Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=200433
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Carly Helfand/MEDILL

Shares of BioSante Pharmaceuticals Inc. plummeted on Dec. 15 after its female sexual dysfunctional gel failed to outperform a placebo. Yesterday's surge recovered only part of that loss.


FDA approval of testosterone gel sends BioSante's shares soaring

by Carly Helfand
Feb 15, 2012


Shares of BioSante Pharmaceuticals Inc. rocketed in after-hours trading Tuesday and continued up Wednesday after the FDA approved a testosterone therapy product the company developed.

Following the FDA approval of Bio-T-Gel Tuesday, shares of the Lincolnshire-based company rose to an intra-day high of $1.23 Wednesday morning, up 62 percent from Tuesday’s 4 p.m. eastern time close of 76 cents, before closing at 97 cents.

The jump came as a surprise to some, including analyst Christopher James of McNicoll, Lewis & Vlak LLC. James said he expected the FDA to approve Bio-T-Gel, a topical treatment that will be marketed by Israeli company Teva Pharmaceutical Industries Ltd. for males with low testosterone.

“Generally when you see the stock up this much, it represents that the market was caught by surprise on positive data,” he said. “This kind of fit in with what our original thesis was.”

BioSante estimates that 4 million to 5 million men in the U.S. are suffering from low testosterone – a condition that can cause erectile dysfunction, impotence, osteoporosis and muscle weakness – resulting in a market for topical testosterone products that was worth $1.2 billion in 2010. Yet despite the large market, which is experiencing double-digit annual growth, James estimates the product will reach no more than $284 million at its peak, perhaps in 2020. With BioSante receiving single-digit royalty rates from Teva, James predicts it will see only $14 million of that.

“When you bring that back to current years, it doesn’t equal a whole lot,” James said. “It’s good news, but it’s not going to bring a whole lot of cash flow to the company.”

BioSante’s stock has been volatile in recent weeks after another of its testosterone-based gels, a female sexual dysfunction drug called LibiGel, failed to outperform a placebo in Phase III human trials. The news sent the company’s shares down 77 percent to 48 cents on Dec. 15, its lowest point since 1999. The company has not yet announced whether it will go forward with that product.

Analyst Graig Suvannavejh of Jefferies & Co. Inc. thinks BioSante’s recent notoriety may be responsible for Wednesday’s dramatic share price increase.

“It’s really one of those stocks that seems to have captured the attention of the retail investor,” Suvannavejh said. “There’s a lot of message board activity on this one and the volumes have been incredibly high, which suggests that there’s been a fair amount of speculation. And when I see the stock up 30 or 40 percent on this news, and on such high volumes, it’s likely the day traders that are really moving this one.”

James, who predicts sales of LibiGel could reach $786 million if it ever reaches the market, said BioSante has the leverage to keep share prices rising.

“It’s really in their hands if they can figure out how to get some value out of this LibiGel program,” James said. “This is a smart company, and I’m expecting them to try to ride this and try to figure out a way to monetize this and move the stock up higher.”