Stock Insight

AIS - Antares Pharma Inc. (AMEX) Company website:
http://www.antarespharma.com

Closed at $1.34, down .03, on Friday. Below is a description of what they do from Yahoo!:

Antares Pharma, Inc. operates as a specialty pharma product development and pipeline company worldwide. The company develops, produces, and markets various drug delivery platforms, including transdermal advanced transdermal delivery gels, fast-melt oral disintegrating tablets, disposable minineedle injection systems, and reusable needle-free injection systems. Its transdermal drug delivery platform develops gels, which deliver medication with less potential for skin irritation, and decreases the initial gastrointestinal and liver metabolism effect of some orally ingested drugs. The company’s fast-melt oral disintegrating tablets are used to help patients experiencing difficulty in swallowing pills, tablets, or capsules. Its injection device platform features reusable needle-free injectors, which deliver precise medication doses through pressurized liquid penetration of the skin without a needle; disposable minineedle injectors that provide subcutaneous injection capabilities with reduced discomfort and safety of a shielded needle; and emerging vaccine intradermal injectors. Antares Pharma, formerly known as Medi-Ject Corporation, was founded in 1979 and changed its name to Antares Pharma, Inc. in 2001.

This company is a pharmaceutical/medical device company. Of those medical devices, the needle-free injectors are the most interesting. This reminds of Star Trek, since Dr. McCoy also used needle-free injectors. I am sure they do not “work” the same way, but it definitely seems like a big advancement, and could have good future prospects for the company. They also have a some drugs they are developing. Two that are noteworthy, are the contraceptive gel for women, and a drug to treat overactive bladders. The latter is getting ready for Phase III testing. See link below:

Antares plans Phase III trial of overactive-bladder drug

While this drug may be farther along, I think the contraceptive gel has the most potential for big revenues down the road. The company has a development agreement with Population Council, and expect their first clinical study to occur next year. While I am not an expert on this, I do know that women have a lot of problems with the current oral contraceptives on the market. AIS’s new drug is supposed to eliminate a lot of these issues. See link below:

Antares Announces Development Agreement with the Population Council

Back to the needle-free injectors. The company recently signed an agreement with Teva Pharmaceutical, which is the largest generic drug manufacturer, to supply its needle-free injectors. A lot of this deal is unknown however. This could mean that when the details are revealed that the stock will get a big boost. The drug that would be sold with the injectors was unnamed, and the amount of money AIS will receive was also undisclosed. However, it is known that Teva will make an upfront cash payment, pay milestone fees, and provide a percentage of sales for use of the system. Teva plans to begin selling the product in the fourth quarter or in early 2007. This could potentially be huge. The stock had little reaction to the deal, so I do not think it is priced in. See link to the PR below:

Antares to Supply Injectors to Teva

So in a nutshell, this company seems to have a lot of potential here for good future revenue growth. Looking at the current picture, the company has been growing their revenues over the last four quarters. For the most part they have increased sequentially, although the first quarter revenues were less than the fourth. However, they were better than the third. The company has continued to lose money, and that loss has increased somewhat. This is typical for a development stage pharmaceutical company, especially as this company is ramping up for clinical studies and filling orders for Teva. Hopefully, there will be a turn around next year when the company begins to receive money from that deal with Teva. See link to current financials below:

http://finance.yahoo.com/q/is?s=ais

Also see link to the latest earnings PR

Antares Pharma Reports Second Quarter 2006 Financial Results

The problem with company’s that are losing money, is that they usually need equity financing to sustain operations, thankfully in this case, that financing has been at favorable stock prices. The last deal had a price of $1.25 a share for the initial infusion of cash, and warrants exercisable at $1.50. The current price of the stock is $1.34.

Looking at the technical picture, the stock was high as around $1.30 in both June and July, before making a decent drop to .86 in mid-August, which is the 52-week low. The stock began to repair itself in late August, as it made a nice jump up to $1.10 in two days, with no news. That cleared both its 20 day EMA and 50 DMA at the time. After settling down, the stock had one more big leap at the end of August which took it past $1.30 resistance, and its 200 DMA (the stock hit $1.35 that day). Again, there was no news behind this rise. The stock gapped down the next day, and eventually traded below all three of its major moving averages, until the beginning of October, when it rose above the 20 day EMA and 50 DMA again. That did coincide with the news of the Teva deal (a 5 cent rise). After that announcement, the stock traded between about $1.10 and $1.15 for a number of days, but did stay above its 20 day EMA. Then on October 12th, the stock began to move up for no apparent reason, and ended up surpassing its 200 DMA ($1.32 at the time) by the 16th. It could not however, pass the most recent high at $1.35, and pulled back on the 17th. Then on the 18th and 19th (last Wednesday and Thursday), the stock re-tested its 20 day EMA, and for the most part held it. That led to a big rise later in the day Thursday that took it all the way past the recent high at $1.35, as well as the 200 DMA (the stock hit $1.38). See current chart below:

There was again no news related to Thursday’s surge, and my feeling is that it was based on the technicals, which have been favorable recently. The stock has a nice uptrend going. Its ability to stay above the 20 day EMA over the last couple weeks or so is bullish. Additionally, the MACD has been strong. The RSI has made a couple of attempts at breaking over the 70 level, which would usually coincide with a breakout, but has fallen short both times. However, I think its time is coming. The stock was able to close above its 200 DMA ($1.31) on Friday, despite the pullback from the large move Thursday. I think if we can see that hold again Monday, we will see another good move up. The stock may violate it intra-day, but I do not think it will go much lower than $1.25. Although, there is the possibility we could get another test of the 20 day EMA, which should be at $1.20 on Monday. I would look to enter anywhere between $1.25 and $1.32, as I would hate to miss the move up trying to get in just above the 20 day EMA. If the stock were to fall below $1.20, I would be a little concerned that I may have read the technical picture wrong, and a move below $1.15 would get me out of the stock.

In my opinion, there is a lot of potential with this one. Technically it looks good, and there is the possibility of a number of positive announcements coming. Keep in mind the 52-week high is $1.89 on this one.

Stock Insight, October 21, 2006

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