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BioDelivery Sciences: Can Bunvail and Belbuca's Sales Improve?

BDSI CBM ENDP COLL

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On Nov 25, 2016, we issued an updated research report on BioDelivery Sciences International, Inc. (BDSI - Free Report) .

On Nov 9, BioDelivery announced third-quarter 2016 results. The specialty pharmaceutical company posted wider-than-expected loss in the quarter even though its revenues beat estimates. The top line also improved significantly on a year-over-year basis backed by an upfront payment from Collegium Pharmaceutical, Inc. (COLL - Free Report) in exchange for the licensing rights to Onsolis in the U.S.

BioDelivery’s portfolio consists of three approved products – Onsolis (breakthrough cancer pain in opioid-tolerant adults), Bunavail (opioid dependence) and Belbuca (chronic pain). The company has not been able to realize the full potential of its marketed drugs. While Belbuca’s launch has been slower than expected due to pain market pressures, Bunavail’s performance has been largely lackluster so far.

The company is aggressively working to ramp up the performance of its key drug, Bunavail. The company has reduced the number of sales territories and is focusing on the most growth-oriented territories.

Meanwhile, BioDelivery is working on securing new or improved positioning for Bunavail on other managed care contracts on an exclusive or preferred status. Since this July, the company has secured improved positioning in six new managed care contracts, providing preferred access to the drug. The improved prescription potential in these six new managed care contracts should boost the sales and profitability of Bunavail.

Moreover, the company has signed a licensing and development agreement with Endo International plc (ENDP - Free Report) for Belbuca. Belbuca was launched in Feb 2016 for the management of pain.

This deal is expected to be a major positive for BioDelivery. It has not only generated funds for the company but has also provided it with a strong partner in Endo, which has significant marketing strength and a solid presence in the pain management market.

However, pipeline setbacks are a major concern for BioDelivery. The company’s pipeline comprises clonidine topical gel (painful diabetic neuropathy/PDN) and buprenorphine depot injection (opioid dependence and chronic pain). In Mar 2015, the company reported disappointing results from a late-stage study on clonidine topical gel in patients with painful diabetic neuropathy (PDN).

Positive data from this study and the commencement of a second phase III study would have allowed the company to file a regulatory submission in the U.S. in 2016. Any more development or regulatory setback could have a material impact on BioDelivery’s shares. Moreover, Onsolis’ commercialization was temporarily suspended following discussions with the FDA regarding certain appearance-related issues in 2012.

Additionally, BioDelivery’s marketed products as well as its pipeline candidates target highly genericized and crowded markets, which exposes them to stiff competitive pressures.

Zacks Rank & Key Picks

BioDelivery currently carries a Zacks Rank #4 (Sell). A better-ranked stock in the health care sector is Cambrex Corp. (CBM - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cambrex’s earnings estimates increased from $2.46 to $2.55 for 2016 and from $2.91 to $3.06 for 2017 over the last 60 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 19.78%. Its share price has increased 6.3% year to date.

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