5/31/2016 Antares; My View of How Otrexup and Medac’s New Product Rasuvo May Compete (ATRS, Buy, $2.54) | Expert Financial Analysis and Reporting | Smit…
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`Antares; My View of How Otrexup and Medac’s New Product
`Rasuvo May Compete (ATRS, Buy, $2.54)
`
`Posted by Larry Smith on Jul 12, 2014 • (21)
`
`Investors Are Concerned About Rasuvo’s Impact on Otrexup
`
`Investors have been concerned about the potential effect on Otrexup if the private company Medac gains approval for Rasuvo. Both
`products are device drug combinations that use highly engineered and proprietary auto injectors to administer methotrexate as a sub-
`cutaneous injection. These products were both developed under the 505 (b) 2 pathway which does not require clinical trials
`demonstrating efficacy to gain approval. The efficacy of methotrexate is well established. It is the gold standard drug for the treatment
`of rheumatoid arthritis and is also important in the treatment of psoriasis and some types of cancer. In order to gain approval Antares
`and Medac needed only to show that their drugs result in therapeutically effective levels of methotrexate in the blood.
`
`Otrexup was approved in October 14, 2013 and has been marketed in the US since early this year. Otrexup is considered a new and
`novel dosage form of methotrexate which entitles it to three years of market exclusivity. There are additional patents on its Vibex auto
`injector that potentially could provide exclusivity for many years and means that any competitor cannot launch a product with an auto
`injector that infringes upon its Vibex auto injector patents. These patents do not protect against a product using a different type of auto
`injector that doesn’t infringe. Medac uses an auto injector developed by Becton-Dickinson.
`
`Antares is Attempting to Block FDA Approval of Rasuvo
`
`Please keep in mind these dates. Medac announced on January 27, 2014 that the FDA had accepted its 505 (b) 2 application and had
`granted a PDUFA date of July 10, 2014. Because the FDA has to accept or reject the application within 60 days, this means that the
`application may have been filed on November 27, 2013 or later. However, there was no obligation for Medac (a privately owned
`company) to announce the FDA acceptance and it could have been filed much earlier. The PDUFA date is usually set by the FDA as
`ten months after the filing of the application. This suggests that the 505 (b) 2 application for Rasuvo was filed on or about September
`27, 2013. This would be before the approval of the 505 (b) 2 application of Otrexup on October 14, 2014.
`
`The timing of the 505 (b) 2 application is of critical importance. If it was filed after the approval of Otrexup on October 14, 2013, Medac
`would be required to submit a certification that it does not infringe several issued patents listed in the Orange Book pertaining to
`Otrexup and would have had to have listed Otrexup as a reference listed drug in their application. In this event, Medac would have
`been required to notify Antares of the filing. At this point, Antares could file for patent infringement. This would prevent approval of
`Rasuvo for either 30 months or the completion of a trial whichever comes first. It is almost always the case that the 30 month stay
`applies. So, if this is the case, Rasuvo could not come to market until April 14, 2016.
`
`Antares filed a Citizen’s petition to block the approval of Rasuvo in March. Antares appears to believe that Medac should have cited
`Otrexup as the reference listed drug for Rasuvo’s application. This might have resulted in a 30 month stay on approval of Rasuvo. It is
`arguable that even if the 505 (b) 2 application of Rasuvo was filed before the approval of Otrexup on October 14 that the 30 month
`stay should still be applicable because Medac knew that Otrexup was the reference listed drug.
`
`Following the filing of the Citizen’s petition to block approval of Rasuvo in March, 2014 documents were exchanged and an injunction
`hearing was held on June 27. A mediation conference was then scheduled for July 9 which was the day before the July 10 PDUFA
`date. However, given the usual slow pace of these types of cases, it may be that this confrontation will continue beyond July 10.
`
`There are also lawsuits by Antares against Medac alleging infringements of patents held by Antares. I believe that Medac and Becton
`Dickinson are counter suing Antares for patent infringement. I think it is next to impossible for investors to predict the outcome of many
`patent disputes and this is certainly the case here.
`
`It is important to understand that any potential third competitor will be subject to a 30 months stay and could not be launched until April
`of 2016 at the absolute earliest. Also, any third competitor also has to defend against patents held on the Otrexup and Rasuvo
`devices.
`
`Rasuvo Not Approved on July 14, but I Am Expecting That It Will Be
`
`The July 10, 2014 PDUFA date has passed and I keep checking the Medac website for an announcement that Rasuvo was approved
`and as I write this on July 11, there has been no announcement. It could be the case that the mediation hearing has brought up some
`issue or decision that has delayed approval.
`
`It is also possible the FDA is overworked and is just slow on completing its work; this is not unusual. It might find some issue to
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`Medac Exhibit 2064
`Koios Pharmaceuticals v. Medac
`IPR2016-01370
`Page 00001
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`prolong the review time or there could be a problem with the Medac filing although I doubt this. Perhaps the FDA is not be satisfied
`with Medac’s user study, but this is just wild speculation on my part. These products are intended to be self-administered by
`rheumatoid arthritis patients who may have badly deformed hands. The FDA required Antares to do a user study that demonstrated
`that Otrexup could be self-administered by rheumatoid arthritis patients. Perhaps Medac’s study was not as convincing but I doubt
`this.
`
`My working assumption is that Rasuvo will be approved shortly and launched in the US before the end of 2014. I also think that the
`patent disputes on the devices will be settled by cross licensing patents between Antares and Becton Dickinson. This will make it more
`difficult for a third competitor to develop an auto injector that does not infringe on these patents.
`
`How Will Rasuvo and Otrexup Compete in The Market?
`
`There is some uncertainty on the part of investors on how Rasuvo and Otrexup will compete in the market. Let me make the point that
`Rasuvo is a unique product and has not been approved as a generic to Otrexup. Generics can be substituted by pharmacists for the
`brand name product and usually compete on price. This is not the case in the Otrexup/ Rasuvo competition.
`
`So will Rasuvo still try to compete on price? I don’t think so. I just don’t see that Medac would compete on a price basis. If they come
`in at a significantly lower price than Otrexup that forced Antares to match the price, Medac would gain no advantage in unit market
`share and would suffer on sales because of the lower price. Based on experience with past launches of similar or me-too products, I
`would expect the Medac product to be priced at the same, a slightly lower or a slightly higher price. I would also add that two
`companies promoting similar products would accelerate acceptance and expand the market.
`
`How Big Is The Opportunity for Otrexup and Rasuvo?
`
`During a recent presentation, Antares presented a slide that showed the breakdown of the usage of anti-rheumatic drugs in the US. It
`showed that there are 700,000 patients in the US who have not progressed to a biologic and showed that of patients 420,000 were
`treated with methotrexate. It also showed that 590,000 patients had progressed to biologics and of these 280,000 were being
`prescribed methotrexate in addition to the biologic. There was a third population of 110,000 patients who were post biologic of whom
`56,000 were being given methotrexate. Altogether, this indicates there are 756,000 patients using methotrexate for the treatment of
`rheumatoid arthritis in the US.
`
`Otrexup and Rasuvo will not be used in mild to moderate rheumatoid arthritis patients if oral methotrexate or some other disease
`modifying agent is effective. They could be used when oral methotrexate is no longer controlling the disease or when patients can’t
`tolerate oral methotrexate. Their primary use will be to keep patients on methotrexate longer before they have to move on to a
`biologic. The above table does not directly address how big this market might be, but it might be some part of the 280,000 patients
`now being prescribed methotrexate plus a biologic. At the Otrexup price of $6,000 per year, this is a rather staggering $1.6 billion. Let
`me hasten to add that I am not projecting sales potential of $1.6 billion for Otrexup and Rasuvo; it will be some fraction of this and at
`this point it is very difficult to guess at a percentage. I am simply indicating that there seems to be a lot of potential.
`
`The presentation also shows that there are 62,000 patients who are receiving subcutaneous methotrexate. There is no approved
`subcutaneous methotrexate product so this represents an off-label formulation that uses injectable methotrexate delivered with an
`insulin syringe. In addition it is estimated that there are about 38,000 patients receiving intramuscular injections of methotrexate.
`Altogether, this indicates that there are 100,000 patients currently receiving methotrexate injections. Otrexup and Rasuvo should
`replace a good deal of the off-label and much of the intramuscular methotrexate usage. These 100,000 patients represent an
`addressable market of $600 million. Again, I am not suggesting that Otrexup and Rasuvo would replace all of this usage.
`
`I do not have any good estimates on the size of the psoriasis market. Antares has indicated that there are 7 million psoriasis patients
`in the US of whom 1 million are in the moderate to severe status that will be the target for Otrexup and Rasuvo. I have heard estimates
`that 200,000 patients could potentially benefit from use of methotrexate, but I don’t know how many are on methotrexate and how
`many of this number might be candidates for Otrexup or Rasuvo. However, it is likely to be a meaningful opportunity. In addition,
`methotrexate is also used in some cancer indications, but I can’t even begin to hazard a guess as to the potential for Otrexup and
`Rasuvo in this therapeutic category.
`
`Importance of Otrexup to Antares
`
`At this point, you are probably waiting for me to give you an estimate of the addressable market for Otrexup and Rasuvo and what part
`of this market they will capture, but I can’t with any degree of accuracy. Before, Rasuvo entered the picture, Antares was projecting
`that Otrexup had peak sales potential of $200 million around 2019. My gut feel is that is quite low, but for the time being, let’s assume
`that Otrexup and Rasuvo split the market and each reaches $100 million at their peak in 2019. What does that mean for Antares and
`Otrexup?
`
`Antares has estimated that Otrexup breaks even at about $24 million of sales indicating that means that product and marketing costs
`are currently running at $24 million. The current cost structure should not increase much as sales approach $100 million. If costs were
`$24 million with $100 million of sales, pretax profits would be $76 million. Assuming an effective tax rate of 35% and 130 million shares
`outstanding, I calculate that the contribution to EPS would be $0.38. If we assume a modest P/E of 15 is placed on these EPS,
`Otrexup alone would be worth $5.50 in the Antares stock price in 2019. Going through the same exercise using $36 million of costs in
`2019 results in a stock price due solely to Otrexup of $4.80.
`
`I hope that you take these numbers for what they are intended to be, i.e. giving magnitude and trend and not being ball bearing
`precise. However, the bottom line is that Otrexup represents major potential for Antares. I am disappointed with the price performance
`of Antares, but this doesn’t affect my positive opinion on the stock.
`
`http://smithonstocks.com/antares-my-view-of-how-otrexup-and-medacs-new-product-rasuvo-may-compete-atrs-buy-2-54/
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`5/31/2016 Antares; My View of How Otrexup and Medac’s New Product Rasuvo May Compete (ATRS, Buy, $2.54) | Expert Financial Analysis and Reporting | Smit…
`
`Tagged as Antares, ATRS, Medac, otrexup, Rasuvo + Categorized as Company Reports
`
`21 Comments
`
`1. StefanClement says:
`July 12th, 2014 at 11:48 am
`
`Dear Larry,
`
`Rasuvo was approved on 10th July 2014.
`http://www.fda.gov/drugs/newsevents/ucm130961.htm
`
`As a private company Medac do not have to publish it immediately.
`Overall the guys from Medac have had a perfect timing regarding the approval process of Rasuvo.
`
`Like you i am very unhappy and disappointed with the Antares stock price.
`I hope that we will see very quickly clearness and peace between the parties, because I also think that there is room for two
`drugs in this area.
`
`When the storm is over we can concetrate us on the selling numbers and i hope they
`will be good for OTREXUP and with good sells the stock price will get updraft.
`
`For stockholders nothing is as bad as uncertainness. So as well as the whole Medac situation is not perfect for Antares, they
`should close this chapter and look in the future.
`And with a filled pipeline, attractive partnerships and profits on the horizon, the future is not as bad as it maybe seems today.
`
`At last some words from an investors soul:
`It never is easy to see decline the stockprice from a company you own and trust in. It needs really power and patience when the
`lights every day are in the red. But if the company is in good order and positioned well as Antares is, time will bring it back to fair
`value.
`
`Investing is an marathon and a test of will to plagiarise you.
`I am sure in one year your recommendation for Antares comes from an greatly higher stockprice level than today.
`
`Greetings from Germany (the domicile from Medac)
`
`Stefan
`
`2. Larry Smith says:
`July 13th, 2014 at 8:16 am
`
`Thanks Stefan
`
`3. Al Marshall says:
`July 14th, 2014 at 4:15 pm
`
`Mr. Smith: You mention that 62,000 patients are currently receiving subcutaneous methotrexate and that you expect a good
`number of these patients to switch over to Otrexup or Rasuvo.
`
`Why is that? At $6k per year Otrexup represents a significant cost which may be substantially higher than methotrexate and the
`insulin syringe (do you know the number?). Could insurance companies refuse to cover the additional costs for those patients
`who are physically able to perform the injections (which presumably many of these patients are already doing)?
`
`Thank you.
`Al Marshall
`
`4. Larry Smith says:
`July 16th, 2014 at 7:45 am
`
`Otrexup has a cost advantage over the biologics which cost $20,000 or more. Because the biologics have a greater effect on
`depressing the immune system, patients are more susceptible to infection.
`
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`In regard to the insulin syringe dosed methotrexate, there are issues. First of all, this is not an approved product. Second of all
`the pharmacist must put a liquid dosage form of methotrexate in a syringe. For injectable products, the FDA for approved
`products requires production of the product in a sterile manufacturing facility to avoid the risk of bacterial contamination.
`Pharmacists filling syringes with liquid methotrexate may not have sterile facilities. While some doctors might opt to continue with
`the insulin syringes with approved products available, most will switch to approved products. Can you imagine the liability if a
`doctor prescribed an unapproved insulin syringe product and that patient suffered a severe bacterial blood infection.
`
`5. TDPeterson123 says:
`July 16th, 2014 at 11:53 am
`
`Hi Larry,
`
`A peer provided the following info to me. I’m hoping you find this interesting and useful. It speaks to the differences between
`Antares and Medac “go to market”, as well as specifics about each competitors device:
`
`Antares has mentioned a 25 rep salesforce while Medac is recruiting 27 reps. But, Leo has a 75 rep salesforce for psoriasis,
`which gives an advantage to Otrexup.
`Antares will have at least an 7-8 months head-start (mid-January Otrexup launch vs. Sep/ Oct Rasuvo launch, as Medac needs
`time to recruit and train its new salesforce).
`Added to the differences in products characteristics, this should give an advantage to Otrexup.
`
`The prescribing information is essentially the same boiler-plate for both, but some differences exist, in particular in the User
`Instructions part:
`
`1 – shelf-life:
`Rasuvo’s is 17 months.
`Otrexup’s is 24 to 33 months (24 for 10/15 mg and 33 for 20/25 mg).
`= At least 7 more months before need to be returned or thrown away.
`
`2 – dose-strengths/ SKU:
`Rasuvo has 10 going from 7.5 to 30 mg in 2.5 mg increments.
`Otrexup has 4 going from 10 to 25 mg in 5 mg increments.
`= Not sure if 2.5 mg increments would really change the life of rheumatologists and patients vs. 5 mg ones.
`= Not sure if 27.5 and 30 mg doses critical vs. 25 mg.
`
`3 – PK/ Bioavalavility:
`Rasuvo: healthy subjects, 7.5 to 30 mg exposure 35 to 68% higher than oral MTX; psoriasis, 30 mg exposure similar IM.
`Otrexup: rheumatoid arthritis patients under oral MTX for at least 3 months, 10 to 25 mg exposure 13 to 36% higher than oral
`MTX, also similar abdomen or thigh.
`= Not sure if one is better than the other in absolute. Still, I think a rheumatologist would find RA data in patients already under
`oral MTX more pertinent.
`= Note “significantly enhanced bioavailability†was highlighted by Medac in this morning’s PR.
`
`4 – Needle visibility:
`Rasuvo has a visible needle.
`Otrexup neddle is hidden.
`= Needlephobia could have influence in patients using a non-oral drug for the first time.
`
`5 – Device activation:
`Rasuvo: pull bottom cap straight (do not twist), push firmly against the skin to unlock safety.
`Otrexup: twist bottom cap, flip top safety clip.
`= Not sure if significant other than the two modus operandi are not exchangeable.
`
`6 – Injection-site preparation:
`Rasuvo: clean, “pinch a pad of skin with your thumb and forefinger of your free hand by gently squeezing. Patients with
`rheumatoid arthritis who are unable to pinch the skin can inject directly into the thigh without pinching if needed.”
`Otrexup: clean only.
`= Otrexup simplest.
`
`7 – Injection:
`Rasuvo: press top button, once click heard count to 5.
`Otrexup: push firmly till click heard, count to 3.
`= Not sure if significant other than the two modus operandi are not fully exchangeable.
`
`Taken together, 5- device activation and 7- injection seem easier for Otrexup.
`
`6. DAMIFINO says:
`July 16th, 2014 at 7:44 pm
`http://smithonstocks.com/antares-my-view-of-how-otrexup-and-medacs-new-product-rasuvo-may-compete-atrs-buy-2-54/
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`AS I MENTIONED IN OTHER MEMO
`
`MR HOWARTH HAS NOT TOLD THE STOCKHOLDERS ANYTHING. IN THE MEANTIME THE STOCK HIT A LOW OF
`ALMOST $2.00 DONT YOU THINK SOMETING SHOULD COME FROM THE COMPANY REGARDING THE PLUNG IN THE
`STOCK? . I OWN 400000 SHARES AND I AM UNHAPPY WITH MR HOWARTH
`
`7. Larry Smith says:
`July 17th, 2014 at 6:50 am
`
`The decline in the stock was started by the resignation of the CEO Paul Wotton. Mr. Howarth addressed questions on this and I
`wrote a blog on it. The approval of Rasuvo though expected continued the decline and other to acknowledge the approval, there
`was not much that can be said. However, the potential for Otrexup is very significant and we should see this become more
`apparent in 2H, 2014 and 2015. We will also begin to focus on QS T which has as much or more potential and then other
`products in thier 505 (b) 2 pipeline. A wild care would be approval of their ANDA for Epi Pen. I think the stock is attractive here.
`Warren Buffet says be greedy when others are fearful and fearful when others are greedy. People are fearful on Antares right
`now.
`
`8. Larry Smith says:
`July 29th, 2014 at 8:25 am
`
`Small stocks like this often get involved in wild swings that are out of proportion on both the upside and the downside. This is
`part comes from the wide range of views on their fundamentals. It also comes from heavy hedge fund involvement on the short
`side. In the end, the issue is how Otrexup and other new products in the pipeline ultimately perform. I know it is tough, but we
`have to stay the course. There is no quick fix for the stock price.
`
`9. DAMIFINO says:
`July 19th, 2014 at 12:34 pm
`
`I am a strong supporter of Antares. I feel time is in their favor
`I see no reason Jack does not tell whatever he can. Little of
`anything goes a long way. What is going on at Leo? It would
`make for good news to know if they are having any success.
`You guys are doing a great service. Keep it up…DAMIFINO
`
`10. daniellaidman says:
`July 21st, 2014 at 10:42 pm
`
`Hi Larry, It’s my understanding that Rasuvo will Be available in 10 different dosages. Oxetrup is only available in 4 dosages. Do
`you see this as a significant disadvantage for Oxetrup as the 2 products compete for market share?
`
`11. Larry Smith says:
`July 23rd, 2014 at 11:33 am
`
`My preliminary view is that you probably don’t have to titrate the dose that carefully. Otrexup can be dosed in mg increments
`whereas Rasuvo is dosed in 2.5 mg increments.
`
`12. DAMIFINO says:
`July 27th, 2014 at 9:13 pm
`
`Larry,
`When is Jack going to tell the stockholders what is going on at Antares?
`You would think Antares would buy back some of its stock on the market
`ATRS has plenty of cash. $2.06 is surely a good buy for the Company.
`I think they need a strong PR person to boost the Stock.
`DAMIFINO
`
`http://smithonstocks.com/antares-my-view-of-how-otrexup-and-medacs-new-product-rasuvo-may-compete-atrs-buy-2-54/
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`13. TDPeterson123 says:
`July 28th, 2014 at 5:29 pm
`
`Larry,
`
`An interesting change recently happened regarding the co-pay strategy for Otrexup (for the better, in my estimation, and the
`result of making program adjustments “on the fly” based on market observations…as good sales program managers do. I’ve
`attached the copy from Antares web-site below in brackets ((( ))). Otrexup, for insured patients, is now available at “zero” co-pay:
`
`((( Take advantage of our savings program!
`The Step Up, Start Up Co-pay Assistance Program may provide financial support to commercially insured patients to assist with
`out-of-pocket costs of Otrexup. Eligible patients* may pay as low as a $0 co-pay for each prescription filled. This card is valid for
`up to 13 fills.
`After your final refill, you must sign up for a new card to continue to receive Otrexup co-pay support.
`
`*Eligibility Restrictions: Offer only valid for patients with commercial prescription insurance. Maximum benefit of up to $125 for
`each prescription filled. Offer not valid for prescriptions reimbursed under any federal or state healthcare program, including
`Medicare, Medicaid, or any state medical assistance programs. Offer void where prohibited by law, taxed, or restricted. Offer only
`valid in the USA. Antares Pharma, Inc. reserves the right to rescind, revoke, or amend this offer at any time without notice. By
`using this co-pay assistance card, you demonstrate that you understand and agree to comply with the terms and conditions of
`this offer as put forth on this co-pay assistance card. )))
`
`What Antares is now offering is essentially the same sort of co-pay program as Pfizer offers with Enbrel. Enbrel offers “zero” co-
`pay for the first 6 months of use, then $10 or less for the duration a patient is on that drug.
`
`It was mentioned by Paul W a number of months ago that Otrexup scripts were being dispensed at only 50% of the rate of the
`actual scripts being written. He said they would look into this and find out why, then obviously take action to correct. I’m of the
`belief that the co-pay change was partly, if not largely due to their findings surrounding why only 50% of scripts were being
`dispensed. The “no co-pay” program should bear fruit in overcoming that concern and create a significant increase in the number
`of scripts getting dispensed in the second half of this year. Margins are strong enough on Otrexup for the drug to support this
`type of action. I also believe this may have been done preemptively IF (and it’s still an if) Medac chooses to launch Rasuvo “at
`risk” later this year. Having no co-pay for insured patients, the market segment where the over-whelming majority of scripts will
`be prescribed, will remove the risk of Medac using a similar tactic as a trump card against Otrexup and will all but eliminate the
`risk of Rasuvo underpricing Otrexup.
`
`14. Larry Smith says:
`July 29th, 2014 at 8:21 am
`
`Buying down the co-pay happens frequently with new product launches. I tend to look at this more as a normal practice than
`something out of the ordinary.
`
`15. TDPeterson123 says:
`July 29th, 2014 at 8:58 am
`
`Larry,
`
`Your “buying down the co-pay happens frequently with new product launches” comment – on one hand doing this makes perfect
`sense since such actions are typical for the pharma industry for new product launches. On the other hand, I’m curious why
`Antares didn’t start the launch this way, especially when (I think) a large percentage of the scripts are insured by tier-3 coverage
`requiring a high co-pay? When PW mentioned that only 50% of the written scripts were getting dispensed, I have to believe there
`was a correlation between the low dispensed rate and the high co-pay required for certain types of insurance. Maybe I’m jumping
`the gun somewhat as I’m also believing the 50% dispensed rate had a lot to do with insurance coverage simply not being in
`place yet for a chunk of the folks who didn’t get their scripts dispensed. The “you are now insured” aspect should be pretty strong
`at this juncture and continue to improve weekly through Q3 (at least). I also believe the timing of going to no co-pay in advance
`of Medac’s launch of Rasuvo, was not a coincidence. Still, all things considered, I see this as a positive (albeit predictable) move
`for Antares.
`
`Question – how do you see this affecting the discount percentage for Otrexup (i.e. gross sales less discounts, rebates, etc.)? You
`previously ball-parked 10% for discounts and rebates and I’m curious what you think the new impact will be.
`
`Appreciate your feedback
`
`16. DAMIFINO says:
`August 6th, 2014 at 10:37 am
`
`http://smithonstocks.com/antares-my-view-of-how-otrexup-and-medacs-new-product-rasuvo-may-compete-atrs-buy-2-54/
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`Hopefully, Antares will tell us Leo is doing
`well with Otrexup.. Do not understand why
`the company does not buy back sock @$2
`DAMIFINO
`
`17. RICHARD DAGLEY says:
`August 8th, 2014 at 12:40 pm
`
`Hi Larry,
`
`Although the Q2 Otrexup sales came in somewhat below the expectations which were modeled in your 5/22 article, I wanted to
`mention another sales model by Ali Yasar which was in his Seeking Alpha article of 5/28. Using a sigmoid function-based model,
`his projection for Q2 was $1.5M, which was thus exceeded by Otrexup actual sales of $1.7M. For anyone who hasn’t seen the
`Yasar article, I think it’s worth a read.
`
`18. TDPeterson123 says:
`August 8th, 2014 at 7:30 pm
`
`Not Larry, but I can shed some light on Ali’s sigmoid sales validation model.
`
`To be clear, Ali’s sigmoid function model is not a sales prediction tool. Rather, it’s a sales validation model. How it works – actual
`quarterly gross sales (not net quarterly sales) are overlayed against the sigmoid “S-curve” validation model to see if, in fact, the
`actual Otrexup sales trajectory will reinforce a sigmoid trajectory (verses a linear trajectory). Ali believes that the Oterxup sales
`trajectory will follow a sigmoid pattern. I believe Otrexup will follow the sigmoid pattern.
`
`Regarding the sales part, gross sales were probably around $1.9M for Q2 (before discounts, rebates, and so forth), while net
`sales were $1.7M. Ali’s sigmoid model used $1.5M gross sales as a validation point. If we get a few more quarters of sales
`validation to support the sigmoid hypothesis, we’re off to the races.
`
`I’m estimating that July’s gross sales were around $1.15M, with net sales of around $1M. If we get solid growth in August and
`September, and I’m believing we will, there’s a very good chance we’ll double Q2 sales in Q3. Then, do it again (or better) in Q4.
`
`19. TDPeterson123 says:
`August 17th, 2014 at 10:12 pm
`
`Larry,
`
`Question about potential Rasuvo pricing. Since Otrexup is already approved, and because it’s already covered by over 90% of
`the insurance plans, and because Otrexup and Rasuvo are both branded drug (i.e. covered by tier-3 insurance rules), would
`Medac have any motivation to price Ravuso anything other than very similar to Otrexup? I understand that a few plans (like
`Medicare) are negotiated amongst providers and the lowest price can win there, but for the majority of the other plans, especially
`the large plans, isn’t it a matter of gaining coverage then “may the best drug win” (all other things being equal, e.g. the co-pay
`amounts required)?
`
`Thanks
`
`20. Larry Smith says:
`August 18th, 2014 at 7:44 am
`
`In virtually every situation in which I have been involved with in competitive situations in which there are two or more similar
`products in a category, companies do not compete on price. The reason is that if one company cuts price and is effective in
`gaining market share, the other company must respond. At best, the price cutting company might achieve a slight and probably
`temporary market share gain in terms of units, but they do not maximize potential revenues. It also runs the risk of a downward
`price spiral. Since Otrexup has only a small unit market right now, this is not a compelling strategy. My expectation is comparable
`pricing.
`
`In looking for a reason why this argument might be wrong, the best that I can come up with is that Medac concludes that Otrexup
`is dramatically over-priced and a lower price is needed to get physicians to prescribe. Actually, this argument is not quite right.
`Physicians prescribe on how they see the merits of a product. It is payors who make decisions based on price. However, it
`seems that payors are not bulking at putting Otrexup on tier 3 formulary status at current prices. As for those very few who fear
`generic pricing of Rasuvo, there is no chance.
`
`It seems to me that Medac will try to differentiate Rasuvo on the basis of product characteristics and the one noticeable
`
`http://smithonstocks.com/antares-my-view-of-how-otrexup-and-medacs-new-product-rasuvo-may-compete-atrs-buy-2-54/
`
`7/8
`
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`5/31/2016 Antares; My View of How Otrexup and Medac’s New Product Rasuvo May Compete (ATRS, Buy, $2.54) | Expert Financial Analysis and Reporting | Smit…
`differentiation is on titration. With Rasuvo, physicians can titrate in 2.5 mg/ mm2/ week increments while Otrexup is titrated in 5.0
`mg/mm2/ week increments. Here is what one of my consultants had to say about this. With initial treatment using oral
`methotrexate, patients are usually started on an oral dose of 2.5 mg/mm2/week and initially titrated up at 2.5 mg/mm2/week
`increments. However, as the dose gets into 10.0, 12.5 or 15.0 mg/mm2/week they are more likely to increase by 5.0
`mg/mm2/week. Increasing the dose from 5.0 mg/mm2/week by 2.5 is a 50% increase in dose. Increasing from 12.5
`mg/mm2/week to 15.0 mg/mm2/week is a 24% increase. Antares expects that most of the dosing of Otrexup to be in the 15.0 to
`20.0 range. The point is that at these ranges, it is more likely that titration will be in 5.0 mg/mm2/week increments.
`
`21. TDPeterson123 says:
`August 18th, 2014 at 10:35 am
`
`Thanks, Larry. What you said makes perfect sense. To me, the two keys to Otrexup’s success (both of which you mentioned)
`remain: 1) Do