BioSante Pharmaceuticals (NASDAQ: BPAX) has been working hard to convince investors that they are on the brink of entering the $2 billion female sexual dysfunction market with their transdermal testosterone gel LibiGel, a product designed to treat hypoactive sexual desire disorder in menopausal women. While BPAX has yet to gain FDA approval for LibiGel the results of their Phase III efficacy and safety trials are expected in December and if all goes according to plan the company could be looking at plans to file a new marketing application in early 2012 with an FDA approval date sometime in the middle of 2013.
BPAX has identified LibiGel as “the most clinically advanced pharmaceutical product in the U.S. in active development for the treatment of hypoactive sexual desire disorder in menopausal women, and that it has the potential to be the first product approved by the FDA for this common and unmet medical need.” To further advance their three ongoing Phase III clinical studies for LibiGel BPAX plans to use an undetermined portion of the net proceeds generated from their recently completed public offering of 16.0 million shares. That offering generated $48.0 million from $3.00 per share of which BPAX received approximately $45.0 million in net proceeds.
While BPAX is pushing the idea that they have an advantage in the female sexual dysfunction market the fact remains it’s a market that most Big Pharma companies have walked away from due largely to the fact that the FDA does not see the issue as pressing, essentially it’s not a life-threatening disease so the safety standards that are set will be lofty. These safety standards include long-term studies and LibiGel is already being monitored for the risk of cardiovascular events and breast cancer. Despite the potential roadblocks BPAX remains confident that LibiGel will navigate its way through the FDA process and eventually find itself on the market.
Even with their success in clinical studies BPAX has seen the greatest catalyst for their share price come from the mouth of CEO Stephen Simes who stated back in July that the company may be looking for a partner or a buyer, a statement that helped push shares to a 52-week high of 4.02. Of course BPAX’s public offering has quieted those talks and it appears as if the company is committed to moving forward on their own but if they managed to get passed the FDA then those talks would certainly take on new life.
Going it alone may be difficult for BPAX regardless of LibiGel’s recent success in trials because BPAX really has no revenue. As pointed out in their most recent quarterly filing “To date, we have used primarily equity financings, and to a lesser extent, licensing income, interest income and the cash received from our 2009 merger with Cell Genesys, Inc., to fund our ongoing business operations and short-term liquidity needs.” BPAX has expressed confidence that $37.1 million of cash and cash equivalents they had as of June 30, 2011, together with the net proceeds from their public offering, would be enough to meet their liquidity requirements through at least the next 18 months but any kind of setback in LibiGel could prove costly.
What may calm some investors is the fact that BPAX has been down the FDA road before, having gained approval for Elestrin, a once daily transdermal estradiol gel approved for the treatment of moderate-to-severe vasomotor symptoms associated with menopause. Of course FDA approval doesn’t mean instant riches and in December 2009 BAPX entered into an amendment to their original licensing agreement with Azur Pharma International II Limited in which they received $3.15 million in non-refundable payments in exchange for the elimination of all remaining future royalty payments and certain milestone payments that could have been paid related to Azur’s sales of Elestrin. That being said, BPAX really has nothing left invested in Elestrin outside the right to receive up to $140 million in sales-based milestone payments from Azur if Elestrin reaches certain predefined sales per calendar year but BPAX has already said such a scenario is unlikely.
With Elestrin offering little in the way of revenue help some investors are pointing to the potential of BPAX’s Bio-T-Gel, a once-daily transdermal testosterone gel in development for the treatment of male low testosterone levels. BPAX has a licensing agreement in place with Teva Pharmaceuticals and the NDA, filed by TEVA, is pending with the FDA with the PDUFA date set for November 14, 2011. On the positive side of all this is the fact that TEVA is responsible for all regulatory and marketing costs but a serious problem could arise in the near future due to a challenge issued by Abbott Laboratories which has filed a complaint against Teva alleging patent infringement with respect to Bio-T-Gel. TEVA has insisted there has been no infringement yet the litigation could delay the process of FDA approval and ultimately delay any royalty payments that BPAX would receive from product sales.
It would seem that BPAX’s fortunes are resting on the success of LibiGel and it would be hard to deny the fact that they are off to a good start in that respect. BPAX knows they can’t afford to drag their feet on the three Phase III trials, having completed enrollment in two LibiGel safety and efficacy trials in the first quarter 2011, and in May 2011 they completed enrollment in the LibiGel Phase III cardiovascular and breast cancer safety study. According to the protocol, the cardiovascular and breast cancer safety study will continue for 12 months of therapy from the date the last subject was enrolled before the primary analysis will be conducted, which will provide data for the NDA submission. BPAX has expressed optimism that they would gain FDA approval sometime in 2013 but it should be noted that the subjects will be in the safety study for five years, meaning the study will continue into 2016.
There are a lot of people excited about the potential of BPAX and that certainly may be warranted but as of late shares have shown serious volatility, swinging from a high of 4.02 down to a low of 2.02 less than a month later and back up to 2.62 on August 29, 2011. Right now shares are holding around the 2.56 – 2.61 range which is still below their 50-day moving average of 2.87 but ahead of their 200-day moving average of 2.24 with trading volume remaining strong. It would stand to reason that there will be a number of events during the remainder of the year that could trigger a spike in share price, namely TEVA’S PDUFA in November and the anticipated results of LibiGel trials in December, but the ultimate success of BPAX is still down the road and with the FDA determining how bumpy that path will be it could take a considerable amount of time, if it happens at all.