongoing.  These long acting forms of Factor VII utilizing OPKO’s CTP platform technology are expected to better support prophylaxis, provide for easier administration and decrease the frequency of dosing.
  • Analytical and clinical validation trials for Claros point of care (POC) PSA test began in January 2017; PMA filing anticipated upon completion; Claros POC testosterone test trials and 510(k) filing to follow. OPKO has begun analytic and clinical validation studies of its POC diagnostic test for prostate specific antigen (PSA) utilizing its proprietary diagnostic platform and intends to submit its PMA application to the FDA for approval in 2017.  OPKO expects to begin an additional multi-center study of its POC testosterone test in 2017 followed by a 510(k) submission.
  • Initiation of four Phase 2 clinical trials anticipated in 2H 2017 and early 2018
    RAYALDEE line extension in dialysis patients with SHPT:  
    Together with its partner, Vifor Fresenius, OPKO is developing RAYALDEE for Stage 5 CKD patients with SHPT undergoing dialysis and anticipates initiating a Phase 2 trial during the second half of 2017.
    – OPK88003, an orally administered selective androgen receptor modulator (SARM): The Company plans to initiate a Phase 2b dose ranging study in the second half of 2017 to evaluate the use of OPK88003 to treat men with benign prostate hypertrophy (BPH) (enlarged prostate).  It is expected to ameliorate symptoms of BPH by reducing prostate size and, on the basis of data from a previous trial in 350 men, provide other benefits such as increase in muscle mass and bone strength and decreased fat mass.
    – OPK88004, a once weekly oxyntomodulin dual GLP1-Glucagon agonist for type 2 diabetes and obesity:  OPKO plans to initiate a Phase 2b study in early 2018 to determine optimal dosing.  The drug has been shown to be safe and effective in a previous 400 patient Phase 2a trial.
    – OPK88002, an NK-1 inhibitor to treat pruritus (itching) in Stage 5 CKD patients undergoing dialysis:  Approximately 50% of renal dialysis patients experience difficult to control pruritus.  An IND was recently filed for a Phase 2a trial of OPK88002, obtained as part of the transaction with Schering Plough in which OPKO also obtained Rolapitant, licensed to TESARO, and now on the market.
  • Orphan Drug Status received in the U.S. and EU for its new Oligonucleotide to treat Dravet Syndrome IND planned for 2H 2017;  OPKO’s oligonucleotide based AntagoNAT (OPK88001) for the treatment of Dravet Syndrome has received orphan drug designation in the US and EU and OPKO plans to initiate clinical trials of OPK88001 for treatment of Dravet Syndrome later this year.  Currently, there is no globally approved treatment for Dravet Syndrome.  AntagoNAT, anti-Natural Antisense Transcripts, is an OPKO platform technology in which single strand oligonucleotide molecules are designed to interfere with regulatory gene expression in order to enhance production of endogenous functional proteins.
  • The combination of our expanding and maturing pipeline of products in clinical development and the expected increase in sales of existing products currently in the market positions the company well for significant growth

Financial Highlights

  • Consolidated revenues for the three months ended March 31, 2017 of $296.1 million improved incrementally over the comparable period of 2016 of $291.0 million.
  • During the first three months of 2017, operating expenses included significant investment in the commercial activities supporting the launch of RAYALDEE,  as well as continued investment in advancement of the Company’s pharmaceutical pipeline.
  • The three month period ended March 31, 2016 benefited from a non-recurring income tax rate change in Israel, which was the principal result of the $20.5 million income tax benefit.
  • Cash, cash equivalents and marketable securities were $131.1 million as of March 31, 2017.

Shares of Opko Health slipped nearly 5% to $7.15 in after-hours trading Tuesday. OPK has a 1-year high of $12.15 and a 1-year low of $7.11. The stock’s 50-day moving average is $7.70 and its 200-day moving average is $9.01.

On the ratings front, OPK has been the subject of a number of recent research reports. In a report issued on April 7, Jefferies analyst Brandon Couillard reiterated a Hold rating on the stock, with a price target of $8.00, which implies an upside of 10% from current levels. On March 14, Guggenheim’s Louise Chen initiated coverage with a Buy rating on OPK and has a price target of $25.00.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Brandon Couillard and Louise Chen have a yearly average return of 23% and a loss of 15.2% respectively. Couillard has a success rate of 78% and is ranked #23 out of 4567 analysts, while Chen has a success rate of 33% and is ranked #4490.

Sentiment on the street is mostly bullish on OPK stock. Out of 4 analysts who cover the stock, 3 suggest a Buy rating and one recommends to Hold the stock. The 12-month average price target assigned to the stock is $11.33, which represents a potential upside of 56% from where the stock is currently trading.

OPKO is a diversified healthcare company. It operates through Diagnostics, and Pharmaceutical segments. The Diagnostics segment is consists of the pharmaceutical operates that the company acquired in Chile, Mexico, Ireland, Israel, and Spain and its pharmaceutical research and development operations. The Diagnostics segment is primarily comprised of the clinical and laboratory operations tit acquired through the acquisition of Bio-Reference and OPKO Lab and its point-of-care operations.