Takeover Target? BioSante Attracts Deal Talks With Female Sex Drug

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(List compiled by Alexander Crawford)

Ever since Pfizer’s (PFE) Viagra was introduced 13 years ago to treat erectile dysfunction, companies have been trying (and failing) to develop a female equivalent for low libido. A new drug LibiGel from BioSante Pharmaceuticals Inc. (BPAX) is entering the industry’s radar as today’s sole contender in an estimated $4 billion a year market.

BioSante CEO Stephen Simes told Bloomberg that there have been talks about possible deals with "many, many companies" regarding LibiGel. 

After developing a promising new drug, small biotech firms often partner with large biotech or pharmaceutical companies to market the drug and continue necessary funding. Deals can involve licensing agreements with future royalties or even an entire takeover of the company.

Simes told Bloomberg that a "very conservative" estimate for a licensing deal would be $100 million plus royalties, or an acquisition of BioSante within $300 to $500 million. Analyst at Rodman & Renshaw Elemer Piros believes the company’s acquisition price could reach $1 billion, contingent on successful Phase III results. To put these numbers into perspective, BioSante’s (BPAX) market cap was $356.62 million as of July 12. 

Four analysts surveyed by Bloomberg estimate that BioSante’s stock price will reach $5.50 within a year from July 12’s price of $3.81.

LibiGel is entering a Phase III safety trial to test for heart and breast cancer risks, the results of which should be available in the third quarter of next year according to BioSante.

In the search for potential deal-partners or acquirers, JMP Securities analyst Jason Butler told Bloomberg. “You can look at any of the mid-to-large specialty pharmaceutical companies as well as any of the global pharmas.”

"Pfizer (PFE), based in New York, and Eli Lilly & Co. (LLY) of Indianapolis, would make good partners because they have successfully marketed sex medicines for men,” Butler said. Analyst at Oppenheimer & Co. Chris Holterhoff told Bloomberg Endo Pharmaceuticals (ENDP) or Warner Chilcott Plc. (WCRX) are also candidates for deals with BioSante.

Do you think LibiGel will attract a deal for BioSante?

Below we compiled some helpful data for the companies mentioned in this article:

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1. BioSante Pharmaceuticals, Inc. (BPAX): Biotechnology Industry. Market cap of $356.62M. The stock is a short squeeze candidate, with a short float at 14.35% (equivalent to 5.22 days of average volume). Exhibiting strong upside momentum--currently trading 35.32% above its SMA20, 40.46% above its SMA50, and 88.93% above its SMA200. The stock has had a couple of great days, gaining 29.59% over the last week.

2. Pfizer Inc. (PFE): Drug Manufacturers Industry. Market cap of $158.02B. Offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 4%, current ratio at 2, and quick ratio at 1.71. The stock has gained 40.94% over the last year.

3. Eli Lilly & Co. (LLY): Drug Manufacturers Industry. Market cap of $43.40B. Offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 5.23%, current ratio at 2.01, and quick ratio at 1.64. The stock has gained 12.31% over the last year.

4. Endo Pharmaceuticals Holdings Inc. (ENDP): Drug Manufacturers Industry. Market cap of $4.69B. The stock has gained 71.42% over the last year.

5. Warner Chilcott plc (WCRX): Drug Manufacturers Industry. Market cap of $6.14B. The stock has gained 45.43% over the last year.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks

Referenced Stocks: BPAX , ENDP , LLY , PFE , WCRX

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