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Danbury, Connecticut-based Biodel Inc. (BIOD) is a $62M market cap specialty biopharmaceutical company that focuses on the development and commercialization of diabetes treatments.

Founded in 2003, the company is involved in developing proprietary formulations of injectable recombinant human insulin for the treatment of patients with type 1 and type 2 diabetes. Biodel also develops liquid glucagon formulations for use as a rescue treatment for diabetes patients experiencing severe hypoglycemia, or very low concentrations of blood glucose.

Biodel's proprietary drug delivery technology enables the company's scientists to alter the pharmacokinetic profile, route of administration, and stability of drugs that would be impractical to use as therapeutic agents because they break down too quickly. The company believes that this technology could have important implications for the use of insulin, a large molecule that is absorbed into the blood relatively slowly. Biodel claims its technology facilitates more natural and rapid absorption of recombinant human insulin than current insulin products, and appears to improve its therapeutic efficacy in patients with Type 1 and Type 2 diabetes.

Clinical studies indicate that Biodel's lead drug candidate, an ultra-rapid-acting insulin product candidate, BIOD-123, may be delivered into the bloodstream faster than regular human insulin and rapid-acting insulins.

Biodel contends that none of the currently marketed meal-time insulin products adequately mimic the first-phase insulin release. The natural spike of the first-phase insulin release in a person without diabetes occurs within several minutes after glucose enters into the bloodstream after a meal. By contrast, injected human insulin enters the bloodstream slowly, with peak insulin levels occurring within 120 to 180 minutes following the injection.

One of the key improvements in insulin treatments was the introduction of rapid-acting insulin analogs, such as Eli Lilly's (LLY) Humalog (insulin lispro)., Novo Nordisk's (NVO) Novolog (insulin aspart [rDNA origin] injection) and Sanofi's (SNY) Apidra (insulin glulisine). These drugs have been big sellers. In 2012, Humalog had sales of $2.4 billion, Novolog $2.8 billion, and Apidra $306 million.

However, even with the rapid-acting insulin analogs, peak insulin levels typically occur within 50 minutes to 70 minutes following the injection, resulting in results in deficient insulin levels at the beginning of a meal and excessive insulin levels between meals. This time lag in insulin delivery can result in excessive glucose levels shortly after eating, leading to hyperglycemia and then, two to three hours later, inadequate glucose levels between meals, which may lead to hypoglycemia. Biodel believes these swings between excessive and inadequate levels of insulin are highly detrimental to the health of people with diabetes.

Diabetes

According to the American Diabetes Association, 25.8 million people, representing 8.3% of the population, have diabetes mellitus. According to the World Health Organization (WHO), 347 million people worldwide have diabetes. In 2004, an estimated 3.4 million people died from consequences of fasting high blood sugar. More than 80% of diabetes deaths occur in low- and middle-income countries. WHO projects that diabetes will be the 7th leading cause of death in 2030.

Diabetes is a chronic disease that occurs either when the pancreas does not produce enough insulin or when the body cannot effectively use the insulin it produces. Insulin is a hormone that regulates blood sugar. Hyperglycemia, or raised blood sugar, is a common effect of uncontrolled diabetes that may eventually lead serious health problems.

Type 1 diabetes

Type 1 diabetes (previously known as insulin-dependent, juvenile or childhood-onset) is characterized by deficient insulin production and requires daily administration of insulin. The cause of type 1 diabetes is not known, nor is it currently preventable.

Type 2 diabetes

Type 2 diabetes, sometimes referred to as "non-insulin-dependent diabetes" or "adult-onset diabetes," results from the body's ineffective use of insulin. Type 2 diabetes comprises 90% of people with diabetes globally. Type 2 diabetes is often caused by excess body weight and physical inactivity. Until recently, this type of diabetes was seen only in adults but it is now also occurring in children.

Gestational diabetes

Gestational diabetes is hyperglycemia that begins or is initially recognized during pregnancy.

Symptoms of gestational diabetes are similar to Type 2 diabetes. Gestational diabetes is most often diagnosed through prenatal screening, rather than reported symptoms.

Impaired glucose tolerance) and impaired fasting glycemia

Impaired glucose tolerance (IGT) and impaired fasting glycemia (IFG) are intermediate conditions in the transition between normality and diabetes.

Diabetes Therapeutics Market

According to Transparency Market Research, the global market for Diabetes Management accounted for $41.9 billion in 2010 and is expected to attain a market size of $114.3 billion in 2016 following a growth rate of 18.2% compound annual growth rate (OTCPK:CAGR).

The US market comprises the main source of revenue for this market contributing in excess of one-third of the overall revenue. However, with the continuous economic growth of the Asia-Pacific region especially that of China, the contribution of the U.S. market is expected to drop by 5% to 7% within a period of 10 years from now.

Transparency attributes the global increase in the prevalence of diabetes to the rapidly developing economies of China and India as a major driving force for the diabetes care market. Besides these two countries, Transparency forecasts that other Asian countries are expected to be major revenue generators for this market by 2030. According to its estimates, seven out of the 10 major countries with high diabetic population will be from the Asian region.

The research and consulting firm, GlobalData, predicts that the type 2 diabetes drug market will climb in value by 145% in just 10 years, while prevalence of the condition across India and China is likely to soar to worrying levels.

GlobalData forecasts revenue for the type 2 diabetes treatment sector across the world's 10 major markets (United States, France, Germany, Italy, Spain, United Kingdom, Japan, China, India and Brazil) will increase from $28 billion in 2012 to $69 billion in 2022, representing a CAGR of 9.4%. During this period, the US market is expected to remain the largest market by some margin, with revenue jumping from $16 billion to $39 billion over the forecast period. Although the US market eclipses all others in terms of value, the prevalence of type 2 diabetes is far greater across Asia, with 71% of the global diagnosed diabetic population living on the continent.

India has the world's largest number of people with type 2 diabetes, GlobalData predicts the number of people with the condition in India will soar from 94 million in 2012 to 182 million in 2022. At an annual growth rate (AGR) of 9.2%, the diagnosis of new cases is expected to outpace all other countries covered in the report, resulting in a larger diabetic population in India than the nine remaining countries combined.

Global Data forecasts that China will experience a dramatic increase in type 2 diabetes prevalence in the near future, with the number of sufferers climbing from 39 million in 2012 to 72 million 10 years later, representing an AGR of 8.4%.

However, due to comparatively under-developed healthcare sectors and a high penetration of less expensive generic drugs, GlobalData analysts predict the combined markets of India and China to claim only 21% of the global type 2 diabetes therapeutics market by 2022.

The research and advisory firm, Decision Resources, forecasts that the type 2 diabetes therapeutic market in China, the third largest after the United States and Japan, will grow 10% annually, reaching $3.5 billion in 2017. Fueling this expansion are the growing number of drug-treated patients and the increasing use of dipeptidyl peptidase-4 ((DPP-IV)) inhibitors, glucagon-like peptide-1 (GLP-1) receptor agonists and insulin analogues.

In its emerging markets report entitled Type 2 Diabetes in China, Decision Resources found that, although further generic erosion of older oral antidiabetics is expected, recently launched DPP-IV inhibitors , such as Merck's (MRK) Januvia/Janumet (sitagliptin), Bristol-MyersSquibb's (BMY) /AstraZeneca's (AZN) Onglyza (saxagliptin), Novartis ' (NVS) Galvus vildagliptin and GLP-1 receptor agonists such as Bristol-Myers Squibb's/AstraZeneca's Byetta (exenatide), and Novo Nordisk's Victoza (liraglutide) will continue to enjoy market exclusivity and gain market share in China during the 2012-2017 period. Decision Resources believes that biosimilar versions of both long-acting and short-acting insulin analogues, will have only a modest impact on China's type 2 diabetes market during the forecast period. Most biosimilar insulins are only slightly less expensive than the branded versions in China. which encourages physicians and patients to stay with branded insulins. As a result. Decision Resources forecasts that along with the launches of additional novel agents, Western-branded therapies will capture more than 70% of China's type 2 diabetes therapeutic market by 2017.

"More than 95% of Chinese residents have access to some form of government-sponsored medical insurance, but broad access does not translate into affordable healthcare," said Decision Resources analyst Jing Wu, M.S., M.B.A. "Select DPP-IV inhibitors and GLP-1 receptor agonists have a reasonable chance of being included on the next version of the National Reimbursement Drug List (NRDL), likely to be released in 2014. However, in order to control treatment costs, the reimbursement of these agents will be restricted to specific type 2 diabetes patient groups."

Since 1990, six new classes of diabetes type 2 medicines have been approved by the US Food and Drug Administration (FDA). According to the Pharmaceutical Research and Manufacturers of America (PhRMA), US biopharmaceutical research companies currently are developing 221 innovative new medicines to help the nearly 26 million patients in the United States affected by diabetes. These medicines are in development - all in either clinical trials or under review by the FDA include 32 for type 1 diabetes, 130 for type 2 and 64 for diabetes-related conditions.

BIOD-123

Biodel's most advanced program involves developing proprietary formulations of injectable recombinant human insulin (RHI) designed to be more rapid-acting than the currently available "rapid acting" analogs used to treat Type 1 and type 2 diabetes.

An earlier RHI-based formulation known as Linjeta (human insulin [rDNA origin]), and previously referred to as VIAject, was the subject of a New Drug Application (NDA) that Biodel submitted to the FDAin December 2009. In October 2010, the FDA issued a Complete Response Letter (CRL) stating that the NDA for Linjeta could not be approved in its submitted form and that the company should conduct two new Phase 3 clinical trials using its preferred commercial formulation of Linjeta prior to re-submitting the NDA.

Based on the CRL and subsequent feedback that the FDA provided to Biodel executives at a meeting in January 2011, the company decided to study newer RHI-based formulations in earlier stage clinical trials. The objective of these clinical trials was to identify an RHI-based formulation with pharmacokinetic and pharmacodynamic profiles similar to the Linjeta formulation, but with improved injection site toleration characteristics. These earlier stage clinical trials evaluated the pharmacokinetic, pharmacodynamic and injection site toleration profiles of our product candidates relative to Eli Lilly's rapid-acting insulin analog, Humalog.

In September 2011, Biodel announced that two newer RHI-based formulations, BIOD-105 and BIOD-107, did not demonstrate its target profile in Phase 1 clinical trials. The company subsequently conducted a Phase 1 clinical trial of two additional formulations, BIOD-123 and BIOD-125. In April 2012, Biodel announced top line results from that trial, which found that both BIOD-123 and BIOD-125 achieved its target pharmacokinetic, pharmacodynamic and injection site toleration profiles.

Based on Biodel's assessment of these two formulations, the company selected BIOD-123 as its lead RHI-based product candidate. In September 2012, Biodel began enrolling patients in a Phase 2 clinical trial of BIOD-123. This Phase 2 clinical trial was designed to assess the clinical impact of BIOD-123 relative to Humalog.

On September 8, 2013, Biodel announced preliminary results from Study 3-201, a Phase 2 clinical study of BIOD-123, an investigational ultra-rapid-acting mealtime insulin, in patients with type 1 diabetes. BIOD-123 achieved the primary endpoint of the study. Compared to Humalog, BIOD-123 demonstrated non-inferiority in change from baseline HbA1c. Despite the positive news, Biodel shares plunged 15%.

BIOD-123 also achieved comparable weight gain, mean hypoglycemia event rates and postprandial glucose excursions over the entire treatment period with some notable trends in favor of BIOD-123 in weight gain during the stable dosing period, median hypoglycemia event rates and postprandial glucose excursions to a liquid meal challenge test.

BIOD-123 also had a comparable safety and adverse event profile, with the exception of an increased frequency of injection site pain associated with BIOD-123, although it which appeared to be clinically minor, was short-lived and did not result in patient dropouts.

"The establishment of non-inferiority in HbA1c of BIOD-123 versus Humalog in this study gives us a high level of confidence that BIOD-123 could achieve this primary endpoint for FDA approval in larger pivotal studies," Errol De Souza, Ph.D, Biodel's president and chief executive officer stated. "We look forward to completing the full analysis of the results, sharing the data with experts and potential partners to obtain feedback and preparing for an end of Phase 2 meeting with the FDA to define the path forward."

Study 3-201 was a Phase 2, open-label, parallel group study conducted at 32 centers in the U.S. In the trial, 132 patients with type 1 diabetes and HbA1c levels between 6.5% to 8.5% were randomized to receive either BIOD-123 or Humalog to use as their mealtime insulin during an 18-week treatment period.

Both arms of the study used insulin glargine, sold as Sanofi's Lantus (insulin glargine) as the basal insulin. Following randomization, subjects entered a 6-week dose titration period during which basal insulin and then prandial (meal time) insulin doses were titrated in order to reach standard American Diabetes Association (ADA) recommended pre-prandial glucose targets. Upon completion of the titration period, subjects entered a "relative stable dosing period" for an additional 12 weeks.

On a Study 3-201 Top Line Data conference call conducted on September 9, 2013, Biodel President and Chief Executive Officer Errol De Souza stated, "The establishment of non-inferiority in HbA1c or BIOD-123 was a Humalog in the present study gives us a high level of confidence that BIOD-123 could achieve the primary endpoint to support FDA approval in larger pivotal studies. We plan on making the best informed decision in the path forward, not only on meeting the regulatory endpoints, but also the commercial endpoints to make the product a success."

"In order to get feedback from the FDA, with respect to studies required for approval of the drug, CMC input, as well as adjunct study that might allow for labeling for a faster onset of actions and other secondary endpoints. The collective feedback from regulators, key opinion leaders, and potential partners will provide us with input necessary to define our path forward, which we move forward to communicating in the months to come," De Souza added.

BIOD-238 and BIOD-250

BIOD-238 and BIOD-250 are insulin analog-based formulations that generally use the same or similar excipients as Biodel's RHI-based formulations and are designed to be more rapid-acting than the "rapid-acting" mealtime insulin analogs currently available although these drugs may present characteristics that are different from those offered by the company's RHI-based formulations.

In January 2013, Biodel announced top-line results from its Phase 1 clinical trial of BIOD-238 and BIOD-250. Conducted in Australia, this trial was designed to compare the pharmacokinetic and injection site toleration profiles of BIOD-238 and BIOD-250 relative to Humalog. In the study, both formulations met the company's target pharmacokinetic profile for an ultra-rapid-acting insulin analog-based formulation, and BIOD-250 met the target injection site toleration profile.

Biodel does not expect to study these formulations in additional clinical trials because they were formulated by adding the company's proprietary excipients to the marketed formulation of Humalog and they did not demonstrate stability characteristics consistent with the target product profile. Biodel is continuing formulation development work to improve the stability characteristics of its ultra-rapid-acting insulin analog-based formulations. Biodel is also developing formulations using the active pharmaceutical ingredient, rather than a marketed presentation, of an insulin analog.

BIOD-531

Biodel's concentrated insulin formations have a unique time-action profile to address the growing population of severely insulin resistant Type 2 diabetes patients and the existing population of patients currently using pre-mixed insulins to manage both prandial and basal glucose control requirements with a single injection.

Biodel's lead concentrated insulin candidate, BIOD-531, is a concentrated U-400 formulation of recombinant human insulin (RHI), disodium ethylenediaminetetraacetic acid (OTCPK:EDTA) and citrate and contains magnesium sulfate, which has been shown in multiple clinical studies to mitigate injection site pain associated with EDTA.

BIOD-531 is under evaluation as an alternative to Humulin R U-500 currently used in the treatment of severely insulin resistant type 2 diabetes patients who require greater than 200 units of insulin daily. Biodel believes that an unmet medical need exists for this subset of diabetes patients for whom no rapid-acting or ultra-rapid-acting concentrated insulins exist.

Currently Eli Lilly's Humulin R, U-500 is the only concentrated insulin product on the U.S. market. Because its duration of action is long enough to provide basal coverage, Humulin R U-500 is often administered by patients twice per day. Biodel claims it has a delayed onset of action relative to standard concentration rapid-acting insulin analog formulations and is not well suited to provide optimal meal-time insulin coverage.

A second segment of the market that a concentrated insulin formulation with an enhanced profile may address is that of insulin premixes. Premixes provide basal and bolus therapy with fewer injections per day. Currently Eli Lilly and Novo Nordisk market human insulin or rapid-acting analog insulins such as NovoLog or Humalog premixed with intermediate-acting basal neutral protamine insulins in a variety of ratios such as 70/30, 75/25 and 50/50. These U.S. analog-based premixes sell more than $1 billion annually. Biodel contends that while the premixes offer prandial and basal coverage with one injection, the prandial component is suboptimal.

Biodel believes that a concentrated insulin formulation with an ultra-rapid-acting onset and basal duration profile coupled with its high concentration could offer diabetes patients and physicians a novel therapeutic to improve prandial coverage while maintaining basal coverage in both insulin resistant patients requiring large doses of insulin and patients who use premixed insulins.

Based on this unique combination of rapid absorption with a basal duration profile, BIOD-531 may provide superior meal-time glucose control relative to Humulin R, U-500. For patients using premixed insulins, BIOD-531 could enable patients to improve prandial control using small injection volumes.

Biodel has studied the pharmacokinetic and pharmacodynamic profiles of BIOD-531 in the diabetic swine model. The company is planning to file an Investigational New Drug (IND) Application amendment with the FDA and initiate a randomized, blinded, cross-over Phase 1 clinical trial in which the pharmacokinetic, pharmacodynamic and toleration profiles of BIOD-531 will be defined and compared to Humulin R, U-500 and to Humalog prandial/basal pre-mixed insulin.

In August 2013, Biodel announced that BIOD-531 would be moving into clinical trials next quarter.

Glucagon

Biodel is developing room temperature stable glucagon presentations for use as a rescue treatment for diabetes patients experiencing severe hypoglycemia, or very low concentrations of blood glucose.

Diabetes patients using insulin often experience varying degrees of low blood glucose concentration known as hypoglycemia. Mild to moderate hypoglycemia symptoms such as headache, weakness, or dizziness are generally treated with orally administered carbohydrates, such as orange juice or glucose tablets. However, severe hypoglycemia often results in a loss of consciousness or seizures, which typically renders the oral administration of carbohydrates unsafe and requires another person's assistance. In such emergency cases, an injection of glucagon can help rapidly raise the patient's blood glucose concentration. The longer a patient is unconscious due to severe hypoglycemia, the greater the chance of brain damage or death. It is estimated that there are over 200,000 hospitalizations per year due to severe hypoglycemia.

Glucagon is a peptide hormone that stimulates the breakdown of the liver's glycogen stores into glucose, thereby raising blood glucose levels. Glucagon is prescribed to patients with diabetes for use by a caregiver in case of incapacitating severe hypoglycemia. The need for a convenient, ready-to-use formulation is heightened by the increasing usage of intensive insulin therapy, which can increase the incidence of severe hypoglycemia.

Due to the inherent instability of glucagon, currently available rescue products are lyophilized, two-part presentations that require a caregiver to perform multiple manipulations to reconstitute the drug into a solution prior to injection. This process is difficult for many caregivers to perform during an emergency situation when the patient is semi-conscious, unconscious, or having a seizure from hypoglycemia. The complexity of the reconstitution and injection process results in a requirement for the potential caregivers to undergo training in a physician's office. The combination of this training requirement and the difficulty many caregivers have with the process limits the number of patients who choose to keep a glucagon rescue product on hand at home, office or school. It is estimated that only 10% to 20% of high-risk patients currently have an unexpired glucagon kit.

Biodel believes that this low level of market penetration provides a potentially lucrative opportunity. According to the company, the current $125 million U.S. market could expand significantly upon the introduction of an easy-to-use presentation. The device supplied by Unilife Corp. (UNIS) requires three simple, intuitive steps as compared to seven or more steps for the currently available rescue kits.

Biodel procured a long-term commercial supply agreement for bulk glucagon and entered into a supply agreement with Unilife for a customized proprietary device from its EZMix platform of dual-chamber devices with worldwide exclusivity for use with glucagon. The device has been customized for convenient portability and ease of use to enable rapid treatment during emergency situations with little to no training. The device automatically reconstitutes lyophilized glucagon when prepared for injection and features automatic, user-controlled retraction of the needle upon full dose delivery, virtually eliminating dosing errors and the risk of needle stick injuries.

Biogen expects to submit an Investigational New Drug (IND) application to the FDA and initiate a pivotal clinical study by the second half of 2014, putting the company in a position to file an NDA to the FDA under the 505(b)(2) regulatory pathway in 2015. Biodel is also developing liquid glucagon for pump use and is exploring other portability options.

On June 8, 2012, Biodel and Aegis Therapeutics, LLC announced a partnership providing Biodel an exclusive worldwide license to Aegis' proprietary ProTek and Intravail technologies for the development and commercialization of pharmaceutical formulations of glucagon.

"This license is complementary to our internal efforts to develop stabilized liquid formulations of glucagon for use in a variety of presentations, routes of delivery and indications. We remain on track for filing an NDA for our first glucagon presentation in late 2013 or early 2014. The glucagon program addresses an important unmet medical need - the lack of a convenient, user friendly treatment for severe hypoglycemia, while significantly strengthening our pipeline," De Souza stated.

Utilizing Aegis' technology, Biodel is developing formulations of glucagon designed to be more stable in solution at both refrigerated and room temperatures than existing commercial formulations. Accelerated stability data indicates that ProTek-based glucagon formulations have greater physical and chemical stability than existing commercial formulations following reconstitution. Biodel's liquid formulation of glucagon administered with an auto injector pen device may eliminate the training requirement and also increase the ability of a caregiver to successfully treat a patient during a severe hypoglycemic event. This improved presentation could increase adoption of this important, life saving therapy and significantly expand the market.

Hypoglycemia in Congenital Hyperinsulinism

On December 6, 2012, Biodel announced that the FDA has granted orphan drug designation for glucagon for the prevention of hypoglycemia in the congenital hyperinsulinism (CHI) population.

The FDA grants orphan designation to promote development of therapies to treat rare diseases. Once this designation is granted, the sponsor may be eligible for a range of incentives including FDA grant funding for clinical trial costs, tax credits related to development expenses, waiver of FDA user fees, and a seven-year period of marketing exclusivity in the U.S. following FDA approval.

"While our primary glucagon program is a rescue product for the treatment of severe hypoglycemia in patients with diabetes, this designation represents an important component of our strategy to maximize the value of our product candidates to patients and shareholders in both our glucagon and ultra-rapid-acting prandial insulin programs," Biodel CEO De Souza stated.

Biodel previously received a positive opinion for orphan drug designation from the European Medicines Agency's Committee for Orphan Medicinal Products (EMA's COMP) on January 17, 2012, and orphan designation by the European Commission (EC) on March 5, 2012.

CHI is a genetically heterogeneous disorder characterized by excess, dysregulated insulin secretion from pancreatic beta cells. It is the most common cause of persistent hypoglycemia in neonates and infants and it occurs at an incidence of one in 30,000 to 50,000 births. Children with this disorder usually require aggressive artificial calorie support in order to prevent hypoglycemia and resulting neurologic damage. Despite aggressive treatment with available therapies, the estimated prevalence of permanent neurologic damage from breakthrough hypoglycemia ranges from 20% to 50%. Treatment for CHI typically begins with intravenous glucose supplementation, often requiring highly concentrated glucose solutions administered through central venous catheters in intensive care unit settings. While some patients respond to treatment with diazoxide and/or somatostatin analogs, the balance of the patients are eventually treated surgically. Of these, many will need to undergo a near-total pancreatectomy which in most cases leads to insulin-dependent diabetes mellitus by the time the patient reaches adolescence.

Glucagon is a potential medical treatment for any form of CHI. Glucagon increases blood glucose concentrations acutely by stimulating breakdown of glycogen stores in the liver (glycogenolysis). In the setting of hyperinsulinism, the liver contains excess glycogen due to insulin-dependent inhibition of glycogenolysis. Pilot data describing clinical experience with long-term subcutaneous infusion of glucagon to CHI patients have been published. In a retrospective review of nine patients with CHI, glucagon infusion over weeks to years allowed the reduction or discontinuation of central glucose infusion in all children studied. The glucagon treatment was generally well tolerated, with the most common side effect being a skin rash. Researchers noted that these glucagon infusions were complicated by frequent catheter obstructions, sometimes occurring daily. These obstructions occur because glucagon in its currently marketed formulations is unstable in solution, particularly at elevated temperatures. This instability in solution makes currently marketed formulations of glucagon impractical for long-term use in these patients.

Biodel's formulation of glucagon is designed to remain stable in solution for a longer period than existing commercial formulations.

Preliminary data have been generated to show that Biodel's formulation has greater chemical stability at elevated temperatures than existing commercial formulations. In addition, in vitro testing has shown chemical and physical stability when used in a commercially available insulin pump.

On June 6, 2013, Biodel announced plans to submit a New Drug Application (NDA) to the FDA in 2015 for a novel glucagon rescue device to treat severe hypoglycemia.

Having previously signed a long-term commercial supply agreement for bulk glucagon, Biodel expects to select a final formulation of its novel glucagon therapy and appoint a contract manufacturing partner during the current calendar quarter. The submission of an Investigational New Drug application to the FDA is expected during the next 12 months. Initiation of a pivotal clinical study is expected to occur during the second half of 2014, putting the company in a position to file an NDA to the FDA under the 505(b)(2) regulatory pathway in 2015.

In preparation for the anticipated regulatory filing and commercial launch of its glucagon rescue product, Biodel signed a 15-year supply agreement with Unilife Corporation for a customized proprietary device from its EZMix platform of dual-chamber devices with worldwide exclusivity for use with glucagon. The device has been customized for convenient portability and ease of use to enable rapid treatment during emergency situations with little to no training. The device automatically reconstitutes lyophilized glucagon when prepared for injection and features automatic, user-controlled retraction of the needle upon full dose delivery, virtually eliminating dosing errors and the risk of needle stick injuries.

Glucose Responsive Insulin

Biodel has conducted early preclinical studies of a new chemical entity we describe as "glucose-responsive" insulin, because it releases insulin proportionally to subcutaneous glucose concentration and, as a result, responds to unanticipated changes in patients' insulin needs, such as exercise or fever, to maintain a more normal glycemic range.

Patients with diabetes who are currently treated with basal insulin doses titrated to achieve target fasting-glucose readings may be "stuck" with that basal dose for the remainder of the day even though that dose may not be optimal for changing conditions that affect their glucose levels. Glucose-responsive insulin could possibly address this problem and prevent the hypoglycemia, hyperglycemia and weight gain often associated with current basal insulins.

In early preclinical studies, Biodel has also explored means by which to improve basal insulins for more desirable pharmacokinetic and pharmacodynamic profiles.

Finances

On August 12, 2013, Biodel disclosed financial results for the third fiscal quarter ended June 30, 2013.

Biodel reported a net loss for the three months ended June 30, 2013 of $9.6 million, or $0.66 per share of common stock, compared to a net loss of $6.1 million, or $0.52 per share of common stock, for the same period in the prior year.

Research and development expenses were $3.6 million for the three months ended June 30, 2013, compared to $3.0 million for the same period in the prior year. The increase in research and development expenses was primarily attributable to expenses associated with our ongoing Phase 2 clinical trial of BIOD-123.

General and administrative expenses were $1.7 million for the three months ended June 30, 2013, compared to $1.8 million for the same period in the prior year.

Expenses for the three months ended June 30, 2013 and 2012 included costs of $0.3 million each in stock-based compensation expense related to options and restricted stock units granted to employees and our non-employee directors.

Biodel did not recognize any revenue during the three months ended June 30, 2013 or 2012.

At June 30, 2013, Biodel had cash and cash equivalents of $42.4 million and 18.9 million shares of common stock outstanding.

Conclusion

Analysts have mixed sentiments about Biodel. Motley Fool readers gave Biodel a better than average four star rating, but Zacks gave Biodel a Zacks Rank #4 (Sell).

On August 15, 2013, JMP Securities increased its price target for Biodel stock from $6.00 to $9.00. JMP has an Outperform rating for the stock,

On May 31, 2013, Ladenburg Thalmann upgraded Biodel from Neutral to Buy with a price target of $6.00.

On December 7, 2012, Wedbush reiterated its Neutral rating and $3 price target for Biodel.

There are 31 institutions that own Biodel stock. Institutions and mutual funds own 62% of Biodel stock. Olmstead Advisors is the company's largest shareholder holding 2,690,334 (14.06%) of Biodel stock. Other institutional investors include Jeffrey R. Jay, the managing director of Great Point Partners, with 1,853,845 shares (9.69%), VHCP Management, LLC with 1,446,413 shares (7.65%), and Austin W. Marxe, & David M. Greenhouse with 1,110,400 shares (5.8%). Top mutual fund owners include Vanguard Total Stock Market Index Fund with 238,888 shares (1.25%), Vanguard Extended Market Index Fund with 58,911 shares (.31%), and iShares Russell Micro Cap Index Fund with 42,967 shares (.22%).

Biodel stock reached a 52 week high of $6.08 on August 5, 3013 and low of $2.13 on November 12, 2012. The stock, which is currently selling in the $3.30 range, could be a good buying opportunity for the aggressive investor who is not averse to risk.

Source: Is Biodel A Buy Or Sell?