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Antares Pharma Inc (NASDAQ:ATRS)
Q3 2020 Earnings Call
Nov 5, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, welcome to the Antares Pharma Third Quarter 2020 Financial and Operating Results Conference Call. [Operator Instructions] I will now turn the conference over to Tram Bui, Antares Vice President of Corporate Communications and Investor Relations. Please go ahead, ma'am.

Tram Bui -- Investor Relations

Thank you, operator, and good morning, everyone. Earlier today, we announced our third quarter 2020 financial results and operating achievements. A copy of the press release and slide presentation for today's conference call are available in the Investor Relations section of the entire website. Before we begin, I'd like to remind listeners that some of the 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.

Examples forward-looking statements include those related to our future financial and operating results, including our expectations regarding the impact of the COVID-19 pandemic and mitigation measures implemented in response to the outbreak on our product supply, demand for our products, new patients and future prescriptions, future revenue, development programs, the global economy and financial markets and our overall business, operating results and financial condition, our ability to achieve revenue guidance, future revenue growth, prescription volumes and market share for our products and our partners' products, new product approvals and the launches, including NOCDURNA, FDA actions and regulatory activities, results of ongoing and future clinical trials and other product development activities and business development efforts.

These forward-looking statements are subject to certain risks and uncertainties, and actual results could differ materially they are identified and described in today's press release and the accompanying slide presentation on slide two and from time to time in the company's filings with the SEC on Form 10-K and is updated on Antares recent periodic filings on Form 10-Q and Form 8-K. 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 as a result of new information, future events and 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; Fred Powell, Executive Vice, Executive Vice President and Chief Financial Officer; as well as Pat Shea, Senior Vice President of Commercial. Let's review the agenda on slide three. Bob will begin with a high-level review of our business, and Pat will provide a more in-depth discussion on our commercial strategy and tactics for our proprietary portfolio Fred will then go through the detailed financials, and Bob will conclude with closing comments before opening up the line for your questions.

Please turn to slide four, and I will turn our call over to our CEO, Bob Apple.

Robert F. Apple -- President and Chief Executive Officer

Thanks, Tram, and good morning to everyone. We are excited to report another quarter of record financial and operating results for the third quarter of 2020, which we believe illustrates the tremendous growth opportunities we have across our business with our proprietary portfolio and partnerships. Our total quarterly revenue increased by almost 17% year-over-year to $40 million, beating street estimates with contribution of almost 38% year-over-year growth -- revenue growth from our proprietary portfolio and a 6% from our total partnered product development and royalty revenue.

This also brings our nine-month year-to-date revenue to a record $105 million, a 23% increase year-over-year. Furthermore, we grew third quarter net income by almost 380% year-over-year to $5 million or $0.03 per share and generated cash from operations of more than $14 million for the nine months ended September 30. Throughout the quarter, we effectively reached physicians and patients with our proprietary portfolio of products, supported our partners with their development programs, and manufactured over one million commercial auto-injectors for our products and our partners' products.

Despite the ongoing impact of the COVID-19 pandemic on our employees, suppliers and the communities we serve. Furthermore, the recent announcement of the licensing of NOCDURNA for the U.S. from Ferring Pharmaceuticals immediately expands our proprietary portfolio and add another lever to our growth strategy. As we continue to work diligently to support our growth initiatives, we are reaffirming our full year 2020 revenue guidance of $135 million to $155 million, which represents growth of between 9% to 25% for the full year compared to 2019.

With that overview of the third quarter achievements, let me start with our proprietary portfolio on slide five, which represents our highest margin business and is the most significant growth driver of the company. While OTREXUP remains a steady contributor, our flagship product XYOSTED remains the fastest-growing branded testosterone product on the market-based on volume, with revenue growth of 74% and 160% in the third quarter and nine months of 2020 versus the same period last year. Total prescriptions for XYOSTED also increased 129% and 237% in the third quarter, nine months ended September 30, 2020, versus the same period last year based on IQVIA data. The testosterone market continues to expand, and we believe the demand for an easy to use virtually painless at home testosterone replacement therapy will further support the adoption of XYOSTED.

We believe our switch messaging has already and will continue to resonate with physicians not wanting to crowd their waiting rooms and offices for IM injections and patients reluctant to venture into any type of healthcare facility for nonemergency care. We were steadfast in our strategy at the onset of the pandemic and leveraged a virtual detailing platform and social media presence to connect with existing and potential patients and healthcare professionals. As our sales force garner more in-office visits with their physicians, we continue to effectively manage through the varying stay-at-home orders, restrictions and phased openings as the pandemic hits a second wave in the U.S. We believe a hybrid between virtual and in-office detailing will actually provide our sales force with more efficiency on a going-forward basis, particularly as we launch NOCDURNA, which brings me to slide six.

We recently met one of our strategic goals of expanding our proprietary portfolio through corporate development. We announced that we signed an agreement with Ferring Pharmaceuticals for the U.S. license of NOCDURNA, a urology asset for the treatment of frequent nighttime urination. With minimal upfront payments, we believe NOCDURNA presents a great opportunity to grow our business and strengthen our urology portfolio and commercial presence in the therapeutic space.

We're excited to be able to immediately expand our portfolio and leverage our 90-person commercial organization that continues to prove their success with XYOSTED, which we believe can be translated into a successful relaunch of NOCDURNA. With that, let me have our Senior VP of Commercial Pat Shea, who joined the company this summer, talk more about the opportunity and launch strategy for NOCDURNA as well as provide more insight into our opportunities for XYOSTED. Pat?

Patrick M. Shea -- Senior Vice President of Commercial

Thank you, Bob, and good morning, everyone. I would like to start by reiterating Bob's excitement for the recent licensing of NOCDURNA for the U.S., which represents a potential large market opportunity based on the high prevalence of nocturia as well as the large number of patients both underdiagnosed and undertreated. With strong commercial insurance coverage and a 50% to 70% targeting overlap between NOCDURNA and XYOSTED, we believe NOCDURNA is a detailed sensitive product that will benefit from improved disease state awareness as well as the attention of our specialty account representatives to aid physicians in proper patient identification and through.

We're excited to reintroduce to physicians and their patients suffering from nocturia due to nocturnal polyuria, a therapy that's clinically proven to treat the underlying etiology of disease. From a commercial execution perspective, we are relaunching NOCDURNA in two phases. The first soft launch phase is currently under way. We have already trained and deployed our sales team to engage in conversations with a targeted group of urologists. These healthcare professionals are current XYOSTED targets, some of whom are also prescribing NOCDURNA. As I just mentioned, we have existing relationships with these offices and providers and believe the receptivity to NOCDURNA will be high.

It's early in the relaunch, yet we're already seeing situations where representatives access to key urology practices has improved due to an interest in NOCDURNA. On the supply chain front, the transition of NOCDURNA with our wholesale partners has been seamless, and there has been no issue meeting prescription pull-through. Our market access team is currently working with our payer customers add NOCDURNA to our existing Antares agreements. Our focus will be primarily on the commercially insured patient segment. Currently, NOCDURNA is covered or better for approximately 80% of commercial lives. We are confident that the focused approach we have implemented for the remainder of this year will meet our objective of generating renewed brand awareness and reestablishing NOCDURNA demand.

We rolled out the soft launch plan of action to our sales team last week with great enthusiasm. Early feedback has been very positive, not only for NOCDURNA but for XYOSTED as well. The second phase of the NOCDURNA relaunch is targeted to start in the first quarter of next year where we plan among other initiatives to broaden and intensify our educational efforts to healthcare providers and introduce patient education and awareness initiatives, all delivered through a multichannel effort. We believe providing tools and programs to increase disease state awareness and education as well as brand awareness are critical initiatives to broaden NOCDURNA trial and adoption and accelerate demand. Overall, we believe our commercial efforts will be highly synergistic with XYOSTED, as we envision not only call point and targeting efficiencies, but tactical program adaptability as well.

While we are now implementing a commercial strategy for a 3-product portfolio, XYOSTED will remain our top priority, given the continued market potential, strong growth in demand and net sales. With 129% year-over-year growth in total prescriptions for XYOSTED in the third quarter, we believe the key drivers of continued growth are accelerating new patient starts and maintaining a strong refill raise. We have an estimated 6,500 XYOSTED prescribers since launch, which we believe has significant potential to deepen their prescribing behavior. In Q4, we fine-tuned our targeting strategy and call plan strategy to focus primarily on driving depth of prescribing within this prescriber base.

From a field force activity perspective, we're very pleased with the progress we have made engaging our customers despite a highly dynamic environment. It's encouraging to see the increase in the number of in-person sales calls over the last several months as conditions, access to offices and increased patients flow have improved across the country. Our most recent data shows nationally, on average, 60% of our sales calls have returned to in-person with providers. The remainder delivered via virtual tactics. We believe the continued execution of both types of calls, virtual and in-person will be critically important to our continued growth throughout the remainder of the year.

Safety of our field personnel and health professionals is our top priority, and we will continue to closely monitor and adjust activity based on state and local conditions. In summary, we are very pleased with the continued growth of our proprietary business, while navigating through a very challenging environment. It remains an exciting time for our commercial organization as we integrate and relaunch NOCDURNA, while continuing to stay focused on driving sustained growth of our flagship XYOSTED. Bob, I'll hand the call back to you.

Robert F. Apple -- President and Chief Executive Officer

Thanks, Pat. I hope having Pat joined our call helps our investors and any potential new investors better understand the opportunity we believe lies ahead for XYOSTED and what a successful relaunch of NOCDURNA could look like. With Pat's extensive commercial pharmaceutical experience spanning three decades and a proven sales force, we will continue to explore other corporate development opportunities to expand our proprietary portfolio, while also focusing on the development of our internal program pipeline. As we have noted in the past, we are in the early stages of the development for two assets in endocrinology and urology, as you can see on slide seven.

Our endocrinology development program, which we refer to as 1901 is a rescue pen that is still in the preclinical and formulation stages of development. We had a successful pre-IND meeting with the FDA earlier this year for this program. Where we were able to identify and grade on a 505 b two development pathway for an eventual NDA submission. As we continue to develop the asset and garner success with the formulation, we plan to submit our IND to the FDA in the first half of next year. Our urology asset, as we referred to as 1902, is in development as a potential weekly formulation of an auto-injector administered product.

We hope to get feedback from the FDA at a pre-IND meeting later this year and expect to initiate a first-in-human study in the first half of 2021 and follow that with an IND filing in the second half of 2021. While these internally developed assets represent potential future growth drivers, we also have a robust commercial and development pipeline with our partners that we believe are underappreciated opportunities. With that, let me now transition over to our partner business on slide eight, which is also a driver of our overall growth. First and foremost, the success of Teva's generic EpiPen and its contribution to our growth this quarter is a testament to the multiple shots on goal we have with our partner business.

Even with the pandemic, we are pleased to see Teva recently garner a 48% market share of the EpiPen market, which is their goal to reach nearly approximately 50% market share split with Mylan's EpiPen. Their expertise and our expertise in delivery technology and support we provide our partners allows Antares to share in their success with attractive royalties on top of cost-plus margin for the device itself. Teva also recently launched generic teriparatide in 11 European countries, Canada and Israel. Teriparatide is a drug-device combination used for the treatment of osteoporosis and represents the first commercialization of our multi-dose pen platform in Europe.

The international approval and launch of generic teriparatide with another milestone achievement in our collaboration with Teva, but we also remain eager for the potential U.S. approval, given the more significant revenue opportunity in the U while we have previously supplied prelaunched product at Teva, we are unable to provide any additional insight into the potential regulatory approval in the U.S. at this time. Let me also briefly comment on our partner product, Makena. As AMAG announced last month, in reaction to notice from the FDA proposing to withdrawal Makena from the market, first and foremost, the product is still in the market, and AMAG expects Makena will remain on the market for the foreseeable future. AMAG has requested a hearing with the FDA, and it will be the FDA's decision whether to grant their request for a hearing. According to their recent disclosures, this process can take months.

And during this time, we will continue to supply the Makena product to AMAG, which is not currently a contributor to our growth. Turning now to some of our development programs with our partners. We remain excited to continue to work on the development of the selatogrel rescue pen with Idorsia. This lateral rescue pen would deliver potentially a fast active P2 Y12 antagonist and be self-administered at the onset of symptoms to stop a suspected heart attack and preserve heart function for patients who have previously had in MI. We have completed initial usability and reliability studies for our QuickShot device, while Idorsia prepares to conduct a clinical bridging study, where we have delivered them the clinical devices to initiate.

Assuming a successful bridging study in the coming months, we are enthusiastic for Idorsia to initiate their global registration trial next year, given the potential importance of this product as well as the significant market opportunity. For our development program at Pfizer, we continue to make good progress on this project for an undisclosed rescue pen. We anticipate that we will be able to provide a more definitive time line on its development in the near future. Regardless of the lack of detail we are able to provide right now, we believe the Pfizer program also represents another large market opportunity for the company.

With that, I'll hand the call over to Fred to discuss the financials.

Fred M. Powell -- Executive Vice President and Chief Financial Officer

Thanks, Bob. Good morning, everyone. Let me reiterate Bob's enthusiasm for the strong third quarter and nine months to date financial and operating results we reported this morning. During the third quarter, our total revenue growth grew by more than 24% sequentially from the second quarter of 2020 to $40 million, and we reported net income of $5 million or $0.03 per share, beating street expectations for both revenue and net income. In addition, both our net revenues and net income for the quarter represent the highest amount in the company's history. So let me now provide a more detailed review of the financial results for the third quarter and nine months ended September 30, 2020, starting on slide number nine.

The total revenue generated from product sales, license and development activities and royalties was $40 million for the three months ended September 30, 2020, an increase of 17% compared to $34.3 million in the same period in 2019. For the nine months ended September 30, 2020, total revenue was $105.5 million, which represents a 23% increase from $86 million for the comparable period in 2019. Product sales were $28.9 million for the three months ended September 30, 2020, representing a 17% increase compared to the same period in 2019. For the nine months ended September 30, 2020, product sales were $80.7 million, representing a 27% increase from the comparable period in 2019. Sales of our proprietary products, XYOSTED and OTREXUP, generated revenue of $15.8 million and $43.2 million for the three and nine months ended September 30, 2020, an increase of 38% and 71% as compared to the three and nine months ended September 30, 2019.

The increase in proprietary product sales for the three and nine months ended September 30, 2020, compared to the three months and nine months ended September 30, 2019, was attributable to the continued growth in sales for the XYOSTED. Partnered product sales were $13.2 million for both the three months ended September 30, 2020 and 2019 and $37.5 million and $38.4 million for the nine months ended September 30 in 2020 and 2019. The net decrease in sales of partnered products for the nine months ended September 30, 2020, as compared to the same period in 2019 is attributable to $5 million in increased sales of needle-free devices to Ferring and $2.8 million in prelaunch one of these generic teriparatide devices sold to Teva.

These decreases were offset by an increase in sales to Teva of their generic EpiPen auto injectors. Remember that the company previously announced the divestiture of the needle-free device of Ferring in 2019. Licensing and development revenue was $4.3 million and $8.8 million for the three and nine-month periods ended September 30, 2020, as compared to $1.2 million and $4.4 million for the comparable periods in 2019. The increase in-licensing and development revenue for the three and nine months ended September 30, 2020, was primarily from the Pfizer rescue pen and the Idorsia selatogrel rescue pen development programs. Royalty revenue was $6.7 million to the three months ended September 30, 2020, compared to $8.4 million for the same period in 2019.

For the nine-month period ended September in 2020, royalty revenue was $16 million as compared to $18.1 million for the same period in 2019. The net decrease in royalty revenue for the nine months ended September 30, 2020, was primarily attributable to a $4.1 million decline in royalties from AMAG on the sale of their Makena subcutaneous auto-injector, which was then partially offset by an increase in royalties from Teva on their sales of generic EpiPen. Gross profit was $23.5 million and $21.2 million for the three months ended September 30, 2020 and 2019. and $61.4 million and $49.6 million for the nine months ended September 30, 2020, 2019. The increase in gross profit was primarily attributable to the increase in proprietary product sales.

Our total operating expenses decreased to $17.6 million for the third quarter of 2020 compared to $19.2 million in the comparable period of 2019. Total operating expenses for the nine months ended September to 2020 decreased to $53.9 million as compared to $54.2 million for the comparable period in 2019. The decrease in operating expenses for the three and nine month period of 2020 as compared to the same period in 2019 was primarily attributable to a reduction in sales and marketing costs incurred as a result of the various stay-at-home orders and travel restrictions related to COVID-19. Net income was $5 million or $0.03 per share for the third quarter 2020 compared to a net income of $1 million or $0.01 per share in the same period of 2019.

Net income was $4.8 million or $0.03 per share for the nine months ended September 30, 2020, as compared to a net loss of $6.7 million or $0.04 per share in the comparable period in 2019. This quarter also represents the fourth out of the last five quarters where we have reported positive net income. Finally, we have a strong balance sheet that we believe can support our growth initiatives. As of September 30, 2020, cash, cash equivalents and short-term investments were $52.2 million compared to $45.7 million as of September 30, 2019. We have generated more than $14 million in cash from operations for the first nine months of this year, which is a $24 million improvement from a cash burn of almost $10 million in the same period last year.

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

Robert F. Apple -- President and Chief Executive Officer

Thanks, Greg. In closing, we delivered outstanding quarterly results with record revenue, profitability, significant cash generation and continue the upward momentum that is indicative of the strength of our organization. We strongly believe our diversified business provides sustainability and will continue to advance and support our future growth as reflected on slide 10. The while our partnerships with Teva, Idorsia and Pfizer remain dedicated to the advancement of their pipeline, we also have an expanded product portfolio with NOCDURNA it now represents another lever of growth beyond XYOSTED.

As we expect to continue to outperform, we will look for additional opportunities to further enhance our proprietary portfolio. We believe we are building a rapidly growing business for our shareholders that is not reflected in our market value. As epidemic continues to affect how we do business, I appreciate the dedication of our employees as we effectively navigate a world that has obviously changed. Operator, you can now open the line for questions.

Questions and Answers:

Operator

[Operator Instructions] And our first question comes from Anthony Petrone of Jefferies. Please go ahead

Anthony Petrone -- Jefferies -- Analyst

Thank you. And good morning. Congratulations on a good quarter, and I hope everyone is going well. Maybe to start with Bob or Pat, maybe dig into NOCDURNA a bit and the detail was helpful here this quarter. And so maybe we can review how many urologists at the moment are writing for NOCDURNA? What is the ultimate target in terms of penetration in the Phase I rollout? And again, what is the synergy, if you will, in expanding throughout all of the prescribers that are currently writing for XYOSTED? And the, I'll have a few follow-ups.

Robert F. Apple -- President and Chief Executive Officer

All right. Well, I'll let Pat handle that question. Pat.

Patrick M. Shea -- Senior Vice President of Commercial

Yes, sure. Thanks, Anthony. So right now, we have, from a urology perspective, around 2,100 targets that we're actually physically calling on or making calls on either virtual or live. About 1,900 of those are also not during a targets. One of the things we want to remember that the volume of NOCDURNA from a prescription perspective somewhere around, in total, about 500, 550 prescriptions per month, which gives us a good base, all coming from this urology group to kind of start building that back up over the next couple of months. So from our standpoint, we look at XYOSTED primary target or a primary call and then NOCDURNA a secondary call with that urology group that I just mentioned.

Anthony Petrone -- Jefferies -- Analyst

Okay. And maybe a little bit of press you a little bit there in terms of how many are currently writing for NOCDURNA, and it sounds like the target is to get to 1,900. So what is the delta? And maybe a bit of history on why under Ferring, it was under-invested and why perhaps it's settled in this 500 to 550 prescription per month range? And really the path to the upside? Is it more DTC marketing? It looks like coverage, Tier three coverage is in place. And so tactically, what is the plan to expand the monthly prescription count?

Patrick M. Shea -- Senior Vice President of Commercial

Yes, sure. So I'll answer both of those components. From a strategy perspective, as we kind of looked at this brand. It was clear that Ferring strategically was kind of moving out of the urology space for a number of different reasons, and therefore, did not put a robust effort behind the product. So with that said, we feel that more effort in a couple of different areas is going to restoke the growth. Number one, we talked around -- talked a bit around the sales force focus from an execution standpoint, carving out this group of urologists, where we feel, a, we have a presence because of XYOSTED, and we have a ton of relationships where we feel pretty confident that, that's going to open up a lot of doors for us. And therefore, a good crossover of patients, overactive bladder patients, BPH patients, nocturnal polyuria patients, all within that practice that we're going to have access to.

Second, we feel pretty bullish on the fact that we have to put into place educational efforts, both to prescriber and to the patient and that's come in the second wave, where we have more time to prepare and execute that starting in the first quarter. And then the third piece, which is a little bit of an offshoot of that second one is really activating the patient. This is a highly underdiagnosed and undertreated patient population. Perhaps some misdiagnosis with overactive bladder and/or BPH. So we feel reaching out through a very aggressive social media campaign, starting again in the fourth -- or I'm sorry, the first quarter of next year is going to be pretty important. So it's call activity with a very focused group of prescribers. It's a robust educational effort, both to physicians and prescribers -- or I'm sorry, physicians and patients and also an assertive effort on the social media front to patients.

Robert F. Apple -- President and Chief Executive Officer

And Anthony, I...

Anthony Petrone -- Jefferies -- Analyst

That's very helpful. Yes, go ahead.

Robert F. Apple -- President and Chief Executive Officer

If you take a step back, we -- strategically, this fits perfectly with XYOSTED. People who have hypogonadism or low testosterone also have nocturia. And so it could be a dual patient for us from a product standpoint. But importantly, and I don't want to underscore this or not mention it. Our sales organization has done a fantastic job with XYOSTED launch. And this is a product in urology that we believe they can have impact with the physicians and for patients.

And so we felt that we couldn't get a better fit for an asset relative to where we are today in the therapeutic area. So we're really excited about the relaunch or the launch for us of NOCDURNA, and we think the team is going to do an outstanding job. But again, the fit was probably one of the best we could possibly hope for relative to our call points. The type of products that we currently sell.

Anthony Petrone -- Jefferies -- Analyst

Very helpful. And now two quick follow-ups, and I'll hop back in. One would be on XYOSTED, Bob, just maybe a reminder of -- you mentioned sort of secondly COVID that was a driver in getting existing IM patients over the subcutaneous XYOSTED. And so is there a way to quantify how many IM patients are still out there and you think you see a reacceleration because of the COVID case counts jumping up? And then a quick one for Fred would be. Just a reminder on the timing of payments from Teva around generic Forteo, both on the device side and the royalty side, how that will be structured as we look into latter part of this year and into '21? Thanks again.

Robert F. Apple -- President and Chief Executive Officer

So Anthony, on the -- on XYOSTED, you know, we continue to -- for our sales team continues to get more and more in-person presence with the physicians with detail calls. But to be honest, we're still not at pre-COVID levels for new patients. Patients still aren't coming in as much as they were in the past. But we are almost at those pre-COVID levels as far as new patient starts. So we're really starting to see that building of the product. And again, in October, which we haven't mentioned, it was our best month-to-date as far as prescriptions are concerned. So we're seeing a nice uplift of our prescriptions even though they were growing all along during COVID.

But importantly, when we look at those new patient starts, a very large percentage of those are switches. And that's an important thing for us because the switch business, there are seven million prescriptions a year for testosterone replacement therapies, 70-plus-percent are IM injections. And so we're just really starting to scratch the surface of getting those patients -- those IM patients to start using XYOSTED. And that's where a lot of our success stories have been over the pandemic is really, those patients who are going into the office, getting their IM injections. They get put on XYOSTED because they can use it at home, it's easy to use. It's virtually painless once a week injection. And they come back to the doctor and they say that the product is so much superior to what they were used to with the IM products. So that's a big key component for us on our future growth.

And what Pat mentioned during his talk is really which is getting a deeper writing and more writing from those same physicians that we already get prescription for XYOSTED four. We got early on we got a lot of new patients to therapy. That was really where the growth of our business was coming from. And now those doctors are switching their patients who are on IM injections. And the switch is the hardest thing to do in with physicians, if they think that patients aren't complaining if they're not -- if they seem satisfied, they're hesitant to switch. But now we're seeing more proactive switching being done because of COVID and because of the messaging that our team is bringing to the physicians. And so we expect that trend to continue. And we really look forward to, say, continue on its growth trajectory going forward. Fred, if you want to take the second question?

Fred M. Powell -- Executive Vice President and Chief Financial Officer

Sure. Good morning, Anthony. Regarding generic Forteo, we're waiting to get the first royalty report for international sales. We have the agreement with Teva where we would actually receive -- where we do receive a royalty report 45 days after the end of the quarter. And since Teva announced that they are at selling the product in the third quarter of 2020, we would expect that report to come in the middle of November. We don't know what that amount is for the royalty. But once we actually have the royalty report, we would then receive a payment after that period of time. Regarding device sales, we would -- we have sold the prelaunch materials to Teva in 2019.

In the future, when we have additional sales, we will manufacture the devices and sell them to Teva with at the time of shipment to Teva will recognize the revenue for those devices. And then it just follows their standard terms of payment to us. So nothing unusual there in the arrangement. But as I said, you got 45 days after the end of a quarter, we'll get the royalty report the quarter that just ended, and then we'll get payment for those royalties after that.

Anthony Petrone -- Jefferies -- Analyst

Very helpful. Thanks again. I'll get back in queue.

Operator

Thank you. The next question comes from David Amsellem of Piper Sandler. Please go ahead.

David Amsellem -- Piper Sandler -- Analyst

Hey. Thanks, guys. Just a few questions. So first on XYOSTED. And I joined late, so I apologize if you said -- if you talk to this. But can you say how many of your reps are actually in the field now versus virtual? And what's your expectation for your reps, more of your reps getting into the field? That's number one. Number two, can you talk to the potential benefit of that XYOSTED can gain from fewer in-office visits? In other words, are you still pulling more and more patients from, say, Testopel, an intramuscular testosterone injections because there's fewer offices? That's number two.

And then lastly, on business development, can you just talk about how aggressive you intend to be to add more assets to leverage your commercial infrastructure? And are you also looking at clinical-stage assets in addition to commercial stage assets like NOCDURNA? Help us understand your thought process there. Okay. Thanks.

Patrick M. Shea -- Senior Vice President of Commercial

David. Thanks, David.. This is Pat. Yes, just to address the first part of the question. Right now, all 100% of our sales representatives are active in the field. It just varies across the country in terms of their ability to get in front of physicians for face-to-face versus virtual. We have seen an improvement over time. The last data point we looked at was at nationally on average, about 60% of our calls have returned to an in-person dialogue with providers. We're watching that really closely because it does vary from territory-to-territory and in some cases, zip code to zip code, but we've seen a nice improvement over time, and we'll just keep an eye on that as things evolve over the next couple of months.

From a, I guess, a switch perspective relative to where we feel the brand has a great opportunity to perhaps gets place other types of products. Bob did talk earlier about some of the targeting relative to IM injections and the fact that with XYOSTED, we don't have to have folks come in on a weekly basis to receive those. So that is definitely an area that we continue to have conversations with physicians about and the benefits of XYOSTED versus that type of delivery.

And then Testopel was another area that over the summer, the team had some sub-targeting types of activities where we're able to look at Testopel targets and encourage those folks to switch to XYOSTED. And we had some success over the summer, doing that as well. And we'll continue to look at that throughout the fall.

Robert F. Apple -- President and Chief Executive Officer

Great. And then David, on your business development, how aggressive we will be. We continue to be very aggressive in looking at multiple assets. And then what we're doing from a 30,000-foot view strategically, we're focusing on assets that are in endocrinology or urology because that's where our 90-person sales team is that is where they're having a lot of and we want to build off of those relationships. The value of the sales team, besides what they're doing for XYOSTED and OTREXUP and now, hopefully, NOCDURNA, is that is leveraging those relationships that they have with the physicians we're one of the few urology, endocrinology sales teams out there, and we have really good access. And so when we look at business development opportunities, we're really trying to focus in on those areas.

So we have a team that's completely dedicated to looking at business development. We looked at assets that are already on the market like NOCDURNA we looked at assets that are under review at the FDA. And for various reasons, we either are moving forward or we've decided to pass on those opportunities. But it's a key component to our strategy going forward is to build in additional products our product portfolio.

Now when we look at clinical stage versus marketed products, I think what we're trying to do is get more products for the bag like we did with NOCDURNA so we can build the revenue, so we can build the value very near-term and then really start to look at earlier stage assets as we get more and more success with the revenue growth and with our sales team so forth. So when we look at earlier assets, I would say that we want to really be past proof of concept. We want to be past Phase II, we want to be in a Phase III or know that the data on one or two studies have been positive. Clearly, as we grow, our ability to go further into the -- further downstream or further into the pipeline, the earlier stage assets, we'll also grow.

And so all I can say is our business development approach is very focused. Near-term assets right now, we're looking at assets that are already been either -- they're under review, and they're waiting for. And the companies may not be committed 100% to launching it themselves and/or things where -- or assets where they've had a one positive Phase III study and now the second. So we cover the gamut on opportunities because we want to make sure that we continue to fuel the growth of our portfolio through internal development as well as external corporate.

David Amsellem -- Piper Sandler -- Analyst

So let me sneak in a follow-up question, Bob. So as you add assets or look at add assets, would you consider monetizing any of key royalty streams in order to not just boost your cash position, but also gives you more flexibility in terms of seeking assets for your commercial portfolio?

Robert F. Apple -- President and Chief Executive Officer

Yes. We look at all different opportunities, whether it's through debt or through using our revenue streams like our royalty revenues, which are pretty robust. Yes, because we want to do this in the best way possible for the company and for our shareholders and try to limit any type of dilution. So when we look at opportunities, depending on the size of them, it really depends on the avenues in which we look at how we're going to finance those. And so royalty streams is clearly something we have as a company, and they have a lot of value, particularly with ones that are on market like EpiPen and others. And then we also obviously have a pipeline of royalty opportunities that also can be looked at.

So David, we do look at the various ways to finance it and we on says, when we initially assess an opportunity, how we're going to finance it is not part of the equation. We want to make sure it's the right asset. It's going to fit the bag. It's going to fit for the company. And then we determine how we can -- and then we can determine how we fund it. And what I can say is we haven't turned any down at this point because of the need to generate cash or going need to finance or the need to sell a royalty stream. We've really been focused on assets we think that will work and do well for our company and our sales team.

David Amsellem -- Piper Sandler -- Analyst

That's helpful. Thank you.

Operator

Thank you. Our next question comes from Stacy Ku of Cowen and Company. Please go ahead.

Stacy Ku -- Cowen and Company -- Analyst

Good morning. Thanks for taking my questions. Appreciate all the details on XYOSTED, this one for me. A point of clarification on the prepared remarks. As we think about Q4 and 2021, could you quantify how we should be thinking about Makena and EpiPen dynamics what can you disclose in terms of the expected EpiPen device demand from

Robert F. Apple -- President and Chief Executive Officer

Sure. So for EpiPen, what we can say is that Teva had a really strong Q3, which obviously translated into a strong Q3 for us for devices and royalties in that. They had a roughly a 43% market share at the end of the quarter that's going up to about a 48 -- 48% market share in the last month or so. They did about according to Symphony they did about 293,000 units in Q3, which was up from 176,000 units in Q2. So clearly, there was a back-to-school increase.

But overall, the market itself is back-to-school was impacted by COVID. Year-over-year, the market was down 22% in the third quarter for both the Mylan product, Teva's product and the overall EpiPen market, which also includes another rescue pen from another company. But when you look at it Teva grew 24% in that period.

So they really had a lot of success in taking market share from both of those products. So in a down market, Teva did a great job. Going forward, so far, the October was very strong, and I think it would be more consistent with previous Octobers. And with the pandemic, the only thing I could say is we'll keep an eye on the market, but people need EpiPens. It doesn't go away if they're at home or if they're outside or at work. And so the only impact that we can't quantify is if the -- if there are tremendous spikes going forward and things get shut down again, does access to the product get change, does -- do people if there's a long drawn-out impact of COVID, it does -- the cost of the product become a problem for patients. But right now, we expect that EpiPen to continue to have a solid Q4 as well as going into 2021, particularly with the way that Teva has been performing.

Stacy Ku -- Cowen and Company -- Analyst

And then a follow-up on Makena. Clarify?

Robert F. Apple -- President and Chief Executive Officer

So Makena, the only thing we could say is that we continue to provide product to AMAG, who work for patients and for physicians. The sales revenue or the product revenue that were shipped or the private amounts that we're shipping are pretty with what they were in Q3. So we haven't seen a dramatic shift relative to the recent request by the FDA to pull the products. And only thing we can do is continue to provide product to AMAG during the review process. AMAG's been very public about their intent to challenge the FDA's position on Makena.

And so they have publicly stated that the process will take some time. Don't know exactly how much time that will take. But we know -- we're pretty confident in Q4, we'll continue to supply product. And then beyond that, it really function of how AMAG responds to the FDA. But again, their public statements have been that it -- the -- in a period of time that it takes could be extended into next year for sure. So continues to buy product.

Stacy Ku -- Cowen and Company -- Analyst

Very helpful.

Robert F. Apple -- President and Chief Executive Officer

Thank you.

Stacy Ku -- Cowen and Company -- Analyst

Thank you.

Operator

Thank you. We take our next question from Elliot Wilbur of Raymond James. Please go ahead.

Elliot Wilbur -- Raymond James -- Analyst

Thanks. Good morning. First question for Bob and Pat. I want to go back to the commentary provided around the synergies in terms of the call pattern with respect to NOCDURNA and XYOSTED, obviously, a significant amount of overlap with existing XYOSTED prescribers. But I wanted to ask the question in inverse manner. I mean, there's a fairly large prescription base out there in terms of products prescribed off-label for nocturia.

I'm not sure if you've really had a chance as it yet to kind of dig into that. But wondering if you have sort of whether or not that may provide an additional opportunity in terms of being able to leverage XYOSTED into urology practices that may be relative under prescribers of XYOSTED, but are fairly high prescribers of products for nocturia, not just NOCDURNA.

Patrick M. Shea -- Senior Vice President of Commercial

Yes, sure. I'll answer that. In the first phase, we're clearly staying focused on that core group of XYOSTED prescribers that have a strong overlap with NOCDURNA. As we move into Phase II we will certainly look at broadening that approach. Yet, we want to make sure we're doing it in a way that's super responsible to the flagship XYOSTED, and we're not going to get ourselves distracted and of course, driving that brand. So we have started to look at that, and we'll start to refine that as we look into kind of first quarter of 2021.

Robert F. Apple -- President and Chief Executive Officer

Yes. I think too, Elliot, if there is a segment of doctors that are heavy prescribers for Nocturia. We can look at business development to see if there are other companies that are covering that and look at a co-promote whether they take NOCDURNA into their bag or XYOSTED or so forth. So we can explore other opportunities if see a segmentation that we're not covering with our current footprint or we could always add reps if we see that there's value. At this point, our plan is not to add reps to cover NOCDURNA. But as we learn more and more about nocturia, which is an area that is -- affects a lot of patients, about 40 million people in the U.S. had essentially getting up at night more than once to urinate. And obviously, as you age, there's more and more patients that suffer from it.

So we think that if this turns out to be somewhere where we want to expand through corporate development or through sales force size, we obviously want to maximize the opportunity. But we're really just starting to understand how our current doctors are writing it, what the value proposition is from a patient standpoint, and we'll try to maximize that as best we can, like we are with XYOSTED.

Elliot Wilbur -- Raymond James -- Analyst

Okay. Thanks. And then I want to ask a follow-up question of Pat as well. Just want to get sort of your high-level observations on the current strategies and game plans around both XYOSTED and OTREXUP, obviously, kind of on the outside looking in, with respect to XYOSTED, it would seem that things are going relatively well and the message would be sort of -- if they broke, don't fix it, but obviously, there's things that you probably see there that may be further optimize and similar question for OTREXUP as well, whether or not you think there's anything that can be there, done there to sort of accelerate conversion of what is a very large methotrexate market but has not necessarily converting to the injectable form to the extent originally expected?

Patrick M. Shea -- Senior Vice President of Commercial

Yes, sure. So I'll start with XYOSTED. Some key observations, and we touched on this in the overview. I think that the part around focusing the effort in that core group of physicians who have written the brands since launch, right? I think it's 6,500, it may be even up to 6,800 most recent data. We really feel that, that's a great opportunity for us to go deeper into prescribing with that group. And we've subsegmented that group into three or four segments, and we're deploying our field force against those folks. So going deeper with those who have already tried the brand, we believe, is a great opportunity.

The second piece is we've only scratched the surface from a digital social media standpoint. And looking into next year, perhaps be more assertive in a space there. And then the third piece, as was alluded to, as we evolve in this new environment, and number one focus is face-to-face calls. We're also looking to evolve our virtual platform over time, right, because we've done a great job from the start. Everybody is doing in the business is catching up to that. And now we want to try to start evolving those tools and those tactics in order to have this hybrid dual approach with physicians. So those are three areas around XYOSTED. OTREXUP, we have a small and very focused group of prescribers as well. And the key right there for us is to maintain that focus in that group and see what we can do to go deeper with that core set of physicians.

More to come on OTREXUP. I think we're obviously -- we see it as an important brand. We're really dialing in a very focused effort there. But we're spending the majority of our time making sure we can drive and sustain robust growth for XYOSTED.

Robert F. Apple -- President and Chief Executive Officer

I think that when we look at it from a strategic standpoint, Elliot, when we look at the upside of XYOSTED versus any upside of OTREXUP, XYOSTED clearly dwarfs OTREXUP in the opportunity. so we don't want to divert the attention of our sales team. And even if you were to add sales team members, and you still don't want to divert them from the flagship product of XYOSTED. And so we're looking at how to improve OTREXUP's performance. But one thing I'll remind everybody, it's a profitable product for the company. It only is right now about 15% of our sales call focus or about 20%, but now not down, will go down about 15%. So we believe that we're doing the right thing by putting all the energy behind XYOSTED and then more energy around NOCDURNA going forward because we think that both of those assets have much more upside than OTREXUP.

But overall, again, OTREXUP is profitable. It's still a valuable asset. Patients still use it. Doctors still use it. And I think it will continue to be utilized for rheumatology for rheumatoid arthritis on a go-forward basis. And we'll see what to try to get more out of that product as we look ahead.

Elliot Wilbur -- Raymond James -- Analyst

Okay. One last question for Fred, any directional commentary you can provide with respect to operating cash flow and operating income trends in the fourth quarter, given the incremental investment required to support the relaunch of NOCDURNA? I understand it's going to be relatively small, but any directional commentary there would be helpful. Thanks.

Fred M. Powell -- Executive Vice President and Chief Financial Officer

Sure. Looking at for the fourth quarter, clearly, our biggest drivers are, XYOSTED as well as EpiPen. And so we continue to see the same level of support investments, operating costs and margins coming through for both of those products. When it comes to unusual expenses or anything larger in the fourth quarter as opposed to the third quarter, looking at it where we stand now, I don't see anything. Clearly, we're still looking at the quarter as momentum from the third quarter building into the fourth quarter. Historically, we've seen our strongest quarters have been our fourth quarter. So we're looking to continue that as we end the year. One thing about the margins we saw going forward, clearly, proprietary products have the highest margin. Next year, we will continue to see that with NOCDURNA that actually has a better margin than our auto-injector. So we would hope that would drive the margin piece of our business when it comes to the lower-margin products that's on the partner side.

And the third quarter had significant development dollars, significant development dollars. 50% of our year-to-date dollars for development came in the third quarter is really the Idorsia's lateral pen as well as the Pfizer product has started to really ramp-up in terms of the work being done and so we would expect that component to continue to go into the fourth quarter in 2021. So you almost have competing pieces, if you will, with higher proprietary margins, plus the partnered products in and so overall, I think when you're taking a look at the business, I think we will see margin improvement continue in 2021 from where we are right now because of the focus on XYOSTED and NOCDURNA and seeing both of those have significant growth.

Operator

Thank you. Our last question comes from Matt Kaplan of Ladenburg Thalmann. Please go ahead.

Matt Kaplan -- Ladenburg Thalmann -- Analyst

Hi guys, thanks for taking the questions. And congrats on the progress during the quarter. I wanted to zero in on XYOSTED for a minute. And can you give us a little bit more detail in terms of what your learnings have been as you continue to launch the product and commercialize the product into the COVID-19 pandemic situation as you pivoted to kind of more virtual sales organization? What are the learnings that -- and systems that you put in place that you I think you can expand or continue going forward to continue the momentum and growth that in that and even as we kind of exit the pandemic of sometime next year?

Robert F. Apple -- President and Chief Executive Officer

Okay. Matt, I'm going to give that one to Pat.

Patrick M. Shea -- Senior Vice President of Commercial

Thanks, Matt. Yes, I mean, it's a great question. And we've benefited over the course of the last six months from the extensive learnings from the virtual platform that we launched rate out of the gate, right? And our systems, I think, are very sophisticated in terms of what we're able to capture in terms of rep activity. And we have learned that those folks who are balancing the effort of virtual calls with face-to-face calls are doing very, very well. So they have embraced the virtual platform, getting out to prescribers in a safe and effective way where they can for face-to-face.

But when they can't, they're really pushing hard with a number of virtual tactics. And so what we've done in this fourth quarter, in addition to fine-tuning our targeting strategy to that 6500 group of writers to go deeper. We've also given guidance to our sales force in terms of the types of calls and the number of calls, both face-to-face and virtual. So we've taken those six months of learnings and now have tactically applied that across the entire country with all 79 representatives.

So there are certain virtual tools that seem to play out better than others. Anytime we have a chance to do a face-to-face virtual lunch -- or I'm sorry, virtual lunch-and-learn with a provider that's always front and center. E-mail traffic is pretty high. Text messaging that's pretty high. And also letter campaigns and email campaigns that allow providers to request clinical information, promotional information, patient information, co-pay card information, they're all in play. And we see the variability across the country in terms of who's using it and who's not. And as I said, we're giving that guidance to our team for fourth quarterquarter.

Robert F. Apple -- President and Chief Executive Officer

And I think that Matt, I'd comment to the pharmaceutical industry was historically a little slow in adopting technology in really how you change the business. And what I would say is I don't see the industry going back, meaning that if they've been successful that we've been in a virtual platform, we're absolutely going to continue to use a virtual platform post COVID. We have seen it is more efficient. And I think that once people are comfortable with technology, and they see that you can get your job done and actually can do a better job with it just becomes part of the normal process going forward.

And clearly, virtual detailing everything before COVID, you had to be in front of the doctor, how you be in front of the doctor. Well, now we're learning, and I think as an industry, we're learning that you don't have to be in front of the doctor every single time. You can be more efficient by doing a blend. And so I think we're going to get more calls from our reps. We're going to get more productivity from our reps by using a combination of the virtual platform as well as in-person, right?

There's always that element of that touch point that I think is key for product success and for -- to be top of mind of a doctor when they are going to write a prescription. But in the end, I think that going forward, we're going to definitely see a hybrid of how people detail. And I think it will be great for products like XYOSTED. And in fact, particularly in year two, year three of the launch and continue to get momentum of being able to focus on more doctors and more calls by using both.

Matt Kaplan -- Ladenburg Thalmann -- Analyst

Great. That's very helpful. Thanks for taking the question.

Robert F. Apple -- President and Chief Executive Officer

Thank you.

Operator

[Operator Closing Remarks].

Duration: 66 minutes

Call participants:

Tram Bui -- Investor Relations

Robert F. Apple -- President and Chief Executive Officer

Patrick M. Shea -- Senior Vice President of Commercial

Fred M. Powell -- Executive Vice President and Chief Financial Officer

Anthony Petrone -- Jefferies -- Analyst

David Amsellem -- Piper Sandler -- Analyst

Stacy Ku -- Cowen and Company -- Analyst

Elliot Wilbur -- Raymond James -- Analyst

Matt Kaplan -- Ladenburg Thalmann -- Analyst

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