Opko Health's 18% Selloff Offers Buying Opportunity

Shares of Opko Health Inc. OPK slumped after the release of mixed results from a Phase III clinical study of long-acting human growth hormone [hGH-CTP] candidate in adults with growth hormone deficiency.

“We view the sell off as overblown and an opportunity to acquire shares,” Ladenburg’s Kevin DeGeeter said in a report. He maintained a Buy rating on Opko, while reducing the price target from $20 to $19.50.

Missed Endpoint

The Phase III study of hGH-CTP “missed the primary endpoint of change in trunk fat mass from baseline to 26 weeks,” DeGeeter mentioned.

Opko would be meeting with the FDA in Q1 2017 to discuss the results and potential for BLA [Biologics License Application] submission based on a modified statistical plan that excludes outliers. The analyst noted that variables such as exercise regimen and diet would likely be included in any modified statistical analysis. The FDA could ask the company to undertake another Phase III study that may need 2.5 years to complete.

Selloff Overdone

DeGeeter stated that the ~20 percent selloff presented an opportunity to buy Opko’s shares, while mentioning the following reasons:

• Expectation for positive pediatric hGH Phase III data
• Roughly 80 percent of potential economics from the hGH program was associated with the pediatric indication
• The company had multiple other product launches in 2017

“Furthermore, we believe there is potential for OPK to file for approval in the adult population this year based on analysis excluding certain patients with extreme weight fluctuations,” the analyst commented.