Opko Health Inc. (NYSE: OPK; TASE: OPK), controlled and managed by former Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) chairman Dr. Phillip Frost, is one of the beneficiaries of the change in the US policy on opening the market for Covid-19 virus testing. Opko's share price is up 45% in today's trading on the Tel Aviv Stock Exchange, after rising steeply on Nasdaq following the company's announcement that it would be able to conduct tests for diagnosing coronavirus in laboratories of BioReference Laboratories, its portfolio company.
Opko's market cap is now $1.5 billion, reversing the downtrend in the share this year, after Opko's revenue from its network of laboratories declined.
The testing market in the US was opened to private companies this week; previously, the entire sector was in the hands of the US Centers for Disease Control and Prevention (CDC), the government agency responsible for controlling epidemics. After it was found that some of the CDC's tests were faulty and its testing capacity proved inadequate, it was decided to allow leading laboratories to develop and conduct their own coronavirus tests. Leading US laboratory networks Labcorp and Quest have already joined this race, and health organizations and hospitals have begun developing their own tests, together with the tests still being carried out by CDC and those by health organizations in various US states.
According to Opko's statement, the company will receive samples of the virus soon, and is likely to offering its test within a week. CDC is planning to conduct 1-1.5 million tests next week (this requires producing antibodies for testing and allocating personnel for the purpose). An extremely large quantity of tests will be needed in the US if the disease continues to spread there, because every potential patient and diagnosed patients is tested several times.
At this stage every person is paying for his or her own coronavirus tests. In certain cases, however, CDC has assumed responsibility for paying for the tests. It is likely that as testing capacity increases, new pricing regulations and insurance reimbursement regulations will be dictated.
Opko's revenue totaled $900 million in 2019, down 10%, compared with 2018, with revenue from laboratory services falling 12% to $716 million. The company lost $314 million in 2019, almost double its 2018 loss, mainly due to writing off assets. Opko is currently waiting for the results of trial results for its delayed release growth hormone, which it acquired from Israeli company Prolor Biotech. This hormone is being developed by Pfizer. Opko also has other products in its development pipeline.
Published by Globes, Israel business news - en.globes.co.il - on March 8, 2020
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