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small-cap

Should You Invest in This Small-Cap Pharma Stock – BDSI

Dec 16, 2021 | Team Kalkine
Should You Invest in This Small-Cap Pharma Stock – BDSI

BioDelivery Sciences International, Inc.

BDSI Details

BioDelivery Sciences International, Inc. (NASDAQ: BDSI) is a specialty pharmaceutical company that specializes in developing treatments for those suffering from serious and debilitating chronic illnesses. BDSI uses its proprietary BioErodible MucoAdhesive (BEMA) drug-delivery technology to develop and commercialize novel medicines that address critical unmet medical needs. BELBUCA (buprenorphine buccal film) for chronic pain and Symproic (naldemedine) for opioid-induced constipation are two of the company's product candidates.

Latest News:

  • Appointment of CFO: On October 21, 2021, BDSI announced the appointment of Mr John Golubieski as its Chief Financial Officer (CFO), effective November 04, 2021. Mr Golubieski carries more than 30 years of financial and operational experience. Before his appointment with BDSI, he served as the CFO with IlluminOss, an orthopaedic company.

Q3FY21 Results:

  • Slight Increase in Topline: The company reported a meagre 4.18% increase in total revenue to USD 41.09 million in Q3FY21 (ended September 30, 2021) compared to USD 39.44 million in Q3FY20, driven by YoY growth of 5.90% in product sales.
  • Decline in Net Income: Net income for Q3FY21 decreased 28.92% YoY and stood at USD 6.67 million compared to USD 9.38 million in Q3FY20.
  • Cash and Debt Position: As of September 30, 2021, the company had cash & cash equivalents of USD 100.71 million and total debt of USD 58.72 million.

Key Risks:

  • Supplier Concentration Risk: The success of BDSI's products depends on the endorsement and willingness of physicians to prescribe the products to their patients. Any failure or delay in educating physicians about the proposed pharmaceutical formulations may cause demand for the company's products to be postponed or reduced.

Outlook:

  • FY21 Guidance: BDSI expects to clock revenue of USD 162 to 167 million, including USD 144 to 148 million from BELBUCA sales. The anticipated range for FY21 operating expenses is USD 115 to 120 million, with EBITDA ranging from USD 40 to 50 million.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

  • % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

BDSI Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

BDSI's share price has declined 40.72% in the past twelve months and is currently leaning towards the lower-band of the 52-week range of USD 2.50 to USD 4.99. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 30.51. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 3.29.

Considering the correction in the stock price in the past twelve months, strong profitability margins, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 2.62, down 0.38% as of December 15, 2021, 11:48 AM ET.