Oppenheimer & Co. lowered their price target on Antares Pharma (AIS) to $3 after BioSante Pharmaceuticals (BPAX) said their female sexual dysfunction drug, LibiGel, failed to show statistically significantly improvement over placebo in clinical trials. Antares had partnered with Biosante for LibiGel, and would have been entitled to 4.5% sales royalties (according to bioduediligence.com) and 25% of any upfront or milestone payments received by BioSante (according to a disclosure in Antares' annual report).
Christopher Holterhoff, the analyst covering Antares at Oppenheimer, held a $3.20 price target on the company, prior to the data release by Biosante. Implicit in this is that LibiGel's present day value (NPV) to Antares was the incremental value shaved off the original price target. Said another way, Oppenheimer's adjusted price target on Antares suggests LibiGel would have been worth roughly $21 million (or $0.20 a share), had the product successfully reached primary endpoints in the study.
Holterhoff held that, following the results of the LibiGel study, Antares was worth about 6.25% less than otherwise estimated. All else being equal, an efficient market would have walked shares of the company down 6.25% on Thursday. However, shares ended Thursday's trading session lower by about 30%.
The sharp sell-off in Antares stock was, by all rational measures, overdone. Antares Pharma was not as exposed to the risk of LibiGel failure as Biosante, which forfeited about 77% of its value the same day. While both equities are technically oversold, Antares' pipeline is diversified among a number of product candidates, including oxybutynin gel, which the FDA approved Thursday - one week prior. Biosante, arguably, held a concentrated interest in LibiGel, which was dubbed to be the 'female Viagra'. Invariably, Antares' recovery from the unexpected results is clearer.
Investors signaled a stronger open for Friday as shares of Antares Pharma edged higher towards the end of the end of the day. Shares ended $0.16 off the day's low. Biosante Pharmaceuticals closed in the narrow range where investors swapped shares for the majority of Thursday's session.
Disclosure: I am long AIS.