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Testosterone Gel Maker BioSante Shares Soar on Drug Approval


But the rise seems unwarranted given the company's "female Viagra" setback in December. Can BioSante and Teva compete for treatment of men with low testosterone?

The government approved a product developed by BioSante Pharmaceuticals (BPAX) and the company's shares jumped almost 50%. Great news for this beaten-up stock? Actually, it's an overreaction to a moderately positive event.

BioSante just won US approval for a product analysts say has little upside potential -- not to mention one that's licensed out to partner Teva Pharmaceutical Industries (TEVA). The approval of the product, Bio-T-Gel, is not the long-term answer for BioSante.

BioSante still hasn't fully recovered from the debacle of LibiGel, a drug billed as a libido-enhancing testosterone gel for women with low sex drives. The company spent more than a decade studying the drug, losing more than $200 million in the process, only to see the treatment fail in a late-stage study in December. (See Female Viagra Drug Failure Causes BioSante Shares to Plunge 77%)

The company is still trying to determine "the best path forward for LibiGel," CEO Stephen Simes told investors at a New York conference Tuesday.

But Simes seems to already be moving on from LibiGel as he spent a good chunk of Tuesday's presentation talking about the company's early-stage cancer drugs. There are 17 early phase studies being conducted on cancer vaccines, which aim to use patients' immune systems to fight off the disease, he says.

BioSante has the "widest portfolio of cancer vaccines in development," Simes boasts.

These studies are far too early for anyone to buy on the hope for promising new cancer drugs. And, frankly, the company has some work to do rebuilding its reputation.

But clearly the just-approved Bio-T Gel is not going to save BioSante. Like LibiGel, the product is a testosterone treatment. But Bio-T-Gel is a product designed for men who have low testosterone levels. The product is aimed at treating a condition known as hypogonadism, which can result in low sex drive, impotence, muscle weakness and osteoporosis, according to BioSante.

The condition actually represents a big market opportunity, but as Rodman & Renshaw analyst Elemer Piros notes, Teva and BioSante are late to the party.

Piros says the market for men with low testosterone probably is a more than $1 billion sales opportunity but several other companies already have products on the market. Abbott Laboratories (ABT) won US approval for a product called AndroGel last year. In fact, Abbott sued Teva saying Bio-T-Gel infringed on Abbott's patent. The suit was settled in December and terms weren't disclosed.

"While the market is sizable," Piros says. "Teva will be the fifth entrant, therefore we don't assume significant royalties to BioSante."

Simes says the royalties on the product are between 5% and 10%. Piros estimates that figure is more like 5% to 7.5%.

"As the company recovers from the LibiGel (study) setback, we believe the company's current and future pipeline may drive shareholder value," Piros says. He has a hold rating on the stock.

After surging almost 50% early Wednesday, the shares were still up 38% to $1.05 in midday trading. Since going public in 2000, the company's shares have lost 88%.

Twitter: @brettchase

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