Cell Genesys sued over buyout of Lincolnshire's BioSante

Cell Genesys Inc., a former maker of cancer vaccines, was sued by investors challenging the fairness of a stock-swap buyout by BioSante Pharmaceuticals Inc., the developer of a testosterone gel to boost women's sex drive.

South San Francisco-based Cell Genesys and BioSante of Lincolnshire, Illinois, said on June 30 that they would combine, with Cell Genesys stockholders receiving 0.1615 share of BioSante for each of their shares, a 12 percent premium at the time.

The buyout price "does not represent the true value" of Cell Genesys, Matthew and Debby Hirschhorn contended in a Delaware Chancery Court complaint filed yesterday asking a judge to stop the buyout and award damages.

BioSante, which plans to complete the purchase by year-end, said in a statement that it intends to focus primarily on the LibiGel testosterone product, now undergoing U.S. Food and Drug Administration assessment.

The product could be ready for sale by the end of 2010 and would be the first of its kind on the market, BioSante's Chief Executive Officer Stephen Simes said in February.

Cell Genesys "currently does not have significant operations," according to the lawsuit. Late last year, Cell Genesys halted work on a prostate cancer therapy after deaths were reported in a study. The company said on Nov. 6 that it would fire 230 workers, or 80 percent of its employees.

BioSante spokesman Alan Zachary said in an e-mailed statement that the company "does not comment on lawsuits."

Cell Genesys officials weren't immediately available to comment on the suit.

Shares of Cell Genesys were unchanged at 26 cents in Nasdaq Stock Market trading at 3:37 p.m. New York time. They traded as high as $3.50 last July 23.

BioSante shares were unchanged at $1.80 in Nasdaq trading. They've risen 80 percent this year.

The case is Matthew and Debby Hirschhorn v. Cell Genesys Inc., CA4715, Delaware Chancery Court (Wilmington).