Loss at BIOD Narrower than Expected - Analyst Blog

Biodel Inc.'s (BIOD) fourth quarter fiscal 2010 (ended September 30) loss of 31 cents per share was narrower than the loss of 37 cents indicated by the Zacks Consensus Estimate. The biopharmaceutical company reported a loss of 44 cents per share in the year-ago quarter. The narrower loss was primarily attributable to the lower spend on research & development (R&D) in the final quarter of fiscal 2010.

The company, like a year ago, did not report revenues in the reported quarter as well. R&D expenses plummeted 76% to $4.5 million in the reported quarter.  The sharp fall in R&D expenses was primarily attributable to reduced clinical, manufacturing, device development and personnel expenses.  

The fall was partially mitigated by an increase in expenses pertaining to the submission of the new drug application (NDA) for Biodel's most advanced candidate Linjeta. Linjeta, an injectable human insulin, is being developed for treating type I and type II diabetes to improve glycemic control. Biodel's diabetes candidate will enter a lucrative but crowded diabetes market on approval. The market has players like Sanofi-Aventis (SNY), Novo Nordisk (NVO) and Eli Lilly & Co. (LLY) developing treatments to combat diabetes.

We remind investors that Biodel received a complete response letter from the US Food and Drug Administration (FDA) for its diabetes candidate in October this year. The FDA refused to approve Linjeta in the present form asking for additional information. The US regulatory body asked Biodel to conduct two late-stage studies with the commercial formulation, one in patients suffering from type I diabetes and the other in type II diabetes patients to establish the safety and efficacy of the candidate.

Biodel intends to meet the FDA regarding the objections raised by the regulatory body and does not intend to conduct the late-stage studies immediately. Meanwhile, general and administrative expenses fell 7.7% to $2.4 million in the reported quarter.

For the entire fiscal 2010, Biodel suffered a loss of $1.58 per share as against $1.82 a year ago. A 23.5% reduction in the R&D spend was primarily responsible for the narrower loss incurred in fiscal 2010.

Our Recommendation

Biodel currently has a Zacks #3 Rank, which translates into a short-term Hold rating. We are also Neutral on the stock in the long term. The stance indicates that the stock is expected to perform in line with the US equity market over the next 6+ months. We advise investors to retain the stock over the time period.

 
BIODEL INC (BIOD): Free Stock Analysis Report
 
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