BioSante Shares Crushed by Placebo Effect

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BioSante Pharmaceuticals (Nasdaq: BPAX  ) is trading down 77% today, and its Antares Pharma (AMEX: AIS  ) drug-delivery partner is down 33% as well, after announcing that LibiGel failed to raise sexual desire in women.

At least on a statistically significant measurement, it didn't.

LibiGel actually performed as expected. It raised testosterone levels in the women and increased the number of days with a satisfying sexual event compared with the time before patients were given LibiGel. The problem, as I warned about back in July, stems from the placebo effect, which complicated the results. For instance, in one of the two trials reported yesterday, LibiGel increased the number of satisfying sexual events by 83%, but taking placebo increased it by 65%. The difference wasn't close to being statistically significant; there's a 70% chance that it happened by chance alone.

That's the danger in measuring a subjective outcome; even if the drug works, variability in the outcome can mute the effect. Unfortunately, subjective outcomes can't be avoided for many indications, such as libido or pain management.

The subjective readout for lupus is one of the reasons that there was such a long gap in the development of a treatment. Human Genome Sciences (Nasdaq: HGSI  ) finally solved the problem by developing a composite endpoint to minimize the variability.

In terms of trying to boost female sexual desire, investors should have taken a clue from Boehringer Ingelheim, Pfizer (NYSE: PFE  ) , and Procter & Gamble (NYSE: PG  ) , which all abandoned their female sexual development drugs. Pfizer and Eli Lilly (NYSE: LLY  ) had it easier developing drugs for men, where tangible results can be more empirically observed.

I wouldn't necessarily encourage investors to give the cold shoulder to all companies running clinical trials measuring a subjective outcome -- Pfizer beat its extremely high placebo rate in a trial testing its rheumatoid arthritis drug -- but their chance at clinical success has to be discounted considerably.

It seems BioSante's investors didn't sufficiently take that into consideration when dreaming of biotech glory.

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Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Pfizer and Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (3) | Recommend This Article (2)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 15, 2011, at 8:39 PM, chrisbaxter65 wrote:

    Are you getting paid by the word?

    You have written the same thing about Biosante 3 times today already. Why don't you do some real journalism and dig a little deeper instead of posting the same fluff over and over.

    How about the complete disparity between what the company reported after phase II compared to the phase III results. How could there be such a big difference? Do some real reporting.

  • Report this Comment On December 17, 2011, at 7:26 PM, brokeassbroad wrote:

    I bet the LibiGel works just fine. They prob'ly just forgot to add the tequila shots and Marvin Gaye music.

  • Report this Comment On February 18, 2012, at 10:08 AM, rrxtech25 wrote:

    First of all, even if a drug makes it through lll clinical phase trials, it is definately worth checking out! You should not post misleading information about Biosante's latest drug waiting FDA approval. This drug is the only one that has been proven to be effective in raising testosterone levels in women and shown significant results, so what I have to say to you is, just sit back and wait for the newest drug to become available to millions of women all over the world who may need this to fulfill there lifestyle and be able to feel "alive" again!!!!!

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