BioSante Plans FDA Meeting on Female Sexual Dysfunction Gel

The stock remains near a 52-week low following P&G's travails.
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The recent regulatory rebuff of a "female Viagra" product from

Procter & Gamble

(PG) - Get Report

continues to reverberate among small companies hoping to get their sexual dysfunction medications on the market.

One of the P&G competitors,

BioSante Pharmaceuticals

(BPA)

, said Thursday that it plans to meet with the Food and Drug Administration during the first quarter to determine what it needs to do to begin final clinical trials on its LibiGel product to improve female sexual desire.

BioSante was the hardest hit among developers of female sexual dysfunction products after an FDA advisory committee rejected P&G's Intrinsa transdermal patch on Dec. 2. The panel said P&G needed to provide more information on Intrinsa's long-term safety.

The panel rejected a product that transmits the hormone testosterone to improve sexual desire in menopausal women whose ovaries had been surgically removed. BioSante and other companies had been hoping for a P&G victory because they believe their products -- ranging from gels to creams to nasal sprays to pills -- could have a marketing advantage over a skin patch like Intrinsa.

P&G, which licensed Intrinsa from

Watson Pharmaceuticals

(WPI)

, said Tuesday that it was withdrawing Intrinsa's application, one day before the FDA was scheduled to rule on the product.

P&G said it plans to resubmit an Intrinsa application after studying the patch's effect on naturally menopausal women, a much larger market than women whose menopause was brought on by surgery.

"BioSante, like Procter & Gamble, remains committed to the development of testosterone products for female sexual dysfunction," said Stephen M. Simes, president and CEO of Lincolnshire, Ill.-based BioSante. BioSante's product is a gel that can be applied to the arms, shoulders or abdomen.

Although P&G's stock easily absorbed the FDA advisory committee's rejection of Intrinsa, BioSante's stock was torched. It lost 10.7% on the day the panel discussed Intrinsa (it didn't vote until after markets closed) and another 35.5% on the day after the vote. The stock hasn't recovered. On Thursday, it was trading at $4.52, off 10 cents, or 2.2%, and close to its 52-week low of $3.92.

The handful of analysts who cover BioSante have basically stuck to their buy ratings, perhaps because they liked the company when its shares were trading higher. (Three of four analysts tracked by Thomson First Call have buy ratings; another analyst cut his rating to hold from buy after the FDA advisory panel's decision on Intrinsa.)

"We view Procter & Gamble favorably," said William Blair & Co.'s Richard Watson, in a Dec. 23 note to clients, as he kept his outperform rating on BioSante. He said the implications for P&G's decision for BioSante "are positive."

Given the high-profile issues before the FDA, such as

Merck's

(MRK) - Get Report

Vioxx, Watson said that P&G withdrawing its Intrinsa application "provides time for the dust to settle" at the agency. Then, the FDA "will be in a better position to provide a practical, reasonable roadmap for approval of Intrinsa," he said.

Once the FDA provides a clear signal to P&G, then BioSante could start its phase III study on LibiGel by mid- to late 2005. Phase III is the final stage of clinical trials before a company submits a drug application to the FDA. (Watson doesn't own shares; his firm has an investment banking relationship.)