The shift from being a cash-burning company to one that is profitable is a momentous occasion for any biotechnology company. Antares Pharma ($AIS) hopes to achieve this feat in 2011, but it is far from a certainty. Due to the fact that AIS has less than $10m cash on hand, any setbacks could force a stock offering. Let's go through the moving pieces of this equation:
-AIS will lose less than $5m in 2010 after undertaking efforts to reduce their cash burn as well as increasing royalties and product device sales for injectable HgH by TEVA in US and Ferring in EU
-The biggest revenue driver will likely be Libigel (developed in North America by Biosante Pharma- $BPAX), but any royalties are a 2012 event at best. However, if BPAX partners this testosterone gel for female sexual dysfunction, AIS stands to receive a large cash windfall (25% of upfront payments).
-AIS has publicly stated that the approval of a second Teva-partnered product (there are four more, the only one identified to date is Epi-pen) would make the company profitable. However, the approval timeline of the lead epi-pen product has been slipping and is clouded by legal issues. Here is a snip from King Pharma's (since acquired by Pfizer PFE) 3q10 SEC filing:
"On November 11, 2008, the Company was granted U.S. Patent 7,449,012 (the “ ‘012 patent”) covering the next generation autoinjector (“NGA”) for use with epinephrine to be sold under the EpiPen® brand name. The ‘012 patent expires September 11, 2025. The ‘012 patent was listed in FDA’s Orange Book on July 17, 2009 under the EpiPen® NDA. On July 21, 2009, the Company received a Paragraph IV certification from Teva Pharmaceutical Industries Ltd. (“Teva”) giving notice that it had filed an ANDA to commercialize an epinephrine injectable product and challenging the validity and alleging non-infringement of the ‘012 patent. On August 28, 2009, the Company filed suit against Teva in the U.S. District Court for the District of Delaware to defend its rights under the ‘012 patent [a 30 month Hatch-Waxman stay of approval therefore applies through January 2012 unless a court ruling eliminates it]. On October 21, 2009, Teva filed its answer asserting non-infringement and invalidity of the ‘012 patent. A claim construction hearing is set for September 15, 2011 and trial is currently set for February 16, 2012. The parties are in the midst of fact discovery. .... On September 14, 2010, the U.S. Patent and Trademark Office issued U.S. Patent No. 7,794,432 (“the ‘432 patent”) covering the NGA for use with epinephrine sold under the EpiPen® brand name. The ‘432 patent expires September 11, 2025. The ‘432 patent was listed in FDA’s Orange Book on September 15, 2010 under the EpiPen® NDA. On September 17, 2010, the Company sent notice to Teva and Sandoz that it had added the ‘432 patent to the FDA Orange Book. On November 2, 2010, the Company received a Paragraph IV certification from Teva challenging the validity and alleging non-infringement of the ‘432 patent. The Company is evaluating the certification and intends to vigorously enforce its intellectual property related to EpiPen®."
So approval, launch, and revenues from Epi-pen royalty should not be assumed in the near-term
-AIS did meet its guidance for filing the NDA for a gel product for overactive bladder in December 2010, indicating a possible approval in late 2011. This may well be the next source of revenue for AIS, assuming they can successfully find a commercial partner for the product
-In summary, new product royalties appear unlikely in 2011- however, increasing HgH income and any success on the partnering front (Libigel, Anturol, Teva milestones, or Nestragel contraceptive gel) should be sufficient to keep AIS near cash neutrality for the year. Of course, a buy-out by Teva for the device expertise and women's health assets is always a possibility too.
-AIS will lose less than $5m in 2010 after undertaking efforts to reduce their cash burn as well as increasing royalties and product device sales for injectable HgH by TEVA in US and Ferring in EU
-The biggest revenue driver will likely be Libigel (developed in North America by Biosante Pharma- $BPAX), but any royalties are a 2012 event at best. However, if BPAX partners this testosterone gel for female sexual dysfunction, AIS stands to receive a large cash windfall (25% of upfront payments).
-AIS has publicly stated that the approval of a second Teva-partnered product (there are four more, the only one identified to date is Epi-pen) would make the company profitable. However, the approval timeline of the lead epi-pen product has been slipping and is clouded by legal issues. Here is a snip from King Pharma's (since acquired by Pfizer PFE) 3q10 SEC filing:
"On November 11, 2008, the Company was granted U.S. Patent 7,449,012 (the “ ‘012 patent”) covering the next generation autoinjector (“NGA”) for use with epinephrine to be sold under the EpiPen® brand name. The ‘012 patent expires September 11, 2025. The ‘012 patent was listed in FDA’s Orange Book on July 17, 2009 under the EpiPen® NDA. On July 21, 2009, the Company received a Paragraph IV certification from Teva Pharmaceutical Industries Ltd. (“Teva”) giving notice that it had filed an ANDA to commercialize an epinephrine injectable product and challenging the validity and alleging non-infringement of the ‘012 patent. On August 28, 2009, the Company filed suit against Teva in the U.S. District Court for the District of Delaware to defend its rights under the ‘012 patent [a 30 month Hatch-Waxman stay of approval therefore applies through January 2012 unless a court ruling eliminates it]. On October 21, 2009, Teva filed its answer asserting non-infringement and invalidity of the ‘012 patent. A claim construction hearing is set for September 15, 2011 and trial is currently set for February 16, 2012. The parties are in the midst of fact discovery. .... On September 14, 2010, the U.S. Patent and Trademark Office issued U.S. Patent No. 7,794,432 (“the ‘432 patent”) covering the NGA for use with epinephrine sold under the EpiPen® brand name. The ‘432 patent expires September 11, 2025. The ‘432 patent was listed in FDA’s Orange Book on September 15, 2010 under the EpiPen® NDA. On September 17, 2010, the Company sent notice to Teva and Sandoz that it had added the ‘432 patent to the FDA Orange Book. On November 2, 2010, the Company received a Paragraph IV certification from Teva challenging the validity and alleging non-infringement of the ‘432 patent. The Company is evaluating the certification and intends to vigorously enforce its intellectual property related to EpiPen®."
So approval, launch, and revenues from Epi-pen royalty should not be assumed in the near-term
-AIS did meet its guidance for filing the NDA for a gel product for overactive bladder in December 2010, indicating a possible approval in late 2011. This may well be the next source of revenue for AIS, assuming they can successfully find a commercial partner for the product
-In summary, new product royalties appear unlikely in 2011- however, increasing HgH income and any success on the partnering front (Libigel, Anturol, Teva milestones, or Nestragel contraceptive gel) should be sufficient to keep AIS near cash neutrality for the year. Of course, a buy-out by Teva for the device expertise and women's health assets is always a possibility too.
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