Submitted by David Rattiner as part of our contributors program.
Pharmaceutical and diagnostics company, OPKO Health, Inc. (NYSE: OPK) , has nearly doubled in the last two years and is floating below its 52 week high of 5.66, to trading today at 4.50. The company engages in the discovery, development, and commercialization of novel and proprietary technologies primarily in the United States, Chile, and Mexico and recently its CEO, Dr. Phillip Frost, has been loading up on buying shares all month.
Dr. Frost, who is estimated to be worth roughly 2.3 billion dollars, bought 30,000 shares of common stock on June 1 of this year according to Form 4 filings with the SEC, and on June 4 he acquired another 20,000 shares.
But the buying spree for Dr. Frost did not stop there. All month long he has been buying. On June 5 he picked up another 27,500, June 7 he got 45,000 shares, June 8, 25,000 shares, June 11, 42,500 shares, June 12, 13, and 14 he bought 125,000 shares combined and on June 15 he picked up a whopping 200,000 shares. Nearly all of the trades that were made were done at or above $4.49 a share.
So it would appear that somebody is going shopping.
Doctor Frost isn’t the only one however that has the attention of investors. Legendary Hedge Fund Manager Mario Gabelli is still holding 15,000 shares of OPK, after selling out most of his shares in the company back in late March.
Opko is a stock that does business in a wide range of ways, including:
*Emerging market pharmaceutical distribution businesses.
The latter part of the business, distribution, has been the primary source of revenue for the company as it seeks to capitalize on their other technologies.
The company has recently announced the approval of a new patent and new stake in company that produces a hepatitis B vaccine. At the beginning of the month Opko announced the receipt of a patent allowance from the U.S. Patent and Trademark Office for the patent application called “Structures for Controlling Light Interaction with Microfluidic Devices”. The process of performing accurate optical measurements in microfluidic systems requires expensive optics with delicate alignment and calibration. The invention described in the patent that was granted addresses these challenges by integrating three-dimensional optical alignment within the fluidics. As a result, OPKO’s inexpensive disposable microfluidic cassettes incorporating this technology can be easily analyzed utilizing simple optics. Abbott Labs (ABT) are utilizing their diagnostic business and seeing its value.
Opko also entered into a definitive agreement to acquire a forty-five percent stake in a private Israeli company that produces a third-generation hepatitis B vaccine (“Sci-B-Vac”) in its biologics manufacturing facility in Rehovot. The Sci-B-Vac is a recombinant mammalian cell produced next generation vaccine which has in multiple clinical studies demonstrated enhanced antibody response in a population of documented non and low-responders for which conventional hepatitis B vaccines do not elicit adequate antibody production.
With the population aging, the diagnostics industry in healthcare is an attractive place to be for investors, and the new technology that Opko is developing puts them front and center of this market. But what’s the value of the stock right now?
For Opko, it’s difficult to make that distinction as the company is trading at a $1.3 billion market cap with revenues that don’t justify it, but faith in Dr. Frost’s leadership brings the stock higher and the potential for new business is very real and the potential for a blockbuster is equally real. The company currently has a target price of $8.25, net income for year over year between 2010 and 2011 increased from ($18,926) to ($1,283) and 12 out of the 18 ratings on the Street give the company a “strong buy” even as it rises.