This Weeks Stock Pick
7-27-2010 STW
Recommendation
BDSI - Buy
BioDelivery Sciences
International Inc. (BDSI) is an emerging biotech company with a bright
future. They have a unique drug delivery technology (BEMA) that received FDA
approval last year in their breakthrough cancer pain product ONSOLIS which
they have begun marketing in the US and are expanding into international
markets with recent announcements of distribution in South Korea and
approval in Canada.
BDSI is using this same
technology with other drugs in various stages of testing. Because the
technology delivers the drugs to most patients more effectively than
existing methods and the drugs they are testing have been previously
approved by the FDA using other delivery methods they may submit for
approval without the usual amount and length of testing. In addition BDSI
has an anti-fungal in early trials that appears to be safe and effective and
the company sees a possibility of expanding this program to treat other
conditions as they are now doing with BEMA. We anticipate a steady stream of
approvals for BDSI products over the next few years plus expect several new
formulations to begin testing soon using their proven technology.
The company has managed
to make it to market without the great dilution that often takes place with
emerging biotechnology - pharmaceutical companies and their financial
outlook is stable after some corporate moves earlier this year. They are
attracting some institutional attention and have had a great increase in
insider buying the past few months. The stock is still thinly followed and
volume has remained lower than expected but as the story of this company and
technology gets out and volume increases so will the share price.
The share price dropped
from highs above $8 after gaining FDA approval last year into the $4 range
during the first quarter of 2010 and now are back to pre approval levels in
the mid to $2.20 to $2.40 range. The recent decline came after disappointing
first quarter financials were announced. We believe the stock is undervalued
because investors are impatient and did not account for the fact that the
roll out, marketing and physician acceptance of any new drug takes time. We
are forecasting slightly improved results for the second quarter and
project increased sales for the balance of 2010 as distribution partnerships
and US adoption increases. We also anticipate news regarding the other drugs
in the pipeline and new additions to the pipeline in the near future which
should further increase share price.
Based on the Technical
analysis below , our expectations of increased sales and profits in the
second half of 2010 and our belief that the BDSI technologies will translate
to more approvals in the future we are setting a short term price target of
$4. We project that over the next couple of years this undervalued stock
will reach the $15 - $20 range based on an analysis anticipated sales
pending FDA approvals and industry standard profit margins.
STW
is now recommending BDSI as a BUY
BDSI Pipeline and FDA Approved Drug Overview
Details taken from BDSI prospectus 04-20-2010
We are a specialty pharmaceutical company that is utilizing licensed and
owned proprietary drug delivery technologies to develop and commercialize,
either on our own or in partnerships with third parties, significant new
formulations of proven therapeutics. Utilizing our drug delivery
technologies, we have developed and are continuing to develop pharmaceutical
products aimed principally in the areas of pain management and oncology
supportive care.
Our patented drug delivery
technologies include:
The BEMA ®
technology , a small,
erodible polymer film for application to the buccal mucosa (the lining
inside the cheek); and
The Bioral ®
cochleate drug delivery technology
, designed for the potential
oral delivery of a broad base of products otherwise administered
intravenously.
Our first FDA approved
product, ONSOLIS ® , as well as our pipeline of developmental
stage products, predominately utilize our BEMA ® technology. Our
current development strategy focuses primarily on our ability to utilize the
U.S. Food and Drug Administration’s 505(b)(2) approval process to obtain
more timely and efficient approval of new formulations of previously
approved, active therapeutics incorporated into our drug delivery
technologies. Because the 505(b)(2) approval process is designed to address
new formulations of previously approved drugs, we believe it has the
potential to be more cost efficient and expeditious, and have less
regulatory approval risk, than other approval methods of the U.S. Food and
Drug Administration, which we refer to herein as the FDA.
Our Products and Product
Candidates
Our FDA approved product and
principal product candidates include the following:
Formulated Products
ONSOLIS ®
Approved by the FDA in July
2009 and commercially launched in October 2009, ONSOLIS ® (fentanyl
buccal soluble film) is an approved treatment for the management of
“breakthrough” pain (pain that “breaks through” the effects of other
medications being used to control persistent pain) in patients with cancer,
eighteen years of age and older, who are already receiving, and who are
tolerant to, opioid therapy for their underlying persistent cancer pain.
ONSOLIS ® is a formulation of the narcotic fentanyl delivered
through our BEMA ® technology.
We have granted
commercialization and distribution rights for ONSOLIS ® on a
worldwide basis (except in
South Korea and Taiwan) to
Meda AB (which we refer to herein as Meda), a leading international
specialty pharmaceutical company based in Sweden with its U.S. headquarters
in Somerset New Jersey. We receive a double digit royalty on the net sales
of ONSOLIS ® and also have the potential to receive milestone
payments based on achieving certain predetermined sales targets. We estimate
that ONSOLIS ® has the potential to reach $200 million in annual
peak sales.
In addition, we believe that
ONSOLIS ® may also have the potential for a broader indication
that would allow for the treatment of chronic pain outside of breakthrough
cancer pain. If approved by the FDA, this would extend the commercial
opportunity for ONSOLIS ® , and we will continue to evaluate this
opportunity together with Meda.
BEMA ®
Buprenorphine (low dose for pain)
This product candidate
utilizes the BEMA ® technology to deliver the opioid analgesic
buprenorphine for the treatment of moderate to severe pain conditions. A low
dose formulation of BEMA ® Buprenorphine was evaluated in a
single dose, Phase 1 study that began in late November 2008. In March 2009,
we announced favorable preliminary results from this Phase 1 study and our
intention to commence a Phase 2 efficacy study in June 2009. In December
2009, we announced that the primary efficacy endpoint was achieved in this
Phase 2 clinical study. We believe that this endpoint, called SPID 8
(summary of the pain intensity difference over 8 hours), is a good indicator
of a product candidate’s effectiveness in treating chronic pain.
We believe that buprenorphine
is an attractive option for development given that it has demonstrated
efficacy in the treatment of pain and is a Schedule
III
opioid, meaning there is a lower potential for abuse and addiction compared
to Schedule II drugs such as morphine and oxycodone. We estimate that BEMA
® Buprenorphine (low dose) has the potential to exceed $500
million in annual peak sales.
BEMA ®
Buprenorphine (high dose for opioid dependence)
We are also investigating a higher dose
formulation of BEMA ® Buprenorphine. Because of its lower
propensity for abuse and addiction, BEMA ® Buprenorphine (high
dose) may also serve as a treatment for opioid dependence by preventing an
opioid addicted patients’ withdrawal symptoms while at the same time
maintaining pain control. Currently in the U.S. there are two buprenorphine
products approved for this indication, and we believe BEMA ®
Buprenorphine (high dose) has the potential to offer advantages over these
products. We estimate that BEMA ® Buprenorphine for the treatment
of opioid dependence has the potential to achieve between $200 to $300
million in annual peak sales.
Buprenorphine as early as the
end of 2010 or in 2011.
BEMA ®
Granisetron
This product candidate
utilizes the BEMA ® technology to deliver granisetron , an
FDA approved antiemetic to prevent the nausea and vomiting often observed
following chemotherapy. This product candidate is presently in initial
formulation development and we intend to move BEMA ® Granisetron
into clinical trials in 2010. We believe that BEMA ® Granisetron
would have the potential for better tolerance than oral formulations in the
presence of nausea and vomiting as well as potential for better and more
consistent absorption in the presence of nausea and vomiting.
BEMA ®
“Triptan”
This product candidate
utilizes the BEMA ® technology to deliver a “triptan”, which
refers to a class of compounds that FDA has approved for the treatment of
migraine headaches. This product candidate is intended to move into
formulation development in the second half of 2010. We believe that BEMA
® “Triptan” has the potential for both earlier plasma
concentrations and migraine response as well as the potential for better
response in presence of nausea and vomiting based on more consistent
absorption from the BEMA ® technology compared to currently
available oral formulations.
Bioral ®
Products
Bioral ®
Amphotericin B
Our lead Bioral ®
formulation is an encochleated version of Amphotericin B, a treatment for
fungal infections. If this product gains regulatory approval it could become
the first “oral” amphotericin product available in the world to treat
systemic fungal infections. A single dose Phase I study has been performed
with Bioral ® Amphotericin B. We reported preliminary results in
February 2009 where we indicated that plasma concentrations of Amphotericin
B were detected in the sample of patients tested suggesting oral absorption
from the Bioral ® delivery system. On
October 6, 2009, we announced
our receipt of a $1.3 million grant from the Walter Reed Army Institute of
Research to support the clinical study of Bioral ® Amphotericin B
product candidate in the treatment of Cutaneous Leishmaniasis, a skin
infection typically found in third world countries.
Other Potential Bioral
® Candidates.
We also believe our Bioral
® technology has the potential to be applied to other types of
pharmaceutical actives and also to other therapeutics such as small
interfering RNA, or siRNA, and although we have not dedicated material
corporate resources to these opportunities in recent years, we may seek to
out-license these opportunities.
FDA Approval of ONSOLIS
®
On
July 16, 2009, we announced
FDA approval of ONSOLIS ® . ONSOLIS ® will be marketed
in Europe under the name BREAKYL TM if regulatory approvals are
obtained. The FDA approval of ONSOLIS ® , together with our
satisfactory preparation of launch supplies of ONSOLIS ® ,
triggered the payment by Meda to us of approval milestones aggregating $26.8
million and the termination of a security interest in the ONSOLIS ®
product and related assets which was held by CDC IV, LLC, or CDC,
pursuant to a funding arrangement that we previously entered into with CDC
in connection with the development of ONSOLIS ® . Additionally,
the FDA approval triggered a requirement by us to pay an approval milestone
of $2.0 million to QLT USA Inc., from which we purchased the BEMA ®
delivery technology, which payment was made in August 2009.
ONSOLIS ®
Commercial Partner
We have granted
commercialization and distribution rights for ONSOLIS ® on a
worldwide basis (except in
South Korea and Taiwan) to
Meda, a leading international specialty pharmaceutical company based in
Sweden. Meda’s U.S. division, located in Somerset, New Jersey, is a
specialty pharmaceutical company that develops, markets, and sells branded
prescription therapeutics. Although Meda was founded in 2001, it draws upon
a long history, entering the U.S. market in 2007 through the acquisition of
Medpointe Pharmaceuticals (previously known as Carter-Wallace, Inc.). Meda
has an experienced, well trained and highly regarded sales force of over 400
representatives with a focus in specialty therapeutic areas including pain
and central nervous system conditions. Meda has established a track record
of commercializing products with their top two products, Astelin ®
and the more recently launched Soma ® 250 mg. They have
proven their ability to launch products and sustain growth in highly
competitive pharmaceutical markets, as demonstrated by Astelin ®
, which has out-performed competitors in the anti-histamine, nasal steroid
and rhinitis markets with regard to total prescription growth. We expect
Meda to also effectively compete in the transmucosal opioid market. Meda has
secured access to additional markets through acquisition of European
businesses from Valeant, and a joint venture with Valeant covering
Australia, Mexico and Canada.
Corporate Information
We are a Delaware corporation.
801 Corporate Center Drive, suite 210
Raleigh, North Carolina, 27607
telephone number (919) 582-9050.
www.bdsi.com
Company Overview
BioDelivery Sciences
International, Inc. (BDSI) is a specialty pharmaceutical company utilizing
licensed and owned drug delivery technologies to develop and commercialize,
either on its own or in partnerships with third parties, new formulations of
therapeutics. The drug delivery technologies include the BioErodible
MucoAdhesive (BEMA) technology, a small, erodible polymer film for
application to the buccal mucosa (the lining inside the cheek), and the
Bioral cochleate drug delivery technology, designed for the oral delivery of
a range of products otherwise administered intravenously. The Company's
United States Food and Drug Administration (FDA) product, ONSOLIS (fentanyl
buccal soluble film), as well as the developmental stage products, utilizes
the BEMA technology. The Bioral formulation is an encochleated version of
Amphotericin B, a treatment for fungal infections.
BDSI Technical Analysis
BioDelivery
Sciences International Inc BDSI: NASDAQ
Bollinger Bands
BDSI has been stable recently.
This is evidenced by the width of its Bollinger Bands which are tighter than
normal. The recent tightening indicates the stock may be ready to make a
move in either direction. BDSI is trading within its Bollinger Bands. This
is a normal condition and suggests that the stock is neither overbought nor
oversold relative to the recent price action.
MACD
BDSI is currently indicating a
weak bullish signal as the MACD is now trending above the signal line.
Stochastic Oscillator
Indicates a strong bullish signal as
the %K has crossed above the %D and the oscillator recently moved above the
critical value of 20 showing it is no longer oversold.
Directional Movement
Index
The +DI line is currently crossed
with the -DI line. This signals that the recent bearishness shown by the
Directional Movement Index is ending and is a positive indicator. |
