BioSante Pharmaceuticals Poised for Continued Success

Jul.21.11 | About: ANI Pharmaceuticals, (ANIP)

BioSante Pharmaceuticals (BPAX) is a biotech company based out of Illinois. The stock has risen about 40% since June 20th with the absence of any major news, so there is significant risk of a short-term pullback.

Pipeline

  1. LibiGel is a gel used to treat Female Sexual Dysfunction. Phase II trials displayed excellent success rates, as users reported 238% more satisfying sexual occurrences than they did when not using the drug. Investors gained some confidence when they found out that both Phase III trials would be covered by an FDA SPA. There is a market potential of $2 billion, therefore approval would transform the share price of BioSante. The company is in talks to partner the medication with another pharmaceutical company, or even to sell the entire BioSante name. An NDA is planned to be submitted in 2012.
  2. Bio-T-Gel is a gel used to treat low testosterone levels in men. Low testosterone levels in men leads to decreased libido, depressed mood, and loss of hair. The NDA was accepted by the FDA in March and now has a PDFUA date of November 14th, 2011. There is a market of $1.2 billion for male testosterone treatments. Bio-T-Gel is licensed to Teva Pharmaceuticals (NYSE:TEVA), which will take care of regulatory and marketing practices.
  3. Cancer vaccines: BioSante has been studying and developing cancer vaccines to treat pancreatic cancer, leukemia, breast cancer, and others. It's been granted orphan drug status on several of its vaccines and has seen very positive and intriguing results. The vaccines aim to "stimulate the patient's immune system to effectively fight cancer."

Financials

According to the most recent 10-K, BioSante believes it currently has enough cash to continue current operations for another 15-18 months without undergoing any new financing. Risks include a secondary offering, but I believe a partnership for LibiGel will occur sometime within the next six months. This partnership will allow BioSante to finance ongoing research and development of LibiGel and will assist in the eventual production and marketing of the drug if and when it is approved.

BioSante has roughly $50 million in cash and cash equivalents. BioSante may receive up to $140 million from sales-based milestones derived from its only FDA approved drug, Elestrin.

Conclusion

  • High-risk stock with compelling upside.
  • Deep, diverse pipeline with the ability to provide investors with profits.
  • Near-term catalysts in Bio-T-Gel PDFUA date and LibiGel Phase III results.

BioSante gives investors an opportunity to add a calculated risk-reward equity to their portfolios. Should BioSante be successful in obtaining positive trial results on LibiGel or other drugs in its pipeline, a share price should react positvely. In additon, FDA approval of one of BioSante's blockbuster drugs may have a transformative effect on share price, as its current market cap of roughly $335 million pales in comparison to potential revenues from LibiGel, Bio-T-Gel, or their various cancer vaccines. BioSante also presents a potential takeover opportunity. While I generally don't recommend trading simply on takeover potential, BioSante has the type of deep, late-stage pipeline that big pharma likes to jump at. A drug like LibiGel, which is meant to be the female version of erectile dysfunction medication, has been a major chase for many biopharmaceutical companies for quite some time now. The massive market potential, but difficulty in production and clearance of regulatory hurdles is why LibiGel, and the whole BioSante name, may be the target of a takeover in the intermediate term. JMP Securities analyst Jason Butler was recently quoted by Bloomberg as saying, "Pfizer (NYSE:PFE) and Eli Lilly & Co. (NYSE:LLY) would make good partners because they have already successfully market sex drugs for men."

Takeover or not, BioSante is a compelling opportunity, and a good way to add some speculation to your portfolio.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in BPAX over the next 72 hours.