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small-cap

Consider Exiting This Small-Cap Pharma Stock - BDSI

Jan 26, 2022 | Team Kalkine
Consider Exiting This Small-Cap Pharma Stock - BDSI

BioDelivery Sciences International, Inc.

BDSI Details

BioDelivery Sciences International, Inc. (NASDAQ: BDSI) is a specialty pharmaceutical company specializing in developing treatments for those suffering from severe and debilitating chronic illnesses. BDSI uses its proprietary BioErodible MucoAdhesive (BEMA) drug-delivery technology to develop and commercialize novel medicines that address critical unmet medical needs. BELBUCA (buprenorphine buccal film) for chronic pain and Symproic (naldemedine) for opioid-induced constipation are two of the company's product candidates.

Latest News:

  • Favorable Court Ruling: On December 20, 2021, BDSI stated that the United States District Court for the District of Delaware has ruled in its favour in its patent dispute with Alvogen Group, Inc., and its affiliates, which submitted an Abbreviated New Drug Application (ANDA) for BDSI's BELBUCA® product on May 23, 2018. The validity of claims in BDSI's patents 8,147,866 (the '866 patent), which expires in 2027, and 9,901,539 (the '539 patent), which expires in 2032, is upheld in the trial judge's ruling. Alvogen admitted to infringing on these patents. As a result, BDSI anticipates BELBUCA to have market exclusivity against Alvogen until 2032.

Q3FY21 Results:

  • Moderate Topline growth: The company reported a slight 4.18% increase in total revenue to USD 41.09 million in Q3FY21 (ended September 30, 2021) from USD 39.44 million in Q3FY20, attributable to YoY growth of 5.90% in product sales.
  • Decline in Net Income: Net income for Q3FY21 decreased by 28.92% on YoY and stood at USD 6.67 million compared to USD 9.38 million in Q3FY20.
  • Cash and Debt Position: As of September 30, 2021, the company had cash & cash equivalents of USD 100.71 million and total debt of USD 58.72 million.

Key Risks:

  • Supplier Concentration Risk: The success of BDSI's products is dependent on physician approval and willingness to prescribe them to their patients. Any failure or delay in educating physicians about the proposed pharmaceutical formulations could delay or reduce demand for the company's products.

 Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

  • % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

BDSI Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

The company’s performance in the quarter just gone by was moderate. Further, the company’s is taking relatively higher time to convert its investment in inventories into cash at bank compared to its peers. Further, BDSI's stock price increased 21.50% in the past and trading above 50-day SMA, however 200-day SMA could be a crucial resistance in the stock and 14-day RSI oscillator hovering in a overbought zone at 72.18, implies a potential consolidation from the current trading level.

Considering the uptick in the stock price, current valuation, and technical indicators, we recommend a "Sell" rating on the stock at the current price of USD 3.646, down 1.19%, as of January 25, 2022, 01:59 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.