We last profiled Opko stock earlier this summer before the run to $6, which you can read here. However, in the past month, Opko stock has been under pressure recently just like many other Covid-19 plays. We see the recent selloff as a discount entry opportunity for those looking for cheap exposure to one of the most exciting small-cap biotechs. The company is one of the few with a real multi-billionaire Chairman and CEO in Dr. Phil Frost. In this article, we lay out the bull case and why Opko stock is a BTFD play.
First up, here’s a little background for those that aren’t familiar with Opko stock. Opko Health runs a diversified healthcare business. Its unit known as BioReference Laboratories is one of America’s largest full-service clinical laboratories, providing comprehensive disease testing service. The company also has a pharmaceutical division through which it is engaged in developing treatments for various health conditions, including diabetes and cancers.
BioReference provides comprehensive testing to physicians, clinics, hospitals, employers, government units, correctional institutions, and medical groups. BioReference has been working expeditiously to develop and offer test services that will yield high quality and accurate results, including a molecular test for helping with COVID-19 diagnosis and an antibody test to help indicate possible COVID-19 exposure. The company is in-network with the five largest health plans in the United States, operates a network of 11 laboratory locations, and is backed by a medical staff of more than 120 M.D., Ph.D. and other professional level clinicians and scientists.
Quest’s Loss Is Opko’s Gain
Quest Diagnostics was under pressure on the heels of a tweet from the Florida Department of Health taking the company to task over, what appears to be, a dump of a large number of overdue COVID-19 test results. Governor Ron DeSantis ordered all state executive agencies to sever ties with the reference lab effectively immediately.
Specimen collection sites in the U.S. have complained about the slow turnaround of results from contracted diagnostic labs, not just Quest since delays undermine intervention efforts on people who test positive. Labs cite supply chain issues preventing timely procurement of essential supplies to run the tests.
BioReference is performing testing at almost 500 Rite Aid and CVS locations. At the time, BioReference and Rite-Aid had a partnership at 262 locations. Quest Diagnostics was under contract with CVS to perform testing for it. Due to long delays from Quest, CVS looked elsewhere for a testing partner resulting in 200+ more pharmacy locations for BioReference.
OPKO Stock and BioReference
This all benefits BioReference. BioReference has been chosen to provide testing services by the CDC, various states, cities, and large healthcare systems, as well as the NBA, NFL, and Major League Soccer.
To date, BioReference has performed about 3.2 million COVID-19 molecular tests. The company has a current capacity of over 50,000 tests per day with plans to scale to 100,000 tests per day over the next several coming weeks.
Since its COVID-19 antibody serology testing offering began in late April, more than 400,000 tests measuring the SARS-CoV-2 specific antibody levels have been performed. The laboratory has a significant capacity to perform antibody testing.
Since launch, over 20,500 patients have had RAYALDEE prescribed by nearly 3,200 physicians. Approximately 200 physicians or about 6% of the total number of prescribers were new RAYALDEE prescribers in Q2. Vifor Fresenius expects to soon receive on a decentralized marketing authorization application, European approvals for RAYALDEE in all countries in which the application was filed, and to launch the product as soon as possible thereafter.
In June the FDA authorized OPKO stock to initiate a Phase 2 trial of RAYALDEE as a treatment for patients with mild-to-moderate COVID-19. This authorization follows from the publication of numerous independent studies reporting a correlation between vitamin D status and COVID-19 risk and severity.
Once Somatrogon is approved, OPKO stock immediately starts getting royalties from GENOPTROPIN from Pfizer. Under Opko’s agreement with Pfizer, Opko Health stock is eligible to receive up to $275 million upon the achievement of certain regulatory and pricing milestones. In addition, following product launches in certain major markets, the company is entitled to regional tiered gross profit sharing for both somatrogon and Pfizer’s GENOTROPIN.
In our opinion and that of many others, once hGH is approved, Dr. Frost will sell OPKO to Pfizer and finally retire. After all, he is 85 years old and already worth over $2 billion.
Opko Stock Bottom Line
Currently trading with a market cap of $2 billion, Opko stock is one of the most exciting small-cap biotech plays for investors. The dips are to be bought as another short squeeze is coming with 34% of the float short. It’s not a matter of if, but when, especially when you consider the company’s COVID-19 testing capabilities and its blockbuster drug line-up.
Dr. Frost is like an artist and Opko Health stock could be his final masterpiece before he retires. There’s a reason a man worth over $2 billion is at the helm of Opko. It’s not the money, but to cement his legacy as a biotech pioneer. That legacy will be Opko Health.
As always, good luck to all (except the shorts)!
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Disclosure: We have no position in NASDAQ:OPK or any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.