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Will BioDelivery (BDSI) Disappoint Estimates in Q3 Earnings?

BioDelivery Sciences International, Inc.BDSI is scheduled to report third-quarter 2015 results on Nov 9, before the opening bell. BioDelivery's performance so far has been disappointing with the company beating expectations only in one of the last four quarters with an average negative earnings surprise of 15.33%.

In the last reported quarter, BioDelivery had delivered a negative earnings surprise of 19.35%. Let's see how things are shaping up for the third quarter of 2015.

Factors at Play in Q3

BioDelivery's recently launched drug, Bunavail (the only buccal film delivery system for the maintenance treatment of opioid dependence), which has been in the U.S. market since Nov 2014, has recorded slower-than-expected initial sales. However, the company is working on increasing awareness by expanding the product's reach through improved managed care access, particularly Medicaid, expanded pharmacy stocking and enhanced physician targeting.

During the third quarter of 2015, BioDelivery inked a two-year agreement with Tennessee Medicaid for Bunavail with the latter granting the drug preferred coverage status on its preferred drug list. Moreover, the U.S. Department of Health and Human Services (HHS) announced initiatives focused on increasing access to treatments for opioid dependence and prevention of opioid overdose. The deal with Tennessee and revision of regulations by the HHS should help ramp up Bunavail sales. The company expects sales to pick up in the rest of 2015 through 2016.

Meanwhile, BioDelivery gained FDA approval for Belbuca in Oct 2015 for the management of pain severe enough to require daily, round-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. The FDA approval triggered a milestone payment of $50 million from Endo International plc ENDP to BioDelivery.

In addition, BioDelivery received FDA approval for a new formulation of Onsolis (breakthrough cancer pain in opioid-tolerant adult patients) in Aug 2015. Both Belbuca and Onsolis are expected to hit the U.S. markets in 2016.

At the time of announcing second-quarter 2015 results, BioDelivery had mentioned that it continues to expect total operating expenses to be in the mid-to-high teen range on a quarterly basis.

Going into the third quarter announcement, the performance of Bunavail and updates related to the company's life cycle management plans for the drug along with the company's commercialization plans for Belbuca and Onsolis and other pipeline related updates will be the key areas of focus.

Earnings Whispers?

Our proven model does not conclusively show that BioDelivery is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here, as elaborated below.

Zacks ESP: The Earnings ESP for BioDelivery is -2.94%. This is because the Most Accurate estimate of a loss of 35 cents per share is wider than the Zacks Consensus Estimate of a loss of 34 cents.

Zacks Rank: BioDelivery's Zacks Rank #4 (Sell) when combined with a negative ESP of -2.94% makes a beat unlikely this season.

As it is, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a couple of health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Merrimack Pharmaceuticals, Inc. MACK has an Earnings ESP of +2.44% and carries a Zacks Rank #3. The company is scheduled to report third-quarter 2015 results results on Nov 9.

The Earnings ESP for Alnylam Pharmaceuticals, Inc. ALNY is +2.13% and it carries a Zacks Rank #3. The company is scheduled to release third-quarter 2015 results on Nov 9.

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ENDO INTL PLC (ENDP): Free Stock Analysis Report

ALNYLAM PHARMA (ALNY): Free Stock Analysis Report

BIODELIVERY SCI (BDSI): Free Stock Analysis Report

MERRIMACK PHAR (MACK): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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