Halozyme Therapeutics, Inc. (HALO) Q1 2016 Earnings Report, Transcript and Summary

Ladies and gentlemen, welcome to the Antares Pharma First Quarter 2016 Operating and Financial Results Conference Call. [Operator Instructions] I will now hand the conference call over to Jack Howarth, Antares’ Vice President of Corporate Affairs. Please go ahead, sir.

Thank you, Laura and good morning everyone. This morning, we released our first quarter 2016 operating results and recent achievements and a copy of the press release can be found on the Antares website at www.antarespharma.com under the News section. In addition, this morning’s teleconference also contains an interactive slide presentation. If you have dialed into the audio-only teleconference, you can follow along with the slides, which can be found on our website under the Investor Information section. The conference call and slide presentation will be simultaneously webcast on the Investor Information section of the Antares website under the Webcast tab. If you are currently unable to access our website, the conference call and slide presentation will be archived under the Webcast tab at the conclusion of today’s call. Before we begin, I would 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 future purchase orders and revenue pre- or post FDA approval; the timing and results of the supplemental safety study for QuickShot Testosterone, or QST; and the company’s ability to prepare and submit an NDA for QST and FDA actions with respect to the QST program; the timing of the launch of Sumatriptan injection and the amount of revenue from the same; the timing and outcome of Paragraph 4 patent litigation related to Teva’s exenatide and teriparatide pen programs; continued progress in ongoing development programs; and actions by the FDA regarding the company’s product candidates and those of its third-party partners, including Teva’s ANDA of the exenatide and teriparatide pens; and AMAG’s product and any future revenue related thereto; 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 in 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 website 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 an overview of the operating highlights, then Jim will take you through the financial results and then Bob will give you a business update and discuss our priorities for 2016. After that, we will open up the lines for your questions. For our interactive web participants, please limit your questions or comments to the first quarter 2016 financial and operating results. Please turn to Slide #4. I will now turn the call over to Bob Apple. Bob?

Good morning, everyone and thank you for joining our call. I am very excited to discuss another fantastic quarter. Total revenues of $12.3 million are up 48% over the first quarter of 2015 and product revenues primarily Epi devices sold to Teva and OTREXUP were $10.8 million, which is a 134% increase over 2015. We sold Teva $6 million worth of Epi devices in this quarter, which brings the cumulative sales under the pre-launch purchase order to approximately $16 million. Consistent with our previous disclosures, we anticipate that the second quarter of 2016 will likely be the quarter in which we complete shipping, pre-launch Epi devices to Teva under the existing PO. Fortunately, we expect to begin shipping Sumatriptan final product in Q2 in advance of the midyear launch by Teva, which should help offset the decrease in half these shipments. Continuing on the commercial front, in March, the FDA approved three new dosage strengths of OTREXUP. The approval of the 12.5, 17.5 and 22.5 milligram products provide us with 8 dosage strengths ranging from 7.5 to 25 milligrams. I believe the addition of these new strengths will help kick start a number of our initiatives and aimed at getting OTREXUP grown again. Looking at our development programs, I am very excited to report on the progress in some key projects. We believe that continued progress in our various development programs should, if success will translate into meaningful commercial revenue, which is essential for our future growth. We announced the final PK data for the QST-13-003 study, along with a 52-week safety data. We believe the data from this trial supports that our PK results are best-in-class and the safety profile of QST should be sufficient for approval assuming the established safety profile is confirmed in the 26-week supplemental safety study. We anticipate that the last patient visit for the QST-15-005 study should take place shortly, which should allow us to meet our goal of filing NDA for QST by the end of this year or early 2017. In April, we were able to disclose that the Teva Pen 1 project relates to a generic version of Eli Lilly’s blockbuster osteoporosis product, Forteo. According to Lilly’s 2015 Form 10-K, Forteo generated $1.3 billion in revenue, with $600 million sold in the United States. In March of this year, Lilly filed a patent infringement lawsuit against Teva in response to Teva’s Paragraph 4 notice contained in their abbreviated new drug application or ANDA for Forteo. The filing on lawsuit effectively starts at 30-month stay, which ends at September 2018. We believe Teva has first to file status, which could entitle them to 180 days of generics exclusivity if their ANDA is approved by the FDA. I will now turn the call over to Jim to take you through their first quarter results. Jim?

Thanks, Bob and good morning everyone. Let’s get started by looking at the details of revenues for the first quarter on Slide #5. Total revenue for the quarter was $4.3 million, a 48% increase over the $8.3 million recorded in the first quarter of ‘15. Product sales, which represent sales of our proprietary products, devices and device components to our customers, were $10.8 million compared to $4.6 million in the first quarter of last year. The increase in product sales was primarily driven by the shipment of approximately $6 million of auto-injectors to Teva for use with their generic epinephrine product currently under active FDA review; and OTREXUP which increased $300,000 or 10% versus the same period last year. Development revenues represent amounts earned under arrangements with partners in which we develop new products on our behalf. Frequently, we have received payments from our partners that are initially deferred and recognized as revenue over a development period or upon completion of defined deliverables. Development revenue was $1.1 million compared to $2.4 million in 2015. The decrease in development revenue was primarily related to the conclusion of the development stage of the epinephrine project in early 2015. However, we are making great progress on other development projects such as Makena, generic Forteo and exenatide, which should generate cash and allow development revenues to grow again later this year. Licensing revenues represent the amounts recognized from upfront for milestone payments received from partners that are initially deferred and recognized over the life of our agreements. Licensing revenue was $51,000 in the first quarter of 2016 compared to $900,000 in 2015. The decrease relates to revenue booked in the first quarter of 2015, in connection with the promotion in license agreement with LEO Pharma, which was terminated in June of 2016 – 2015, excuse me. Quarterly licensing revenues for the balance of 2016 should be similar to the amount recorded in the first quarter. Royalty revenue is recognized primarily from the end market sale of the products sold by our partners, royalty revenue was $0.3 million for the first quarter of ‘16 compared to $0.5 million for the comparable period ‘15. Let’s move now to Slide #6 and have a look at the first quarter income statement. Total gross profit increased in the first quarter of ‘16 to $5.5 million, compared to $4.7 million during the same period last year. Gross margin rate of 45% for the first quarter of 2016 was lower than the same period last year, primarily due to a higher proportion of lower margin device sales. Total operating expenses were approximately $13.3 million for the first quarter of ‘16 compared to $11.4 million in the comparable period of 2015. The increase was primarily attributable to external clinical trial expenses incurred in connection with the development of QuickShot Testosterone. Net loss was $7.7 million for the first quarter of ‘16 versus $6.8 million in the comparable period of ‘15, which translates into a net loss per share of $0.05 for the first quarters of 2016 and 2015, respectively. At March 31, 2016, our cash and investments totaled $42.1 million, a $5.8 million burn since December 31, 2015. We are comfortable with our cash runway and the strength of our balance sheet. We will continue to invest in our pipeline projects and plan to manage the business through appropriate investments and prudent cash management. With that, I will turn the call back over to Bob.

Thanks Jim. Let’s turn to Slide 7 and discuss OTREXUP. Revenues for the quarter grew 10% over the first quarter of 2015. Sequentially, the quarterly revenues for OTREXUP are flat with Q4 2015. We are committed to growing OTREXUP prescriptions and revenues this year. Therefore, we have recently made some significant changes to the leadership and the sales and marketing organizations and modified some of our payer tactics. We have launched the three additional dosage strengths approved by the FDA, which will complement the five currently marketed strengths and should allow physicians to titrate patients more effectively for better disease control. We believe that implementing these changes should result in higher prescriptions and revenues for OTREXUP during the balance of 2016. Turning now to Slide #8, this past December, we have received approval from the FDA of our ANDA for 4 milligram and 6 milligram Sumatriptan injection for the acute treatment of migraine and cluster headaches in adults. This product is therapeutically equivalent and therefore substitutable at the pharmacy to the referenced listed drug Imitrex Statdose. On Slide #9, the data from 2015 indicated that the retail value of the Sumatriptan auto injector market in the U.S., which is solely the Imitrex Statdose market is approximately $200 million. Sandoz and Teva will be the only companies applying both the 4 milligram and 6 milligram dosage forms as a generic. We believe that having both dosage 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. We are on track to begin delivering package products to Teva in the second quarter and expect them to launch into the market midyear. Unlike our other alliance products, we will sell Teva the final finished product at our cost and we will receive 50% of the profits on the product. Please turn to Slide #10. We believe that the QuickShot Testosterone development program 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 released the results of the 52-week safety data and the final 12-week PK data in March and we expect the last patient to complete dosing in the 26 weeks supplemental safety study QST-005 shortly. The data generated from these studies will form the basis for our NDA filing and if approved, we believe we will have best-in-class products. As a reminder, that graphs on Slide 11 tell an interesting story about why are so excited to bring QST to the market. The market for testosterone replacement therapy is very large and has appeared to stabilize in 2015. The biggest change we see is a switch from topical treatments to injectables. And we believe this bodes well for our approach to treat hypogonadism. Our novel subcutaneous auto injector of testosterone should effectively address both segments of the testosterone market. Turning to Slide 12, the Makena project with AMAG is the most recent collaboration that come from our alliance business. And we couldn’t be happier with the progress we have made to-date with our partner. We are developing our subcutaneous auto injector for the weekly administration of Makena, which AMAG believes could be a real advancement for pregnant women and their caregivers by combining a new, potentially less painful subcutaneous route of administration, with a pre-filled easy to use auto injector. We believe the QuickShot device is a perfect fit for Makena. While we have recognized some level of development revenues from this project in the first quarter, there will be significantly more development revenues earned in the last three quarters of the year as we finalize the development work in advance of AMAG’s sNDA filing, which they anticipate will happen in Q2 2017. As announced by AMAG last week, Makena revenues for Q1 2016 were $65 million and AMAG reiterated that 2016 revenues for the product should be in the range of $310 million to $340 million. We stepped to earn development revenue until the filing of the sNDA. And if successful, we would be responsible for supplying the devices and packaging the final product for a specified margin. Also, we will receive a high single-digit to low double-digit royalties on the end market sales of the product and certain sales base milestone payments. Another one of our near-term opportunities for significant value is our Epi project with Teva, which we will discuss on Slide 13. We have had significant dialogue with Teva on this project and our teams are working together very well. Getting the final responses to the CRL is a high priority for both companies. We believe we can adequately address all of the voice related question contained in the CRL and that the product can be approved with an AB rating to Mylan’s Epipen. Now let’s turn to Slide #14 to discuss the generic Forteo project. We are very excited about the FDA’s acceptance of Teva’s ANDA for a generic form of Forteo, which we believe is a very positive event for Antares and our shareholders. We believe Teva has first to file status and if approved, could be in total of six months of generic exclusivity. This marks the fourth ANDA accepted by the FDA through our relationship with Teva and importantly, marks the third ANDA with first to file status. The acceptance and potential first to file status of the Forteo filing, not only increases the potential size of the opportunity for Teva and Antares, it should also result in increased development revenues later this year as we expedite the work we acquired to be prepared for a launch. The scope is collaboration fees worldwide. Our agreement with Teva for generic Forteo allows us to receive a reasonable margin on our supplier devices and single-digit to mid-teen royalties on overall product sales. On Slide 15, I will discuss our Exenatide project. Teva’s ANDA for Exenatide, which is marketed by AstraZeneca under the trade name Byetta, was accepted by the FDA in October 2014. Patent litigation was initiated by AstraZeneca in the fourth quarter of 2014 and the 30-month stay expires in April 2017. We believe that Teva has first to file status and could also be entitled to six months of generic exclusivity for this product. If approved by the FDA, this product will be substitutable for Byetta to pharmacy. Symphony Health Solutions estimates the retail value of the U.S. Byetta market was $300 million in 2015. AstraZeneca is currently in the process of switching patients from Byetta, which is dosed twice a day to Bydureon, which is dosed once a week. Importantly, the active pharmaceutical agreement for both products is exenatide. While Teva’s generic exenatide would not be substitutable at the pharmacy to Bydureon, we believe that managed care companies may require patients to step through a generic Byetta before moving to Bydureon. Symphony Health Solutions estimate the retail value of the U.S. Bydureon market was $1 billion in 2015. Our agreement with Teva for this product provides for a margin on our supply devices and a high single-digit to mid-teen royalty on overall product sales. We expect exenatide development revenues to increase in the balance of 2016. Let’s wrap up my prepared remarks on Slide 16 by reviewing our five priorities for the balance of 2016. One, successfully launched Sumatriptan with delivery of pre-launch product to Teva beginning in Q2 in advance of a midyear launch by Teva. Two, file the NDA for QST in late 2016 or early 2017. Three, assist Teva in a timely response to the FD complete response letter device questions. Four, grow development revenues from successful projects around Makena, teriparatide and exenatide; and five, continue to grow OTREXUP prescription and revenues. We know that we must stay focused and execute against this plan in order to achieve our objectives and make meaningful progress on what we believe are the drivers of value. I am confident that 2016 will be a very successful year. Thank you very much for taking the time to be with us this morning. Operator, we have finished our prepared remarks for today. Could you now open the lines for questions and answer session?

Thank you. [Operator Instructions] Our first question comes from Anthony Petrone with Jefferies.

Thanks and good morning everyone. One on OTREXUP and then a couple on Teva. On OTREXUP, you have announced a few initiatives here, launch of additional doses and a new pricing strategy as well. So, I am just wondering what your expectations are going forward once this new strategy is in place? And then specifically, on gross to net spreads, do you see a widening there from the new pricing strategy going forward? And then I will just have a couple of follow-ups on Teva.

So, Anthony it’s Jim Fickenscher. So I think maybe a little bit of a misunderstanding it’s not that we have a completely new pricing strategy. I think what we have talked about is that there are some payer strategies that we have – that we are looking at, implementing this quarter, have started. These are more around making sure that where we have good coverage in place. The representatives are able to communicate effectively with the doctors to make sure the patient’s prescription can get filled. So, it’s not that we have decided to get a lot more aggressive with the discounts that we are offering. So, I think that we should continue to see our expectation will be to continue to see the gross to net spreads similar to what it’s been in the last quarter to two.

Great. Maybe the benefit from the new doses on volumes?

Yes. So, I will take that. The news pens were really brought on to allow the doctor to be able to titrate. Originally, we had – the most used dose was 20 milligram and the doctor would either go to 25 milligram or go back to 15 milligram. And depending on what they found in side effects, it sometimes was a challenge. So, what we are able to do is bring in doses that could have the doctor titrate more effectively to reduce the side effects, if there are any or to see increased efficacy if they want to go up in those incremental doses. So, again, we always believe we had the appropriate doses, but this has allowed the doctor to be – to focus on individual care at the patient level and really titrate them to try to get to the best effective dose for that individual patient. And so we think that it could help the doctors improve their care and we believe it will help stimulate some growth in the products.

Helpful. And then just on Teva and I will hop back in. Maybe just an update on timing for Forteo multi-dose pens in terms for development when that will begin? Is that later this year? It sounds like it could be. And then just a high level one on Teva the company is sort of marching toward the close of Actavis generics. And if you look at that portfolio specifically, it does contain a number of specialty generic injectable products. I think they call out 50 products in total. So, if that deal does close, do you see an opportunity for expansion of the relationship with Teva? Thanks.

I mean, as far as Forteo, we have always been working with Teva on Forteo in net. In our development programs, we typically start out with where we are providing a good bit of work around the clinical section or initial stability devices and so forth and then it moves into the commercial stages is where we are and that’s when you see this nice ramp of potential development revenue going forward. Importantly as well is that signified that we are getting close to commercial launch of the product. So, we are really excited that not only Forteo, but in exenatide and Sumatriptan are very close from a launch standpoint. On the Forteo side, particularly, the commercial ANDA that when we start finishing up the tooling and start to get the commercial production going, that’s going to start in earnest in Q3 and beyond. So, we are really excited about moving that program forward and continue to see growth there. As far as the Teva Actavis acquisition, obviously that acquisition hasn’t happened. I think it’s scheduled to close in June of this year. And quite frankly, you are really not allowed to talk about the different products that are in the portfolio until it happens. So, if there is opportunities obviously we will discuss them with Teva, but until they have them, we really don’t have any dialogue with them in the products that they are getting as part of that acquisition. But clearly, with the amount of success that we have had so far with the four programs with Teva, we believe we are an ideal candidate for them for any new opportunities in the device area.

Thank you.

We will take our next question from Matt Kaplan with Ladenburg Thalmann.

Hi, good morning guys.

Hey, Matt. How are you doing?

Doing well. Thanks. Just want to start out a couple of questions on QST, could you describe your interaction I guess with the FDA now that you are kind of nearing the completion of your clinical development? And do you think I guess the question is aimed at do you think there is any additional studies that they could request or associated with prior to the NDA filing?

Well, I would characterize our interaction with the FDA is normal interaction that you have on development program. Officially, we are finishing up the safety study this quarter. And obviously, we will look to have a pre-NDA meeting at some point with the FDA, which will be scheduled before the end of the year. As far as your question as to whether or not they are going to require any additional data and so forth, the only thing I could comment on is that at this point, our data has been very robust and has been from an efficacy standpoint and our safety data is consistent with the RLD. So I would not anticipate additional data required by the FDA, but obviously the FDA is unpredictable and you never know where the focus is going to be. What I can tell you is that the studies we performed were very robust and we felt satisfied all the requirements that the FDA asked us to perform doing that clinical program.

I guess kind of a follow-up on that. What’s your sense in terms of the FDA stance on requiring cardiovascular risk study prior to approval? And will you have to perform one of those, I guess?

Yes. I mean, again our data doesn’t show any concern in that area. And we haven’t had any dialogue with the FDA that would suggest that would it be the case that they would require a cardiovascular study before we filed. And in fact, I think they had gone out last year publicly and stated that any kind of cardiovascular work will be done is a class product and will be undertaken by the currently marketed products. And they still haven’t figured out exactly what that means or how they are going to implement that. So, we are under the impression that we are filing the NDA with all the data we had and we shouldn’t have any issues with regards to additional data, unless – again we haven’t heard anything from FDA that suggests otherwise.

Great, that’s very helpful. Thank you. And then in term of just shifting to your product set or partnering with Teva. First, could you talk about your visibility to product revenues due to I guess device sales going forward to Teva, you mentioned that the device sales associated with both Sumatriptan and Epipen should I guess ramp down in the second quarter and talk about the – your visibility to the other device sales with the other partner products?

Yes. Matt, it’s Jim. So again, in the first quarter, we did $6 million worth of devices for epinephrine. That brings the total to $16 million since we started shipping them devices last year. We are – we have talked numerous times about the fact that we have a purchase order. We are nearing the end of that purchase order so that implies that they will have the quantity of pre-launch materials that they believe that they need. So we are very happy with how well that has gone. I am not sure that anybody actually looking back a year ago would have thought that we would be in the $16 million plus range of total devices required for the pre-launch client. So we are very happy with that. But this will – in the second quarter, we will probably ramping up the majority of that. There could be a little bit that sort of comes out after that, but we certainly I think the majority of the purchase order will be finished up in the second quarter of this year. With respect to Sumatriptan, we are going to begin shipping those products. We actually, not only take the device, but we get the active ingredient from Teva. We package them together and we do final packaging. So it’s more than just shipping them devices. And so as you can imagine, we have been getting the pre-filled syringes from them and packaging them as quickly as we can. I don’t think we will have all of the pre-launch quantities in the second quarter, but we will make good progress and we are – things are moving very well with our contract manufacturer. So obviously, our goal is to get that product into the market as fast as we possibly can. With respect to the other products, just to make sure that we’re all clear, what I anticipate for this year is really more development revenue as opposed to product revenues. So reminding you that development revenue comes from the things that Bob discussed, so for example, when we start doing the final tools for – whether it’s Forteo or Exanotide, that is a revenue that shows up on development revenues post the product revenues. So product revenue really starts when we begin shipping devices for them in advance of the launch and we don’t have anything right now that we are commenting on that says that we are going to ship any of those devices this year. But obviously, these things follow a cycle, unless you finish up the development work, i.e. you validate the tools and everything are working, then you will begin to ship in anticipation of a launch. So typically, there would be a purchase order that will come from Teva for those prior to that. So really what we would expect this year is sale of – product sales for the Sumatriptan. We will also be booking our profit share once the product is put into the market. And I would also just remind everybody out there that we will book that profit share on a one quarter lag. So if they put product into the market for example, in the third quarter, we will book that in the fourth quarter going forward.

Okay. And then what are your margins on the device sales to Teva, I guess each product line probably has a different margin?

Yes, a little bit. But generally speaking, what we have said is when you think about our overall mix, I mean OTREXUP has a pretty normal call it mid-70s gross margin that you would expect for specialty pharma product. And generally speaking, devices as well as development work tends to be in the 30% to 35% range on margin and that’s why you see for example, this quarter the mix caused the 45% gross margin because we had a pretty substantial number of devices to Teva.

And if you remember Matt, the value of our programs with Teva and companies like AMAG is obviously – the device sales are important, but more important is the royalties priced at 100% margin when we started to achieve those. And so when you look at the mix, that’s when you look at the value of the products, it’s not percent of device sale itself, it’s the overall sale of the end commercial product where we get a nice royalty on those sales.

Sure. And I guess the final question and I will jump back in the queue. In terms – you spoke about the launch of Sumatriptan, I guess with the CRL for the epinephrine pen, could you talk about potential timing and launch of the other products that you have partnered with Teva including the epinephrine?

Well, still on the IP side, what we have stated is that obviously, the CRL is in the hands of Teva and the only guidance you have given is that they won’t launch until the market during – I guess until – after 2017. So other than that, we don’t get much more guidance. As far as Bayetta, which is one of the other programs, the 30-month stay in mid-’17, so assuming there is success with that and they get the approval, then obviously the timing of the launch would be in that timeframe.

Are there any other – I guess what I am getting at, in addition to the 30-month stay, are there any other patents that could delay the launch?

Yes. So they clearly need to settle the litigation. And as you know, the end of the 30-month stay doesn’t necessarily mean that all litigation has resolved. So that’s what I think for Teva to talk about as opposed to us, but our view is certainly not before the end of the 30-month stay. If there is a settlement, then that will obviously provide a lot more clarity. And just one other thing I want to say, the warning that Teva has used on Epi is not before 2017, so they have not given a specific date, they just know that they are not going to launch this year, so.

I am sorry. Bob, I cut you off before.

No, then the same thing with Forteo, Forteo’s 30-month stay ends in early ‘18, second quarter of ‘18, so again if everything were to go well, that timing is where we expect to potentially launch. Again, as a function of the settlement with the settlement of the litigation with parties and the eventual approvals is needed as well.

Great. Thanks for the added detail and congrats on the progress guys.

[Operator Instructions] Our next question comes from Sameer Singh with Piper Jaffray.

Guys, this is Sameer on for David, so I just wanted to ask…

I am sorry, we can’t hear you.

Sameer we can’t hear you?

Well, can you hear me now?

Yes.

Yes.

Okay. I just wanted to ask if you guys would consider looking for strategic alternatives for OTREXUP or does it still fit into the company’s long-term commercial plans?

Well, I mean as far as OTREXUP is concerned, we think that the product is at the very early stage of its growth cycle. And so we are continuing to sell that to rheumatology space. And we’re looking at if there is any other assets that we can bring into the bag to help supplement the sales force. But at this point, OTREXUP is a – is our first auto injector product, it’s been approved, it’s doing well from a patient standpoint and physicians like it, it’s just a matter of getting some additional growth and reimbursement from the payers and continue to grow that product. So we are committed to it and we will continue to sell that going forward.

There was a question on the interactive on the line that asks how much money per quarter are losses on OTREXUP sales force, so we don’t get real specific with that, but I think it’s appropriate to answer this question now, while we are talking about OTREXUP. What we have said is that our breakeven for OTREXUP is kind of in the low $20 million worth of revenue. And so last year, we did $13.3 million in revenue of OTREXUP. So we are certainly looking to continue to grow that. I would also say as we have looked at this a little bit more, we have kind of curbed back some of our spending on that. So the breakeven might even be in the low – very low-20, maybe even a little bit below that. So at this point in time, it’s good to have a product and we are committed to trying to grow that business as best as we can.

Thank you.

It appears there are no further phone questions at this time. I would like to turn the conference back to Jack Howarth for any additional or closing remarks.

Yes. We have a couple of more questions asked on the interactive portion. The first one is regarding Byetta and Makena, can you please elaborate on the structure of the royalty payment, specifically what sales levels award the single-digit levels versus the double-digit levels?

So, on – obviously, Makena and Forteo and Byetta are totally different deals and that not only are they with different companies, but they also one, two of the products with Teva are generic products and then with Makena, it’s a branded product with basically where we are focusing on lifecycle extension here. So with Makena, all we really said is that it’s starts out at high single-digit royalties and goes to low double-digit and that’s basically from dollar one of our auto-injector sales of Makena if it gets approved. And then as far as reaching the second piece of that tier, we don’t disclose what that amount is.

They are achievable.

But they are achievable. Yes, absolutely. And then with Teva, they start out at high single-digit and go to mid-teens. And the way their royalties are structured is based on market share that they achieved versus the RLD or other people in the space if there is any other competitors within for that product. And what I can say is that obviously the high single-digit, it starts at dollar one and the – to get to the mid-teens, we believe they are very achievable based on the normal generic substitution rate that you see when a product is launched and particularly given the fact that if we get the first to file status for these products, the amount of market share that a first to file gets is typically very high. And so we feel very confident that we can achieve those royalty levels for those products.

Okay. And we have one final question. Regarding Sumatriptan, will launch milestone payment come from Teva and if so, what amount?

So again, we do get a launch milestone payment from Teva. We have not disclosed it. It is not a material payment. It is more to help basically cover a lot of the costs that were incurred in getting ready for the launch. And so the real value for us is on the end product into the market, getting the royalty on those sales, but we will see payments and that will be recognized over some period of time. I am sure they pay it on accounting rules.

Thank you, Bob. Thanks again for joining us on today’s conference call. If you have any follow-up questions, you can reach me at 609-359-3016. That completes today’s call.

And once again that does conclude today’s conference. We thank you for your participation.