Please ensure Javascript is enabled for purposes of website accessibility

But, But, But, I Thought You Were for Sale?

By Brian Orelli, PhD - Updated Apr 6, 2017 at 8:17PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

BioSante raises cash -- guess it's not on the market.

Earlier this month, BioSante Pharmaceuticals' (Nasdaq: BPAX) Chief Executive Officer Stephen Simes told Bloomberg there were "many, many companies" interested in the BioSante's female libido drug, LibiGel. The way the article read, it sounded like a licensing deal worth $100 million upfront or that possibly a complete takeout was imminent.

I guess not.

BioSante announced today that it is raising $45 million by selling 16 million shares at $3.00 a pop. That's a 17% increase in the share count at a 3% discount to yesterday's closing price, which certainly doesn't look like tide-us-over-until-we-get-a-deal-done money to me.

What have we learned from this? Sticking a for-sale sign on the front lawn isn't enough to find a buyer. It didn't work for Biogen Idec (Nasdaq: BIIB) a few years ago. Forest Labs (NYSE: FRX) bought Clinical Data but for less than the company was worth the day before. At least management didn't go that route.

As I said previously, companies that sell erectile dysfunction drugs -- Pfizer (NYSE: PFE), Eli Lilly (NYSE: LLY), Bayer, and GlaxoSmithKline (NYSE: GSK) -- are all potential licensors of LibiGel. But given the history of failures for female libido drugs, it would be risky for them to buy in before the safety and efficacy are confirmed.

We also learned that BioSante isn't the best market timer. Raising capital earlier this month when shares briefly touched $4.00 per share would have been a lot less costly for investors. Maybe "many, many" deals were in the works then and they all fell through. Or maybe management was hoping shares would go higher.

Welcome to the club.

Interested in small companies? Grab this free report from Motley Fool analysts: "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Click here to see his holdings and a short bio. The Motley Fool owns shares of GlaxoSmithKline. Motley Fool newsletter services have recommended buying shares of GlaxoSmithKline and Pfizer. 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

ANI Pharmaceuticals, Inc. Stock Quote
ANI Pharmaceuticals, Inc.
ANIP
$37.47 (5.88%) $2.08
Eli Lilly and Company Stock Quote
Eli Lilly and Company
LLY
$308.08 (2.63%) $7.89
Pfizer Inc. Stock Quote
Pfizer Inc.
PFE
$50.11 (3.77%) $1.82
GSK Stock Quote
GSK
GSK
$36.03 (0.84%) $0.30
Biogen Inc. Stock Quote
Biogen Inc.
BIIB
$220.99 (1.27%) $2.77

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/13/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.