Antares Pharma Inc (ATRS): A Critical Look

Potential buyout

When talking about the market cap of Antares, one needs to take into account its strong intellectual property and patent portfolio, especially around the injection of highly viscous biologic and biosimilar (generic equivalent of a biologic) formulations, e.g. Antares holds critical patents on “two-stage reconstituting injector”. Why is that important?

Biologics and biosimilars require special storage and handling prior to their use because of stability issues. Therefore, therapeutic proteins in a biosimilar drug are usually formulated as powders (lyophilization). However, lyophilized proteins must be reconstituted prior to injection. The need to reconstitute lyophilized proteins at the point of administration necessitates the use of a two-stage reconstituting injector.

According to Antares, global sales of biologics compatible with Antares’s technology exceed $50 billion. Biosimilar sales are expected to grow exponentially thanks to patent expirations of biologics. Following Obamacare, 20 year data exclusivity patent protection on biologics is reduced to 12 years, opening up competition. Which mega Pharma might be interested?

According to Wyatt Research, Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) is the number one bet on the growth of the biosimilar market under Obamacare given its position in generic drugs. However, Scott Matusow speculates a buyout by Pfizer Inc. (NYSE:PFE), who would benefit the most from Antares Pharma Inc (NASDAQ:ATRS)’s technology and patent portfolio in biosimilar injection. Indeed, Pfizer Inc. (NYSE:PFE) is getting strongly into the biosimilars business as David Simmons (Pfizer executive) told Bloomberg that Pfizer is planning to sell a copy of biologic blockbusters like Amgen’s Epogen and Sanofi’s Lovenox. Pfizer pipeline could eventually include 10 to 15 biosimilars, and the company is hunting for new partners or buyout deals to meet its goals (Wyeth acquisition).

Irregardless of a potential buyout by either Teva or Pfizer Inc. (NYSE:PFE), my conclusion is that Antares Pharma Inc (NASDAQ:ATRS)’s current market cap is too low in regards to its revenue potential. Its late-stage pipeline of 13 products is on the cusp of significant revenue generation. Indeed, Antares would have been profitable in 2012 excluding development expenses of Otrexup. I expect 2014 to be the break-out year for Antares.

The article Antares Pharma: A Critical Look originally appeared on Fool.com and is written by Ali Yasar.

Ali Yasar owns shares of Antares Pharma. The Motley Fool has no position in any of the stocks mentioned. Ali is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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