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OPKO Health, Inc.
OPK Details
OPKO Health, Inc. (NASDAQ: OPK) is a multinational biopharmaceutical and diagnostics company and operates the diagnostics business via BioReference Laboratories, Inc. (BRL), amongst the largest full-service laboratories with a core genetic testing business in the US, and the pharmaceutical business through Rayaldee, a US Food and Drug Administration (FDA) approved treatment for secondary hyperparathyroidism (SHPT) in adults. OPK’s leading product in development (in partnership with Pfizer, Inc.) is Somatrogon, a once-weekly human growth hormone injection that completed a successful phase 3 study in August 2019. As of June 22, 2021, the company’s market capitalization stood at USD 2.53 billion.
Product Pipeline (Source: Corporate Presentation, March 2021)
COVID-19 Testing Program for Cruise Industry: On June 22, 2021, the company announced a COVID-19 testing program for US-based crew and guests cruising with the Royal Caribbean Group. The guests will undergo rapid, COVID-19 point-of-care (PCR) testing at the end of their voyage, before disembarking, and the Royal Caribbean Group crew members will undergo routine laboratory-based PCR tests at regular intervals.
Commercializing Rayaldee in Greater China & Japan: On June 21, 2021, OPK signed an agreement with Nicoya Therapeutics, for developing and commercializing Rayaldee in Greater China in patients with stage 3 or 4 chronic kidney disease (CKD). In addition, on May 24, 2021, the company announced the transfer of certain licensed rights from Japan Tobacco Inc. to Vifor Fresenius Medical Care Renal Pharma (VFMCRP), which covers the development and commercialization of Rayaldee in Japan in patients with CKD and Vitamin D insufficiency.
Sale of Manufacturing Facility in Ireland: On June 17, 2021, the company signed an agreement to sell one of its facilities relating to sterile-fill-finish business in Waterford, Ireland to Horizon Therapeutics plc, in exchange for a cash consideration of USD 65.0 million, subject to certain assumed and accrued liabilities.
Robust Q1FY21 Results: The company reported a steep increase of 157.80% in net revenue to USD 545.17 million in Q1FY21 (ending March 31, 2021) as compared to USD 211.47 million in Q1FY20. Revenue from diagnostics witnessed a growth of 196.74% to USD 506.95 million in Q1FY21, primarily due to COVID-19 testing. Net income for Q1FY21 was USD 31.12 million in Q1FY21, compared to a net loss of USD 59.13 million reported in Q1FY20.
Key Risks: Many of the company’s products are in early R&D stages and are prone to risks of failure inherent in drug, diagnostic, and medical device product development. The products further run the risk of being ineffective, unreliable, or fail to receive regulatory approval. OPK relies on licensing agreements with VFMCRP for the international development and marketing of Rayaldee, and failure to maintain these agreements could prevent it from commercializing Rayaldee worldwide.
Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation
(Analysis by Kalkine Group)
OPK Daily Technical Chart
Stock Recommendation: OPK has declined 17.42% in the past 3 months, and is currently leaning towards the lower band of the 52-week range of USD 2.38 to USD 6.47. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is 52.58. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 4.47. Considering the significant correction in the stock price in the past 3 months, healthy product pipeline, continued demand for COVID-19 testing, and strong financial performance, we recommend a “Buy” rating on the stock at the closing price of USD 3.84, up 1.59% as of June 22, 2021.
* The reference data in this report has been partly sourced from REFINITIV.
* All forecasted figures and industry information have been taken from REFINITIV.
BioDelivery Sciences International, Inc.
BDSI Details
BioDelivery Sciences International, Inc. (NASDAQ: BDSI) is a specialty pharmaceutical company that provides pioneering therapies for individuals living with chronic conditions. The company utilizes its proprietary BioErodible MucoAdhesive (BEMA) drug-delivery technology to develop and commercialize its portfolio of products and therapies that address serious and debilitating conditions. BDSI’s key product portfolio includes BELBUCA (buprenorphine buccal film) for chronic pain and Symproic (naldemedine) for opioid-induced constipation. As of June 22, 2021, the company’s market capitalization stood at USD 353.81 million.
Q1FY21 Results: The company reported a 7.16% increase in total revenue to USD 41.02 million in Q1FY21 (ending March 31, 2021) compared to USD 38.28 million in Q1FY20, driven by an increase in paid prescriptions of BELBUCA and Symproic across all business channels, which contributed 89.21% and 10.79%, respectively, of the net product sales in Q1FY21. Net income for Q1FY21 was USD 5.24 million, higher than USD 4.97 million reported in Q1FY20.
BELBUCA & Symproic TRx Growth Relative to Market (Source: Corporate Presentation, May 2021)
Key Risks: Opioid, whose abuse in the US is a significant healthcare issue, is an active ingredient in BELBUCA. As a result, law enforcement and regulatory agencies continue to apply policies and guidelines to limit its availability/use, which could affect the company’s ability to successfully market BELBUCA. Further, in FY20, BDSI utilized only one contract manufacturer to create the BELBUCA laminates and two manufacturers for its final packaging, and one contract manufacturer each for Symproic tablets and its final packaging. Hence, any issues, regulatory or otherwise, with any of these vendors could significantly delay the supply of its products and negatively impact its financial strength in the future.
FY21 Guidance (Source: Corporate Presentation, May 2021)
Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation
(Analysis by Kalkine Group)
BDSI Daily Technical Chart
Stock Recommendation: BDSI has declined 2.72% and 16.00% in the past 3 and 6 months, respectively, and is currently leaning towards the lower band of the 52-week range of USD 3.04 to USD 5.45. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is 49.33. On the technical chart, the next support level is USD 3.14. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 4.21. Considering the correction in the stock price, decent fundamentals, positive future outlook, and associated risks, we recommend a “Speculative Buy” rating on the stock at the closing price of USD 3.57, down 0.56% as of June 22, 2021.
* The reference data in this report has been partly sourced from REFINITIV.
* All forecasted figures and industry information have been taken from REFINITIV.
* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level.
Kalkine Equities LLC provides general information about companies and their securities. The information contained in the reports, including any recommendations regarding the value of or transactions in any securities, does not take into account any of your investment objectives, financial situation or needs. Kalkine Equities LLC is not registered as an investment adviser in the U.S. with either the federal or state government. Before you make a decision about whether to invest in any securities, you should take into account your own objectives, financial situation and needs and seek independent financial advice. All information in our reports represents our views as at the date of publication and may change without notice.
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Past performance is not a reliable indicator of future performance.
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