Bioanalytical Systems, Inc. (BASI): Why Has Large Pharma Not Snapped This Up?

Bioanalytical Systems, Inc. (BASI) is a pharmaceutical development company providing contract research services and monitoring instruments to the world’s leading drug development companies and medical research organizations. Shares in the stock are up 94% in 2017. The YTD chart below shows today’s spike and how its shares have performed this year. The Company focuses on developing innovative services and products that increase efficiency and reduce the cost of taking a new drug to market. Click here for some information on the company.

The company released First Quarter Results a few weeks back. You can find more information here, below is a thumbnail.

For the three months ended December 31, 2016, revenue amounted to $6,174,000 a 26% increase from $4,895,000 in the first quarter of fiscal 2016.

Service revenue for the first quarter of fiscal 2017 increased 30% to $5,264,000 compared to $4,055,000 for the same period in fiscal 2016. Preclinical services revenue increased due to a significant increase in the number of studies compared to the prior year period. Other laboratory services revenues were positively impacted by higher discovery and pharmaceutical analysis revenues in the first three months of fiscal 2017 versus the comparable period in fiscal 2016.

We’re encouraged by the growth in service revenue, and we like the company’s chances of once again being afforded the market multiple of a service company. Taking a step back, we also think the company will benefit from the increasing urgency at the FDA to prioritize life threatening and rare diseases. This past fall, the FDA and its European counterpart, the EMA, announced a collaboration to share information on the development and scientific evaluation of medicines for rare diseases. Rare diseases affect a total of 60 million people in the US and Europe, though each disease by itself concerns a limited number of patients.

Two key areas of focus for this working collaboration will be:

• Preclinical evidence to support development programs
• Opportunities for regulatory flexibility

We believe Bioanalytical Systems could be a clear beneficiary as more companies ramp their therapeutic programs and clinical testing to align with the FDA’s broadcast intentions.

We will also be keeping close watch on the company as it should, if it hasn’t already, garner interest from pharmaceutical companies as a snap-on acquisition to streamline clinical programs.

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