Halozyme Therapeutics, Inc. (HALO) Q2 2017 Earnings Report, Transcript and Summary

Ladies and gentlemen, welcome to the Antares Pharma Second Quarter 2017 Operating and Financial Results Conference Call. Throughout today's recorded presentation all participants will be in a listen only mode. After the presentation there will be an opportunity to ask questions. [Operator Instructions] I will now hand the conference over to Jack Howarth, Antares' Vice President of Corporate Affairs. Please go ahead, sir.

Thank you, Linette and good morning everyone. This morning, we released our second quarter 2017 financial results and recent operating 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'd 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. Forward-looking statements provide Antares' current expectation or forecast of future events. Factors that could cause actual results to differ include, but are not limited to, statements about new product approvals and FDA action, revenue, growth opportunities, the timing and results of research, development, clinical trials and financial performance and are also discussed on Slide 2 of today's presentation, 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 conference call and does not undertake any obligation to update any forward-looking statements contained in this conference 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 Fred Powell, Senior Vice President and Chief Financial Officer. Let's review the agenda for today's call on Slide number 3. Bob will begin with a review of the second quarter and recent operating progress. Fred will then take you through the detailed first quarter financial results and then Bob will give you a business update. After that we will open up the lines for your questions. Please turn to Slide number 4. I'll now turn the call over to Bob Apple. Bob?

Thanks Jack and good morning everyone. I'm pleased to report on a very successful quarter. We saw significant progress on a number of key deliverables for 2017. I would start today's call by updating you on a few of our second quarter achievements and then I'll turn the call over to Fred for a detailed review of the second quarter and year-to-date financial results, as well as a brief overview on the debt financing we recently completed. During our last call in May, we indicated that we had started planning for the commercial launch of XYOSTED. I'm happy to report that we've made significant progress thus far and have completed the hiring of seven XYOSTED regional sales managers. These managers have on average 15 years of experience in the industry, working with urologists, anrochenologists and most importantly experienced in launching new products. In addition to taking the first steps towards building an experienced and highly motivated sales organization, we also conducted a number of advisory board meetings with healthcare professionals and third party players to obtain guidance in determining the appropriate pricing and messaging for our XYOSTED launch. I'll dwell into more detail on that topic later in the call. Financially this was another strong quarter for the Company, with 13.4 million in revenue and a net loss of only $0.02 per share. For the six months ended June 30, 2017, we have recognized 25.4 million in revenue versus 24.5 million during the same period last year and we decreased our loss per share to $0.05 over the first six months of 2017 versus $0.09 last year. Turning now to our commercial business, we continued to be very pleased with the broad reach of Teva's distribution of our Sumatriptan injection product. If you recall, we shipped the first lot of finished product to Teva just one year ago and in a span of 12 months, Teva has achieved a 29% share of injectable migraine market, based on recent release weekly prescription data from Symphony Healthcare. The impressive aspect of that market share is that we were fortunate into an already established market. The successful march of our first complex generic is due in large part with the collaboration of our supply chain management team and Teva's relationships with both Walgreens and CVS. Given our experience with Teva's commercialization of Sumatriptan after only one year, we remain excited about the potential of our other Teva project products, exenatide, epinephrine and teriparatide, all pending FDA approval. Moving now to OTREXUP, we reported our highest number of total prescriptions still been recorded. According to Symphony Healthcare data, we achieved 16% increase in total prescriptions versus the first quarter of this year and 14% increase over the second quarter of last year. Importantly, for the first six months of 2017, on a standalone basis, the OTREXUP business realized a profit for the first time. As I communicated to you in the past, OTREXUP will be a slow but steady growing product and we'll continue to focus on product messaging and peripheral. Looking at our new term potential products with our partners Teva and AMAG, all of which are under active review at the FDA, we reported strong quarterly and year-to-date development revenue of 4.8 million and 6.4 million respectively. Although the development revenue we generated was impressive, the most important aspect of that revenue is that we believe a signal we are getting closer to the commercialization of the four partner products. Historically, development revenue always increases as we get to the end of our pre-commercialization efforts. This was a very exciting quarter as we're continuing to make significant progress with a number of key achievements on both the commercial operations and the financial side of the business. I'd now like to turn the call over to Fred, who will walk you through our second quarter and year-to-date financial results, and provide some details on the recent debt financing. Fred?

Thanks, Bob. Let's begin by looking at the revenue details for the second quarter on Slide number 5. Total revenue was $13.4 million for the three months ended June 30, 2017, compared to $12.2 million in 2016, an increase of 10%. Total revenue for the six months ended June 30, 2017, was $25.4 million compared to $24.5 million in 2016, an increase of 4%. Product sales represent sales of our proprietary products and devices or device components to our partners. Product sales were $7.3 million for the three months ended June 30, 2017, compared to $8.7 million in 2016 and $17.4 million for the six months ended June 30, 2017, compared to $19.5 million in 2016. The decrease in product sales for the three months ended June 30, 2017, as compared to 2016 was primarily driven by reduction in sales of pre-launch quantities of auto injector devices for use with Teva's generic epinephrine product and sumatriptan, partially offset by increased sales of OTREXUP. The decrease in product sales for the six months ended June 30, 2017, as compared to 2016 was primarily driven by a reduction in sales of pre-launch quantities of auto injector devices for use with Teva's generic epinephrine product, partially offset by increased sumatriptan product shipments to Teva. Development revenue was $4.8 million for the three months ended June 30, 2017, compared to $3.3 million in 2016 and $6.4 million for the six months ended June 30, 2017, compared to $4.4 million in 2016. The increase in development revenue was primarily the result of increases in development activities with AMAG for the Makena auto injector product. Licensing revenue represents amounts received from partners for the right to use certain intellectual property. Licensing revenue was $1 million for the three months ended June 30, 2017, compared to $39,000 for 2016 and $1 million for the six months ended June 30, 2017, compared to $89,000 in 2016. The increase in licensing revenue was due to recognition of $1 million in licensing fees previously deferred related to the Teva's sumatriptan distribution agreement. Royalty revenue is recognized primarily from in-market sales of products sold by our partners. Royalty revenue was $265,000 for the three months ended June 30, 2017, compared to $232,000 in 2016 and approximately $600,000 for the six months ended June 30, 2017 and 2016 respectively. Turning now to Slide number 6, operating expenses were $10.5 million for the second quarter of 2017 compared to $11 million in 2016 and $21.1 million for the first half of 2017 compared to $24.2 million in 2016. The decrease in operating expenses was primarily due to reduction in external clinical and development costs related to XYOSTED partially offset by an increase in pre-launch sales and marketing expenses for XYOSTED. Net loss per share was $0.02 for the quarter, for the second quarter of 2017 as compared to $0.04 in 2016 and $0.05 for the first half of 2017 as compared to $0.09 in 2016. As of June 30, 2017, cash, cash equivalents and short-term investments totaled $43.4 million compared to $27.7 million at December 31, 2016. Turning now to Slide 7, on June 6, 2017, the company entered into a five-year loan and security agreement with Hercules Capital for a term loan of up to $35 million, the first tranche of $25 million was funded upon execution of the loan agreement. Under the terms of the loan agreement, Antares has an option to draw up to an additional $10 million subject to achieving certain corporate milestone in satisfying customer conditions. Payments under the loan agreement are interest-only until the first principle payment which is due on August 1, 2019. We believe this non-dilutive financing further strengthens our cash position and gives us the financial ability to properly invest in the launch of XYOSTED. I'll now turn the call back to the Bob. Bob?

Thanks, Fred. Let's turn now to Slide 8. With our PDUFA date for XYOSTED of October 20, 2017 fast approaching, we're extremely busy with more preparation. I now like to take you through a very high level overview of our XYOSTED launch plan. Let's turn to Slide number 9, we have a number of critical decisions to make in the coming weeks, including finalizing price, third-party payer access strategy, final marketing activities, our distribution strategy, trade negotiation and most importantly account representative recruitment, which will begin and be at a little closer to the October PDUFA date. Moving now to Slide 10, important to our commercial launch plan is the identification of the right physician population for XYOSTED. We will be targeting neurologists, primary care physicians and endocrinologists who are currently high prescribers of testosterone products. We have completed the physician targeting and we have mapped all the territories for the 60-specialty account representatives, which we expect to hire. And as I mentioned earlier, we have already hired 7 outstanding regional sales managers to assist in the screening, recruitment and selection of qualified account representatives as well as the development of all the sales training tools needed for launch. The hiring process will commence shortly and the account representatives will be brought on board contingent upon XYOSTED's approval targeting a late fourth quarter 2017 or early first quarter 2018 launch. On Slide 11, we'll see that we have concluded - conducted a larger amount of third-party payer market research in advance of the potential launch. At the Academy of Managed Care Pharmacy meeting held in April, we organized an advisory board which consisted of members of the XYOSTED's sales and marketing team, as well as representatives from various health plans and pharmacy benefit managers. The goal of the meeting was to increase our understanding of the insurance coverage of the various existing testosterone therapies while each payer is willing to choose structure of each plan. We shared our thoughts on XYOSTED pricing with the advisory board and obtained their feedback on potential coverage rebates formally positioned and any restrictions to coverage based on price. Antares' National Account Directors in partnership with a retained service team of strategic account managers will target and engage formulary placement discussions with approximately 40 of the top PBM national, regional and government payers during the fourth quarter of 2017. These target payers represent 75% of the overall brand commercial utilization and 70% of the generic commercial utilization for the testosterone replacement market basket of products. We also plan to engage in discussions regarding Medicare opportunities with the payers. Medicare Part D represents 14% of the overall testosterone market annual utilization. And finally when asked about initial formulary actions for XYOSTED, over 50% of the target commercial accounts responded what they would entertain access during the first six months of launch provided the company offers an access rebate. Turning now to Slide 12, in addition to conducting market research on third-party payer coverage, Antares had conducted both qualitative and quantitative physician prescriber research over the past year. In conjunction with the American Urology Association's annual meeting and the annual meeting of the Sexual Medicine Society of North America, we convene an advisory group of 15 nationally recognized clinical experts in the treatment of testosterone deficiency. During these events, academic conditions represented data from the Phase III clinical trial of XYOSTED as well as aspirational product messages and target plan to meet the experts at pharmacokinetics, clinically meaningful testosterone levels even used and commercial access are most important prescribers and their patients. We believe the PK profile of XYOSTED including both the average T levels after does as well as the average C trough data depicts the product that produces clinically meaningful and viable total testosterone levels. In our Phase III trial, 98.5% of study completers were within the physiologically normal range of between 300 and 1,100 nanograms per deciliter, six weeks after the start of therapy. Further, by week 12, patients achieved an average P level of 553 nanograms per deciliter or approximately 330 points above their total testosterone levels prior to treatment. Over the course of one year, the average C trough level for patients in our study was 435 nanograms per deciliter, still well above the cutoff levels considered normal and importantly no patients in our study exceeded total P levels of 1,500. Regarding the introduction of pain associated with self-administration, of 1,519 total injections observed in our Phase III study, 1,510 or 99.4% were reported by patients to be completely painless. And lastly, our critical experts noted that commercial insurance patient access is widely important to our product success. To that end, Antares has designed and expects to implement a comprehensive patient support program that will offer co-pay systems in most commercially insurance patients as well as the benefits of investigation and prior authorizations for service for physician offices. Antares had recently conducted a double-blinded online electronic survey of 150 community based urologists, endocrinologists and primary care physicians to help validate the insight of our clinical expert advisors. Moving now to Slide 13 for an update on sumatriptan, sumatriptan continues to be a great story for Antares. In the past 12 months since we launched the product with our distribution partner, Teva, market share growth has been impressive. To date, we recorded $15 million in revenue over four quarters. According to Symphony Health Solutions, the second quarter market share for sumatriptan injection was 26%, up from 21% in the first quarter of this year. Recent weekly prescription data for the weekend in July 21, as our sumatriptan auto injector had a 29% market share, very impressive indeed. We remain pleased with the market acceptance of our product. On Slide 14, we see a record of prescriptions for OTREXUP. Prescriptions grew 14% in the second quarter of '17 versus the same quarter one year ago. We've seen the gap between gross sales and net sales grow as we had to renegotiate some of our third-party payer agreements in order to get better formulary coverage for OTREXUP. We have not been able to avoid the industry trend of larger rebates and major PBMs and plans in order to maintain coverage, which only gives us a lower net selling price of our product. With that said, net revenue of OTREXUP increased 3% versus the second quarter of 2016 and 19% versus the first six months of 2016. Let's wrap up by turning to Slide number 15, I'll provide an update on the progress we made this quarter in our Alliance business. On our last quarterly call, we outlined a potential approval timelines for all four of our Alliance business projects, beginning with exenatide, we begun to execute our purchase order for commercial devices with Teva. You'll recall while Teva's ANDA for exenatide is still under active review of the FDA. Litigation with AstraZeneca has been settled and Teva had negotiated settlement launch date of October 15 of this year with 180 days of exclusivity pending approval. Until then we will continue to manufacture pre-launch products and devices in anticipation of approval. Turning now to epinephrine, we continue to ship pre-launch devices to Teva in the second quarter bringing the total dollar amount shipped to-date of approximately$20 million worth of devices. Teva's ANDA for this product is still under active review in the FDA. And Teva recently changed its guidance from approval in late 2017 or early 2018 due to potential for an early 2018 launch again pending FDA approval. With respect to teriparatide, TEVA's ANDA is still under active review in the US. Although the paragraph for 30-month stake ends in the US in August of 2018, teriparatide was approved with marketing authorizations grant in 17 countries within the EU last December. We believe Teva is anticipating a 2018 launch in certain countries in Europe. But the exact timing of those launches could be impacted by the overall US patent litigation currently ongoing and existing European pat. And finally, AMAG reported the second quarter that the FDA had set their sNDA review period 10 months, which resulted in a target action date of February 14, 2018. We are currently executing on a purchase order for commercial devices for use in our Makena subcutaneous auto injector product as AMAG await FDA action on their sNDA. Overall, I'm very pleased with the progress we made during the past quarter and excited about our current commercial business and our near-term opportunities. We continue to grow our marketing products and we anticipate an approval on October 20 of this year for our most exciting active development, XYOSTED. And we're extremely active in pre-commercial activities as well as positioning our partners and gaining approval of four high valued partnered products. I look forward to providing you an update on our progress during the next quarterly call. That concludes the prepared remarks for today. Operator, could you now open the lines for the questions and answers session.

Thank you. [Operator Instructions] We'll take your first question from Corey Davis with H.C. Wainwright.

Hi. This is Aaron Askowitz. Just a few, congrats on a good quarter. On XYOSTED, do you have any visibility on, I guess whether market could be impacted potentially by this AndroGel product liability settlement we saw? I'm curious if you think that there's going to be some more dialing back of brand explosion in that space. In this case which might you have actually an increased share of voice?

I don't think there was a settlement. I think that there was -

Sorry, not a settlement, a ruling.

Yeah, ruling against AbbVie, but I'm sure that they're going to challenge that ruling. So I think that what we're seeing in the market is, we did mention the prescriptions, but the prescriptions remain to be very strong well over 6 million prescriptions a year in both the gel - in total both the gel and the injectable generic marketplace. I think that the market leader is still AndroGel and continues to do quite well from a dollar standpoint. But we do see a reduced amount of detailing for the brand of products which we do believe will bode well for us from a voice standpoint and speaking of if when we go out to potentially detail XYOSTED to that patient population and offered to physicians.

And we have attractive situation I remember you guys were - different point of the house, you had a follower in that space and can you just remind us I guess how the difference with the thoughts are on in terms of your competitive position once you're on the market that you have the visibility potentially anyone else is trying to come behind you and what if someone else can do a shortcut a clinical trial or you think they have to take the same path of what you did?

Well, I think that relative to OTREXUP, there was a final where we didn't have to do any clinical data, we just PKed, so we didn't get any exclusivity from the FDA. With regards to XYOSTED, we had to do full clinical and we believe we're going to be eligible for exclusivity from the FDA for a subcutaneous auto injector of testosterone. So we believe we'll get protection in that regard. But until the FDA weighs on that decision, that's never a 100%. But also from a techno standpoint, we haven't seen any testosterone product not have to conduct large clinical studies like we did. And so clearly it would take a number of years for someone to do that. And then from a potential handle standpoint, we have tremendous amount of IP around the device and the use of testosterone with regards to XYOSTED and we'll have a number of orange books listed patent that we think will be able to assert if someone were to try to get into the market over the next few years.

I could be greedy, I'm sorry. I know you don't like to talk about partner products that you can't control that much but can you at least confirm whether you're still thinking there's a big lead time between approval and launch so we can maybe back up from the early 2018 guidance from Teva to maybe guesstimate whether it's taking about potential approval filing?

Yeah that's a question for Teva. We're in very good position to launch a product from a devise standpoint. Then as Teva has publicly stated they're in active discussions with the FDA regarding approval and the timing which is really subject to the two of them working out any final questions if the FDA has. I think the distance between an approval and a launch is the normal supply chain issue that you're going to face where you're doing a labeling, you're final labeling negotiations with the FDA, and then you have to actually get your labels printed, make the drill because epinephrine is such a short-dated product generally about 18 months of life on a product, the supply chain is extremely point. So it's not like you can build out lot of above advance and sit on it. So, obviously the plan would be once the approval happens to have the batches made, the places are ready, readily available and then assemble them intact I mean try to get them out to market as fast as possible, but I think again going by Teva's guidance of an early 2018 launch, one would assume an approval is not that far back from there.

All right. Thank you so much.

We'll hear next from Elliot Wilbur from Raymond James.

Hi. This is David [ph] on for Elliott. And thanks for taking the question. Just to start off keeping in mind that OTREXUP saw a one-time benefit in the first quarter. It looks like from a fundamental standpoint, dynamics have been trending upwards for the product. Is this due to any advances on the formulary front or sales force execution? And I guess more generally what else have you seen that has been driving the uptick of the product? Thanks.

Well, I think it's clearly both of those. We do have increased formulary coverage and that's why our rebates or net price is going down a little bit because we had to give rebates to other plans to get coverage, to get better coverage. And then I think that from a sales force standpoint, we continue to give them new product, new detailing that have been very effective. We've been hiring very good people. They're well trained and I think generally the sales force execution has been very good. And then the final thing is overall the market for the auto injectors' of methotrexate has been increasing. And it's just a general - a better awareness from the physicians that product like OTREXUP can benefit their patients in an area or an indication that is a life-long disease where multiple treatments are needed. So I think when I look at the growth of OTREXUP over the last six months or so, it's just continuing involvement or evolving of the product and the overall acceptance of it by physicians.

Great.

Navigate to the payer landscape.

Got it. Thank you.

We'll move next to Anthony Petrone from Jefferies.

Good morning. This is Chris [ph] on for Anthony. Thank you for taking my questions. Maybe the first one just on the development revenue, we saw a nice uptick in the quarter. I know that most of it was from Makena, but if you could maybe quantify the contribution by Makena and then your execution for drop-off into the second half help us on the modeling front for the development revenues in second half of '17? Please.

When it comes to the Makena auto injector for the development revenue is, it was a very, very strong first half of the year for us. We don't actually break down development revenue by each individual contracts that we have. We expect that the second half of 2017 will be equally as strong as the first half of 2017. So we had a good first half the year, we're looking to continue that in the second half as the partner products get closer to approval. We will be finishing up the work on those products. And then shipping to our product development and actually producing devices for them. So we see a strong second half.

Good. Thank you. And then maybe just one more, do you have any updates on the managed care discussions that you are having and then timing, it's a chain coverage in 2018 once you have clearance for the product? Thank you.

Yeah, so, with coverage, like I mentioned in our prepared remarks, so far the reaction from the payers has been positive. It's an area that there is good coverage provided. They had preferred products as well as generally Tier 3 type coverage. And our expectation is that we will have Tier 3 and we'll have generally good coverage for the product. When you're looking at 2018, when you look at some of the major decisions by the PBMs like Express Scripts and CVS Caremark, they have not excluded any of the major products in the testosterone replacement market. In fact they actually included I think moved up AndroGel as to a preferred product.

Right.

And so I think generally the market still sees testosterone replacement as a needed coverage item for patients. And we don't see any trends that are changing in the near term. So we expect good coverage. And we expect us to have to like I said in the prepared remarks probably contract with about 40 of the major plans in the country and we're in the process of sorting that. But to be honest, you can't do any of that in earnest until you have an approved product. And so that's when you'll really see the type of covers that the payers are going to provide you and/or what type of rebate they're going to expect to get - to gain that coverage.

Great. Thank you very much.

[Operator Instructions] We'll move next to Matt Kaplan from Ladenburg Thalmann.

Hi. Good morning, guys.

Hey, Matt, how are you doing?

Doing well, thanks. Just want to follow up a little bit on XYOSTED launch and how we should think about that going into next year given all the work you've done up front especially discussions with payers in getting coverage? It seems as though from what you said that the product characteristics are very attractive to the doctors and patients. Talk about how we should think about the launch and the trajectory given the necessary work you need to do on coverage?

Yeah, so I think with any product launch today obviously coverage is the biggest roadblock and/or obstacle that you have to overcome. And the reason why I say that is unlike a number of years ago when plans used to cover you when you first launched, it's the exact opposite today. Most plans will try to block new products. Almost all new products are blocked from a cover standpoint for at least the first few - six months. What we're trying to do in order to mitigate that and I think other companies have had success with this is given access rebate to those plans so that they're - while they're doing their medical review of the product as to where they're going to place it on formulary and so forth you still gain access or they still cover the product during that review period obviously with an appropriate rebate in order to gain that coverage. And so I think that what we learned with OTREXUP a few years ago and where we are today is vastly different and that we acknowledge and understand that the third-party payers are a big component to launches and the trajectory of those launches. And so we've done a lot more homework this time around, we're doing to a lot more work at the plan level to try to make sure we have access from the beginning. It's kind of like a chicken there, if you don't have the access, you don't get demand. And if you don't have the demand, they don't want to give you access so. And so you really got to work with the plan in order to get that demand up, so they see that there's a need for the product so that it gets covered. So I think that it's going to be like any other launch you're going to see a nice steady growth over time and we haven't given any guidance into what our expectations are for 2018 with regards to launch of XYOSTED. And I think if anyone gives launch guidance, it's kind of I don't know it seems to be very difficult to do that given that the markets are unpredictable relative to any individual product. And so you get out there and see what the coverage landscape is and see what type of coverage the other competitive products have. So again I think that we're going to have a nice steady growth of the product. I think very different too is that vis-a-vis XYOSTED versus OTREXUP, I think XYOSTED has a lot of benefits for both the patient and physician that we're not asking the physician to do anything different, we're just - we believe we're just giving them a product that's the best in class we believe that we're giving them the best way to administer testosterone for the patients that are already on testosterone whether it's an injectable form of testosterone or a gel they're still trying to basically increase their levels of testosterone by replacing their natural testosterone. So we think that with the hope of self-administration at home, painless administration for the patients, steady PK, all those product features did well for the adoption at the doctor level as well as the patient level. What we have to then navigate is prepare environment and we think that we are in much better positioned now then we were a few years ago.

Great, that's very helpful. Then one another question on XYOSTED, in terms of your focus on your sales asset, how important I guess is the primary care detailed investors, the specialist urologists, endocrinologists in terms of what you are seeing out there now in the market?

Though I mean the primary care is important, when you look at the primary care writers they are the majority of the prescriptions, but within that universe they are the big prescribers that are Dean, that are kind of Dean in this primary care, but they are probably more a specialist than primary care. And even if they are primary care, we're really going target the desk files like six to 10 of those primary care docs. And our universe is based on the high prescribers of primary care, urologists and the endocrinologists. And so they are - here they - we can effectively reach the biggest writers with that 60% sales force. And as the product gains traction and as we potentially build the value of the products, we will look to potential increase the sales force, if it's warranted. If we see that we can gain additional prescriptions by adding sales reps. What we do see is that when the doctor universe goes from just out of seven to just out of six, there is prescription drop in the number of prescription that you gain on the next level doctors and so there is - it's really about focusing on those top three or four details [ph] about doctors that will get you the majority of the value of market place.

And then just shifting to your partner products in terms exenatide or Teriparatide and the epinephrine, what was on your standards on the opportunities and how that translates to opportunities for and targets for each of those products.

Okay. Well that's live information. So for me - from AMAG standpoint, with their making a products they're looking to turn their [indiscernible] syringe products which in currently $400 million to an auto injector and intend to switch the majority of the patients to the auto injector. And obviously there are applicants, they potential loss of the course in exclusively in 2018. So ultimately the converge is really a challenge or an opportunity for AMAG, but what we gain is obviously whatever they are able to convert over to the auto injector business, we get a nice product revenue [indiscernible] as well, so you give the packaging and so forth for them so will be a tax product and rise margin. And then we get a high single digit to low double digit royalty on their end sales of Makena, one of the auto injector. And again their guidance has been that they intend to switch the vast majority of all of their Makena sales to our auto injector. So I think it's a near very high value product for the company. Epineprine that's a traditional, we believe AB rated and a substitutable product to Mylan's Epipen. That market has been changing quiet bit over that last year or so. There has been an authorized generic launch by Mylan. There has been a non-substitutable product that's gaining some market share, [indiscernible] through the CDS program and that's going back and forth between a few - between FBE brand, FBE generic and the other products been quick as far as market share. All I can tell you is that we sell devices that have a nice margin. We get at high single digit royalty on the end sales of the generic Epipen that we will be - that Teva will be selling and we believe that there is a much needed - there is a very big need for a true generic to the Epipen. And our expectations is we will get an approval and launch that product in '18 with Teva and we think that will be a very meaningful product, two entireties even with the change in dynamics within the market place. Exenatide that's a smaller product, the market for the brand is probably less than $200 million. We will be going to a fully substitutable product to BYETTA we sell devices at a margin and then we also get a high single digit in mid teen royalty on their end sales of the generic vilo. It proves to fully substitutable, we don't expect any major change in the market place over the next year or two, it will a product that hopefully the payers respond well to because it will be first generic, injectable product into the diabetes base and we are hoping that help to reduce cost within that space that payers make agents., potentially go on to a generic BYETTA and before they go on to long acting [indiscernible] which essentially in the same amount as it is less in number injections per week. And then finally PTH, very large product, released product for sales just about down $1.6 billion worldwide, our dealers worldwide. As we mentioned on our script, it's been approved in 17 countries in Europe. And Europe is not as big as the US. The US market is around $700 or $800 million a year. In the US fully that product will be substitutable again the same type of deal we have Exenatide and we sell the device with a nice margin and then we also get a high single digit to mid teen royalty on their end sales of hopefully a substitutable generic [ph] in U.S. In Europe, it's a pending launch three store and then so, the international productivity issues and we believe that will be supplying them pens this year and in the next year for the launch in Europe to different market place, it's not substitutable in Europe, but they have an outlet to be able to sell that through their branded divisions and others and we look forward to that being a nice start to potentially a very large product in the US

Great. Thanks a lot.

David Amsellem from Piper Jaffray. Your line is open.

Yeah. This is Sameer on for David. Just a quick one and may be a follow up. So should we think about pricing for XYOSTED and will it be similar to branded?

Yeah, so where pricing concepts haven't changed dramatically from what I've been saying for the past year or so. The branded products which endogel which is the market leader and axiron, which is the number two product in the market, they are around $560 to $570 per month. We believe that even though XYOSTED is - in our opinion better products from potentially for patients from compliance and a PK profile and so forth. We intend to actually price it lower than the brands and the reason is we want to make sure we gain good access for the patients and for the physicians and so we are still in that range of $400 to $500, so a nice discount or nice we lower price than the brands, but still high not value for us to make it a very meaningful product. Obviously that's the way and we'll also provide as I mentioned in our script end patient support, but we think that the net selling price for the company and for the patient will still be a very good value for us and a good value for the patients. So we are trying to make sure that the uptake and the price is not a barrier to good adoption and launch.

Okay, got it. And then maybe just quickly with the potential launch of the product there. Where does OTREXUP fit in your overall strategy, should we think of it as core asset going forward? Thanks.

Sure, OTREXUP has always been a full asset. It's given us the ability to be prepared for XYOSTED. We had third party payer group internally, we have supply chain, we have sales and marketing organizations ready to XYOSTED because of OTREXUP and OTREXUP has been growing. And so, I think that the fact that it actually was profitable for the first time in the first six months of this year, it's an asset that has tremendous value to us on a go-forward basis. So, I don't think it's unusual in especially pharma space to have two sales forces that call on two different sets of doctors and we'll look to see how we can leverage the OTREXUP reps on a go-forward basis for Xyosted. But I think for external purposes, OTREXUP is still a long-term asset for the company and we continue to see growth in that product and hopefully more profitability to come.

Thank you.

We'll hear next from John Vandermosten from Zacks Investment Group.

Good morning. It's John Vandermosten. I had a first question on Xyosted and there are a variety of options in the market. I mean we've talked about them from previous callers. And I wanted to see if you could identify the most attractive patient for this therapy given the Xyosted upcoming and other injectables that are out there. Who would be the target patient for this? I mean are there any characteristics you think of in terms of that?

I think that our product, we believe the first going product, so anyone who is diagnosed with testosterone deficiency, we believe is the perfect candidate for Xyosted. It's a once-a-week at-home administration with - it's easy to use auto injector. So, we prove it in our Human Factor studies that patients can easily use the product. It's 99.6% being the painless diag by the patients that were actually in the Phase 3 studies. So, I think that there isn't any particular patient population that has to stop from deficiency that we're excluding or that we think is a better candidate, whether if you're on a gel today, we believe we can improve the experience replacing your testosterone by the weekly injection as opposed to a daily application of gel that has transference issues. And then if you're a patient who is using the generic injectables, it's quite a painful process. We're using a deep IM injection once every two weeks or every three weeks depending on the brand, but it's very painful, the 19-gauge needle intramuscular in the glutes. Sometimes done at the doctor's office. Sometimes done at home, majority of which are done at the doctor's office. But you also - with what we are providing from a PK standpoint, we believe it's a huge benefit where you don't get these peaks and troughs of your testosterone levels over the course of therapy, which obviously when a patient had a very high level of testosterone, they feel super physiologic and kind of very energetic. And then when they're down for the end of the time, they're typically below normal range and can feel depressed and really need for a next dose. We saw in our study a very flat PK curve where over an extended period of time the testosterone levels were very constant. And we think that - we believe that will benefit the patient as well. So, overall it's the whole market, out of those 6 million prescriptions we believe that our product is appropriate in both the gels and the injectable market.

Okay. Second question regarding Makena, it looks like there is going to be a break in between the PDUFA date and the exploration of exclusivity for AMAG. And I was wondering if you thought there might be any issues in terms of maintaining pricing there, given that there may be a short break where there is the generic alternative perhaps.

Yeah. I mean I think that's a question for AMAG and I don't want to contrite about that. But their strategy is [indiscernible] strategy. I don't know if there is going to pretty be a breakdown. I don't know what the price is going to be from a generic standpoint, if one enters the market. And what I can tell you is that AMAG feels confident that they're still going to be able to maintain a large percentage of the market based on the characteristics of the auto injector based on what they're hearing from physicians and the payers. And so, whether the timing of the approval, whether earlier or at the PDUFA date, it's really a function of how the review is going between them and AMAG and then the launch of generics. So, what I can tell you is that in our business where we do generics, the FDA has been exactly timely getting approvals done within 10 to 12 months. And in fact I think the average approval time line for generic is almost two years now. And so, there is no guarantee that when an ODE ends or when a patent ends. There is going to be a generic on the market, especially if it's a complex product and I think that Makena is definitely one of these specialty type products where the FDA is probably going to expect to serve to the amount of regular [indiscernible]. And so, that's the question again that you should ask AMAG, but I think generally again what we'll be ready for is providing them the devices. We'll be ready for providing the packaged products for them and given if they get the approval from the FDA. And so, we're really excited about the opportunity and we're looking forward to launching that product.

Last question on licensing revenue. I think it was that the jump was regarding deferred revenue. Is that - was that all recognized in the quarter or is there more to come or should we expect that line items to be similar to order in the first quarter and last year levels going forward?

That was a one-time second quarter item that we had. We had to maintain the NDA and we had to maintain supplies and we certainly did that. And so, we were able to go back to them and recognize that million dollars in the second quarter. It will not be going forward.

Okay. Great. Thank you very much.

We'll go back to a follow-up from Anthony Petrone from Jefferies.

Great. Thanks and congrats again on the quarter. We're just hopping back and forth between the calls. I guess just one high level question on Teva. Clearly the company is going through some shifts here in between CEOs looking at its internal businesses and we've heard obviously reports that there's a fair amount of turnover in Israel. And so I'm just wondering any visibility on the relationship with Teva you are seeing shifts in the folks that you're dealing with there and how are they prioritizing their various and the pipeline specifically those where Antares has a development relationship?

Right. So, all of our products are with Teva US and so any turnover that we are seeing in Israel typically affect the US business for us. Obviously, I think Teva is doing their best to bring in a new CEO and CFO and that's something that they have to handle. From our internal programs, one thing Teva really needs is more revenue and ours are very near-term. And so, it's anything we get a priority within Teva to make sure that we have a lot of resources whether it's regulatory or commercial or whatever for epinephrine, exenatide, and PTH, they're all very important products in Teva and they communicate with us and they communicate that back to us on a regular basis that are critical to them. And so, we haven't seen any negative affect of the some of the issues that Teva is going through at their organization. So, for us we're continuing to have very robust team updates with Teva from a commercial standpoint, as well as the regulatory uptick standpoint. So, all is good on our end.

That's helpful. Maybe just a quick follow-up would be just beyond the current partners that we deal with Teva, AMAG, and some others. Is there - can you provide an update possibly on the partnered pipeline outlook, say, over the next year to two years? Do you see Antares partnering up with additional pharmaceutical companies for growing device combination products?

Well, I mean obviously one of our main activities is looking at other partnered products with other companies. It's a nice part of our business. It's a less risky for us when we enter into these partnerships. Lower than it would relative to a branded product that we develop ourselves, but clearly that's risk. And so we try to balance that out, where we develop our own programs with a potentially high reward, but a high risk with the partner products and so what I can say is that we have a very active business development department within the organization. They're constantly talking to different type of pharmaceutical companies, whether they're small, mid-size or large companies, but what I can tell you is that the combination products are the difficult area for any pharmaceutical company and we have a lot of expertise in these areas. And so we are definitely called quite a bit from different organizations and then we try to work potentially with new partners, but it has to be on their planned business model where we can make money and we're not just a diversifier, that's not what we do. We're not looking to make a couple enemies for the devise, we're looking to bring a lot of value to the organization vis-a-vis our expertise and regulatory approvals and so forth. And we expect a very sizable royalty for that work. Otherwise it's not worth it for us. So we're very particular about the type of business development arrangements we enter into and so I can't give you any specific guidance as to when the next one will come. There's another one to come, but what I can say is that our business continues to grow, both from a partner standpoint as well as our internal programs.

Thank you.

And as I find there are no additional callers on the queue. I'd like to turn the conference back over to Mr. Howarth for any additional or closing comments.

Thanks, Linette and 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 concludes today's call.

That does conclude today's teleconference. We thank you all for your participation.