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Will Biodel Be the Comeback Company of 2010?


The answer hinges largely on the success of the drug, VIAject.

Biodel (BIOD) could be the little biotech that could in 2010.

The Danbury, Conn.-based biopharmaceutical company filed a new drug application with the US Food and Drug Administration on Wednesday for its fast-acting injectible insulin VIAject to send its shares soaring 16% in early-morning trading on the last day of 2009 to linger around $4.70 per share.

"We believe our studies demonstrate that patients receiving VIAject had faster reductions in blood glucose activity, reduced risks of hyperglycemia and hypoglycemia and less weight gain than patients who received recombinant human insulin, and that VIAject may offer important clinical benefits to people with diabetes," said Biodel Chairman Sol Steiner.

Despite the cheery ending to 2009, Biodel has seen its share of woes over the past few years. The company had a massive setback in September 2008 when data from late-stage trials of VIAject showed that the fast-acting insulin caused severe pain at the injection site when given in the 25 IU/ml dosage. The pain was so severe that 24 patients dropped out of the two studies. The stock fell from about $18.00 per share at the time to its current levels and has been widely ignored by investors ever since.

But Biodel could be the comeback kid of 2010. The company managed to adjust its dosage to 100 IU/ml and create a more promising product that, if approved by the FDA, could be a potential blockbuster. "After spending over a year away from investor focus, 2010 may augur a turning point for BIOD. The company is still trying to shake off the aura of company with a failed Phase III drug and we believe the NDA filing this year will go a long way towards that goal," wrote Leerink Swann analyst Josh Schimmer in a recent note to investors.

The drug caters to both type-1 and type-2 diabetics. Diabetes is a disease that affects 285 million, or 7%, of the adult population in the world, according to the International Diabetes Federation. The disease commonly comes in two types -- type 1 is an autoimmune disease that cannot be prevented and typically begins early in life, whereas type 2 diabetes is a preventable condition that tends to affect older, overweight patients. It's a leading cause of blindness, amputation, kidney failure, and stroke. VIAject is a fast-acting insulin that has proven to be more rapidly absorbed into the bloodstream than current standards of care. Its pen injection device makes it easy for patients to administer on their own.

(See, For Big Pharma, Diabetes Means Big Business.)

The upcoming year will be full of catalysts that should push the stock back up. The next milestone investors will be watching out for is the acceptance of the new drug application filing by the FDA, which typically occurs within 60 days of submission. This sets the date at which the FDA will decide about approval of the drug in the fourth quarter of 2010.

The only potential hindrance to the FDA's acceptance of the new drug application for VIAject could be a small number of patients in a late-stage study from India. The number of patients in the study was reduced by one-third when Biodel had to exclude certain data after some of the samples were mishandled. While the FDA typically allows exclusion of data for this reason, the small sample size could be a bleak spot for the filing.

A lot hinges on the success of this drug for Biodel. The company has said that it cannot afford to bring VIAject to market by itself and will be looking for a partner from Big Pharma in the coming year. Leerink Swann's Schimmer thinks that Sanofi-Aventis (SNY) will be an ideal partner for the little biotech. "Sanofi has the best selling long-acting insulin, Lantus, but its fast-acting insulin, Apidra, has fared poorly in the marketplace. By substituting VIAject for Apidra, Sanofi can offer a more compelling combination of ultra-fast and long acting insulins," wrote Schimmer.
No positions in stocks mentioned.

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