Keep Your Expectations in Check

BioSante Pharmaceuticals (NAS: BPAX) isn't giving up hope of raising sexual desire in women after the company's testosterone gel, LibiGel, failed to show a statistically significant increase in libido. The new anticipation comes from the Pill-Plus, a triple-component oral contraceptive that adds a testosterone precursor to the standard estrogen/progestogen combination used in oral contraceptives.

In six different phase 2 trials enrolling 355 women, the Pill-Plus increased frequency of sexual activity, arousal, responsiveness to partner, and other measurements of satisfaction. BioSante licensed the rights to the combination in pill form to Netherlands-based Pantarhei Bioscience, which is looking for a pharma partner to run the larger, more expensive phase 3 trials.

Good luck with that. Boehringer Ingelheim, Pfizer (NYS: PFE) , and Procter & Gamble (NYS: PG) all abandoned their drugs aimed at stimulating female sexual desire. I'd guess they're not interested in making a second attempt.

Bayer, Merck (NYS: MRK) , or one of the other companies that make current birth-control pills might be willing to license the rights as a hedge against competition if the combination worked in phase 3 trials. BioSante would be due a portion of the sublicensing fee that Pantarhei would collect, but given the history of the indication, I wouldn't count on a big upfront bet from Big Pharma.

The Pill-Plus could run into the same issue that LibiGel did. The subjective nature of the readout for sexual desire can result in a high placebo effect that is hard to overcome. If a pharma partner is going to foot the bill for the late-stage trials, it'll want to leave that risk in the hands of BioSante and Pantarhei by linking most of the milestone payments to clinical and regulatory success.

Even though it'll only get royalties on sales of the Pill-Plus, the combo pill could be a big money maker for BioSante. And the biotech still owns rights to the transdermal-patch form of the product, which it could license out as well.

Just keep in mind that BioSante is still playing in a very high-risk, high-reward indication. Keep your expectations for getting lucky in check.

At the time thisarticle was published Fool contributorBrian Orelliholds no position in any company mentioned. Check out hisholdings and a short bio.Motley Fool newsletter serviceshave recommended buying shares of Procter & Gamble and Pfizer. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days. The Motley Fool has adisclosure policy.

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