Antares Pharma, Inc.

ATRS Details

Antares Pharma, Inc. (NASDAQ: ATRS) is a specialty pharmaceutical company engaged in developing and commercializing self-administered injectable pharmaceutical products leveraging innovative drug delivery auto-injector technology. The company has a portfolio of proprietary and partnered commercial products under development and substantial strategic collaborations with pharmaceutical corporations such as Teva Pharmaceutical Industries, Ltd., Pfizer Inc., and others. Its US Food and Drug Administration (FDA) products include XYOSTED, OTREXUP, and NOCDURNA. 

Latest News:

• License Agreement for TLANDO: On October 18, 2021, ATRS signed an exclusive license agreement with Lipocine Inc., a clinical-stage biopharmaceutical firm, for TLANDO, oral medicine for testosterone replacement therapy (TRT) in the United States. Under the agreement, Lipocine received an upfront payment of USD 11.0 million and is entitled to future milestone payments of up to USD 10.0 million and tiered royalty and commercial milestones depending on the net sales of TLANDO.

• Phase 1 Study for ATRS1902: On September 30, 2021, ATRS commenced the Phase 1 research for ATRS1902 in treating adrenal crisis. The research program backs a proposed indication for treating acute adrenal insufficiency, also known as an adrenal crisis, in adults and adolescents, leveraging a novel patented auto-injector platform to deliver a liquid stable hydrocortisone formulation.

Q2FY21 Results:

• Double-Digit Growth in Topline: ATRS reported a YOY growth of 38.89% in its total revenues to USD 44.98 million in Q2FY21 (ended June 30, 2021) compared to USD 32.38 million in Q2FY20, attributable to expansion in sales of XYOSTED.
• Expansion of Net Income: The company's net income increased to USD 4.42 million in Q2FY21 from USD 2.18 million in Q2FY20.
• Cash and Debt Position: As of June 30, 2021, the company had cash and cash equivalents of USD 45.13 million and total debt of USD 26.15 million.

Gross and Expenses Margin (Source: Q2FY21 Earnings Presentation, August 05, 2021)

Risks:

• Customer Concentration Risk: In FY20, ATRS' largest customer, Teva Pharmaceutical Industries, Ltd., accounted for ~40% of the total revenue. Further, its top three wholesale distributors, McKesson, AmerisourceBergen, and Cardinal Health, represented 12%, 12% and 11%, respectively, of the company's total FY20 revenue. Hence, the loss of any of these key customers could hurt its financials.
• Dependence on Third Parties: ATRS is dependent on third-party service providers such as Cardinal for various requirements, including product distribution, contract administration, storage, and transportation, and others. Any failure on the contractual obligation by vendors could harm the company's operations.

Outlook:

• Revenue Estimates: As of Q2FY21, ATRS expects its FY21 revenue to range between USD 175 – 200 million, thus realizing YoY growth of 17% – 34%.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation   

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

ATRS Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

ATRS' share price has decreased 16.25% in the past three months and is currently trading close to the mid-band of its 52-week range of USD 2.70 to USD 5.07. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 53.78. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 4.49.

Considering the correction in the stock price, growth prospects, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 3.69, up 4.10% as of October 29, 2021, 1:16 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.