Opko Health Continues to Rise Despite Bearish Bets

Opko Health

continues to be a controversial mid-cap healthcare name and a battleground stock. Opko has been heavily shorted in recent years, but the shares continue to rise. Currently, short interest in Opko is sitting at around 19 percent as investors speculate about the prospects of the roughly $2 billion company. Despite the heavy short interest in the name, Opko has seen its stock price surge around 290 percent over the last 5 years and better than 40 percent in 2013 alone. The company has an unorthodox structure, which houses a myriad of diverse, speculative and complicated business lines. This unique operating entity has garnered skepticism from some, but investors' belief in Opko and its CEO and Chairman Dr. Phillip Frost has been richly rewarded. Short-sellers, on the other hand, have been hurt as the stock continues to hit new highs. One of the reasons that investors have had so much faith in Opko is due to a series of large share purchases by Dr. Frost, who made his fortune by investing in other emerging healthcare companies. In the recent past, Opko Health has made forays into businesses which include drug testing, equipment development, and commercialization of pharmaceutical treatments. The company is developing a number of solutions to diagnose, treat and prevent various conditions including molecular diagnostics tests, point-of-care tests, and pharmaceuticals and vaccines. From an investment perspective, Opko's most intriguing business lines are its Claro device business and its Alzheimer's/Cancer diagnostic tests business. Essentially, Claros is a blood test that can be administered at a care center rather than blood samples being sent to an outside laboratory. The product, however, has not been approved by the FDA and is undergoing clinical trials. The technology behind the company's diagnostic tests was developed by Thomas Kodadek, Ph.D. and is based on peptoid chemistry to detect disease-specific antibodies. Overall, Opko is a controversial stock and there is certainly some risk in investing in the company. Many investors believe both in Dr. Frost and the science behind the company's businesses. Although revenue remains very low in light of the company's valuation, Opko's top-line has been growing in recent years. If the company is able to achieve success with one of its various product candidates, today's valuation may appear cheap in hindsight.