Antares: Phase III Trial Results For Libi-Gel Are Imminent

| About: Antares Pharma (ATRS)

Investment Overview

One of the eleven products that Antares (AIS) has in late stage development is Libi-Gel for treating female sexual dysfunction based on testosterone replacement. This product is licensed to BioSante (BPAX) for the U.S. and certain foreign markets while Antares retains rights for Europe.

The Phase III trial results for Libi-Gel are expected to be reported at any time. There is strong evidence that testosterone replacement will treat some forms of sexual dysfunction in women. The Intrinsa testosterone patch developed by P&G (NYSE:PG) was judge to be effective by a vote of 14 to 3 in an FDA advisory committee meeting in 2004 and Intrinsa was approved in Europe. Moreover, there is substantial off-label prescribing of testosterone in the US.

There is good reason to think that the Phase III trials will be positive and I believe that this will be the case. However, unexpected outcomes can always arise with clinical trials and this always makes me anxious when a trial is about to be reported. Importantly, the gating factor for U.S. approval of Libi-Gel is a safety study requested by the FDA that will be completed in late 2012 that is looking at cardiovascular risk and the potential for increased cancer risk. Interim looks at this study have been encouraging and I think that this study will assuage the FDA’s concerns

I am assuming that Libi-Gel’s NDA is filed in early 2013 and approval is gained in early 2014. I estimate that the product will be licensed to a larger company in the U.S. and that marketing will begin in 2014. There is a large U.S. addressable market in the billions of dollars for Libi-Gel. However, I am projecting a modest takeoff in sales in the 2014 and 2015 period. My sales estimates are $20 million for 2014 and $40 million for 2015.

I think that my estimates are substantially below what both BioSante and Antares are expecting as well as what most investors are looking for. My conservatism is based importantly on the slow product launches that have become the norm in biotechnology. I also think that the educational effort will require time to make physicians and patients comfortable with the safety and efficacy of Libi-Gel.

There are strong arguments against my conservative posture. It can be argued that off-label prescribing could and should be quickly transferred to Libi-Gel if it is approved. With this assumption and because the off-label testosterone market is $300 million, it is possible to come up with much larger sales projections for 2014 and 2015.

In my sales projections for Antares, Libi-Gel is not overly important for 2014 and 2015 results. In the 2015 to 2020 time frame it could be of much greater importance. In the event of an unexpected failure or disappointment in the soon to be reported Phase III trials, I would expect investor disappointment and possibly a sharp drop in the stock price of Antares. I would be a buyer in this event and I would also to be a buyer if the trials are successful and the stock moves higher. The following table puts the importance of Libi-Gel into perspective as judged by my models.

Sales Projections for Antares Pharmaceuticals 2011-2015
All numbers are in ($000) 2011 2012 2013 2014 2015
Proprietary products
Injectable methotrexate 15,000 50,000
Self-injection product sales
Human Growth Hormone
Injector and consumables sales
TevTropin 4,145 5,918 8,107 10,802 13,344
Ferring HGH product 3,595 3,865 4,154 4,466 4,689
RJR HGH product 381 410 440 473 497
Sub-total 8,121 10,193 12,701 15,742 18,530
Vibex epinephrine injector 0 0 10,000 10,200 10,404
Vibex sumatriptan injector 0 0 2,493 2,543 2,542
Pen injector (NASDAQ:ANDA) product sales 0 0 0 0 0
Pen injector 505 (b) 2 product 0 0 0 0 0
Sub-total 8,121 10,193 25,195 28,485 31,476
Royalties from self-injection products
Human Growth Hormone
TevTropin 1,930 2,758 3,196 3,658 3,768
Ferring HGH product 174 178 181 185 189
RJR HGH product 23 24 26 28 30
Sub-total 2,127 2,960 3,404 3,871 3,986
Vibex epinephrine 0 0 1,800 1,836 1,873
Vibex sumatriptan 0 0 792 792 776
Pen Injector (ANDA product) 0 0 0 0 0
Pen injector 505 (b) 2 product 0 0 0 0 0
Sub-total 2,127 2,960 5,996 6,499 6,635
Royalties from gel technology
Elestrin 450 488 512 537 564
Anturol 0 2,000 4,000 5,500 7,500
Libi-Gel 0 0 0 900 1,800
Sub-total 450 2,488 4,512 6,937 9,864
Overall sales summary
Self-injection and gel formulations
Product sales 8,121 10,193 25,195 28,485 31,476
Royalties 2,577 5,448 10,508 13,436 16,500
Development revenue 3,626 3,500 3,500 3,500 3,500
Licensing revenue 8,728 1,000 1,000 1,000 1,000
Sub-total 23,051 20,141 40,202 46,421 52,476
Injectable methotrexate 15,000 50,000
Total Revenues 23,051 20,141 40,202 61,421 102,476
Click to enlarge

Source: SmithOnStocks

LibiGel for Female Sexual Dysfunction

Libi-Gel is the only product in Phase III development for Hypoactive Sexual Desire Disorder (HSDD), the most common condition leading to female sexual dysfunction. Antares developed a low dose testosterone gel and licensed it to BioSante for the North American, Israel and China markets; BioSante branded the product as Libi-Gel. Antares has rights to all of the clinical data created by BioSante and retains commercialization rights for the rest of the world. Antares will receive a 4.5% royalty on sales of LibiGel and also 25% of any partnering milestones that BioSante receives. BioSante will almost certainly partner the product as it lacks commercial infrastructure; Antares has indicated that it would prefer a worldwide partnership that would include its territories. Some of the obvious potential partners would be Pfizer (NYSE:PFE), Eli Lilly (NYSE:LLY) and Warner-Chilcott (NASDAQ:WCRX).

The introduction of Viagra changed the way that society looked at sexual dysfunction from an embarrassing condition that was not spoken about to recognition that it is a condition that can seriously impair quality of life and which can and should be treated. With this arose a large commercial market opportunity for treating male sexual dysfunction. However, there are no FDA approved counterpart products for females even though studies suggest that sexual dysfunction affects a greater percentage of women than men.

Investors should avoid the temptation to think of Libi-Gel as a female Viagra. Viagra and its competitors treat a distinct physiological condition in which the male is unable to obtain an erection. This can usually be corrected by increasing blood flow to the penis which is what Viagra does. Female sexual dysfunction is more complex and results from the interplay of a number of physical and psychological disorders. HSDD is probably the most common cause of female sexual dysfunction, but there are other prominent causes. The FDA defines HSDD as the persistent or recurrent deficiency or absence of sexual thoughts, fantasies, and/or desire for sexual activity, which causes marked distress or interpersonal difficulty.

The Rationale for Testosterone Replacement Therapy to Treat HSDD

Testosterone is involved in signaling the brain which leads to sexual arousal in women and also increases vaginal lubrication. Testosterone replacement can potentially restore sex drive in testosterone deficient women. However, there is a narrow therapeutic window so that too much testosterone can lead to side effects such as hair growth, deepening of the voice and clitoral enlargement.

The dose of Libi-Gel is about one tenth that of Androgel, the leading male testosterone replacement product. The Libi-Gel formulation produces less of a therapeutic spike in blood levels following application relative to patch and other dosage forms and also smoothes peaks and valleys of testosterone levels in the blood. Recent studies suggest that LibiGel raises testosterone in the blood to the same level seen in pre-menopausal women.

Proof of Concept for Libi-Gel

There is strong evidence that testosterone replacement in women who have below normal levels can favorably impact HSDD. Proctor & Gamble developed a testosterone patch called Intrinsa whose NDA was considered by an FDA advisory committee meeting in December of 2004. The committee voted 11 to 3 that the drug was effective. However, theoretical but unanswered concerns about the potential for long term cardiovascular safety and increased cancer risk resulted in a unanimous vote to not approve Intrinsa in the US. European regulatory authorities did not share this safety concern and Intrinsa was approved and is marketed in Europe.

Clinical Trial Program for Libi-Gel

The FDA requested a long term safety study for approval of Intrinsa in the U.S. Proctor & Gamble decided not to do this study, probably because management had decided to get out of the pharmaceutical business. BioSante saw an opportunity and decided to launch the safety study requested by the FDA at the same time as the Phase III efficacy studies.

BioSante should report the results of the pivotal Phase III BLOOM trials in the very near term. Based on the Intrinsa experience and the considerable off-label use of testosterone in HSDD, there are strong reasons to believe that these trials will show that LibiGel is effective and that short term side effects will not be an issue that will bar approval. The two Phase III BLOOM trials are identical in design, with 500 patients in each trial, randomized 1:1 to drug and placebo. The enrollment criteria specify surgically menopausal women (hysterectomy and bilateral oophorectomy) between the ages of 30 and 65. These trials are covered by an SPA.

The primary efficacy measure is the number of sexually satisfying results. The patient records the number of satisfactory sexual events (SSEs) each week in a diary. Satisfaction can only be judged on a yes or no basis. These diaries are submitted each week. The weekly results are then averaged to calculate the monthly frequency for sexually satisfying results. An eight week period before the beginning of therapy is used to establish the baseline of SSEs. After this, the patients are assigned to either Libi-Gel or placebo. The patients submit diaries weekly and there is a monthly medical visit to check on side effects. Patient enrollment is for six months. The SPA states that to meet the primary endpoint the SSEs in the last month of the trial has to show a statistically significant increase over the level established during the eight week run in period. While the SPA doesn’t state what numerical increase in SSEs would be considered clinically meaningful, BioSante believes that an increase in one event on a monthly average basis would be considered clinically significant which is in line with the data for P&G’s Intrinsa.

Based on the results with Intrinsa and the considerable off label use of low dose testosterone, there is very good reason to think that the Phase III trials will be successful. However, the gating factor for approval is success in the long term safety study for which I anticipate results in 2H, 2012. A Data Monitoring Committee has already taken five interim looks at data and in each case has recommended that the trial continue. This is an encouraging indication that the safety trial will be successful and result in an NDA filing in late 2012 or early 2013. If the efficacy and safety trials are successful, Libi-Gel will be approved in late 2013 or early 2014.

Estimating Market Size for Libi-Gel

Libi-Gel is targeted at women who have below normal levels of testosterone production. This condition naturally occurs as women age and especially as they enter menopause. Surgically induced menopause through removal of the uterus and ovaries also reduces testosterone production as the ovaries account for about 60% of testosterone production so that women with oophorectomies experience a decline.

An estimate of market size for Libi-Gel is very difficult because there are no approved products for HSDD that give an insight into market size. It is made still more difficult because HSDD is not well defined or broadly recognized as a disease condition. I have looked at four studies which suggest that the incidence of HSDD in surgically and naturally menopausal women ranges from 7% to 26%. In the 2006 Journal of Menopause, Dr. Sandra Leiblum estimated that 14% to 26% of surgically menopausal women and 9% of naturally menopausal women suffer from HSDD. BioSante points to this paper as being the best researched article.

There are roughly 500,000 oopherectomies per year in the U.S. performed in women between 30 and 65 years of age. This suggests that the prevalence may be on the order of 17 million women in this category. There also around 30 million post-menopausal women in the US. In this report, I am assuming that the incidence of HDSS is 7% in surgically menopausal and 4% in naturally menopausal women. Other than for conservatism, I have no strong reason for doing so. These assumptions would result in an addressable market of 700,000 surgically menopausal women and 1,200,000 naturally menopausal women with HSDD.

Another way of looking at market potential is to look at off-label use of testosterone products. In the US, there is a significant amount of off label usage of male testosterone products in women. Also, specialty pharmaceutical compounding of generic testosterone products for use in women is a widespread practice.

IMS estimates that there are 4 million prescriptions each year for off-label use of testosterone. As a rule of thumb, a specialty pharmacy compounded prescription costs about $75. Applying this to 4,000,000 prescriptions suggests that the sales value of off-label prescribing would be $300 million. Male testosterone products cost about $360 per prescription and a pharmacist might be able to get five female doses per one male dose suggesting a cost of $72 per effective prescription for a woman prescribed he male product. Both of these support the estimate that current spending on off label use of testosterone is around $300 million.

BioSante has not indicated its pricing strategy, but its public comments indicate that it will price Libi-Gel at a discount to the male testosterone and erectile dysfunction products. Viagra sells at $15 to $18 per tablet and monthly usage is estimated at 4 to 8 times. This suggests a monthly price of $60 to $144 for Libi-Gel. Male testosterone products are priced at $12 per day or $360 per month. BioSante has publicly stated that based on its market research with payors and physicians that it believes that LibiGel can be priced at $7 to $10 per day or $210 to $300 per monthly prescription.

Based on these estimates, I am estimating that the addressable market for LibiGel in surgically menopausal women is 7% of 17 million or 1.2 million women and in naturally menopausal women it is 4% of 30 million or 1.2 million. Using a monthly prescription price of $210 and assuming that the average woman will use the prescription for eight months of the year, I estimate that the addressable market for surgically menopausal women is $2 billion and for naturally menopausal women is also $2 billion.

European Approval

Antares has all rights to Libi-Gel in Europe. However, to gain approval in Europe, it is probable that LibiGel will have to do a head to head trial against Intrinsa. This could put European approval in the 2016 or so time frame. The label for Intrinsa in Europe is complicated. Patients have to have had a hysterectomy and then assure their doctors that their sex drive has dropped following the hysterectomy.

Sales Projections for Libi-Gel

I am assuming that Libi-Gel’s NDA is filed in early 2013 and approval is gained in early 2014. I estimate that the product will be licensed to a larger company in the U.S. and that marketing will begin in 2014. There is a large U.S. addressable market in the billions of dollars for Libi-Gel. However, I am projecting a modest takeoff in sales in the 2014 and 2015 period. My sales estimates are $20 million for 2014 and $40 million for 2015.

I think that my estimates are substantially below what both BioSante and Antares are expecting as well as what most investors are looking for. My conservatism is based importantly on the slow product launches that have become the norm in biotechnology. I also think that the educational effort will require time to make physicians and patients comfortable with the safety and efficacy of Libi-Gel.

There are strong arguments against my conservative posture. It can be argued that off-label prescribing could and should be quickly transferred to Libi-Gel if it is approved. With this assumption and because the off-label testosterone market is $300 million, it is possible to come up with much larger sales projections for 2014 and 2015.

Disclosure: I am long AIS.