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Matchmaking in the Midwest
November 2012
by Jim Cirigliano  |  Email the author


LINCOLNSHIRE, Ill.—BioSante Pharmaceuticals and ANI Pharmaceuticals out of Minnesota have announced that they plan to merge through an entirely stock-based transaction. BioSante will be the surviving company; after the merger, however, the company will be renamed ANI Pharmaceuticals Inc. and will be run by ANI's management team.
Prior to the execution of the merger, BioSante will distribute to its current shareholders contingent value rights that will provide rights to payments on future revenues derived from the company's female testosterone product, LibiGel. Then, BioSante will issue to ANI stockholders a number of shares of BioSante stock sufficient to equate to an approximate 53-percent stake in the combined company.

The merged company stands to combine BioSante's cash, expected revenue from licensing deals and royalties and other products in the development pipeline with ANI's specialty brand and generic pharmaceutical products, contract manufacturing operations and positive cash flow.

In December 2011, BioSante announced that one of its most promising new products, LibiGel, had missed its endpoints in Phase III efficacy trials. LibiGel is a female testosterone gel intended to treat hypoactive sexual desire disorder, particularly in post-menopausal women. The disappointing results of the product's Phase III efficacy trials caused BioSante's stock value to plunge to $1.23 by the end of October, down from a 52-week high of $16.56.

In light of this announcement, the company evaluated several alternatives for its business and products, including several potential merger candidates, before its board of directors unanimously recommended the merger with ANI.

BioSante's portfolio remains product-rich, however, and includes two U.S. Food and Drug Administration (FDA)-approved products currently licensed to other pharmaceutical companies. Jazz Pharmaceuticals markets BioSante's first FDA-approved product, Elestrin—used to treat hot flashes in postmenopausal women—in the United States, and Teva Pharmaceuticals USA Inc., has the license to market a testosterone gel for male hypogonadism. The company also has several products in earlier stages of the development pipeline, including several cancer vaccines in ongoing Phase I and Phase II clinical trials and the Pill-Plus, an oral contraceptive in Phase II clinical development by Pantarhei Bioscience BV.

ANI Pharmaceuticals' targeted areas of product development include narcotics, potent anti-cancer and hormone compounds and niche extended-release generic prescription products. ANI has a sizeable manufacturing, packaging and laboratory capacity, including the capability to produce and store products that must be manufactured in a fully contained environment due to their potency or toxicity. ANI's net sales in 2011 were an estimated $16 million.

"We believe that potential future license and other royalty fees due to BioSante for its FDA-approved male testosterone gel, licensed to Teva, and other products could generate significant future cash flow for ANI going forward," ANI President and CEO Arthur S. Przybyl—who is expected to become president and CEO of the new company—said in an Oct. 4 media release about the merger.

"We found the ANI opportunity to be particularly compelling for our stockholders since it will combine two potentially valuable portfolios of products in development and add a sales and marketing presence, while preserving for our current stockholders the right to realize potential future value from LibiGel in the form of contingent value rights of up to $40 million," BioSante President and CEO Stephen Simes added.

The boards of directors of both companies have approved the merger deal, and the transaction is expected to close in the first quarter of 2013.

Representatives from both companies declined requests for further comment until after the merger clears a shareholder vote and a Form S-4 registration statement regarding the transaction is filed with the SEC.

"That document will contain additional information regarding the transaction, BioSante, ANI and the combined company that will result from the merger," says Simes.

Code: E111221



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