OPKO, INC AND BIOREFERENCE…DIAGNOSIS: PROFIT?

Opko is a medical test and medication company, founded in 1991, with an emphasis on diagnostics and pharmaceuticals. Based in Miami, Florida the company’s CEO Phillip Frost has a colorful history–in 2018, he was accused of making $27 million in an unlawful stock trading scheme, but he eventually reached a settlement with the SEC. Earlier in his career, he had formed Key Pharmaceuticals with Michael Jaharis, and later founding Ivax, a huge generic drug maker. And then came Opko.

By Juliette Duguid, Biotechnology Strategist

The reason why this stock has come into the public eye is because of its recent high-profile deal with the NFL–the company’s BioReference Lab Division is now the official Covid-19 tester of the football teams. BioReference Labs is one component of Opko’s operations, which focuses on providing comprehensive testing to physicians, clinics, hospitals, employers, correctional institutions, government units, and medical groups. The company’s ability to land such  high-profile clients is a testament to the excellent service it provides–and the fact that their tests are both highly accurate and highly efficient. In fact, the company’s test can produce accurate results in 72-hours, and the service can be expedited up to 24-hours for front-line workers. Furthermore, last week, BioReference also announced that they entered into a coronavirus screening contract with the National Basketball Association. According to the company, under this agreement, testing will encompass PCR diagnostics, rapid diagnostics, and antibody testing. Executive Chairman of BioReference Jon Cohen is quoted saying “Collaborating with the National Basketball Association throughout the Covid-19 pandemic has been a privilege for BioReference…Similar to testing for employers trying to get their employees back to work, professional sports entertainment is another integral part of the everyday American experience. We are proud to be part of the solution that can help the nation return to normal”.  It is also quite noteworthy that Opko was able to beat out biotech giants like Quest Diagnostics and LabCorp to acquire this contract with the NFL, which is again, a testament to this group’s ability to profit greatly from the coronavirus. After Jon Cohen announced that they will be testing all 32 of the league’s teams on CNBC, the stock price jumped 23%. 

On July 20th, Opko’s BioReference Lab Division received another win when it signed a contract with the CDC for Indefinite Delivery Indefinite Quantity (IDIQ) to provide Commercial Surge Capacity Testing as part of the CDC’s Covid-19 Emergency Response. In other words, the division will be working closely with the CDC in an effort to provide antibody testing and release key information and data about the prevalence of the virus in various demographics in an effort to help mitigate its spread. Cohen said in a statement that “Many studies suggest that the majority of the public has not been infected with Covid-19, but multiple factors limit these findings. Together with the leading public health authority, we are leveraging extensive depth and breadth of testing expertise to increase overall understanding of the disease burden of the virus”. The contract is scheduled to end in November of 2020. 

In addition to winning such prestigious contracts, Opko has been working steadfastly to improve outcomes in the greater community. In April, the company announced that a subsidiary of BioReference Labs, called GeneDx, “…will begin testing for Covid-19 to further expand public access to testing”. In addition, they also announced that they would leverage its facility located in Melbourne, Florida to make testing even more accessible to the public, especially in the Florida region, which seems to be experiencing a rise in cases. These two facilities will have the same technologies to ensure that the same level of accessibility is offered to both regions and to ensure that diagnoses occur earlier in the progression of the disease. On a similar note, the company partnered with the City of Miami to make testing more accessible for residents by providing drive-through testing by appointment. 

BioReference labs was selected by Rite Aid to help significantly expand Covid-19 testing efforts by adding 46 no-charge testing sights which will operate through the store’s drive-through windows. Testing would also be open to adults who aren’t currently exhibiting symptoms, which many testing sights don’t currently offer–and is a step in the right direction in an attempt to catch the virus at its earliest stages. 

On May 7th, Mayor Bill De Blasio announced a partnership with Bioreference Labs in an effort to make antibody testing more accessible to the general public. The survey, which was set to be issued in all 5 boroughs, aimed to test 70,000 New Yorkers over a two week period, with testing facilities having the capacity to administer 5,000 tests daily. According to De Blasio, “…While antibody tests are not a fix-all solution, they will give our communities the knowledge they need to help defeat the virus together”. Cohen agreed, saying that “For New York, a city that has been seriously impacted by the COVID-19 pandemic, this type of information will be of great value in helping healthcare professionals to analyze the presence and progression of the disease in order to identify at risk populations for possible early intervention”. Furthermore, in mid May, BioReference partnered with employers in New York to launch the BioReference Employer Solution, a screening program that aims to assist employers as they make decisions about bringing their employees back into work. 

The bottom line is, Opko is quite an interesting stock — according to the company’s Q1 earnings report, consolidated revenues for this quarter were $211.5 million compared to $222.5 million for the same period last year. Diagnostics revenue seemed to be the sector within the company that took the largest hit, with revenues from the first quarter of 2020 being $170.8 million compared to $178.9 million in 2019.  Opko has consistently lost money for years. That being said, the company’s Q2 earnings report has yet to come out, meaning that these numbers could very well take a turn for the better–especially because Opko is beating out its fellow biotech giants as far as producing and delivering coronavirus diagnostic tests. Opko plans to announce second quarter earnings on August 5th. With the Market hoping for Opko’s first profitable quarter, the time to buy may well be now.