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Expert Financial Analysis and Reporting

Antares: Things Are Looking Up (ATRS, Buy, $2.22)

Overview of Report

I listened to the presentation by CEO Bob Apple at the Raymond James conference on March 5th and go over his key remarks in this report I have been frustrated by the CRL for Xyosted and delays in approval for AB rated versions of EpiPen and Byetta which have had a sharply negative impact on the stock. However, the recent approval of Makena SC was a shot in the arm (for both Antares and patients). I think that within two weeks we are likely to hear a clear path forward to approval for Xyosted and I think that approval of the AB rated version of EpiPen is highly likely in the near  and approval of the AB rated version of Byetta could also come in 2018. The year 2018 could be a breakout year for Antares.

Xyosted

Antares held a type A meeting with the FDA on February 21, which Mr. Apple described as cordial. The unexpected and shocking CRL received last October seemed to focus on two side effects seen in the phase 3 trial. These were incidences of high blood pressure and depression. These effects are known class effects of all marketed testosterone products and there is no reason to believe that Xyosted results in more severe cases than currently approved products. In fact, I think that  the incidence would be much less since Xyosted appears to be best in class in maintaining blood levels of testosterone below the accepted upper bound of normal. Excursions above this level are more likely to cause side effects.

Why then did FDA single out Xyosted? I believe that it was because the FDA has requested that manufacturers of currently marketed testosterone replacement products conduct post marketing studies to help assess the risk of high blood pressure and depression in a real world setting. However, manufacturers have not followed though and the FDA is unhappy. It is my best judgment that FDA is using this CRL to pressure Antares into doing a phase 4,  past marketing study as a condition of approval.

Antares already knows what was discussed at the “cordial meeting” with FDA on February 21st. However, all companies refrain on discussing the outcome of a type A meeting until they receive written minutes from the FDA to make sure that  their understanding of what was agreed upon agrees with the FDA minutes. I think that Antares in two weeks will indicate that the FDA will approve the product if Antares commits to do a well-designed phase 4 post marketing plan to determine the real life risk of high blood pressure and depression. I would be shocked if this is not the outcome, but nothing is ever certain with the FDA. If I am correct, I would expect a significant bounce in the stock.

Makena SC

Antares expects AMAG to begin receiving royalties from Makena SC this month. I think the stock market is worried about the effect potential generic completion could have in the second half of the year. I would not be surprised if approval of a generic takes longer than that and I also feel that Makena SC is so superior to an intramuscular generic version of Makena that even when a generic are approved it won’t have a dramatic  effect. I think analysts will be surprised on the upside for 2018 sales of Makena SC.

AB Rated Generic Version to EpiPen

Mr. Apple says that Teva is still expecting approval of their AB rated version of EpiPen in 1H, 2018. I would not be surprised to see an approval at any time. Antares pegs the EpiPen market in the US at $650 million in 2017 although Mylan has not released any numbers. This is a huge opportunity and if this approval is gained, it should have a huge impact on the stock.

AB Rated Version of Byetta (exenatide)

A legal settlement has been reached with Astra-Zeneca so that marketing can begin as soon as the sNDA is approved. Mr. Apple says that the FDA has been very slow on approving generics so that Teva has no clear idea on when approval might come. I think that this slow FDA action on Byetta might also apply to the generic version of Makena so that its approval might be longer than expected.

AB Rated Version of Forteo (teraperatide)

Teva has settled litigation with Eli Lilly in the US which will determine potential launch time, but the timing hasn’t been disclosed. Teva also has to gain FDA approval for its AB rated version in the US.

In Europe, there is no such thing as an AB rating that allows a generic to be substituted when a prescription is written for the brand name. They have something similar called therapeutic equivalence. Teva has received approval in 17 European countries, but has not settled litigation with Eli Lilly that would allow marketing to begin.

This is a giant opportunity for Teva and Antares as Forteo does over $900 million of sales in the US and perhaps $700 million in Europe. The timing of these launches is difficult to project.

New Pipeline Product

Antares will announce a new product for its own account within six months. It hasn’t given any clues on what this might be.


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7 Comments

  1. I am hearing from a good source TEVA will hear from the FDA with an approval for an AB rated EPI but it will be sometime in 2018. Is that early 2018? Who knows. And it is the device that has been the sticking point but what else could it have been?

  2. TDPeterson123 says:

    Thanks Larry. I like the phrasing used in your title, things are looking up, and indeed they appear to be. Finally 🙂 The Makena approval was really nice to see. I agree with all of your thoughts on Makena including the liklihood of Gx competition being later than 2018. First pass ANDA CRL’s are still way up the upper 90% range. I do expect a fairly high percentage of current patients to switch to Makena SC due to the notable reduction in felt pain and to a lessor extent the ability to keep clothed in the doctors office. Fast, painless administration in the back of the arm vs. a painful spear in the exposed glute. I already feel better for those ladies, and I’m not the one who’s been suffering the Makena shots.

    Agree about Gx epipen as well. Approval and Launch timing continues be early 2018 from Teva. Teva’s been working so close with the FDA on this since Q2 2017. If they’re still guiding early 2018 launch, and they are, then indeed launch could be imminent.

    No idea about Exenatide other than it probably received its “as usual” first pass CRL from the FDA. Hopefully, if a CRL was in fact received, it was of the ECD variety (TBD).

    Hoping for a surprise Q2 EU launch of Gx Forteo. Why not?

    Pipeline additions…hmmmm. I have a couple of thoughts. I’ll keep them close to the vest for now.

  3. larry, the 30day period from the FDA meeting has passed – is the company going to communicate with investors about it now that it is public record — and, on that note, is public record accessible?

  4. This is a material event that has to be disclosed. They will only communicate key points. They will not make the whole communication public.

  5. TDPeterson123 says:

    Today (3/23) is 30 calendar days from 2/21, so today probably was the day Antares received their notes from the FDA regarding the meeting.

  6. Larry, one of the points the company made on their 4Q concerning the AMAG opptny was interesting, and i wanted to ask you if my interpretation was correct. They said Makena does not go thru the regular Walgreen/CVS distribution network, which would make it more difficult for a generic competitor to grab share — is this because the Makena product goes through compound pharmacies?

  7. TDPeterson123 says:

    Antares just released their next steps PR for Xyosted. Larry surmised and advised like a prophet regarding the FDA’s thoughts and actions on this one. Well done and thank you Larry.

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