The FDA approved BioSante Pharmaceuticals' (Nasdaq: BPAX) Bio-T-Gel yesterday. Shares were up 61% at one point this morning, which I guess is somewhat justified, but it's still trading at less than half the level it was before LibiGel failed in December.

Both drugs deliver testosterone to people, but they have wildly different economics.

Bio-T-Gel treats hypogonadism -- essentially low testosterone -- in men. Replacing testosterone seems to be a simple thing to do based on the number of testosterone treatments available: Abbott Labs' (NYSE: ABT) AndroGel, Auxilium Pharmaceuticals' Testim, and Endo Pharmaceuticals' (Nasdaq: ENDP) Fortesta. The market for hypogonadism may exceed $1 billion, but Bio-T-Gel is going to have to share that with the other treatments.

And BioSante only gets a portion of those sales; it licensed the rights to the drug to Teva Pharmaceutical (Nasdaq: TEVA), which will market Bio-T-Gel.

LibiGel, on the other hand, is fully owned by BioSante. If the drug were approved, it would owe a royalty to Antares Pharma (AMEX: AIS), which contributed the gel delivery system, but BioSante retained most of the economics for LibiGel.

And the market is wide open. LibiGel delivers testosterone to women with sexual dysfunction. The female version of Viagra has been harder to come by.

Unfortunately, LibiGel failed its most recent clinical trial. The drug probably works, but the placebo affect washed out any effect that might have been there. Without another major trial, I have a hard time seeing the drug getting approved.

BioSante isn't being valued very highly -- even with the increase today, it has just a $125 million market cap -- but that seems pretty reasonable. Bio-T-Gel doesn't look like it's worth much and assuming LibiGel is dead, you're paying for a pipeline that includes a risky cancer vaccine program and an oral contraceptive.

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