Antares Pharma Inc (ATRS): A Critical Look

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Recently, I enjoyed an article contributed by Adam Feuerstein (“AF article”) regarding Antares Pharma Inc (NASDAQ:ATRS) and its transformational product Otrexup. Here, I would like to present my views on the following items debated in the AF article: (1) sufficiency of data submitted to FDA, (2) marketability and sales of Otrexup, and (3) Antares Pharma Inc (NASDAQ:ATRS)’s market capitalization and its buyout potential.

Otrexup is a drug-device combination currently seeking FDA approval to become the first and only self-injectable methotrexate (MTX) device that can be used by rheumatoid arthritis (RA) patients at home. I refer interested readers to my previous article on Otrexup for a very detailed analysis.

Sufficiency of data submitted to FDA

AF article states that very little data have been presented and published by Antares Pharma Inc (NASDAQ:ATRS) on Otrexup. Since Otrexup is a drug-device combination product, its regulatory pathway for approval is managed by the Office of Combination Products, or OCP, division of the FDA.

OCP issued a guidance to clarify the data requirements for injector drug-device combinations seeking approval. According to the OCP guidance the applicant needs to submit data showing that the intended user group can safely and effectively use the injector. Antares Pharma Inc (NASDAQ:ATRS) submitted data from its “Human Factors Usability” and “Actual Human Use” studies.

Furthermore, if the injector is prefilled with a certain drug, OCP requires a pharmacokinetics study comparing the new injector to an approved route of delivery. Note that Otrexup changes the route of injection from intra-muscular (IM) to subcutaneous (SC). Antares conducted two pharmacokinetic studies to satisfy this additional requirement by comparing Otrexup against oral administration and IM injection.

OCP also encourages meetings to clarify case-specific data requirements. Antares Pharma Inc (NASDAQ:ATRS) had numerous meetings with OCP: 2011 meeting to confirm regulatory pathway, pre-submission meeting in 2012, and mid-cycle review meeting in 2013, all of which went smoothly.

Additionally, Antares submitted the results of numerous European clinical studies showing the benefits of subcutaneously injected MTX over oral administration, as supporting evidence. Note that, SC injection of MTX has been already approved and widely used in Europe and Canada.

Marketability and sales of Otrexup

AF article states that Antares is likely to face skepticism from all sides: “Doctors won’t have any efficacy data on Otrexup so may not rush to prescribe. Insurance companies could be slow to accept Otrexup”.

I completely disagree. Antares as well as many European clinical studies (see slide 10) established that SC injection has better efficacy than oral forms, as the systemic bioavailability of MTX is higher especially at higher doses. Antares Pharma Inc (NASDAQ:ATRS) already referenced such studies in their FDA application.

Better efficacy is not the only reason for superiority of Otrexup over oral tablets. European studies also established that since oral tablets have to go through gastro-intestinal tract, they cause many more side effects and the amount of oral medication that is absorbed into the blood varies greatly among patients, i.e., notorious “variable absorption” problem.

Secondly, Otrexup will grab massive market share from IM injections for many reasons as detailed in my article. Insurance companies will happily switch patients from IM injection to Otrexup to eliminate the cost of weekly office visits.

Thirdly, insurance companies would be interested in keeping patients longer on MTX before switching to expensive biologics, which can be achieved by the higher systemic bioavailability of MTX, thanks to Otrexup.

Antares’s market capitalization

After raising questions about data quality and marketability of Otrexup, AF article states that Antares’s market cap already exceeds $500 million. Market cap of Antares has been the biggest bear argument, i.e., 23 million in sales with half a billion in market cap sounds like over-valuation.

Bears fail to realize that a savvy investor doesn’t buy Antares for its current sales, but rather its future billion dollar revenue potential driven by Otrexup, testosterone injector, three marketed products, and eight other pipeline products. Their Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) partnership alone is developing drug-device combination products worth $3 billion in US sales. Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) is familiar with the superiority of Antares injectors, especially when selling highly generic drugs in competitive markets, e.g., Teva increased its sales of human growth hormone from $20 million to $100 million after switching to Antares’s injector.

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