Opko Health Inc. (OPK) Opens Wider Window in CINV Market Thanks to Varubi Approval, Cheers Cantor

Louise Chen notes that under OPK's agreement with Tesaro, the approval of Varubi IV is a huge win.


Opko Health Inc. (NASDAQ:OPK) licensee Tesaro just garnered an FDA not for chemotherapy-induced nausea and vomiting (CINV) drug Varubi in both oral and IV formulations, blowing the market opportunity doors wide open for the biotech player.

Cantor analyst Louise Chen takes the expansion of the glimmering market opportunity as “more good news for OPK.” Worthy of note, Tesaro had already emphasized back in September that the IV formulation carries a lot of prospective commercial weight, allowing penetration that could reach 90% of the domestic market rather than just 10% with the oral market. “This expands the market opportunity for Varubi, which will now have approval for both oral and IV formulations,” comments Chen.

On back of the approval, the analyst trumpets his bullish stance, reiterating an Overweight rating on OPK stock with a price target of $20, which represents a close to 202% increase from where the stock is currently trading. (To watch Chen’s track record, click here)

This is a marked stride forward for the drug maker, the analyst explains, elaborating, “We view this as positive for OPK, which shares in the upside for the IV opportunity based on its agreement with Tesaro.”

Worthy of note, “The availability of a new formulation offers healthcare providers the flexibility to choose oral or IV administration,” Chen adds, bolstering his enthusiasm on what this FDA approval could mean for Opko.

Additionally, the analyst provides context that the news will not alter his confidence on rival Heron’s CINV franchise moving forward whose approval for Cinvanti with a PDUFA date set next month: “Some weakness in Heron’s […] stock may have been in anticipation of the Varubi IV approval given it could compete with Heron’s Cinvanti. We note, however, that TSRO may be more focused on selling PARP inhibitor asset Zejula (approved in March 2017) and fighting off competition from Lynparza (which was recently granted a broad expansion of its label in August 2017) and Rubraca than on prioritizing Varubi IV. In 2Q17, Zejula product sales accounted for ~90% of Tesaro’s net product revenue ($25.9MM of $28.8MM).”

TipRanks analytics demonstrate OPK as a Buy. Out of 5 analysts polled by TipRanks in the last 12 months, 4 analysts are bullish on Opko stock while 1 remains sidelined. The 12-month average price target stands at $14.20, marking a 114% increase from where the shares last closed.

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