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Antares Pharma Inc (ATRS) Q1 2019 Earnings Call Transcript

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ATRS earnings call for the period ending March 31, 2019.

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Antares Pharma Inc  (ATRS)
Q1 2019 Earnings Call
May. 02, 2019, 8:30 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Ladies and gentlemen, welcome to the Antares Pharma First quarter 2019 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.

I will now hand the conference over to Jack Howarth, Antares' Vice President of Corporate Affairs. Please go ahead, sir.

Jack Howarth -- Vice President, Corporate Affairs

Thank you, Jennifer and good morning, everyone. This morning, we announced our first quarter 2019 financial results and recent operating achievements, and a copy to the press release can be found on the Antares website at under the For Investors 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 For Investors section of the Antares website, under the Webcast & Presentations tab. If you're currently unable to access our website, the slide presentation will be archived under the Webcast & Presentations 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 US 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, market acceptance, adequate reimbursement, successful launch and future revenue from XYOSTED and Teva's generic EpiPen, market acceptance and future revenue from Makena, sumatriptan and OTREXUP, the timing and results of proprietary and partnered research, development and clinical trials, including ATRS-1701, methotrexate for ectopic pregnancy and development projects with Teva and Pfizer, statements about new product approvals and FDA action, and the Company's financial performance, including achievement of the 2019 revenue guidance and other factors, which are also identified in today's presentation and from time-to-time in the Company's filings with the SEC on Form 10-K and as updated in Antares' recent periodic filings on Form 10-Q and 8-K and other filings made with 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, Executive Vice President and Chief Financial Officer.

Let's review the agenda for today's call on slide number three. Bob will begin with a high-level review of our strong first quarter results, Fred will go through the detailed financials, and then Bob will give you XYOSTED launch update and review our pipeline and future catalysts. After our presentation, we will open up the lines for your questions.

I'll now turn the call over to Bob Apple. Bob?

Robert F. Apple -- President and Chief Executive Officer

Thanks Jack. And good morning to everyone on today's conference call and webcast. This morning's first quarter earnings release highlights record quarterly revenue, which marks the beginning of what we believe will be a transformational year of top line growth for the Company and also serves as a solid beginning toward achieving our 2019 revenue guidance of $95 million to $105 million. We believe these quarterly results validate our strategy to focus on the development of a diversified commercial business consisting of both proprietary and partnered products.

Let's get started with some highlights from the quarter on Slide number 4. First quarter revenue of $23.3 million, marked the fifth consecutive quarter of total revenue growth for the Company and represented an 83% increase over the first quarter of 2018. The increase in total revenue was driven by $18.3 million of product revenue, representing a 67% increase over the prior year.

As you can see from this slide, the product revenue was almost equally split between proprietary and partnered products.

With our proprietary products, XYOSTED, OTREXUP and sumatriptan representing 45% of total product revenue. We believe that contributions from our products such as XYOSTED will grow over time as they gain traction and become the main driver of top line growth. The other significant contributor in the first quarter was royalty revenue, which grew to $4.1 million as compared to $5,00,000 in the first quarter 2018, a 768% increase.

Important to note is that the royalty revenue growth has yet to receive the full benefit of royalties from Teva's generic EpiPen, which was launched in limited commercial quantities in late 2018.

According to Teva, the full commercial launch should occur in the second half of this year. We've reported a net loss per share at $0.03, down from a net loss per share of $0.04 during the same quarter last year. This reduction in net loss occurred despite our heavy investment to support the January launch of XYOSTED.

With regard to the XYOSTED's launch, I'm pleased with the strong start, which shows month over month prescription growth. Our field sales force of approximately 83 sales representatives and 10 district managers are calling on a high prescribing urologist, endocrinologist and primary care physicians, who write testosterone replacement products.

The initial feedback from physicians and patients have been very positive. We believe XYOSTED will be the significant growth driver we expected based on the positive product attributes. I will cover XYOSTED in more detail later in the call.

I'll now turn the call over to Fred for more details on our excellent first quarter results. Fred?

Fred Powell -- Executive Vice President and Chief Financial Officer

Thanks, Bob. Please turn to Slide 5. This was a tremendous quarter for Antares with significant revenue growth and a reduction in net loss. Over the past year, we had several substantial revenue and operating expense changes.

With regards to revenue, AMAG's Makena auto-injector and Teva's EpiPen were both approved and launched in 2018, and we are now recording device and royalty income for both of these products. In addition, we completed a full launch of XYOSTED in January, and we are now starting to see the revenue from that product. To support our commercialization for XYOSTED, we increased the size of our commercial team and incurred launch costs, all of which, are reflected in our increased operating expenses.

So let me provide a breakdown of our revenues and operating expenses for the first quarter of 2019. Total revenue was $23.3 million for three months ended March 31st 2019 compared to $12.7 million for the comparable period in 2018.

Product sales were $18.3 million for the three months ended March 31st 2019 compared to $10.9 million for the comparable period in 2018. Product sales for commercialized proprietary products totaled $8.2 million for the three months ended March 31st 2019 compared to $6.8 million for the comparable period in 2018 and consisted of OTREXUP, XYOSTED and sumatriptan.

Product sales for partnered revenues totaled $10.1 million for the three months ended March 31st 2019 as compared to $4.2 million for the comparable period -- comparable quarter in 2018 and consisted revenue from generic Epi devices, Makena, teriparatide and needle free devices.

The increase in product revenue was primarily driven by sales of auto-injector devices fused with Teva's generic epinephrine product, needle free devices to Ferring XYOSTED, sumatriptan injection and shipments of multi-dose pens for the use in Teva's generic teriparatide product in anticipation of a potential 2019 launch offset by a decrease in pre-launch inventory stocking to Makena auto-injectors to AMAG.

Licensing and development revenue was $900,000 for the three months ended March 31st 2019 compared to $1.3 million for comparable periods in 2018. Licensing and development revenue includes license fees received from partners for the right-to-use our intellectual property and amounts earned in joint development arrangement with partners under which we perform development activities or develop new products on their behalf.

The decrease in development revenue was primarily a result of reduction in development activities with AMAG for the Makena auto-injector product, which was approved by the FDA in February 2018 and is now a marketed product. First quarter 2019 development revenue was primarily related to Teva's teriparatide development program as well as development programs with Pfizer.

Royalty revenue was $4.1 million for the three months ended March 31st 2019 compared to $500,000 for the same period in 2018. Royalties are recognized based on in-market sales of products sold by our partners. The significant increase in royalties for the first quarter 2019 was attributable to increased royalties from AMAG's Makena auto-injector product, which was launched at the end of the first quarter of 2018 and Teva's generic epinephrine product, which was launched in limited quantities in the fourth quarter of 2018.

Operating expenses were $17.3 million for the first quarter of 2019 compared to $11.1 million in the comparable period of 2018. The increase in operating expenses in the first quarter of 2019 was primarily due to the 53 new sales representatives hired in the fourth quarter of 2018 and increased sales and marketing expenses associated with the launch of XYOSTED.

Net loss was $5.5 million for the first quarter of 2019 compared to $6.2 million in comparable period in 2018. A decrease of 11%. Net loss per share was $0.03 for the quarter ended March 31st 2019 and $0.04 for the quarter ended March 31st 2018.

At March 31st 2019, cash and cash equivalents were $23.2 million compared to $27.9 million at December 31st 2018. During the first quarter 2019, we generated $8.1 million in gross proceeds from the sale of common stock at an average price of $3.51 per share through the previously established At-the-Market equity offering program or ATM.

During the quarter, accounts receivables increased by $10.8 million as a result of significant shipments to our partners toward the end of the quarter as well as an overall increase in revenue. We do not expect this will be repeated in future quarters and the cash burn should normalize over the next few quarters.

I'll now turn the call back to Bob. Bob?

Robert F. Apple -- President and Chief Executive Officer

Thanks, Fred. Please turn to Slide 6 for an update on the XYOSTED launch. We officially launched XYOSTED in January of this year and our reps have been detailing the product in the field for a little over four months. To date, we are focused on and have reached almost half our position target population, which is comprised of the high writers of testosterone products. Over 1,200 of those physicians detailed thus far, have already written at least one prescription for XYOSTED, and our reps are continuing to focus on those high decile writers. When looking at what type of patient physicians are writing XYOSTED for, 45% of XYOSTED business is coming from new patients starts with another 42% coming from patients switching from the generic injectable.

So clearly, although, it's still very early, we believe XYOSTED has broad application to all patients with testosterone deficiency. Critical to any successful launch is good coverage by insurance plans and PBMs. In that regard, by the end of the first quarter, we had better than 50% of commercial lives covered by insurance, which is well ahead of our goal for the end of the first quarter. Effective April 1st, additional insurance plans added XYOSTED to their formularies increasing our covered lives to approximately 60% of all commercial lives. We are still targeting that better than 70%, all (ph) commercial lines will be covered for XYOSTED by the end of this year.

Turning now to Slide 7, you can see the monthly prescription trends for XYOSTED continuing to grow and trending in a very positive direction. More importantly, new prescriptions are increasing and refills are growing, which is a strong sign for the very important patient persistence.

Since the product launched, XYOSTED has recorded double-digit month-over-month sequential growth in both new and total prescriptions. From a product branding perspective, in addition to the traditional physician detailed pieces, we recently launched our branded social media consumer campaign, designed to grow brand awareness and reach. The response to this campaign has been very positive.

In summary, I am very pleased with the progress of the XYOSTED launch. Moving now to Slide 8, and an update on our pipeline. Focusing first on our partnership product development pipeline. The Teva programs for Forteo or teriparatide for osteoporosis and BYETTA or exenatide for Type 2 diabetes, are with the FDA following the ANDA pathway. We look forward to the potential approval of these combination products, and in the interim, we continue to fill purchase orders for the pre-launch quantities of generic Forteo devices.

With respect to our Pfizer collaboration, we have initiated development work on modifying the QuickShot device for Pfizer's rescue pen. We have already begun feasibility testing as well as completed formative human factor studies. And although, the drug is undisclosed, we remain excited about the potential for this combination product.

We are continuing development work on our next potential proprietary product, ATRS-1701, a combination drug device product in the neurology space. We have made solid progress on the device design and we are working on optimizing the most recent formulation and look to move this product to a clinical trial. We've also commenced initial development work for another potential proprietary product, which focuses on an unmet need in the urology space, which we believe would fit strategically in our sales force bag.

And finally, we are pleased to announce another pipeline project with the receipt of orphan drug designation for the use of methotrexate to treat ectopic pregnancy. Our intention is to design a development program utilizing a proprietary auto-injector device with doses of methotrexate not commercially approved or available in an auto-injector. Approximately 128,000 ectopic pregnancies occur annually in the US and despite improvements in diagnosis and management, ectopic pregnancy continues to be a significant cause of pregnancy-related morbidity and mortality. Current treatment options include minimally invasive surgical techniques for the use of intramuscular methotrexate in an off-label fashion. Once we have finalized a development plan, we will be requesting a meeting with the FDA to determine the path forward.

Wrapping up on Slide 9 with the 2019 potential catalysts. We're off to great start this year, and therefore, we are reiterating our 2019 (sic) revenue guidance of $95 million to $105 million. We believe XYOSTED continues to be a significant opportunity and our number one priority right now is a successful launch in the US market, where there were approximately 7.2 million prescriptions written last year. We are working to make inroads in the managed care environment, which is critical to any new product launch. We believe we made good progress thus far and remain excited about the potential for XYOSTED to become an important product in the treatment -- treatment regimen for testosterone deficient patients.

Next catalyst for 2019 is the successful launch by Teva of their generic to Mylan's EpiPen. Based upon Teva's forecast and our 2019 revenue guidance assumes a full commercial launch by Teva in the second half of the year. We expect to receive larger royalty payments on Teva's in-market sales of generic EpiPen as well as significant auto-injector product revenue associated with shipping additional devices. Given Teva's past comments on market share, this could potentially be a solid revenue driver in 2019 and beyond.

AMAG subcutaneous auto-injector product continues to be a solid contributor to our revenue growth. AMAG is continuing to work hard to grow the subcutaneous auto-injector and defend the Makena franchise with a differentiated product. We believe they are expecting the auto-injector to maintain a significant share of the hydroxyprogesterone market. We look forward to more details on our progress when they report first quarter results next week.

Another potential catalyst for 2018 is Teva's ANDA for a therapeutically equivalent generic to Forteo. Lilly reported 2018 Forteo global revenue of $1.5 billion, with $758 million in revenue reported in the US. According to Teva, this ANDA is a high priority for them and guided the Street on the last earnings call for a potential launch of this product in the second half of 2019. We believe this is potentially a big opportunity for both Antares and Teva.

In closing, this is an exciting time for Antares and our shareholders, since assuming the role of CEO in 2016 and implementing a strategy to maintain laser focus on driving the pipeline to regulatory approval and moving development assets forward to commercial products we have recorded annual year-over-year revenue growth. We believe that our first quarter results continue to show the progress we've made and focusing our future growth on increasing the commercial product mix of our total revenue. The balance revenue growth from both proprietary and partnered products helped drive record sales, which we have placed -- which has placed us on a solid foundation toward achieving extraordinary year for the Company.

That concludes our prepared remarks for today. Operator, would you now open the lines up for the question-and-answer session.

Questions and Answers:


Yes. (Operator Instructions) And we'll go first to David Amsellem with Piper Jaffray.

Mickey Ingerman -- Piper Jaffray -- Analyst

Good morning. This is Mickey Ingerman on for David. Thanks for taking the questions. First on XYOSTED. Can you provide some context on the number of unique prescribers? Are a significant number of the prescriptions coming from a select group of physicians or a volume spread over -- spread out over a wider audience? And then secondly, if you could just comment on the nature of the step edits for XYOSTED thus far?

Robert F. Apple -- President and Chief Executive Officer

Right. So as far as the writers, we've had over 1,200 physicians writes XYOSTED since launch. And so what that shows is a pretty broad audience or a list of doctors, who are writing XYOSTED. There are no -- I would say there is no -- obviously, there's always a large writers, but they don't make up the large percentage of the scripts being written. It's pretty much across a large number of physicians, and interestingly, it's also across all three categories of doctors who write testosterone products. Urologists are writing it on a regular basis, endocrinologists, I think then the message of steady states are really resonating well with endocrinologists and then general practitioners who write testosterone products are also writing, and I think are biggest writers at this point.

So it's across all facets, and we continue to see some of those physicians turning to big writers. But it's the early stages of the launch, and we're seeing very good utilization across all -- across all facets of the physicians.

As far as the step edits, I think that we're seeing pretty much the same step edits that all the other testosterone products have. Obviously, everyone has a prior authorization, where you need to have two blood draws in the morning to prove that you have testosterone deficiency. If the patient is already on testosterone, they obviously don't have to go through that.

And then some of the plans -- depending on the plans, whether if they're a high cost plan, where they're trying to maintain -- keep costs low, we may need to step through generic, but fortunately, 70% of the market is already on a generic. And so that already counts. And so we're really not seeing a heavy step edit process for XYOSTED.

Mickey Ingerman -- Piper Jaffray -- Analyst

Got it. That's helpful. Thank you


We'll go next to Anthony Petrone with Jefferies.

Anthony Petrone -- Jefferies -- Analyst

Thanks. Congratulations on a good start to the year here. I've a couple on XYOSTED and maybe shift to Epi. Just on the mix -- a little more detail there Bob, just on the mix of physicians. Is that just urologists out of the gate or do you have endocrinologists in there, and GPs just trying to get a sense of the mix?

Robert F. Apple -- President and Chief Executive Officer

Yeah. So I think I mentioned on the last question, the mix is actually pretty solid. We're getting all three physicians writing, urologists, endocrinologists, and general practitioners. And I'd say right now, the general practitioners are probably our biggest writers. But overall, it's been well received by all three groups. And it's really -- I would say it's probably following the normal writing from any other testosterone products, where the high decile writers are becoming the bigger writers.

And then like I said earlier, over 1,200 physicians have written and it's across all those three spectrums of physicians.

Anthony Petrone -- Jefferies -- Analyst

That's helpful. And maybe the follow up to stay on XYOSTED for a moment. Would this be on covered 60% of covered lives as of the end of April, it's ahead of expectations as you mentioned. And so maybe just a little bit on the terms there. Is it Tier 2, Tier 3 coverage, and it seems like you're well on your way to hitting that 70% target, do you think there's a potential to sort of exceed that by the end of the year? And I'll just have one more on Epi. Thanks again.

Robert F. Apple -- President and Chief Executive Officer

Sure. So we 100% have targeted Tier 3 coverage. We don't -- we think that with our co-pay support that we provide to patients up to $125 of co-pay support, that, that would cover pretty much any plan in Tier 3 coverage. And so to get to Tier 2, we think it's too costly as far as from a rebate standpoint.

When we look at the mix of the plans, we have a lot of plans that are coming us at Tier 3 with no rebate, and then obviously, the larger plans and the large PBMs, we are providing a rebate to have that access to those plans.

So we feel pretty good about where we are. And as far as where we'll be at the end of the year, we gave guidance of 70% of the lives that we covered. Clearly, we feel pretty confident that we're going to hit that number whether or not we see that it's really a function of some of the smaller plans that we haven't even had discussions with yet. And so probably Q2 -- we'll probably have a better update as to where we are and if you -- if you saw in the in the prepared remarks, we had 50% of the lives covered in Q1. And effective April 1st, really the end -- the start of Q2, we were up to 60%. And that's the way the plans typically work. They will start the coverage on a quarter. And so we're hoping that come July 1, we'll see some more plans come on (inaudible) and with good coverage and we expect to see that. But as far as guiding more than 70%, I just don't know, if that's going to happen right now. But I think I'll have a better sense come the end of Q2.

Anthony Petrone -- Jefferies -- Analyst

Very helpful. And very quickly just on Epi The numbers there on the auto-injector side obviously also ahead. And so I'm just wondering, is it stocking in there on the side of Teva? Or should we just be looking at that as a better than expected launch? Thanks.

Robert F. Apple -- President and Chief Executive Officer

Yeah. I think that the launch is going well. And I think that where Teva is, is exactly where they had disclosed last quarter, which was they're still doing a limited launch. They expect to be able to bring the Epi Junior on to the market in the back in the second quarter early third quarter. And I think that's when they're going to do the full commercial launch. And so we are seeing week over week growth of them supplying the markets, which is obviously in need of EpiPens.

But they still haven't done their full launch. As far as our device sales to them, we're trying to stay ahead of that full commercial launch. And so there is some stocking of devices, but it's in the normal course of their forecast. We're basically producing to their forecast. And so we expect a pretty significant increase in their sales of the product in the second half of the year. But as far as our devices, we are consistently going to continue to supply at this rate, and hopefully, we'll see a growth in that as well.

So it's been really -- it's been a good start for us and Teva, and once, both products are available, and they do the full commercial launch, we see there's a very big opportunity for both of us.

Anthony Petrone -- Jefferies -- Analyst

Thank you.


We'll go next to Matt Kaplan with Ladenburg Thalmann.

Matthew L. Kaplan -- Ladenburg Thalmann -- Analyst

Hi, good morning. And congrats on the quarter.

Robert F. Apple -- President and Chief Executive Officer

Thanks, Matt.

Matthew L. Kaplan -- Ladenburg Thalmann -- Analyst

Just wanted to drill down a little bit more into XYOSTED, if we could. I guess with your -- now look at -- with a quarter of sales under your belt. With your existing sales force out there and the messaging that you're out there with, do you see any modifications that you need to make in terms of the size of the sales force or messaging based on the feedback that you've gotten from the marketplace that could even further enhance your launch of XYOSTED?

Robert F. Apple -- President and Chief Executive Officer

Okay. So as far as the messaging, we actually had our National Sales Meeting just a few weeks ago. We had planned to bring them back really after three months in the field to assess what they're hearing from the physicians and see if our message is resonating. And from a very positive standpoint, the message is resonating. It's a really easy story to show the PK, the doctors get it. And then next question is coverage. And coverage is a big deal, because, when you launch a product, you don't have it all lined up and making it easy for the physician and the patient to get XYOSTED is the most important aspect. And so we keep hammered home to the reps to get that -- not only to get that prescription written but to see it get filled.

And so that's where they're spending a lot of time. That's why we only got to about 50% of our targets, because we're focusing on making sure that those high decile writers get comfortable that when they write it they get filled.

So the message of steady state painless, all those positive attributes of the product are absolutely resonating with the physicians and the patients. We're getting a lot of emails from physicians, physicians' assistants and patients saying that the experience with XYOSTED has been extremely positive.

So that, that part, I would say that we really don't have to alter our message much.

As far as the second part of your question, which was -- I'm sorry what was that?

Fred Powell -- Executive Vice President and Chief Financial Officer

Modification to the sales force?

Anthony Petrone -- Jefferies -- Analyst

Any modification to sales force (multiple speakers)

Robert F. Apple -- President and Chief Executive Officer

So the modifications to XYOSTED (ph) sales force. Yeah. No ,we're very comfortable where we are. We have about 83 territories, all calling on the urologists, endocrinologist and primary care docs. And I'd say primary care docs are really not primary care physicians, they are mental physicians, they are our primary care physicians that have a heavy focus on testosterone. And so it's not as large of an audience as you would expect.

So the 83 territories, I think they're -- they do right size, it lowers the windshield time of the rep. And right now, it feels, like it's the right size. Obviously, if we see -- if we see a potentially large impact on adding a few more reps, we would do that. But right now, we assessed our territories, but until we get all the coverage from the insurance plans in place, we really -- we'll start looking at viable territories and we're expanding the territories. But right now, we feel really confident with the number we're at.

Matthew L. Kaplan -- Ladenburg Thalmann -- Analyst

All right. That's very helpful. And just shifting gears a little bit in terms of the pipeline. You mentioned a 1701, a neurology product. Could you give us a little bit more color on that in terms of the market opportunity, maybe indication, anything that you can add to the 1701? And then you also mentioned a urology product that's moving into development as well. Any color on that?

Robert F. Apple -- President and Chief Executive Officer

Yeah. I mean, -- on the neurology product, it's the one we've been working on for the last year or so. The one thing is it is a rescue pen. It's in our area, where we think we have very strong capabilities of developing rescue pens as given by the Epi results, as we have an Epi -- we have a rescue pen with Pfizer. And so the neurology one is a rescue pen. We really don't want to give much more detail until we get into clinical trials, and really are able to lay out the clinical program for that product. But we do think it's a meaningful proprietary asset for us. And so we're excited about it. And clearly, we focus on unmet needs and that's an area of an unmet need for the patient population that we're targeting.

On the other product, the urology one, that's early stage, but we're not going to give much detail. It's not a rescue pen, but it is in an area for urology, where there is an unmet need, where the patients aren't satisfied with what they currently are using. And so we see it as an opportunity. And again, as we formalize development, meet with the FDA, start the clinical program, we're going to keep that under wraps until that time.

Matthew L. Kaplan -- Ladenburg Thalmann -- Analyst

Very good. Thanks for taking the questions


We'll go next to Bill Maughan with Cowen & Company.

Bill Maughan -- Cowen & Company -- Analyst

Good morning, and congrats on the progress. My first question is, at this point, what percent of XYOSTED prescriptions have been paid prescriptions? And can you remind us of the program or the programs that you have in place at this point to get XYOSTED into patients' hands in terms of sampling and co-pay assistance?

Robert F. Apple -- President and Chief Executive Officer

I mean, I can handle the second part of that question and I'll turn the other one over to Fred. As far as with the program that we have from a co-pay assistance, from sampling and so forth. From a sampling standpoint, we want all the physicians to use a first sample in the office in a new patient. So that they experience the injection. They see how easy it is to use, how painless it is. And that gives that patient one week of therapy at the doctor's office and also helps us with -- if the physician is new, they also see how easy it is to use and how painless and positive response typically is with the patients. We then asked that physician to also provide another sample to their patient, so they essentially had two weeks of therapy when they walk out the door of the office. And in that process, the physician has probably written in e-script, it's electronically submitted to the pharmacy.

And if there is any type of adjudication time to get it approved for that patient, we hope that, that two weeks is sufficient to get that through the process, and we use a nationally recognized adjudication company called CoverMyMeds and they help with the adjudication process. So if the person has commercial insurance, and they need prior authorizations that the physician hasn't provided yet, they'll help get that information from the physician office.

If there's commercial insurance, and there is initially a rejection, because it's not covered, we then provide one month free of drug. And the reason why we do that is during that month, that same company CoverMyMeds will then appeal that rejection. And we've had pretty good success of reversing that appeal. And so that's all part of the process again of making it easy for the physician and the patient to get XYOSTED.

If at the end, the patient doesn't have any insurance, then we can't support that patient anymore. But if they have commercial insurance, then obviously, hopefully, they turns into a paid script.

And then the second part of your question as far as what percentage of our scripts to date have been paid versus free product, I'll turn that over to Fred.

Fred Powell -- Executive Vice President and Chief Financial Officer

Sure. What happen is as you'd expect at the beginning of the launch, when coverage was less than where it's currently at, it was a higher percentage. And so while I can't give you a percentage as of right now, we have seen the percentage of paid prescriptions increase. We had a target in mind and that we hoped we would be below for free scripts and we're below that. So we've seen that percentage continue to increase over the first quarter and going into the second quarter. I can tell you it is certainly below the 40%. It's much -- it is lower than that percentage for the entire time.

Robert F. Apple -- President and Chief Executive Officer

And I think it follow suit to that as our coverage improves, which we're already at 60%, the need for that program diminishes. So we feel so far everything's going as planned and we're really happy with the response. I would think that most physicians when -- there were some surveys being done by some of the analysts and those surveys came back, where the physicians found that it was relatively easy to get the product and it was covered. And so that's what we want to hear. And that's what's happening out in the field and there's always room for improvement. So that when the patient gets a script, they get it 100% at the time, but that's not the real world especially at a launch. But we're really focused on making that as seamless and as easy as possible for both the patient and the physician. And more importantly, believe t or not, it's the physician, they want to know that when they write it, it gets filled. And so that's what we've been doing.

Bill Maughan -- Cowen & Company -- Analyst

Okay. And then I was hoping to get a little bit more color on the ectopic pregnancy market. What can -- anything you can do to help us size it in terms of maybe how many ectopic pregnancies get methotrexate as it is? And what's the current understanding of the efficacy of methotrexate for these patients?

Robert F. Apple -- President and Chief Executive Officer

So as far as what percentage of patients get methotrexate versus a surgical procedure. I think the majority of the patients get methotrexate. It's obviously less invasive for the patient, tends to be better outcomes for the patient if they do surgery, if there's any scarring, it can lead to more difficulties in getting pregnant again. And so I think that the standard of care if provided a good option of easy to use auto-injector in the office with the physician, I think that will -- that could help move more of it toward even more of it toward methotrexate. But again, it really is a function of the product we develop, the success of that clinical plan and so forth.

As far as the number, there's about 128,000 ectopic pregnancies a year, and we think that having an auto-injector with a labelled indication for ectopic pregnancy would be a benefit for both physicians and patients. And I'm not sure, if I missed another part of the question. I think I hit your questions.

Bill Maughan -- Cowen & Company -- Analyst

Yeah. You covered it. Thank you very much.


(Operator Instructions) We'll go next to Elliot Wilbur with Raymond James.

Zachary Kramer -- Raymond James -- Analyst

Hi. Morning. This is Zach Kramer (ph) on Elliot. Thanks for taking the questions. Just have two here. First one is on, if you have any read on the refill rates for XYOSTED? And if you know if that's coming mostly from those that step through generic or if they were a new patient starts?

Robert F. Apple -- President and Chief Executive Officer

Yeah, I mean, the refill rates has been very high. Our refill rates is in excess of 75%. And I don't think we really determine whether or not, it's patients that are new to therapy or switches. We know that overall the refills are becoming more and more meaningful on a weekly basis. And so we're seeing that persistence that you want to see, and the refill rate is pretty high. Testosterone is an area, where patient persistence is an issue. And we're very pleased at where we are right now. And if those persistency rates continue, we'll be very happy with the launch, we expect to continue, because of the -- because of the product attributes. But I think that we need some more time to see where those -- where the persistency is coming from whether or not, switched patients is more likely to stay on therapy longer versus a new patient. We don't know that yet. But we know that overall the refills have been quite strong.

Zachary Kramer -- Raymond James -- Analyst

Okay. Got it. That's helpful. And then second, just wondering, if you had any thoughts on the failure of AMAG's hydroxyprogesterone trial to reach its end points. And any concerns that Makena might be removed from the market?

Robert F. Apple -- President and Chief Executive Officer

No. I mean, obviously, Q1 was a very strong quarter for us with Makena. And we haven't seen any change in Q2. The volume of auto-injectors going out has been very strong. As far as the results of the study and so forth, that's really a question for AMAG. What we know is that the physicians -- the physicians are still writing. They're still using Makena. I'm not sure where AMAG is with the FDA, but we see this as a long-term product and until AMAG has further dialogue with the FDA, it's really inappropriate for me to give any commentary other than what we're seeing in the marketplace, which is still very strong.

So all I can say -- the other thing I would say is factual, which is Makena was approved on a very robust clinical study with very strong efficacy. And I think that will help continue to have that product be a meaningful program for both us and AMAG.

Zachary Kramer -- Raymond James -- Analyst

All right. Thanks.


And at this time, there are no further questions. I will turn the call back to Jack Howarth for closing remarks.

Jack Howarth -- Vice President, Corporate Affairs

Thanks, Jennifer. 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 completes today's call.


That concludes today's conference. We thank you for your participation.

Duration: 43 minutes

Call participants:

Jack Howarth -- Vice President, Corporate Affairs

Robert F. Apple -- President and Chief Executive Officer

Fred Powell -- Executive Vice President and Chief Financial Officer

Mickey Ingerman -- Piper Jaffray -- Analyst

Anthony Petrone -- Jefferies -- Analyst

Matthew L. Kaplan -- Ladenburg Thalmann -- Analyst

Bill Maughan -- Cowen & Company -- Analyst

Zachary Kramer -- Raymond James -- Analyst

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