In a note to clients by Wells Fargo's Matt Andrews.
Obviously bullish and without doubt based on Stendra news, but wouldn't mind reading the full text if anyone on this MB happens to have had access to it.
A brief summary will do just fine!
Greetings Whogo, hope all is well with you however, I doubt seriously that any form of a dilutive raise of capital is imminent especially at current stock levels in addition to the forward Q estimates painting a far from dire picture to even warrant considering it. JMHO
Salt, here's where we disagree. Yes, an in-house sales effort is more "controllable" in terms of your own sales force "prioritizing" what is in the company's best interest as opposed to say a multi, multi, product big pharma sales force hawking your product. However, Leo, as an example, is a partner that assumed risks to license out Otrexup and based on their size and speciality, it is a safe assumption that they will make every effort to sell the product for Antares as well as themselves.
IMO, a similar type partner (but a bit larger with RA expertise) would have been ideal. In fact "we don't know exactly what was turned down in terms of RA partnership possibilities". I'm basing most of the partnership premise on the ease of closing the Leo agreement so it is only logical that several potential RA partners would have made offers to reach an agreement and the balance NEVER to be a component of the short thesis.
Salt, add up the launch expenses from Leroux hiring to breakeven and then add an addition 10-20M "would have been" licensing fees and then consider O sales needed to recoup this cash then consider whether the conservative route might have been the better move.
I do agree with you that in the end, the in-house effort might, in a big way, pay big dividends for the risks the company has taken on, but IMO that proves only that opting for the road with more speed bumps and perils can potentially get you to where you want to go faster. It doesn't mean it was the prudent choice however.
activity still running white hot within the sector including the latest in the form of the "declining sales/restructuring" Auxl. I would describe the Endo rationale as "they are "at this moment' vulnerable and opportunistically receptive to a premium enhanced proposal" more so then if they were lighting it up with expanding sales Q/Q also combine the timing with a depressed stock price.
OT, but similarities permeate the drug space. Teva? Pfizer? Anyone?
PS, I still say that if PW partnered R/A and banked roughly a 20M upfront licensing fee, S.I. would have had to call it a day no lower than the old 52 wk low @3.35 "at worst" (maybe even near 4) no matter the rationale behind shorting the commercial viability of Otrexup along with the financial limitations behind the launch.
An above partnership would have situated Antares with about 90-100M in cash on hand combined with the pre-launch mini burn of about 1-2 cents per Q and that has a far more limiting short seller shelf life then the door opened up by PW.
It all may still work out for the best, but IMO the solo launch was/is unnecessary pain inflicted on ATRS shareholders as well as a too aggressive marketing strategy for a company better off building a solid partnered revenue stream "FIRST' to better fund a solo launch later on down the road.
Vulnerable is now where we find Antares.
Merger more likely JD. The combined entities might be valued at around 600M+ but at RTQ Siga shares will garner IMO "at least" 1/2 the total value of the combined companies "whatever the street happens to assign if or when it happens". Favorable conversion ratio for Siga shares for sure with the valuation gap between the 2 companies as it stands now.
Pip IMO may not feel it prudent to over play their hand beyond the friendly confines of the Parson sphere of influence primarily because an SC miscalculation (total $ ) is an outcome that MUST be avoided at the cost of compromise.
Mac Andrews & Forbes , I suspect have an inkling of the ultimate outcome, and I also suspect that RP isn't about to just sit by idle while the value of 14M shares slips down the drain needlessly.
An additional factor might be the looming 100M shelf registration Pip filed.
Interesting soap opera going on here.
Even the resident pessimist issued positive O comments specifically relating to significant in combo potential negating any NVS negatives In addition, NVS trials in the more difficult to treat heart failure sub group will be on going clear into 2019 and this segment is estimated to be on the order of another 5B annually.
Seems reasonable, although, just on Tirasemtiv SVC data "alone" with solid balance sheet the stock is worth $6 - $7 a share before FDA lays out a pathway to approval post meeting in the near future.
The stock is far too undervalued here at todays close sub 150MC and MLV is far too conservative on their PT assignment.
Under valued beyond even the obvious.
Sorry for typo!
Submission Issue Meeting is the corrected.
FWIW, my preference is getting the info post meeting vs managements anticipated view of FDA specifics.
As per the company PR, a scheduled meeting with the FDA for "clarification" is/was anticipated within "weeks" after the date of the public notification of 7/16.
Based on the above, it is logical to assume that Lundy will inform shareholders with the specifics of the FDA requests during the upcoming Q call and I agree with the current non-issuance of vague or incomplete info at this time by management prior to the actual FDA face to face.
If the expected minor omission quick fix becomes fact, the CC should be when it is confirmed.
Interesting question Brunoq.
Three points of consideration that immediately come to mind are
a) The Quintiles contract/agreement. Are early termination costs involved?
b) The cash resources "already" invested in the current sales/marketing effort. A write off of significance.
c) Much more difficult to get equal value for the asset if motivated to do so under duress as opposed to fielding offers from potential partners "prior" to the go it alone "commitment".
MHO answer is that Antares, at this point, is and has to remain committed to the Paul Wotton strategy and "make it work" Option "B" is no longer the "prudent" winner that it once was.
The above is not to imply that the O effort/commitment will not ultimately succeed, only that the consequences of failure (or just the mere potential of this) has grave consequences and is being "exploited" to the max by short interest which also IMO would NOT have been the case if ATRS banked RA partnership milestone millions and booked the modest revenue/profits totals onto their (what was) very, very low operating costs.
C'est la vie!
Revisiting the PW miscalculation is relevant because it illustrates clearly that he was virtually pushed out the door and that his departure is/was "not necessarily" a harbinger of doom for Antares, but an acknowledgement of a critical gaff that put the company under considerable pressure to make good on reaching profitability ASAP and then maintain and further grow, This is based on current sales trends that align closely to the FY'14 sales estimates posted/published by knowledgeable followers of the company and small bio at large. So the break even timeline still appears very much in tact and on schedule.
The key Qs center on Medac's impact from ATRS breakeven EOY and beyond. What will the Medac product pricing look like? Personally, I don't see a "scorched earth" strategy coming out of Medac. The reason being is because they seem to be telegraphing a confidence that the space is plenty large enough to support volume with lucrative margins for 2 players and I suspect that even Medac realizes that the shelf life for the two companies by themselves will not last till perpetuity.(3 years maybe?) So why endeavor to kill each other?
On the settlement front, the only outcome I expect is possibly an under the table agreement (pricing and good luck proving collusion) as both parties cease litigation.
ATRS not even close to dead yet!
Good for me!
Without question, it's viable. Building multi-product pipelines via the 5052b pathway within a low operating cost business structure WORKS and if or when the PPS falls to my buy point,,,,,,,,,I'll do just that!
The caveat is that the CEO has to push all the right buttons especially when a particular company isn't yet generating free cash Q/Q on a reliable basis. Hence the downfall of Paul Wotton. Cutting to the chase, if your going to opt on making a big cash commitment by independently selling/marketing your first product you MUST be 100% sure of the level of success of the given product. This includes being aware of "anything" in the market place that could surface and hurt you. Not being aware is NOT why a CEO is compensated as richly as they are!
Now a 20/20 hindsight hypothetical. If Antares received 10M in milestone payments along with a 50-50 revenue split agreement from Leo, what potentially would RA have garnered via a partnership? Double the Leo milestones seems conservatively reasonable IMO or 20M combined with a similar revenue sharing % breakdown. That would mean that ATRS would be NOW sitting with 100M+ on the balance sheet from the extra milestone cash and the "eliminated expenditures" now present but not needed if RA partnered. Last but not least is that less of a "total market pie" (Medac impact) would be much less of a big deal when considering the cost to get the product through the FDA to begin with.
What the above means is that PW should have stayed the conservative course and partnered RA. If that means "partnered potential" dollar wise falls to say 70M-75M annual "with" Medac in the space then SO WHAT! It cost ATRS roughly 15M-20M in total to get Otrexup to the market place. A fantastic ROI if 75M annual low risk end result.
With all that cash on hand, PW "would have" had the flexibility to open up the flood gates by running 2,3,4 new product trials "immediately and simultaneously".
See what I mean!
No chance AT ALL unless retail guesses just right with limit orders in close proximity to wash out bottoms.
The S.I. cartel didn't put out the "ok to buy now sign" you would expect from such a nice group of fellas!
Man,,,,,,,,,,,that was fast!
I'm not even going to ask because magically, everybody and their relatives bought tons sub 2.10! Yeah right!
continuation of downtrend should have surprised "no one"! 300M MC looked like a given after he was no doubt prodded TO LEAVE while he still had a choice.
Sub 300M MC, it starts to get interesting but still tricky IMO.
Medac now factored (2H launch) break even still appears on schedule for ATRS EOY with a 50% hair cut to est peak for O you get something like from 200M to 100M for RA combined with about 60M to 30M for psoriasis for 130M reduced peak estimate factoring in Medac.
2 X 130M = 260M + cash is roughly 320M so HOW does one want to value the stock with Pfizer/QST/Teva?
Where ever the stock settles into a convincing base, I hope it stays there long enough to re-accumulate shares .That would be the best scenario for buyers in waiting vs quick reversal off oversold.
Let us hope for an opportunity.
PS 1.80-2.00 looks like a long shot to me but at this point, who knows!
I agree more with rph Affirmed. IMO the settlement angle has come and gone because Medac would only agree to a compromised delay IF they thought the court would issue a restraining order prohibiting approval and conversely, Medac has no chance of making any legal headway to stop Antares from marketing Otrexup based on dosing claims of exclusivity so Antares has no interest in considering any Medac settlement proposals looking ahead.
The Medac countersuit was more of a tit for tat response to Antares' first strike infringement filing Smith had it right all along.
IMO, it's back to weekly script #s , Put simply, the time it takes to reach say 500 Nx weekly should be duplicated "in half the time it takes to achieve 500 Nx from a dead start". So Feb through maybe Jul/Aug is around 6-7months which gets you to 1000 Nx break even is sometime in Nov. roughly when Medac gets started.
from a stock moving standpoint on FDA/Medac news undoubtedly because the street/S.I./L already baked the "expected ie;L.Smith" into the cake and in rapid fashion from the highs.
At this point, I'd have preferred more panic to reload the now washed stop out shares I'm contemplating, at least partially, reacquiring heading into Pfizer news and QST data (nearer term) followed by probable partnership in roughly 15 months.
Realistically, peak O estimates might be now more in the 150M annual range incl Leo which still isn't too bad added on to Pfizer & QST hence selling muted on the news at current valuation is my best guess.
The BOD is also "excited" about having a CEO in place that will adhere more strictly to the recommendations of it's members RPH.
Certainly Hobbs appears qualified to lead the company but I see his appointment more as a front man in a "leadership by committee" role and that is a good thing considering the abundance of wisdom and experience that reside in the boardroom and front lines of a business this size.
The stock has really gotten beaten down due to uncertainties but also IMO already or very close to pricing in a late '14 Medac launch "or" primed for a stunning rally if the current litigation delays the Medac entry an additional 30 months which is still a distinct possibility with or without Paul Wotton and thats what it's really all about at this juncture.
Surprising and somewhat unexpected from my viewpoint.
Somewhat unexpected because roughly 6 months ago I suggested that an entity might approach him in an attempt to pry him away from Antares, but this observation was posted "before" the now infamous 4Q call that was IMO a genuine low light of Dr. Wotton's tenure. All he had to say was (for example) "yes we are and have been well aware of Medac and their efforts to enter the self injectable MTX space with Otrexup and we/ATRS are extremely confident in the strength of our patents that reinforce the value of our asset exemplified by our rapid response infringement suit ", That IS instead of the "never heard of them" twisting in the wind for ATRS shareholders.
The above is #1. Next is that I suspect that the BOD is or was highly peeved by the decision to in house market Otrexup vs partnership ala Leo which was an "excellent" agreement for ATRS and would has put the company in fabulous position financially moving forward towards QS T. Think about it, not to mention any risks negated albeit a route (RA partnership) potentially less lucrative then the present path.
In conclusion, I think the BOD and major holders were on his case big time exacerbated by the stock performance hence the the mad scramble to land on his feet "anywhere" before he was, let us say, asked to turn in his keys.
No one is perfect, but much early on good was undone over the last couple Qs by PW.
Possible addition by subtraction going forward IMO with leadership that is responsive and more willing (flexible" to consider the consensus of opinion.