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Female Viagra Maker BioSante to Be Taken Over by Private Equity-Backed Company


CEO Stephen Simes says he did the best deal he could following LibiGel failure. Merger partner ANI Pharmaceuticals will own majority of shares and will rename the company.

MINYANVILLE ORIGINAL For all the hype surrounding a female libido drug in recent years, the takeover of the experimental product's developer BioSante Pharmaceuticals (NASDAQ:BPAX) ends the saga with little fanfare.

BioSante will merge with private equity-backed generic drug maker ANI Pharmaceuticals, which will own a majority of the combined company and rename it. ANI Chief executive Arthur Przybyl will lead the merged company and ANI directors will control four of the six board seats. BioSante CEO Stephen Simes will leave.

Simes led the company since 1998, spending the majority of his time trying to bring LibiGel, a testosterone gel, to market as a female libido drug, a so-called female Viagra. That effort seemed to be dead late last year when the company said the gel didn't work in a clinical trial. Yet Simes said in June that he would continue efforts to bring the drug to market. (See BioSante Tries Again to Show Female Libido Drug Works.) As part of the deal with ANI, BioSante shareholders will be issued separate securities known as contingent value rights that will trade based on the future success of LibiGel. Most investors have given up on any hope for that product. Those shareholders still in BioSante will receive no premium in the merger -- only a minority position in a combined company controlled by bigger investors looking for an exit strategy.

"Right now, BioSante is valued the way Wall Street says," Simes says in an interview with Minyanville. "We did the best deal for shareholders."

When it went public in 2000, BioSante traded at more than $75 per share, but that level wasn't sustainable. By last year, the stock reached a high of almost $22 on hopes for LibiGel, only to come crashing down after the LibiGel trial failed. The shares traded down 11% to $1.61 in trading late Thursday morning.

About 90% of ANI is owned by a group of private equity investors that include Meridian Venture Partners and Argentum Capital Partners. While Simes acknowledges the new majority owners will gain a more liquid investment in a publicly traded company, he notes that there will be lock-up provisions that prevent the private equity owners from selling their shares immediately.

BioSante lost almost $18 million in the first half of this year on $222.8 million in royalty revenue. The company licenses two drugs: A male testosterone product to Teva Pharmaceutical Industries (NYSE:TEVA), and another gel for menopausal hot flashes to Jazz Pharmaceuticals (NASDAQ:JAZZ). ANI reportedly had revenue of around $16 million last year.

BioSante also is partnered with some other companies and a foundation to develop early-stage cancer drugs. Those partnerships will continue and the company likely will seek additional partners for its cancer program, Simes says.

Twitter: @brettchase

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