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PostPosted: Mon Apr 09, 2012 11:40 pm 
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Reckitt Benckiser

BDSI on Track to File ANDA for Suboxone-Like Film by Late 2012…

BDSI announced today it is on track to file an ANDA for a Suboxone-equivalent film product by late
2012/early 2013. We see the following sequence of threats to Reckitt Benckiser’s profitable Suboxone
business (c25% of total company EBIT): generic tablets by early 2012, the Titan implant by late 2012/early
2013, and the BDSI film by late 2013/early 2014. We maintain our sell stance on RB/ LN. In European
Food/HPC our top pick is Unilever (we recently downgraded L’Oreal to hold).

In simple non-pharma terms, a Suboxone-like film could enter the market by late 2013 or early 2014, and
would face to patent issues according to BDSI. BioDelivery Sciences International (NASDAQ: BDSI) held a
conference call this morning to provide an update on the development of BNX (a Suboxone-like film blending
the two active ingredients, Buprenorphine and Naloxone), calling the product “the front running commercial
opportunity in the company’s pipeline”. BDSI has initiated a confirmatory pharmacokinetic study of a formulation
of Buprenorphine and Naloxone utilizing BDSI's “patented BioErodible MucoAdhesive (BEMA) drug delivery
technology”. According to management, BEMA Buprenorphine/Naloxone is being developed for the treatment
of opioid dependence and contains the same drug components as Suboxone but will utilize BDSI's proven
BEMA technology to efficiently and conveniently deliver buprenorphine. The current study, BNX-102, is
expected to be completed by this December and will be used to select the final doses of BEMA
Buprenorphine/Naloxone to be used in the “pivotal bioequivalence study compared to Suboxone”, which is
anticipated to start in January of 2012 and be completed by March (the pivotal bioequivalence study, or BNX-
103, is required for a New Drug Application, or NDA, and is targeted to begin in January 2012 with results
expected in March). BDSI management said that a positive outcome of BNX-103 will show that BEMA
Buprenorphine/Naloxone is bioequivalent to Suboxone, and at that point, an open-label safety study in opioid
dependent patients will be conducted; “how quickly full enrollment in this safety study is achieved, as well as
study results, will dictate the timing of an NDA submission, which is currently targeted for late 2012 or early
2013”. While the BDSI product is still at least two years away, it calls into question RBP’s assertion that its film
product is “patent-protected”.

The Titan implant could be in the market by late 2012 or early 2013. Titan Pharmaceuticals has said it is on
track to file an ANDA for its Suboxone-type implant by early 2012 and is in negotiations to find a commercial
partner. Titan recently announced additional positive results from its Phase 3 tests for its Probuphine product
(implant to combat opioid dependency). According to the company, Probuphine is designed to deliver six
months of continuous round-the-clock, long-term therapeutic levels of the drug buprenorphine following a single
subcutaneous treatment. Management has said the product’s economics will be equivalent to Suboxone’s (i.e.
cost of implant and procedure vs. the monthly equivalent Suboxone treatment). The safety and effectiveness of
treatment with Probuphine has been demonstrated in several late-stage and Phase 3 studies conducted to date,
including a 163-patient placebo-controlled study which demonstrated clinically meaningful and statistically
significant treatment with Probuphine over a 24-week period and was published in the Journal of the American
Medical Association (JAMA) and a confirmatory study of 287 patients that showed statistically significant
efficacy versus placebo and non-inferiority with a currently marketed sublingual formulation of buprenorphine.
Probuphine was developed using ProNeura, Titan's continuous drug delivery system that consists of a small,
solid rod made from a mixture of ethylene-vinyl acetate (EVA) and a drug substance. The resulting product is a
solid matrix that is placed subcutaneously, normally in the upper arm in a simple office procedure, and is removed in a similar manner at the end of the treatment period. The drug substance is released slowly, at
continuous levels, through the process of diffusion. This results in a constant rate of release similar to
intravenous administration.

We continue to expect generic tablets by early 2012, based on trade talk, and note despite the launch of
the Subxone film, tablets still account for 60-70% of total US Suboxone earnings. We recently cut our
sales and EBIT estimates for RBP owing to the slow film growth and the impact of (disclosed) regulatory
changes on margins. In 3Q Suboxone tablets accounted for 63% of Suboxone sales (vs. 51% in 2Q11, and
c60% in 1Q11). We know film margins are lower (the company says 10pt lower, we think this may be worse
given the recent price cuts and film co-pay rebate extensions), so we are concerned that tablets still account for
about 70% of Suboxone EBIT. We had projected RBP EBIT to remain stable for FY12-14 in a £550-600M
range, but on Oct 26 we cut that number to £350M for FY12 to reflect the impact from generics on the
company’s tablet business (we think a generic may be closer than the market seems to expect).

The current valuation does not reflect the Suboxone risks. Our Dec 2011 PT takes RBP at 7x EV/EBITDA
(2012) and values the core HPC/OTC businesses in a range of 9.5-10x EV/EBITDA, resulting in a PT range of
2830-2970p, hence our 2900p price target.

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PostPosted: Tue Apr 10, 2012 9:07 am 
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Location: Leesburg, FL
VERY interesting....thanks for sharing.

-As I have grown older, I've learned that pleasing everyone is impossible, but pissing everyone off is a piece of cake.

-I'm only responsible for what I say, not for what you understand.

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Fond Du Lac Psychiatry
Dr. Jeffrey Junig, M.D., Ph.D.

  • Board Certified Psychiatrist
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