Antares Pharma, Inc. (“Antares” or the “Company”) is a specialized pharma product development
and pipeline company with patented drug delivery platforms including Advanced Transdermal Delivery (ATD™) gels, fast-melt oral (Easy Tec™) tablets, disposable mini-needle injection systems (Vibex™), and reusable needle-free injection
systems (VISION ® AND Valeo™). Antares’
lead ATD™ gel product is Anturol™ oxybutynin for the treatment of overactive bladder (OAB). These platforms and products are summarized and briefly described below:
Delivery Platforms
Transdermal Drug
Delivery Platforms
Advanced Transdermal
(ATD™) Gel
Systematic or
Topical
Fast-Melt Oral
Disintegrating Tablets
Platform
Easy Tec™
Injection Device
Platforms
Needle-Free Reusable Injectors (MJ Platform)
Medi-Jector VISION ® and
Valeo™
Mini-Needle Disposable Injectors
(AJ Platform) Vibex™
Vaccine Intradermal Injectors
Product Candidates
Transdermal Delivery Gels
Fast-Melt Oral Dissolve Disintegrating Tablets (EasyTec™)
Injection Devices
Transdermal Drug Delivery Platform
Antares’ transdermal drug delivery platform is dedicated to developing gels that offer a cosmetically superior option to patches, while delivering
medication efficiently with less potential for skin irritation and minimizing the gastrointestinal impact, as well as, the initial liver metabolism effect of some orally ingested drugs. The Company’s gels are hydro-alcoholic and contain a
combination of permeation enhancers to promote rapid drug absorption through the skin following application typically to the arms, shoulders, or abdomen. The Company’s transdermal gel systems provide the options for delivering both systemically
(penetrating into and through the subcutaneous tissues and then into the circulatory system) as well as locally (e.g. topically for skin and soft tissue injury, infection and local inflammation). Typically, the gel is administered daily, and is
effective on a sustained release basis over
approximately a 24-hour period of time. The Company’s gel systems are known as our Advanced Transdermal Delivery (“ATD™”) gels.
Fast-Melt Oral Disintegrating Tablets
Our Easy Tec™ fast-melt oral disintegrating tablets are designed to help patients who experience difficulty swallowing pills, tablets or capsules,
while providing the same effectiveness as conventional oral dosage forms. Our tablet features a “disintegrant addition” that facilitates the disintegration of the oral drug to promote quick and easy administration in saliva without water.
This could play an important role in Antares’ ability to target the pediatric market segment as well as the rapidly expanding geriatric market. Easy Tec™ tablets can be manufactured without specialized equipment and because the tablets are
not effervescent (highly moisture sensitive), we believe it represents several significant processing and packaging advantages over conventional competitors. Our Easy Tec™ tablets may also be of interest to pharmaceutical firms seeking line
extensions in the marketplace and could represent a step in Antares’ evolution as a specialty pharmaceutical company with its own products.
Injection Device Platforms
Antares’ injection device platform features three distinct products:
reusable needle-free injectors, disposable mini-needle injectors, and its vaccine intradermal injectors. Each product is briefly described below:
•
Reusable needle-free injectors deliver precise medication doses through high-speed, pressurized liquid penetration of the skin without a needle. These reusable, variable-dose
devices are engineered to last for a minimum of two years and are designed for easy use, facilitating self-injection with a disposable syringe to assure safety and efficacy. The associated disposable, plastic, needle-free syringe is designed to last
for approximately one week.
The Company has sold the Medi-Jector VISION ® for use in more than 30 countries to deliver either insulin or human growth hormone
(“hGH”). The Medi-Jector VISION ® employs
a disposable plastic needle-free syringe, which offers high precision liquid medication delivery through an opening that is approximately half the diameter of a standard, 30-gauge needle. The product is available over-the-counter (“OTC”)
or by prescription in the United States for use by patients with diabetes, and available through our partners in Europe, Japan and Asia for hGH. To date, we believe that more than 100 million such injections have been performed worldwide.
•
Disposable mini-needle injectors (“Vibex™”) employ the same basic technology developed for the Medi-Jector VISION ® , combining, spring-powered source with a tiny hidden needle in a disposable,
single-use injection system compatible with conventional glass drug containers. The Vibex™ system is designed to economically provide highly reliable subcutaneous injections with reduced discomfort and improved convenience in
Index to Financial Statements
conjunction with the enhanced safety of a shielded needle. After use, the device can be disposed of without the typical “sharps” disposal concerns.
Antares and its potential partners have successfully tested the device in multiple patient preference and bioavailability tests, and the Company continues to explore product extensions within this category, including multiple dose, variable dose and
user-fillable applications.
•
Vaccine intradermal injectors are a variation of the Vibex™ disposable mini-needle injection technology and are being developed to deliver vaccines into the dermal and
subdermal layers of the skin (a preferred site of administration in the vaccine industry). The Company believes that this proprietary device will offer easier and more rapid dosing compared with conventional needle-based devices.
History
On
January 31, 2001, the Company (formerly known as Medi-Ject Corporation or “Medi-Ject”) completed a business combination to acquire the three operating subsidiaries of Permatec Holding AG (“Permatec”), headquartered in Basel,
Switzerland. Medi-Ject was at that time, focused on delivering drugs across the skin using needle-free technology, and Permatec specialized in delivering drugs across the skin using transdermal patch and gel technologies as well as developing
fast-melt tablet technology. With both companies focused on drug delivery but with a focus on different sectors, it was believed that a business combination would be attractive to both pharmaceutical partners and to the Company’s shareholders.
Upon completion of the transaction the Company’s name was changed from Medi-Ject Corporation to Antares Pharma, Inc.
The U.S. device
operation, located in Minneapolis, Minnesota, develops, manufactures with partners and markets novel medical devices, called jet injectors or needle-free injectors, which allow people to self-inject drugs without using a needle. The Company makes a
small reusable spring-action injector device and the attached disposable plastic needle-free syringes to hold the drug, known as the Medi-Jector VISION ® . Using an adapter, the liquid drug is drawn from a conventional vial into the needle-free syringe, through a small hole at the end of the
syringe. When the syringe is held against an appropriate part of the body and the spring is released, a piston drives the fluid stream into the tissues beneath the skin, from where the drug is dispersed into systemic circulation. A person may re-arm
the device and repeat the process or attach a new sterile syringe between injections.
The Company was a pioneer in the invention of home
use needle-free injection systems in the late 1970s. Prior to that, needle-free injection systems were powered by large air compressors or were relatively complex and expensive, so their use was limited to mass vaccination programs by the military,
school health programs or for patients classified as needle phobic. Early injectors were painful in comparison to today’s injectors, and their large size made home use difficult. The first home insulin injector was five times as heavy as the
current injector, which weighs five ounces. Today’s insulin injector sells at a retail price of $335 compared to $799 eight years ago. The first growth hormone injector was introduced in Europe in 1994. This was the Company’s first success
in achieving distribution of its device through a license to a pharmaceutical partner, and it has resulted in continuing market growth and, the Company believes, a high degree of customer satisfaction. Distribution of growth hormone injectors has
expanded through the Company’s pharmaceutical company relationships to now include Japan and other Asian countries.
The Company has
also developed variations of the jet injector by adding a very small hidden needle to a pre-filled, single-use disposable injector, called the Vibex™ mini-needle injection system. The mini-needle platform is an alternative to the
Vision ® system for use with unit dose injectable drugs and is suitable for branded and
branded generic injectables.
Antares is committed to other methods of drug delivery such as transdermal gel formulations. The Company
believes that transdermal gels have advantages in cost, cosmetic elegance, ease of application and lack of irritancy as compared to better-known transdermal patches and have applications in such therapeutic markets as hormone replacement, over
active bladder, osteoporosis, cardiovascular, pain management and central nervous system therapies.
The Company’s first transdermal
and fast-melt tablet products were developed in Argentina under Permatec’s name in the mid-1990s. Subsequently, the Argentine operations were moved to Basel, Switzerland, in late 1999.
The transdermal product effort initially resulted in the commercialization of a seven-day estradiol patch in certain countries of South America in 2000. Over
time, Permatec’s research efforts moved away from the crowded transdermal patch field and focused on transdermal gel formulations, which allow the delivery of estrogens, progestins, testosterone and other drugs in a gel base without the need
for occlusive or potentially irritating adhesive bandages. We believe the commercial potential for transdermal gels is attractive, and several licensing agreements with pharmaceutical companies of various sizes have led to successful clinical
evaluation of Antares’ formulations. The Company is now also developing its own transdermal gel-based products for the market and has announced Phase II clinical results for Anturol™, its oxybutynin gel for overactive bladder.
The Company operates in the specialized drug delivery sector of the pharmaceutical industry. Companies in this sector generally leverage technology
and know-how in the area of drug formulation and/or delivery devices to pharmaceutical manufacturers through licensing and development agreements while continuing to develop their own products for the marketplace. The Company also views many
pharmaceutical and biotechnology companies as collaborators and primary customers. The Company has negotiated and executed licensing relationships in the growth hormone segment (needle-free devices in Europe and Asia) and the transdermal hormone
gels segment (several development programs in place worldwide, including the United States and Europe). In addition, the Company continues to market needle-free devices for the home administration of insulin in the U.S. market through distributors
and has licensed its technology in the diabetes and obesity fields to Eli Lilly and Company.
The Company is a Delaware corporation.
Principal executive offices are located at 707 Eagleview Boulevard, Exton, Pennsylvania 19341; telephone (610) 458-6200. The Company has wholly-owned subsidiaries in Switzerland (Antares Pharma AG and Antares Pharma IPL AG) and the Netherlands
Antilles (Permatec NV).
Industry Trends
Based upon experience in the industry, the Company believes the following significant trends in healthcare have important implications for the growth of its business.
When a drug loses patent protection, the branded version of the drug typically faces competition from generic alternatives. It may be possible to
preserve market share by altering the delivery method, e.g., a single daily controlled release dosage form rather than two to four pills a day. The Company expects branded pharmaceutical companies will continue to seek differentiating drug delivery
characteristics to defend against generic competition and to optimize convenience to patients. The altered delivery method may be an injection device or a novel oral or transdermal formulation that may offer therapeutic advantages, convenience or
improved dosage schedules. Major pharmaceutical companies now focus on life cycle management of their products to maximize return on investment and often consider phased product improvement opportunities to maintain competitiveness.
The increasing trend of major pharmaceutical companies marketing directly to consumers, as well as the recent focus on patient rights may encourage the
use of innovative, user-friendly drug delivery systems. Part of this trend involves offering patients a wider choice of dosage forms. The Company believes the patient-friendly attributes of its transdermal gels, fast-melt tablets and injection
technologies meet these market needs.
The Company envisions its transdermal gel formulations as a next-generation technology, replacing
many transdermal patch products with more patient-friendly products. Topical gels offer patients more choices and added convenience with no compromise of efficacy. Our gel technology is based upon so-called GRAS (“Generally Recognized as
Safe”) substances, meaning the toxicology profiles of the ingredients are known and widely used. We believe this approach has a major regulatory benefit and may reduce the cost and time of product development and approval.
Many drugs, including selected hormones and protein biopharmaceuticals, are degraded in the gastrointestinal tract and may only be administered through
the skin, the lung or by injection. Pulmonary delivery is complex and has recently been commercialized for limited therapeutic proteins intended for systemic delivery. Injection therefore remains the mainstay of protein delivery. The growing number
of protein biopharmaceuticals requiring injection may have limited commercial potential if patient compliance with conventional injection treatment is not optimal. The failure to take all prescribed injections can lead to increased health
complications for the patient, decreased drug
sales for pharmaceutical companies and increased healthcare costs for society. In addition, it is becoming increasingly recognized that conventional needles
and syringes require special and often costly disposal methods.
In addition to the increase in the number of drugs requiring
self-injection, recommended changes in the frequency of insulin injections for the treatment of diabetes also may contribute to an increase in the number of self-injections. For many years, the standard treatment protocol was for insulin to be
administered once or twice daily for the treatment of diabetes. However, according to major studies (the Diabetes Control and Complications Trial), tightly controlling the disease by, among other things, administration of insulin as many as four to
six times a day, can decrease its debilitating effects. The Company believes that with the increasing incidence of diabetes coupled with an increasing awareness of this disease, the benefits of tightly controlling diabetes will become more widely
known, and the number of insulin injections self-administered by people with diabetes will increase. The need to increase the number of insulin injections given per day may also motivate patients with diabetes to seek alternatives to traditional
needles and syringes.
Due to the substantial costs involved, marketing efforts are not currently focused on drug applications administered
by healthcare professionals. Jet injection systems, however, may be attractive to hospitals, doctors’ offices and clinics, and such applications may be explored in the future. The issues raised by accidental needle sticks and disposal of used
syringes have led to the development of syringes with sheathed needles as well as the practice of administering injections through intravenous tubing to reduce the number of contaminated needles. In 1998, the State of California banned the use of
exposed needles in hospitals and doctors’ offices, if alternatives exist, and several additional states have adopted similar legislation. In November 2000 the Federal Government issued guidelines encouraging institutions to replace needles
wherever practical. The Company believes that needle-free injection systems or its shielded mini-needle products may be attractive to healthcare professionals as a further means to reduce accidental needle sticks and the burdens of disposing of
contaminated needles.
The importance of vaccines in industrialized and emerging nations is expanding as the prevalence of infectious
diseases increases. New vaccines and improved routes of administration are the subject of intense research in the pharmaceutical industry and the Company has been researching the feasibility of using its devices for vaccines and new vaccine
ingredients including evaluating opportunities in recent bio-terrorism initiatives.
The Company’s fast-melt technology also addresses
industry trends by focusing on the needs of specific market segments such as geriatric and pediatric patients who often have difficulty swallowing conventional oral medications. We believe that better health outcomes can be expected when patients
are compliant with recommended medication regimens. The Company’s fast-melt technology offers consumers a potentially important alternative oral delivery system.
Market Opportunity
According to a March 2006 Cowen & Co. publication, the worldwide market
for urinary incontinence is estimated to be $1.6 billion in 2005 and growing to $2.6 billion by 2010. Older incontinence drugs, such as immediate release oxybutynin, are plagued by anticholinergic effects including moderate to severe dry mouth (seen
in 70% of the patients), constipation and confusion. It is also estimated that half of the 20 million U.S. adults suffering from overactive bladder either are too embarrassed to discuss the symptoms or are not aware that pharmacological
treatment is available. It is further estimated that only 47% of U.S. incontinence patients sought treatment in 2005 and that 16% of incontinence patients were compliant with their treatment in 2005 estimated to increase to 18% by 2010.
According to a March 2006 Cowen & Co. publication, the worldwide hormone replacement market is expected to grow from $1.3 billion in 2005 to
$1.9 billion by 2010. Further growth in this sector may be achieved by the use of testosterone products in both male and female applications. According to the same comprehensive study by Cowen & Co., the female sexual dysfunction market is
estimated to be 78 million sufferers worldwide rising to 95 million by 2010. Additionally, the sexual dysfunction market is projected to be $3.9 billion in 2005 growing to $5.6 billion by 2010. The importance of gel products containing
testosterone for men has been exemplified with the success of Androgel ® (Unimed-Solvay) for treatment of male hypogonadism, where sales in the U.S. were recently estimated at approximately $500 million per year. A new market opportunity also exists with the use of low dose
testosterone for treatment of FSD, a disorder according to the Journal of American Medicine (JAMA) in February 1999 that affects an estimated 40-55% of all
women and for which no drug is currently approved in the U.S. Antares Pharma, along with its U.S. partner BioSante, has a low dose testosterone product named Libi-Gel™, which has completed Phase II testing for FSD. We have the exclusive market
rights in Europe and elsewhere outside the United States for Libi-Gel™. As evidenced in Europe and, more specifically, in France, the leading country in the use of transdermal hormone replacement therapy, the Company believes that patient
demand for transdermal hormone therapy products will continue to increase. According to an industry report, 64.8% of treated menopausal women in France used either patch (44.7%) or gel (20.1%) therapy. Gel products are also being
formulated to address equally large opportunities in other sectors of the pharmaceutical industry, including cardiovascular, pain, infectious diseases, addiction and central nervous system therapies.
According to industry sources, fast-dissolving oral dosage forms are estimated to be in excess of $1 billion with a growth rate of more than 20% per
year. This field of melt-in-the-mouth, or fast-dissolve, tablets clearly has a significant role to play in effective product administration to the elderly and to those who have difficulty swallowing. While many products have been developed to meet
this need, many have disadvantages, including lack of applicability to all drug candidates, dose limitations, high cost of manufacturing, and product robustness issues that can challenge packaging and distribution systems. Using its Easy Tec™
technology, Antares has undertaken to develop products that could be applicable over a wide dose range, could be manufactured under conventional conditions and would meet the standards of performance necessary to provide the desired patient benefits
of rapid dissolution, good mouth feel and ease of handling.
According to industry sources, an estimated 9 to 12 billion needles and
syringes are sold annually worldwide. The Company believes that a significant portion of these are used for the administration of drugs that could be delivered using its injectors but only a small percentage of people who self-administer drugs
currently use jet injection systems. The Company believes that this lack of market penetration is due to older examples of needle-free technology not meeting customer needs owing to cost and performance limitations as well as the small size of the
companies directly marketing the technology to consumers not being able to gain a significant “share of voice” in the marketplace. The Company believes that its technology overcomes limitations of the past and that its business model of
working with pharmaceutical company partners has the potential for improved market penetration. However, to date neither the Company nor its competitors have achieved substantial market penetration. Greystone Associates in 2003 estimated that the
needle-free injection market in the U.S. would grow from $10.2 million in 2002 to $425 million by 2007, of which self-administration of insulin is expected to account for 54% of the total market. In 2003, Antares licensed its needle-free injection
technology to Eli Lilly and Company for development and potential use in the fields of diabetes and obesity.
Antares’ device focus is
specifically on the market for delivery of self-administered injectable drugs. The largest and most mature segments of this market consist of insulin for patients with diabetes and human growth hormone for children with growth retardation. According
to a March 2006 publication by Cowen & Co., the worldwide insulin market is estimated to grow from $7.7 billion in 2005 to $14.6 billion in 2010, of which $2 billion in 2010 is inhaled insulin. The Company believes that the number of
insulin injections will increase with time as the result of new diabetes management techniques, which recommend more frequent injections as evidenced by the U.S. insulin market projected to grow from $2.7 billion in 2005 to $5.8 billion in 2010. A
second attractive market has developed with growth hormone; children and young adults suffering from growth retardation take daily hormone injections for an average of five years. The number of children with growth retardation is small relative to
diabetes, but most children are needle averse. The Company’s pharmaceutical partner in Europe, Ferring Pharmaceuticals BV (“Ferring”), has made significant inroads using its injectors in the hGH market, and the Company expects similar
progress in other geographic regions where partnerships have already been established. Other injectable drugs that are presently self-administered and may be suitable for injection with the Company’s systems include therapies for the prevention
of blood clots and the treatment of multiple sclerosis, migraine headaches, inflammatory diseases, impotence, infertility, AIDS and hepatitis. Antares also believes that many injectable drugs currently under development will be administered by
self-injection once they reach the market. This is supported by the continuing development of important chronic care products that can only be given by injection, the ongoing effort to reduce hospital and institutional costs by early patient
release, and the gathering momentum of new classes of drugs that require injection. A partial list of such drugs introduced in recent years that all require home injection include Enbrel ® (Amgen, Wyeth) for treatment of rheumatoid arthritis, Aranesp ® (Amgen) for treatment of anemia,
Kineret ® (Amgen) for rheumatoid arthritis, Forteo™ (Lilly) for treatment of osteoporosis, Intron ® A (Schering Plough) and Roferon ® (Roche) for hepatitis C, Lantus ® (Aventis Pharma) for diabetes, Rebif ® (Serono) for multiple sclerosis, Copaxone ® (Teva) for multiple sclerosis and Gonal-F ® for fertility treatment. The dramatic increase in numbers of products for self-administration by injection and the breadth of therapeutic areas covered
by this partial listing represents an opportunity for Antares’ device portfolio.
Products and Technology
Antares is leveraging its experience in drug delivery systems to enhance the product performance of established drugs as well as new drugs in development.
The Company’s current technology platforms include transdermal Advanced Transdermal Delivery (ATD™) gels; fast-melt oral disintegrating tablets (Easy Tec™); disposable mini-needle injection systems (Vibex™); and reusable
needle-free injection systems (Medi-Jector VISION ®
and Valeo™).
Transdermal Drug Delivery
Transdermal drug delivery has emerged as a safe and patient-friendly method of drug delivery. The commercialization of transdermal patches for controlled
drug delivery began over two decades ago and has resulted in the appearance of diverse products on the market. Among them are nitroglycerin for angina, scopolamine for motion sickness, fentanyl for pain control, nicotine for smoking cessation,
estrogen for HT, clonidine for hypertension, lidocaine for topical anesthesia, testosterone for hypogonadism, and a combination of ethinyl estradiol and norelgestromin for contraception. Skin penetration enhancers are often used to enhance drug
permeation through the dermal layers.
The primary goal of transdermal drug delivery is to effectively penetrate the surface of the skin
via topical administration, such as a patch or gel. When successful, transdermal drug delivery provides an easy and painless method of administration. The protective capabilities of the skin, however, often act as a barrier to effective delivery.
Since the primary role of the skin is to provide protection against infection and physical damage, the organ often prevents many pharmaceuticals from entering the body as well. Large molecules may not be as effectively absorbed by the skin and enter
the body in prohibitively small amounts, significantly reducing their therapeutic potential. As a result, a limited number of active substances are able to cross the skin’s surface.
Despite these limitations, transdermal drug delivery is still viewed as a highly attractive route of administration for certain therapeutics. As a high
concentration of capillaries is located immediately below the skin, transdermal administration provides an easy means of access to systemic circulation. Transdermal systems can be designed to minimize absorption of the active drug in the blood
circulation as is needed in topical applications. This allows a build-up of drug in the layers underlying the skin, leading to an increased residence time in the targeted tissue. Transdermal systems can also be designed to release an active
ingredient over extended periods of time, providing benefits similar to depot injections and implants, without the need for an invasive procedure. If required, patients are also able to interrupt dosing by removing a patch or discontinuing the
application of a gel. Finally, this delivery technology minimizes first-pass metabolism by the liver as well as many of the gastrointestinal concerns of many orally ingested drugs.
Transdermal Gels
While transdermal patches remain an important aspect of the transdermal drug delivery market, transdermal gels have emerged as a viable means of administering a wide array of active pharmaceutical treatments. The concept of transdermal gels
parallels that of the transdermal patch, in the creation of a drug reservoir to provide sustained delivery of therapeutic quantities of a drug. While a patch provides this from an external reservoir, gel formulations create a subdermal reservoir of
the medication.
To address the penetration capabilities of transdermal products, Antares has developed its ATD™ gel technology that
utilizes a combination of permeation enhancers to further bolster a pharmaceutical agent’s ability to penetrate the skin. This new generation of products leads to a sustained plasma profile of the active agent, without the irritation and
cosmetic concerns often associated with patches.
Gels also provide drug developers with an opportunity to explore a wide variety of potential
applications. Due to the physicochemical properties of the excipients employed in gels, combined with the enhanced solubilization properties, a broad range of active agents can be formulated. These solubilization properties allow for higher
concentrations of the active ingredient to be incorporated for delivery. The enhanced viscosity in gels further enhances the patient’s ability to apply the product with little-to-no adverse cosmetic effect. There is also relatively little
limitation in the surface area to which a gel can be applied, as opposed to patches, allowing greater quantities of drug to be transported if required.
Antares’ Advanced Transdermal Delivery (ATD™) System
Antares’ ATD™ system successfully penetrates the skin to deliver a variety of treatments. The gels consist of a hydro-alcoholic base including a
combination of permeation enhancers. The gels are also designed to be absorbed quickly through the skin after application typically to the arms, shoulders, or abdomen. In comparison with commonly used patch delivery systems, the gels cause minimal
skin irritation or occlusion following application and possess a distinct cosmetic advantage over other approaches. The following is a summary of the benefits of our ATD™ gel platform:
Benefits of ATD™ Gel Platform
Discrete
Easy application
Cosmetically appealing compared with patches
Reduced irritancy compared with patches
Application of once per day for most products
Potential for delivery of larger medication doses
Potential for delivery of multiple active drugs
Ability to be either systemic or topical
Antares’ ATD™ gels can deliver both a single active ingredient as well as a combination
of active ingredients with different release profiles, and have demonstrated potential in a variety of therapeutic areas. Current ATD™ drug gels in development encompass an oxybutynin gel for treatment of over active bladder (Anturol™), an
estrogen gel for women to treat vasomotor symptoms associated with menopause (Bio-E-Gel™), a low dose testosterone gel to treat low libido in women (Libi-Gel™), a testosterone gel for men to treat hypogonadism, a contraceptive gel, and an
alprazolone gel for anti-anxiety. Antares has also licensed an ibuprofen gel in 11 countries for several years. ATD™ gels may be extended to a variety of fields, including the treatment of central nervous system (“CNS”) disorders,
cardiovascular disease and chronic pain, in which potent compounds may require alternatives to oral and injectable delivery for the following reasons:
•
poor oral uptake;
•
high first-pass liver effect;
•
requirement for less frequent administration;
•
desire to provide an alternative dosage form;
•
reducing peak plasma levels to avoid side effects; and
•
reduction in gastrointestinal side effects.
The Company
has also formulated several combination gels demonstrating the ability to deliver multiple actives with different release profiles.
Oral Delivery
The majority of all drugs are administered orally. Despite this, there remain limitations for those patients who have difficulty swallowing conventional
oral dosage forms or where an underlying disease state (for example, migraine, Parkinsonism or cancer) impacts a person’s ability to swallow. Additionally, where patients are resistant to oral drug delivery, the phenomenon of
“cheeking” (hiding a pill between the cheek and gum) and subsequent drug disposal is quite well known. New generations of oral product forms are being developed to address these issues.
Fast-Dissolving Tablets
Fast-dissolving tablet technology is an oral delivery method that offers an alternative to patients who experience difficulty ingesting conventional oral dosage forms. As a result, formulators are focusing on the development of tablet
dosage formulations for oral administration that dissolve rapidly in saliva without need for the patient to drink water. This formulation is easy to take and possesses similar therapeutic benefits to traditional oral technologies, thus appealing to
a wide demographic population.
One of the primary realities influencing the development of fast-dissolving technologies is the increased
life expectancy of a growing geriatric population. As many elderly individuals experience difficulty taking conventional oral dosage forms, such as solutions, suspensions, tablets and capsules, the need for more user-friendly formulations is
expanding. While swallowing difficulties often affect the elderly population, many young individuals also experience difficulty as a result of underdeveloped muscular and nervous systems. Other groups, including the mentally ill, the developmentally
disabled and uncooperative patients also require special attention. Other circumstances, such as motion sickness, allergic attacks and an unavailable source of water also necessitate fast-dissolving oral formulations.
The development of a fast-dissolving tablet also provides pharmaceutical companies with an opportunity for product line extensions. A wide range of drugs
(e.g. neuroleptics, cardiovascular drugs, analgesics, antihistamines, and drugs for erectile dysfunction) may be considered candidates for this technology.
Antares’ Easy Tec™ Fast-Melt Oral Disintegrating Tablet
Antares’ patented Easy Tec™ technology is based
on the simultaneous use of two disintegrants in an oral formulation. Two primary advantages of Easy Tec™ over competing technologies are that Easy Tec™ tablets can be manufactured with conventional tableting equipment and no unique
packaging requirements are necessary. The Company also believes that Easy Tec™ possesses several other key advantages over competing fast-melt technologies;
Easy Tec™ Competitive Advantages
• Higher drug dose loading is possible
• Friability within pharmaceutical specifications
• Moisture sensitivity lower compared with many competitor products
• Blister packaging sufficient to prevent moisture uptake
• Cost-effective, easy, time-saving process
• Easily transferable to final product site
• No specific facility required, compared to effervescent products
In addition to
being easy to take, such products are perceived as being fast acting because of rapid dispersion in the mouth. Antares believes that there may be attractive opportunities to develop its own fast-melt products using generic active ingredients as part
of its specialty pharmaceutical strategy and to achieve product approval based on an Abbreviated New Drug Application (“ANDA”) or 505(b)(2) filing in the United States and equivalent regulatory submissions in other parts of the world.
Antares has formulated its first Easy Tec™ based product, a non-steroidal anti inflammatory (NSAID) generic currently called AP-1022 for the treatment of pain.
Injection Delivery
According to industry sources, an estimated 9-12 billion needles and syringes are sold each year. While the need for these components will always exist,
burgeoning development efforts are focused on easing the dependence on needles in favor of more user-friendly injection systems. Currently available data suggest that injection with needle-free systems matches the performance of needle-based systems
with regard to drug bioavailability, and offers benefits in the speed of injection and the lack of requirement for needle disposal.
Needle-Free Injection
The most significant challenge beyond discovery of new molecules is how to
effectively deliver them by means other than conventional injection technology. The majority of these molecules have not, to date, been amenable to oral administration due to a combination of several factors, including breakdown in the
gastrointestinal tract, fundamentally poor absorption, or high first pass liver metabolism. Pulmonary delivery of these molecules, as an alternative to injection, has also been pursued and only recently one such application has been approved by the
FDA. It remains to be seen how clinical success will be accepted by patients, doctors and third party payers. Many companies have expended considerable effort in searching for less invasive ways to deliver such molecules that may allow them to
achieve higher market acceptance, particularly for those requiring patient self-administration.
Needle-free injection is a form of
parenteral drug delivery that continues to gain acceptance among the medical community. Encompassing a wide variety of sizes and designs, this technology operates by using pressure to force the drug, in solution or suspension, through a minute
perforation, creating an ultra-thin stream of liquid that penetrates the skin and deposits the drug into the subcutaneous tissue. Needle-free injection systems are being developed as small, pre-filled single-use devices, refillable devices for
repeat usage and specialized systems for high throughput applications in mass immunization campaigns.
Needle-free injection
represents a combination of an accepted technology - injection, with the elimination of the part of the injection – the needle, that concerns patient’s that have to self administer and health care professionals concerned about risks to
themselves. Improving patient comfort through needle-free injection may increase compliance and mitigate the problem of daily injections. Needle-free delivery eliminates the risk of needlestick injuries as well, which occurs frequently in
institutions in the U.S., and can result in disease transmission to healthcare workers. In response to concerns about needlestick injuries, the Occupational Safety and Health Administration (“OSHA”) issued a Bloodborne Pathogens Compliance
Directive in November 1999 mandating the use of safer needles and requiring that healthcare facilities perform annual reviews of safety and compliance programs. The National Institute for Occupational Safety and Health has also urged healthcare
providers to avoid unnecessary use of needles where safe and effective alternatives are available.
One of the primary factors
influencing development in the category of needle-free injection is the inherent problematic dependence on needles. It is also recognized that greater willingness to accept injection therapy could have a beneficial impact on disease outcomes. For
example, patients with diabetes appear to be reluctant to engage in intensive disease management, at least in part because of concerns over increased frequency of injections. Similarly, patients with diabetes who are ineffectively managed with oral
hypoglycemic agents are reluctant to transition to insulin injections in a timely manner because of injection concerns.
The advent of
these technologies has, to date, had a minor influence within the injectable sector, and they have failed to produce the deep market penetration that many within the industry believe they are capable of gaining. Several factors are believed to
contribute to this lack of market penetration, beginning with older needle-free injection systems. Many of the early needle-free injection systems had an assortment of drawbacks associated with both performance and cost efficiency. With potential
consumers aware of these historical shortcomings, current technologies promising greater efficiency and lower prices have failed to gain wide acceptance in the industry. In spite of the relative minor market penetration within this sector to date,
in June 2003, Greystone Associates predicted that the needle-free injection market would grow from $10.2 million in 2002 to $425 million by 2007 with 54% of these sales being insulin-based.
Antares’ Medi-Jector Series of Needle-Free Injectors
The Medi-Jector VISION ® represents the seventh in a series of Medi-Jector devices, with each generation offering improvements over the previous versions. Antares pioneered the
development of needle-free injection systems for individual use in 1979 and remains among the industry leaders as the technology continues to advance and is marketed worldwide. The Company’s current revenue stream is derived primarily from
sales of needle-free injectors and related disposable syringes for human growth hormone delivery in Europe and elsewhere.
Medi-Jector VISION ® (MJ7)
The Medi-Jector VISION ® has been sold for use in more than 30 countries to deliver either insulin or human growth hormone. The product features
a reusable, spring-based power source and disposable needle-free syringes, which eliminate the need for routine maintenance of the nozzle and allow for easy viewing of the medication dose prior to injection. The device’s primary advantage over
earlier devices is its ease of use and cost efficiency. The product is also reusable, with each device designed to last for approximately 3,000 injections (or approximately two years) while the needle-free syringe is disposable after approximately
one week of continuous use.
Antares believes this method of administration is a particularly attractive alternative to the needle and
syringe for the groups of patients described below.
Patient Candidates for Needle-Free Injection
• Young adults and children
• Patients looking for an alternative to needles
• Patients mixing insulins
• Patients unable to comply with a prescribed needle program
• Patients transitioning from oral medication to insulin
• New patients beginning an injection treatment program
The Medi-Jector VISION ® is primarily used in the U.S. to provide a needle-free means of administering insulin to patients with diabetes.
Patients with insulin-dependent diabetes are often required to make a life-long commitment to daily self-administration of insulin. In an effort to improve both the comfort and performance of this injected hormone, needle-free injection could become
an important alternative method of choice for administration.
The Medi-Jector VISION ® administers insulin by using a spring to push insulin in solution or suspension through
a micro-fine opening in the needle-free syringe. The opening is approximately half the diameter of a standard 30-gauge needle. A fine liquid stream of insulin then penetrates the skin, and the insulin dose is dispersed into the layer of fatty,
subcutaneous tissue. The insulin is subsequently distributed throughout the body, successfully producing the desired effect.
The
Medi-Jector VISION ® is primarily used in Europe and
elsewhere to provide a needle-free means of administering human growth hormone to patients with growth retardation. The Company typically sells its injection devices to partners in these markets who manufacture and/or market human growth hormone
directly. The partners then market the Company’s device with their growth hormone. The Company receives benefits from these agreements in the form of transfer pricing and royalties on sales of products.
Development Efforts: MJ8 (Valeo™) Needle-Free Injection Systems
In addition to the Medi-Jector VISION ® , Antares is also developing a reusable Medi-Jector device, the Medi-Jector MJ8 (Valeo™) with unique needle-free injection capabilities. The Medi-Jector Valeo™ accepts a conventional drug cartridge to create a
completely self-contained, multi-dose, needle-free injection system. With these improvements, the Medi-Jector Valeo™ aspires to provide more user-friendly capabilities than its predecessors and, if marketed, the Company believes it would be the
smallest reusable needle-free injector on the market.
Vibex™ Pre-filled, Disposable Mini-Needle Injector
Beyond reusable needle-free injector technologies, the Company has designed disposable, mini-needle devices to address acute medical needs, such as
allergic reactions, migraine headaches, acute pain and other daily therapies, as well as for the delivery of vaccines. The Company’s proprietary Vibex™ disposable, mini-needle product combines a low-energy, spring-based power source with a
small, hidden needle, which delivers the needed drug solution subcutaneously or, in the case of vaccines, subdermally.
In order to
minimize the anxiety and perceived pain associated with injection-based technologies, the Vibex™ disposable mini-needle injector features a triggering collar that shields the needle from view. The retracting collar springs back and locks in
place as a protective needle guard after the injection, making the device safe for general disposal. In clinical studies, this device has outperformed other delivery methods in terms of completeness of injection, while limiting pain and bleeding. A
summary of the unique benefits of the Vibex™ disposable mini-needle product is provided below.
Benefits of Vibex™ Disposable Mini-Needle Injectors
• Rapid injection
• Eliminates sharps disposal
• Ease of use in emergencies
• Reduces psychological barriers since the patient never sees the needle
• Highly dependable subcutaneous injection
• Designed around conventional cartridges or pre-filled syringes
The primary goal of the Vibex™ disposable mini-needle injector is to provide a fast, safe,
and time-efficient method of self-injection that addresses the patient’s need for immediate relief. This device is designed around conventional cartridges or pre-filled syringes, which are primary drug containers, offering ease of transition
for potential pharmaceutical partners.
Disposable Mini-Needle Vaccine Delivery Device
Antares’ disposable vaccine delivery device is at an earlier stage and is derived from its mini-needle injector technology (see above section). The
disposable device is designed to deliver vaccines intradermally and to subdermal layers of the skin. Effective intradermal injection methods, using variants of conventional needles, depend extensively on the skill of the person administering the
injection. Antares’ vaccine delivery technology simplifies the process for intradermal delivery, minimizing the dependence on skilled individuals administering the injection, and providing for a more comfortable means of vaccine delivery.
Research and Development
We currently
have one pharmaceutical product candidate in our own clinical studies listed below. Additionally, pharmaceutical partners are developing compounds using our technology (see “Collaborative Arrangements and License Agreements”).
ANTUROL™. We are currently evaluating Anturol™ for the treatment of over active bladder (OAB). Anturol™ is the anticholinergic oxybutynin
delivered by our proprietary ATD™ gel that is used to achieve therapeutic blood levels of the active compound that can be sustained over 24 hours after a single, daily application. It is believed that Anturol™ may offer equal or increased
oxybutynin to the metabolite ratio, thus resulting in decreased reporting of
adverse events when compared to patients taking comparable oral products. In addition, Anturol™ may also be more cosmetically appealing than patches and
have less irritation and allergic reactions as well as comparable or decreased reporting of adverse events.
Background
and Statistics
OAB affects more than 20 million adults and is one of the fastest growing segments in the urology market. It is
characterized by involuntary muscle contractions resulting in urine leakage. Symptoms include urinary frequency, urgency and urge incontinence. While OAB may occur at any age, it is most common among the elderly, affecting up to 61% of those over
65, particularly post-menopausal women. A recent SCRIP Report showed the incontinence market growing at 40% per year.
Treatment
currently consists of oral administration of compounds such as oxybutynin, tolteradine, darifenacin, solifenacin, and trospium each of which have significant side effects, including dry mouth (seen in 70% of patients), nausea, dry eyes, and
constipation. It is estimated that half of the adults suffering from OAB either are too embarrassed to discuss their symptoms or are not aware that pharmacological treatment is available. It is estimated by Cowen & Co. in their March 2006
publication that just 16% of incontinence patients were compliant with their treatment in 2005 improving modestly to 18% in 2010.
Summary of Clinical Data
In February 2006, the Company announced the results of its Phase II dose ranging study for its
ATD™ oxybutynin based gel product called Anturol™. The study was an open label, single period, randomized study using 48 healthy subjects and three different doses of Anturol™ over a 20 day period. Variables tested included
accumulation of the dose, dose proportionality, decay of plasma levels, skin tolerability and other adverse events.
The overall
conclusions of the study were positive. Dose proportionality occurred within the tested dosing range. A steady state was achieved after 3 applications (i.e., 3 days). Efficacy appeared comparable to oral products marketed. The incidences of dry
mouth were minimal and similar to other transdermals while significantly improved over comparable oral medications. Additionally, skin tolerance (i.e. local skin irritation) was excellent.
A Phase III study has been preliminarily approved by the FDA and will include 400 patients (130-135 per treatment arm) with urge and mixed urinary
incontinence. The study will be a multi-center study over a 12 week period with two dosage strengths applied once a day and compared to a placebo.
Proprietary Rights
When appropriate, the Company actively seeks protection for its products and proprietary information by
means of U.S. and international patents and trademarks. With the injection device technology, the Company currently holds 28 patents and has an additional 82 applications pending in the U.S. and other countries. With the Company’s topical
delivery technologies, it holds 2 patents, and an additional 17 applications in various countries are pending, with the Company’s oral technologies, it holds 2 patents and 12 applications in various countries. The patents have expiration dates
ranging from 2015 to 2022. In addition to issued patents and patent applications, we are also protected by trade secrets in all of our technology platforms.
Some of the Company’s technology is developed on its behalf by independent outside contractors. To protect the rights of its proprietary know-how and technology, Company policy requires all employees and
consultants with access to proprietary information to execute confidentiality agreements prohibiting the disclosure of confidential information to anyone outside the Company. These agreements also require disclosure and assignment to the Company of
discoveries and inventions made by such individuals while devoted to Company-sponsored activities. Companies with which Antares has entered into development agreements have the right to certain technology developed in connection with such
agreements. Ownership of intellectual property developed under the Lilly Development and License Agreement will be governed by U.S. laws of inventorship except that intellectual property relating to compounds, has been assigned to Lilly.
Manufacturing
We do not have the resources, facilities or capabilities to manufacture any of our product candidates. We have no current plans to establish a manufacturing facility. We expect that we will be dependent to a significant extent on contract
manufacturers for commercial scale manufacturing of our product candidates in accordance with regulatory standards.
Contract manufacturers
may utilize their own technology, technology developed by us, or technology acquired or licensed from third parties. When contract manufacturers develop proprietary process technology and have ownership of the Drug Master File (DMF), our reliance on
such contract manufacturers is increased, and we may have to obtain a license from such contract manufacturers to have our products manufactured by another party. Technology transfer from the original contract manufacturer may be required. Any such
technology transfer may also require transfer of requisite data for regulatory purposes, including information contained in a proprietary DMF held by a contract manufacturer. FDA approval of the new manufacturer and manufacturing site would also be
required.
We have not contracted with a commercial supplier of pharmaceutical chemicals, to supply us with active pharmaceutical
ingredients of oxybutynin for Anturol™ in a manner that meets FDA requirements. We have contracted with Patheon, Inc. (Patheon), a manufacturing development company, to supply clinical quantities of Anturol™ gel in a manner that may meet
FDA requirements. The FDA has not approved the manufacturing processes of Patheon.
The Company is responsible for U.S. device
manufacturing in compliance with current Quality System Regulations (“QSR”) established by the Food and Drug Administration and by the centralized European regulatory authority (Medical Device Directive). Injector and disposable parts are
manufactured by third-party suppliers and are assembled by a third-party supplier. Packaging is performed by a third-party supplier under the direction of the Company. Product release is performed by the Company.
The ATD™ Gel formulations for clinical studies have, in the past, been manufactured by contract under the Company’s supervision. Early in 2005,
Antares Pharma AG, our wholly owned subsidiary in Switzerland, received a GMP approval for the production and wholesaling of medicaments.
Marketing
The Company expects to currently market most of its products through other more substantial pharmaceutical and medical device companies
while continuing direct-to-consumer marketing of its insulin injection devices and related disposable components in the U.S. In the future as the Company develops more products in niche therapeutic areas, it may decide to incorporate limited sales
and marketing capabilities.
During 2005, 2004 and 2003, international revenue accounted for 77%, 82% and 77% of total revenue,
respectively. Europe (primarily Germany) accounted for 71%, 83% and 95% of international revenue in 2005, 2004 and 2003, respectively, with the remainder coming primarily from Asia. Ferring accounted for 48%, 47% and 62% of the Company’s
worldwide revenues in 2005, 2004 and 2003, respectively. BioSante Pharmaceuticals, Inc. accounted for 7%, 11% and 14% and JCR Pharmaceuticals, Co., Ltd. accounted for 12%, 6% and 1% of the Company’s worldwide revenues in 2005, 2004 and 2003,
respectively. Revenue from Ferring and JCR resulted from sales of injection devices and related disposable components for its hGH formulation. Revenue from BioSante resulted from license fees, development fees, milestone payments and clinical
testing supplies for hormone replacement therapy transdermal gel formulations.
Collaborative Arrangements and License Agreements
The following table describes significant existing pharmaceutical and device relationships, and license agreements.
Partner
Compound/Product
Market Segment
Technology
BioSante
Estradiol (Bio-E-Gel)
Hormone replacement therapy
(North America, other countries)
ATD™ Gel
BioSante
Testosterone (Libi-Gel™)
Female sexual dysfunction
(North America, other countries)
ATD™ Gel
Solvay
Estradiol/NETA
Hormone replacement therapy
(Worldwide)
ATD™ Gel
Undisclosed
Undisclosed
Development Agreement
Dermatology
ATD™ Gel
Undisclosed
Undisclosed
Development Agreement
Central Nervous System
ATD™ Gel
Ferring
MJ-7
Growth Hormone
(U.S. and Europe)
Needle Free Device
Teva Pharmaceuticals, Ltd., affiliate
Undisclosed
Undisclosed
(United States)
Undisclosed
Eli Lilly and Company
MJ-7
Diabetes and Obesity
(Worldwide)
Needle Free Device
JCR Pharmaceuticals Co., Ltd.
MJ-7
Growth Hormone
(Japan)
Needle Free Device
SciGen Pte Ltd.
MJ-7
Growth Hormone
(Asia/Pacific)
Needle Free
Device
This table summarizes agreements under which the Company’s partners are selling products,
conducting clinical evaluation, and performing development of the Company’s products. For competitive reasons, the Company’s partners may not divulge their name or the exact stage of clinical development.
In June 2000, the Company granted an exclusive license to BioSante to develop and commercialize three of the Company’s gel technology products and
one patch technology product for use in hormone replacement therapy in North America and other countries. Subsequently, the license for the patch technology product was returned to the Company in exchange for a fourth gel based product. BioSante
paid the Company $1 million upon execution of the agreement and is also required to pay the Company royalty payments once commercial sales of the products have begun. The royalty payments are based on a percentage of sales of the products and must
be paid for a period of 10 years following the first commercial sale of the products, or when the last patent for the products expires, whichever is later. The agreement also provides for milestone payments to the Company upon the occurrence of
certain events related to regulatory filings and approvals.
Under the Company’s June 1999 agreement with Solvay, the Company granted
an exclusive license to Solvay for the Company’s transdermal gel technology for delivery of an estradiol/progestin combination for hormone replacement therapy. The exclusive license applies to all countries and territories in the world, except
for North America, Japan and Korea. The agreement contains a development plan under which the Company and Solvay collaborate to bring the product to market. Solvay must pay the Company a license fee of $5 million in four separate payments, all of
which are due upon completion of various phases of the development plan. To date, the Company has received $1.75 million of this fee. When commercial sale of the product begins, Solvay is required to, on a quarterly basis, pay the Company a royalty
based on a percentage of sales. The royalty payments will be required for a period of 15 years or when the last patent for the product expires, whichever is later.
In August 2001, Solvay entered into an exclusive agreement with BioSante in which Solvay has sublicensed from BioSante the U.S. and Canadian rights to the Company’s estrogen/progestin combination transdermal
hormone replacement gel product, one of the drug-delivery products the Company previously licensed to BioSante. Under the terms of this license agreement between the Company and BioSante, the Company received a portion of the up
front payment made by Solvay to BioSante. The Company is also entitled to a portion of any milestone payments or royalties BioSante receives from Solvay
under the sublicense agreement.
On January 22, 2003, the Company entered into a revised License Agreement with Ferring, under which
the Company licensed certain of its intellectual property and extended the territories available to Ferring for use of certain of the Company’s reusable needle-free injection devices to include all countries and territories in the world except
Asia/Pacific. Specifically, the Company granted to Ferring an exclusive, royalty-bearing license, within a prescribed manufacturing territory, to utilize certain of the Company’s reusable needle-free injector devices for the field of human
growth hormone until the expiration of the last to expire of the patents in any country in the territory. The Company granted to Ferring similar non-exclusive rights outside of the prescribed manufacturing territory. In addition, the Company granted
to Ferring a non-exclusive right to make and have made the equipment required to manufacture the licensed products, and an exclusive, royalty-free license in a prescribed territory to use and sell the licensed products under certain circumstances.
The Company also granted to Ferring a right of first offer to obtain an exclusive worldwide license to manufacture and sell the Company’s early version of a disposable mini-needle device in a specified field.
In November 2005, the Company signed an agreement with an affiliate of Teva Pharmaceuticals Industries Ltd. under which the affiliate is obligated to
purchase all of its injection delivery device requirements from Antares for an undisclosed product to be marketed in the United States. The affiliate also received an option for rights in other territories. The license agreement included, among
other things, an upfront cash payment, milestone fees and a negotiated percentage of the gross profit on units sold.
In September 2003,
the Company entered into a Development and License Agreement (the “License Agreement”) with Eli Lilly and Company. Under the License Agreement, the Company granted Lilly an exclusive license to certain of the Company’s needle-free
technology in the fields of diabetes and obesity.
In 2004, JCR Pharmaceuticals Co., Ltd. initiated a campaign to broaden its marketing
efforts for human growth hormone under a purchase agreement with our needle free injector, MJ-7. In 1999, SciGen pte Ltd. began distribution in Asia of our needle free injector MJ-7 for human growth hormone, and in 2004 Shreya Life Sciences
initiated a test market evaluation that resulted in limited distribution in India with insulin.
Distribution/supply agreements are
arrangements under which the Company’s products are supplied to end-users through the distributor or supplier. The Company provides the distributor/supplier with injection devices and related disposable components, and the distributor/supplier
often receives a margin on sales. The Company currently has three distribution/supply agreements under which the distributors/suppliers sell the Company’s injection devices and related disposable components for use with insulin.
Competition
Competition in the pharmaceutical
formulation sector is considerably large, mature and dominated by companies like ALZA Corporation, Elan Corporation plc, SkyePharma plc and Alkermes, Inc. Competition in the gel market includes companies like NexMed, Inc., Cellegy Pharmceuticals,
Inc., Bentley Pharmaceuticals, Inc. and Novavax, Inc. Competition in the fast-melt market includes Eurand, CIMA Labs, Inc., Cardinal Health and Yamanouchi Pharmaceutical Co., Ltd. Competition in the disposable, single-use injector market includes,
but is not limited to, OwenMumford Ltd., The Medical House and Pharma-Pen, Inc. (formerly Innoject, Inc.), while competition in the reusable needle-free injector market includes Bioject Medical Technologies Inc. and The Medical House.
Competition in the injectable drug delivery market is intensifying. The Company faces competition from traditional needles and syringes, newer pen-like
and sheathed needle syringes and other needle-free injection systems as well as alternative drug delivery methods including oral, transdermal and pulmonary delivery systems. Nevertheless, the majority of injections are still currently administered
using needles. Because injections are typically only used when other drug delivery methods are not feasible, the needle-free injection systems may be made obsolete by the development or introduction of drugs or drug delivery methods which do not
require injection
for the treatment of conditions the Company has currently targeted. In addition, because the Company intends to, at least in part, enter into collaborative
arrangements with pharmaceutical companies, the Company’s competitive position will depend upon the competitive position of the pharmaceutical company with which it collaborates for each drug application.
Government Regulation
We and our collaborative
partners are subject to, and any potential products discovered, developed and manufactured by us or our collaborative partners must comply with, comprehensive regulation by the FDA in the United States and by comparable authorities in other
countries. These national agencies and other federal, state, and local entities regulate, among other things, the pre-clinical and clinical testing, safety, effectiveness, approval, manufacturing operations, quality, labeling, distribution,
marketing, export, storage, record keeping, event reporting, advertising and promotion of pharmaceutical products and medical devices. Facilities and certain company records are also subject to inspections by the FDA and comparable authorities or
their representatives. The FDA has broad discretion in enforcing the FD&C Act and the regulations thereunder, and noncompliance can result in a variety of regulatory steps ranging from warning letters, product detentions, device alerts or field
corrections to mandatory recalls, seizures, injunctive actions and civil or criminal actions or penalties.
Transdermal and topical
products indicated for the treatment of systemic or local treatments respectively are regulated by the FDA in the U.S. and other similar regulatory agencies in other countries as drug products. Transdermal and topical products are considered to be
controlled release dosage forms and may not be marketed in the U.S. until they have been demonstrated to be safe and effective. The regulatory approval routes for transdermal and topical products include the filing of an NDA for new drugs, new
indications of approved drugs or new dosage forms of approved drugs. Alternatively, these dosage forms can obtain marketing approval as a generic product by the filing of an ANDA, providing the new generic product is bioequivalent to and has the
same labeling as a comparable approved product or as a filing under Section 505(b)(2) where there is an acceptable reference product. Many topical products for local treatment do not require the filing of either an NDA or ANDA, providing that
these products comply with existing OTC monographs. The combination of the drug, its dosage form and label claims, and FDA requirement will ultimately determine which regulatory approval route will be required.
The process required by the FDA before a new drug (pharmaceutical product) or a new route of administration of a pharmaceutical product may be approved
for marketing in the United States generally involves:
•
pre-clinical laboratory and animal tests;
•
submission to the FDA of an IND application, which must be in effect before clinical trials may begin;
•
adequate and well controlled human clinical trials to establish the safety and efficacy of the drug for its intended indication(s);
•
FDA compliance inspection and/or clearance of all manufacturers;
•
submission to the FDA of an NDA; and
•
FDA review of the NDA or product license application in order to determine, among other things, whether the drug is safe and effective for its intended uses.
Pre-clinical tests include laboratory evaluation of product chemistry and formulation, as well as animal studies, to assess
the potential safety and efficacy of the product. Certain pre-clinical tests must comply with FDA regulations regarding current good laboratory practices. The results of the pre-clinical tests are submitted to the FDA as part of an IND, to support
human clinical trials and are reviewed by the FDA, with patient safety as the primary objective, prior to the IND commencement of human clinical trials.
Clinical trials are conducted according to protocols that detail matters such as a description of the condition to be treated, the objectives of the study, a description of the patient population eligible for the
study and the parameters to be used to monitor safety and efficacy. Each protocol must be submitted to the FDA as part of the IND. Protocols must be conducted in accordance with FDA regulations concerning good clinical practices to ensure the
quality and integrity of clinical trial results and data. Failure to adhere to good clinical practices and the protocols may result in FDA rejection of clinical trial results and data, and may delay or prevent the FDA from approving the drug for
commercial use.
Clinical trials are typically conducted in three sequential Phases, which may overlap. During Phase I,
when the drug is initially given to human subjects, the product is tested for safety, dosage tolerance, absorption, distribution, metabolism and excretion. Phase I studies are often conducted with healthy volunteers depending on the drug being
tested; however, in oncology, Phase I trials are more often conducted in cancer patients. Phase II involves studies in a limited patient population, typically patients with the conditions needing treatment, to:
•
evaluate preliminarily the efficacy of the product for specific, targeted indications;
•
determine dosage tolerance and optimal dosage; and
•
identify possible adverse effects and safety risks.
Pivotal or Phase III adequate and well-controlled trials are undertaken in order to evaluate efficacy and safety in a comprehensive fashion within an expanded patient population for the purpose of registering the new drug. The FDA may
suspend or terminate clinical trials at any point in this process if it concludes that patients are being exposed to an unacceptable health risk or if they decide it is unethical to continue the study. Results of pre-clinical and clinical trials
must be summarized in comprehensive reports for the FDA. In addition, the results of Phase III studies are often subject to rigorous statistical analyses. This data may be presented in accordance with the guidelines for the International Committee
of Harmonization that can facilitate registration in the United States, the EU and Japan.
FDA approval of our own and our
collaborators’ products is required before the products may be commercialized in the United States. FDA approval of an NDA will be based, among other factors, on the comprehensive reporting of clinical data, risk/benefit analysis, animal
studies and manufacturing processes and facilities. The process of obtaining NDA approvals from the FDA can be costly and time consuming and may be affected by unanticipated delays.
Among the conditions for NDA approval is the requirement that the prospective manufacturer’s procedures conform to current good manufacturing
practices, which must be followed at all times. In complying with this requirement, manufacturers, including a drug sponsor’s third-party contract manufacturer, must continue to expend time, money and effort in the area of production, quality
assurance and quality control to ensure compliance. Domestic manufacturing establishments are subject to periodic inspections by the FDA in order to assess, among other things, compliance with current good manufacturing practices. To supply products
for use in the United States, foreign manufacturing establishments also must comply with current good manufacturing practices and are subject to periodic inspection by the FDA or by regulatory authorities in certain countries under reciprocal
agreements with the FDA.
An sNDA is a submission to an existing NDA that provides for changes to the NDA and therefore requires FDA
approval. Changes to the NDA that require FDA approval are the subject of either the active ingredients, the drug product and/or the labeling. A supplement is required to fully describe the change. There are two types of sNDAs depending on the
content and extent of the change. These two types are (i) supplements requiring FDA approval before the change is made and (ii) supplements for changes that may be made before FDA approval. Supplements to the labeling that change the
Indication Section require prior FDA approval before the change can be made to the labeling, e.g. a new indication.
Both before and after
market approval is obtained, a product, its manufacturer and the holder of the NDA for the product are subject to comprehensive regulatory oversight. Violations of regulatory requirements at any stage, including after approval, may result in various
adverse consequences, including the FDA’s delay in approving or refusal to approve a product, withdrawal of an approved product from the market and the imposition of criminal penalties against the manufacturer and NDA holder. In addition, later
discovery of previously unknown problems may result in restrictions on the product, manufacturer or NDA holder, including withdrawal of the product from the market. Furthermore, new government requirements may be established that could delay or
prevent regulatory approval of our products under development.
FDA approval is required before a generic equivalent can be marketed. We
seek approval for such products by submitting an ANDA to the FDA. When processing an ANDA, the FDA waives the requirement of conducting
complete clinical studies, although it normally requires bioavailability and/or bioequivalence studies. “Bioavailability” indicates the rate and
extent of absorption and levels of concentration of a drug product in the blood stream needed to produce a therapeutic effect. “Bioequivalence” compares the bioavailability of one drug product with another, and when established, indicates
that the rate of absorption and levels of concentration of the active drug substance in the body are equivalent for the generic drug and the previously approved drug. An ANDA may be submitted for a drug on the basis that it is the equivalent of a
previously approved drug or, in the case of a new dosage form, is suitable for use for the indications specified.
Before approving a
product, the FDA also requires that our procedures and operations or those of our contracted manufacturer conform to Current Good Manufacturing Practice (“cGMP”) regulations, relating to good manufacturing practices as defined in the U.S.
Code of Federal Regulations. We and our contracted manufacturer must follow the cGMP regulations at all times during the manufacture of our products. We will continue to spend significant time, money and effort in the areas of production and quality
testing to help ensure full compliance with cGMP regulations and continued marketing of our products now or in the future.
If the FDA
believes a company is not in compliance with cGMP, sanctions may be imposed upon that company including:
•
withholding from the company new drug approvals as well as approvals for supplemental changes to existing applications;
•
preventing the company from receiving the necessary export licenses to export its products; and
•
classifying the company as an “unacceptable supplier” and thereby disqualifying the company from selling products to federal agencies.
The timing of final FDA approval of an ANDA depends on a variety of factors, including whether the applicant challenges any listed patents for the drug
and whether the brand-name manufacturer is entitled to one or more statutory exclusivity periods, during which the FDA may be prohibited from accepting applications for, or approving, generic products. In certain circumstances, a regulatory
exclusivity period can extend beyond the life of a patent, and thus block ANDAs from being approved on the patent expiration date. For example, in certain circumstances the FDA may extend the exclusivity of a product by six months past the date of
patent expiry if the manufacturer undertakes studies on the effect of their product in children, a so-called pediatric extension. The pediatric extension results from a 1997 law designed to reward branded pharmaceutical companies for conducting
research on the effects of pharmaceutical products in the pediatric population. As a result, under certain circumstances, a branded company can obtain an additional six months of market exclusivity by performing pediatric research.
In May 1992, Congress enacted the Generic Drug Enforcement Act of 1992, which allows the FDA to impose debarment and other penalties on individuals
and companies that commit certain illegal acts relating to the generic drug approval process. In some situations, the Generic Drug Enforcement Act requires the FDA to not accept or review ANDAs for a period of time from a company or an individual
that has committed certain violations. It also provides for temporary denial of approval of applications during the investigation of certain violations that could lead to debarment and also, in more limited circumstances, provides for the suspension
of the marketing of approved drugs by the affected company. Lastly, the Generic Drug Enforcement Act allows for civil penalties and withdrawal of previously approved applications. Neither we nor any of our employees have ever been subject to
debarment.
Drug delivery systems such as injectors may be legally marketed as a medical device or may be evaluated as part of the drug
approval process in connection with an NDA or a Product License Application (“PLA”). Combination drug/device products raise unique scientific, technical and regulatory issues. The FDA has established an Office of Combination Products to
address the challenges associated with the premarket review and regulation of combination products. New drug/delivery combinations may require designation from the Office of Combination Products to determine assignment to the appropriate regulatory
center. To the extent permitted under the FD&C Act and current FDA policy, the Company intends to seek the required approvals and clearance for the use of its new injectors, as modified for use in specific drug applications under the medical
device provisions, rather than under the new drug provisions, of the FD&C Act.
Products regulated as medical devices may not be commercially distributed in the United States unless
they have been found substantially equivalent to a marketed product or approved by the FDA, unless otherwise exempted from the FD&C Act and regulations thereunder. There are two methods for obtaining such clearance or approvals. Under
Section 510(k) of the FD&C Act (“510(k) notification”), certain products qualify for a pre-market notification (“PMN”) of the manufacturer’s intention to commence marketing the product. The manufacturer must, among
other things, establish in the PMN that the product to be marketed is substantially equivalent to another legally marketed product (that is, that it has the same intended use and that it is as safe and effective as a legally marketed device and does
not raise questions of safety and effectiveness that are different from those associated with the legally marketed device). Marketing may commence when the FDA issues a letter finding substantial equivalence to such a legally marketed device. The
FDA may require, in connection with a PMN, that it be provided with animal and/or human test results. If a medical device does not qualify for the 510(k) procedure, the manufacturer must file a pre-market approval (“PMA”) application under
Section 515 of the FD&C Act. A PMA must show that the device is safe and effective and is generally a much more complex submission than a 510(k) notification, typically requiring more extensive pre-filing testing and a longer FDA review
process. The Company believes that injection systems, when indicated for use with drugs or biologicals approved by the FDA, will be regulated as medical devices and are eligible for clearance through the 510(k) notification process. There can be no
assurance, however, that the FDA will not require a PMA in the future.
In addition to submission when a device is being introduced into
the market for the first time, a PMN is also required when the manufacturer makes a change or modification to a previously marketed device that could significantly affect safety or effectiveness, or where there is a major change or modification in
the intended use or in the manufacture of the device. When any change or modification is made in a device or its intended use, the manufacturer is expected to make the initial determination as to whether the change or modification is of a kind that
would necessitate the filing of a new 510(k) notification. The Medi-Jector VISION ®
injection system is a legally marketed device under Section 510(k) of the FD&C Act. In the future the Company or its partners may submit 510(k) notifications with regard to further device design improvements and uses with additional drug
therapies.
If the FDA concludes that any or all of the Company’s new injectors must be handled under the new drug provisions of the
FD&C Act, substantially greater regulatory requirements and approval times will be imposed. Use of a modified new product with a previously unapproved new drug likely will be handled as part of the NDA for the new drug itself. Under these
circumstances, the device component will be handled as a drug accessory and will be approved, if ever, only when the NDA itself is approved. The Company’s injectors may be required to be approved as a combination drug/device product under a
supplemental NDA for use with previously approved drugs. Under these circumstances, the Company’s device could be used with the drug only if and when the supplemental NDA is approved for this purpose. It is possible that, for some or even all
drugs, the FDA may take the position that a drug-specific approval must be obtained through a full NDA or supplemental NDA before the device may be packaged and sold in combination with a particular drug.
To the extent that the Company’s modified injectors are packaged with the drug, as part of a drug delivery system, the entire package is subject to
the requirements for drug/device combination products. These include drug manufacturing requirements, drug adverse reaction reporting requirements, and all of the restrictions that apply to drug labeling and advertising. In general, the drug
requirements under the FD&C Act are more onerous than medical device requirements. These requirements could have a substantial adverse impact on the Company’s ability to commercialize its products and its operations.
The FD&C Act also regulates quality control and manufacturing procedures by requiring the Company and its contract manufacturers to demonstrate
compliance with the current Quality System Regulations (“QSR”). The FDA’s interpretation and enforcement of these requirements have been increasingly strict in recent years and seem likely to be even more stringent in the future. The
FDA monitors compliance with these requirements by requiring manufacturers to register with the FDA and by conducting periodic FDA inspections of manufacturing facilities. If the inspector observes conditions that might violate the QSR, the
manufacturer must correct those conditions or explain them satisfactorily. Failure to adhere to QSR requirements would cause the devices produced to be considered in violation of the FDA Act and subject to FDA enforcement action that might include
physical removal of the devices from the marketplace.
The FDA’s Medical Device Reporting Regulation requires companies to provide information to the FDA
on the occurrence of any death or serious injuries alleged to have been associated with the use of their products, as well as any product malfunction that would likely cause or contribute to a death or serious injury if the malfunction were to
recur. In addition, FDA regulations prohibit a device from being marketed for unapproved or uncleared indications. If the FDA believes that a company is not in compliance with these regulations, it could institute proceedings to detain or seize
company products, issue a recall, seek injunctive relief or assess civil and criminal penalties against the company or its executive officers, directors or employees.
In addition to regulations enforced by the FDA, we must also comply with regulations under the Occupational Safety and Health Act, the Environmental Protection Act, the Toxic Substances Control Act, the Resource
Conservation and Recovery Act and other federal, state and local regulations.
In addition to regulations in the United States, we are
subject to various foreign regulations governing clinical trials and the commercial sales and distribution of our products. We must obtain approval of a product by the comparable regulatory authorities of foreign countries before we can commence
clinical trials or marketing of the product in those countries. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement and the regulatory approval process all vary greatly from country to country.
Additionally, the time it takes to complete the approval process in foreign countries may be longer or shorter than that required for FDA approval. Foreign regulatory approvals of our products are necessary whether or not we obtain FDA approval for
such products. Finally, before a new drug may be exported from the United States, it must either be approved for marketing in the United States or meet the requirements of exportation of an unapproved drug under Section 802 of the Export Reform
and Enhancement Act or comply with FDA regulations pertaining to INDs.
Under European Union regulatory systems, we are permitted to submit
marketing authorizations under either a centralized or decentralized procedure. The centralized procedure provides for the grant of a single marketing authorization that is valid for all member states of the European Union. The decentralized
procedure provides for mutual recognition of national approval decisions by permitting the holder of a national marketing authorization to submit an application to the remaining member states. Within 90 days of receiving the applications and
assessment report, each member state must decide whether to recognize approval.
Sales of medical devices outside of the U.S. are subject
to foreign legal and regulatory requirements. Certain of the Company’s transdermal and injection systems have been approved for sale only in certain foreign jurisdictions. Legal restrictions on the sale of imported medical devices and products
vary from country to country. The time required to obtain approval by a foreign country may be longer or shorter than that required for FDA approval, and the requirements may differ. Antares relies upon the companies marketing its injectors in
foreign countries to obtain the necessary regulatory approvals for sales of the Company’s products in those countries. Generally, products having an effective 510(k) clearance or PMA may be exported without further FDA authorization.
The Company has obtained ISO 13485: 2003 certification, the newly released medical device industry standard for its quality systems. This
certification shows that the Company’s development and manufacturing comply with standards for quality assurance, design capability and manufacturing process control. Such certification, along with European Medical Device Directive
certification, evidences compliance with the requirements enabling the Company to affix the CE Mark to current products. The CE Mark denotes conformity with European standards for safety and allows certified devices to be placed on the market in all
European Union countries. Semi-annual audits by the Company’s notified body, British Standards Institute, are required to demonstrate continued compliance.
The Company has also received GMP approval from the Swiss Medical Institute for the production and wholesaling of medicaments, specifically related to its Advanced Transdermal Delivery (ATD™) gels. This allows
the Company to produce clinical trial materials and related packaging as well as production of intermediate products and end-user medicaments.
Employees
We believe that our success is largely dependent upon our ability to attract and retain qualified personnel in
the research, development, manufacturing, business development and commercialization fields. As of March 1, 2006, we had 24 full-time and 3 part-time employees worldwide, of whom 14 are in the United States. Of the 27 employees, 14 are
primarily involved in research, development and manufacturing activities, 2 are primarily involved in business development and commercialization, with the remainder engaged in executive and administrative capacities. Although we believe that we are
appropriately sized to focus on our mission, we intend to add personnel with specialized expertise, as needed.
We believe that we have
been successful to date in attracting skilled and experienced scientific and business professionals. We consider our employee relations to be good, and none of our employees are represented by any labor union or other collective bargaining unit.
However, competition for personnel is intense and we cannot assure that we will continue to be able to attract and retain personnel of high caliber.
Item 1A.
RISK FACTORS
The following “risk
factors” contain important information about us and our business and should be read in their entirety. Additional risks and uncertainties not known to us or that we now believe to be not material could
also impair our business. If any of the following risks actually occur, our business, results of operations and financial condition could suffer
significantly. As a result, the market price of our common stock could decline and you could lose all of your investment. In this Section, the terms “we” and “our” refer to Antares Pharma, Inc.
Risks Related to Our Operations
We have incurred significant
losses to date, and there is no guarantee that we will ever become profitable
We had working capital of $965,169 at December 31,
2005, and $8,489,253 at December 31, 2004. We incurred net losses of ($8,497,956) and ($8,348,532) in the fiscal years ended 2005 and 2004, respectively. In addition, we have accumulated aggregate net losses from the inception of business
through December 31, 2005 of ($91,123,107). The costs for research and product development of our drug delivery technologies along with marketing and selling expenses and general and administrative expenses have been the principal causes of our
losses.
We completed private placements in March 2006 and February and March 2004 in which we received aggregate gross proceeds of
$10,962,500 and $15,120,000, respectively. We believe that the combination of these equity financings and projected product sales and product development and license revenues will provide us with sufficient funds to support operations beyond 2006.
However, if we need additional financing and are unable to obtain such financing when needed, or obtain it on favorable terms, we may be required to curtail development of new drug technologies, limit expansion of operations, accept financing terms
that are not as attractive as we may desire or be forced to liquidate and close operations.
Long-term capital requirements will depend on
numerous factors, including, but not limited to, the status of collaborative arrangements, the progress of research and development programs and the receipt of revenues from sales of products. Our ability to achieve and/or sustain profitable
operations depends on a number of factors, many of which are beyond our control. These factors include, but are not limited to, the following:
•
the demand for our technologies from current and future biotechnology and pharmaceutical partners;
•
our ability to manufacture products efficiently and with the required quality;
•
our ability to increase and continue to outsource manufacturing capacity to allow for new product introductions;
•
the level of product competition and of price competition;
•
our ability to develop, maintain or acquire patent positions;
•
our ability to develop additional commercial applications for our products;
•
our limited regulatory and commercialization experience;
•
our reliance on outside consultants;
•
our ability to obtain regulatory approvals;
•
our ability to attract the right personnel to execute our plans;
•
our ability to control costs; and
•
general economic conditions.
As we changed our business model to be
more commercially oriented by further developing our own products, we may not have sufficient resources to fully execute our plan.
We
must make choices as to the drugs that we will combine with our transdermal gel, fast-melt tablet and disposable mini-needle technologies to move into the marketplace. We may not make the correct choice of drug or technologies when combined with a
drug, which may not be accepted by the marketplace as we expected or at all. FDA approval processes for the drugs and drugs with devices may be longer in time and/or more costly and/or require more extended clinical evaluation than anticipated.
Funds required to bring our own products to market may be more than anticipated or may not be available at all. We have limited experience in development of compounds and in regulatory matters and bringing such products to market; therefore, we may
experience difficulties in making this change or not be able to achieve the change at all.
We currently depend on a limited number of customers for the majority of our revenue, and the loss of any one of these
customers could substantially reduce our revenue and impact our liquidity
During 2005, we derived approximately 48% and 12% of our
revenue, from Ferring and JCR Pharmaceuticals, Co., Ltd., respectively.
The loss of either of these customers would cause our revenues to
decrease significantly, increase our continuing losses from operations and, ultimately, could require us to cease operating. If we cannot broaden our customer base, we will continue to depend on a few customers for the majority of our revenues.
Additionally, if we are unable to negotiate favorable business terms with these customers in the future, our revenues and gross profits may be insufficient to allow us to achieve and/or sustain profitability or continue operations.
If we or our third-party manufacturer are unable to supply Ferring with our devices pursuant to our current license agreement with Ferring, Ferring would own a fully
paid up license for certain of our intellectual property
Pursuant to our license agreement with Ferring, we licensed certain of our
intellectual property related to our needle-free injection devices, including a license that allows Ferring to manufacture our devices on its own for use with its human growth hormone product. This license becomes effective if we are unable to
continue to supply product to Ferring under our current supply agreement. In accordance with the license agreement, we entered into a manufacturing agreement with a third party to manufacture our devices for Ferring. If we or this third party are
unable to meet our obligations to supply Ferring with our devices, Ferring would own a fully paid up license to manufacture our devices and to use and exploit our intellectual property in connection with Ferring’s human growth hormone product.
In such event, we would no longer receive royalties or manufacturing margins from Ferring.
If we do not develop and maintain relationships with
manufacturers of our drug candidates, then we may not successfully manufacture and sell our pharmaceutical products.
We do not possess the
capabilities, resources or facilities to manufacture Anturol™, which is currently in clinical studies for over active bladder, or any other of our future drug candidates. We must contract with manufacturers to produce Anturol™ according to
government regulations. Our future development and delivery of our product candidates depends on the timely, profitable and competitive performance of these manufacturers. A limited number of manufacturers exist which are capable of manufacturing
our product candidates. We may fail to contract with the necessary manufacturers or we may contract with manufactures on terms that may not be entirely acceptable to us. Our manufacturers must obtain FDA approval for their manufacturing processes,
and we have no control over this approval process.
We have not contracted with a commercial supplier of active pharmaceutical ingredients of oxybutynin
for Anturol™. We are currently working towards selecting a manufacturer to provide us with oxybutynin in a manner which meets FDA requirements.
We
have contracted with Patheon, a manufacturing development company, to supply clinical quantities of Anturol™ in a manner that meets FDA requirements. The FDA has not approved the manufacturing processes of Patheon. Any failure by Patheon to
achieve compliance with FDA standards could significantly harm our business since we do not have an approved secondary manufacturer for Anturol™.
We have limited device manufacturing experience and may experience manufacturing difficulties related to the use of new device materials and procedures, which could increase our production costs and, ultimately, decrease our profits
Our past assembly, testing and device manufacturing experience for certain of our device technologies has involved the assembly of
products from machined stainless steel and composite components in limited quantities. Our planned future drug delivery device technologies necessitate significant changes and additions to our manufacturing and assembly process to accommodate new
components. These systems must be manufactured in compliance with regulatory requirements, in a timely manner and in sufficient quantities while maintaining quality and acceptable manufacturing costs. In the course of these changes and additions to
our manufacturing and
production methods, we may encounter difficulties, including problems involving yields, quality control and assurance, product reliability, manufacturing
costs, existing and new equipment, component supplies and shortages of personnel, any of which could result in significant delays in production. Additionally, in February 2003, we entered into a manufacturing agreement under which a third party
assembles our MJ7 devices and certain related disposable component parts. There can be no assurance that this third-party manufacturer will be able to meet these regulatory requirements or our own quality control standards. Therefore, there can be
no assurance that we will be able to successfully produce and manufacture our products. Any failure to do so would negatively impact our business, financial condition and results of operations. We are now in the process of outsourcing manufacturing
of our AJ mini-needle products to third parties. Such products will be price sensitive and may be required to be manufactured in large quantities, and we have no assurance that this can be done.
Our products have achieved only limited acceptance by patients and physicians, which continues to restrict marketing penetration and the resulting sales of more units
Our business ultimately depends on patient and physician acceptance of our needle-free injectors, gels, fast-melt tablets and our other
drug delivery technologies as an alternative to more traditional forms of drug delivery, including injections using a needle, orally ingested drugs and more traditional transdermal patch products. To date, our device technologies have achieved only
limited acceptance from such parties. The degree of acceptance of our drug delivery systems depends on a number of factors. These factors include, but are not limited to, the following:
•
advantages over alternative drug delivery systems or similar products from other companies;
•
demonstrated clinical efficacy, safety and enhanced patient compliance;
•
cost-effectiveness;
•
convenience and ease of use of injectors and transdermal gels; and
•
marketing and distribution support.
Physicians may
refuse to prescribe products incorporating our drug delivery technologies if they believe that the active ingredient is better administered to a patient using alternative drug delivery technologies, that the time required to explain use of the
technologies to the patient would not be offset by advantages, or they believe that the delivery method will result in patient noncompliance. Factors such as patient perceptions that a gel is inconvenient to apply or that devices do not deliver the
drug at the same rate as conventional drug delivery methods may cause patients to reject our drug delivery technologies. Because only a limited number of products incorporating our drug delivery technologies are commercially available, we cannot yet
fully assess the level of market acceptance of our drug delivery technologies.
A 2002 National Institute of Health (“NIH”) study and the 2003
findings from the Million Women Study first launched in 1997 in the U.K. questioned the safety of hormone replacement therapy for menopausal women, and our female hormone replacement therapy business may suffer as a result
In July 2002, the NIH halted a long-term study, known as the Women’s Health Initiative, being conducted on oral female hormone replacement therapy
(“HRT”) using a combination of estradiol and progestin because the study showed an increased risk of breast cancer, heart disease and blood clots in women taking the combination therapy. The arm of the study using estrogen alone was
stopped in March 2004 after the NIH concluded that the benefits of estrogen did not outweigh the stroke risk for women in this trial. The halted study looked at only one brand of oral combined HRT and of estrogen, and there is no information on
whether brands with different levels of hormones would carry the same risk. In January 2003, the FDA announced that it would require new warnings on the labels of HRT products, and it advised patients to consult with their physicians about whether
to continue treatment with continuous combined HRT and to limit the period of use to that required to manage post-menopausal vasomotor symptoms only. Subsequently, additional analysis from the NIH study has suggested a slight increase in the risk of
cognitive dysfunction developing in patients on long-term combined HRT. The Million Women Study, conducted in the U.K., confirmed that current and recent use of HRT increases a woman’s chance of developing breast cancer and that the risk
increased with duration of use. Other HRT studies have found potential links between HRT and an increased risk of dementia and asthma. These results and recommendations impacted the use of HRT, and product sales have diminished significantly. We
cannot yet assess the impact any of the studies’ results may have on our contracts or on our partners’ perspective of the market for transdermal gel products designed for HRT. We also
cannot predict whether our alternative route of transdermal administration of HRT products will carry the same risk as the oral products used in the study.
If transdermal gels do not achieve greater market acceptance, we may be unable to achieve profitability
Because transdermal gels are a newer, less understood method of drug delivery, our potential consumers have little experience with manufacturing costs or
pricing parameters. Our assumption of higher value may not be shared by the consumer. To date, transdermal gels have gained successful entry into only a limited number of markets. There can be no assurance that transdermal gels will ever gain market
acceptance beyond these markets sufficient to allow us to achieve and/or sustain profitable operations in this product area.
We rely on third parties
to supply components for our products, and any failure to retain relationships with these third parties could negatively impact our ability to manufacture our products
Certain of our technologies contain a number of customized components manufactured by various third parties. Regulatory requirements applicable to medical device manufacturing can make substitution of suppliers costly
and time-consuming. In the event that we could not obtain adequate quantities of these customized components from our suppliers, there can be no assurance that we would be able to access alternative sources of such components within a reasonable
period of time, on acceptable terms or at all. The unavailability of adequate quantities, the inability to develop alternative sources, a reduction or interruption in supply or a significant increase in the price of components could have a material
adverse effect on our ability to manufacture and market our products.
We may be unable to successfully expand into new areas of drug delivery
technology, which could negatively impact our business as a whole
We intend to continue to enhance our current technologies. Even if
enhanced technologies appear promising during various stages of development, we may not be able to develop commercial applications for them because
•
the potential technologies may fail clinical studies;
•
we may not find a pharmaceutical company to adopt the technologies;
•
it may be difficult to apply the technologies on a commercial scale;
•
the technologies may not be economical to market; or
•
we may not receive necessary regulatory approvals for the potential technologies.
We have not yet completed research and development work or obtained regulatory approval for any technologies for use with any drugs other than insulin, human growth hormone and estradiol. There can be no assurance
that any newly developed technologies will ultimately be successful or that unforeseen difficulties will not occur in research and development, clinical testing, regulatory submissions and approval, product manufacturing and commercial scale-up,
marketing, or product distribution related to any such improved technologies or new uses. Any such occurrence could materially delay the commercialization of such improved technologies or new uses or prevent their market introduction entirely.
As health insurance companies and other third-party payors increasingly challenge the products and services for which they will provide coverage, our
individual consumers may not be able to receive adequate reimbursement or may be unable to afford to use our products, which could substantially reduce our revenues and negatively impact our business as a whole
Our injector device products are currently sold in the European Community (“EC”) and in the United States for use with human growth hormone or
insulin. In the case of human growth hormone, our products are provided to users at no cost by the drug manufacturer. In the United States the injector products are legally marketed and available for use with insulin.
Although it is impossible for us to identify the amount of sales of our products that our customers will submit for payment to third-party insurers, at
least some of these sales may be dependent in part on the availability of adequate reimbursement from these third-party healthcare payors. Currently, insurance companies and other third-party
payors reimburse the cost of certain technologies on a case-by-case basis and may refuse reimbursement if they do not perceive benefits to a
technology’s use in a particular case. Third-party payors are increasingly challenging the pricing of medical products and services, and there can be no assurance that such third-party payors will not in the future increasingly reject claims
for coverage of the cost of certain of our technologies. Insurance and third-party payor practice vary from country to country, and changes in practices could negatively affect our business if the cost burden for our technologies were shifted more
to the patient. Therefore, there can be no assurance that adequate levels of reimbursement will be available to enable us to achieve or maintain market acceptance of our technologies or maintain price levels sufficient to realize profitable
operations. There is also a possibility of increased government control or influence over a broad range of healthcare expenditures in the future. Any such trend could negatively impact the market for our drug delivery products and technologies.
The loss of any existing licensing agreements or the failure to enter into new licensing agreements could substantially affect our revenue
One of our business pathways requires us to enter into license agreements with pharmaceutical and biotechnology companies covering the
development, manufacture, use and marketing of drug delivery technologies with specific drug therapies. Under these arrangements, the partner company typically assists us in the development of systems for such drug therapies and collect or sponsor
the collection of the appropriate data for submission for regulatory approval of the use of the drug delivery technology with the licensed drug therapy. Our licensees may also be responsible for distribution and marketing of the technologies for
these drug therapies either worldwide or in specific territories. We are currently a party to a number of such agreements, all of which are currently in varying stages of development. We may not be able to meet future milestones established in our
agreements (such milestones generally being structured around satisfactory completion of certain phases of clinical development, regulatory approvals and commercialization of our product) and thus, would not receive the fees expected from such
arrangements or related future royalties. Moreover, there can be no assurance that we will be successful in executing additional collaborative agreements or that existing or future agreements will result in increased sales of our drug delivery
technologies. In such event, our business, results of operations and financial condition could be adversely affected, and our revenues and gross profits may be insufficient to allow us to achieve and/or sustain profitability. As a result of our
collaborative agreements, we are dependent upon the development, data collection and marketing efforts of our licensees. The amount and timing of resources such licensees devote to these efforts are not within our control, and such licensees could
make material decisions regarding these efforts that could adversely affect our future financial condition and results of operations. In addition, factors that adversely impact the introduction and level of sales of any drug covered by such
licensing arrangements, including competition within the pharmaceutical and medical device industries, the timing of regulatory or other approvals and intellectual property litigation, may also negatively affect sales of our drug delivery
technology.
The failure of any of our third-party licensees to develop, obtain regulatory approvals for, market, distribute and sell our products as
planned may result in us not meeting revenue and profit targets
Pharmaceutical company partners help us develop, obtain regulatory
approvals for, manufacture and sell our products. If one or more of these pharmaceutical company partners fail to pursue the development or marketing of the products as planned, our revenues and profits may not reach expectations or may decline. We
may not be able to control the timing and other aspects of the development of products because pharmaceutical company partners may have priorities that differ from ours. Therefore, commercialization of products under development may be delayed
unexpectedly. Generally speaking, in the near term, we do not intend to have a direct marketing channel to consumers for our drug delivery products or technologies except through current distributor agreements in the United States for our insulin
delivery device. Therefore, the success of the marketing organizations of our pharmaceutical company partners, as well as the level of priority assigned to the marketing of the products by these entities, which may differ from our priorities, will
determine the success of the products incorporating our technologies. Competition in this market could also force us to reduce the prices of our technologies below currently planned levels, which could adversely affect our revenues and future
profitability.
If we cannot develop and market our products as rapidly or cost-effectively as our competitors, then we may never be
able to achieve profitable operations.
Competitors in the over active bladder, transdermal gel drug delivery and needle-free injector
market, some with greater resources and experience than us, may enter the market, as there is an increasing recognition of a need for less invasive methods of delivering drugs. Additionally, there is an ever increasing list of competitors in the
oral disintegrating fast-melt tablet business. Our success depends, in part, upon maintaining a competitive position in the development of products and technologies in rapidly evolving fields. If we cannot maintain competitive products and
technologies, our current and potential pharmaceutical company partners may choose to adopt the drug delivery technologies of our competitors. Drug delivery companies that compete with our technologies include Bioject Medical Technologies, Inc.,
Bentley Pharmaceuticals, Inc., Aradigm, Cellegy Pharmaceuticals, Inc., Watson Pharmaceuticals, Cardinal Health, CIMA Laboratories, Laboratoires Besins-Iscovesco, MacroChem Corporation, NexMed, Inc. and Novavax, Inc., along with other companies. We
also compete generally with other drug delivery, biotechnology and pharmaceutical companies engaged in the development of alternative drug delivery technologies or new drug research and testing. Many of these competitors have substantially greater
financial, technological, manufacturing, marketing, managerial and research and development resources and experience than we do, and, therefore, represent significant competition.
Additionally, new drug delivery technologies are mostly used only with drugs for which other drug delivery methods are not possible, in particular with
biopharmaceutical proteins (drugs derived from living organisms, such as insulin and human growth hormone) that cannot currently be delivered orally or transdermally. Transdermal patches and gels are also used for drugs that cannot be delivered
orally or where oral delivery has other limitations (such as high first pass drug metabolism, meaning that the drug dissipates quickly in the digestive system and, therefore, requires frequent administration). Many companies, both large and small,
are engaged in research and development efforts on less invasive methods of delivering drugs that cannot be taken orally. The successful development and commercial introduction of such a non-injection technique could have a material adverse effect
on our business, financial condition, results of operations and general prospects.
Competitors may succeed in developing competing
technologies or obtaining governmental approval for products before we do. Competitors’ products may gain market acceptance more rapidly than our products, or may be priced more favorably than our products. Developments by competitors may
render our products, or potential products, noncompetitive or obsolete.
Although we have applied for, and have received, several patents, we may be
unable to protect our intellectual property, which would negatively affect our ability to compete
Our success depends, in part, on our
ability to obtain and enforce patents for our products, processes and technologies and to preserve our trade secrets and other proprietary information. If we cannot do so, our competitors may exploit our innovations and deprive us of the ability to
realize revenues and profits from our developments.
Currently, we have been granted 32 patents and an additional 111 applications pending
in the U.S. and other countries. Any patent applications we may have made or may make relating to inventions for our actual or potential products, processes and technologies may not result in patents being issued or may result in patents that
provide insufficient or incomplete coverage for our inventions. Our current patents may not be valid or enforceable and may not protect us against competitors that challenge our patents, obtain their own patents that may have an adverse effect on
our ability to conduct business, or are able to otherwise circumvent our patents. Further, we may not have the necessary financial resources to enforce or defend our patents or patent applications.
To protect our trade secrets and proprietary technologies and processes, we rely, in part, on confidentiality agreements with employees, consultants and
advisors. These agreements may not provide adequate protection for our trade secrets and other proprietary information in the event of any unauthorized use or disclosure, or if others lawfully and independently develop the same or similar
information.
Others may bring infringement claims against us, which could be time-consuming and expensive to defend
Third parties may claim that the manufacture, use or sale of our drug delivery technologies infringe their patent rights. If such claims are asserted, we
may have to seek licenses, defend infringement actions or challenge the validity of those patents in