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`Antares: Thoughts On The Upcoming Otrexup Launch - Antares Pharma Inc. (NASDAQ:ATRS) | Seeking Alpha
`
`Seeking Alpha
`
`Antares: Thoughts On The Upcoming Otrexup Launch
`Nov. 8, 2013 8:59 AM ET31 comments
`by: Smith On Stocks
`
`Investment Thesis
`
`Antares (NASDAQ:ATRS) is preparing to launch Otrexup in January 2014; it is the first product it has ever introduced and
`investor attention is keenly focused on the launch. This report is not a comprehensive overview and if you would like to see more
`in-depth research on other aspects of the company, I would refer you to my website. In this report, I focus primarily on the
`preparations that Antares is making for the Otrexup launch.
`
`Probably the most important factor in stock price performance in 2014 will be how the market judges the launch. There is some
`anxiety among investors because this is the first company launch and also because managed care initiatives have slowed the
`adoption of new products. Most recent new product launches have been disappointing relative to expectations, even for those
`that have gone on to gain traction. Some hedge funds have a strategy of shorting into a launch on the assumption that initial
`launch results will be viewed as disappointing.
`
`Management has avoided giving any numerical guidance on sales potential in 2014 although in the past it initially said that
`peak sales potential could be in the $100 to $200 million range. With favorable results in a systemic bioavailability trial,
`management is now guiding to the upper end of that range. I am anticipating a slow initial launch with sales as follows: 1Q, 2014
`($250 thousand), 2Q, 2014 ($1 million), 3Q, 2014 ($4 million) and 4Q, 2014 ($6 million) resulting in full year sales of $11.3
`million. I think that most Street analysts following the stock have comparable first year numbers. My 2015 sales estimate is $45
`million.
`
`I have been recommending Antares since my initiation report of December 15, 2011. The basis of my recommendation was a
`new strategy formulated five years ago to change the company from a business model that was based on licensing its injection
`technology to corporate partners. The new strategy is to take proven drugs that are off patent and use Antares injection
`technology to improve the performance of the drug and to provide the intellectual property protection needed to block generic
`competition. These drugs will be marketed by Antares, not a partner. Its products can be approved by the 505 (B) (2) pathways in
`which Antares only has to demonstrate bioequivalence to the generic drug.
`
`This strategy makes for a quick turnaround time on product development time. For example, it took three years between the IND
`filing and NDA approval of Otrexup. For a new chemical entity, this time could very well be 7 to 10 years. The FDA review time
`for Otrexup was 10 months. Antares believes that its next major product, QS T for testosterone replacement can be launched in
`2016. Thereafter, it believes that it can launch one major new product per year for the next five years. If so, this should provide
`explosive sales and earnings growth over the balance of this decade.
`
`Antares is a complex company with many moving parts, some of which are not addressed in this report. However, estimates for
`all parts of Antares are shown in the income statement projections shown in the following table.
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`http://seekingalpha.com/article/1822102-antares-thoughts-on-the-upcoming-otrexup-launch
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`Medac Exhibit 2063
`Koios Pharmaceuticals v. Medac
`IPR2016-01370
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`Antares: Thoughts On The Upcoming Otrexup Launch - Antares Pharma Inc. (NASDAQ:ATRS) | Seeking Alpha
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`(Click to enlarge)
`
`Source: Smith On Stocks Projections
`
`Otrexup: Product Positioning in the Rheumatoid Arthritis Market
`
`Otrexup is a self-injected dosage form of methotrexate, the gold standard of disease modifying drugs used to treat rheumatoid
`arthritis. Key opinion leaders that I have heard speak have enormous confidence in methotrexate and virtually all patients who
`need a disease modifying drug are started on oral methotrexate. Still, there are limitations of oral methotrexate that Otrexup
`effectively addresses and gives it a significant commercial opportunity.
`
`As rheumatoid arthritis progresses, the physician may need to increase the dosage of methotrexate. Initial does may start at 7.5
`2
`mg/mm2/ week. As the dose reaches 15 mg/mm / week, the level of drug in the blood plateaus so that increasing the dose does
`not increase the therapeutic effect. This may force the physician to add on or switch to a biologic drug like Enbrel or Humira to
`control the disease. There are also some patients who can't tolerate oral methotrexate because of gastrointestinal side effects.
`
`The product positioning for Otrexup is straightforward. Unlike oral methotrexate, as Otrexup's dose increases up to 25 mg/mm2/
`week, blood levels and therapeutic effect increase directly as opposed to plateauing. This has the advantage of allowing a
`patient to stay on the trusted methotrexate treatment for a longer period of time postponing the use of biologics.
`
`Antares has indicated that it will price Otrexup at a price of $548 per prescription. Each prescription contains four weekly
`injectors. This has cost implications as the biologics can cost $15,000 to $25,000 per year versus about $6,600 for Otrexup. If
`Otrexup can avoid the use of a biologic, a health care plan can save $10,000 to $20,000 per year.
`
`Otrexup enhances and extends the clinical utility of methotrexate through increased bioavailability and improved tolerability.
`Importantly, Otrexup can be self-injected; it is easy to use and is virtually painless. I have seen some writers dismiss Otrexup as
`just a new dosage form of methotrexate that has limited medical and commercial potential. This view misses the key clinical that
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`cost and ease of use advantages that meaningfully differentiate Otrexup from oral methotrexate. For an in-depth of the product
`profile of Otrexup, I would suggest that you refer to the report that I wrote on August 20, 2013.
`
`The Commercial Team Introducing Otrexup
`
`The launch and marketing of a new product entails much more than just hiring salesmen and having them go out and call on
`doctors' offices. There are three essential components of a commercial team: the salesmen and their district managers, the
`national account managers who negotiate access to managed care formularies and the medical science liaisons who educate
`the medical and managed care communities about the benefits of the drug.
`
`Antares has been planning the Otrexup launch for about 18 months. At this point, the company has three district sales managers
`in place. They have received applications from over 500 candidates and are currently interviewing prospects for sales positions.
`The goal is to hire 25 salesmen and have them in place by Thanksgiving before the actual launch in January. The sales force
`will focus on the 2,500 physicians that write 80% of prescriptions for oral methotrexate. This physician universe should quickly
`grasp the clinical value and cost benefit of Otrexup in patients who have not had an adequate response to oral methotrexate.
`
`There are 6 managed care specialists, who have been calling on managed care organizations and third-party payers since
`June 2013. They have started to implement a comprehensive strategy to gain access and reimbursement and have had
`discussions with payers that provide coverage for more than 200 million lives in the United States. Initial access to Otrexup will
`be at the tier 3 formulary level although several plans have mentioned the possibility of tier 2 placement. Otrexup also met the
`deadline for Medicare and Medicaid state coverage effective January 1, 2014.
`
`In September, Antares deployed 6 dedicated medical science liaison professionals who have initiated dialogue with many key
`opinion leaders in rheumatoid arthritis. They are also educating rheumatologists, nurses, patients and caregivers of the
`therapeutic importance Otrexup.
`
`Antares has built inventory to support a full year of sales. They want to avoid the risk of being out of stock.
`
`QS T: The Next Important Product after Otrexup
`
`On September 16, Antares announced that the first patients have been dosed with its injectable QS T product for males with low
`testosterone levels or low T. This is a dose-ranging study that is designed to evaluate testosterone administered weekly by
`subcutaneous injection at doses of 50 milligrams and 100 milligrams. Testosterone is a highly viscous substance that is difficult
`to deliver by injection. A major advantage of QS T is that it administers the dosage in less than 5 seconds.
`
`Data seen in the first few patients has been encouraging. The therapeutic goal of QS T is to avoid the peaks and valleys of blood
`levels seen with most other injectable formulations and provide a consistent blood level comparable to gel formulations. This
`has been seen in patients treated so far.
`
`The complete results of this first study should be available in 1Q, 2014. If the results are encouraging, pivotal clinical studies can
`be started in 2014, an NDA can be filed in 2015 and QS T can be launched in 2016.
`
`Intellectual Property Protection
`
`Antares' products are based on generic drugs that do not have the protection afforded by composition of matter patents.
`However, the company has a comprehensive strategy for patenting drug formulations and its injectable technology. During the
`third quarter conference call, the company mentioned that it had received three new patents on Otrexup in the last few months
`and that Otrexup is now protected by at least 7 different patents going out as far as 2030.
`
`These patents prevent competitors from copying the injectors and formulations. It does not prevent them from developing their
`own formulations and injectors. However, any such competitive product would have to be sold as a branded product and could
`not be interchanged with Otrexup as is the case with generics.
`
`Methotrexate Is a Valued Drug
`
`Methotrexate is considered to be the gold standard therapy for rheumatoid arthritis patients who need a disease modifying
`agent. It is the most important and valued drug in the rheumatologist's drug armamentarium. I have listened to numerous
`presentations at conferences by key opinion leaders in rheumatology and am always struck by the confidence that they have in
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`this drug.
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`Antares: Thoughts On The Upcoming Otrexup Launch - Antares Pharma Inc. (NASDAQ:ATRS) | Seeking Alpha
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`Rheumatoid arthritis patients generally start on drugs such as aspirin, naproxen and ibuprofen that treat the pain and
`inflammatory symptoms of the disease. As the disease worsens, they progress to disease modifying agents that treat the cause
`of the disease and the first drug used is almost always methotrexate. If patients fail to respond to methotrexate, physicians turn to
`newer biologic agents such as Enbrel, Humira and Remicade. Methotrexate may be used alone or in combination with anti-
`inflammatories and biologics. In total, it is estimated that methotrexate is used in 70% or more of rheumatoid arthritis patients
`who need disease modifying agents. It is also used to treat psoriasis and other autoimmune diseases.
`
`Methotrexate was first developed as an anti-cancer agent in the late 1940s. In cancer, its mode of action causes the same effect
`as many chemotherapy drugs; it inhibits the synthesis of DNA in rapidly dividing cells. It has a different mode of action in
`autoimmune diseases like rheumatoid arthritis in which it blocks the proliferation of T-cells that play an active role in these
`diseases. This activity was ignored for many years, but beginning in the mid-80s, this effect became more broadly recognized
`and methotrexate began to be used widely for the treatment of autoimmune diseases.
`
`Methotrexate for rheumatoid arthritis is most commonly given as oral tablets once a week. It is usually started at 7.5
`2
`2
`mg/mm /week and then titrated up to as much as 20 to 25 mg/mm /week. The absorption of methotrexate can be erratic as the
`dosing is increased and this can be a problem getting patients titrated to the right dose.
`
`Gastrointestinal side effects such as nausea are troublesome for somewhere between 20% and 50% of patients when initially
`treated and can prevent dosing to the appropriate level. In some patients these side effects disappear on their own or may be
`controlled by lowering the dose or spreading the dose out over the course of a day. Some patients take their dose on Saturday
`so that the side effects do not interfere with the work week.
`
`Otrexup Product Description
`
`Otrexup is a disposable single, self-administered injection intended for once weekly administration of methotrexate. It is injected
`sub-cutaneously (under the surface of the skin) using Antares' Vibex Medi-Jet auto injector device in one of four dosages of 10,
`15, 20 and 25 mg/mm2/week. (mm2 refers to the estimated skin surface area of the patient being treated). These dose volumes
`are small and can be comfortably injected in the leg or the abdomen. Otrexup delivers the dose in about half a second, but
`patients are told to hold the device on the skin for about 3 seconds to make sure that they complete administration of the dose.
`There is minimal pain on injection. Antares ran a study in which patients were asked to evaluate the pain of injection on a scale
`of 0 to 100 where 0 represented no pain and 100 represented maximum pain. The Vibex Medi-Jet device used with Otrexup was
`ranked between 2 and 3.
`
`The clinical program had to show that patients with moderate to severe impairment of their hands-which commonly occurs in
`rheumatoid arthritis patients-, could safely administer Otrexup. Antares conducted a usability study which showed that 98% of
`RA patients were able to effectively use it in a home setting. The instruction for use manual provided with each injector was
`found by 100% of patients to correctly instruct them on how to use the device as intended.
`
`Self-administration of Otrexup is a three-step process that takes about three seconds. Patients self-administer the drug by first
`removing a cap and unlocking the safety by flipping it up. They then touch the collar of the device to the skin to trigger the
`injection; there is no button to push or any other action required by the patient. The patient never sees the needle which reduces
`patient apprehension and therefore improves compliance. Otrexup is a well-designed system and contrasts with currently used
`injectable devices in the US that require removing the drug from a vial with a needle and syringe and then injecting
`intramuscularly. With intramuscular shots, it is possible to hit a major blood vessel leading to some form of embolism, but there is
`little risk of this with a subcutaneous injection.
`
`Safety is an important issue as methotrexate was originally developed as a cancer drug with some potentially dangerous side
`effects and physicians don't want to inadvertently expose other members of the family to the drug. This injection device is self-
`contained and delivers 99.99% of the dose of methotrexate leaving little drug residue in the device. In addition, a locking needle
`shield reduces the risk of any accidental needle sticks following usage.
`
`Disclosure: I am long ATRS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it.
`I have no business relationship with any company whose stock is mentioned in this article.
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