Antares Pharma, Inc.
Q4 2017 Earnings Call Transcript

Published: 13 Mar 2018

[Operator:]

Ladies and gentlemen welcome to the Antares Pharma Fourth Quarter and Full Year 2017 operating and financial results conference call. Throughout today's recorded presentation all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions [Operator Instructions] I would now hand to conference over to Mr. Jack Howarth, Antares' Vice President of Corporate Affairs. Please go ahead, sir.

[Jack Howarth:]

Thank you, Rina and good morning everyone. This morning, we released our fourth quarter and full year 2017 financial results and recent operating achievements and a copy of the press release can be found on the Antares' website at www.antarespharma.com under the for Investors section. In addition, this morning's teleconference also contains an interactive slide presentation. If you have dialed in to the audio-only teleconference, you could follow along with the slides, which can be found on our website under the Investor Information section. The conference call and slide presentation will be simultaneously webcast on the for Investor Information section of the Antares website under the webcasts tab. If you are currently unable to access our website, the conference call and slide presentation will be archived under the webcasts tab at the conclusion of today's call. Before we begin, I'd like to remind you that some of our statements made during this conference call will contain forward-looking statements within the meaning of the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are subject to certain risks and uncertainties and actual results could differ materially from those projected in any forward-looking statements. Forward-looking statements provide Antares' current expectation or forecast of future events. Factors that could cause actual results to differ include, but are not limited to, statements about new product approvals and FDA action, including the outcome of the type A meeting with the FDA; the company's ability to adequately and timely respond to the deficiencies in the XYOSTED complete response letter or CRL; the company's ability and timing to resubmit the responses to the XYOSTED CRL; and FDA acceptance of the resubmitted responses to the XYOSTED CRL; and any approval of the company's NDA for XYOSTED. Future revenue including revenue from Makena, Sumatriptan, and OTREXUP, growth opportunities, the timing and results of research, development, clinical trials and financial performance and other factors which are also identified on slide two of today's presentation and from time to time in the company's filings with the SEC on Form 10-K and as updated in Antares' recent periodic filings on Form 10-Q and 8-K and other filings made with the Securities and Exchange Commission. Links to these documents are available on the Investor Information section of our website and we encourage you to review these materials. Antares is providing this information as of the date of today's conference call and does not undertake any obligation to update any forward-looking statements contained in this conference call as a result of new information, future events or circumstances after the date hereof, except as required by law or otherwise. The company cautions investors not to place undue reliance on these forward-looking statements. Joining me on the call today are Bob Apple, President and Chief Executive Officer; and Fred Powell, Executive Vice President and Chief Financial Officer. Let's review the agenda for today's call on slide three. Bob will begin with a review of the fourth quarter and recent operating progress, Fred will present the fourth quarter and full year financial results, and then Bob will give you an Alliance business update. After our presentation, we will open the lines for your questions. Please turn now to slide number four, I'll now turn the call over to Bob Apple. Bob?

[Bob Apple:]

Thanks Jack and good morning to everyone joining us on today's call. I hope you all had a chance to review this morning's operating and financial results press release, which highlighted record annual revenues for the company. We reported fourth quarter revenue of $14 million, driven mainly by sales of our proprietary products and partnered product devices. For the full year of 2017, revenue increased 4% to $54.5 million, primarily due to increases in OTREXUP, Sumatriptan, and Makena device sales. We ended 2017 with cash and short-term investments of $31.6 million; a net number excludes the $2.75 million we received from Ferring in the first quarter of 2018. Fred will take you through the detailed financial results later in the call. Please turn to slide five. Last month, we received positive news from our partner, AMAG, that their supplemental new drug application for a subcutaneous injection on Makena using our QuickShot device had been approved by the U.S. FDA. This approval was a significant achievement for both companies. We believe the first pass approval of Makena was validation of our QuickShot device technology and continued proof that we know how to get combination products approved at the FDA for ourselves and our partners. Makena QuickShot represents the third FDA approval of combination product, utilizing one of our auto injectors, OTREXUP, Sumatriptan injection, and now Makena. Importantly, the Makena product is the first drug device combination product approved utilizing our QuickShot platform, the same platform we are using for XYOSTED. This has been a great development partnership with AMAG and we look forward to continuing to work with AMAG as they enter the commercialization and launch phase of this important opportunity. The QuickShot device was developed to promote better pacing components and easier administration. The current route of administration for Makena is a deep intramuscular injection with a larger gauge needle, which can be painful and time-consuming as the injection cannot last up to one minute. The QuickShot device was designed to administer highly viscous liquids such as progesterone and oil through a fine gauge, non-visible needle in 15 seconds or less. We believe this proprietary device may enhance both the patient and caregiver administration experience. As you can see from this slide, AMAG has indicated they expect the launch of the Makena subcutaneous auto injector will take place in the second half of this month. On slide six, is a picture of the Makena QuickShot auto injector, a single weekly precise dose of Makena. In the recent investor conference call, AMAG discussed their commercialization strategy for the Makena auto injector. AMAG indicates that their sales representatives will emphasize the physicians, nurses, and other health care providers the ease of use of the auto injector. The Makena QuickShot auto injector is a prefilled device that is ready to use out-of-the-box and can be administered in approximately 15 seconds. The current single dose vial of Makena requires drawing one milliliters of drug from the vial with an 18 gauge needle, then changing to a 21 gauge needle in preparation for approximate one-minute IM injection in gluteus. The new Makena auto injector is discrete and delivers a drug with a shorter, thinner, non-visible needle that is administered in the back of the upper arm. Patients receiving an injection from the auto injector will no longer be subjected to an inch and a half long needle and does not require patient to disrobe as is necessary with the current IM Makena. The QuickShot device also had a protective needle guard that prevents needle stick, after which the auto injector is disposed. AMAG believes that these attributes, namely efficiency, discretion and administration-friendly device will be important to patients and health care providers. We believe AMAG has a strong experienced commercial team. And as part of their prelaunch activities, they've done extensive market research on the use of the Makena subcutaneous auto injector. AMAG indicated to investors that upon launch of the product, they will immediately begin switching patients from intramuscular to subcutaneous. The IM formulation of Makena recently loss orphan exclusivity and according to AMAG's disclosure, could be facing potential generic competition sometime in 2018. AMAG intends to initially call upon physician, office staff, and begin educating them on the benefits of the QuickShot auto injector. Their field teams will be using demonstration devices to help communicate the benefits of the device and how to appropriately administer the injection. AMAG believes in getting physicians and nurses immediately trained on how to use the device will be important to moving the market from IM to the auto injector as quickly as possible. AMAG has also indicated that they will begin deploying their highly successful Makena care connection team to proactively work with physicians and office staff to increase awareness of the Makena auto injector as a viability for immediate use with new patient enrollment's. These are exciting times for Antares and AMAG and we look forward to a successful launch. Moving now to slide seven. In October of last year, we announced the sale of the worldwide rights for the ZOMAJET needle-free auto injector device to Ferring Pharmaceuticals for $14.5 million. The purchase price will be paid in four installments, consisting of a $2 million upfront payment, which was received in October and a $2.75 million payment which was received earlier this quarter. Two additional installments, totaling $9.75 million, will be paid upon the completion of contractual milestones and will be subject to customary closing conditions. We believe the transaction can be completed by the end of 2018. We will continue to ship products to our ZOMAJET partners and receive royalties on those sales until the completion of the transaction. The sale of this non-core legacy asset, which had averaged approximately $5.5 million in annual revenue for the past three years, will allow the company to better focus resources on several near-term strategic objectives, including building our pipeline. Please turn to slide number eight. Moving now to the existing commercial side of the business, I'm pleased to report that full year 2017 revenue generated from the sales of fully packaged Sumatriptan injection, combined with profit sharing from our distribution partner, Teva, increased 48% to $13.5 million. In the fourth quarter of 2017, Teva's distribution of Sumatriptan has achieved a 30% TRx share of the Sumatriptan auto injector market and a 27% TRx share for the full year according to Symphony Health Solutions. We remain pleased with the market acceptance of our product and we believe that Teva's strong commercial presence in Walgreens and CVS has contributed to the strong market share. Turning now to slide number nine. OTREXUP continues its steady growth with fourth quarter revenue of $4.8 million, a 17% increase over the fourth quarter of 2016 and full year revenue of $17.9 million, an increase of 18% over the last year. Our salesforce will be targeting auto injector adopters in areas where we have good insurance coverage. Our commercial team will continue to refine the product messaging, improve perception of access and affordability, educate health care professionals and patients on an easy to use device, and strive to increase prescription growth, utilizing our OTREXUP total care support program. Now, before we get into a discussion on the detailed financials, please turn to slide 10, and I will give you a brief update on our pipeline beginning with XYOSTED regulatory process. On October 20, we received the complete response letter, or CRL from the FDA, which identified two deficiencies related to our XYOSTED clinical data. Based on results from our two clinical studies filed with the new drug application, the FDA was concerned that XYOSTED could cause a clinically meaningful increase in blood pressure. In addition, the letter also raised a concern regarding the occurrence of depression and suicidality. On the last quarterly call, we indicated to you that we were in the process of developing a very detailed response to the two deficiencies identified in the CRL. In December of 2017, we submitted a briefing book to the FDA and requested an in-person type A meeting to discuss the CRL. The meeting was held with the FDA on February 21st with the primary goal of discussion of resubmission plan in response to the CRL for the XYOSTED NDA. We found the meeting to be both collaborative and constructive, and we anticipate receiving the formal meeting minutes 30 days from the date of the meeting. We believe this minutes will confirm our understanding of the path forward for a potential approval of the product and we intend to provide an update after we receive those minutes. Finally, we've been reviewing a number of potential product opportunities to add to our proprietary pipeline and have conducted a significant amount of preclinical work on these development opportunities. We have identified a lead candidate as well as a second promising developing candidate. I'm very encouraged with the progress our development team has made on our next proprietary drug device combination products. We expect to add a lead candidate to our pipeline in the second half of this year. I would now like to turn the call over to Fred who will discuss our fourth quarter and year-to-date financial results. Fred?

[Fred Powell:]

Thanks Bob. Let's begin by looking at the revenue details for the fourth quarter and full year 2017 on slide number 11. Total revenue was $14 million for the three months ended December 31st, 2017 compared to $14.2 million in the fourth quarter of 2016. Total revenue for the 12 months ended December 31st, 2017 was $54.5 million compared to $52.2 million in 2016, an increase of 4%. Product sales were $11 million for the three months ended December 31st, 2017 compared to $9.7 million for the comparable period in 2016 and were $41.7 million for the year ended December 31st, 2017 compared to $40.3 million in the same period of 2016. Product sales represent sales of our proprietary products and devices or device components to our partners. The improvement in product sales for the full year of 2017 over 2016 was driven by revenue increases in our commercial products of OTREXUP and Sumatriptan and sales of pre-launched auto injectors of AMAG's Makena. OTREXUP revenue increased 18% to $17.9 million for the full year of 2017 over 2016, while Sumatriptan revenue increased 48% to $13.5 million for the full year of 2017 over 2016. The third significant growth driver for product revenue was device sales of Makena, which increased 47% to $2.5 million for the full year of 2017 over 2016. Partially offsetting these increases was a reduction in sales of prelaunch auto injector devices reused with Teva's generic epinephrine product. Development revenue was $2.2 million for the three months ended December 31st, 2017 compared to $3.8 million in the fourth quarter of 2016 and $10.1 million for the 12 months ended December 31st, 2017 compared to $10.2 million for the full year 2016. The decrease in development revenue for the fourth quarter of 2017 compared to 2016 was primarily a result of lower development revenue related to the pen injector programs. Turning now to slide 12. Operating expenses were $11 million for the fourth quarter 2017 compared to $11.7 million in the comparable period of 2016, a reduction of 7% and $43.5 million for the full year 2017 compared to $47.5 million in 2016, a reduction of 8%. The decrease in operating expenses for the three and 12-month periods of 2017 was primarily due to a reduction in external clinical and development costs related to XYOSTED, partially offset by an increase in sales and marketing expenses associated with our initial preparations for the potential launch of XYOSTED. Net loss per share was $0.02 for the fourth quarter of 2017 as compared to $0.03 in the fourth quarter of 2016 and $0.11 for the full year 2017 as compared to $0.16 loss for the comparable period in 2016. As of December 31st, 2017, cash, cash equivalents, and short-term investments totaled $31.6 million compared to $27.7 million at December 31st, 2016. And as Bob mentioned earlier, the cash balance at the end of 2017 did not include the $2.75 million we received from Ferring in the first quarter of 2018 in connection with the sale of ZOMAJET. I'll now turn the call back to Bob. Bob?

[Bob Apple:]

Thanks Fred. Let's wrap up by turning to slide number 13 and I will provide an update on our Alliance business. Beginning with epinephrine, we shipped approximately $1.7 million worth of auto injectors to Teva in the fourth quarter of 2017 and $2.9 million for the full year 2017. Total dollar amount for prelaunch device is shifted to Teva to-date is approximately $22 million. Antares has received a margin on these device sales. And assuming FDA approval, Antares will receive a mid-to high single-digit royalty on overall net product sales by Teva, as well as a milestone payment upon FDA approval of the product. There continues to be a high public perception and visibility for a need for an AB-rated generic to the EpiPen and we are working closely with Teva towards a potential approval of the epinephrine ANDA, which according to Teva, remains under active review with the FDA with a potential for a 2018 launch. Turning now to Exenatide, Teva continues to work through to the FDA regulatory process for approval, pursuant to the ANDA pathway. You'll recall that all litigation with AstraZeneca and Amylin has been settled, which means that once Teva has received an FDA approval, they can launch the product. Antares will supply devices at a cost plus margin and receive a high single-digit to mid-teen royalty on Teva's net sales following approval. We believe that Teva has first-to-file status and therefore, 180 days of market exclusivity post-approval. With respect to Teriparatide, Teva continues to work through the FDA regulatory process using the ANDA pathway. During the fourth quarter 2017, the U.S. patent litigation between Lilly and Teva was settled. However, the settlement terms were not disclosed by either party. Outside of the U.S., Teva completed a decentralized registration process in 17 countries in Europe and is awaiting patent clearance in the EU prior to launching. As is the case with Exenatide and epinephrine, we believe that Teva has first-to-file status for Teriparatide and therefore, 180 days of marketing exclusivity post approval. We will supply devices to Teva at cost plus a margin and receive a high single-digit to mid-teen royalty on Teva's net sales following approval. We're particularly excited about this collaboration as Lilly recently reported full year global sales of Forteo increased to $1.75 billion in 2017 with $965 million of that coming from the U.S. sales of product. And finally, the Makena subcutaneous auto injector is in full production mode with the recent FDA approval. AMAG anticipates launching the Makena auto injector in late March 2018. AMAG supplies Antares with a prefilled syringe of Makena and we supply AMAG with a fully packaged finished product ready for shipment. Antares receives a payment of cost plus margin on the finished product in addition to a high single-digit to low double-digit royalty on net sales as well as certain sales-based performance milestones. AMAG has produced at risk approximately $1.5 million of devices in the fourth quarter of 2017 so that they can meet their aggressive timeline of a March 2018 launch. We're continuing to produce additional devices for AMAG, and we'll be shipping fully packaged product in order to support their launch. Overall, I am pleased with the operational progress we made during 2017. While disappointed with the receipt of the XYOSTED CRL, we had a constructive meeting with the FDA to discuss a path forward. We continue to remain excited about our near-term Alliance business opportunities. Looking forward, we anticipate seeing further revenue growth in 2018 due in large part to the recent approval of Makena. In addition, 2018 revenue could also be positively impacted by our partner products currently filing the ANDA regulatory pathway at the FDA. Thank you for your attention, and I look forward to providing operational and regulatory updates to our investors in 2018. That concludes our prepared remarks for today. Operator, could you now open the lines for the question-and-answer session?

[Operator:]

Thank you. [Operator Instructions] And we will take our first question from Elliot Wilbur in Raymond James. Please go ahead.

[Elliot Wilbur:]

Thank you. Good morning. My first question is with respect to Makena. Bob, maybe you could just talk a little bit about the company's current commercialization efforts and, really more specifically, I guess, commercialization readiness. Sounds like AMAG gives you some sort of advance notice in terms of product requirements via purchased orders. I don't know how long that -- or what your visibility is for 2018, but maybe you could just talk about company's readiness in terms of supporting the launch of that product and whether or not you think you'll be at full capacity requirements or already there.

[Bob Apple:]

Yes. So, thanks Elliot. As far as our production capabilities, we are fully prepared to support the 2018 launch of Makena for AMAG. Like I mentioned, AMAG did give us the ability to manufacture the devices in anticipation of the approval. And what we had to do after the approval was obviously complete, like, the final packaging or the final labeling, get the package inserts and so forth done once the agency has completed the review. And so that's what we're doing right now. We are labeling the devices, putting the PIs into the box, and we'll be shipping those products this month. So, I think we're in line to meet AMAG's needs, and we're here ready and willing to produce more as they see the launch hopefully do well and really be a function of them getting out there and converting the current patients or their new patients from IM to sub-Q, which is really their strategy, because as everyone knows, there is a potential generic that could show up sometime this year, and the switch is a really important strategy for AMAG to get as much value of that product as possible.

[Elliot Wilbur:]

Okay. And then a follow-up question for you, Bob, as well. You mentioned a couple of new opportunities that are being explored on the proprietary side, specifically with possible IND filing this year. Not sure at this point if you're ready to kind of disclose the company's area of interest. But when might we get that? Or do we actually have to wait for the IND filing? And I'd be really curious to hear your perspective on sort of the BD opportunities on the partnering side. Obviously, a lot of companies moving into the more complex generics and biosimilars, all of which -- or many of which require sophisticated delivery devices. It seems like the opportunity set in terms of additional partnerships, would be increased dramatically. I'm just sort of wondering kind of where that ranks in terms of priorities for the year.

[Bob Apple:]

Sure. Well, let me first tackle your first question about our proprietary products and their development. You're correct in that we will not really disclose what that product is until we file the IND and then it's basically public as to what we're working on. But we are focused on urology because, obviously, we believe XYOSTED will ultimately get approved. And we're going to have a sales force out there of 60 or so reps, and so obviously, filling that bag with other urology opportunity is important. And we've also mentioned numerous time in The Street that neurology is an area that we believe is a -- fits well with the products that we could develop in those -- for the neurology franchise. So, that's really all we can say as far as where we're focusing. Developing our own products is important strategic aspect of our business. We believe that having control of that product -- in the development process, having control of the product at launch is really key for continuing to grow our company. We will get business Alliance opportunities as opportunistic. And as you would expect with the recent approval of Makena and hopefully, some approvals with our partner, Teva, in the near -- in the future, that's bringing a lot of interest in our devices from other potential business Alliance partners. What I will say, that I think that the value that we bring is really on the regulatory process and getting the product approved as opposed to the -- frankly, the auto injectors. That's an important element. I think we have a great platform. But I think the major value that we bring to organizations that are moving into this complex combination product area is really our ability to help navigate the FDA process for that partner. So, again, I think our focus is -- 100% is developing additional products

[Elliot Wilbur:]

Okay. And then just one final question for you as well, Bob. I guess we'll get a more detailed update on XYOSTED and the path forward when you actually are in receipt of the minutes from the FDA meeting. But I guess between the last time we heard an update from you guys in 3Q and today, obviously, you submitted a briefing document. The company kind of had a chance to do a very deep dive in terms of looking at testosterone as a class. And just wondering if this exercise, from your perspective, yielded anything that altered or sort of reinforces some of your prior commentary or observation around testosterone in a profile and what we're dealing with, specific product issues or class issues? Thanks.

[Bob Apple:]

Yes, I mean, I think that from the briefing book that we developed, it's really a function of supportive data as to why we believe that the XYOSTED NDA is approvable. And so when we look at the products, the product attributes stayed the same. We think it's a very good opportunity for patients and physicians to have a once-weekly injection of testosterone. Our PK data, I think, it obviously remains the same. It was a very flat PK curve over an extended period of time at 52 weeks, which is really important for patients and for physicians. One thing we did learn was in the –various AdComs that were held with other oral testosterone products, when the patients got up and gave testimonies as to why they were looking for alternatives, one of the key things that they focused on was the peaks and valleys that they see with IM injection and how difficult it is to manage those. And so I think that what we've learned in our briefing book and in discussing in the AdComs and so forth is that the product attributes are still there. I mean they are still -- it is still a very positive -- potentially positive product for patients who have hypogonadism. And so with that, we're committed to getting the product approved. And again, in the next few weeks, we'll have those minutes, and we'll be able to disclose what the outcome of that meeting was. And like I said earlier in the call, it was a collaborative meeting and very productive and looking forward to getting XYOSTED eventually approved once we were able to tell The Street as to what those steps are going to be to get that to happen.

[Jack Howarth:]

Thanks. Could we take the next question?

[Operator:]

And our next question comes from Anthony Petrone in Jefferies.

[Anthony Petrone:]

Thank you. Good morning. Maybe a couple on Makena and then we'll jump into a few others in the pipeline, but maybe to begin there. Maybe a little bit on pricing discussions with AMAG. Can you share anything there on what their pricing plans are for subcutaneous version of Makena? If there any thought at this point just on peak sales, just given that this is brand lifecycle extension. Potentially, there is a generic, obviously, The Street estimates out there are for declines in Makena going forward, but maybe your thoughts on peak sales for the subcutaneous product and when those maybe achieved? Thanks.

[Bob Apple:]

Yes. Thanks Anthony. As far as the pricing, what AMAG has communicated to us as well as The Street is they believe that, even though they think this product has an advantage, a number of advantages relative to their IM injection, they're going to price it at parity to their IM injection. And the reason is they want to make sure that the switching that they want to achieve, that there's no barriers to that happening from a payer standpoint and in particular, with potentially a generic coming into play as well. Obviously, the generic strategies are typically a discount to what the current price is, and so AMAG believes that keeping the price at parity to the IM injection gives the product the best opportunity for the switch, and obviously, overall the best opportunity for the sales to be as large as they possibly can. As far as what AMAG's expectations are or our expectations as far as the product, all I can tell you is that, last year, the IM injection, which had about a 50% market share of this space, did around $385 million or so and I do believe that AMAG has obviously guided The Street a bit down. But I think it's even difficult for AMAG to predict what the ultimate sales for this product will be, given that it's a potentially better product for patients, given that it could potentially extend compliance for their product. But overall, I think the impact of the generic, if one comes in 2018, is really hard to predict until you start to see the trends, particularly around the payers. What I think is different or what AMAG has stressed that is different with Makena auto injector versus a generic or even an IM Makena is that this is buy and bill market. It's not your traditional market where patient goes to Walgreens or CVS to pick up the drug. You have to go to your doctor's, basically buy the product in advance and they dispense the product for you as an individual patient. And they maintain that vial for that patient and were to go the single-dose vial, they obviously use multiple doses over the course of therapy, and the course of therapy is around 13 or 14 weeks. And so I think it's difficult -- or AMAG believes that it's difficult, potentially, for generics to go into a market that isn't a traditional market. They're selling to physicians as opposed to selling to Walgreens and CVS and so forth. So, I think that, that, in and of itself, could create a nice barrier, at least in the near term, to hopefully decrease the generic erosion that they may see for product -- if a generic comes on the market. But again, they haven't given specific guidance and nor can we and we just hope that AMAG continues their strong commercial success with Makena. And they've done a great job with that product and have grown that market dramatically since they purchased that product a few years ago. And we believe that one thing we can count on is them being a good commercial partner and a good commercial organization, growing -- continue to at least maintain or grow the product, if possible, in this marketplace.

[Anthony Petrone:]

Fair enough. Maybe to move on -- and then that's very helpful. A couple on the pipeline, maybe just to circle back to the XYOSTED at this point. I understand that the FDA meeting occurred a couple weeks ago, and we're sort of in a holding pattern here. But maybe anything from that meeting on specific concerns out of the CRL, the elevated hypertension, depression, suicidality anything in particular that came up on that front? And maybe your thoughts on how the FDA walked away from that meeting, what the comfort level around those three specific risks. Thanks.

[Bob Apple:]

Yes, thanks Anthony. We're not going to give any specifics on the meeting discussions or topics until we have the meeting minutes in place. Obviously, we believe we understand what the outcome of the meeting was. But until you get official minutes from the FDA, their walkaway could be different than ours, which I don't think is the case. But until we get that in writing as to that -- that they either or disagree with the path forward that we presented to them, I really can't comment on even the FDA's perception of the issues at any -- during the meeting. Obviously, they give us -- they had CRL, which was two issues that we've been very open about as far as what the FDA's concerns were and we'll address those when we get the minutes in a press release or and 8-K once we receive those. The meeting was the 21st of February. Statutorily, they basically give you minutes within 30 days, and typically, it's on the 30th day. And so hopefully, we'll get those on time and we'll be able to communicate to The Street what the path forward is for XYOSTED. But again, it was a collaborative meeting, it was productive, and we're hoping that the minutes reflect that.

[Anthony Petrone:]

Thanks again. And just last one on EpiPen. Just the guidelines shifted there a bit, making it seems, a little bit easier for a generic version to come on with an alternative device in late November. So maybe just a little bit more color on the collaboration with Teva. And I know they're still calling for 2018, but it seems it should be a faster pathway now, given those changes in late November, so just an update there will be helpful. Thanks again.

[Bob Apple:]

Sure. I mean I think the only update we can give you is that we continue to ship devices to Teva in anticipation of a launch. And that the guidelines that came out, actually throughout 2017, we addressed all of those items in the file. And we believe that the end of that Teva file were the -- or the answers or -- to the CRL that they received a year or so ago was a comprehensive answer. And again, Teva hasn't really changed their guidance at all. It's just the fact that they originally said they would launch in Q1, and we're in March. It might be difficult to hit a Q1 launch. But obviously, 2018 is still clearly an opportunity for Teva to get the product approved and launched. And so for us, we continue to support Teva. We expect an approval sometime in 2018. But until the FDA weighs in on that, it's -- we really can't comment. It's Teva's ANDA and it's difficult for us to have full clarity as to what the next steps are, if any. And so again, all we can be ready for is the launch, which, again, I mentioned in our call that we've already supplied with over $22 million of devices for launch. And as anyone could see, that could be a very meaningful opportunity for us, given that the EpiPen still does quite a large market -- or has quite a large market and continues to do well. And we believe it'll be AB-rated and it'd be substitutable at the pharmacy. And I think that's key because, to-date, no one has received the AB rating, and there still continues to be very large market opportunity for Teva and for us.

[Anthony Petrone:]

Thank you.

[Operator:]

Our next question from Oren Livnat in H.C. Wainwright. Please go ahead.

[Oren Livnat:]

Hi guys. Thanks for taking the questions. I wanted to pile onto a couple of popular topics. First on XYOSTED, I mean, clearly, you're waiting for these minutes, and I understand your reticence to comment too much beyond that. But just given that we've all seen some several companies struggling in the same therapeutic area and these public AdComs and some of those companies commenting on what their path is forward or what they think it is forward, can you at least give us some color, based on what you know publicly versus your package? Maybe how do you think your 's safety data package stacks up versus what we know about what others have done, maybe about ambulatory blood pressure studies or not? And I guess just what you think your path forward might be that could be different from others that have said publicly, if you catch what I'm saying.

[Bob Apple:]

Yes. Thanks Oren, for the question, and I'm going to have to defer on that question. I mean, I think that for me to comment on someone else's safety profile without seeing the NDAs of those products, it's really difficult for us to even consider doing that. What I can say is that the only other products that are under review right now our orals, and they have a host of other issues in their CRLs that they've disclosed that, obviously, we don't have. But clearly, our CRL is focused on these two areas of blood pressure and depression. I don't want to even comment if that's a class issue or not because it's really not -- it doesn't matter what -- where the issue is coming from. If the FDA is concerned about it, we have to address it. And so we're only a few weeks away from the minutes and we'll be able to provide some guidance as to what our steps are and I think that'll give some clarity for our investors. But comparing ourselves to other products and what they've done from a clinical standpoint is really -- it doesn't -- it adds no value to discussing our product. And we're focused on XYOSTED and like I said earlier, we believe we had a collaborative and productive meeting with the FDA. And once we get those minutes, we will -- we'll communicate to The Street what the outcome of that meeting was.

[Oren Livnat:]

All right. Thanks. I appreciate it. And on Makena, congrats again on that approval. Maybe a dumb question. You talked about substitutability when we're talking about EpiPen just now and I'm wondering what your understanding is around the way it's prescribed now with the intramuscular. If a doctor writes a Makena script now, would -- is it possible that that could be automatically switched or fulfilled, I guess, by AMAG with the auto injector formulation? Do they have to request the auto injector? Are they currently requesting a vial? Do you have any idea how that dynamic would play out?

[Bob Apple:]

Actually, I don't know 100%. That's a question for AMAG. I would assume that the doctor would write Makena subcutaneous or Makena IM and therefore, then it'll be filled at the pharmacy as such. So, what AMAG is doing or trying to do and what they communicated is to try to get all of the current physicians to start writing the auto injectors vis-à-vis subcutaneous, because then that can't be switched if it's written subcutaneous with an IM generic. And so the only way to get there is an active plan that made patients step through IM generic before they got to sub-cue, but again, we don't even know -- I have no idea what the plan structure is for Makena and the covers and so forth. But clearly, if you write subcutaneous Makena, that's the only thing that the product can be dispensed at the pharmacy. There would have to be another step in place in order to switch it back to IM. And again, Makena -- AMAG is going to go out to the physicians and talk about the benefits of the auto injector and why it's better for patients, why it's better for the office to use the sub-cue versus the IM.

[Oren Livnat:]

Okay. And lastly, if I may, on the pipeline. I understand you're not give us any more color until you file an IND. Can you at least comment on whether the new lead and/or second candidate, whether you -- we should be expecting a full clinical approach, more like a XYOSTED? Or is it possible that we could see a bioequivalence pathway similar to what we saw with OTREXUP?

[Bob Apple:]

All right. So, we always try to first go in with a OTREXUP-type clinical program where we're doing a PK study. And -- but the basis or the function of the pre-IND meeting is to determine that pathway and to see if the FDA agrees with a shorter pathway, such as a PK versus a clinical program. There is value to do a clinical program, because you do typically can get -- you can get exclusive. You get a different label and so forth. But initially, in these areas, we are looking to do PK, particularly in the lead product that we've talked about potentially being in the clinics this year. And in the second -- the second products, again, we're always going to try to go with the PK program. But if a smaller clinical like we saw with XYOSTED is required, it's -- we believe it would still be worth the resources to do that, for either of these products. But initially, again, the IND meeting is going to set the tone as to what type of studies the FDA is going to be comfortable with, and then we'll be able to communicate that as well to The Street once we have that meeting.

[Oren Livnat:]

All right. Thanks so much.

[Operator:]

Thank you. Next question from Matt Kaplan in Ladenburg Thalmann. Please go ahead.

[Matt Kaplan:]

Hi, good morning guys.

[Bob Apple:]

Hey Matt.

[Matt Kaplan:]

Just wanted to -- not to beat a dead horse, but dig in to XYOSTED a little bit more. So, can you tell us a little bit about what you have in hand already with respect to being able to address the FDA's questions in the CRL? For example, do you have -- already have ambulatory blood pressure data? Obviously, that was a major focus in the AdComs that were held in January and the discussion there was ambulatory blood pressure data. Do you already have that for some of your studies? And where do you stand with that?

[Bob Apple:]

So, we're going to go back to the dead horse and try to answer -- really answer as best I can. We really haven't disclosed what the full clinical program would've entailed. What I can say is that, obviously, when we submitted the briefing book within a month or so of the CRL, obviously, we did not do another clinical program in that short period of time. And so the basis of our briefing book was essentially current data that we had from our two Phase 3 studies that we felt were supportive or, at least, areas of where maybe the FDA didn't focus in those two key areas that they brought up in the CRL. And so again, I hate to keep sounding like a broken record, but we're going to get the minutes and we're going to announce to The Street what the strategy is and how we believe we'll accomplish that. But at this point, like I said in the briefing book, we didn't do another clinical program. And so we're relying on our data that we had in hand to have that discussion with the FDA. If you remember the 005 study was really an additional supplemental safety study, where we added 150 patients as -- at the request of the FDA back in 2015 or 2014. And so we felt that between the two programs that we did 003 and 005, 003 being the mainstay of the efficacy side of the product and then 005 really focusing on safety, we felt that our package was appropriate and was -- again, with the briefing book, we just focused the FDA on areas of interest that maybe they didn't see in the NDA filing. And so that's all we can say at this point. Again, we are only a few weeks away. I know it's frustrating for everybody to not have a good understanding as to where we are with XYOSTED, but we're talking weeks, not months. So, we'll give you an update once we receive those minutes.

[Matt Kaplan:]

Okay. I'll hold off my other questions on XYOSTED then. And in terms of the programs partner with Teva, can you help us think about those in terms of your perception of the potential and the potential impact on Antares for each of them -- the three main ones, yes?

[Bob Apple:]

Yes. I think the one -- the only surrogate that I can give you is that Sumatriptan has been a -- had a nice rise in market share for Teva and for us and it was a very different market. Sumatriptan, we entered into that market as the fourth generic, so a much satisfied market and Teva was able to achieve a 30% market share in about a year and a half. The three products that we're developing with them now that are currently under FDA review, they all have, potentially, first-to-file status. And that's a very different market when a generic goes into being the first generic. The substitution rate tends to be much heavier and quicker and then there's also not as much price pressure, as we see with the Sumatriptan market. And so when I look at epinephrine, it's really hard to say what the market is now for the Mylan EpiPen because they don't disclose the individual product anymore. Best guess is that they're probably doing it -- in 2017, they were around $500 million to $650 million of the EpiPen because they launched an authorized generic by themselves. And so there's two products that are out there with the name of EpiPen, which is their brand as well as their AG. And then there is another player out there that is not AB-rated, it's the Adrenaclick and that's done well in a CVS-dominated price play. And so I think that the EpiPen is still a very material opportunity as far as the market value. And obviously, there is no cure for anaphylactic shock, so it's not going away anytime soon. And so we believe that Teva will do as best job as they possibly can in converting patients to a generic, the Mylan EpiPen. There really hasn't been much focus on the dollar amounts lately, but Mylan had publicly stated that they felt that a generic would erode their business by approximately 40%. But how that translates when we actually launch with an authorized generic in the market already is really a function of the success that Teva could have with the pharmacies, such as CVS and Walgreens, which is obviously the mainstay of the U.S. market, and they've done really well with the Sumatriptan products with that. As far as Byetta is concerned, it's a -- from -- it's a product that is still being used by diabetic patients. If they're happy with it, they stick with it. They do have a -- Amylin does have a long-acting Byetta that's on the market called Bydureon. It did about a $1 billion last year. Byetta, according to IMS or Symphony, did about $250 million retail, but it's really difficult to determine what that net number really is. But again, we would be the first product out there, fully substitutable if we get an AB rating, which we -- obviously, that's what we filed and that's what's being reviewed. And so not as large of a meaningful opportunity, but again, with substitution, it can be -- there could be a quick adoption with that product and still be a nice bottom line positive impact for Antares as well as Teva. And then finally, with Teriparatide, that's a really big product. Obviously, it is now dwarfing even the Epi opportunity. Lilly's global sales of Teriparatide or Forteo, it was about $1.75 billion, of which almost $1 billion of that is the U.S. And again, they filed an ANDA. They believe they have a fully substitutable product, an AB-rated product and that could obviously be a very large opportunity for both us and Teva, given the substitution rate they could possibly see with a generic. So, that's a really exciting opportunity. They settled the litigation with Lilly, and they haven't any given any kind of guidance to The Street, either Lilly or Teva, as to the results of that settlement. But obviously, we're working towards an approval, helping them work towards an approval, and hopefully, that product will be approved and can be launched. It's already approved in Europe in 17 countries. Europe is a smaller part of the market globally, but still a value proposition there in all the major markets there and they're waiting for the patents to fall in that market to launch that product. So, again, I think that Teva is the right partner to be playing in this space with us as far as making it as a big opportunity as possible. And we're really still excited about all those opportunities and hope for an approval on those products, hopefully, in the short-term.

[Matt Kaplan:]

And just with Lilly's patents on Teriparatide, they expire in middle of 2019, something like that, September 2019. Is that correct?

[Bob Apple:]

That's correct. Our understanding is that they expire in 2019. And the positive element of working with us on that product was that there is a device patent that's out there until 2024, I believe, so an additional five years. And during the litigation process, Lilly agreed that we did not infringe that IP, and so therefore, it really reduce the timeframe in which we can launch this product. And so -- obviously, if approved. And so I think that -- I'm not saying that we're going to be in the market by ourselves for a long period of time, but obviously, we know there's not many -- I don't think there's anyone behind us, because we haven't seen any additional litigation from Lilly. And with us being able to potentially not -- to reduce that time line from 2024 to late expiring one 2019, I think, has been a huge value driver, potentially, for Teva and for us.

[Matt Kaplan:]

All right, guys. Thanks for the added detail Bob.

[Bob Apple:]

Absolutely.

[Operator:]

Thanks. Next question is from David Amsellem in Piper Jaffray. Please go ahead.

[David Amsellem:]

Thanks. Most of my questions have been answered. I did want to ask a little bit about the pipeline. Beyond what we talked about, I'm sure that other products -- partnered products that are in the bag, so I just want to get a little bit of color on when we may hear more about additional opportunities? And give us kind of a general flavor of what other opportunities we should be keeping an eye on, maybe not necessarily for this year, but for 2019 and 2020, again, in the partnered portion of the pipeline?

[Bob Apple:]

So, -- well, first, on the development side in our internal programs, the beauty of what we have in our platform technology of the auto injector and pen injectors and other things is that we do believe there is an infinite amount of opportunities that we can use our technology and develop new products. And we go through a pretty thorough screening process internally to make sure that the value driver of the product isn't just a device. The value driver of the product is improved PK or improved efficacy, if an improved PK results in improved efficacy. Other elements that -- long-acting type of drugs like our weekly testosterone, potentially weekly subcutaneous Makena, those are the elements that really focus on which is improving the product from an efficacy or safety standpoint for the patients. And again, we think we have a number of those. And what we do is really focus down on the ones where we want to be in that therapeutic area, where it's a commercial team that we can build like in neurology that wouldn't be a burden for a company of our size and can allow us to add to that bag as we look forward. From a business Alliance standpoint and a partnership opportunity, I really can't speak to any particular transaction that we're working on, because we're not allowed to really do that until the transaction is done. But what I can say is that they take a number of months to do the documents and so forth. But I think, overall, the one thing that we really focused on for Antares is making sure that we get the proper economics for those types of business Alliance. When we look at Teva's transactions or Alliance deals as well as AMAG's, I think it'd be hard-pressed for anyone to show another company that can get a high single-digit to mid-teen royalties on a device sale. And I think that we want to maintain that level of value for us or, otherwise, it wouldn't be worth us pursuing those opportunities. We would be better served doing more internal programs as opposed to external programs. And so what I can say is that there's still interest in business Alliance with other potential partners on both sides of the table and even with that value proposition that we've demand in our deals because if we continue to get these approvals in a very complex area, in a very disciplined area with trying to get these things through the FDA, I think that doing more business Alliance minimizes our risk in those programs and allows us to take more risks on our internal pipeline. And so I think it's a real nice balance that we have. And I can't particularly comment on the areas of business that we may get in the future with partners, but I can say that it's still a component of our business that we think will bring value to shareholders and we continue to pursue those.

[David Amsellem:]

Thanks.

[Operator:]

Thanks. Next question from John Vandermosten in Zacks Small Cap Research. Please go ahead.

[John Vandermosten:]

Good morning Bob, Fred, and Jack. My questions are related to Sumatriptan. And first, I noticed that Endo had discontinued their product, and I wanted to see what your thoughts were in terms of how much that might help market share. We're pretty high right now at 30%. What can we expect going forward?

[Bob Apple:]

Yes, I believe that the Endo product was quite small relative to the market. I think that there is one other company that has a larger market share than us right now, which is Dr. Reddy's and it's -- we're getting rather close to being in that same market share. As far as expectations going forward, the more you drive market share to one product, the more the price goes down. And so there is a -- almost a little bit of an art to this and I believe that Teva knows those pinch points, and they are pretty good at it. So, we don't really look at, going forward, what type of market share they potentially could get, because obviously, we want to maintain as much value as possible in the selling price and in the profit in the product. And so we really don't guide as to what market share. I think we really just focus on the market share to show what Teva has done in a crowded market, to show what the opportunity potentially could be with the other products that are in development with Teva and I think are a very different potential market, in that it's not -- any of those other three products that we're working with Teva, there's no saturated generic market at this point. And if they enter into the market as a first-to-file, we believe that they will be successful with those products. And so -- but again, first thing we got to do is get the approvals or Teva's got to get those approvals so we can launch those products. But Sumatriptan, as far as the market share, I'm really impressed with what they've done at this point, given when we entered the market. So, they've already exceeded my expectations.

[John Vandermosten:]

Okay, yes. And I mean I think that's great with so many competitors, that they could achieve that. And again, on Sumatriptan, there seem to be a disconnect between the market share and the revenues most recently. And you've just mentioned price is one of those moving factors; maybe you can help me understand a little bit more about that disconnect?

[Bob Apple:]

Yes, I mean, I think that what I've mentioned in other presentations and so forth is that the market value of the Sumatriptan market goes down over time because of the competition and Teva was able to achieve that market share, obviously, based on price, to some degree. And so the market, hopefully, is at -- it's kind of inflection point, where it stays where it is, but we -- Teva was able to achieve that market share through a better price than what the other players were offering their products for. And so the market is what it is. It's split up between four companies basically. And hopefully, we're at a status quo standpoint on the pricing and so forth, but that can change. If someone wants to get more market share, the way they get it, is to reduce the price. So, that's that.

[John Vandermosten:]

Okay. Thank you for the answers.

[Bob Apple:]

Thanks John. Operator, I think we time for one more question.

[Operator:]

Sure. We'll take a follow-up question from Elliot Wilbur in Raymond James. Please go ahead.

[Elliot Wilbur:]

Thanks. Just a quick question on financials for Fred, maybe specifically help us think about the directional trends in OpEx for 2018. SG&A has been at similar levels for quite some time. I assume there's not going to be a lot of movement there. But maybe help us think a little bit about quarterly flow in R&D, I guess, given the wind down of some of the programs and then potentially escalating cost in the back half of the year? Thanks.

[Fred Powell:]

Sure, no problem. And I think you're right. It's -- looking at the operating expenses for 2018, we will see on the back half of the year, really, additional R&D expenses as we -- as Bob announced. Looking to stay with the IND is going to be -- we would expect that we would see the R&D expenses increase at that time. At the beginning of the year, we would not expect much fluctuation in the R&D side. With XYOSTED is we can't -- there's no decision on that yet as to where those expenses will be. So, I can't comment on that. And when it comes to the general and administrative expenses, certainly, expect that those will be relatively flat from last year to this year, not looking at significant increases in the admin expenses. But you're right, when it comes to the R&D side, as we continue to embark and add more products to our pipeline, we're going to see that line item increase. When you think about the last time that we had significant R&D expenses, it was when the XYOSTED was still going through clinical trials. And all of 2017, we were waiting for the FDA, because we have submitted the NDA and December last year. So, that'll be a line item that does increase over last year.

[Elliot Wilbur:]

Okay. And just a real quick follow-up, Fred. So, basically, R&D has kind of averaged in the low $3 million per quarter rate in 2017. It's fair to say that's basically baseline number, then all the additional programs would potentially be incremental to that?

[Fred Powell:]

Yes. That's fair accounting.

[Elliot Wilbur:]

Okay. Thank you.

[Operator:]

Thank you. So, there are no more questions at this time. I just like to hand the call back to Mr. Jack Howarth. Please go ahead.

[Jack Howarth:]

Thanks Rina 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:]

Thank you for your participation. Ladies and gentlemen, you may now disconnect.