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Expert Financial Analysis and Reporting

Quick Take on Antares Following 2Q, 2015 Conference Call (ATRS, Buy, $2.10)

Investment Opinion

Antares stock has been pummeled by the “so far” disappointing launch of Otrexup and uncertainty as to when or if the AB rated generic to EpiPen will be approved. I think that investors will become more confident in the potential for Otrexup by the end of the year and that there is a very good chance for the approval on the AB rated generic to EpiPen. If so, this could lead to very strong stock performance.

I have been disappointed and amazed by the decline of the stock given its fundamentals as I see them. As so often happens in situations of uncertainty for emerging biotech companies there has been extremely aggressive shorting of the stock. I feel that this has led to a much greater than justified decline in the stock. I continue to be a buyer. In my report of June 21, 2015 Antares: One of My Top Stock Picks for 2015 and 2016 (ATRS, Buy, $2.40, For Paid Subscribers), I explained my thinking that results in a price target range of $4.00 to $6.00 in 2016.

The Company’s pipeline has been essentially ignored in the meltdown of the stock. The big product on the horizon is the QST testosterone product which is on schedule for a launch in late 2017 or early 2018. A generic to sumatriptan could be launched in 2016, but this is a minor product. Beyond this is a project with Teva on an exenatide pen product, an undisclosed pen product with Teva and other products. For a company of Antares size, this is a strong pipeline.

NearTerm Outlook for the Stock

Investors are awaiting the outcome of two major events in the coming quarters/ months. Will the AB rated generic to EpiPen be approved and when will Otrexup begin to show an unequivocal upward inflection in prescriptions and sales?

There was nothing new during the call on the AB rated generic to EpiPen other than management quoting Teva management as saying that TEVA felt “fairly good” about approval in 2H, 2015. Both Teva and Mylan (the marketer of EpiPen) have previously issued guidance that incorporated approval in 2015. I think that there is still a good chance that there could be an approval at any time in 2H, 2015. I don’t read anything new on the potential for approval.

The sales reorganization and new marketing approach is anticpated to result in an infection in prescriptions and sales for Otrexup. There is a hint that this is happening. The number of prescriptions in 2Q, 2015 were 8,123 as compared to 6722 in 1Q, 2015, a 21% sequential increase. Prescriptions began to flatten in October of 2014 and continued to be flattish through 1Q, 2015. The number of unique prescribers in the quarter increased sequentially by 8%, from 1,546 in 1Q, 2015 to 1,673 in 2Q, 2015.

My sales projection for 2Q, 2015 was $3.718 million which compares to $3.346 million that was reported. This compares to $3.004 million in 1Q, 2015 and $2.818 million in 4Q, 2014. These 2Q sales are close to being on target and I am not changing my 3Q, 2015 sales projection of $4.453 million or my 4Q, 2015 projection of $5.593 million which would bring full year revenues to $16.481 million. The Company indicates that it can break even on Otrexup sales at an annual run rate in the low $20 millions (say $22 to $23 million) which corresponds to quarterly sales of $5.5 to $5.8 million. If my projections are correct, Otrexup will be close to break even in 4Q, 2015.

Other Items

The sales in the quarter increased 128% year over year to $14.4 million, but this is misleading. Included in this was $5.1 million of amortized revenues resulting from the discontinuation of the agreement with Leo; this resulted in all future amortized revenues being recorded in 2Q, 2015 and there will be no future revenues from this source. Taking into account out this extraordinary event, sales were $9.3 million, a 47% increase over 2Q, 2014.

The operating burn rate in the quarter was about $6 to $8 million. Cash at the end of 2Q, 2015 was $58 million. The Company was criticized for raising $43 million of cash during the quarter, but I believe this was a good decision. In the event that the approval of the AB rated version of EpiPen is delayed or if Otrexup continues on a slower growth trajectory, the Company will not be in a financial bind in late 2015 or early 2016.

Tagged as , , , + Categorized as Company Reports


  1. Robert Dorney says:

    Teva dropped its bid for Mylan which should reduce uncertainty about generic EpiPen introduction following approval.

  2. Thanks

  3. TDPeterson123 says:

    Hi Larry,

    I thought you might find this interesting…could have significant implications for QST

    Testosterone Treatments Protect Cardiovascular Health in Veterans

    When levels of the hormone are returned to normal, the risk of heart attack, stroke or death from any cause was lowered significantly. By Stephen Feller Aug. 10, 2015

    WASHINGTON, Aug. 10 (UPI) — Researchers found that returning testosterone levels to normal in men who have low levels of it lowered their risk of heart attack, stroke, or death from any cause, contradicting previous studies that questioned the efficacy of the hormone treatment.

    The mixed results of previous studies has left doctors without concrete guidelines on treating men for low testosterone, with the Food and Drug Adminstration advising against over-prescription because of an increased risk of heart attack and stroke.

    The new study is said to be significant because it considered more than 83,000 patients over the course of 15 years, from 1999 to 2014.

    “It is the first study to demonstrate that significant benefit is observed only if the dose is adequate to normalize the total testosterone levels,” said Dr. Rajat Barua, a cardiologist at Kansas City Veterans Affairs Medical Center, in a press release. “Patients who failed to achieve the therapeutic range after testosterone replacement therapy did not see a reduction in [heart attack] or stroke and had significantly less benefit on mortality.”

    Researchers analyzed records for 83,010 male veterans, splitting them three groups: Men whose treatment was to restore testosterone to normal levels; Men who were treated but whose levels did not return to normal; and men who were not treated. The men were followed-up with an average of 4.6 to 6.2 years after treatment.

    The difference in benefit from testosterone treatment between the group restored to normal levels and those only treated for low testosterone was small, although those who got some kind of treatment saw a small benefit over the men who were not treated, the researchers said.

    Compared to men who were untreated, however, the men whose levels returned to normal were shown to have 56 percent less risk of dying during the follow-up period, were 24 percent less likely to have a heart attack, and 36 percent less likely to have a stroke.

    Researchers wrote in the study that future studies will need to clarify the effects of testosterone on the cardiovascular system. “The mechanisms for these effects remain speculative,” they wrote.

    The study is published in European Heart Journal.


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