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RyanJMartin
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I'm an economics major and am self-employed trading daily in digital currency markets as well as traditional online retail investing.
  • Jumping On The BDSI Bandwagon? Be Ready To Get Out Before The Wheels Are Stuck In The Mud. 6 comments
    Jun 11, 2014 5:28 PM | about stocks: BDSI, ORXOF

    This is my first post here on SA, I've found alot of insightful commentary here and decided to try my hand at adding my own (hopefully) useful thoughts.

    BDSI has a supposedly bright future ahead with the recent FDA approval of Bunavail. Bunavail is basically THE drug meant to launch BDSI into the big leagues. Like many other small-cap pharma stocks, they have almost everything riding on one drug slogging its way through the FDA approval process. Sure BDSI has a few other approved products and a deal with Endo that has made last year's income statement a little less grim, and their debt to assets is manageable so long as they have some success with Bunavail. But what is it about Bunavail that is going to launch BDSI to the stars.

    First let me say I have followed BDSI for years, you can see my picks on Motley Fool's CAPS stock simulator and see that I picked BDSI as a buy 1 1/2 years ago at ~$4 (caps.fool.com/player/tunafizzle.aspx) and have had it in my own portfolio. But I've taken my profits on BDSI already. Why would anyone sell a small-cap pharma stock after making a nearly 3x return and soon as their "blockbuster" gets the FDA greenlight? Somebody that realizes Bunavail is entering a market not meant to connect end-users with the product. Imagine an Apple store ready to launch the latest iPhone but nobody can unlock and open the doors to the store, this is what BDSI's Bunavail faces.

    Bunavail is for the treatment of opiate addiction and is composed of the same ingredients as RB's Suboxone, which brought in billions for RB and was their entire pharmaceutical line until the patent expired about a year ago. RB came out with a sublingual film version and even launched a PR offensive to convince the public and especially prescribers that the tablet version, which they just lost the patent on, was dangerous and the film was safer. They raised the prices on their tablet version while offering steep discounts to distributors and patients on the film version. RB has had some success with this but not nearly the same level as they had when they had exclusivity over Buprenorphine/Naloxone. (Checkout the remarkable slide in sales of Suboxone: www.drugs.com/stats/suboxone)

    As generics from Actavis began finding their way to CVS and Rite-Aid, the film's initial success has been slumping as more prescribers, insurers, and out-of-pocket patients realize that the generic tablets are equally effective and are now cheaper than the film. "But wait" you say, "Bunavail has a different formulation that allows for better bioavailability, it really could be a better drug." Well this is true, you've certainly done your homework. But remember last year when a small pharma co. by the name of Orexo (ORX) got approval for Zubsolv (another buprenorphine/naloxone combo with higher bioavailability) almost a year ago? No? Vaguely familiar? That's because Zubsolv's sales never materialized and after investors saw Orexo was still deep in the red and the share price went from $170 in Jan '14 to $90 in May.

    So why couldn't Zubsolv get sales rolling and is BDSI really doomed to the same fate? Here's the real painful part that all investors of BDSI and ORX need to know.... these drugs: Zubsolv and Bunavail will never be big sellers unless Congress does something. Yes, that branch of government that does nothing and is about as dependable as a cinderblock is about the only thing that can help. Confused? Some history will help. Around 2000 Congress passed an act allowing doctors to finally and legally treat drug addiction in their own practice, however doctors had to complete a 6-hour course and get a special certificate often referred to as a DATA2000 (after the act of congress) waiver. This waiver let's the DEA know that this doctor is allowed to prescribe buprenorphine/naloxone for addiction and is allowed to treat up to 100 patients (formerly only 30 patients) as long as they met vague record-keeping and prescribing requirements enforced by the DEA. This means that most doctors cannot prescribe Zubsolv or Bunavail, and those that can are typically at their 100 patient limit (there are stories of patients calling 20, 30, 40 DATA2000 approved doctors without finding one accepting patients). The real tragedy here is not the shareholders bottom line but that addicts seeking help face waitlists 6 months long at best.

    Remember that most doctors don't look at this as a money-making opportunity, most have no shortage of patients as is and having to deal with addicts that might try to pull one over on them and to get hassled by the DEA is simply not worth it. But what about drug treatment facilities, the "methadone clinic" they arent subject to this stuff? This is true that such locations are able to meet the demand better, however almost no insurance companies will cover treatment or prescriptions from such places, so a brand name drug like Zubsolv or Bunavail doesn't stand a chance.

    Bottom Line: Unless BDSI (with their 22 employees) can convince doctors to get DATA2000 certified, or Congress acts (hahahaha, I'm hilarious I know) Bunavail will never be one Suboxone was for RB.
    As of 6/11, I plan on buying back in on BDSI but it will be short-term and maybe in the form of options. BDSI may be able to grow to $20 and do well this summer but be ready to get out in a hurry by fall or winter. If your reading this by July and thinking of buying its likely too late.

    Note: I'll update this later with links, charts, and better editing.

    EDIT 6/13: In the end I decided to buy some calls on BDSI for this summer (think $10, $12.50, $15 strikes). As BDSI rises I expect to make a nice profit on those options then use some of those profits to buy put options for early next year, once BDSI 's share price is up and the premium on a put with a $15 strike is low.

    Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in BDSI over the next 72 hours.

    Stocks: BDSI, ORXOF
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Comments (6)
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  • Snapfisher
    , contributor
    Comments (5) | Send Message
     
    If you believe what you write, I'm unclear why you are not putting your money elsewhere.
    11 Jun 2014, 11:50 PM Reply Like
  • RyanJMartin
    , contributor
    Comments (4) | Send Message
     
    Author’s reply » I should edit the post to reflect what I mean better, BDSI will be going up in the very near term, but it will be dead in the water once quarterly earnings show they aren't selling/cant sell any Bunavail.
    12 Jun 2014, 03:03 PM Reply Like
  • MDTX321
    , contributor
    Comment (1) | Send Message
     
    Better bioavailability? Compared to Suboxone TABLETS not the film!! Orexo made the same claims, never told physicians like myself that studies where comparing their tablet to the Suboxone tablet. The reps go on and on about greater bioavailability, superior product when in fact my patients were needing to take 3 of their 5.7mg instead instead of 2 that was supposedly equal to 16mg of Suboxone Film. So much for greater bioavailability!! I don't plan on trying Bunavail on any of my patients, because it's the same song and dance that Orexo continues to do!!
    13 Jun 2014, 02:27 AM Reply Like
  • RyanJMartin
    , contributor
    Comments (4) | Send Message
     
    Author’s reply » Wow, didn't think it was that bad, thanks for the insight. If a company could find a way to create a sublingual or buccal route of admin that releases buprenorphine/naloxone with a few drops of ethyl alcohol they could double bioavailability easily. Even still though, does it really matter? Patients can just take 8/2mg and get the same results as 5.7mg orexo(if it actually worked!) or, say, 4mg of what I described....hard to see why better bioavail truly matters.

     

    Thanks for sharing though, great to have some first-hand insight.
    13 Jun 2014, 02:07 PM Reply Like
  • Amy Joyc
    , contributor
    Comments (2) | Send Message
     
    It's a shame that you wouldn't try Bunavail because of the lack of success of Orexo.

     

    1) Orexo's Zubsolv is a tablet but Bunavail is a film. There is a big difference, including patients needing approximately half the dose of Suboxone, as Orexo apparently claimed but didn’t study comparatively.

     

    2) Although Orexo may have compared the Zubsolv tablet to the Suboxone tablet, Bunavail film was compared to Suboxone tablets (105 subjects) and Suboxone Film (144 subjects). Also, BDSI used 4 times more participants in the study Bunavail.

     

    3) Suboxone is administered as sublingual film however Bunavail is buccally administered. The two areas/products differ in time taken to break down and dissolve , and how well it attaches in the mouth. The Sub film moves around a bit but the Bun film is “stickier” and adheres to the cheek, making it difficult to disengage (either accidentally thus swallowing and rendering it useless, or purposely removing it out after the Naloxone separates from the Bupe so that it can be abused.).

     

    4) Bunavail: The film adheres to the inside of the cheek within seconds, and
    the Bupe is efficiently absorbed. The backing layer creates a barrier to facilitate one-way absorption into the cheek. There is no need for patients to avoid talking or swallowing during administration, and the film completely dissolves in 1- 3 minutes instead of 5 – 15 minutes.

     

    5) Of the 41% that reported constipation before the study began (a big problem for opiate users), and only 13% of them had any constipation at the end.

     

    6) Bun apparently tastes better. Sub tastes awful although it’s worth it and adaptable.

     

    http://on.mktw.net/1qI...

     

    http://bit.ly/1qISypa

     

    http://bit.ly/1qISzJL

     

    *I think it's wonderful that you care about addicts enough to deal with the negative circumstances in which to treat them. It's not easy to find doctors that treat them and care about the outcome of treatment.
    13 Jun 2014, 07:29 PM Reply Like
  • Amy Joyc
    , contributor
    Comments (2) | Send Message
     
    I think congress may sing a different tune when they figure out that government $ spends a fortune on addiction treatment, 30 day = 30k, that isn't medicinal. They just teach life dependency on AA 12 step therapy and keep people cozy but on lock down during that time. If the health care continues and addiction treatment will still be a benefit of Gov insured, I'd think they want something that works better. I hope. Most heroin addicts go to rehab 7 times before getting "well".
    Been through the mill myself and treatment is bullshit now :( and that's how I understand it.
    13 Jun 2014, 02:31 AM Reply Like
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