BioDelivery Sciences' South Korean Deal Print E-mail
By Vinny Cassano   
Tuesday, 01 June 2010 03:00

Shares of BioDelivery Sciences have been trading for under three dollars of late, but a licensing development announced in a press release last Thursday sent shares of BDSI back to over the three dollar mark.

BioDelivery announced that it has entered into a licensing agreement with Kunwha Pharmaceutical Company to develop and commercialize BEMA Fentanyl (Onsolis) in South Korea.

The agreement will bring in a $300,000 up front payment for BioDelivery and potential milestones have the potential to rake in an additional $1.275 million. BioDelivery will also receive a royalty on South Korean sales, although I don't expect the royalty rate to be too much since Kunwha will not only sell and distribute BEMA Fentanyl in South Korea, but the company will also develop and manufacture the product, according to the 8-K filed by BioDelivery with the SEC.

Because Kunwha will have to front quite a bit of money themselves since the company has full responsibility of the product from development to sales and distribution, I don't see the royalty rate for BioDelivery being more than ten percent on sales.

Any new licensing and distribution news is good for this company, but I don't believe that an entry into the South Korean market is the news that will reverse the recent course of the BDSI stock and send it upward. I could be wrong, beause when the big boys are ready to let it roll, then it will roll even on less than blockbuster news, but I don't think anyone interprets the South Korean market as a big one. The news is encouraging, however, especially on the heels of the recent approval in Canada..

For the BDSI stock price to permanently recover, Onsolis sales in the US need to significantly pick up steam, in my opinion, or some partnership/buyout speculation needs to come into play.

I personally belive that with BioDelivery's current pipeline, which includes the BEMA drug-delivery technology, it would be a nice - and relatively cheap - pickup for a larger pharmaceutical company. Of course, that's just my own speculation.

I'm still accumulating BDSI here and there as the stock sits tucked safely away in my IRA.

Disclosure: Long BDSI.

Vinny also authors the popular stock investing blog VFC's Stock House.




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