This is a lengthy article because I think it's necessary to build the case for why Antares (ATRS) is an excellent investment. Because it's one thing to write that; it's another thing to prove it. Is there possible downside for Antares? Of course, but as I will demonstrate that downside has been mitigated by a variety of ten factors. Right now, I think the greatest risk to Antares investors is the overall market and Vibex MTX (Antares's methotrexate auto-injector) will need to be approved by the FDA -- but that too appears likely.
The other night I was having a conversation with a relative about biotech investing. I strongly cautioned against throwing so many of his/her eggs into a very speculative biotech stock that I am known to trade (He/she follows my articles). That conversation led me to state that while the vast majority of biotech stocks are very volatile and highly risky, I knew of only one (yes "one") biotech stock that I thought was a much lower risk in comparison to other biotech stocks yet offered an equal if not a better reward within the next one to three years. That biotech stock is Antares Pharma in which I have recently re-assumed a significant position that given my own personal financial goals may become a much longer hold now that I have achieved what I elsewhere gained in spades.
You see, I invest to make money and I have only one strategic goal: to put my money in stocks I truly think can turn me a profit, be it by holding for 1-3 years or flipping the stock in under a month. Recently, I scored on Zalicus (ZLCS) in a gutsy high percentage move away from Antares, but Antares remains my top biotech pick--frankly, I think there are none better, enough so to say that to my own relatives. Zalicus is extremely risky, Antares is not (I'll explain why). While at times Antares's share price may move like a turtle, it's a turtle that is going to win the race in the next one to three short years.
Now here are ten reasons why I never hesitate to speak so highly of Antares Pharma.
1. Foremost and above all, CEO Wotton is guiding this bio-medical products firm in the near-term direction of bottom-line profitability. Rare among biotechs going for below $4/share, Antares is just about break-even quarter to quarter and will soon move to net positive profitability. Wotton, unlike most biotechs, isn't bleeding his shareholders with semi-annual dilutions or operating a research agenda that spends millions of dollars with little hope of a near-term return. Antares is a savvy operation and its two facilities are modest at best. I have viewed one of its facilities with my own eyes testifying to its presence and modest well-thought-out lease/rental including a near-by herd of deer. I have also viewed Anturol or now Gelnique 3% first hand -- before it went into production. It is to say, I do my homework. And yes, Wotton's habit is to under-promise and over-deliver as the recent update on Vibex MTX was an ahead-of-schedule treat for Antares investors. Wotton 'gets it' while many much higher paid start-up biotech CEO's don't. Frankly, if I had millions of dollars I would put a huge chunk in Antares; if I was an investor for a large institution I would demonstrate my skill and knowledge because whomever is invested in Antares over the next few years is going to look like a genius. The three year holder will probably see thousand percent gains.
2. The risk of investing in Antares dropped substantially on the recent positive report of Vibex MTX. When I read that press release, irrespective of the company's share price (up or down), I knew I had to take a substantial position from that point forward. The clinical window for bio-medical products is very short and I expect Antares will file with the FDA for Vibex MTX by Q1 2013 if not in Q4 2012. Either way, before the end of 2013, by 2014 Antares will be selling a high-need, very profitable product. These estimates have been covered by other SA authors so I won't rehash them. It's more important to me that I have read and know that rheumatologists want a pain-free injectable method that patients can self-inject because the subcutaneous method is much more effective than taking methotrexate by other means.
3. The presence of biotech powerhouses Teva (TEVA) and Pfizer (PFE) cannot be ignored. Teva seems to almost own the injectable technology of Antares, if you believe most chat room talk, but I'm not quite so sure. Certainly, Antares has three lucrative deals with Teva, but in the last year, Pfizer has established a unique foothold; this has come from two verifiable directions: an undisclosed product set to move into phase 3 in the 2H of 2012 and two new top-level Antares employees who come directly to Antares from Pfizer. The first employee, Jack Howarth, has an established history of tying up the loose ends of firms about to be acquired. The second recent hire, Dr. Jonathan Jaffe, has been appointed the VP of Clinical Development suggesting that he may be joining Antares to make certain that the undisclosed phase 3 drug will be guided with Pfizer's full blessing.
4. For those "longs" invested in Antares they will understand my next statement. Antares is like the safety of mutual fund diversity, but offers the profitability of being invested in only one stock. Why is because the pipeline of Antares is so diverse and is already earning the company quarterly revenue. For example, Elestrin has seen improved sales growth thanks to the takeover of Jazz Pharmaceuticals (JAZZ). Likewise, Gelnique 3% is off to a good running start with Watson (WPI) and I suspect a new partner in Europe will be announced very soon. The point is: Antares is making money, not just spending it. The cash flow fluctuations demonstrate how close Antares is to profitability. Risk is mitigated when a company is profitable or near-profitable. Antares is near-profitable and I am a fan of Gelnique 3% because my web searches suggest to me that it is gaining significant traction.
5. Vibex MTX is going to be Antares's first block-buster bio-medical product boom. It's also the reason why I re-established a position in the stock as quickly as possible. Because Vibex MTX represents a real need for rheumatoid arthritis sufferers and the data to date favors a FDA approval in 2013, which means, a product launch in 2014. The stock market will eventually recognize this and buyers coming to the stock could increase exponentially. How do I explain this? The advantage of methotrexate injection doesn't need to be proved, it just needs to go to market -- Antares is very fortunate because its patents protect it for years to come. From everything I read, self-injectable methotrexate is going to take off -- buying to hold now gets you in on an easy triple digit run. Millionaires are going to be made when Vibex MTX goes to market. For those who can sit tight for three years, they will be among them. I refer to an astute chat board poster named Bsav88atty because in actuality, this poster has been behind the published accolades of other SA authors who want to look smart. Bsav88atty has done more due-diligence on Vibex MTX than any other writer/poster that I know of--which is why I give him/her 100% credit. Smart investors will search Bsav88atty posts out, especially his/her estimates of profitability. Cut all of his/her estimates by 50% and you still have a whopper of a firm.
6. A chat room poster on Antares named Stockrafter continues to provide some of the most interesting leads I've read since the first day I invested in Antares. He/she goes by various names and is known as L___daug. Irrespective, there is not enough article room to post the volumes of interesting and credible leads regarding Antares's future. For example, on 4 July 2012, he/she uncovered a recent foray between Amgen (AMGN) and Teva over Filgrastim. This exemplifies a mood among Antares shareholders that the undisclosed Teva partnerships may be for heavy hitters, among them Copaxone for Multiple Sclerosis. I concur with Stockrafter's research including the questions surround NestraGel (for women) and a possible male contraceptive that has caused a flurry of debate among investors. I don't have the space to cover the entire debate except to say that Antares is known to have its own testosterone and estradiol gel products. Antares's Ferring, a former partner, remains in the background and I for one am following this story very closely. If the Population Council moves on NestraGel before year-end, Antares could be a double digit stock in a moment's notice. After all, a gel contraceptive for women would be enormous. Stockrafter thinks Antares is in on a male contraceptive. If so, look out.
7. Follow the money. Antares wouldn't be at $3.76/share unless the market believed in its potential. But have you looked at the stock's chart? It's phenomenal.
The dip in May was market driven, not Antares driven. I think it was the last opportunity to get 'on board' below $3/share. Antares is on its way to going over $4/share before summer end and I think above $6/share before year-end because the revelation of the Pfizer phase 3 drug should send the stock price much higher.
8. Whether it's Pfizer or Teva or someone else, the buy-out rumors cannot be ignored. Antares has hired two top-level people from Pfizer including one (Jack Howarth) who is known to prep companies for a buy-out. On this point I agree with other SA writers who think the buy-out is already set in motion. The question is, Will Teva sit back and let it happen? That's what makes the situation so interesting because Antares will no doubt drive a double-digit price. While I don't believe in investing in a firm on buy-out rumors, in this case the rumors have legs. According to one source, Pfizer's jet has landed in tiny Trenton's airport just south of Antares on multiple occasions; the same source brags that the buy-out rumor is being floated on the trading desks; I have no way of confirming this, but I will write this: I am listening because it makes sense. Both Pfizer and Teva have a substantial investment in Antares and either company would benefit from buying-out Antares. Do I invest on rumors? Yes, sometimes I do and in Antares's case, I most certainly am.
9. I was there when Antares briefly fell on LibiGel's failure. I was also there when the stock recovered. Ultimately, I was there to see that Antares is not a one-trick pony, but a carefully aligned firm that is banking on highly probable winners, among them Vibex MTX and Vibex QS. Antares isn't dependent on others firms like BioSante (BPAX) to achieve success; in fact, Antares dropped LibiGel like a hot potato and has ever since has gone up. Why? Because CEO Wotton et al have not bet the store on one drug or one partnership.
10. I have re-entered Antares because its time has come. This is one of those firms where you put your money down and then let it ride. It doesn't matter if it goes down on Tuesday because you know that it will go up on Friday. Long-term (1-3 years), Antares is going to reward its investors triple to quadruple returns. As I said to my relative, "Show me a stock that you know will most likely return triple to quadruple returns and I will show you Antares." I like Antares because I've made it my night and day project to determine whether it is all I think it could be. My conclusion is: unless the global market takes a monstrous fall, in 1-3 years Antares will be worth multiples on your original investment.
In conclusion, I only invest in biotech firms where I think I'm going to make money. In general, biotech investing is very risky which is why I am drawn to Antares. Antares offers a unique opportunity to be on the front end at a much lower risk. Knowing that I could triple or quadruple my return in 1-3 years is why I am here. Quite frankly, I think when the share price goes over $5/share, investment institutions are going to pile in and the share price will go even higher.
Disclosure: I am long ATRS. Investors buy and/or sell at their own risk. For me "long" means until I sell. I do not "short" stocks. I declare that I may buy or sell any stock at any time referenced in this article.