Quick Take on Antares Following 2Q, 2015 Conference Call (ATRS, Buy, $2.10)
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.
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 AB Rated Generic to EpiPen, Antares Pharma Inc., ATRS, Otrexup launch + Categorized as Company Reports