Expert Financial Analysis and Reporting

Purpose of Report

I just listened to the presentation by Antares at the Jefferies conference in London on Wednesday, November 20 and this report is a summary of key points that I heard on the call. I am in the process of coming up with my sales and earnings model for 2020 and beyond. There are a lot of things going on with the launches of Xyosted and the AB rated generic to EpiPen in 2019. There is a pending important launch of an AB rated generic to Forteo (probably comparable in potential to EpiPen) and a much smaller opportunity for an AB rated generic to Byetta, both in 2020.

I recently published a detailed report showing my sales model for Xyosted. This conference was useful in providing some data that will aid my projections for other products. This report is in bullet point form rather than in a more carefully crafted report that I usually put out. Let me know what you think of this format.

The stock price is just beginning to reflect that this is potentially one of the most explosive growth stories in biopharma. The stock has a long way to run in my judgment.

Indorsia Deal

Antares announced on November 19 that it had entered into a global agreement with the Swiss company Indorsia Pharmaceuticals, to develop a novel, drug-device product combining selatogrel, a potent, fast-acting and highly selective P2Y12 receptor antagonist that has completed phase 2 development, with the Antares subcutaneous Quick Shot auto injector. Selatogrel is a new chemical entity being developed for the emergency treatment of a suspected acute myocardial infarction in adult patients with a history of AMI. It is an emergency medicine similar to EpiPen in its marketing characteristics.

• Selatogrel has a similar mode of action to the widely used drugs Plavix and Brillinta in that it inhibits the aggregation of platelets and reduces the tendency to form blood clots that can lead to heart attacks. These products are very broadly used on a global basis.
• While selatogrel has the same mechanism of action, the market is quite different. Plavix and Brillinta are given in pill form and used chronically to prevent heart attacks. Selatogrel is given subcutaneously and would be used when a patient senses symptoms of a heart attack emerging.
• This product has market characteristics similar to EpiPen. The addressable market would be patients who have had a heart attack or who are determined to be at high risk. It would be carried on airplanes, ships, trains, places of business, etc. It is a huge addressable market; much, much larger than EpiPen.
• This product is a new chemical entity that could carry 20 years of patent exclusivity.
• The product has completed phase 2 trials which Bob Apple characterized as very encouraging. Antares will work with Indorsia to develop a product in the Quick Shot formulation. Mr. Apple said phase 3 could begin in 2021. As a guess, if the phase 3 trial is successful, commercial introduction would likely be in 2025 or later.
• Indorsia is working with the FDA on a Special Protocol Assessment. The number of potential participants for a phase 3 trial is huge, but it is a very heterogeneous population in terms of risk. The SPA will probably identify a sub-group to be studied and come up with an endpoint that demonstrates that heart attacks are prevented.
• Economics are similar to other Antares partnered products with a margin on injector sales and a high single digit to low double-digit royalty on sales.
• Apple says this could be the largest product opportunity that Antares has yet encountered.
• Antares began talks with Indosia in July and the deal was completed in November.

Xyosted Launch

• 12,000 patients have been treated.
• 3,500 physicians have prescribed the product. The target population is 12,000.
• Persistence is a huge issue for testosterone supplementation products. Patients who receive gels typically drop out of therapy or go on to an IM product within 3-6 months of receiving a new prescription. Persistence for an IM prescribed product is 6 months. Antares says that persistence with Xyosted has been 7 months. I must admit that this is a bit confusing as Mr. Apple did not say how many of the 12,000 patients who have received Xyosted that this is based on,
• There has been good penetration of the three key physician markets; endocrinology, urology and general practitioners.
• New patients account for 50% of new prescriptions for Xyosted and switches from IM are 40%. Switches from gels are 10%.
• Demand do far has been patient driven. A media campaign started in July using Instagram and Facebook is targeted at creating patient awareness.
• IM formulations are 70% of the testosterone supplementation market
• The market is growing at 7% per annum.
• Analysts have peak sales estimates of $150 to $300 million for Xyosted.
• Antares is happy with the current sales force of 83 to 85 reps and have no immediate plans for expansion
• They are talking to potential partners for Xyosted in foreign markets. However, the reimbursement for branded generics is generally poor and opportunities are on a limited, country by country basis.

AB Rated Generic to Epi Pen

• The adult targeted product was launched in 1Q, 2019 and the Junior product for kids in June 2019.
• Prescriptions were 29,000 in 1Q, 2019: 125,000 in 2Q, 2019 and 237,000 in 3Q, 2019
• The market share in 3Q was 27% and currently is 34%. Teva’s goal is 50%.
• Mylan continues to encounter production issues with EpiPen.
• 4Q is seasonally slower than 3Q for prescriptions.
• Teva’s sales have primarily come from pharmacy sales. They have only scratched he surface for sales to schools and other institutions.

AB Rated Generic to Forteo

• The product remains under FDA review. Teva originally guided to a 4Q, 2019 launch. It is now guiding for a 2H, 2020 launch,
• The product is approved in 18 foreign countries, but Teva apparently is waiting for US approval before launching.
• There are difficult reimbursement issues for branded generics in many foreign markets.
• Forteo had US sales of $750 million in 2018 and foreign sales of $750 million in 2019.
• I think the potential to Antares for the AB rated generic to Forteo is comparable or better than the AB rated generic to EpiPen.

AB Rated Generic to Byetta

• Sales of Byetta are about $100 million.
• It is a small opportunity.
• Teva is looking to launch in 2020.

Pipeline

• ATRS 1701 is an emergency product for use in neurology. The chemical entity on which it is based will be disclosed in 2020
• ATRS 1710 can be marketed by a 50rep sales force separate from the Xyosted/ Otrexup sales force. Antares can use the infrastructure created for Otrexup and Xyosted to deal with reimbursement and other marketing issues.
• The Pfizer product is also an emergency pen. The underlying chemical entity has not been disclosed
• Antares has emerged as the go-to product for emergency medicines delivered subcutaneously because the injectors must be more reliable.

Company Sales Guidance

• Sales guidance for 2019 has been raised twice over the course of the year. Latest guidance for 2019 is $110 to $120 million. Sales in 2018 were $64 million.
• No guidance on sales or cash flow.