Antares Pharma, Inc.
Q4 2019 Earnings Call Transcript

Published: 3 Mar 2020

[Operator:]

Ladies and gentlemen, welcome to Antares Pharma Fourth Quarter and Full Year 2019 Operating and Financial Results Conference Call . After the presentation, there will be an opportunity to ask questions . I will now hand the conference call over to Jack Howarth, Antares' Vice President of Corporate Affairs. Please go ahead, sir.

[Jack Howarth:]

Thank you, Shelly, and good morning, everyone. Earlier today, we announced our fourth quarter and full year 2019 financial results and operating achievements. A copy of the press release and slide presentation for today’s conference call are available on the Investors section of the Antares Web site.

[Bob Apple:]

Thanks Jack and good morning everyone. 2019 was an exceptional year for the Company, highlighted by the successful commercial launches of two products and the addition of a new chemical entity to our development pipeline. Our evolution as a pharmaceutical technology company continues as we delivered record revenue and the company's first full year of operating income. Our primary focus in 2019 was to accelerate and expand our commercial footprint in both our proprietary and partner products. I'm proud to say that our team has delivered on that goal. This morning, we reported another record quarter and full year of financial progress, driven in large part by sales of our flagship product, XYOSTED as well as continued strong demand and growth for Teva's generic EpiPen.

[Fred Powell:]

Thanks Bob. Please turn to Slide Number 8. As Bob mentioned earlier on today's call, 2019 was a tremendous year for Antares, and our 2019 revenues reflect this success. Full year revenue was approximately $124 million, which exceeded the upper end of our guidance range of $115 million to $120 million, and have represented 95% increase over 2018 full year revenue. In addition, we recorded our first quarterly income from ongoing operations, as well as overall net income. So let me start my financial overview by providing a detailed breakdown of our revenues and operating expenses for the fourth quarter and full year of 2019. Total revenue was $37.8 million for three months ended December 31, 2019 compared to $18.8 million in 2018, a 101% increase. For the year ended December 31, 2019, total revenue was $123.9 million, a 95% increase over the $63.6 million reported in 2018. Total product sales were $28.5 million for the fourth quarter, compared to $14.2 million in the fourth quarter 2018, 100% increase. Importantly, product revenue as percentage of total revenue continues to grow and accounted for 75% of total fourth quarter revenue. For the 12 months ended December 31, 2019, product sales were $92.1 million, as compared to $47.9 million in 2018, a 92% increase.

[Bob Apple:]

Thanks, Fred. And if you haven't noticed, both Fred and I are both suffering from really bad cold and the flu is going through our organization. So I apologize for the coughing and the challenging voice here. But as you can see on Slide 9, this has been a very exciting time for Antares and for our shareholders. We had an outstanding year and we believe that our financial results and commercial successes continue to reflect the progress we made in growing our business. We announced revenue guidance for double digit growth in 2020 despite uncertainties around revenue from one of our partner products. With our 2020 revenue guidance range of $135 million to $155 million, we are poised to deliver a full-year average revenue growth rate of 29% at the midpoint in that range. We remain focused on driving commercial success, and we are committed to advancing our product pipeline. We believe our pipeline will translate into future product revenue and royalty for our company overtime. It’s probably worth mentioning that our auto injector devices are manufactured in three locations in the U. S., and the prefilled syringes for our proprietary products are not sourced from China. Overall, 2019 was an incredibly successful year for Antares and as a result, we believe we have put in place a solid foundation of future growth for 2020 and beyond. This concludes my prepared remarks for today. Operator, could you please open the line for a question-and-answer session? Thank you.

[Operator:]

Thank you . We'll take our first question from Anthony Petrone with Jefferies.

[Anthony Petrone:]

Great, and congratulations on a great year for the company and good luck into 2020. Hope everyone’s doing well there as well. Maybe just to start on XYOSTED and selatogrel, just on XYOSTED, maybe when we look at just actual patients being prescribed, so the 15,000 put up exiting the year versus the refill rate. I'm just wondering on the actual new patient starts when considering that we’re at 4,700 physicians. Just where you think that number can go through 2020, and what are the expectations maybe sort of for peak penetration within the TRT market? And then the follow up on selatogrel will be when we look into the back half of the year or heading into 2021 when that Phase 3 study begins. How large do you think that study will be and how substantial do you think the auto injector sort of uptake within the study specifically can be once that begins?

[Bob Apple:]

So, on your first question around on XYOSTED. Obviously, new patient starts are a critical part for the growth of XYOSTED. And fortunately for us, we've seen a very positive continuing trend of NRx on a weekly basis, monthly basis and really what you need to look at. We expect to see continued growth in that area. We clearly haven't even scratched the surface of the number of patients that are on testosterone therapy today. What we're focusing on is getting those doctors who are writing to write for more patients. And I think that what's happened is the initial year we definitely had success in getting those patients who are unhappy on their IM injection or they were new to therapy, so the doctors wanted to put them on XYOSTED, because they felt that there were -- XYOSTED is the best product on the market, we believe. But I think that when we look at continue to grow the product, we need to get those doctors to now start switching patients who are on IM, who aren't complaining. Doesn't mean they're not unhappy, it just means that they're not complaining, and so part of the messaging is really focusing on those patients. I can't give you specifics as to how many new patients we've seen over the next year. It's kind of hard for me to even know that number at this point. But all I can say is, again, it's a big focus of ours and we have had a lot of success in getting new patients every week and we expect to see that trend continue. So things are going well with XYOSTED. And again, I think the other thing that is worth mentioning for XYOSTED is that now that we're at about 72% of all lives covered from a commercial insurance standpoint, which really didn't happen until September or October last year, it's starting to get quite a bit easier to get patients on the product. And I've always maintained that when a doctor writes a prescription, if two out of four don't get filled they tend to get frustrated but once you get into that three out of four, it starts to become a much easier product for them to adopt. And so we're at that almost that 75% rate, so I feel that we’ll see continued growth just based on the fact that we have really good coverage. So that's I think for -- that answers your question. For selatogrel, the Idorsia is responsible for the regulatory and clinical program. They've been communicating with the FDA. These are the pre end of Phase 2 meetings, things like that. I would say that we don't know the final number, but we're estimating that the study will be about 15,000 patients globally, but obviously it's been run out of the U. S. and dealt with through the FDA. And that's a number based on the fact that once a patient is on selatogrel and when they're enrolling the study, they're going to look for an outcome where a patient has a heart attack and that doesn't happen obviously to every patient who's already had a heart attack. So I think that number of patients of around 15,000 would anticipate some percentage of those patients needing to use selatogrel. And so right now it’s an early estimate, but we'll see where it goes with the FDA and with Idorsia and give update as the Phase 3 starts.

[Operator:]

We will take our next question from Elliot Wilbur with Raymond James.

[Elliot Wilbur:]

Bob, you touched on this in your prior response to some extent, but just maybe any additional detail you could share with us in terms of how the XYOSTED marketing plan may evolve over the course of 2020, specifically thinking about changes in the number of targeted doc’s frequency, and then I know previously you've talked about potentially altering some of the co-pay support program to maybe to get pass kind of the initial depressive effects of some of the high deductible plans and the impact they have in the first quarter, and anything you could share with respect to just to DTC or social media. Just maybe a little bit more color in terms of changes to the overall marketing game plan for 2020.

[Bob Apple:]

So first, I'd like to say that the marketing messaging has been pretty much spot on as far as a physician standpoint and as a patient standpoint. So there isn’t going to be many changes in the message. The steady levels of XYOSTED are driving the business, the lack of those peaks and valleys that patients are seeing in real life are driving the demand and then the fact that it's easy to use its painless, it's once a week. All of those attributes are still the biggest component of selling XYOSTED for us with physicians and with patients. Now with that said like you mentioned Elliot is that in the beginning of every year, you have patients who are at peak, their co-pay resets and also importantly, about 30% of all people in the country are on high deductible plans. And so they typically have to burn through an average deductible of $1,000 or $1,500 per year before they start getting coverage for any drug. What we've done to help compensate for that is we've increased our co-pay support for a short period of time, probably about three months where we've doubled that support to help those patients get through that high co-pay or high deductible plan and we've seen great persistence with that program. And the one thing we didn't want to have happened were people that were on the drug were very happy with it, we’re happy with XYOSTED and then they go to their pharmacy and they have to spend $300 for a co-pay or worse sometimes. We didn't want to lose those patients, even for just a few months. And so we've accelerated or increased the co-pay support, which so far has shown really good results and persistence. I think we have a very high persistence rate of about 70% I think in the first two months of this year. So we're very happy with that. Beyond that, from a messaging standpoint and social media, we have definitely stepped up our social media campaign utilizing Facebook, LinkedIn and other services where if you are online searching about testosterone, you will likely receive a banner ad for XYOSTED for our product. And so we were focusing on where we're spending. Obviously, in the first year, you see what worked, what didn't work and we're pushing those resources to where we think we're getting the most ROI for those programs, so social media is a big aspect and the co-pay support. The other thing that we've increased too is just generally adjudication services, just helping doctors continue to deal with the prior authorizations, helping them where we have our in-house adjudication reps, if you want to call them, handling when a script gets written if there needs to have certain things under where there is a prior authorization or signature from their office, they chase it down instead of our reps. It gives our reps more time to spend detailing on the field. And to your point earlier, Elliot, detailing the more doctors. And I think that's what we're going to do in 2020 is expand our reach into more prescribers so we can get the continued growth that we're seeing right now.

[Elliot Wilbur:]

And I want to ask a follow up question around pipeline activity during the course of 2020. Any movement on some of the undisclosed programs, such that might trigger disclosure such as investment in the clinical trials or some sort of IP filing or something like that that might give a little bit more visibility into the identity of some of the molecule?

[Bob Apple:]

So I mean, I think you're referencing on the Pfizer program, which is really our undisclosed program and there's quite a bit of sloping going on with our investors. And so I think that clearly the program is moving forward. Clearly, we will be conducting all the studies this year with Pfizer. And so whether it's in clin trials or whether it's in some other filings, we're not sure when or how it's going to emerge as to what product it is. But clearly we're talking to Pfizer on a regular basis, we have JSC meetings, joint steering committee meetings and we're looking for that right time when they're ready to publicly disclose what the product is. We're really excited about the asset, we want it out there but obviously Pfizer, it's their product that we're working with them on and we want to respect what their wishes are. But I think there's a lot of activity that's happening that will probably make it more evident as to what the product is. And hopefully once we get a green light from Pfizer, we will be able to announce it what the program is based on.

[Elliot Wilbur:]

Any decision points on methotrexate and atopic pregnancy that maybe reached during 2020?

[Bob Apple:]

Yes, I think that we're looking at that asset. We believe it's a really good asset. We think it's a very viable out-license opportunity. It's not an area that we focus on. We're trying to really drive our product portfolio into the areas where we commercially have a footprint, endocrinology, urology and even some general -- GP products just because we're in those offices. And so I think that atopic, we're going to continue to look for potential partners for that product. We think it's got a great opportunity for any companies that are in women's health, maternity and we will focus our efforts in that area at least initially, and then we'll see where -- if there's interest there.

[Elliot Wilbur:]

One last question for Fred. Maybe just give us some insight to the extent possible into GTN trends over the course of 2020. And also specifically any color or commentary you could share on the strength in OTREXUP sales in the quarter, whether that was GTN adjustment effect or actually the increasing sales showed a pretty strong correlation with units? Thanks.

[Fred Powell:]

Sure, I’ll answer the first one, the OTREXUP question first. And that was really no reserve adjustments during the quarter. We continue to see growth take place in OTREXUP and we're looking for growth to continue into 2020. Certainly not the same dramatic growth that we would expect in XYOSTED, but still we would expect to see steady volume growth as we go into all the 2020. When we take a look at the gross to net calculations that we have for this year, I think it's going to remain fairly stable from where we were at the end of 2019. And I say that because of the individual components. As you remember, when we first launched the product, we had a significant amount of first bill free, because we wanted to make sure that doctors that were actually writing XYOSTED for their patients actually had those prescriptions filled. As Bob was mentioning, we didn't want doctors to prescribe and then their patients not receive XYOSTED. And so that as a total percentage in the gross to net calculation has come down is now we have over 70% coverage. What the opposite side of that is rebates. And during the year, our rebates were relatively low as a percentage of the gross to net calculation going to be over 70% in the fourth quarter pushed our rebate amount much higher than we have been during the full year. Other than the co-pay support for the beginning of the year, as Bob mentioned, doubling for high deductible plans we would expect the co-pay support percentage remain fairly flat for the entire year. So overall, I don't see much of a change taking place from the end of 2019 to 2020. Individual components may change. But overall, I expect to be about the same in the 50% that we would see dropping to the net revenue line.

[Operator:]

We'll take our next question from David Amsellem with Piper Sandler.

[David Amsellem:]

So first you've provided in the past some nice metrics on the usage mix for XYOSTED in terms of patients who were testosterone naïve versus those who are an IM injection versus those who were switching from the gels. Can you just talk about the mix as we sit here today and how do you expect that to evolve as 2020 progresses? And then secondly, given that you have sales infrastructure in place, calling on basically men's health prescribers broadly speaking. How active are you in looking for assets to bring in where you can better leverage that sales infrastructure? Thanks.

[Bob Apple:]

So on your first question I believe that in the later part of last year, our metrics for XYOSTED were over half our patients were new patient therapy starts. And again, I mentioned that earlier that was clearly where the doctors were going in the beginning as they were comfortable writing XYOSTED for new patients. We saw very high percentage of our patients being new to therapy, which was a great sign, because obviously -- and then the doctors were very comfortable with XYOSTED being first line therapy. That still continued as far as I'm being very comfortable at first-line therapy. We have seen a shifting of the trend where toward the latter part of last year and this year, we're seeing more of our prescriptions are switches from the IM, which makes sense. It's a great product from an injectable standpoint, it's easy to use, once-a-week, its painless -- versus IM. And so we're seeing about 50% I believe of our patients are switches from IM and then about 30% or 40% new patients therapies and then, it's interesting, we still are not seeing a big penetration on the gels. And I think that's generally because when the men choose the gel is because they're needle phobic. And still the new patients will still say, hey if I'm given a choice of an injection versus a non-injection, I'll try the gel. When they try the gel fortunately for us within three months or so, they're very unhappy with it. So they tend to be switches later on. But early in the treatment paradigm, we still see patients go into some of the gels. Clearly, still smaller percentage overall but that's the first inkling sometimes with the patients. So we're seeing, again, just to wrap it up on that aspect, more of our sales are coming from IM switches, which is good, because the IM piece of the market is around 70% of all prescriptions. So it's a very large part of the market that we can attack. With regards to your second question on our men's health, obviously, we have a very strong sales force of about 85 representatives calling on urologists and endocrinologist as well as some special medicine/general practitioners who write for testosterone products. So that is a big asset for us as an organization. So we have been very focused on looking at already approved assets that are on the market where companies may not be focused on that asset or they may be looking to get outside of that therapeutic area. And so we have an extensive BD engagement or surge for those types of assets. And so what we wanted to make sure is that if we do acquire or license in another asset, that it doesn't hurt the growth of XYOSTED and so getting the right asset is the challenge. But rest assured that we are clearly looking at putting more products in the bag of our sales force in 2020.

[David Amsellem:]

And just to follow up on those comments, it sounds to me that you don't have an appetite to bring in an asset where you are going to take on significant R&D risk. Is that a fair characterization?

[Bob Apple:]

Well, I mean I think that it really just -- we clearly are looking at even assets that maybe has already passed through Phase 2 where you have reduced the risk of clinical failure at least as much as you can. No, I mean we clearly look at even Phase 3 assets. It's definitely more -- our focus right now is more on commercialized assets but that doesn't mean that with the right development asset comes along that we wouldn't look and license it. Again we want to make sure that we don't drive our profitability down based on what we're seeing on our upper trend and so it's really a balance of what asset make sense for us. But it doesn't -- we are looking at whole assets to kind of clearly to build that pipeline we have.

[Operator:]

We’ll take our next question from Matt Kaplan with Ladenburg Thalmann.

[Matt Kaplan:]

So just want to dig in a little bit more to kind of your 2020 revenue guidance 135 to 155. It appears as though there's kind of no new product adding to that equation there in terms of your product mix and royalty stream. I guess with respect to that talk about the pipeline and potential new products coming in 2020 or 2021 with respect to PTH, exenatide, internal programs and then I guess lastly kind of the timeline for selatogrel to the market?

[Fred Powell:]

I'll answer the first part of it, with the guidance that we issued and where that was built upon. And you're exactly right when we took a look at our guidance for 2020, we certainly do expect that the XYOSTED is going to continue to grow this year, really be the most dynamic part of the growth that we see in our guidance. At the same time, if you remember with Epi really being fully launched in the middle of 2019, we only had the back half of the year for the full launch there. So we would expect that to be a significant driver of our revenue. Taking a look at where some of the potential risk would be as Makena. And as I mentioned, in our lower end of our guidance, we can hit that without having any revenue coming in from Makena that obviously we're already through the second month of the year. So we will have some revenue so that's really why you see the lower end where it’s at. When it comes to other products for 2020, we do not -- we have not built in anything for Forteo. Teva has made the announcement that there could be an approval by the end of 2020. We did not model that into our upper end of our guidance, and that would be an upside to our guidance. We certainly would expect that that would come -- certainly would hope that it would come into 2021. And as I mentioned a little bit earlier with OTREXUP again, we would expect some continued growth taking place with that product. Development is going to be strong again and we'd expect that the royalty that we will get from Epi will increase year-over-year. So overall that's how we built the guidance. With the other products I'll turn it over to Bob.

[Bob Apple:]

So first, a couple clarifications. On Makena, there's no indication that that product is coming off the market anytime soon. We just don't know and AMAG had recently announced that they're working with the FDA to keep the product on the market. So our guidance didn't reflect any beliefs that we have, whether the markets -- the price is down the market, for the whole year, less than the whole year or not. We believe Makena is a great product and has a lot of value for patients and physicians, and we hope that AMAG can come to an agreement with the FDA to keep the product on the market. Secondly, on the Forteo same thing, our guidance should not reflect our belief. Our guidance, we do not put unapproved assets in our guidance. And that's why it's not in there. It's not that we don't believe it can be approved and launched, it's just the fact that we found that it's most prudent to not put unapproved assets or unapproved products in our guidance until they become approved. We feel very confident about PTH. We think it's a great asset. And I know it's a very important asset for Teva. The product is still doing really well for Lilly. And we believe if approved being a fully substitutable first priority -- first to market generic would be a very big asset for both of us. So I just wanted to clarify those two things. On the other element of Idorsia, we believe based on what Idorsia has taught us again, it's very early, they haven’t even started their Phase 3 yet but they're targeting like 2024 type of approval potential launch. It's not in a year or so, this is a very large study, its 15,000 patients or so. And so that's more of a longer term pipeline asset for us. But the magnitude of it is so large, we just want to make sure that people understand not only the value of the asset but also just how impactful that product may be for people who have suffered a heart attack, or may have coronary artery disease. So we're excited about that. And we'll see some significant development revenue during that period of time before a potential approval launch. But for us, it's really around the novel concept of a heart attack rescue pen, it gets us really excited. Pfizer, we haven't really given any guidance yet as to the timing. But clearly, we think it's in that ‘23 timeframe, maybe a little sooner or later, it's really a function of when they get everything going and then when they disclose it. I think a lot of it has to do with is the regulatory timeline as to how fast the FDA will review the product and so clearly nothing in 2020 from a product standpoint for the Pfizer transaction or Idorsia. And so I think as for 2020 besides PTHs, there's obviously exenatide still has the potential approval, not a large product but still the nice single for us. The product itself is doing around $100 million, it will be the first generic for diabetes. BYETTA still sells, people still use it. It's just one of the older products for diabetics and so -- but Teva still committed to getting that product across go line and it's -- hopefully we'll have an approval in 2020 for that as well.

[Matt Kaplan:]

And then just in terms of internal programs that you’re focused on that could add to your indo-euro GP focused marketing effort. When should we have any more detail, additional detail on your internal pipeline?

[Bob Apple:]

So I think in our 10-K, you'll see that we wrote that we're focusing -- we are working on two different assets right now, one for endocrinology and one as well in urology. And they're very early stage. We would not announce what those products are until we have the IND filed. We're open to have our pre-IND meeting this year on those assets. We're doing some formulation work that obviously needs to be successful. As we look at our pipeline, we're looking at more challenging assets in order for them to have more value in the marketplace. And so with the challenging assets, obviously, there's more risk in the pre-development stage, whether it's formulation or just generally the clinical design. And so our pipeline, we continue to focus on where our commercial footprint is. I think, again, we're looking to have pre-IND meetings on to assets and hopefully if they evolve, we’ll be able to announce what those assets are once we have an IND filed with the FDA.

[Matt Kaplan:]

And I guess on the internal programs, was there a program that you're working on in urology space previously, or am I mistaken?

[Bob Apple:]

No, there, it was 1701 and we are -- because it's not really in our area of where we're focusing, we are looking to potentially out-license that asset. But again, that's early stages and we'll give update as we get more information to provide you guys.

[Operator:]

We'll take our next question from Anthony Petrone for Jefferies.

[Anthony Petrone:]

Just wanted to quick follow up and I think you referenced it earlier, just on Makena, I know it's baked in the 2020 guidance, but anything as we sit here in March as it relates to Makena just in terms of orders you've gotten in the fourth quarter and just the outlook relative to where the 2020 range is today. Just update on Makena. Thanks.

[Bob Apple:]

I think that our shipments continue to AMAG. They gave guidance of I believe $80 million to $100 million, which obviously is substantially less than what they did last year. I think last year they did about 120 -- 130, we haven't announced yet. But we're clearly seeing shipments supporting that range and until AMAG gives more guidance, it’s really not our place to say but Makena continues to be a good asset for us and for AMAG. And again, we hope that they can come to an agreement with the FDA to keep that product from the market and keep it available for physicians and patients. But we will clearly see revenue in Q1 related to Makena and we expect to see it hopefully the rest of the year.

[Fred Powell:]

And just to expand just a little bit on that. So we certainly expect it go through the rest of the year. We do have orders for the rest of the year. It's not as though they're cutting it off after the first quarter and say no more orders. So we continue to see Makena orders for production throughout all of 2020.

[Operator:]

There are no more questions in the queue at this time. I'd like to turn the call back over to Jack Howarth to closing remarks.

[Jack Howarth:]

Thanks Shelby. And thanks again for joining us on today's conference call. If you have any follow up questions, you can reach me at 609-359-3016. That completes today's call.

[Operator:]

This concludes today's call. Thank you for your participation. You may now disconnect.