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BioDelivery Sciences Value Halved on Failed Drug Study


Company says it's not defeated but it will need a development partner for painkiller.

Like its bigger rival Cephalon (CEPH), BioDelivery Sciences International (BDSI) aims to make existing drugs better -- more effective, faster, safer and easier to administer. That's the goal.

Cephalon grew to a multi-billion dollar company. BioDelivery Sciences just lost more than half it market value by announcing its improvement over an existing drug doesn't actually work. The company says its Bema buprenorphine for chronic pain worked no better than placebo. The drug, considered a lower risk for abuse some other painkillers, is administered through a film placed inside the mouth.

The company has said it expects the product may generate more than $500 million in annual sales -- if it works and if it can be approved for sale. The company also says it's not giving up on the drug. In fact, it plans to conduct another study in the near future -- a trial that will take another nine months to complete. So certain are company execs, they're reiterating their sales prediction and seem confident they'll find a development partner.

"Our previously announced market projections for the product of $500 million in annual peak sales should not change based on the delay this outcome creates, and we will continue our ongoing partnering discussions in earnest, including the sharing of these results, which we believe should be viewed positively," CEO Mark A. Sirgo says.

The trial results were supposed to show that the drug worked in a mix of patients who either were taking other painkillers or those receiving none (aka opioid naive or opioid experienced). The trial showed a "near statistically significant difference" between the company's drug and placebo in the "opioid experienced" group. That's one of the key findings that gives the company hope for the potential of this drug.

"While there is disappointment over missing the primary efficacy endpoint of this study, the many positive findings we observed gives us great confidence in our ability to ultimately bring this product to market for the treatment of chronic pain in a variety of patient types," Sirgo says. He adds that a partner may help the company refine the design of its next study.

Investors aren't buying the argument. And they shouldn't -- at least until the company can sign a partner and give some needed credibility to the research.

Shares are down 57% to $1.32 in midday trading. Public since 2002, BioDelivery Sciences traded up to almost $7 a share in 2009.

Through the first six months of this year, the company lost $14 million on just under $268,000 in revenue. The revenue comes from payments from Swedish drug maker Meda, the company's development partner and licensee for the approved cancer pain medicine Onsolis. BioDelivery Sciences had about $21 million in cash and marketable securities as of June 30.

The FDA approved Onsolis in 2009 with some restrictions to deter abuse. Despite those restrictions, Onsolis validated BioDelivery Sciences technology. Now the company is going to need to go back to work to convince investors to back up its claims for Bema buprenorphine.

As for Cephalon, that company is being acquired by Teva Pharmaceutical Industries (TEVA) for more than $6 billion. (See Teva Makes $6.8 Billion Bet on Cephalon)
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