|Good Deal? Bad Deal? Biosante's Acquisition of Cell Genesys.|
|By Andrew Greenbull|
|Wednesday, 12 August 2009 03:00|
I have been watching BioSante Pharmaceuticals (Nasdaq:BPAX) for a long time and waiting for the best time to get in.
So was it a really bad deal?
Let’s start with Cell Genesys first.
According to the Merger Agreement, CEGE shareholders will get 0.1615/per share of BPAX.
Apparently, the market saw the terms and reacted immediately, but as we know, the market is also shortsighted. Looking at the deal a little deeper, I think this buyout could be a key development for BPAX’s future success and here's why:
1- CEGE will bring $20M to $25M cash to BPAX, it could be life-saving fund for the company whose current cash reserves only go as far as March of 2010.
2- The good relationship between CEGE and Takeda may open the door for BAPX to one of the most important markets in Asia—Japan.
3- If Biosante decides to continue development of CEGE’s immunotherapy for prostate cancer, it could enrich BPAX’s product pipelines and provide important technical support.
I like that BioSante is a specialty pharmaceutical company focused on developing products for female sexual health, menopause, contraception and male hypogonadism.
Elestrin™ for the treatment of moderate-to-severe hot flashes associated with menopause is at the marketing stage, BPAX has an agreement with Azur Pharma to sell Elestrin™ in the United States. Under the terms of the agreement, Azur paid BioSante US$3.3 million comprised of a product licensing fee and payment for the transfer of the trademark and inventories, amongst other items. In addition, Azur Pharma will pay BioSante royalties and contingent milestones with a maximum of $144.5 M based on future net sales of Elestrin.
Whats really intriguing is the stage 3 clinical trial of LibiGel® which will finish final data collection in March 2010 as seen in the BioMedReports FDA calendar. A successful trial will be an important milestone in BPAX’S history
BPAX will release thier second quarter earnings report after the market close on 08/07/2009 and besides some updated news of clinical trial data, I am expecting that the company will provide a much clearer and satisfiable explanation for its buyout of Cell Genesys.
Given more time, I believe that BPAX may be able to find the type of success that the father of Viagra, Pfizer, has had with that drug.
My 3 month target price per share for BPAX is $3, and my one year target is $5, but in the service of full disclosure, I am not a licenced analyst.
Disclosure: Long BPAX