BDSI expects to end the year cash-flow positive and could earn $30 million in sales-based milestones.

BioDelivery Sciences (BDSI) received a $26.7 million milestone fee from Meda due to FDA approval of BDSI’s breakthrough cancer pain product, Onsolis, and preparation of commercial supplies. It is expected to be available early in the fourth quarter.

Onsolis is the first product to utilize the company’s BioErodible MucoAdhesive (BEMA) drug delivery technology, which consists of a small, dissolvable, polymer film for application to the buccal mucosa. It was approved with a risk evaluation and mitigation strategy, which FDA has indicated will be a requirement for all oral transmucosal fentanyl products.

In September 2007 Meda secured North American rights to the drug with a $30 million up-front payment. In January 2009 Meda paid another $3 million to gain worldwide rights, excluding Taiwan and South Korea. As per the terms of the 2007 deal, BDSI could obtain $30 million in sales milestones as follows: $10 million when annualized sales exceed $75 million, $10 million when annualized sales exceed $125 million, $10 million when annualized sales exceed $175 million.

BDSI will also receive a double-digit royalty on net sales. Onsolis will be commercialized in the U.S. by Meda Pharmaceuticals, the U.S. subsidiary of Meda AB.

“The receipt of this milestone payment, together with approximately $5 million we have received from the exercise of outstanding warrants over the past several weeks, puts the company in the strongest financial position in its history, with approximately $30 million in cash and no long term debt,” states Mark A. Sirgo, Pharm.D., president and CEO of BDSI. “In addition, we expect that receipt of these funds will leave BDSI cash flow positive from operations and with nearly $60 million in recognized revenue for 2009.”

BDSI previously recorded milestone payments from Meda as deferred revenue. With the FDA go-ahead those amounts together with the approval milestone will be recognized as revenue to the company.

“In short, our economic outlook and ability to execute our business plan have never been better,” Dr. Sirgo points out. “These funds allow us to immediately turn to accelerating the development of our exciting pipeline, particularly BEMA™ Buprenorphine and Bioral™ Amphotericin B, as well as to place a third BEMA product in the clinic next year.

“Of note, we anticipate year-end results from our Phase II dental pain study with BEMA Buprenorphine, which we believe could lead to a sizable licensing transaction in 2010,” Dr. Sirgo says. “We also hope to have completed our next Phase I trial with Bioral Amphotericin B this year before moving to Phase II in the first half of 2010.

“Now, with an FDA-approved product in Onsolis, a validated technology in BEMA, an exciting pipeline of products and cash on hand,” Dr. Sirgo concludes, “we believe that our ability to drive shareholder value has never been better.”
BEMA Buprenorphine is a formulation of the analgesic buprenorphine. It is being developed for the potential treatment of both acute pain conditions such as postoperative pain and chronic pain conditions like low back pain, osteoarthritis, and neuropathic pain.

Bioral Amphotericin B is a formulation of the antifungal agent Amphotericin B that utilizes BDSI’s second drug delivery system, Bioral. The Bioral drug delivery system encapsulates and appears to protect certain drugs from degradation in the gastrointestinal tract, facilitating the potential oral absorption of drugs that previously could only be delivered intravenously. BDSI is currently developing Bioral Amphotericin B for the oral treatment of fungal infections such as esophageal candidiasis and parasitic diseases such as Leishmaniasis.

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