Biotech Stock Mailbag: BioSante Pharma

BOSTON (TheStreet) -- Welcome back to the regular Friday edition of the Biotech Stock Mailbag. I hope everyone read Thursday's bonus Mailbag, which included an update of the Biotech Stock Mailbag Readers' Portfolio.

Craig N. emails to ask, "I thought you wrote a very good, thoughtful article on BioSante Pharmaceuticals(BPAX) in 2008. I'm wondering about your thoughts on the company since the safety factors are looking good and the company seems to have enough cash to get LibiGel to a new drug application in mid 2011. Are you thinking of doing another article on them?"

I'm not entirely sure, but this is probably the BioSante article Craig refers to.

The safety profile of BioSante's LibiGel does look clean. Post-menopausal women using the low-dose testosterone gel as a treatment for female sexual dysfunction (FSD) are not dropping dead of heart attacks and they're not prone to more breast cancer. Independent safety monitors told BioSante to continue LibiGel's phase III safety study, which is being run in tandem with two phase III efficacy trials.

BioSante announced the positive update on its LibiGel program Monday -- at which point the stock sold off. Shares closed at $1.60 at the bell on Thursday.

Investors didn't rush to buy BioSante this week because there's not much debate about the efficacy and safety of LibiGel in FSD. Use of low-dose testosterone has previously been shown to be a moderately effective way to boost the libido of post-menopausal women. Proctor & Gamble(PG) demonstrated this already with a testosterone patch known as Intrinsa. BioSante's LibiGel is the same product, only in a more convenient gel form.

Safety is a minor, unresolved overhang, but even here, any concerns that LibiGel use will make women more prone to heart attacks or cancer is also likely overplayed. So far, the LibiGel safety study isn't picking up any problems and I think most investors don't expect that to change when the final data are analyzed.

What investors are worried about when it comes to BioSante is how the company is going to commercialize LibiGel if (when) the FDA approves the product. (This is the same concern I voiced in that 2008 article.)

Back in 2004, the BioSante marketing plan was brilliant. The company was going to bring LibiGel to market after P&G launched Intrinsa with hundreds of millions of dollars in consumer advertising to build awareness and demand for a testosterone-based FSD treatment dubbed the "female Viagra."

In other words, BioSante was going to ride the P&G coattails into the market with LibiGel, which women would find easier to use than Intrinsa.