Shares of Opko Health (OPK) gained 8% today after the company announced that it had formulated a partnership agreement with Pfizer (PFE) for developing and testing a drug to be used against Growth Hormone Deficiency -- GHD. Opko will receive an upfront payment of $295 million and potential milestone payments of $275 million as the drug progresses through clinical trials. Under the deal Opko will be responsible for the lead indications of Growth Hormone Deficiency in adults and small children for its drug known as hGH-CTP. Pfizer will be responsible for handling hGH-CTP in other possible lead indications and will also be responsible for the cost of marketing the drug. 

Growth Hormone Deficiency occurs when the pituitary gland, located at the base of the brain, doesn't produce enough growth hormones, leaving patients with many problems. In children, not having sufficient growth hormone inhibits growth of the body itself. In adults it causes many problems such as the inability to maintain appropriate bone and muscle density. There have also been cases of GHD causing cholesterol problems and a possibility for tumors. The current estimate for the GHD market is around $3 billion and both companies will share the gross profit of the drug once it is approved by the FDA. 

The drug hGH-CTP is a growth hormone analog peptide that helps to treat those patients who are unable to produce enough of the growth hormones on their own. Opko has created this peptide to be delivered as a drug with no encapsulation -- closing drug within a lipid shield -- or nanoparticle -- delivering drug attached to a nanoparticle. This drug will do well if approved by the FDA because the hGH-CTP drug only requires one injection per week. Current treatments for GHD require daily injections for the patient; therefore being able to reduce treatment down to only one injection per week would be a pretty big change for the patient.

Besides GHD, Opko has a wide variety of therapeutic and diagnostic products that target large segments of the market. This deal inked today with Pfizer could be one of the many possible pharmaceutical deals coming down the road for Opko. We believe that Opko is a great long term investment and will do well with the leadership of the CEO Dr. Phillip Frost.