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Expert Financial Analysis and Reporting

Antares Pharma: FDA Action to not Approve Xyosted on its October 20, 2017 PDUFA Date is Perplexing (ATRS, Buy, $2.23)


Investors have had high confidence that Xyosted would be approved by the FDA on its October 20, 2017 PDUFA date. A press release and 8-K from Antares published on October 12 shattered this expectation. Antares’ stock promptly dropped 38% from $3.73 to $2.32 after the Company alerted investors to an issue with the Xyosted regulatory review. The key paragraph in the 8-K is reproduced verbatim as follows:

“On October 11, 2017, the Company received a letter from the FDA (the “Letter”) stating that, as part of its ongoing review of the NDA, the FDA has identified deficiencies that preclude the continuation of the discussion of labeling and postmarketing requirements/commitments at this time. The letter does not specify the deficiencies identified by the FDA and there has been no further clarification of the deficiencies by the FDA at this time. The Company anticipates receiving further clarification from the FDA on or before the PDUFA date. The Company intends to work with the FDA to understand the nature of the deficiencies once identified and resolve them as quickly as possible.”

The quandary for investors and the Company itself is that there is no explanation of what the issue is, let alone how it might be addressed and when it might be resolved. I spoke with the Company and asked the obvious questions, but they have no more information than what they published in the 8-K. I gathered that they believed that communication with the agency prior to October 11 had been going smoothly and in investor conferences in early October, top management seemed confident of approval on October 20.

This is the first time I have been involved in a deficiency situation and I am at a loss to offer any intelligent comment based on prior experiences that might shed light on this. All I can say is that it is not a complete response letter that is commonly issued. I do not know if it is more easily addressable although my intuition is that this may be the case. Let me offer some of my random thoughts:

  • This was a 505 (b) 2 filing in which Antares had to show acceptable testosterone bioequivalence relative to FDA requirements established with previously approved testosterone products. The Company believes and I concur that data from Xyosted clinical trials showed that it produced and maintained testosterone levels in the blood better than any marketed product; I have thought and continue to think that it is best in class. While I cannot rule out some issue on bioequivalence, I would be very surprised if the FDA has some major issue with the data.
  • Not infrequently, issues with manufacturing and quality control can cause the FDA to delay approval. Could this be the issue? At this point there is no way for the Company or investors to know.
  • Another thought that popped into my mind is that the FDA might be considering some type of new class labeling for all testosterone products and needs to formalize this before approving the Xyosted label. However, the agency has given no indication that it is considering such an action.
  • The FDA is extremely over worked and not always able to meet PDUFA targets on which the agency is judged. It sometimes uses CRLs to prolong the review time and extend the PFUFA date.
  • It could be (probably is?) something else that I have not considered.

Investment Opinion

At this stock price, I am a buyer of Antares even in the case that Xyosted is never approved. This is based on its outstanding pipeline prospects as detailed in my August 17, 2017 report: “This Small, Emerging Biotechnology Company Is Poised for Explosive Growth Based on Five Major New Product Introductions by 2020”. However, based on everything I am aware of, I believe that Xyosted should be approved and is the best in class product in the $1+ billion US testosterone supplementation drug category


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  1. No, it’s not a CRL, but don’t you think one is coming tomorrow? Yes, extremely disappointed but, no more disappointed in TEVA and the FDA not having an AB Rated generic in the market.

    Another possibility could have to do with that one case of hives. Who knows?


  2. Saw a prior instance in April this year when another pharma (TXMD) issued a regulatory update involving a FDA letter alleging the exact same language. That also involved a potential product widely expected to be approved without any problems. In that case, the letter subsequently turned into a CRL based on issues with the length of the Phase 3 test (12 weeks). FDA wanted 12 months. The product in question was simply a new method of applying a substance to the vaginal area. Company has been contesting that by providing studies showing the substance involved (estrogen) was already widely used over a long period with no issues. Still waiting for the FDA to respond to the studies.

    The problem I run into, while not having a high regard for the FDA, overworked as it may be is the alleged wording of the letter. Admittedly a cynic, but I have a problem believing the FDA is sending letters shortly before projected PDUFA date saying in effect it’s found problem(s) but can’t identify them. Really? I suspect a lot of investors share the same doubt. If true, it would make sense to me to make the letter public, shifting the burden of doubt to the FDA.

  3. A deficiency letter presupposes a CRL. This is a now standard FDA process.

    What’s odd is that this was received so late in the review process. The timing and the wording of the letter makes wonder if it was due to labeling. Labeling is complex, it has to be perfect, and XYO is a new form of administration for the testosterone category. Also the class labeling topic, that’s potentially another element to consider.

    On a potentially positive note, and as Larry said, efficacy for the drug was stellar. Best in class, hands down with no peaks/valleys between dosing, strong 7 day duration of efficacy, and no food or other supplemental requirements needed to make the drug work. CMC was also stellar. No issues with meeting primary or secondary end point. Titration protocol was simple and effective. Safety was excellent, and the safety trial emcompassed a very large patient size due to the FDA expanding the safety trial requirement due to industry-wide concerns that surfaced in latter 2014 about improper prescribing due to the questionable advertising tactics used by the gel manufacturers. I do wonder about labeling, though.

  4. I’ve been saying it’s labeling also. It just makes the most logical choice based on what you and others have already stated. Soon to know.

  5. I do believe labeling was part of the CRL as labeling is invovled with virtually every CRL. As for the nuances of the labeling discussion, this is indeed a negotiation between the FDA and the filing company. Because it usally happens in the final two weeks of a review and is usually the final piece of the puzzel to complete the process, tensions can run high as the FDA can stop the label review process at any time and resort to issuing a CRL. The wording for the Antares deficiency letter included, “As part of our ongoing review of your application, we have identified deficiencies that preclude the CONTINUATION of the discussion of labeling and postmarketing requirements/commitments at this time”, makes crystal clear that the labeling discussion was well underway.

    Part of what Larry said really resonated with me, “The FDA is extremely over worked and not always able to meet PDUFA targets on which the agency is judged. It sometimes uses CRLs to prolong the review time and extend the PFUFA date.” My instincts tell me this is probably the primary reason for the CRL. The FDA shares resources for NDA and ANDA filings. To much work for to few people.
    So, they have to frequnelty choose what projects get prioritized with resources getting reallocated on the fly. People being pulled off of one project and assigned to a higher priority project. It happens in private enterprise all the time, and it also happens with the FDA.

    We’ll know more on Monday.

  6. I’ll add a point of clarification to the above. When I said the FDA shares resources for NDA and ANDA filings, I did not mean that the generic drug (ANDA) and new drug (NDA) organizations share resources. I simply meant that those involved with filing reviews within the new drug side (NDA) can be working on multiple NDA filings concurrently, and can be shifted around real time based on changing priorities. Ditto for the generic ANDA side.

  7. Larry, what is your opinion regarding the CRL?


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