The healthcare industry is massive, and it offers opportunities to invest in companies that specialize in everything from direct care to the research and development of new therapies. The need for quality medical solutions is always high, and there is an ever-expanding market for innovative products and services.
Of course, not every company operating in the healthcare space is successful. Promising research leads to dead-ends in patient trials, patents expire, and medical centers run into obstacles ranging from natural disasters to physician malpractice. Choosing the right business for your portfolio is challenging at best.
Recent developments with OPKO Health have attracted the attention of analysts. Interestingly, the company is having big wins and serious setbacks almost simultaneously. Teasing apart the nuances of its current status is critical to making the right decision for your particular investment goals.
OPKO takes a four-pronged approach to advancing healthcare. First, it is working to improve the diagnostic process. It is focused on technology that improves accuracy and identifies issues sooner so that physicians are able to offer treatment earlier than ever before. For example, the 4Kscore test gives patients critical details on their likelihood of developing prostate cancer based on individual biomarkers.
Second, OPKO [NASDAQ: OPK] is developing next-generation vaccines and therapies to address large, underserved global markets.
The company’s portfolio currently includes growth hormone, hemophilia, and obesity products, as well as vitamin D and phosphate management products.
A variety of additional small molecule and biological therapies are in the development phase, including protein up-regulation treatments, asthma and COPD solutions, and new therapies for Parkinson’s disease.
Third, OPKO [NASDAQ: OPK] is manufacturing and distributing products to a global market, with locations in the European Union, Chile, Mexico, and the United States.
Finally, OPKO is carefully monitoring achievements by startups, entrepreneurs, and individual researchers. The organization has expertise in identifying early-stage companies that have the potential for increasing in value.
OPKO regularly invests in these businesses to support the work being done, as well as to give its own stockholders an opportunity to realize a share of the profits.
Unfortunately, despite its efforts, OPKO’s most recent earnings report doesn’t give investors much to get excited about.
Revenue decreased to $25.4 million from $33.8 million for the same period in 2017, and it is expected to drop further in coming months.
In addition, the company is executing a complex maneuver that will dilute the value of current shares. This announcement led to a sell-off of OPKO stock, which depressed stock prices by nearly 20% in early February.
With so many irons in the fire, the biggest question for shareholders is whether OPKO is achieving any of the goals on its extensive list of projects and if so, how these achievements are impacting the company’s value.
OPKO has successfully developed Rayaldee, which offers an important benefit for chronic kidney disease patients. It is the only therapy thus far that successfully raises 25-hydroxyvitamin D levels in the blood while simultaneously lowering parathyroid hormone levels. New studies support the unique advantages of Rayaldee therapy, and OPKO plans to capitalize on these reports with an expansive marketing and distribution strategy.
If successful, Rayaldee promises substantial gains the company’s bottom-line profits.
A long list of other products are reaching the end of the research stage and nearing launch. For example, the Sangia Total PSA test with the Claros 1 analyzer recently obtained regulatory approval for use at the point of care.
Since there are more than 25 million PSA tests given in the US each year, this approval represents a massive opportunity for OPKO to gain market share.
Perhaps most exciting of all, a collaboration with the National Cancer Institute is showing positive results in genetically-based cancer therapy development, which is considered the future of cancer treatment.
One of the biggest obstacles facing any company that develops new tests and new therapies is demonstrating the products’ effectiveness to a long list of regulatory agencies in governments around the world.
The United States is particularly challenging, because tests and therapies must first obtain approval from the Food and Drug Administration (FDA) to permit their sale, then companies must work with individual medical insurers to get products covered. Without support from insurers, tests and therapies are often financially out of reach for patients.
The 4Kscore test is critical to OPKO’s short-term success, and the company has not yet gained the needed approvals.
In recent months, Novitas a decision-maker for the US Medicare plan elected not to support the 4Kscore test. This was a major blow to OPKO’s short-term prospects, and it isn’t an unusual outcome.
No matter how strongly investors believe in OPKO’s products and services, it is difficult to predict whether the company will be able to obtain critical regulatory approvals in the US or any other market.
Any one of the breakthrough products and therapies currently in development could lead to transformative care for patients and blockbuster profits for OPKO.
However, today’s share price doesn’t reflect these possibilities. For investors willing to gamble on OPKO’s ability to bring its products to market, now is a great time to buy in. Share prices are low, but a single strong win could drive them up with dizzying speed.
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