BioSante Pharmaceuticals ( BPA) is wounded, maybe seriously.

The Thursday night rejection of Procter & Gamble's ( PG) female testosterone sex-drive patch Intrinsa by a Food and Drug Administration advisory panel will almost certainly delay efforts by BioSante to develop its own product, a testosterone gel called LibiGel.

BioSante shares, trading in the green all day Thursday, plunged at the closing bell as the Intrinsa panel's vote was taken. The stock closed the day down 90 cents, or 10%, to $7.50, then fell another $3.15, or 42%, to $4.35 in the after-hours session. Needless to say, this selloff is not what BioSante bulls (and I include myself in that category) were hoping for.

The FDA panel dinged Intrinsa over a lack of long-term safety data. Sharing concerns expressed by the FDA on Wednesday, the panel members were concerned that long-term use of testosterone by post-menopausal women already taking estrogen hormone therapy would raise their risk of heart attacks and cancer. A proposal by Proctor & Gamble to collect additional post-approval safety data from women using Intrinsa was dismissed by the panel as inadequate.

Although the FDA has yet to issue an approval decision on Intrinsa, the agency will likely follow the panel's recommendation and ask Proctor & Gamble to collect additional safety studies before approval. But how much safety data need to be collected, and from how many patients? Will ongoing Intrinsa studies be sufficient, or will the company be forced to start new studies?

The answers to these questions are unclear, which has both good and bad implications for BioSante. The company was expected to begin a phase III study of LibiGel in the first quarter 2005. There will be a delay but BioSante CEO Stephen Simes, reached last night while he was boarding a plane leaving the Intrinsa panel meeting, is hopeful that it won't last too long.

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