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Expert Financial Analysis and Reporting

Antares Pharma: This Small, Emerging Biotechnology Company Is Poised for Explosive Growth Based on Five Major New Product Introductions by 2020 (ATRS, Buy, $3.02

Investment Thesis

Antares is one of my top recommendations based on its extremely impressive pipeline prospects. In a March 23, 2017 report Antares: Pipeline is Bursting with Late Stage Products (ATRS, $2.77, Buy)  I did an in-depth analysis that goes over my assumptions and resultant projections in great detail for the five partnered products and two proprietary products that will drive results between now and 2021. Note that access to this report requires a subscription to my website I have just listened to the second quarter conference call and nothing in that call changed my investment thesis and sales projections

Key Investment Points from March 23, 2017 Report are Unchanged:

  • Antares has an impressive portfolio of seven new products that could lead to explosive growth over the next four years.
  • I am projecting that revenues of five partnered products could increase from $17.0 million in 2016 to $142.9 million in 2021 (a nearly eight fold increase) and that revenues from two wholly owned and marketed products could increase from $15.1 million in 2016 to $65.1 million in 2021 (a fourfold increase).
  • The company has not unveiled other potential new products, but I think that there will be others, perhaps one or two per year. In my analysis, I do not attempt to attribute any value to them.
  • My price target for 2017 is $4.10 to $5.75 and for 2018 is $5.50 to $7.60.


Antares Essentially Has Two Business Models Based on Injector Technology

The first is one in which Antares partners with another company to provide the injector device which will be used to deliver drugs that its collaborator will market. Antares receives a royalty and also realizes sales from providing the injectors. Antares is partnership with Teva in developing AB rated generics to Imitrex (sumatriptan), EpiPen (epinephrine), Byetta (exenatide) and Forteo (teriparatide). It has a partnership with AMAG Pharmaceuticals to develop a subcutaneous formulation of that company’s branded product Makena (progesterone).

It is also building a specialty pharmaceutical business in which Antares develops proprietary branded products for its own account. The strategy is to meaningfully improve the characteristics of widely used injectable generics by incorporating them in Antares’ innovative injectors. The first product marketed is Otrexup (methotrexate) which was launched in February 2014. In late 2017 or early 2018, ATRS will likely begin to market Xyosted (testosterone). These products will be marketed by two separate sales forces.  The Otrexup sales force will target rheumatologists and the Xyosted sales force will target high prescribing (for testosterone therapies) urologists, endocrinologists and primary care physicians. This specialty pharmaceutical part of the business is in the startup stage and is creating significant losses that offset the profitable partnered products business.

The following table summarizes my projections through 2021. You can see that I am projecting explosive growth for both proprietary and partnered products.

Projections for Key Products of Antares 2016-2021
$ millions 2017 2018 2019 2020 2021
Proprietary products
Otrexup 15.1 16.9 19.3 22.0 25.1
QST 0.0 0.0 10.0 22.5 40.0
Proprietary product revenues 15.1 16.9 29.3 44.5 65.1
Five Partnered Products
Royalties 16.5 49.4 74.8 96.0 114.1
Injector Sales 0.5 11.2 19.8 25.7 28.8
Partnered product revenues 17.0 60.6 94.6 121.7 142.9
Note: There are a few other minor components of the P&L which are not
included in the above table. Also, there are likely to be other products
introduced before 2021.


Some Second Quarter Highlights

Otrexup experienced a 14% increase in total prescriptions over the second quarter of last year. Sales grew at lesser rate of 3% as a result of renegotiating some of third-party payer agreements in order to get better formulary coverage. Otrexup is caught in the industry trend of larger rebates demanded by major PBMs and health care plans in order to maintain coverage. Management predicts slow but steady growth for the product. In the first six months of 2017, it reached profitability for the first time on a standalone basis.

In the past 12 months since Teva launched an AB rated generic to Imitrex (sumatriptan), Antares has booked as its share $15 million of revenues which   largely translates into profit. Teva’s market share gains have been impressive as second quarter market share increased from 21% in the first quarter to 26% in the second. .

The Company reiterated previous guidance on approval for its new proprietary product QST (testosterone) and four new partnered products:

  • Xyosted (testosterone) The PDUFA date is October 20, 2017 and Antares is preparing intensively for the launch making critical decisions on finalizing price, third-party payer access strategy, marketing tactics, distribution strategy, trade negotiations and most importantly sales rep recruitment. Assuming approval on October 20, Antares is targeting a late fourth quarter 2017 or early first quarter 2018 launch.
  • AB rated generic to Byetta (exenatide) Teva's ANDA for exenatide is still under active review at the FDA. Litigation with AstraZeneca has been settled and Teva can launch the product in the US on October 15, 2017 if FDA grants approval by then. Teva will have 180 days of exclusivity pending approval. Antares and Teva are manufacturing pre-launch products and devices in anticipation of approval.
  • AB rated generic to EpiPen (epinephrine) Antares continued to ship pre-launch devices to Teva in the second quarter bringing the total dollar amount shipped to-date to approximately$20 million worth of devices. Teva's ANDA for this product is still under active review at the FDA. Teva has given guidance that it expects approval in late 2017 or early 2018 and will launch shortly thereafter.
  • AB rated generic to Forteo (teriparatide) TEVA's ANDA is still under active review in the US. The paragraph IV certification which grants an automatic 30-month on approval ends in the US in August of 2018. The Teva product, was approved with marketing authorizations in 17 countries within the EU in December 2016. Teva is planning a 2018 launch in certain countries in Europe. However, the exact timing of those launches could be impacted by ongoing US patent litigation.
  • Subcutaneous formulation of Makena AMAG reported in its second quarter conference call that the FDA had set an sNDA review period of 10 months, which results in a target action date of February 14, 2018. Antares is currently executing on a purchase order for commercial devices for use in the Antares developed subcutaneous auto injector in anticipation of approval.

Financing Issues

Antares recently entered into an agreement with Hercules Capital for a five year term loan of up to $35 million. The first tranche of $25 million was funded upon execution of the loan agreement. Antares has an option to draw up to an additional $10 million subject to achieving certain milestones. Payments under the agreement are interest-only until the first principle payment which is due on August 1, 2019. This was done to provide the financial resources needed to properly invest in the launch of Xyosted. This brings the June 30, 2017 cash position to $43 million. Subsequent to the second quarter conference call, Antares announced that it had entered into a $30 million ATM to raise money through periodic equity issuances at current market prices. I would think that this will largely be executed over the next year bringing in an additional $30 million.


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  1. Dear Larry!

    First many thanks for your update.

    I think your estimated revenues for Xyosted is a little too conservative.
    The Testosterone Replacement Therapy Market is very huge (> 1 billion) and Xyosted is a best-in-class product. 10 million dollars in sales in 2018 would be very disappointing, albeit if I can understand your conservative estimate regarding the subdued market launch of Otrexup.
    The preparations for the market launch of Xyosted are on high tours and I am very confident that Antares has drawn experiences from the past and will tackle things more successfully.

    I do not want to exclude any acquisitions by a pharmaceutical company. Because that is precisely the subject of the current CFO Mr. Powell.

    Let us surprise.

    Best Greetings from Germany


  2. Although the agggtregate numbers for Antares look huge,on a product by product basis I have tried to be conservtive. There are just a lot of numbers to add. My conservatism on Xyosted is based on the unnkown extent to which managed care will put up hurdles. It sometimes takes a year or more to establish rebates and gain formulary acceptance. The PK on this product is so good that it could eventiually get 25% or more of a $1 billion market as PK is extremely important for testosterone replacement products.

  3. I doubt management would sell with Xyosted being the potential blockbuster in the near future. But watch out that’s just when these smaller biotechs do sell to maximize value. This little player does have a lot in the pipeline!

  4. It always depends on price. I think Teva will eventually but the company.

  5. Great research and analysis. One question. How do you project $49M in royalty revenue in 2017? Where does that come from?

  6. There was a mistake in the row for the years. 2016 should be 2017 and so on. The $49 million is for 2018. I corrected the mistake. Somehow gremlins always manage to step in on these reports.

  7. Hi, Larry, some reports say Testosterone Replacement Therapy market will be 3B, instead of 1B in your modeling. Then 20% market share will be 600MM? Too optimistic?

  8. even says “The global market of TRT is projected to reach US$6.5 billion by 2020, driven by the aging male population, increasing awareness and growing availability of convenient and efficacious treatment options” . IMO, the last one “convenient and efficacious treatment options” is for Xyosted/QST specifically 🙂


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