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BioDelivery (BDSI) Q2 Loss Wider than Expected, Stock Falls


BioDelivery Sciences International, Inc. BDSI reported a loss of 27 cents per share in the second quarter of 2017, which was wider than the Zacks Consensus Estimate of a loss of 25 cents. The company had reported a loss of 31 cents per share in the year-ago quarter.

BioDelivery’s shares fell more than 11% in after-hours trading on Aug 9. However, shares have traded significantly higher than the industry so far this year. The stock gained 80% while the industry registered an increase of 8.7%.

Revenues were $8.7 million in the reported quarter, up 74.7% from the year-ago period. Revenues surpassed the Zacks Consensus Estimate of $7.8 million. However, revenues were down from $29.5 million in the prior quarter.

We remind investors that BioDelivery reacquired worldwide rights to Belbuca in Jan 2017 from Endo Pharmaceuticals, a subsidiary of Endo International Plc ENDP. As a result of the reacquisition, the company started recording product revenues for Belbuca against royalties recorded previously.

Due to this reacquisition, BioDelivery recorded $20 million in non-cash deferred revenues last quarter. The amount was a part of the $50 million received from Endo upon Belbuca’s approval.

Quarter in Detail

We note that BioDelivery has shifted to the sell-in method for revenue recognition since the beginning of this calendar year from its earlier sell-through method.

BioDelivery’s opioid-dependence drug, Bunavail, recorded 59.4% sequential decrease in sales to $1.3 million. The revenues in the first quarter had included $1.7 million recognized as sales for product shipped to wholesalers before Jan 2017.

In the reported quarter, the company recorded the highest net sales revenues of $6.6 million for Belbuca since the product was launched in early 2016, up 43.5% sequentially. The growth was primarily due to preferred access given to Belbuca over Butrans as part of a contract signed with United Healthcare.

In the second quarter, research and development expenses decreased 60.3% to $1.6 million from the year-ago period. Selling, general and administrative expenses were however up 27.8% year over year to $16 million.

Other Details

In June, the drug received regulatory approval in Canada for the management of severe pain. The company also signed a deal with Purdue Pharma in July for the commercialization of Belbuca in Canada. Per the agreement terms, BioDelivery will receive 4.5 million in Canadian Dollars as upfront and milestone payments along with royalties on sales. The company expects a launch in early 2018.

In the reported quarter, BioDelivery received approval from the FDA for a supplemental new drug application (sNDA) for the label expansion of Bunavail. The company is looking to expand the label of Bunavail to include induction of buprenorphine treatment for opioid dependence.

Also, at March end, the company announced that patent protection for its three approved products including Onsolis was extended from 2020 to 2027 under two new patents. The company will receive a milestone payment of $3 million from Collegium Pharmaceutical, Inc. COLL due to the extension of patent for Onsolis. However, the payment is subject to approval of the supplemental application supporting the new manufacturer for Onsolis by the FDA.

The company expects Belbuca’s positive growth trend to continue this year along with the addition of new managed care contracts. The company is also planning to file a regulatory submission later this year to qualify a new manufacturer for Onsolis. A potential relaunch of the drug is expected in the first half of 2018.

Zacks Rank & Stocks to Consider

BioDelivery carries a Zacks Rank #3 (Hold).

A better-ranked stock in the pharma sector is Enzo Biochem, Inc. ENZ, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Enzo Biochem’s loss estimates narrowed from 12 cents to 7 cents for 2017 over the last 60 days. The company came up with a positive earnings surprise in all the four trailing quarters with an average beat of 55.83%. The stock is up 61.1% so far this year.

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