BioSante Female Sex Drug Spurs Deal-Making Talks, CEO Says
BioSante Pharmaceuticals Inc. is in talks to partner on its sex gel to raise female libido or sell the company, according to Chief Executive Officer Stephen Simes. The shares rose to their highest value since 2008.
Scientists have tried to chemically treat female sexual dysfunction since Pfizer Inc.'s Viagra, with $1.9 billion in 2010 sales, was introduced 13 years ago for erectile dysfunction in men. After failed attempts by Pfizer, Boehringer Ingelheim GmbH and Procter & Gamble Co., BioSante, based in Lincolnshire, Illinois, is next in line seeking to capitalize on the idea.
The market for a female sex drug may mirror sales for male products at about $4 billion a year, said Jason Butler, an analyst at JMP Securities in New York. Simes, in an interview, said he aims to seek U.S. regulatory next year for his LibiGel testosterone gel, in anticipation of U.S. sales in 2013. In the meantime, there have been talks about possible deals with “many, many companies,” he said.
“BioSante was an underdog,” said Elemer Piros, an analyst at Rodman & Renshaw in New York, in a July 8 phone interview. “Nobody really wanted to touch BioSante when they had a three-, four-, five-year window ahead of them. The company is just being recognized, just starting to appear on people's radar screens.”
BioSante gained 8 cents, or 2.2 percent, to $3.68 at 1:11 p.m. New York time in Nasdaq Stock Market composite trading, erasing an earlier decline of as much as 8.3 percent. The shares rose to as high as $3.90, their highest intraday price since October 2008, and have more than doubled this year. Four analysts surveyed by Bloomberg estimate they'll reach $5.50 within a year.
Study Results
The company may fetch an acquisition price as high as $1 billion as early as the first quarter of next year if two studies of 500 women each find the drug increases desire and sexual experiences, Piros said. The data is due to be reported by the end of the year, the company said.
Chris Holterhoff, an analyst at Oppenheimer & Co. in New York, estimates 2015 sales of $540 million for LibiGel, with use by 6 percent of potential patients. Possible use of the drug beyond its officially approved designation for postmenopausal women may double that revenue, Piros said.
‘Conservative' Deal
A “very conservative” estimate may be a licensing deal for $100 million plus future royalties, or an acquisition in the range of $300 million to $500 million, Simes said. He acknowledged a higher price may be possible with “a significant premium” over the company's market cap of about $337 million as of July 8.
“What we think is the gating factor to partner interest and to approval is very strong safety data,” Holterhoff said in a July 8 telephone interview.
LibiGel also is being tested for cardiovascular safety and a potential risk of breast cancer in a study of more than 3,600 women. Researchers monitoring that study have not found an imbalance in risks that would require the study to be stopped early, which Piros said is “good enough proximal information” to suggest the drug is safe.
“We believe the value of LibiGel will increase as new efficacy and safety data become available and these data will be available beginning in the coming months,” Simes said today.
The safety data will be available in the third quarter of next year, according to the company.
‘Broad Range'
“There's a broad range of potential partners and acquirers for this product,” JMP's Butler said in a July 8 telephone interview. “You can look at any of the mid-to-large specialty pharmaceutical companies as well as any of the global pharmas.”
Pfizer, based in New York, and Eli Lilly & Co., of Indianapolis, would make good partners because they have successfully marketed sex medicines for men, Butler said. Oppenheimer's Holterhoff also identified Endo Pharmaceuticals or Warner Chilcott Plc.
Raul Damas, a Pfizer spokesman, said in an e-mailed response that the world's largest drugmaker has “no current plans to develop medicines for female sexual dysfunction.”
Kevin Wiggins, a spokesman for Chadds Ford, Pennsylvania- based Endo, said the company doesn't comment on market speculation. Lilly spokesman Mark Taylor said the company doesn't comment on possible business development. Voice-mail and e-mail messages weren't immediately returned by Emily Hill, a spokeswoman for Dublin-based Warner Chilcott.
Male Hormone
Testosterone, while often characterized as a male hormone, also plays a role in women's libido. The amount of testosterone produced naturally by a woman's body decreases with age, especially after menopause. The goal of therapy is to increase hormone levels to the normal range of a premenopausal woman. There were 4 million prescriptions for male testosterone gels written to women in 2009, representing about 30 percent of the females who report sexual problems to their doctors, Simes said.
LibiGel is applied to the upper arm once daily in pea-sized amounts, unlike male testosterone gels that are often slathered across the upper body.
BioSante licensed the drug in 2000 and had planned for the drug to reach the market years ago before the FDA asked for more safety data in the wake of the 2004 withdrawal of Merck & Co.'s Vioxx painkiller over heart risks.
So far the delays haven't spooked investors, Simes said.
“People are impressed with the market opportunity and at least today there is no competition,” he said. “We didn't expect it to take this long to get this product for women. It's taken a lot more time and a lot more money.”
Pfizer stopped developing Viagra for women in 2004 because studies didn't show a benefit. Later that year, Cincinnati-based P&G withdrew its application to sell a female testosterone patch after the FDA asked for more safety information. Closely held Boehringer, of Ingelheim, Germany, abandoned its flibanserin pill last year after failing to convince the FDA that it was safe and effective in women.