BioSante Pharma Announces Its Re-Acquisition of Elestrin

Last week, BioSante Pharma (BPAX) announced that it had reacquired Elestrin (estradiol gel) from privately-held Nycomed, which acquired the rights to the product along with its acquisition of Bradley Pharma in February 2008. BioSante will assume all manufacturing, distribution, and marketing responsibilities for Elestrin, which is a fast-drying gel formulation of estradiol (the natural form of estrogen in women) and FDA approved for the treatment of hot flashes in menopausal women. Elestrin will now be added to the strategic review being conducted by Deutsche Bank to maximize shareholder value.

Also, insiders at BioSante accumulated over 147,000 shares ($2.15 per share) through the exercise of options at the end of July, continuing a consistent trend of insider buying on both the open market and via options.

Elestrin is absorbed through the skin after topical application on the upper arm, and delivers estradiol to the bloodstream evenly over time in a non-irritating, painless manner. Elestrin is administered using a metered dose applicator that delivers 12.5 micrograms of estradiol, a dose that is 67% lower than the lowest dose transdermal estradiol patch that is FDA approved for the treatment of hot flashes in the US. The lowest dose of Elestrin studied produces very low estradiol blood levels and exhibits a safety profile similar to that observed in the placebo group.

The total, single-entity US estrogen therapy market is estimated at about $1.4 billion in annual sales, of which the transdermal segment, mostly patches, is about $260 million. The low-dose efficacy of Elestrin is important because of consensus medical guidelines which recommend that women use the lowest effective dose of estradiol for the shortest period of time.

On June 10, BioSante announced that it hired Deutsche Bank as a strategic advisor in order to explore strategic alternatives to maximize shareholder value now that the Company has clarified the steps necessary for FDA approval of LibiGel (transdermal testosterone gel) for the treatment of female sexual dysfunction [FSD] and the drug is in active Phase 3 development. BioSante plans to submit a new drug application for FDA approval in 2010 and launch the drug in 2011. In my opinion, the review could result in either a licensing deal for LibiGel or a buyout of the entire Company since the plan for FDA approval is well underway and the Company has reacquired the rights to Elestrin.

A study published in the Journal of the American Medical Association demonstrated that 43% of American women (about 40 million) are estimated to experience some degree of impaired sexual function, with the majority of women reporting FSD being postmenopausal, through either the natural aging process or surgical means (hysterectomy).

According to Procter & Gamble (PG) market estimates, about 20% to 25% of the 25 million surgically menopausal women in the US are "distressed by a lack of sexual desire," with another 10% of the 30 million naturally post-menopausal women also experiencing this distress – equating to about 8 million women who could be classified as experiencing FSD. Since LibiGel will be priced at a cost of about $100 per month per patient or $1,200 annually, a conservative estimate of the US sales potential for the product is $500 million to $1 billion.

Sales of over $1 billion would result for LibiGel from treating 850,000 women per year at an annual cost of $1,200 – and even more women are likely to seek treatment for a FDA-approved treatment with the possibility for insurance coverage and the assurance of consistent manufacturing facilities.

Given the execution on LibiGel Phase 3 development, the reacquisition of Elestrin, consistent insider buying, and engagement of Deutsche Bank to explore strategic alternatives, I believe CEO Stephen Simes and CFO Phillip Donenberg will continue their legacy of creating shareholder value for BioSante investors -- which includes previous success at Unimed and Gynex before they were acquired by Solvay and Savient Pharma, respectively.

Stock position: None.