BioSante Pharmaceuticals, Inc. (BPAX)

BioSante Pharma Announces Re-Acquisition of Elestrin
BioSante Pharma (Nasdaq: BPAX) 1-Year Chart

Last week, BioSante Pharma (BPAX) announced that it had reacquired Elestrin (estradiol gel) from privately-held Nycomed, which acquired the rights to the product along with its acquisition of Bradley Pharma in February 2008. BioSante will assume all manufacturing, distribution, and marketing responsibilities for Elestrin, which is a fast-drying gel formulation of estradiol (the natural form of estrogen in women) and FDA approved for the treatment of hot flashes in menopausal women. Elestrin will now be added to the formal strategic review being conducted by Deutsche Bank to maximize shareholder value. Also, insiders at BioSante accumulated over 147,000 shares ($2.15 per share) through the exercise of options at the end of July, continuing a consistent trend of insider buying on both the open market and via options.

Elestrin is absorbed through the skin after topical application on the upper arm, and delivers estradiol to the bloodstream evenly over time in a non-irritating, painless manner. Elestrin is administered using a metered dose applicator that delivers 12.5 micrograms of estradiol, a dose that is 67% lower than the lowest dose transdermal estradiol patch that is FDA approved for the treatment of hot flashes in the US. The lowest dose of Elestrin studied produces very low estradiol blood levels and exhibits a safety profile similar to that observed in the placebo group. The total, single-entity US estrogen therapy market is estimated at about $1.4 billion in annual sales, of which the transdermal segment, mostly patches, is about $260 million. The low-dose efficacy of Elestrin is important because of consensus medical guidelines which recommend that women use the lowest effective dose of estradiol for the shortest period of time.
Posted by Mike Havrilla at 11:05 AM 0 Comments
Sunday, July 27, 2008
BioSante Pharma Explores Its Alternatives For LibiGel
Since I last featured BioSante Pharma (BPAX) on Seeking Alpha in mid-January and my original article in September, the shares have risen by 32.5% and declined by 5.6%, respectively, closing Friday at $5.38 per share within a 52-week range of $2.05 (3/24/08) to $6.29 (8/14/07) and a market cap of $146 million [M]. As of 1Q08 results in early May, the Company has $27.6M in cash, zero debt, 27.2M shares outstanding, and a short interest of 0.7M shares as of mid-July. In addition, a director has purchased 15,000 shares of the stock on the open market at $3.59 per share on 5/12/08, bringing the total number of shares purchased by officers and directors since 12/14/07 up to 166,000 within a range of $3.59 to $3.98 per share. BioSante has also attracted more attention recently from the financial media, being featured as a buyout target by Gene Marcial at BusinessWeek and interviewed by TheStreet.com TV.

On June 10, BioSante announced that it hired Deutsche Bank as a strategic advisor in order to explore strategic alternatives to maximize shareholder value now that the Company has clarified the steps necessary for FDA approval of LibiGel (transdermal testosterone gel) for the treatment of female sexual dysfunction [FSD] and the drug is in active Phase 3 development. BioSante plans to submit a new drug application for FDA approval in 2010 and launch the drug in 2011. In my opinion, the review could result in either a licensing deal for LibiGel or a buyout of the entire Company since the plan for FDA approval is being executed. Both the CEO (Stephen Simes) and the CFO (Phillip Donenberg) of the Company have a solid track record in creating and building value for shareholders with previous success at Unimed and Gynex before they were acquired by Solvay and Savient Pharma, respectively. In addition, another special protocol assessment [SPA] has been agreed upon with the FDA to include naturally menopausal women in addition to the existing SPA for surgically menopausal women to expand upon the potential market for LibiGel.

Based on statistics from my previous article, a study published in the Journal of the American Medical Association demonstrated that 43% of American women (about 40 million) are estimated to experience some degree of impaired sexual function, with the majority of women reporting FSD being postmenopausal, through either the natural aging process or surgical means (hysterectomy). According to Procter & Gamble (PG) market estimates, about 20% to 25% of the 25 million surgically menopausal women in the US are “distressed by a lack of sexual desire,” with another 10% of the 30 million naturally post-menopausal women also experiencing this distress – equating to about 8 million women who could be classified as experiencing FSD.

Based on my previous financial model, LibiGel will be priced at a cost of $100 per month per patient or $1,200 annually. The Company believes LibiGel will be the first FDA-approved product for FSD, with an estimated 1.4 million off-label prescriptions written for testosterone to treat this condition in the US during 2006. The minimum estimated US market for LibiGel is $2 to $4 billion with blockbuster ($500 million to $1 billion dollar) sales potential for LibiGel. Billion dollar sales potential for LibiGel is easily achievable, based on a little more than 10% market share of the 8 million women identified by Procter & Gamble with FSD in their marketing study. Sales of over $1 billion would result for LibiGel from treating 850,000 women per year at an annual cost of $1,200 – and even more women are likely to seek treatment for a FDA-approved treatment with the possibility for insurance coverage and the assurance of consistent manufacturing facilities.

Given the execution on LibiGel Phase 3 development, insider buying, and engagement of Deutsche Bank to explore strategic alternatives; I believe BioSante Pharma offers a good risk/reward for a buy around the 50-day moving average of $4.79 per share, which is well above the 200-day moving average of $3.96 as the stock has rocketed off its lows set earlier this year. With the blockbuster sales potential for LibiGel, I believe CEO Stephen Simes and CFO Phillip Donenberg will continue their legacy of creating shareholder value for BioSante investors.

A biopharmaceutical company which develops hormone therapy products to treat men and women. It is also engaged in the development of its proprietary calcium phosphate nanotechnology for aesthetic medicine, novel vaccines and drug delivery.