Jack Howarth - VP, Corporate Affairs Bob Apple - President and CEO Fred Powell - EVP and CFO

Mickey Ingerman - Piper Jaffray Matt Kaplan - Ladenburg Thalmann Oren Livnat - H.C. Wainwright Anthony Petrone - Jefferies John Vandermosten - Zacks Small-Cap Research

Ladies and gentlemen, welcome to the Antares Pharma Second Quarter 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.

Thank you, Adrian, and good morning, everyone. This morning, we released our second quarter 2018 financial results and recent operating achievements and a copy of the press release can be found on the Antares’ website at www.antarespharma.com under the For Investors section. In addition, this morning’s teleconference also contains an interactive slide presentation. If you have dialed in to 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 Webcasts tab. If you are currently unable to access our website, the conference call and slide presentation will be archived under the Webcasts 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 U.S. 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, statements about new product approvals and FDA action, the Company’s ability to resolve the deficiencies identified by the FDA in the complete response letter for XYOSTED and FDA approval of the company’s NDA for XYOSTED and future market acceptance and revenue for XYOSTED. Future revenue including revenue from Makena, Sumatriptan, and OTREXUP, growth opportunities, the timing and results of proprietary and partnered research, development, clinical trials including development projects with Teva and Pfizer, the Company’s financial performance and other factors, which are also indentified 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 the 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 the second quarter and recent highlights. Fred will present detailed second quarter financial results, and then Bob will give you commercial business update and review our future catalysts. After our presentation, we will open the lines for your questions. Please turn to slide number four, I’ll now turn the call over to Bob Apple. Bob?

Thanks, Jack, and good morning to everyone joining us on today’s call. I hope you all had a chance to review this morning’s press release, which highlighted several of our second quarter and most recent achievements. We are very pleased with the operating and financial results and the progress we made on a number of key initiatives. On the financial front, we reported second quarter revenue of $14.2 million and year-to-date revenue of $26.9 million versus $13.4 million and $25.4 million in the same periods last year. The growth in the second quarter was driven by an increase in product revenue, primarily from the sales of the Makena auto injector product sold to our partner AMAG. In addition, royalties increased by $1 million, which were the result of the recent launch of Makena. We believe the second quarter revenue numbers reflect a positive shift in our revenue mix, transitioning away from development revenue and moving more toward product revenue, which increased by 51% versus the second quarter of 2017. Operating expenses were up 6% for both the quarter and year-to-date periods, mostly attributable to increased investment in research and development as we continue to expand our internal pipeline portfolio. We ended the second quarter with cash of $28.8 million, which compares to $28.1 million in the first quarter of 2018. Fred will take you through the detailed financial results in just a few minutes. On the business alliance side, just yesterday, we announced the addition of another partner product to our pipeline. We have entered into an agreement with Pfizer to develop a combination drug device rescue pen. Although the drug is undisclosed for competitive reasons, this uniquely designed rescue pen will utilize the Antares QuickShot auto injector. Pfizer will pay for the design and development cost of the device, which will flow through our development revenue line item. We then intend to enter into a separate commercial supply agreement pursuant to which Antares will provide fully packaged finished product to Pfizer at a cost plus margin, and we will receive royalties on net sales of the rescue pen, assuming FDA approval. The terms to the product price and royalty rates were agreed to as partner development agreement. Pfizer is responsible for obtaining FDA approval of the combination product and commercializing the product in the U.S. We’re very excited to be working with Pfizer on this important program. The agreement between the two companies further expands our portfolio of high-quality business partnerships, which has yielded approved commercial products and continues to add to the growth of Antares. Given our expertise in auto injector and rescue pen products and Pfizer’s success in drug development, we believe our combined efforts could potentially produce a treatment solution in a growing market with limited treatment options. We look forward to working with Pfizer through rapid development phase and assisting them with the FDA drug device approval process. On the development front, our most important and exciting asset XYOSTED awaits potential FDA approval with a September 29, 2018 target action data. During the second quarter, the FDA accepted our complete response initiative and considered a complete class 2 response, assigning in a six-month review period. We are actively working with the FDA and look forward to a potential approval on the PDUFA goal date. Commercially, we are preparing for the potential launch of XYOSTED, which I’ll cover later in this call. And finally, I’m very pleased to announce that James Tursi MD has joined the Antares executive management team as Head of Research and Development and Chief Medical Officer. Dr. Tursi has a diversified corporate background, including 15 years of drug development experience within the biotech and pharmaceutical industry. Over the course of his career, James has worked in various roles of increasingly responsibility including managing clinical and non-clinical research and development programs, clinical operations medical affairs, and global safety activities focused among other things, urology. I believe that his experience and leadership will have a positive impact on our goal of expanding our internal and external pipeline. We welcome James to the Antares team. I would now like to turn the call over to Fred, who will discuss our second quarter financial results. Fred?

Thanks, Bob. Let’s begin by looking at the financial details for the second quarter and six months year-to-date through June 30th on slide number five. Total revenue was $14.2 million for the three months ended June 30, 2018, compared to $13.4 million in 2017, an increase of 6%. Total revenue for the six months ended June 30, 2018 also increased by 6% to $26.9 million as compared to $25.4 million in 2017. Product sales were $11.1 million for the three months ended June 30, 2018 compared to $7.3 million in 2017, a 51% increase and were $22 million for the six months ended 30, 2018 compared to $17.4 million in 2017, a 27% increase. Product sales represent sales of our proprietary products and devices or device components to our partners. The increase in product sales for the three and six months ended June 30, 2018 was primarily the result of sales of Makena auto injectors to AMAG and increased exenatide product sales to Teva. OTREXUP revenue was $3.8 million and $7.7 million for the three and six months ended June 30, 2018, which represent slight decreases versus the same periods of 2017. The decreased revenue in 2018 was due to an adjustment for current and prior period rebates claimed by large pharmacy benefits manager and an additional $1.3 million of OTREXUP revenue, recognized in the first quarter of 2017 as a result of a change in estimation and recognition method for revenues. Licensing and development revenue was $1.8 million and $5.8 million for the three months ended June 30, 2018 and 2017, respectively, and $3.1 million and $7.4 million for the six months ended June 30, 2018 and 2017 respectively. The decrease in development revenue for the three and six months ended June 30, 2018 as compared to the same periods in 2017 was principally a result of a reduction in development activities for AMAG Makena auto injector product, which was approved by the FDA in February 2018 and is now a marketed product. Royalty revenue was $1.3 million for the three months ended June 30, 2018 compared to $265,000 for the same period in 2017 and totaled $1.8 million for the six months ended June 30, 2018 compared to $595,000 for the first half of 2017. Royalty revenue is recognized primarily from the in-market sales of products sold by our partners. The increase in royalty revenue for the three and six-month periods of 2018 was driven by in-market sales of the Makena auto injector product by our commercial partner AMAG Pharmaceuticals. Operating expenses were $11.1 million for the second quarter of 2018 compared to $10.5 million in comparable period in 2017. Total operating expenses for the six months ended June 30, 2018 were $22.2 million as compared to $21.1 million for the same period in 2017. The increase in operating expenses for the three and six-month period of 2018 was primarily due to additional research and development spending associated with potential pipeline products and an increase in prelaunch sales and marketing expenses associated with potential launch of XYOSTED. Net loss was $4.5 million for the second quarter of 2018 compared to $2.8 million in the same period 2017 and $10.7 million for the six months ended June 30, 2018 compared to $7.6 million in the same period 2017. Net loss per share was $0.03 and $0.07 for the three and six-month period ended June 30, 2018, respectively, and $0.02 and $0.05 for the comparable periods in 2017, respectively. The increase in net loss per share for the three and six-month periods was due to an increase in operating expenses, as well as reduction in gross margins due to variable changes in product mix with lower margins. At June 30, 2018 cash and cash equivalents were $28.8 million compared to $31.6 million at the December 31, 2017, a $2.8 million burn for the first six months of 2018. The operating results for the second quarter excluded $4.75 million sales proceeds received from Ferring Pharmaceuticals. The receipt was recorded a deferred gain on the balance sheet. The $7.5 million received to date in 2018 and the final installment of $5 million expected to be received will be recognized as a gain in the future period, once it is considered probable that a significant reversal of the gain will not occur. I’ll now turn the call back to Bob. Bob?

Thanks, Fred. Please turn to slide number six. I will provide some additional detail on our commercial business. OTREXUP prescription continued to grow in the second quarter with total prescriptions increasing approximately 3% versus the same period last year, an over 8% growth versus the first quarter of this year, according to data from Symphony Health Solutions. Prescription growth was offset by the impact of the rebate adjustment Fred spoke of earlier. Without the adjustment, revenue would have increased approximately 8% on a comparable basis. On a standalone basis, OTREXUP continued to be profitable. Turning now to Sumatriptan, second quarter 2018 revenue was $2.7 million, a 16% increase over the same period one year ago. According to Symphony Health Solutions, the Sumatriptan auto injector market grew approximately 14% during the second quarter of 2018 versus the same period in 2017, and Teva’s total prescriptions increased approximately 11% during the same period. Teva’s overall market share decreased by 6% versus the last quarter due to a loss of certain contract, as a result of competitive generic pricing. As discussed in previous quarters, our Sumatriptan revenue is mostly dependent upon Teva’s device forecast and the arrival of prefilled syringes that we receive from Teva and therefore it’s highly variable on a quarter-to-quarter basis. Now, let’s talk about the recently launched Makena subcutaneous auto injector product. AMAG recently reported increased second quarter revenue for Makena which was driven by increased volume and the launch of the subcutaneous auto injector. According to AMAG, of all new patient enrollments through the Makena Care Connection program, 60% are for the auto injector. AMAG believes the early adoption data they have seen to date should translate to continued growth of the sales of the Makena auto injector in the third quarter. The generic competitor of the intramuscular needle and syringe of Makena now on the market, their commercial team is focused on protecting the Makena brand. This includes the creation of strong and sustainable new patient access programs through subcutaneous product, even conversion from intramuscular administration. In the second quarter, we reported $3.9 million in combined product, royalty and development revenues from our collaboration with AMAG. As a reminder, the Makena auto injector has been on the market just 13 weeks through June 30th. AMAG informed us that it takes approximately 14 to 16 weeks to call on all physicians that drive Makena. Additionally, once a patient receives a script for the Makena auto injector, they are typically on therapy for the duration of treatment, which could range somewhere around 14 weeks. Therefore, we believe that we are just starting to see the cumulative effect of the increasing number of patients on the Makena auto injector, affecting growing demand. Based on everything we have heard from our partner thus far, we believe the launch is off to a great start. Turning now to slide seven for a further update on XYOSTED, our once weekly subcutaneous auto injector of testosterone. We are actively working with the FDA during this review cycle and are targeting a potential approval by September 29, 2018. As you can imagine, our commercial team has resumed launch planning activities. They are in the process of identifying highly experienced pharmaceutical reps with the preferred background in neurology or testosterone replacement therapy and offering physicians contingent upon XYOSTED approval. During the second quarter, the team also updated sales training materials, visual aids, physician targeting and territory mapping with the approximately 60 specialty care representatives which we expect to hire. In addition to conducting marketing research on third party payer coverage, extensive research was done with healthcare professionals and consumers to help ensure the proper strategies are in place for the launch. We have also designed a comprehensive patient support programs that will offer co-pay assistance to most commercially insured patients, as well as benefits investigation and prior authorization support for physician offices. A commercial team has been extremely busy planning for our potential late 2018 launch of XYOSTED. Now, let me turn to slide number eight and briefly summarize a number of potential events that could occur which believe will build positive momentum in the second half of 2018, and potentially increase shareholder value. Let’s begin with Makena. As I mentioned earlier, $3.9 million of revenue was generated in the second quarter. We understand from AMAG that the commercial team continues doing excellent job of converting patients from the vial, needle and syringe administration to the auto injector. And based on the early conversion data, they have disclosed the date. We believe that this should be potentially the solid and growing revenue generator for Antares. Moving on to our Teva development products. The first product is a generic equivalent to Mylan’s EpiPen, the epinephrine auto injector. Teva is still anticipating a 2018 launch of a generic EpiPen, and we receive additional POs to supply auto injectors in 2018, beyond the initial launch quantities already shipped. This product is on an active review by the FDA following the ANDA pathway. And we continue to believe, it could be a significant contributor to the future growth of Antares. To-date, we have shipped Teva $22 million worth of devices at cost plus margin. And once the product is potentially approved and launched, we will also receive mid to high single digit royalties on in-market sales of the product. We will also receive a onetime milestone payment upon approval. Next, Teva continues to focus on obtaining a teriparatide approval in the U.S., using the ANDA pathway. Teriparatide, which is a generic to Eli Lilly’s product, Forteo, has already been approved in 17 countries in Europe and is awaiting patent clearance before launching. Lilly and Teva settled the U.S. patent litigation late last year. And Lilly has disclosed in their 10-K that they do not expect any competitive products to enter the market earlier than the second half of 2019. They also disclosed that 2017 worldwide sales of Forteo was $1.75 billion. Therefore, we believe an AB rated generic approval of this product would be a meaningful contributor to our top line and future growth. And finally, Teva continues to develop exenatide, a generic to AstraZeneca’s Byetta. While not as large in opportunity as teriparatide, we fully expect exenatide, if approved, to potentially contribute to future revenue growth. All patent litigation has been settled and Teva continues to work toward an approval following the ANDA pathway. As a reminder, Antares recorded sales of multidose pens for both, teriparatide and exenatide for Teva at cost plus margin, and received a high single digit to mid-teen royalty on in market sales of both of these products, assuming FDA approval and commercial sale of each product. With respect to our own development projects. We continue to evaluate potential product opportunities to add to our proprietary pipeline and have conducted significant preclinical work on a new compound. We expect to add a lead candidate to our pipeline in the next six months. Also, as I mentioned earlier in the call, we were pleased to announce that we added another product to our pipeline, announcing a partnership to develop a drug device combination rescue pen with Pfizer using our QuickShot device. And finally, we continue to work with the FDA towards the potential approval and launch of XYOSTED, which we believe is a very exciting new product opportunity and potentially important catalyst for future growth of our Company. Overall, I believe we made solid operational progress this quarter and in the first six months of 2018. The first quarter approval of AMAG’s Makena product and the recently announced partnership with Pfizer were exciting events for the Company. Looking ahead to next six months, there is a potential for an approval of XYOSTED late in the third quarter and an approval of Teva partnered product. We continue growth in product sales and a renewed focus on developing our pipeline; we believe the balance of 2018 can be an exciting time for Antares and our shareholders. Thank you for your attention and look forward to providing commercial and operational updates for investors throughout 2018. That concludes our prepared remarks for today. Operator, could you open the lines for the questions-and-answers session.

[Operator Instructions] Will go first to David Amsellem at Piper Jaffray.

Hi. This is Mickey Ingerman on for David. One quick question. Assuming XYOSTED approval next month, I know you guys mentioned 60 reps, but if you guys could give some additional color around the number of physicians you will be targeting and the extent to which you think the payer landscape will be restrictive.

So, I mean, I think that when we look at our target audience, we’re looking at, call it, around 10,000 physicians with a pretty good rotation as far as the number of calls. And as far as the payer landscape, we believe that there is good access for testosterone products based on the current marketed products. We’re looking to be in Tier 3. We’re now looking for preferred position. We believe that the product attributes are strong enough and not to require a heavy discount in order to get access. And so, again, we’re focusing Tier 3 will provide co-pay support for the patients, so that it essentially could be actually cheaper than getting a generic as most plans. The generics are at $25 to $50 co-pay, if we buy the co-pay down to zero up to a certain amount, it could actually be less expensive for our patient to be on our product. And so, our target is the commercial insurance or a commercially insured patients, and we believe they will have adequate access -- will have adequate access for them for XYOSTED.

And we’ll move next to Matt Kaplan at Ladenburg Thalmann.

I just wanted to get a little bit more detail on Makena. It seems to be one of the driving forces for the quarter. Can you talk a little bit more about the market dynamics there? You mentioned the generic injectable IM product and how that’s potentially going to affect sales for Makena.

So, I mean, I can’t really speak per say for this Makena franchise. But, what I can say is from our auto injector standpoint, the generic that entered the market was just for the intramuscular injectable product, and they came in I believe at a 15% discount to the current WAC. And so, I’m not sure exactly what AMAG’s plans are with the pricing of the auto injector. But initially the auto injector was priced parity at the IM injection, which I think gave excellent access for patients because of the payers basically easily switched to the auto injector because of parity. I’m not sure what you are going to need to do if anything on the pricing. I don’t think a 15% price difference is that significant in order to overcome, but that’s really upto AMAG. The market dynamic is such that AMAG is trying to, and I think has been very effective in switching all the patients from the intramuscular injection to the subcu because AMAG believes as we do, it’s a better paid product for the patient and for the physician, so subcutaneous injection versus a deep IM injection. It’s in the back and the arm. So, the patient doesn’t have to disrobe. The current IM product, you have to disrobe. And it’s injected in the bootius maximus. And so, obviously, the other characteristics that are important is that the IM injection takes about a minute and the subcutaneous injection takes about 10 seconds. So, there is a lot of positive attributes for the patient and for the physician and the physician’s office which hopefully will translate to better compliance. And I believe that’s the message that you’re selling to the payers. And compliance is everything in this marketplace. If the patient isn’t complaint, they may have spontaneous early pregnancy, and there is a lot of cost associated with that. So, I think, AMAG has done a great job of converting, as I mentioned in this script. Over 60% of new patients are starting on the auto injector through the Makena Care’s program. That’s not every patient; that’s the ones that they can track. And so, I think the dynamics are they’re going to continue to do that. The generic is going to go after the injectable product that exits, the branded product. And again all the focus from AMAG is going to be on our auto injector. And AMAG did launch and authorized generic of their own. And so, obviously, they are trying to maintain as much of the total franchise as possible.

And then, just with -- you’ve got two potential approvals and launches going forward in the near-term, I guess XYOSTED under your control; and then, epinephrine AB rated -- potentially AB product with Teva. Can you give us a sense in terms of XYOSTED, how you think -- what your thoughts are on pricing and how you can grab market share with that product?

Sure. XYOSTED, the current market leader is a gel product, it’s AndroGel and it sells for about -- I think $625 a month for that product. There is a -- it’s preferred product on Tier 2. And they obviously provide co-pay assistance I’m sure for that product. We are going into the market with we believe a much better product. It’s a great PK profile, easy to use, once a week application, subcutaneous, 99% pain free when it comes to the injection process, and we think a very good product for both patients and for physicians as it really doesn’t require a lot of titration during the -- while you’re on the product. We’re coming we believe around anywhere between $450 to $500 WAC, So, a discount to the brand leader. And it’s a tactic that we have vetted out with the payers. And we believe that will give us a much better access initially, which is really important. Make sure that it’s not hard for physicians to get product filled. That’s really -- I think in any -- with any product launch today, access and the ability for the doctor when he it writes to get the product is really key. And the payers make it more and more difficult every year. And so, coming in with a discounted price, they like the fact that we were going after a very high price. We weren’t going after the highest price in market. And we believe that that will allow us to maintain the rebate at a reasonable rate. And I think that we fully expect to still pay rebates to the payers for access, especially early access because it typically will make you wait to get on formulary, if you don’t pay an access rebate. But again, with that pricing, we believe we’ll be able to minimize as much as possible the effect of the rebates on our product. So, I think the strong pricing paradigm which is counter to -- or actually kind of following the line with what you are seeing in the industry which is the success of prices are really being [indiscernible] heavily and it tends to block the uptake and utilization of the products. And so, we’re trying to go with a more -- we believe will be a more effective pricing program for that product to get good access for the patients and for the physicians as well.

And then, one last question on XYOSTED. How have your conversations been going with FDA going into the PDUFA date?

We don’t really characterize our interactions with the FDA because I think that’s kind of folly for any company to do that. But, we expect the product to be improved on the PDUFA date. I can characterize it as there haven’t been any surprises. The dialogue’s been effective between us and the FDA. And we look forward to potential approval September 29, 2018. I think, we put together a very good briefing book when we first filed a response. I think the fact that the FDA reviewed it and accepted it in less than four days was a testament to what I believe was a very clear and concise answers to their concerns. And they signed a six-month PDUFA date and we seem to be on track to hit that. So, short of that, we’re -- again we’re preparing for a launch of XYOSTED on the September 29th.

We’ll go next to Oren Livnat at H.C. Wainwright.

You mentioned that the Pfizer project, obviously that’s not being disclosed specifically but it’s not often [ph] that those guys have their own longstanding meridian device division, I guess they actually make up themselves. So, I’m wondering why did they need to go to you guys for an injector project. I have a couple other questions. Thanks.

Sure. Well, I mean, I can’t speak on behalf of Pfizer, but I believe that the QuickShot device is a novel and easy to use device and I think it suits itself really well the rescue pen, because of its one step delivery. You basically take off the cap and you inject it. And so, in a rescue situation, I think that’s the best that you could hope for, something that’s easy to use and something that’s -- hopefully protect the patients. Furthermore, I believe that our proven track record with combination products approved with at the FDA may have been another factor in your decision. We’ve had 505(b)(2) approved in OTREXUP; we’ve had sNDA approved with Makena; we’ve had ANDAs approved with Sumatriptan. Although we haven’t received the approval yet from XYOSTED, both, XYOSTED, Makena and now the future products are going to be all on the QuickShot platform. So, I think that they were very comfortable in our experience and the product itself. And so, we are really excited at Pfizer to start to go outside of their own shop and work with us on this potentially very interesting product.

And without telling us what this product is, are you able to give us any kind of ballpark guidance on what sort of market size this even plays in?

I think that over time as the product moves further down the development pipeline, really depending upon Pfizer’s -- when they want to disclose, what it is, and what product they’re working on, I think that’s when we will be able to assess or give some guidance as to the market opportunity. And so, Pfizer really didn’t want to disclose this molecule, drug and I understand that. And we’ve done that in the past with Teva. Actually every one of our Teva deals were originally undisclosed. And as they moved forward and further down the pipeline, then they were either filed or at least if they had to do clinical trials, that was when the product became -- people were investing in order to being able become aware as to what the product what. I don’t see that any different with this product with Pfizer. There is a lot of competitive reasons why you don’t want to disclose what the program is. And we’re going to honor that request by Pfizer not to disclose what the product is.

Okay. And on the Makena side, AMAG didn’t break out specifically what the subcu auto injector sales were this quarter. The vast majority were still IM. So, I think everybody is expecting your revenue number to go up going forward. But, I’m curious, is there in fact, a lag, because you had some royalty revenue this quarter? Is there some part of a quarter lag, most of a quarter, not really, with the results that you’re reporting, so that should we expect a big jump next quarter, as their third quarter sales go up or should that -- maybe should we expect it to come more in the fourth quarter?

Hey, Oren. This is Fred, let me just handle that one. No. We have a very good relationship with the finance team at AMAG. So, within a few days after the end of the quarter, they report to us what the sales are and what the net price is. And then, it’s an easy calculation to apply the royalty percentage. So, there is no lag that when we actually have our royalties for Makena.

Okay, great. If I may just simple OpEx question. If everything goes -- sorry go ahead.

As far as Makena in this quarter, as I mentioned in the script, it takes at least 14 to 16 weeks for this AMAG sales team to get through all of the physicians who write Makena. So, they haven’t even done that through the quarter two. And so, we expect to see further penetration with the physicians. And on top of that, as you can imagine, it wasn’t like they took every patient that was on the IM and they switched them. They were focusing on all new patients being converted to the subcu. And that’s a cumulative kind of building processes, just like a pyramid. You’re building the base. And as those patients stay on that therapy for 14 to 16 weeks, whatever they say on, the number of auto injectors being consumed obviously grows exponentially over the next period of time, assuming they get to some saturation point. And so, yes, we expect it to continue to grow over next few quarters. Where it ultimately peaks and kind of market share it gets of the overall Makena franchise, we don’t know. But, we do believe it’s going to be a meaningful product for our company because we just really started to see the impact in Q2, and I think we’ll see more -- clearly more of an impact of that product in Q3 and beyond. And so, we’re really excited about that opportunity.

And just if I may, on OpEx, obviously if everything goes according plan, XYOSTED approval at the end of September, and I guess hopefully unveiling or at least progress on your in-house pipeline asset or assets. Can you give us a sense of where OpEx, SG&A and R&D should go in 3Q and 4Q?

As we take a look at the 3Q and 4Q, 4Q, we’ll really see the increase from XYOSTED. What we’ve been trying to do is keep the cost prior to the approval at a minimum for XYOSTED. Obviously, we’re looking at the market, we are looking at the sales territories, we’re looking at the coverage. But, the significant expanse is really for the sales and marketing hitting 4Q. And so, we’d expect to see an increase there, anywhere probably around 20% increase over the third quarter going into the fourth quarter. R&D, there, we will continue to see increases, as Bob referenced earlier on the call. With the internal program that is going very well now, we will continue to have increasing expenses there, plus we will have the FDA fees for the hope for approval of XYOSTED. So, we should see R&D expenses continue to increase probably in the same range, 20% going forward in the third and fourth quarter. Again, we will see the FDA piece come on board if we get XYOSTED approval. Other than that, I think, we’re going to see relatively flat G&A expenses going forward?

We’ll go next to Anthony Petrone of Jefferies.

Maybe a little bit, Bob, on looking ahead to XYOSTED assuming September 29 goes well. Just how the rollout will be bifurcated, so in terms of target positions, so obviously high volume endocrinologists but also once we get in there, there is topicals versus IM. So, just maybe a thought on how the sales force you think at this point can be structured in terms of target physicians? And then, how do you think the market sort of breaks between topicals and IM? And on topicals versus IM, really getting at, is there a price difference versus those two?

As far as how we are going to target our physicians, clearly we’re going to go after the top prescribers. And that’s really a combination of the urologists and high decile primary care doctors. And what’s interesting over the last three years, the market really has shifted in a positive way I think where the scripts have been continued to grow. But importantly, the number of physicians has actually shrunk and in a positive way. In that there are more, larger writers than were in the past. And they tend to be their urologists and the primary care physicians. And so, it makes it a bit easier for us to target those high decile doctors. We’re clearly not going to go after the -- the docs that are writing one or two scripts, and there is a lot of those. And so, they really don’t -- there isn’t any value in going to those. But, we can really hit the decile sixes upto the tens in a relatively solid basis with the sales force that we are designing in a territory alignment. And so, I think that clearly urologists are the thought leaders in this area. So, we are going to target them initially to get them writing. And once they start writing, the primary care physicians, if they are not a special medicine physician, typically will follow suit. The endocrinologists, we go there, they are not a key call point for us but they -- because they treat diabetes, and diabetics do have testosterone deficiency, they do write testosterone products. So, we’ll focus on the high writing endocrinologists. But, again, they are more of our third position that we’ll actually call on. As far as the pricing, as I mentioned earlier, the gels, the brand leaders in that $600 range, they are generic gels. And so, clearly they’re not priced there. We believe the average cost to the plan for any branded or generic product is around $300. And we believe that with our price of $450 to $500 with some modest rebates, the plan will not see a negative impact on the cost of the product for them, if they write XYOSTED. And then, on the IM product, which is really all generics, that ranges anywhere from a couple of hundred bucks. But again, to the patient, it’s typically $25 to $50. We believe we can be effective in detailing or getting those patients to switch over, A, because of the product profile, clearly, but also with our co-pay support, it actually may be the same price or cheaper for the patients to use our product. And so, we think that XYOSTED is a first-line therapy. We will probably need to make sure that the patient has already been on a generic or on a gel. We fully anticipate that. But the good news is that they typically rotate off the gels rather quickly. And so, we believe that any kind of prior authorizations, which are there in the marketplace, should be satisfied pretty quickly. So, we feel that XYOSTED is going to be well-positioned against the branded, the generic gels as well as the injectables.

We will move next to John Van with Zacks Small-Cap Research.

First question is on the Pfizer deal. And can you compare and contrast this with the ones with Teva, just in terms of attractiveness? I mean, some of those were pretty good in terms of the ultimate royalty rate and sharing.

Yes. I mean, I think that clearly, the partnership is very attractive. It’s one of the best, well-recognized companies in the world in the pharmaceutical development world. And so, I think that there’s a lot of marquee value in having such a high prestige partner come to -- and use one of our auto injectors along with the AMAG and others. So, we’re really excited about that. As far as the financial aspect of it, I think that it follows suit with what we’ve done in the past. We get paid for development at a margin during development program. And then, on top of it, we get a -- we sell them fully packaged -- I think it’s pretty, again, unique in this situation and that we’re actually delivering fully packaged product to Pfizer. We are relatively small organization relative to them, but yet they were very comfortable with what we’ve been doing from a commercial standpoint as an organization to deliver fully packaged auto injectors with their drug in it. So, we’re going to sell it to them at a cost plus a margin. And then the royalty rate, we think we haven’t really given any guidance as far as the raise concerned. But, it’s in line with all of our other programs. It’s a very positive deal structure where we believe the value for us is at the end sale of that combination product. And so, royalties are -- we receive royalties on the product. And again it’s going to -- it’s in line with what we’ve done with all the other programs, whether it’s AMAG or Teva. And we were -- I think that the value preposition is there. And we’re hoping that the Pfizer agreement as well as AMAG others continues to bring us a pipeline of new opportunities with other partners. And so, we think that there is a lot of positives really to that potential product with Pfizer.

And is the Pfizer drug a generic or new chemical entity?

Yes, I can’t answer that.

Can you give us sense of -- I understand that. That’s fine. Can you give a sense of the timing then on what -- how long it might be for the development stage and then when we might eventually see end product sales to patients?

I think that has to be something that Pfizer guides on if they guided at all. I think what I’ll say is that most of our products are 505(b)(2)s. They tend to be a relatively accelerated timeline versus traditional development, that’s for sure. And so, I don’t think it will really deviate from traditional time line that we’ve seen for 505(b)(2)s for combination products. But, at this point, we’re really not in a position to -- nor I think it would be kind of inappropriate to guess how long it’s going take anyway, because we’re just starting the initial stage of the developments. I’m very comfortable with the device. I’m very comfortable with how the drug will work within our device. So, that’s really going to be a function of the regulatory process and the timing with the FDA. So, that’s all in Pfizer’s camp, and that’s a question that they should answer, not us.

Okay. Thank you for the detail there. I wanted to congratulate Dr. Tursi on his role of Head of R&D. And I was wondering if there is new areas that you may explore to potentially attract other big guys like Pfizer perhaps, in the future, anything new there that might be exciting in terms of drug delivery that he would be heading up?

Well, I mean, we brought in James really to try to accelerate our internal programs. We were really focused on XYOSTED and other external programs because we do have a lot of them. And we kind of lost a little sight on the internal programs. And I think that having one person who is responsible overall for both the internal and external programs from an R&D standpoint I think will be a much more effective, potentially much more effective development timelines for us relative to clearly internal and hopefully he will help as well external program. So, as we’ve been messaging to the investors, our goal is to expand our internal pipeline. We have a relatively strong candidate that we are working on right now, but we look to expand beyond that one candidate. We have other products that we’re developing as we speak, and we’re just trying to get them to the next level, once you get through the formulation work and then start doing some clinical [technical difficulty]. So, James I think will be effective in accelerating our programs, and that’s what our goal is, and then also obviously bringing ideas for new products.

And last question on just the details of agreements with manufacturers. Are there generally any terms that preclude you from working with others in the same therapeutic area or other versions of the same generic drug, I mean, I guess, even with other manufacturers or even internal development, any restrictions like that that exist?

Well, when we do partnerships, we give exclusively for that particular molecule in that indication. So, yes, we’re restricted. For instances, we wouldn’t do a generic of Makena because we have relationship with them and we’ve given them an exclusive for auto injector for the Makena product. And so, there are some restrictions. But overall, it really isn’t that restrictive. We can use are QuickShot product, our QuickShot device for multiple molecules, as long as it’s not in the same drug and sometimes in the same indication.

We will go next to Elliot Wilbur at Raymond James.

This is Lucas Lee [ph] on for Elliot. I have two questions. Do you think you could give us a little more color on your new product base and development? I think you signaled to be in urology and CNS space previously. Thank you.

I think, we haven’t really given much color as to the product because you obviously you want to get through development process, file an IND and announce it. But, clearly we have stated, it’s a neurology product and that continues to be the case. And that’s the only color we will give right now until we file the IND, which we’re hoping is within the next six months. And so, -- or at least, the time will be, disclose the product once we’ve done some additional human clinical work on it. So, it’s a neurology product. We think it’s our auto injector which we’re looking to use the QuickShot device. It shoots itself well for this indication. And that’s the only information I can give you at this time.

Got it. And the second one I have is, do you think you can comment on your future BD activity, are you looking to continue adding partners? I would appreciate any color on that. Thank you.

Sure. I mean, the partnerships have been a key growth area for Antares. You derisk to some degree the development side of the program because it’s typically being funded by the partner. You get a little bit of less return on the back end obviously, because it’s a royalty and a cost plus margin. So, we do think it’s a fundamental piece of our business strategy. And so, yes, we will continue to look for business development, alliance programs, and new partners, existing partners, really as we develop and become more and more commercially oriented and become -- and are producing millions of pens, I think it’s going hopefully get more opportunities with other partners. So, I think clearly, we are going to continue to look for new business alliance partners. In fact, they actually come in bound for the most part. So, we don’t go out there and shop a molecule. It’s not what we do. They come in to us for our device or our expertise. And obviously it takes time. And there is a lot of effort in getting a deal signed. So, we will continue to do and look to expand our partnerships with companies like Pfizer and AMAG and Teva.

[Operator Instructions] And at this time, there are no further questions. I’ll turn the conference back over to Mr. Howarth for any closing remarks.

Yes. Before we have our closing remarks, we do have one additional question from our interactive slide presentation. The question is, is there going to be a collaboration partner for QSC? [Ph]

So, I assume that’s from an investor. Yes. So, we’re looking -- obviously, in the U.S., we’re looking to launch the product our-self. And we believe we can effectively deal with the sales force structure that we are looking to build. But clearly, OUS, we are looking for partners for XYOSTED. And I think that if you look into history of most products when the companies are looking to launch in the U.S. and out-license in OUS, typically partners emerge once the product is approved in the U.S. And that’s what our expectations are. Once we get the product through the FDA approval process, hopefully we believe that partners will emerge. We’ve had interest for sure OUS, but I don’t think they are really get into earnest discussions until they know the product has been approved in the U.S. and the supply chain is there and that all the components of the FDA approval process are behind us. And so, we are looking for OUS partners. It will probably to be a range of partners as opposed to one global partner, because the territories are so unique outside this country. And so, hopefully, once we receive the FDA approval, we’ll be focusing on the OUS partnerships.

Thanks, Bob. 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.

Thank you. And that does conclude today’s conference. Again, thank you for your participation.