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ANOTHER GREAT ADAM F. ARTICLE
LINCOLNSHIRE, Ill. (TheStreet) --Don't look any deeper than momentum-fueled day trading to explain the dramatic rise in BioSante Pharmaceuticals'(BPAX_) stock price. Real numbers don't justify the company's valuation.
BioSante shares rose 27% to 96 cents Wednesday -- and were up as much as 62% intraday -- after U.S. regulators approved Bio-T-Gel, a testosterone replacement therapy for men who have low levels of natural testosterone.Teva(TEVA_) is in charge of marketing Bio-T-Gel and will pay BioSante a small single-digit royalty (think 6%) on sales.
Bio-T-Gel's fundamental problem is that five existing testosterone gels already compete in a crowded U.S. market. None of these products are materially different from each other, so Bio-T-Gel faces serious challenges coming in as testosterone gel number six.
For that reason alone, BioSante is an expensive stock. Even trading for less than a buck per share, the company's market value of $106 million is too rich by at least a third, perhaps as much 50-60%.
Abbott(ABT_) is the testosterone gel market leader. Worldwide sales of Androgel totaled $875 million in 2011, a company spokeswoman said, although she declined to break out U.S. sales.
That's a lot of testosterone gel, but once you get past Abbott's 74% U.S. market share, according to IMS Healthcare, the numbers drop off fast.
Auxillium Pharmaceuticals(AUXL_) has reported $150 million in sales of Testim through the first nine months of the year, making it the second-largest testosterone replacement gel in the U.S. Testim sales in 2010 totaled $190 million -- it took eight years for the product to reach that level.
Behind Testim, none of the other testosterone gels sold in the U.S. -- from Watson Pharmaceuticals(WPI_), Eli Lilly(LLY_) and Endo Pharmaceuticals(ENDP_), respectively -- cracks $100 million in sales, according to IMS Healthcare.
Remember, all these testosterone gels are basically the same, giving doctors and patients have very little reason or incentive to switch. Abbott's Androgel was the first gel approved in 2000 and it remains the market leader. Testim was the second gel approved and lags badly. The other gels are almost non-factors in the market.
Realistically, Bio-T-Gel doesn't stand a chance, but let's give Teva the benefit of the doubt and assume its marketing muscle and know-how actually makes a dent in the T-gel market. How generous should we be? Let's say Teva manages to pull in $100 million in Bio-T-Gel sales five or six years after launch.
That puts $6 million in BioSante's pocket -- not even enough to cover half a quarter's cash burn at the company's current rate of spending.
I generally counsel investors not to follow the advice of sell-side analysts because their forecasts are usually way too optimistic but let's make an exception for BioSante.
The Roth analyst forecasts $200 million in Bio-T-Gel sales by 2015 (I told you, these analysts can be crazy optimistic) but that only brings $11.6 million in royalty revenue to BioSante. Roth has the company losing $3.5 million in that year.
The Jefferies analyst is a bit more realistic, forecasting $6.8 million in Bio-T-Gel royalty revenue for BioSante in 2015. [That infers $113 million in actual Bio-T-Gel sales.] On that revenue, BioSante would lose $13.2 million in 2015, Jefferies says.
The Jefferies analyst also does a sum-of-the-parts valuation analysis on BioSante in which Bio-T-Gel is worth today just 59 cents per share. The entire company today is worth 70 cents per share.
In case you were wondering, Leerink Swann's current fair-value calculation on BioSante: 11 cents per share.
However you spin it, BioSante at 96 cents per share is grossly over-valued.
One last word: No mention of Libigel? And what about the cancer vaccine programs? Libigel is an expensive placebo. Two failed efficacy trials in female sexual dysfunction proved that fact beyond any argument. BioSante continues to run a Libigel safety study, but demonstrating that a placebo does no harm isn't exactly a value-creating feat of drug development. Libigel is a zero.
Likewise, BioSante's cancer vaccine programs are worthless. BioSante gained control of the cancer vaccines when it acquired the defunct Cell Genesys for its cash. Cell Genesys blew up because its cancer vaccines failed phase III studies. Another zero.
PSI, Why would they do a buyback? Give me one reason that makes sense!!
The company is cashflow negative has never been in the black they need every dollar they can get. How many cancer vaccines are on the market?
Until the company is in the black it needs every penny it can get NO SHARE BUYBACK WILL HAPPEN WHILE THEY ARE LOSING 2 MILLION A MONTH.
Look it's 1/2 the BPAX posters over here now........lol. Nice move today.
Starter position at .78 this morning.
It proves this whole move was not by investors, but flippers this stock was frontloaded hopefully after today that will no longer be the case.
Frontloaded everyone was talking about this stock, Bio-T doesn't bring in much revenue even if it is as important milestone, people are locking in profits!!
Be grateful it gapped as hard as it did. IMO, this goes up longterm though just not a good TRADE today unless you were in yesterday or are a chartist.
It gapped....that doesn't count you should know that. Look at buy/sell volume this morning SELLS are winning. Stock was very frontloaded over the next week or two there should be a steady rise, but today's hopes and dreams of $2 etc will not be happening.
Might hit 25 Million traded by end of the day....I bet it hit's 1.00!
Gap filled or not there is no buying pressure too frontloaded.
Buying pressure is not strong will be a boring day.
I disagree this is one of the most tracked biotechs out right now. The bottom line is Bio T is a low revenue, but very much needed asset for reasons previous mentioned.
Unless traders get on board the big move many are wishing for won't be happening today.
I'll shuttup now and we'll see :)
It is and MM's see the orders ready to slam the bid as people who are trying to get out even. Morning should be similar to yesterday.
NO, but I'm not a chartist 1.20 close is my prediction.
Maybe some traders will others will move on to other biotechs waiting to announce soon.
We will see what the MOMO does this morning traders moved it over $1 last time they could move to $2. We'll see I'm just glad it was approved.
Pigs get slaughtered.
I think you are too focused on what will happen today. You must be a trader/flipper?
Over the course of the next week-two weeks the trend will continute and test that 2.00+ resistance. There are alot of people that want out and want to lock in profits, so I still say it closes at $1.20 today.
Why does someone have to sell? Why can't they hold this isn't a one trick pony ;)
Sure I say a close of $1.20 what do you say?
It's only because you can't!! What will it do tom answer that?
All these crazy gap predictions.....I still say a close around $1.10-1.20 tom of course intraday could be nuts. I don't see $2.00 longterm this should be over $5 again.
It'll be archived for 90 days you can listen to it.
Simes is queer for cancer vaccines, but one needs to come to fruition.
Then why didn't you call it yesterday? Because charts are after the fact that's why!!
I've played my share, but they don't work in the small cap world let alone the penny world.
I agree Joshuri I've been there BPAX shows promise of rising again. I did the same years ago made out with a 9% gain.....hopefully you'll be the same :)
RICKOCKULOUS WHY ARE YOU BACK? YOU SAID THIS WAS BK CITY, A POS, GET OUT NOW, FOR WHAT TWO WEEKS STRAIGHT?
You are pumping your balloon this week versus deflating it huh?
I don't disagree with your statement though......lol.
Funny people think it would drop to the high .60-low .70's with a NO APPROVAL form the FDA.
.40-.50's the downward pressure is so huge here. It's like a ant trying to pull against a train.
Looks ugly though..
25K shares is strong buying.......lol.
You are assuming a obvious win with that statement. Who wouldn't do that?
You are Joe blow investor and have no position just cash now what do you do? How do you play the game in a not blatantly obvious scenario?
Doubt it.......a denial will send this reeling and you'll be waiting a long long time.
Yeah, so how do you do that? Either you are in, out, or short......so tell me how do you play the game....lol.
Yep....how can you not be? Up 20% from here or down 30% it's gambling at this point.
Why are we posting the same stuff over and over? Some may call it information sharing....I calling it trying to pump a stock.
We should know today either Bio Tgel is approved and this moves above $1 or it is not approved and this tanks back to the .50-.60 range.
The conference won't matter because anything that is said won't be material for months and months.
Yep that and this board is very "pumpy" the Yahoo board is very "bashy" and is still going strong btw.
There is nothing to say......either it's approved and this should move back over $1 or it will tank and we'll see .50-.60.
We will all know soon enough.
No its not no volume just t trades
The CEO doesn't NEED to do anything. He is being paid and running the company his job isn't to pump a stock unlike this and other boards.
Approval it goes up, if their drugs show good in the trials it goes up, THIS PUMP AND TRADE PHILOSOPHY IS NOT PART OF THE COMNPANY'S PLAN!! It's a self seeking one ;)
Why would anyone think it would rise? Before the LibelGel efficacy data came out and the stock tanked there was no sell off.
It's as simple as hold and lose 30-40% of you investment gain 10-15% all imo.
I sold 1/2 on Friday these are free share I'll just ride out.
No....its as simple as with approval over $1 no approval .50 place your bets.
Frontloaded that's why...upside is 10-15% from here. Downside is huge because of the short position.
If temporarily means months than yeah I agree!! FWIW it should get approved transdermals have been around forever so you would think a gel would be fine too.
TRT therapy isn't rocket science!! I actually think the upside will be short lived and momentum based because the %5 royalty isn't much to do back flips over, but if for some oddball reason it get's denied it will be a bloodbath.
Hoping for the best!! Longterm 1 years plus should be fine imo.
Frontloaded and traders is keeping it down added to what you alreday said. BPAX has had swings of 10% a day everyday last week.
Bio T-Gel get's approval it'll go back over a $1 dollar if not TANK CITY.
So, hope for the first one we will know soon.
That's funny.......getting desperate?
Well, if the close isn't strong I'm out. The pressure on this stock is strong it's frontloaded already. Every message board is going crazy with pumps etc.
If FDA does not approve this will tank hard and approval will be but a modest gain probably $1-$1.10 then everyone jumping for the gate anyway.
Best of luck.