BioDelivery (BDSI) to Report Q3 Earnings: What's in Store?

BioDelivery Sciences International, Inc. BDSI is scheduled to report third-quarter 2017 results on Nov 9 after market close. Last quarter, the company delivered a negative earnings surprise of 8%.

Year to date, BioDelivery’s shares have outperformed the industry. The stock has gained 67.1% during the period compared with a 3.9% increase for the industry.

BioDelivery missed estimates in three of the last four quarters while beating the same once. The average positive earnings surprise for the last four quarters is 129.37%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

BioDelivery’s key products include Belbuca (chronic pain) and Bunavail (opioid-dependence).

Bunavail’s sales performance has been lackluster so far. BioDelivery is working on improving Bunavail’s performance. The company has reduced the number of sales territories and is focusing on the most growth-oriented territories to improve Bunavail’s profits.

The company is also focusing on securing new or improved positioning on other managed care contracts either on an exclusive or preferred status. BioDelivery is also running a highly targeted Bunavail-focused, direct-to-patient digital advertising campaign in four cities. With a reduced cost structure combined with growth opportunities, BioDelivery expects Bunavail to reach profitability by the end of 2017.

Bunavail sales improved somewhat in the first quarter but plunged in the second quarter. It remains to be seen how the drug has performed in the third quarter.

Belbuca’s start has also been slower-than-expected due to pain market pressure. We remind investors that BioDelivery had reacquired worldwide rights to Belbuca in January from Endo Pharmaceuticals, a subsidiary of Endo International plc (ENDP). As a result of this reacquisition, the company started recording product revenues for Belbuca against royalties recorded previously.

The return of rights resulted in higher Belbuca revenues in both the first and second quarters of 2017. In the second quarter, Belbuca revenues rose 43.5% sequentially, primarily driven by a preferred access given to Belbuca over competitive product Butrans as part of a contract signed with United Healthcare. We expect the positive trend to continue in the third quarter. Meanwhile, Belbuca was approved in Canada in June, which should also contribute to the drug’s sales in the soon-to-be reported quarter.

Earlier this month, BioDelivery entered into a settlement agreement with Teva, under which the latter gets a non-exclusive license to first begin selling its generic version of Bunavail in the United States on Jul 23, 2028 or earlier under certain circumstances. We expect an update on this settlement agreement on the conference call.

Earnings Whispers

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

Zacks ESP: The Earnings ESP for BioDelivery is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 23 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Although BioDelivery’s Zacks Rank #3 increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some health care stocks that you may want to consider, as our model shows that these have the right combination of elements to come up with an earnings beat.

Inovio Pharmaceuticals, Inc. INO is scheduled to release results on Nov 8. The company has an Earnings ESP of +41.79% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pieris Pharmaceuticals, Inc. PIRS is scheduled to release results on Nov 9. The Zacks #3 Ranked company has an Earnings ESP of +2.44%.

Regenxbio Inc. RGNX, scheduled to release results on Nov 8, has a Zacks Rank #2 and an Earnings ESP of +4.23%.

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