Biotech Values

[mcbio]

Biodel reports top-line results from pump study of experimental insulins; the two Biodel formulations did not meet the company's target product profile and, therefore, will not be advanced into Phase 2 clinical testing

Keep in mind these are the recombinant human insulins and not the insulin analogs. That said, this is disappointing news insofar as BIOD now appears to be an all-or-nothing bet on the insulin analogs. So, clearly there is a lot more risk for BIOD after today's news and I understand the stock reaction. But I do think it's worth noting that BIOD is now trading below cash and they have guided for having cash through March 2013. Also, today's news doesn't appear to me to have any direct relevant impact on the potential for the analogs and they are still going to announce in 4Q the outcome of their discussions regarding the analogs with the potential big pharma partner. So, all told, I am going to continue to hold, as painful as that has been so far.

They presented at JPM today and, after listening, I will guess that it is LLY that BIOD is hoping to ink a deal with to improve upon Humalog. There was reference around the 23 min mark of how we have "seen what the profiles look like" of the different ultra-rapid acting analog formulations BIOD has developed. That is shown on slide 28 (it's 29 on the Adobe file number but 28 on slide)(http://files.shareholder.com/downloads/BIOD/1212675955x0x502891/fd166e0a-28fb-4045-9c5a-8863b140a531/Biodel_-_JMP_Securities_9-27-11_FINAL.PDF ) and it looks to me like the most pronounced improvement is what BIOD has done to Humalog. Also, I am assuming NVO is not the potential partner since they already have their own candidate in Phase 1. Furthermore, there was reference during the presentation to BIOD potentially doing a head-to-head study of their best analog to Humalog in a Phase 3 trial if they don't land a partner. So, presumably they would only do that if Humalog is indeed the drug that they are trying to improve upon so they can directly show any potential improvement.

Management also said that it is not the data that is holding back their ultra-rapid acting analog, it is just securing a business arrangement. So, we will see. No guarantees on anything but I am sticking around for a bit longer.

The one silver lining I'll take out of the negative news for the recombinant insulins today is that it's nice that BIOD apparently isn't engaging in Zebra's Law. They could have easily said they were moving forward with one of the formulations and spared the stock some carnage today.