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BioSante acquisition adds cash to complete trials for sexual dysfunction drug

Illinois’ BioSante paid $38 million in stock for Cell Genesys and an ownership stake in a former subsidiary. In exchange, it gains fresh money to get its LibiGel product through Phase III clinical development under a U.S. Food and Drug Administration Special Protocol Assessment.

LINCOLNSHIRE, Illinois –  Drug company BioSante Pharmaceuticals has purchased what’s left of oncology biotech Cell Genesys, and the combined company will focus on a testosterone gel that treats female sexual dysfunction.

Illinois’ BioSante paid $38 million in stock for Cell Genesys and an ownership stake in a former subsidiary. In exchange, it gains fresh money to get its LibiGel product through Phase III clinical development under a U.S. Food and Drug Administration (FDA) Special Protocol Assessment. Cell Genesys had a cash balance of about $36 million, compared to BioSante’s cash and cash equivalents balance of about $6.2 million.

LibiGel treats under-active sexual desire in menopausal women. BioSante expects to complete the trial in about a year.

Trouble started for California’s Cell Genesys last year when it dropped plans for a late-stage trial of its GVAX Immunotherapies product after the company’s independent monitoring board concluded that the trial had less than a 30 percent chance of success. Since then, the company has searched for a buyer or other strategic options. It lost $8.7 million in the first quarter and cut 95 percent of its 290-member workforce.

For some time, BioSante has been considered “buyout bait” for a big pharmaceutical company. LibiGel shows near-term promise, and additional drugs — such as Bio-T-Gel and The Pull-Plus— show potential down the road. The company recently submitted its hot-flashes drug Elestrin for acceptance into the Israeli market. The only problem with LibiGel in its Phase III trial is a low level of cardiovascular problems.

The merged company would try to develop GVAX Immunotherapies and try to license other Cell Genesys technologies to others, according to a BioSante press release. BioSante also gets 16 percent ownership in the San Diego gene-therapy company Ceregene, a former Cell Genesys subsidiary.

The merger should be done around the start of the fourth quarter. BioSante stockholders will own about 60 percent of the outstanding shares of the combined company, while former Cell Genesys stockholders will have the rest, according to the BioSante release.

BioSante CEO Stephen M. Simes will continue to run the company.