NEW YORK (TheStreet) -- Several recent news events in December have led me to investigate the prospects of Biodel (BIOD), a small company with strong proprietary technology in the growing insulin delivery market. The company has had success in recent trials and has several catalysts coming in 2014 that should get investors excited about long-term prospects.
Shares of Biodel are not for the weak; they currently trade around $2 and have seen several double-digit swings throughout trading days. The company is also high-risk with minimal revenue and a cash burn that could see the company issue more shares in 2015. Investors should greatly consider the risks of dilution and possible market failures of the company's drugs before investing. With that being said, I believe the opportunities outweigh the risks and this could present a huge reward for long term shareholders through 2015 or 2016.
Year to date, shares of Biodel are down 3%. Back in August, shares were above $5 and seemed like they could breakout. Shares have now traded in a range of $1.93 to $6.08 over the last 52 weeks. Amazingly enough, shares of Biodel are down 97% since their 2007 IPO. With upcoming catalysts in 2014, shares should breakout of the $2 range.
As for those catalysts, here's the company's Web site: "Biodel's technology facilitates more natural and rapid absorption of recombinant human insulin analogs than current insulin products and appears to improve its therapeutic efficacy in patients with Type 1 and Type 2 diabetes." In fact, Biodel is taking on products from two large pharmaceutical companies in Novo Nordisk (NVO) and Eli Lilly (LLY).
The company's pipeline from the site:
- Ultra-rapid-acting prandial insulin RHI based
- Ultra-rapid-acting prandial insulin analog based
- Ultra-rapid-acting concentrated insulin
The four major areas of Biodel have a current market opportunity of $8 billion. By 2020, that number is set to almost double to $15 billion. Biodel is hoping to take away share from Novo and Eli Lilly, which both have key patent expirations in 2014 for the insulin market. BIodel, on the other hand, has patents lasting until 2026 in the United States and 2027 in Europe.
Humalog, from Eli Lilly, continues to see an increase in use. In the most recent third quarter, sales of Humalog hit $616 million, growth of 7%. Through the first nine months, the drug has sales of $1.9 billion, a six percent increase. Humalog is the third-biggest drug in third-quarter sales for Eli Lilly.