Shares of BioSante Pharmaceuticals have soared on the news that regulators in the USA have given the green light to its testosterone gel Bio-T-Gel, partnered with Teva.

The US Food and Drug Administration has approved Bio-T-Gel for the treatment of male hypogonadism or low testosterone levels. This is generally characterised by impotence, a lack of sex drive, muscle weakness and osteoporosis, BioSante noted.

Bio-T-Gel was initially developed by BioSante, and licensed to Teva for late-stage clinical development. The Israeli major's US unit is responsible for all regulatory and marketing activities and BioSante will receive royalties and possible milestone payments.

The current US market for male testosterone products is estimated at over $1.6 billion and BioSante chief executive Stephen Simes said Bio-T-Gel will provide another treatment option. He added that "we are confident that Teva has the commercialisation and marketing expertise to implement a successful launch".

BioSante stock jumped over 60% during trading before closing at $0.97, up  27.3%, although some analysts are concerned about its potential. Elemer Piros at Rodman & Renshaw said that “while the market is sizeable…Teva will be the fifth entrant, therefore we don’t assume significant royalties to BioSante”, possibly between 5%-7.5%.

The situation is further complicated by the recent settlement of a legal tussle between Teva and Abbott Laboratories which won US approval for a similar product, AndroGel last year. Abbott sued Teva, claiming that Bio-T-Gel infringed its patent and the lawsuit was settled in December.

However, terms of that settlement were not disclosed and analysts believe a launch for Bio-T-Gel is likely to face delays. Still the FDA approval is good news for BioSante, which has suffered since December when it published disappointing late-stage data for its female sexual dysfunction treatment LibiGel.