Antares Q1 Results Unimpressive, but Otrexup Could Be Catalyst

Antares Pharma (NASDAQ: ATRS  ) announced its first-quarter results  Wednesday morning but failed to impress the market. Shares were down around 3% in midday trading. Here are the highlights from the company's results.

Results
Antares reported a net loss for the quarter of $3.4 million, or $0.03 per share. That figure didn't compare well against the $74,000 loss from the same quarter a year ago, but met the average analysts' estimate.

Revenue for the first quarter totaled $4.5 million, a 34% drop from the $6.8 million reported in the same period of 2012. However, the total from last year benefited from a one-time milestone payment of $3 million. Analysts expected revenue for this year's first quarter of slightly over $5 million.

A significant portion of Antares' revenue stemmed from its partnership with Teva Pharmaceuticals (NYSE: TEVA  ) . Teva paid the company $1.2 million in royalties from the sale of hGH Tev-Tropin. Antares also sold $0.6 million of pre-launch quantities of its VIBEX auto injector to the Israel-based pharmaceutical firm for use in generic epinephrine auto-injector products. These items were on top of ongoing sales to Teva for reusable needle-free injector devices and disposable components.

Operating costs jumped during the first quarter by 18% year-over-year to $5.9 million. Antares attributed the increase to higher spending on efforts related to a planned 2014 commercial launch of Otrexup.

The company reported $80.3 million in cash and investments at the end of first quarter. That amount reflects a decrease from the $85.2 million total as of Dec. 31, 2012.

Looking ahead
Antares is banking on a positive decision from the Food and Drug Administration in October for Otrexup. The product enables delivery of methotrexate using Antares' Medi-Jet technology for the treatment of rheumatoid arthritis, poly articular-course juvenile rheumatoid arthritis, and psoriasis. 

Otrexup appears to be the most likely coming catalyst for Antares' fortunes. Methotrexate is taken by around 70% of rheumatoid arthritis patients. While many take the medication orally, that comes with some key drawbacks, including gastrointestinal side effects. Administering methotrexate via injection can minimize these side effects and improve absorption of the drug, but using traditional needles isn't appealing to a large number of patients. Antares thinks that the convenience of its Medi-Jet self-injection with Otrexup could prove attractive to this group.

Shares are up 21% over the past year, but most of the gains came from a rally in June and July of last year. So far, 2013 has looked unexciting for Antares. I don't expect that this situation will change dramatically until the fourth quarter when the FDA makes its decision on Otrexup. However, I anticipate a positive FDA ruling and an accompanying boost to Antares' stock. 

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