BDSI Might Again Be Ready For Prime Time

Jan. 8.12 | About: BioDelivery Sciences (BDSI)

With nearly five million shares traded and a 120% price increase on Friday, BioDelivery Sciences (NASDAQ:BDSI) was unsurprisingly one of the most talked about stocks heading into the weekend after the small company whose stock has a daily trading average of under 300,000 signed a worldwide licensing and development agreement with Endo Pharmaceuticals (NASDAQ:ENDP) to bring BEMA Buprenorphine to market.

BEMA Bup, as its known for short, failed to meet the primary endpoint of a Phase III trial completed earlier this year, although company CEO Dr. Mark Sirgo said at the time that some data from the trial was compelling enough to warrant additional studies.

Endo seems to have agreed with that assessment and the resulting validation that came in the form of a major partnership - worth up to $180 million in up-front and milestones to BioDelivery - sparked a flurry of investor interest that led to Friday's double in the BDSI share price.

BEMA Bup, being investigated to treat chronic pain, fits right into Endo's wheelhouse of marketing drugs and treatments for pain indications, and the whole-hearted support for BioDelivery led William Blair to initiate coverage on BDSI with a tag of 'outperform'.

2011 was a rough year for BDSI and its investors, but 2012 is already looking a little different.

Another recent announcement by the company could also factor heavily into the short and long term success of BioDelivery Sciences. The approval by the U.S. Food and Drug Administration (FDA) that provides a Risk Evaluation Mitigation Strategy (REMS) covering all transmucosal fentanyl products alleviates a long-standing concern for BioDelivery and levels the playing field for the competition in relation to its already-approved treatment for breakthrough pain in cancer treatment, ONSOLIS.

As CEO Sirgo stated in a recent press release, "BDSI was the first company required by the FDA to have a REMS program for a transmucosal fentanyl product. Unfortunately, companies with similar products being marketed prior to the approval of ONSOLIS were not all held to the same standard. This resulted in a significant commercial disadvantage for ONSOLIS given the requirements of the REMS and the associated additional steps required by healthcare providers and their patients."

BioDelivery's partner for ONSOLIS, Meda Pharmaceuticals, looks to have the REMS in place by the end of the first quarter of this year, at which point the product will succeed or fall on its own merits, and not due to variables outside of the company's control.

At some point, it can now be speculated, one of the BioDelivery's larger partners may decide to outright buy the smaller company and retain full control of the BEMA drug delivery technology. It's likely, however, that such a deal would not come until the conclusion of the latest round of BEMA Bup trials that Endo has come on board to support.

Already a big winner for 2012, this could be the year that BDSI finds itself playing in prime time again.

Disclosure: Long BDSI.