Drug development company Opko Health Inc. (NYSE: OPK; TASE: OPK) announced today its intention of raising up to $100 million in a public offering. The announcement follows the company's success in a its final premarketing clinical trial of its growth hormone for children with suspected growth hormone deficiency. The product, originally developed by Israeli company Prolor Biotech, will be marketed by Pfizer. Opko is entitled to milestone payments of up to $275 million from the product's marketing, as well as royalties. Opko share price is down 7% today on the Tel Aviv Stock Exchange (TASE) following the announcement of the financing round, after failing yesterday to respond to the trial results. Opko's share price has lost 42% of its value in the past year, driving its market cap down to NIS 3.9 billion.
Opko operates the Bio Reference chain of laboratories and markets the Rayaldee product for treatment of chronic kidney disease and the 4Kscore and Claros tests for men's diseases. The company has various additional products in its pipeline.
Opko acquired Prolor, managed by Shai Novik and Dr. Abraham Havron, in 2013 for $480 million in Opko shares. Opko CEO and controlling shareholder Dr. Phillip Frost was an investor in Prolor for a number of years.
In 2017, Prolor signed a commercialization deal for its growth hormone products with Pfizer. Prolor received a $295 million immediately cash payment, $275 million in milestones payments, and royalties under this agreement.
Less frequent hormone injections
Prolor's technology makes it possible for hormone injections to be administered less frequently. In 2017, the company announced the failure of its leading product at the time - a growth hormone for adult use. A lack of growth hormone in adults caused by a brain tumor, either malignant or benign, or by aging, causes fatigue and abdominal obesity. Wisdom of the crowd and a number of tentative studies have marked the hormone as a sports drug and anti-aging product, although these benefits have not been conclusively proven. Adults are currently treated with growth hormone in cases of significant lack and substantial damage to quality of life, but this is only a small part of the global growth hormone market.
Opko and Pfizer sought to expand this use, and to provide research support for it. The companies conducted a trial designed to demonstrate that growth hormone reduces abdominal fat among people who lack growth hormone, but the trial failed in 2017.
At the same time, there is an existing and clear market for treating children suffering from retarded development with growth hormone. These children need daily injections, which is a very difficult treatment regime for them. In the current trial, in which 224 children participated, Opko showed that treatment once a week was as effective as the daily treatment, measured by the height to which the children grew, levels of hormone in the blood, and age of the bones. No side effects were found for OPKO's hormone beyond the side effects of the existing products.
There are several other companies in advanced clinical trials for delayed release growth hormone, including Novo Nordisk, one of the leading players in the growth hormone market. As of now, however, it appears that Opko is the first company to achieve satisfactory results in a large-scale trial.
Pfizer's revenue from growth hormone for daily use stand at $1.1 billion. Opko's contract with Pfizer also makes it a partner in the existing product as soon as the product is approved.
Published by Globes, Israel business news - en.globes.co.il - on October 23, 2019
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