837 is the TOTAL which could be paid as milestone payments in the future. This is before royalties. Two tiny kickers are that this partner WILL COVER some of the PHASE 3 dialysis costs. The other DITTY is this revenue gets send to OPKO Ireland, not Opko US.
What is subtle in all this, and should not be missed is THE MASSIVE discrepancy between the analysts expectations for peak rayaldee sales, and WHAT the leading CKD pharma is WILLING to pay to get a piece of the pie. WOULD you pay 50 million for a 400m max market in 2020??????? NO way, as stated before, the analysts do not get it. They were looking at competing drug sales. They ignored the 2/3 untreated market, where MOST of the SALES will be generated.
With this earnings release today on , umm, and fact BRLI Q's DO NOT overlap post merger makes estimating revenue a best guess scenario. Hope my initial estimates are close, and this new news becomes a double dagger.
OPKO has about 1.7B in COMMITTED future milestone revenue, not TOO bad.
Why Amgen's drug that is for STAGE 5 dialysis patients to treat ckd patients, it is a Calcimimetic. The GREAT NEW FOR Opko and for Amgen is that this drug might go hand in hand with Rayaldee if Rayaldee ever ENTERS the dialysis ckd population. Fact is in stage 3-4 if Rayaldee takes hold, a calcimietic such as Amgen's would likely not be needed.
Why is that? Rayaldee has been shown to not raise calcium levels, so why would a Dr. prescribe a drug to slow the production of calcium. In this regard, Rayaldee does the job of two drugs, Raises D, slows Calcium production. HMM., can we charge twice if the one drug accomplishes two goals.
So those here who READ the MFool article and did not treat it as a starting point for DD, to do your own research, umm, buy a mutual fund. Those HAPPY shorts claiming a better drug is coming, DITTO.
It was on the internet, it must be true....., or better yet, written by a stock advisory letter with no AGENDA, who can't get BASIC info correct. Intervenious, at time of dialysis, in stage 5, correcting calcium issue, lowers shpt. Ray stage 3-4, PILL form, corrects D, SHPT, calcium levels stop rising... Different patient population, different indications.
I for one expect the cash on hand to start to grow, generating enough FCF to negate this 13.75 cash burn & should happen this Q. Those that are balance sheet impaired will make claims like dilution is near, when in fact Opko will show a growing, not declining cash line in 2016. Of course the 100m cash invested in our IRISH subsidiary was money well spent, but I for one wished they used all stock. I guess Dr. Frost figured that investing cash instead of stock was a better use of capitol, but I would of liked the extra 100m cushion.
that could have been a tad better. One time charges knocked .03 off earnings, pushing a .01 positive number to the wrong side of the number line. STILL, MASSIVE ORGANIC revenue growth.
Think about last q revenue at 279m with a 15m bonus from TSRO. Subtract that bonus out for a second you get = 264m. So 264m was pure revenue last Q, 291 ( this Q ) -264 = 27m Q/Q revenue growth. Solid 10.22%+ q/q growth, and firing on all cylinders. Those who do not think this 10%+ is all that good, annualize it. I will take 40% annual growth, year in year out. The best part is, that 40% number umm, is LIKELY TOO low. Figure 1 and 1/2 quarters of Rayaldee sales, 4k up take doubling and like Emeril Lagasse, BAM, BAM !!!!we can kick it up a NOTCH.
Last year 2015, full year revenue was, 294m, we JUST DID 291m in ONE Q !!!!! 3m short of 2015 annual revenue. Talk about revenue growth. Talk about A brilliant deal buying over a BILLION in revenue for ninety cents on the dollar. Pay 900m, get 1BILLION in sales, built in sales force, built in revenue growth. Dr. Frost,
DANG, you are the man.
So there you have it, my annual pump Opko spiel.
OH, Share price WILL follow revenue.
Dr. Frost stated his plan in a prior Mission letter about 4 or 5 years ago. Since then there have been more recent CEO letters on the Opko home page, but I want to summarize Dr. Frost's earlier, might be earliest stated game plan. Of course this is all paraphrased, but the facts are presented as accurately as possible. I read this mission statement no less than 8 times, basically this was/is the STATED OPKO strategy:
The plan is to create a diagnostics division that is profitable. The profit from the diagnostics division will be used to fund R&D, and phase studies. To facilitate the sale of our diagnostics, and eventual drugs, we will opportunistically establish a global footprint. He said we are taking this approach because R&D can be very expensive and he believed he could fund most R&D internally once diagnostics was profitable.
How is he doing with the plan?
He has acquired the 4k technology, the Claros platform and BRLI, the company has had 2 profitable or break even quarters in a row. Since this letter, we are in Israel, Spain, Russia, Chile, Mexico and several other countries. He out licensed Varubi, so no expense there, but did fund several phase studies through a note offering, revenues, and of course the PFE deal.
To those who never saw this in black and white, Opko might appear a strange mix of companies. NOT so, EVERY moves was by design, stated years ago as his plan in an earlier or earliest Mission statement.
So I have been VERY happy cause I knew the plan and have watched Dr. Frost masterfully execute it. Those newer investors, I throw this out here to lend a little clarity to Dr. Frost's intent, and mission.
We know they had about 1500 Drs. from the Q3 call, so they picked up about 1500 in the first two weeks of Feb. No wonder Dr. Frost claimed the BRLI strategy was working in spades. Hoping for mid point in reimbursement on 1900, I would be happy with 5-600 hundred. A subtle point too was they are tying psa test RIGHT to 4k on the blood test form. Dr. asking for 4k to be done immediately after PSA, if PSA hits a certain number. This is good for the Dr. and patient. It gives the Dr. immediate feed back, and the patient does not need a second blood draw. So no second trip to a blood draw clinic if you psa is high.
Last Jan brli rev 208m, this q ending in Dec 220 but the numbers are for different months so not a fair comparison.
Last quarter is the templet you need look at. What goes on during the 4th quarter that does not in the first quarter. Any diagnostics that would take place over the Thanks Giving holiday gets pushed out a week. Most diagnostics that would take place in the dec 21- Jan 1 time frame gets pushed out into this Q. That is a 2 week dip in revenue that gets pushed forward. Unless it is absolutely necessary to get the testing done, which might lead to further medical considerations, people will delay this into the new year, past that holiday time frame.
So figure BRLI generates about 20 million a week on average, and figure only 25% gets delayed, that pushes 10m forward into this q. Last Q revenue was 276m including that 2 week period. Estimates are for a dip to 266, see the issue with that estimate? Both lab corp and quest grew revenue q/q, not surprising as q1 is usually a q/q up quarter. So if 4k generated no incremental sales, we know it did, opk's rev should at a minimum be = to last Q, if the holiday weeks had no impact, they did, always do.
To estimate revenue at 276m, a 10m beat seems safe, just figuring the holiday add back. Toss in a 1-2% organic growth and you get rev in the 280m range, a 15m beat.
Figure historically Opk has had a 5-30 million paper charge due to the notes, and in some quarters the ENTIRE loss was that paper loss from the notes. That OVERHANG is not gone, not 100%, but 75%, as only 25% of the notes have not been converted. So the max negative impact of the notes 7.5 million. Eps. is anticipated at -.02, but with the uptick in revenue, and higher margin 4k sales, umm, if any, reduced note impact, see the problem with the neg .02? Last Q was flat, this Q could see another positive surprise up to about .08, could be more, those notes on OCCASION do toss a paper gain. WE will see.
2 holds. Estimates are from low to high, 11, 12, 14, then it jumps to 19, 20, 22. Well, it has hit 19 in the past 12 months which was and is Barrington's target. Once Rayaldee gets approved expect a few of those lower targets to move toward the higher end of consensus.
Most equities ratings are listed with historic up/down grades at analyst rating network. They usually catch about 95% of all analyst's moves, so they do miss a call or two. Yahoo is obviously missing one of the three 19-22 targets, they show 16.80 as the consensus. I know ARN missed one about a year ago, which was a 19 price target, they have corrected it, but that 19 is now a 20. Was 19, 19, 22, on upper end, currently 19, 20, 22.
The low end is likely too low, Opk has surpassed those targets in the past, and should retest those. The high of the high end might be too high, but the consensus is a reasonable target. Six analysts, and the low to the high discrepancy is a 100% move, 11 low-high 22, talk about the TWO camps of thought on OPK.
Will note one thing, even with these analysts being all over the NUMBER LINE on this equity, 5 of the six talking know nods have higher targets than the recent close, so one might think the uptrend will hit a few of those higher estimates. The consensus, 17.20 would be higher than 3 estimates, BUT lower than 3, sounds like a possible landing spot based on estimates.
No way to know if this is to meet BRLI organic growth, or from the addition of 4k into their menu of tests. Regardless, it bodes well for an increased revenue stream. If BRLI had been part of opk for a full 12 mo. revenue would of been about 1.04B, it i projected at 1.17 for 2016, which based on this magnitude of hiring will likely prove light. Rapidly growth is happening in Tex, Cal, Fl, NY and NJ, in areas of heavy population density.
It is not mentioned but figure some of these hirings in some of these states are for NEW blood draw locations, by new I mean open less than one year. Eirgen Ireland is also hiring, 5 jobs, Opko Miami 13, BRLI 161 jobs, did not check Israel, Spain, or the Americas, so figure 179 known growth positions but likely closer to 220. Gendx lists jobs separately from BRLI, they have near 20, with a half dozen in OTHER countries.
Over one Billion in diagnostics revenue.
4k received cpt code 1, in both the NCCN and EAU guidelines. Gaining global acceptance.
200 person sales force focusing on BOTH Urologists and Primary care physicians.
Inroads in the Americas, Europe, Asia, Australia, etc.,
Insurance expanding, NO SOLID number on amount
Claros device FDA submission 2nd half 2016, 2017 launch
PSA and Testosterone submission 2016, 2017 launch.
Menu will expand AFTER initial approval, Vit D, and Women's health a priority.
First drug Varubi is on the market, out licensed, IV formula to FDA, milestones and royalties.
Second Drug Rayaldee " WILL " be approved oops, PDUFA date March 29.
20 person sales force to start, launch 2nd half 2016.
HGH, for adults, phase 3 results 2nd half 2016, PRODUCT launch 2nd half 2017.
Alpherin phase 3, no TIMELINE given, so a GUESS is 2018 launch.
Oxy first subject dosed, phase 1 data readout Sept 2016.
If you are not happy with the progress Opko is making, sell and buy a coal stock.
a move back toward 11 early next week closing this upside gap. I see 10.49, 10.75 as short term issues that need to be taken out. As FORBES says this " SHORT "( pun ) term noise is a buy the dip OPPORTUNITY. If you NOTICED the analysts came out IN SUPPORT of the stock MAINTAINING upside targets AVG 17.80, while HOLDING steady on REVENUE and EPS. projections.
It would take OPKO the better part of a decade and COUNTLESS millions in start up expense to build and become a global leader in the CKD market. Rayaldee international would SLUG along for years as a cash drain as sales SLOWLY build, and in time would add to the bottom line once CRITICAL mass was hit.
OR let me think, HOW about being profitable TODAY, hit critical MASS today, ASSURING OPKO's pipeline growth by partnering WITH a global LEADER in CKD. UMM, let me think, guarantee it today, or gamble on owning the whole Ray franchise in a rapidly advancing competitive bio industry and hitting critical MASS 5-10 years from today. If I go that route, I can SPREAD my resources around the globe, instead of concentrating on SAY one continent or country like the US.
Glad DR. Frost RUNS Opko, and not some who have no clue, who post fears about the deal, umm, Stating Opko is selling the future, OH BROTHER.
Share price will follow revenue, give it time, Rayaldee rockets out of the gate, will not crawl as it would have before this deal.
Will not bother with their names, umm, barely remember them, but they do come and go just as fast. PUFF, like a Frog transforming into smoke in a cartoon.
The first day opk could trade post earnings was Tues, 3/1. It traded down to 8.58 before closing up for the day, a solid reversal. Today it hit the 3rd best 2016 level at 9.89, a 15.26 move up from Tuesday's spike down, a solid rebound and short term trend reversal wiping out near all 2016 slide. Umm, good for one side of the trade, not so good for the other. We will see how this plays out heading into the FDA announcement. The next move obviously is into the 10, 10.25 are after a day or possibly two of consolidation. There is a back log of buyers, 66m with their fingers precariously perched over the buy button, thinking what to do, what to do? Down 15% in 4 days not very disciplined, on that side of the trade, and if we get into the 10.50 congestion area near fda date will get curiouser, and curiouser.
Note the turn around the day after earnings, the first day the market could trade, hitting 8.58. down .72, about 8% to close up .05. The last time this type earnings turn around happened was about a year ago, starting a run that hit several new highs. Generally earnings releases saw opk finish down after one week by .25-.40 on weak earnings. When Opk has had better than expected two of the three most recent times opk was up in the same range after a week. One of those times however Opk ran, and kept running hitting 9 new highs. Not saying we are about to run, and obvious;y have a way to go to hit new highs, but we are at a 2 month high, in an area that could start to nudge the 15m shorts who added in the 9.50-10.50 range. A push above 10,50 it gets curious, if/when that happens.
over 11 on this 4% short covering move. Shorts are a bit trapped, they got good fda help, stock did not tank, and is approaching the range prior to the FDA fiasco. 4% cover pushed Opk up $1.17, and it has inched up a tad more, creating angst, and uncertainty amongst that group. IF BAD fda news can not create a profit for them, and the stock has moved near 15% against that fda news, this spells trouble for some.
Getting into that 10.50 area, gets real curious, especially if on no news. That area could find a little push to the 11.85 area, a break out area, we will see.
It is basic human nature, you miss over 35% not covering at bottom, so you hope to get it back, FDA news, great, now we get it back, cept the stock has taken back near all the FDA gain, at 11.85 it is all gone. It becomes, I am GRABBING anything I have LEFT, or I am NOT losing another 15-35% more. Just basic FEAR of loss, or GREED if protecting shrinking profits. LIGHT volume CAN help this rise strange as that might sound.
It is all about perception. Not one thing to do with facts. If Opko struck a similar or far worse deal with GILD, MRK, Amgn, the stock would rocket. The fact they struck a deal with a PARTNER far SUPERIOR to those companies in the CKD area somewhat gets a YAWN cause the new partner is not a household name. They are as formidable in ckd as gild is in HIV but not many know who or what they do.
Thing too, Opk is set up for explosive growth, but fact is, the TWO biggest drivers, the RAY international revenue and PFE deal, where we get to own 1/2 of the PFE HGH franchise, is still at best 18 months off.
Once both of those franchises kick in, generating revenue in the 500-600 million range, at no expense, not only does revenue explode up, but eps takes a HUGE leap.
Some one was pointing out various companies and market caps to point to opk's being fairly priced or over priced? Comparing a steel stock with 10% growth, to a med stock doubling revenue y/y but with steady q/q growth that planes at 15% then jumps 200%, then plans, then jumps up again is NOT apples to apples, more like a raisin to a water mellon if GROWTH maters.
Price will ultimately follow revenue. Eps. will follow revenue too.
Notice that it hit a high of 11.49, which is where I thought it " MIGHT " get to at some point this week, just missed it today, sort of surprising. Also think of the other side of this trade, the short side, they see this too. Point being this dropped from 19, to 8, recovered to 11.49, stalled, and ran down to 7's. So from the short perspective, this area worked well last time.
There is a gap that needs close at 12, need get through this second congestion area, and take out the Dec high ( 11.49 ). From there it is free to run to 12. then light resistance until about 13.25.
My take of the chart is that the ODDS are opk can scratch and crawl to 16 if it can get above 13.25 then 13.75, another resistance area. So first things first, need take out todays high 11.47, and get above 11.49. Might take a while, put some popcorn on the stove. Opko is a young Co. it will not grow old in this range, it will get back to teens sooner than later.
so expected. It trades this way when in an uptrend. Sort of TELLS YA, YEP, I am going to create a new trading area just above where we are, but I am going to poke my head into that area a couple times, look around, dance just under it, and then inch my way up. As stated before, OPK USUALLY SPENDS ABOUT 15 or so days basing in an area before it CLAWS it's way to a NEW higher or lower range. In this situation, it is an upside range. NOTE, all that toothless yakity yak about options expiration, and 10.50-10.60 was on the prior trading day. Think I said we poke 11 by Wed, so a tad early. MIGHT get an 11 close no later than FRI, but could even be today, but secretly thinking WED. tell no one, it is a secret
PSST, SSSH, needs push aside 11.07, then me thinks we close in the 11's, sssh.
I have been told posting on an eye sore is a waste of time. I do enjoy all the umm, intelligent red thumbs, but minimus feed back from key strokes explaining that intellectual effort. Please, by all means, explain what I missed???