Antares Pharma, Inc.
Q4 2015 Earnings Call Transcript

Published: 10 Mar 2016

[Operator:]

Ladies and gentlemen, welcome to the Antares Pharma Fourth Quarter 2015 Operating and Financial Results Conference. 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 will now hand the conference over to Jack Howarth, Antares Vice President of Corporate Affairs. Please go ahead sir.

[Jack Howarth:]

Thank you, Lynette, and good morning, everyone. This morning we released our fourth quarter 2015 operating results and recent achievements, and a copy of the press release can be found on the Antares web site at www.antarespharma.com under the News section. In addition, this morning's teleconference also contains an interactive slide presentation. If you've dialed into the audio-only teleconference, you can follow along with the slides, which can be found on our web site under the Investor Information section. The conference call and slide presentation will be simultaneously web cast on the Investor Information section of the Antares' website under the web cast tab. If you are currently unable to access our web site, the conference call and the slide presentation will be archived under the Web cast 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. These forward-looking statements may include, but are not limited to, statements concerning the growth of prescriptions and sales of OTREXUP, Teva and our ability to adequately and timely respond to the complete response letter received from the FDA for the VIBEX Epinephrine auto injector ANDA, and approval by the FDA of the same. The timing and therapeutic equivalence rating thereof and any revenue pre or post FDA approval. The timing and results of the supplemental safety study for QuickShot Testosterone or QST; the company's ability to prepare and submit an NDA for QST, and FDA actions with respect to the QST program. Actions by the company's third party partners or suppliers, the timing of the launch of Sumatriptan injection, and the amount of revenue from the same; actions by the FDA regarding the company's product candidates, and those of its third party partners, including Teva's ANDA for the Exenatide pen; the timing and results of clinical research and development projects, and the timing of launch of products in development and future product revenue. Forward-looking statements provide Antares current expectation or forecast of future events. Factors that could cause actual results to differ are discussed from time-to-time in the company's filings with the SEC on Form 10-K and the Antares 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 web site and we encourage you to review these materials. Antares is providing this information as of the date of today's press release and does not undertake any obligation to update any forward-looking statements contained in this earnings 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 Jim Fickenscher, Senior Vice President and Chief Financial Officer. Let's review the agenda for today's call on slide 3; Bob will begin with some opening remarks and an overview of the operational progress we made since our third quarter call in November of last year. Jim will take you through the financial results, and then Bob will discuss our priorities for 2016. After that, we will open the lines for your questions. For interactive web participants, please limit your questions or comments to the fourth quarter and full year 2015 financial and operating results. I will now turn the call over to Bob Apple. Bob?

[Bob Apple:]

Good morning everyone. Let's begin with slide number 4; six weeks ago, the Board of Directors asked me to step into the role of CEO here at Antares. I want to express my gratitude to the Board for giving me the opportunity to run a company that has been my passion and focus over the last 10 years. I also want to thank all the investors who have reached out to me with a congratulations and words of support. As a fellow shareholder, I am very frustrated with our stock price. I can assure you, that the management team and I are fully aligned with our shareholders. The majority of our compensation comes from stock options, restricted shares and performance units, that only create value, if our stock prices increase over time. I know that we are in a very tough stock market right now, but I believe that Antares is a company that has a very bright future, with multiple opportunities for value creation, and should have a stock price and market capitalization, that reflects this value. When I joined Antares 10 years ago, we were a drug delivery platform company, with revenues of approximately $4 million and a pipeline that was focused on transdermal gels and a fledgling injection device technology known as the VIBEX platform. We have 15 dedicated employees in the United States, and another 15 in Switzerland, working to turn early stage science and engineering into some of the product opportunities in front of us today. I believe that we will reap the benefits of those efforts, and we are poised for success. Having made a transition to a commercially focused company, our annual revenues have grown to $46 million in 2015. We have a proven track record of success with the FDA, with the approvals of OTREXUP and Sumatriptan, utilizing our VIBEX platform. Our proprietary pipeline includes, what we believe, will be the best in class, patient friendly testosterone replacing therapy, that should be filed with the FDA in the coming year. We have built relationships with world renowned pharmaceutical companies that provide us with multiple near term product opportunities. In total, our pipeline of six products we will potentially launch in the markets, with a current retail value of approximately $8 billion. As CEO of Antares, I am going to focus our great team of employees on the theme that we can control. In the short term, this includes growing OTREXUP prescriptions, launching generic Sumatriptan with Teva, responding to the comments raised by the FDA on Teva's Epinephrine ANDA, and getting the QST NDA filed as soon as possible. We will also continue to support our partners, as they attempt to bring generic Exenatide Pen1 and the next generation Makena to the market over the next few years. I know that many investors are hyper focused on our relationship with Teva, to bring the first generic Epinephrine pen to the U.S. market. Clearly, the financial implications of an approval for this product are significant for all of our shareholders. In the filing with the SEC last week, Teva stated that they had received a complete response letter from the FDA for their Epinephrine ANDA, and that the FDA identified certain major deficiencies. Teva also advised that they are valuing the CRL and intend to submit a response, and a launch will not take place before 2017. Although we will not be discussing the specific contents of the CRL, I can tell you that there are some questions related to our device. The Antares team is already hard at work collaborating with Teva to respond to the device related questions asked, and we believe that we can adequately address the questions raised with respect to the device. We want nothing more than to see this product approved as soon as possible. However, to say that Antares' success is depending on Epi, is something that I do not believe. We have worked hard to develop a portfolio of relatively lower risk proprietary and partnership opportunities. We believe these will come to fruition beginning this year with Sumatriptan and continue over the near term horizon. Many of these opportunities, including QST, Makena, Exenatide and the Pen1 have the possibility of having value similar to Epi. I can tell you that we have always managed our company without a singular focus on Epi, due to the diverse nature of our business, and we believe that Antares is a compelling investment opportunity, even with the delay in the Epi projects. Moving to the highlights of Q4 2015 on slide number 5; I am very pleased to announce that we continued our string of outstanding quarterly performance. Starting with the top line, we reported total revenues of $11.8 million, a 40% increase over the fourth quarter of 2014. For the full year 2015, we reported record revenues of $45.7 million, which is 72% higher than the 2014 revenues of $26.5 million. This is truly exceptional year-over-year growth. In December, we announced the approval of our ANDA for our Sumatriptan auto injector. This represents our first approval of a complex generic, and a product we are very excited about. We are currently in full production mode, and expect to begin shipping product to Teva in the second quarter, with a launch into the market by Teva near the middle of the year. In January, we disclosed our partnership with AMAG for the progesterone product Makena. This product is indicated for the use in lowering the risk of preterm birth. It is currently sold in a multi-dose vial and injected into musculi through a 21 gauge needle. AMAG recently announced that their single use, preservative free option for Makena was approved by the FDA. This is an important step in our lifecycle management of Makena, with an ultimate goal of moving to the single use subcutaneous auto injector that we are helping to develop. The graph on slide number 6; shows quarterly prescription data since the launch of OTREXUP. In comparison to the fourth quarter of 2014, prescriptions grew 34%. After seeing traction in growth, following the onboarding of our own salesforce in the second and third quarters of this year, we saw fourth quarter prescriptions flattening out. We believe this was primarily due to decisions made by certain managed care plans, to implement step edits on the entire methotrexate class. These patients have to fail on oral methotrexate then fail on vial needle syringe, before being given an opportunity to get a subcutaneous auto injector. After re-assessing our strategy, we now have our reps focusing on patients that do not have those step edits in their insurance plans. In addition, late last year, we modestly expanded the number of territories in our field force to optimize our call plan, and we are continuing to look for ways to increase prescriptions. That concludes by 2015 operating highlights. I will now turn the call over to Jim Fickenscher, who will take you through the financial results. Jim?

[Jim Fickenscher:]

Thanks Bob and good morning everyone. Let's get started by looking at the details of revenues for the fourth quarter on slide number 7; total revenues for the quarter was $11.8 million, a 40% increase over the $8.4 million recorded in the fourth quarter of 2014. Product sales, which represent sales of our proprietary products, devices and device components to our customers were $9 million compared to $4.5 million in the fourth quarter of last year. The increase in product sales was primarily driven by OTREXUP, which increased $0.5 million or 17% versus the same period last year, and a shipment of $4.9 million of auto injectors to Teva, for use with our generic Epinephrine product currently under active review. Development revenues represent amounts earned under arrangements with partners, in which we develop new products on their behalf. Frequently, we receive payments from our partners that are initially deferred and recognized as revenue over a period, the development period, or upon completion of defined deliverables. Development revenues, $0.9 million compared to $2.3 million in 2014. The decline in development revenue was primarily related to the conclusion of the development stage of the Epinephrine project in early 2015. Licensing revenues represent the amounts recognized from upfront or milestone payments received from partners, that are initially deferred and then recognized over the life of our agreements. Licensing revenue was $1.1 million in the fourth quarter 2015, compared to $0.9 million in 2014. Let's move now to slide number 8 and have a look at the fourth quarter income statement ;total gross profit increased in the fourth quarter of 2015 to $5.8 million compared to $3 million during the same period in 2014. The gross margin rate for the fourth quarter was higher than 2014, due to a $2.2 million non-cash charge for excess and obsolete inventory taken in 2014, offset by a higher proportion of lower margin device sales in 2015. Fourth quarter 2015 total operating expenses were $12.3 million versus $13 million in 2014. The decrease in operating expenses was primarily due to a decrease in expenses connected to the sales and marketing efforts on OTREXUP, and lower legal fees, following the settlement of litigation. Net loss was $6.6 million for the fourth quarter of 2015 versus $10.1 million in 2014, which translates into a net loss per share of $0.04 and $0.08 for the fourth quarters of 2015 and 2014 respectively. At December 31, 2015, our cash and investments totaled $47.9 million, a $3 million burn since September 30, 2015. We are comfortable with our cash run rate and the strength of our balance sheet. We will continue to invest carefully, to unlock the value of our pipeline. Looking at slide 9, allows you to see the significant progress we made during 2015. Total revenue is up 72% and of the $45.7 million recorded, $27.5 million is attributable to product sales, which are up 109% over 2014. 2015 gross profit is up 72%, investment in R&D is up 6%, and selling, general and administrative expenses are down 15% versus last year. Overall, we have cut our net loss by 41% and we plan to continue to manage the business through appropriate investments and prudent cash management. With that, I will turn the call back to Bob.

[Bob Apple:]

Thanks Jim. Let's take a look at some of our most important value drivers, which are the primary focus for Antares in 2016. Turning on slide number 10; this past December, we received approval from the FDA of our ANDA for 6 milligram and 4 milligram Sumatriptan injection for the acute treatment of migraine and cluster headaches in adults. This product is therapeutically equivalent, and therefore, suitable to active pharmacy to a reference listed drug Imitrex StatDose. As I mentioned earlier, we believe that we will begin selling packaged product to Teva in Q2. Once they have launched the products, we are eligible to receive 50% of the profits on the drug. On slide number 11, the data from 2015 indicate that the retail value of the Sumatriptan auto injector market in the U.S. is approximately $200 million. Sandoz and Teva will be the only company supplying both the 4 milligram and 6 milligram dosage forms as a generic. We believe that having both doses forms, combined with Teva's distribution expertise, puts the product in a position to gain meaningful market share and profits for us into the future. Please turn to slide 12; we believe that QuickShot testosterone is a very attractive and underappreciated value driver for Antares. Our goal is to file the NDA for QST by the end of 2016 or early 2017. Assuming a 10 month review, this could provide us with a PDUFA date and possible launch in late 2017 or early 2018. We expect to release the results of the 52-week safety data before the end of March. In the second quarter of 2016, we anticipate that the last patient will complete their last visit in the supplemental safety study. We believe that the data generated from these studies will form the basis for our NDA filing. The two graphs on slide number 13, tell an interesting story about why we are so excited to bring QST to the market. On the left side of the chart, we track total prescriptions by major form for the last five years. The blue line represents total prescriptions in the class, while the grey line charts topical general prescriptions, and the orange line represents prescriptions for intramuscular injectable testosterone. Although the total market had come off its peak in 2013, it is important to note that there were still 6.8 million total prescriptions and the retail value of the TRT market in 2015 was $2.8 billion. We also know, that over the last five years, prescriptions for injectable products have continued to grow, and last year surpassed the topical gels. We believe that this is a very positive trend for our subcutaneous auto injector products. Perhaps as important as the total number of prescriptions written in 2015, is the fact that the multi-prescriptions during the year appear to be stabilizing, as represented by the graph on the right. We know that companies who participated in the TRT market in the 2013 timeframe, felt pain as the market contracted and generic gels were launched. However, the data indicates that there is still tremendous demand for this class of products. We believe that QST addresses some of the significant safety and convenience issues associated with topical gels and inter-muscular products. If we are successful in getting QST approved, we believe that we have an excellent opportunity to build a very successful product, that addresses the whole market. Let's move to slide number 14; in 2015, we shipped $9.9 million worth of devices to Teva, under a purchase order of pre-launch quantities of devices and trainers for the Epi project. $4.9 million was shipped in the fourth quarter of 2015 alone. We expect to complete shipping devices under this purchase order in the first half of 2016. We will also work very closely with Teva and responding to any device related questions contained in this CRL for this valuable product. Turning to slide 15; the last of our short term value drivers is growing our alliance business. We are very excited about the opportunity that exists in our partnership with AMAG for their version 3.0 of Makena. We are developing a subcutaneous auto injector, which AMAG believes to be a real advancement for pregnant women and their caregivers, by combining a new, potentially less painful subcutaneous round of administration, with a pre-filled, easy to use, auto injector. The advantage of the Antares auto injector, is that it allows the administration of Makena subcutaneously with a much smaller 27-gauge needle. The QuickShot auto injector is specifically designed for administration of viscous drug through a small gauge needle. Makena did approximately $252 million in revenue for AMAG in 2015, and they have indicated that 2016 revenues for the product should be in the range of $310 million to $340 million. On a go forward basis, we expect to earn development fees and if successful, we would be responsible for supplying the devices and packaging the final product for a specified margin. Also, we will receive high single digit to low double digit royalties on the end market sales of the product and certain sales based milestone payments. AMAG is targeting approval of Makena 3.0 prior to the February 2018 orphan exclusivity end date. Now let's wrap up by turning to slide number 16; this was another excellent quarter and an outstanding year for Antares. We have a plan for growth, that we believe we can drive shareholder value. We know that we must stay focused and execute against the plan, in order to achieve our objectives, and make meaningful progress on the drivers of value. I am confident that we will continue to move forward on multiple fronts in 2016. Thank you very much for taking the time to be with us this morning. Operator, we have finished our prepared remarks for today. You could now open the lines up for questions-and-answer session.

[Operator:]

[Operator Instructions]. We will take your first caller in the queue, and that will come from Anthony Petrone from Jefferies.

[Anthony Petrone:]

Thanks gentlemen and good morning and congratulations Bob. Maybe to start with the Epi questions and sort of the presentation you gave earlier in this year, you mentioned questions you received from the FDA, you have responded to those questions, of course we have the CRL. So I am just wondering, from the questions you received from the FDA and the CRL, I mean, how much was related to both of those events, and any additional color you can share on timing and sort of the interaction between the company and Teva would be helpful?

[Bob Apple:]

Sure. So as far as the CRL comments and what components for the devices versus a drug or whatever, we are really not going to be in a position to characterize the type of questions that we receive from the FDA. This is Teva's ANDA and so it's their responsibility to really respond to questions about the ANDA or how they are going to actually deal with it, on a go forward basis. What I can tell you is that we are already working with Teva to respond to some of the questions that were raised, and like I said, in the script, we feel good about getting those answered and forwarded to the FDAs, and hopefully, we will be able to meet the timing that Teva put out in The Street, that the launch would be sometime after 2017.

[Anthony Petrone:]

All right. Helpful, may be to jump over to Sumatriptan, couple of questions there; maybe as you look ahead, obviously, you are comparing it to the injectable market. But can you give us a sense, relative to the other routes of injection, oral and nasal, will there be sort of a chance to sort of gain share within those routes of administration? And then maybe as you look ahead, is there any indication on pricing of Sumatriptan injection relative to Imitrex, and then I will have one last follow-up. Thanks.

[Bob Apple:]

Yeah I mean, as far as the Sumatriptan market in the injectable component of that market relative to orals and nasals, and so for -- I think it has been pretty consistent over the last few years, and I don't think that our product is going to change that in any way. It’s a drug, it’s a device that we believe is a very nice device, and so it's going to be easy to use for patients. But it is the third generic into the market, and we are really counting on Teva's contracting expertise to gain meaningful market share within that class of products. It has maintained a nice value, as far as the total class of injectable of Sumatriptan, and we believe we will be able to hopefully take some meaningful piece of that. And as far as the second part of the question --

[Anthony Petrone:]

Which was the pricing?

[Bob Apple:]

Yeah, thank you. The pricing, I think that the -- Teva plans on being prudent in that area. Like I said, there is two other products that are really the mainstay of that class, which is a product from Dr. Reddy and a product from Sun, and so far, the price has maintained a reasonable value, and I think that we look to gain market share by keeping that price in the same range. But again, that's all Teva's decision, and it's up to them as to how they feel best to penetrate that market.

[Anthony Petrone:]

Great. Then just one on QST testosterone; can you give us a sense there also, is the initial sort of plan here to go exclusively against injectables, or is there sort of a position here where you can be positioned against both injectables and topicals? Thanks for taking my questions.

[Bob Apple:]

Sure. Well, there is no question we believe that we are going to participate in both sides of the markets. The product from an injectable standpoint, obviously, we believe that we have reduced the peaks and troughs associated with the IM injection products. We also believe that our product will be significantly less painful than the deep intramuscular injections that are currently on the markets. And as far as the gels are concerned, we believe we completely removed the transparency issues associated with gels. We also go through a once-a-week injection versus the daily applications of gels, and our levels are very consistent across the period of time on the drug, and we believe that we -- quite frankly, we just think we have the best product out there. So we believe we will participate in the whole market.

[Anthony Petrone:]

Thank you.

[Jim Fickenscher:]

And just one other comment, as you may know, there is a couple of companies that are trying to bring oral products to the market. They haven't been approved, they have made some progress, some have had some issues and some, we think may get to the end. But even there, where we are looking at a product that potentially might be two times a day tablet, we think that due to the nature of our injections being so limited in pain, and of one week duration, we think that we will actually compete well against those, should any of them come to the market as well.

[Anthony Petrone:]

Helpful. Thanks.

[Operator:]

We will hear next from Matt Kaplan from Ladenburg Thalmann.

[Matt Kaplan:]

Hey guys.

[Bob Apple:]

Hey Matt.

[Jim Fickenscher:]

Hey Matt.

[Matt Kaplan:]

So congrats on the progress. Just can you give us a little bit of perspective in terms of how you guys are thinking about a revenue growth for 2016? And maybe touch on specifically, I guess, a couple of things in terms of the OTREXUP opportunity and how you are thinking of that, given the Medac competition there? And also, in terms of anything you spoke about this in your prepared remarks, with respect to injector sales to Teva going forward as well?

[Jim Fickenscher:]

Sure Matt. It's Jim Fickenscher, good morning. So obviously, we as a company do not give forward guidance. So I won't be able to get real specific with you. But I think as Bob mentioned, our plan is that we believe that we are going to be able to continue to grow our revenues in 2016. When you look at it, we have got a very interesting mix of places to generate revenue. So we do believe very much in OTREXUP and we are looking to continue to see growth in that product. Obviously from our point of view, we need to make sure that we are focused on trying to grow that entire market. We are battling hand-to-hand combat with our friends from Medac and Rasuvo. But we think we have got a better device, and we think that to the extent that the two of us can convince more physicians, that they should use a subcutaneous auto injector, then we could continue to see the entire market grow and both of us should be able to benefit from that. With respect to the injectable devices to Teva, we expect that we are going to continue to sell those through the first half of the year, and there are, I would say meaningful revenues still to be made. As we ramp up the production and sale of the Epi devices, the pre-launch quantities of Epi devices to Teva, we should then be in a situation, where we are going to deliver the Sumatriptan devices. And so, just as a reminder to everybody, the way that our contract works, we will sell the devices. We actually do the final packaging, Teva provides us with the active ingredient. We do the final packaging and ship that back to Teva. That will be at our cost, so no margin on the initial shipment. And then, when Teva places a product into the market, we will do a profit split calculation, we get 50% of that, but that is on a one quarter lag. So don't be surprised, if you see a reduction in our margins in the year and the quarter, where we are shipping the devices to Teva, unless it happens in the exact same quarter, which of course, the profit split will be at least one quarter delayed. That's when we will see the real margin coming in. So I think overall, when you combine that with continued royalties on some of the other products that we have, we are believing that we are going to have some increased development revenues from some of the projects that we talked about. We feel very good about where 2016 looks from a revenue point of view.

[Matt Kaplan:]

I guess a quick follow-up in terms of going back to OTREXUP. Prior management had guided that that could be over $100 million product, or even multiple $100 million. Is that still how you guys are thinking about that product opportunity in its own right?

[Bob Apple:]

That's a tough question. I mean, that long term, the product has a tremendous value for the company. We believe it will continue to grow, and there will be a mainstay for rheumatology patients. But obviously, that guidance was done before we had a competitor in the market and that's obviously -- in theory, has created half the market opportunity than it had been in the past. And I think that, if you talk to any pharmaceutical company that's selling into the space, the managed care players, the managed care market has become extraordinarily challenging as far as coverage and reimbursement, and it's really a function of getting those doctors to write more and showing that there is a desire for the product, in order for the payors to reimburse it. And that's a long cycle, longer than it used to be. So I think that, again, we believe that OTREXUP has a significant long-term through our company and to RA patients. But as far as the top line, what we think it could do, we are not really going to be in a position to provide, where we think the product is going to go in the next three years or so.

[Matt Kaplan:]

Okay. Very good. And then just a question on the Epipen; I guess, given the success that you have had in terms of getting auto injectors approved, OTREXUP, Sumatriptan, were you surprised at the questions in the CRL that you received with respect to the device, and given the progress that you made addressing prior questions?

[Bob Apple:]

I think again, I am not going to characterize the type of questions, but when we ultimately received the approval for Sumatriptan, that was over a number of CRLs from the FDA in varying durations and varying challenging questions, and we got it across the goal line. And I think that, it’s a complex drug, it’s obviously a very publicized drug, as far as the fact that it’s a life sparing drug, in given situations, if the person is having a severe allergic reaction. And so all those factors weight into the length of the review process. So I am not surprised by those types of questions, I am not surprised on the number of questions. I think it's just a matter of working through with the FDA, and ultimately getting towards the goal of getting this thing approved on the market.

[Jim Fickenscher:]

And maybe if I could just add one thing Bob, I think the good news, is that we have the CRL, and sure, we would have loved to have gotten an approval. But we all knew, since the time back in December, that Teva was going to -- felt that they were going to get a CRL. We now have it. It is as it is termed in complete response letters. So at this point, we are in the process of trying to whittle down and make progress and answer every one of those questions. We hope that we and Teva will be successful on that the first time through. But as Bob said with Suma, sometimes, you should start with a complete list of questions, and you start to narrow things down towards approval.

[Matt Kaplan:]

That's very good. Thanks for that detailing. And last question, I guess for you Jim; you showed that you are able to cut your SG&A expenses in 2015. Can you give us a sense in terms of operating expenses for 2016, in terms of R&D and SG&A?

[Jim Fickenscher:]

Yeah so, I guess what I would say is, the work that was done on reduction of SG&A was really -- in 2015, was primarily a result of two things; one was, in the year after the launch of OTREXUP, we made some changes to the team that was marketing the product. Bob took over as Chief Commercial Officer there, and frankly, he brought a level of discipline that needed to be bought. So I don't know, so I would expect to see continued reductions in 2016 versus 2015. I think we have now got the spending in the right buckets and the right size of the organization. We talked about the fact that we have actually increased the size of the field force. We did that twice effectively in 2015, so there will be some incremental costs associated with commercialization. Although we always continue to look at every one of those marginal dollars, to determine that's just the right place to spend it or not. We also had a reduction in 2015 versus 2014 because we settled our litigation with Medac. Obviously, that's now out of the base. So that gives you, hopefully, an idea of where SG&A should continue to go into the future. We are a growth stage company. With respect to R&D, we are now finishing up the work that has to happen on QST, so we have got the -- on the good side, we finished up the big Phase-III trial, the 1303 trial last year and early this year, but we still have the 1505 study that's ongoing for the first half of the year. Once those costs of the trial and all that are done, we are going to get into the costs associated with putting together the NDA, and should we file it this year, there would be, of course a filing fee with the FDA. So without getting anything specific, I do not believe that we are a, cut the expense story, in order to get the profitability. We have got a great pipeline of opportunities, we need to get them across the end line, and then be successful commercializing them ourselves and with our partners.

[Matt Kaplan:]

Thanks guys.

[Operator:]

We will move to the next caller, David Amsellem from Piper Jaffray. Please go ahead.

[Michael Chang:]

Hey guys. This is Michael on for David. Just a few quick questions; do you think the withdrawal of Sanofi's Auvi‑Q and [indiscernible] supply chain issues with their Adrenaclick AG will make the FDA a little bit more gun-shy about an AB rating, given the challenges seen by these other players? And just secondly, sort of -- what are your thoughts on possibly monetizing OTREXUP, it could be a source of non-dilutive financing to get the product into an organization with little more sales resources? To put it another way, does it make sense for you guys to currently have a commercialization, given where the company is in its lifecycle? Thanks.

[Bob Apple:]

Thanks Michael. So as far as Auvi-Q and the fact that it was pulled off the market, and does that affect or would it affect the FDA's view on an AB rating of the product, I think the answer is no. Auvi-Q wasn't AB rated, they had issues with delivered volume, and so I don't think it will impact on how FDA views our product as substitutable or Teva's product as substitutable relative to the Epipen. But I think overall, obviously, they are going to be sensitive to the fact that that product was approved and had to be recalled, because of mechanical issues. So I think that the Auvi-Q product is, I think recently Sanofi said that they are not going to be reselling that product, unless you're aware it's going to go. So clearly, the Epipen will probably get a larger market share on a going forward basis, until our product is approved. But I think generally, the FDA is very aware of the safety elements around any Epinephrine auto injector. As far as your question on OTREXUP, we obviously believe that OTREXUP is a very valuable asset to us, and obviously, would have value to other companies that are in the RA space. We believe that, at this point, we are going to continue to sell it, and we are totally committed to it. We have a 45% commercialization that's out there, and we are looking to expand that market. So when we look at where we are going in the future with QST, going into Euro in endocrinology and potentially primary care, obviously, we need to reassess all those elements, when that product is approved. But until then, we think that OTREXUP continues to grow the product revenue. We believe it’s a long term valuable product for us, and we are going to continue to sell it at this point.

[Michael Chang:]

All right. Thanks guys.

[Operator:]

[Operator Instructions]. We will move next to Swayampakula Ramakanth from HC Wainwright.

[Swayampakula Ramakanth:]

Thank you. Good morning Bob. This is RK from HCW. Congratulations on getting to head the company as well. One quick question, as Antares has done quite a few programs within the auto injector space; and then you come across this experience with Epinephrine, Teva's product. What have you learned through that program, especially going through that CRL at this point, that you could utilize going into your next program, which is the QST program?

[Bob Apple:]

Well, it's a great question RK. I think that in those, QST and Epi and Suma, each one of those programs are very different. And with QST, it's not an ANDA, where we are trying to be exactly like -- well not exactly, but relatively like the RLD product, which poses a lot of challenges from a device standpoint, and from a user interface standpoint. So QST, we are going down the path of a 505(b)(2) and NDA, and I think that, traditionally, most of the work with the device is in the patients in the Phase-III and you see a really good use of the product. And then, you may still have to do a small user study, to show that patients unaided, when they first get their product or aid it, trained or untrained, can use the product successfully. And we have a lot of experience in that, both from an ANDA standpoint and a 505(b)(2), because of OTREXUP. So I think QST, we feel very confident about our ability to deal with any of the combination drug device issues that you would see, in these type of products. As far as, Epi and Suma and OTREXUP, like I said, what we have learned is, you are dealing with multiple departments within the FDA, you're dealing with the Office of Epidemiology, you're dealing with a device group, you're dealing with the drug side of the business. And what we have learned is that, you will see very diff questions from all three groups, all kind of mixed in, in the CRL and you have to try to figure out, who is asking the question and why they are asking it. And just work through them, like Jim had mentioned and like I have mentioned earlier, it's just a process of going through the questions, and answering them as best you can, with the data that you already have provided to the FDA. And sometimes, this is a function of just pointing them to where the data is. These ANDAs are huge, and so it’s a function of directing them to the right information and getting the question answered on a relatively quick basis. But again, every filing is different, every interaction is different, because it is different groups within the FDA, even within the drug area. But what I can tell you is, we are pretty tenacious about it, and we get things done and we have had a very good track record of getting products approved, and we believe that will be -- we will apply that to Epi and QST and Exenatide and other products going forward.

[Swayampakula Ramakanth:]

Great. Thank you very much.

[Operator:]

And at this time there are no further callers in the queue. Mr. Howarth, I will turn the conference back over to you.

[Jack Howarth:]

Thanks very much, Lynette. We actually have one question from our interactive audience, and the question is, earlier in the call, you mentioned a pipeline of six products that will potentially launch into markets with a current retail value of approximately $8 billion. Could you give us a quick explanation of what those products are?

[Jim Fickenscher:]

Sure Jack. I'd be happy to take it. So starting with the $8 billion, that is the current retail value -- prescription value that we see for these different products within Symphony, which is who we get our market information from. So starting with the nearest term, moving forward, we have Sumatriptan and Sumatriptan is a $200 million retail market. I think Bob talked about it on the slide today, the main competitors being Sun as well as Dr. Reddy's, or does a little bit, as well [indiscernible]. Epinephrine is really just -- the data would have included Auvi-Q as well as the myelin Epipen and some other smaller products. But obviously the lion's share of that is the Epipen, where we are hoping to be a substitutable generic product at the pharmacy level there. With respect to Exenatide, we see Exenatide as about a $1.3 billion market. I will tell you that that is a combination of two drugs, its BYETTA as well as BYDUREON. The ANDA that Teva has filed is specifically against BYETTA. But we do believe that since BYDUREON is effectively an extended release version of BYETTA, we think that there is a pretty good chance that managed care plans could potentially have patients step through, first a generic BYETTA before allowing them on to the extended release products. So we really do think that the entire $1.3 billion is something that we can at least be attractive to look at. Next market would be testosterone. TRT, as we mentioned, $2.8 billion, that's made up of a number of different gel products, as well as intramuscular products today. Probably the most well-known product is Androgel, one of the gel products; and then, we have about a $300 million market for Makena, and then the final one is, with respect to Pen1, that market is about $1.2 billion market. We have not announced what that market is, Teva is still working on that. But we can tell you that, it’s a very attractive market, and we think that it's going to be very interesting, when we get to the point that we are able to launch a product for Pen1 as well.

[Jack Howarth:]

Thanks Jim. So that wraps up today's call. Thanks again for joining us. If you have any follow-up questions, you could reach me at 609-359-3016. That completes today's call.

[Operator:]

That does conclude today's teleconference. We thank you all for your participation.