Why last year's gains are more relevant than pre-2018 loses
Apr 27, 2021 17:08:42 GMT
gatokity likes this
Post by lookingforatenbagger on Apr 27, 2021 17:08:42 GMT
First there is the obvious fact data gets old and in today's world data gets old fast. But in OPKO's case it is more than that.
As I see it there are six defining products or events in OPKO's history. 4K Score, Rayaldee, Somatrogon, BRL purchase, SEC complaint, and COVID testing. I am sure there are more, but this is mostly off the top of my head.
Let's take 2018 and see where we were before and after for each of these six critical events.
4K score was approved prior to 2018, but Novitas did not issue a final ruling on coverage until November of 2019. The lack of insurance coverage held back 4K Score's acceptance prior to 2018, while I believe the pandemic may have increased acceptance.
Rayaldee was also approved prior to 2018 and was in the early stages of marketing. Deals had been cut with Vifor and JT, but there had been little progress in gaining approvals. Sales were increasing, but not as fast as I would have liked. During the pandemic Rayaldee Sales fell when salesmen were restricted from face to face meetings with doctors and patients. In 4Q20 Vifor obtained marketing approvals in ~10 European countries and will be actively marketing Rayaldee in 4Q21. Milestone payments will also be coming in addition to royalties. OPKO's Rayaldee sales force will also be actively marketing by the second half of 2021.
Somatrogon was still in trials in 2108, having experienced a set back in at the end of the year. Today the Phase 3 trial have been completed, Pfizer has applied for for FDA approval and expects to receive it in 4Q21 when milestone payments can be expected. Also, the original agreement with Pfizer has been amended to give OPKO royalties from not only Somatrogon, but also for Genotropin.
IMHO, the BRL purchase was the worst mistake of Dr. Frost's career. Clearly pre-purchase due diligence was inadequate and from 2015 to 2018 OPKO spent hundreds of millions of dollars and too much of upper management's time straightening out the books. The mistake should have bankrupted OPKO, but it didn't. It did drain resources and slow development of their pipeline. In early 2018 the accounting system was updated to accurately reflect bookings and Dr. Monk was hired. In 2019 Dr. Cohen was hired. When the pandemic hit BRL was ready and performed, leading OPK to its first profitable year. COVID testing will fall this year. but relationship made in 2020 will remain. GeneDx's growth was restricted by the pandemic and I expect it will resume.
In September of 2018 the bogus (IMHO) SEC complaint was filed. OPKO's future was immediately in doubt and the market moved away. Even after the settlement, many former institutional holders stayed away, putting OPKO into a money crunch. Once again OPKO was threatened with possible bankruptcy or at least forced sale of some of its parts. This was alleviated somewhat by the 2019 convertible bond offering and by the sale of shares later in the year.
COVID testing arrived at the perfect time for OPKO. Management approved the purchase of the required testing equipment in January of 2020, before the CDC approved commercial testing. Drs. Monk and Cohen were established and lead the company to meet the challenge. This allowed OPKO to pay off short term debt, put $100M in the bank and post OPKO's first profitable year. The $100M guarantees OPKO will survive until
1. Vifor has started marketing Rayaldee along with the post COVID US sales force
2. Pfizer will be able to market Somatrogon, and
3. Both Vifor and Pfizer will make the promised milestone payments.
This is why OPFO's 5-year and 10-year histories do not properly reflect OPKO's future as well as OPKO's least 18 months.
All of the above is just my humble opinion, and I invite comment.
As I see it there are six defining products or events in OPKO's history. 4K Score, Rayaldee, Somatrogon, BRL purchase, SEC complaint, and COVID testing. I am sure there are more, but this is mostly off the top of my head.
Let's take 2018 and see where we were before and after for each of these six critical events.
4K score was approved prior to 2018, but Novitas did not issue a final ruling on coverage until November of 2019. The lack of insurance coverage held back 4K Score's acceptance prior to 2018, while I believe the pandemic may have increased acceptance.
Rayaldee was also approved prior to 2018 and was in the early stages of marketing. Deals had been cut with Vifor and JT, but there had been little progress in gaining approvals. Sales were increasing, but not as fast as I would have liked. During the pandemic Rayaldee Sales fell when salesmen were restricted from face to face meetings with doctors and patients. In 4Q20 Vifor obtained marketing approvals in ~10 European countries and will be actively marketing Rayaldee in 4Q21. Milestone payments will also be coming in addition to royalties. OPKO's Rayaldee sales force will also be actively marketing by the second half of 2021.
Somatrogon was still in trials in 2108, having experienced a set back in at the end of the year. Today the Phase 3 trial have been completed, Pfizer has applied for for FDA approval and expects to receive it in 4Q21 when milestone payments can be expected. Also, the original agreement with Pfizer has been amended to give OPKO royalties from not only Somatrogon, but also for Genotropin.
IMHO, the BRL purchase was the worst mistake of Dr. Frost's career. Clearly pre-purchase due diligence was inadequate and from 2015 to 2018 OPKO spent hundreds of millions of dollars and too much of upper management's time straightening out the books. The mistake should have bankrupted OPKO, but it didn't. It did drain resources and slow development of their pipeline. In early 2018 the accounting system was updated to accurately reflect bookings and Dr. Monk was hired. In 2019 Dr. Cohen was hired. When the pandemic hit BRL was ready and performed, leading OPK to its first profitable year. COVID testing will fall this year. but relationship made in 2020 will remain. GeneDx's growth was restricted by the pandemic and I expect it will resume.
In September of 2018 the bogus (IMHO) SEC complaint was filed. OPKO's future was immediately in doubt and the market moved away. Even after the settlement, many former institutional holders stayed away, putting OPKO into a money crunch. Once again OPKO was threatened with possible bankruptcy or at least forced sale of some of its parts. This was alleviated somewhat by the 2019 convertible bond offering and by the sale of shares later in the year.
COVID testing arrived at the perfect time for OPKO. Management approved the purchase of the required testing equipment in January of 2020, before the CDC approved commercial testing. Drs. Monk and Cohen were established and lead the company to meet the challenge. This allowed OPKO to pay off short term debt, put $100M in the bank and post OPKO's first profitable year. The $100M guarantees OPKO will survive until
1. Vifor has started marketing Rayaldee along with the post COVID US sales force
2. Pfizer will be able to market Somatrogon, and
3. Both Vifor and Pfizer will make the promised milestone payments.
This is why OPFO's 5-year and 10-year histories do not properly reflect OPKO's future as well as OPKO's least 18 months.
All of the above is just my humble opinion, and I invite comment.