Opko Health – What are the insider’s thinking?

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Over the past month, Opko Health has attracted attention for the insider buying spree. As of March 20, the CEO/Chairman of the Board Dr. Phillip Frost purchased over 3M shares

Insider Transactions
FROST PHILLIP MD ET AL
Officer
Purchase
Mar 10, 2011
103,667,052

Mar 10, 2011

HSIAO JANE PH D
Officer
Acquisition (Non Open Market)
Mar 9, 2011
3,097,800

Mar 9, 2011

OPKO Health, Inc. is a publicly traded healthcare company involved in the discovery, development, and commercialization of proprietary pharmaceutical products, medical devices, vaccines, diagnostic technologies and imaging systems.

Initially focused on the treatment and management of ophthalmologic diseases, OPKO has since expanded into other areas of major unmet medical need such as oncology, infectious diseases, and neurological disorders. Additionally, OPKO plans to establish industry-leading positions in large and rapidly growing medical markets through strategic acquisitions and organic growth.

What do they have that is getting the insiders so excited?

In Q4/2009, OPK commenced selling and distributing pharmaceutical products, over-the-counter products and medical
devices for government, private and institutional markets in Chile through our subsidiary, Pharma Genexx. Pharma Genexx was established in
2006 by FASA, the largest drugstore chain in Latin America, and Laboratorios Volta S.A., a Chilean pharmaceutical company. Pharma Genexx
sells a broad range of products to the private, hospital and institutional markets in Chile for a wide range of indications, including without
limitation, cardiovascular products, vaccines, antibiotics, gastro-intestinal products, and hormones, among others. Since its inception, Pharma
Genexx has enjoyed continued growth in sales and profits.  This is where most of the revenues of OPK are derived.

Ophthalmics - Aquashunt™ is a novel glaucoma drainage device (GDD) invented by Dr. Bruce Shields at Yale University. This innovative shunt device is used for the treatment of glaucoma, the second leading cause of blindness in the U.S.  The patented Aquashunt™ device is intended to reduce intraocular pressure physiologically by allowing excess fluid in the eye to exit naturally. In January 2009, we began treating patients in a clinical trial designed to assess the safety and efficacy of the Aquashunt™ device. Trials started early last year in 20 patients, and the company is trying for a CE mark to start a clinical trial in the EU this year.  The Aquashunt is not without its issues, as the body seems to form a fibrosis body around the shunts, thus rendering them inactive over a period of time.  So, either drugs or a special coating will need to be used on the shunt so that the fibrosis cannot attach to the shunt.  This technology has a ways to go.

Figure 1.  Physiologic Outflow Pathways.                                   Figure 2. Aquashunt.

The second part of their ophthalmic division is siRNA technology.  The company’s Phase 3 clinical trial was halted because the monitoring committee did not see the trial hitting is primary endpoint.  They have several other siRNA technology targets, but they do not excite me at this time.

Doxovir™-  In June 2008, OPK acquired exclusive worldwide rights in the field of ophthalmology to a novel small molecule agent in Phase II clinical development for the treatment of viral conjunctivitis and other viral infections. The agent, CTC-96 (cobalt chelate complex; Doxovir™) was developed by Redox Pharmaceutical Corporation. Viral conjunctivitis is a highly contagious epidemic disease and the most common source of acute care visits to eye care professionals in the United States. Symptoms of viral conjunctivitis include redness, swelling, discharge from the eye, sticking of eyelids, pain or discomfort in the eye and light sensitivity. OPK is undergoing a Phase 2 clinical trial for Doxovir™.

Vaccines - A research team led by Academia Sinica President Chi-Huey Wong published an article in the Proceedings of the National Academy of Sciences (PNAS)  in October 2009, which hints at the possibility of a new vaccine design that could be applied to vaccines for many strains of influenza such as ‘swine flu’ ‘bird flu’, and perhaps other viral diseases such as Hepatitis C and HIV.  The team investigated how the hemagglutinin protein found on the surface of influenza viruses binds to host cells. Specifically, they looked at how glycans (sugar chains) attached to the surface of hemagglutinin affect binding to host cells (lung cells in the case of pneumonia).  Shown in Figure 3, the hemagglutinin example for a virus is a spike-shaped surface protein made of two chain types. The blue chains are the targeting mechanism: they search for specific sugar chains on our cellular proteins. When the hemagglutinins find the right one, it binds to the cell and the yellow chains initiate the attack.  When the attack starts, a signal by the virus facilitates its entry of the viral genome into the target cells by causing the fusion of host endosomal membrane with the viral membrane.  (Think of it as two oil layers, one small (virus), one large (host cell) on water becoming one).  A link to their article is here for those who crave scientific rationale, but in essence, what Dr. Wong has done is strip the sugar (blue) off the virus and exposed conserved regions of the virus.  These conserved regions can then be generated as an anti-viral, and the body can raise antibodies against it, thus warding off several variant forms of a virus.  This could be huge!

Figure 3.  Hemagglutinin functions. 

Small Molecule Development – Rolapitant. Our lead product candidate, rolapitant, a potent and selective competitive antagonist of the NK-1 receptor, has successfullycompleted Phase II clinical testing for prevention of chemotherapy induced nausea and vomiting and post-operative induced nausea and vomiting. We intend to pursue final development and commercialization of rolapitant for both indications. NK-1 receptors are highly concentrated in the brain and are also found in other tissues of the body. Activation of NK-1 receptors leads to the release of neurotransmitters and other signaling molecules that play a central role in controlling nausea and vomiting and other basic functions. Phase I clinical testing has also been completed for a second compound in the same class, which is being considered for further development in other indications. This program was bought from MRK after the merger with SGP, and MRK already has a lead compound in the area, Emend (~$250M).  There are others drugs coming through the pipeline at MRK and GSK, so I do not expect this to be a huge winner for OPK.

Molecular Diagnostics – The initial molecular diagnostic is based on peptoid chemistry to detect disease-specific antibodies from Dr. Thomas Kodadek from The University of Texas South Western Medical Center, whose lab is now located at Scripps Institute in Florida. Such antibodies have been found in patients with Alzheimers disease, Parkinson’s disease, and non-small cell lung cancer, and potentially a wide variety of other diseases. The development of accurate and reliable blood tests to diagnose these diseases early may have profound impact on disease outcome. In addition, these blood tests can be used to follow progression of disease, response to drug treatment, and even to select patients who are most likely to respond to a given therapy.  Still unproven in a proper clinical trial.

Other Research Investments – Sorrento Therapeutics: they have a humanized monoclonal antibody library for various diseases.  This is a very hot area, but development is years away.  Crystal Pharmatech appears to be a CRO for drug research.

The company also has a device division for Ophthomology.  I have to apologize, but I am not a device expert, especially in the ophthomology area….so if there is a ophthomologist on the board…I would welcome them to post in the comments section below.

Briefly, from the way I understand things, the company has 6 different devices.

Spectra OCT/SLO – The system combines industry-leading spectral OCT imaging with a confocal scanning ophthalmoscope (SLO) in one highly advanced instrument. Ophthalmologists are able to both diagnose and track changes in the most complex retinal diseases and their treatments.

Microperimetry – assesses the visual function of a specific area of the retina and fovea, and correlates to the OCT structural changes. It provides a quantifiable way to measure the regression or progression of retinal visual function in the examined eye.

OCT Cornea – this is an add-on to the Spectra OCT/SLO above.  The add-on lens provides high-resolution Spectral OCT imaging of the cornea and angle that is capable of imaging both posterior and anterior segments.

OTI-Scan 3000 is a modular high-resolution ultrasound system that can be configured to meet the needs of your practice. It is available as an A-Scan system, a B-Scan system, a UBM system, or a combination B-Scan/A-Scan/UBM system. Scans are easy to capture and you can display multiple scans on a single screen.OTI-Scan 3000 is a modular high-resolution ultrasound system.

Opko Health is a very diversified company, and the Latin American division derives most of the revenues.  The company is very diversified, and if any one of them become a hit, the company has no where to go but up.

I currently own shares of OPK.

 

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