CORAL GABLES, FL / ACCESSWIRE / April 6, 2015 / Holding companies invest in the securities of other companies all the time aiming to increase shareholder value. There are hits and there are misses, as with all investments. But Opko Health (NYSE:OPK) has been on such a hot streak in this game especially in the last few months that even relatively small deals deserve attention. Its latest move – both for Opko and for Frost’s personal investment trust – is to be part of a $12M private placement into MabVax Therapeutics (OTCQB: MBVX).
Before we go into MabVax, it is helpful to understand the recent movement of Opko’s share price in light of its past investment moves. While Opko has its own pipeline candidates, most notably Rayaldee which has completed phase 3 and is on the verge of applying for an NDA, it is actually Opko’s previous investments that have catalyzed its most recent 75% upsurge since December.
On December 15, Opko announced a $570M licensing deal with Pfizer (NYSE:PFE) for its long-acting human growth hormone hGH-CTP, including a $295M down payment from the Big Pharma giant, and an additional $275M in milestone payments. Opko, however, did not develop hGH-CTP on its own. It acquired it when it acquired Prolor Biotech two years ago for $480M. Since the announcement of the deal with Pfizer, Opko’s market cap has skyrocketed over 75%, or $2.8B. While it could be argued that Rayaldee’s phase 3 success accounts for some of this gain, Rayaldee succeeded in its pivotal phase 3 trial back in September. This latest 75% move didn’t begin until after the Pfizer announcement.
So in the end, for a $480M deal, both Opko and Prolor shareholders have been rewarded with a $2.8B equity gain.
Prolor, however, is not the only investment that has succeeded for Opko and Frost. Neovasc (NASDAQ:NVCN), a trial-stage cardiovascular device company focusing on devices for angina and mitral regurgitation, has surged 765% since Opko first took a 6% position in August 2011. Dr. Frost owned 36% of the company before Opko came in. Neovasc has raised $110M in equity just over the last 12 months, so investors are eagerly following Opko and Frost’s lead.
Opko also owns 8% of biotech firm Cocrystal Pharma (OTCQB:COCP), with Frost himself owning 14.3%. Cocrystal has skyrocketed 200% since February, and is Opko’s second largest holding in its investment portfolio.
Even more recently, Opko took one of its private equity investments public through a merger with Levon Resources (OTCQX: LVNVF). Israeli biotech firm SciVac, which markets a 3rd generation hepatitis B vaccine, was 45% owned by Opko, now 31% in light of the merger. While the deal is still fresh and trends are not definitive yet, Levon has nevertheless moved up 40% since announcement of the deal.
Which brings us to MabVax. This is a company that already has licensing deals with big names in the oncology space like Sloan Kettering and Juno Therapeutics (NASDAQ:JUNO), which itself has jumped 63% since its December IPO. MabVax essentially filters through cancer antibody candidates produced naturally by patients administered cancer vaccines at Sloan Kettering, bringing the most promising antibodies through clinical development. Juno has a deal with MabVax allowing it to use MabVax’s candidates as a targeting mechanism for its own pipeline, while at the same time MabVax is developing its lead antibody HuMab 5B1 as both an imaging agent for pancreatic cancer and as a therapeutic.
Mabvax, which only had about $3.5M in cash as of Q3 2014 with a much higher annual burn rate, was in need of an institutional investor in order to move forward and it got one. MabVax’s market cap is still only $18M, so a $12M investment is quite substantial in light of the company’s size. Will Opko eventually go the whole way with MabVax like it did with Prolor? Hard to say, but evidence that Opko is at least considering it lay in the fact that Steven Rubin, Opko’s Executive Vice President, will be getting a seat on the MabVax advisory board.
Considering Opko’s success of late as a biotech holding company, the relatively small sum – for now – that Frost and Opko are sinking into MabVax may prove to be just the beginning.
Contact Name: Adam Heimann
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