Biodel Is Seriously Undervalued
Growth, Long/Short Equity, Momentum
Seeking Alpha Analyst Since 2013
Several recent news events in December have led me to investigate the prospects of Biodel , a small company with strong proprietary technology in the growing insulin delivery market. The company has had success in recent trials and has several catalysts coming in 2014 that should get investors excited FOR MORE SHORT- TERM GAINS.
Shares of Biodel are not for the weak; they currently trade around $9 and have seen several double-digit swings throughout trading days. I believe the opportunities outweigh the risks and this could present a huge reward for long term shareholders through 2014 and 2015.
Biodel is down 0.3%. So I believe it is the best opportunity to buy this stock to get major gains possible. Back in August, shares were above $5 and seemed like they could breakout. Shares have now traded in a range of $1.93 to $6.08 over the last 52 weeks. Amazingly enough, shares of Biodel are down 97% since their 2007 IPO. With upcoming catalysts in 2014, shares should breakout of the 3-12 range.
As for those catalysts, here's the company's Web site: "Biodel's technology facilitates more natural and rapid absorption of recombinant human insulin analogs than current insulin products and appears to improve its therapeutic efficacy in patients with Type 1 and Type 2 diabetes." In fact, Biodel is taking on products from two large pharmaceutical companies in Novo Nordisk and Eli Lilly .
The company's pipeline from the site:
Ultra-rapid-acting prandial insulin RHI based
Ultra-rapid-acting prandial insulin analog based
Ultra-rapid-acting concentrated insulin
The four major areas of Biodel have a current market opportunity of $8 billion. By 2020, that number is set to almost double to $15 billion. Biodel is hoping to take away share from Novo and Eli Lilly, which both have key patent expirations in 2014 for the insulin market. BIodel, on the other hand, has patents lasting until 2026 in the United States and 2027 in Europe.
Humalog, from Eli Lilly, continues to see an increase in use. In the most recent third quarter, sales of Humalog hit $616 million, growth of 7%. Through the first nine months, the drug has sales of $1.9 billion, a six percent increase. Humalog is the third-biggest drug in third-quarter sales for Eli Lilly.
Novo Nordisk has had sales of $2.3 billion in the first nine months of the fiscal year for Novo Nordisk, representing 12% growth. Novo continues to be the leader in the diabetes market with a huge portfolio of insulin drugs. The company had a global insulin share of 48%, including 40% in the United States as recent as the third quarter. More importantly, in what is considered new generation treatments, Novo has a share of 46% globally and 39% in the United States.
Biodel is hoping its treatments will improve the time for diabetes patients when injecting insulin. Old-school insulin injections take 120 to 180 minutes for patients. New, rapid-acting methods take 50 to 70 minutes, which greatly boosts prior performances. However, Biodel has shown in several studies that it can improve on the success of Novo and Eli Lilly with shorter delivery times. Results have also shown that those taking the insulin need a lower amount throughout the day from Biodel versus other companies existing insulin injections.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.