Halozyme Therapeutics, Inc. Q2 FY2021 Earnings Call

Ladies and gentlemen, welcome to the Antares Pharma Second Quarter 2021 Financial and Operating Results Conference Call. I will now hand the conference over to Tram Bui, Antares’ Vice President of Corporate Communications and Investor Relations.

Thank you, operator, and good morning, everyone. Earlier today, we announced our second quarter 2021 financial results and operating achievements. A copy of the press release and slide presentation for today’s conference call are available in the investor relations section of the Antares Pharma corporate website. Before we begin, I’d like to remind listeners that some of our statements made during this conference call will contain forward-looking statements within the meaning of the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include those related to our future financial and operating results, including our expectations regarding the impact of the ongoing COVID-19 pandemic and mitigation measures implemented in response to the outbreak on our overall business, operating results and financial condition, our ability to achieve the 2021 revenue guidance, future revenue growth, prescription volumes and market share for our products and our partner products including XYOSTED, OTREXUP, NOCDURNA and Teva’s generic EpiPen. FDA actions and other regulatory activities, including actions with respect to Makena and potential FDA approval of Teva’s generic Forteo and Byetta timing and results of ongoing and future development programs and clinical trials including ATRS-1901 and ATRS-1902 hydrocortisone for acute adrenal crisis rescue as well as programs with Pfizer and Idorsia and other product development activities and business development efforts. These forward-looking statements are subject to certain risks and uncertainties and actual results could differ materially. They are identified and described in today’s press release, in the accompanying slide presentation on Slide 2 and the company’s filings with the SEC on Form 10-K and is updated in Antares’ recent periodic filings on Form 10-Q and Form 8-K. Antares is providing this information as of the date of today’s call and does not undertake any obligation to update any forward-looking statements contained in this conference call as a result of new information, future events or circumstances after the date hereof, except as required by law or otherwise. The company cautions investors not to place undue reliance on these forward-looking statements. Joining me on the call today are Bob Apple, President and Chief Executive Officer; Fred Powell, Executive Vice President and Chief Financial Officer; Dr. Peter Richardson, Executive Vice President, Research and Development and Chief Medical Officer; and Joe Renda, Senior Vice President of Commercial. Let’s review the agenda for today’s call on Slide 3. Bob will begin with a brief review of our business and then hand the call over to Joe to provide more information about our commercial strategy and achievements for our proprietary portfolio. Dr. Richardson will then discuss our R&D initiatives before handing the call back to Bob to provide an update on our partner business. Fred will then go through the detailed financials, and Bob will conclude with some closing comments before opening up the lines for your questions. Please turn to Slide 4, and I will hand the call over to Bob Apple. Bob?

Thanks, Tram, and good morning, everyone, and thank you for your interest in our second quarter results and operations update. As we wrap up the first half of the year, we are pleased to be able to report another record quarter for financial performance, which included $45 million in revenue, representing a 39% increase over 2020. EBITDA increasing 65% year-over-year to $7.9 million and a doubling of net income to $4.4 million or $0.03 per share for the three months ended June 30. Our strong results continue to be driven by both our proprietary business led by XYOSTED and our partner business led by Teva’s generic EpiPen. We believe XYOSTED’s total prescription growth of more than 50% year-over-year for the quarter is as remarkable as Teva’s 58% market share of the EpiPen market, up from 38% one year ago. As we look ahead, we expect continued growth from both assets as well as robust contributions from our other products and development revenue, and therefore reaffirm our full year 2021 revenue guidance in the range of $175 million to $200 million, which represents 17% to 34% year-over-year growth. Even with our commercial business growing at a rapid pace, we continue to be focused on the future growth of our business and the importance of our pipeline, both internal product development as well as partnership opportunities. In that light, in the second quarter, we unveiled ATRS-1902 as hydrocortisone for adrenal crisis rescue, and our partner Idorsia announced they initiated their global Phase 3 study for selatogrel that utilizes our Quickshot auto-injector as a heart attack rescue pen. Furthermore, we still look forward to Pfizer’s pending NDA submission for an undisclosed asset in the second half of this year. Collectively, we believe that the advancement of our proprietary pipeline, in tandem with our partners’ development programs will support our strong growth trajectory. In other words, we believe the diversification of our business supports a foundation from which we will continue to grow. Now, let me hand the call over to Joe to provide an overview of our commercial achievements and strategy for continued growth for our proprietary products. Joe?

Thanks, Bob, and good morning, everyone. I appreciate the opportunity to join today’s call. I’m going to start by highlighting that I believe the success the commercial organization has achieved thus far with XYOSTED is impressive, particularly given the limitations during the pandemic. But more importantly, I believe there is still considerable growth to be garnered, which is one of the main reasons why I joined the company. Since joining Antares in May, I’ve had the opportunity to engage with quite a few of our different customers, as I’ve traveled to 10 different markets across the United States. I’ve met with over 25 different healthcare providers, including some of our urologists, endocrinologists, and even some of our general practitioners, and the goal was really to better understand their perspectives, as well as the perspectives of our field team members. The physician feedback has been consistent. Many of our prescribers believe that XYOSTED is the best testosterone replacement therapy on the market. With approximately 9,300 physicians in the tough market that have already written XYOSTED, which you can see on Slide 5, we remain focused on further penetrating their prescribing behavior, as they see new patients coming into their office, as well as continuing to drive switches, which has really been a key component of our growth at the height of the physician office closures. In the second quarter, XYOSTED total prescriptions increased over 50% year-over-year, as well as 15% sequentially. In fact, June was our highest script month to date, and July is tracking really strong. As physicians’ offices have opened up more broadly, we have been seeing more strength in new prescriptions and are currently drawing an approximate 50-50 split between new patients and switches. Our growing refill rate has also highlighted the strong persistence with our brand. I’ve really been impressed with the motivation from our field sales team, and they have been excited to get back into physicians’ offices more fully this year with an expanded bag, but still with a primary dedication on XYOSTED. We’re currently able to make approximately 70% of our calls in person and the remaining 30% virtually. With that said, we’re monitoring any new developments that may arise from the Delta variants. We’re really prepared to adapt to our customers and whatever approach is best for their practice. We believe that hybrid model will persist and we have found success in both in-person calls as well as our virtual calls with our customers. When you look at the total testosterone market, it remains compelling from a size and growth perspective. We believe XYOSTED represents an effective therapy for at-home use. We expect to continue to grow our market share with more switches from painful IM injections, in addition to those new to therapy. In support, we have new branded consumer and HCP digital campaigns that are targeted to healthcare professionals and consumers through platforms such as Facebook, Instagram, Medscape, and Reddit. It’s really to drive awareness from both the providers and the consumers. Our field team is also working with updated interactive visual aids that highlight key features such as a steady pharmacokinetic profile, along with our virtually painless auto-injector that we believe will further enhance the growth of XYOSTED. Another element we believe will help sustain and bolster our growth in the proprietary portfolio is the recent expansion of our field team. We went from 79 representatives to 85, and we expect that additional territories will provide us with more reach and targeting in some new markets. Although XYOSTED remains the primary detailing focus for all of our representatives as I just mentioned, we also remain dedicated to the opportunity to grow NOCDURNA. The customer feedback has also been very positive for NOCDURNA, and we believe physician education remains a key component in driving growth with this product, which now brings us to Slide 6. We recently launched new branded peer-to-peer educational speaker programs across the United States with some of our key opinion leaders who are experts in treating patients who struggle with nocturnal polyuria, and we believe this will further educate healthcare providers. Nocturnal polyuria affects approximately 88% of nocturia patients, and it’s important that we help physicians differentiate the cause of frequent nighttime urination from benign prostate hyperplasia or overactive bladder. We also created branded consumer and HCP digital campaigns targeted at healthcare professionals and consumers, and we’ve placed those on similar platforms as we did with XYOSTED. In addition, new sales and marketing tools will enable the field teams to better describe the patient types that may be suitable for NOCDURNA in the physician’s offices. Internally, we have generated better territory insights, dedicated more focus to targeting strategies, and enhanced the incentive compensation for our field team. Overall, we are adding new doctrines of NOCDURNA targets and writers every week, and NOCDURNA remains consistent with our expectations in this first year of launch. Based on what we’ve learned, we expect our marketing initiatives and a normal sales cycle to really enhance this opportunity. So to wrap it up, as we enter the back half of the year, we expect to continue to execute on all cylinders, and believe our commercial strategy presides that NOCDURNA will continue to drive revenue growth. As we look out further, we believe we have an extremely successful commercial organization that is excited to leverage their physician relationships with this enhanced capability. We’ve established a vision that’s built around creating high performing teams that demonstrate excellence in business management, a team with exceptional professional and scientific acumen, and one that really fosters a culture of collaboration and innovation, which we believe will ultimately drive the performance of our brands. And with that, I’m going to hand the call over now to Dr. Peter Richardson. Peter?

Thank you, Joe, and good morning, everyone. First and foremost, let me start by saying that I’m delighted to be part of the Antares team, and I very much look forward to continuing to develop and hopefully enhance the company’s proprietary development pipeline, along with the experienced team here at Antares. Based on my background as a drug developer and clinician, I’m privileged to help advance our lead internal product candidates, ATRS-1901 and ATRS-1902, towards addressing the unmet needs of patients. In the second quarter, as we promised, we filed the investigational New Drug Application for ATRS-1902 for acute adrenal crisis rescue, which has been accepted by the FDA. The IND application for ATRS-1902 supports the proposed indication for the treatment of acute adrenal insufficiency, known as adrenal crisis in adults and adolescents, using a novel proprietary auto-injector we have developed to deliver a liquid stable formulation of hydrocortisone, which brings us to Slide 7. Adrenal crisis is a potentially fatal condition resulting from an acute deficiency of cortisol, a hormone normally produced and released by the adrenal gland in response to stress such as infection, injury, surgery, or even anxiety. This occurs in patients with long-term adrenal sufficiency from conditions such as Addison’s disease. The current standard of care for adrenal crisis rescue is the administration of hydrocortisone, which is presently provided in a sterile powder that needs to be reconstituted with water for injection and then drawn through a needle for intravenous or intramuscular injection. We think this represents a time-consuming and cumbersome injection process characterized as having multiple steps, all of which could prove extremely challenging when in crisis. With ATRS-1902, we developed a new technology platform, which, if successful, will deliver a liquid formulation of hydrocortisone stable at room temperature. Our development program aims to provide a reliable, easy-to-use two-step injection process for this patient population. As a leader in rescue pens, Antares remains dedicated to providing reliable, robust, simple, and portable solutions to medical emergencies. Results from a formal human factor study that was recently completed by an independent U.S.-based specialist group confirmed the ease of use and administration of ATRS-1902 in the hands of the patient. We conducted the usability study to assess use with untrained users of our novel auto-injector platform as well as to explore potential improvements. We expect to conduct additional human factor studies to provide for the eventual submission of our NDA next year, all following confirmation of the appropriate pharmacokinetic profile in our planned studies. In this human factor study, 18 subjects participated, during which they used two delivery systems to administer the medication in a simulated emergency. The Antares drug delivery system is comprised of an auto-injector containing a prefilled syringe with medication, and the comparator solid quarter considered standard of care was decided and it's currently on the market for the dual chamber vial syringe, which was used to reconstitute and inject the medication. Overall, far fewer user errors were observed when participants used the auto-injector than when they used the vial, needle and syringe. We’re proud to note that 17 out of 18 participants successfully achieved simulated full doses of medication when using our auto-injector, while only one participant did so successfully when using the reference product. Needless to say, while this initial human factor study only represents a piece of the overall development program, we’re very pleased with these positive results that confirm our expectations for the potential ease of use of our auto-injector system to deliver essential therapy at the time of stress. Now with an active IND, we can initiate the first pharmacokinetic studies to confirm the pharmacokinetics of our formulation in the coming weeks. If successful, the second study will be conducted using our final auto-injector combination product. These two studies, along with the human factor study, are anticipated to be the basis of an NDA filing with the FDA by the end of 2022. We understand the urgency to advance this asset, which will not only address a clear patient need but also expand our proprietary product offering within our developing endocrinology franchise. Let me also mention ATRS-1901, which is a weekly formulation of an auto-injector administered product in uro-oncology, and we will be pursuing the 505(b)(2) pathway for this asset. We remain on track to file the IND for ATRS-1901 in the fourth quarter of this year; I will announce any clinical trial initiation accordingly. I look forward to sharing greater detail on future calls. Beyond these two assets, we will continue to explore other opportunities that will leverage our pharmaceutical and device technology expertise to expand our pipeline.

Thanks, Peter. Before I dive into our partner business, I think it’s important to reiterate our commitment to the development of our proprietary pipeline. We believe our proprietary hydrocortisone rescue pen represents a large revenue opportunity for Antares based on the current patient population. We believe the advancement of this internal development program, coupled with ATRS-1901, will support our future growth trajectory within our therapeutic footprint. With the commercial success we continue to garner with XYOSTED, we remain eager to leverage the commercial team, including with business development initiatives which remain ongoing. Our enthusiasm for our proprietary business also carries over to our partner business, which leads me to Teva’s generic EpiPen in Slide 8. As you can see, Teva’s total prescriptions increased 153% year-over-year, and it captured 58% market share in the EpiPen market. Teva’s success contributed to doubling our royalty revenue in the second quarter. We expect that a normal back-to-school season this year will help maintain this growth. The growth of this product is partially due to our ability to produce and provide a reliable supply of millions of devices to meet the increased demand due to Teva’s market share gain and the associated demand around COVID vaccinations. Our relationship with Teva also extends to generic Forteo and generic Byetta, which remain future growth opportunities pending FDA approval. In addition, we’re excited for Pfizer’s NDA submission to the FDA for their undisclosed asset this year, and note that its lack of disclosure has not hampered its advancement. We continue to respect Pfizer’s wishes to keep the assay confidential but also look forward to its potential contribution to our future growth. I’m also pleased with the progress of our partnership with Idorsia and their initiation of their global Phase 3 trial for selatogrel. We’re very excited to play an important role in this development program, which utilizes our QuickShot auto-injectors. The strong collaboration between our teams has allowed Idorsia to achieve this important milestone for this novel combination product in approximately 18 months from the signing of our development agreement. The opportunity to self-inject selatogrel at the onset of symptoms from a suspected heart attack represents a compelling proposition for patients and we believe, with Idorsia’s commitment to that innovation, it could prove revolutionary as well as transformative for Antares. We look forward to continuing to support Idorsia’s clinical advancement of selatogrel with clinical supply during the trial. I’ll now hand the call over to Fred for a detailed review of our financials, Fred.

Thanks, Bob. Good morning, everyone. We’re very excited to report another record quarter with total revenue increasing 39% over 2020, achieving $45 million. A net income of $4.4 million or $0.03 per share for the three months ended June 30, 2021. We believe the diversification of our business remains a core strength in Antares, and we expect a strong performance from both XYOSTED and Teva’s generic EpiPen to persist and further support our confidence in achieving our full year 2021 revenue guidance range of $175 million to $200 million. Furthermore, as we continue to generate cash, we felt it was prudent to make a prepayment of $15 million on our term loan with Hercules, which reduced our principal loan amount and related interest expense. Now, let me provide a more detailed review of the financial results for the second quarter and six months ended June 30, 2021, which brings us to Slides 9 and 10. Total revenue was $45 million for the three months ended June 30, 2021, representing a 39% increase compared to $32.4 million in the same period in 2020. For the six months ended June 30, 2021, total revenue was $87.1 million, a 33% increase from $65.5 million for the comparable period in 2020. Sales of our proprietary products XYOSTED, OTREXUP and NOCDURNA generated revenue of $19 million and $37.7 million for the three and six months ended June 30, 2021, compared to $14.8 million and $27.4 million for the same periods in 2020. The 28% and 37% increase in proprietary product sales for the three and six months ended June 30, 2021, compared to the same periods in 2020 were principally attributable to continued growth in sales of XYOSTED. Licensing and development revenue was $7.2 million and $12.2 million for the three and six months ended June 30, 2021, compared to $2.7 million and $4.4 million for comparable periods in 2020. The increase in licensing and development revenue in 2021 was primarily the result of incremental development and product maintenance activities with Teva and our other ongoing partner development projects. Royalty revenue doubled to $9.9 million for the three months ended June 30, 2021 from $5 million for the same period in 2020. For the six months ended June 30, 2021, royalty revenue was $17.9 million, compared to $9.3 million for the same period in 2020. During the quarter ended June 30, 2021, the EpiPen market returned to pre-pandemic levels, and Teva achieved a 58% market share, which accounted for the net increase in royalty revenue over 2020. Our gross profit was $28.5 million and $54.2 million, representing gross margins of 63% and 61% for the second quarter and six months ended June 30, 2021 compared to $19.9 million and $37.9 million, or 62% and 58% gross margin in the same periods in 2020. The improvement in gross profit and margin were primarily attributable to increases in XYOSTED sales and Epi royalties. Research and Development expenses were $4 million and $6.7 million for the three and six months ended June 30, 2021 compared to $2.4 million and $5.4 million for comparable periods in 2020. The increase in R&D costs were due to progress in our internal development programs ATRS-1901 and ATRS-1902. As Peter discussed previously, we submitted an IND application with the FDA in June of this year for the initiation of a clinical study for ATRS-1902 for adrenal crisis rescue. Selling, general and administrative expenses were $17.7 million and $35.3 million for the three and six months ended June 30, 2021, compared to $14.4 million and $30.9 million for the comparable periods in 2020. The net increase in SG&A in 2021 was primarily due to an increase in sales and marketing expenses that had declined during the pandemic, and incremental costs associated with NOCDURNA. As a result of our strong financial and operational results, we reported net income of $4.4 million or $0.03 per basic and diluted earnings per share for the second quarter of 2021 compared to $2.2 million or $0.01 per basic and diluted earnings per share in the same period in 2020. Net income was $8.2 million or $0.05 per basic and diluted earnings per share for the six months ended June 30, 2021, compared to a net loss of $200,000 or $0.00 per basic and diluted earnings per share in the comparable period in 2020. Finally, Antares generated cash from operations of $8.4 million for the six months ended June 30, 2021. As a result of our consistent cash generation, in June of this year, we made a prepayment of $15 million on our term loan to Hercules. This prepayment allowed us to reduce our principal loan balance of $25 million, as well as save on approximately $1.2 million annually on interest expense. As of June 30, 2021, after the Hercules payment, our cash balance was $45.1 million. I’ll turn the call back to Bob for closing remarks. Bob?

Thanks, Fred. I’m extremely proud of what we continue to accomplish at Antares. Our strong financial and operating results this quarter continue to reflect our effective execution. Our positive results in both operations and development shouldn’t be a surprise for anyone, as we continue to map out our future and execute on all fronts. We believe our two current primary growth drivers, XYOSTED and EpiPen, are still in the early stages of their product lifecycle and will continue to support our growth trajectory. We also believe that we are building a strong internal development pipeline, coupled with what our partners are accomplishing in their development programs. We believe we are poised for significant growth longer term. As we look ahead, we look forward to the potential continued growth at XYOSTED and a successful launch year of NOCDURNA, continued growth at Teva’s EpiPen, assuming a normal back-to-school season, by this NDA submission this year for potential FDA approval in 2022, the U.S. approval and launch of generic teriparatide by Teva; the initiation of clinical programs for ATRS-1902, our adrenal crisis rescue pen; the IND submission for ATRS-1901 this year; Idorsia’s patient enrollment in their Phase 3 trial for this selatogrel heart attack rescue pen; and finally, new business alliances and business development opportunities. Again, thank you for your interest. Operator, you can now open the line for questions.

Thank you. Our first question comes from an unidentified analyst with Truist Securities.

Good morning, guys. Thanks for taking the questions. First on XYOSTED, how do you see the mix of patients evolving from the current 50-50 split between new patients and switches as pandemic headwinds abate?

Yes, thanks, Greg. This is Joe. I think if I heard your question correctly, you’re asking about the evolution of the split. We’re still seeing about a 50-50 split between both the switches and the new patients, and obviously, with the physician offices that have been opening up, we’re seeing new patients coming in, which is continuing to help Antares grow. So, it’s still about a 50-50 split though.

Yes, okay. Can you give a sense for how much of the intramuscular market is self-injection versus a healthcare provider doing the injection?

Got it. We’re seeing that more physicians are probably enabling the patients to rely on their self-injection. We don’t see as many offices doing the injections themselves, especially since the pandemic created a scenario where patients weren’t able to do that. More patients are doing that on their own, and that’s why we believe the auto-injector is really a key benefit for us, because it allows patients to self-administer without the pain of an intramuscular injection.

Got it. That’s helpful. I was just wondering if you could comment, maybe high level on the potential for applying your auto-injector technology to more new chemical entities. Should folks view the Idorsia collaboration as potentially the first of many? Any color on that front would be helpful. Thank you.

Hey, Greg. I’ll take that question. We believe our auto-injector platforms are very compatible with any new chemical entity that may need self-injection products. Our QuickShot device and others are very simple to use; it’s a two-step process. As we continue to gain success with programs like Idorsia’s and others, I think that will increase our ability to get additional new chemical entities on our platforms. Early on in our lifecycle as a company, large companies were concerned about our ability to produce millions of devices; we’ve proven that with a challenging product like EpiPen, where we are now the market leader with Teva. The success we’ve had with Teva EpiPen, combined with potential success with Idorsia, will open more opportunities for new chemical entities. In fact, we continue to discuss with other companies about our platform for potential new licensing opportunities. These successes, including XYOSTED, will help us capture more opportunities, particularly in the new chemical entity space.

Great, thank you.

Great, thanks. Maybe to start off on ATRS-1902, congratulations on the IND filing there. Can you just provide a little bit more detail on the opportunity around acute adrenal insufficiency? You mentioned in the deck that there are 140,000 patients in the United States annually. Just wondering, when you look at that opportunity, what is the incidence of crisis within that 140,000? And I know it’s a bit early, but are there any early views relative to what’s out there currently on how this could be priced? I have a couple of follow-ups?

Hi, it’s Peter. I’ll address the use of this in patients with adrenal insufficiency and their frequency of experiencing a crisis. The first thing is that patients who are on maintenance hydrocortisone or XYOSTED need to have one of these devices or alternative therapies available for use at home should they get into a stressful situation. In an ideal scenario, a patient would never have to use the device; you want to prevent the need for it. Most patients will not use this every year; some may need to use it. The principle is that all patients with adrenal insufficiency should have easy access to a means of administering hydrocortisone during acute situations, and this should be as simple as possible.

Yes, and regarding the market, we believe it is larger than currently assessed because the existing product is cumbersome, which causes many patients to avoid using it during crises. Many simply present themselves to the emergency room. We believe there is a significant opportunity beyond the existing market. As for pricing, we will evaluate that as we further develop the product. Pricing typically reflects the benefits introduced to the patient population and healthcare system. As we gather more insights into how the product performs from the user perspective and demonstrate that the pharmacokinetics are consistent with the standard of care, we intend to price it at traditional rescue pen pricing, which typically carries a premium over standard maintenance therapy. Overall, we believe it has real potential both commercially and as a significant advancement for patients experiencing Addison’s disease and adrenal crises.

I have a couple of follow-ups. First, on the generic EpiPen, if you look back, it seems we’re in a more normalized environment relative to 2020. If you refer back to 2019 trends, there’s typically a third-quarter bump from the second quarter. Should we expect that for this year for generic EpiPen? Teva currently has a 58% market share; where do you think that can top out?

Sure. Teva has been hovering around 55% to 60% market share, although it varies weekly depending on patient buying dynamics and coverage for either Teva’s or Mylan's product. We expect a normal back-to-school season, based on all the news suggesting everyone wants their children back in school. This means schools need to equip themselves with EpiPens for students. The Delta variant presents an uncertainty, but pandemic conditions aside, we expect a typical season. Teva maintaining their share between 55% and 60% would indicate a strong quarter for Teva and Antares. Early trends in July support these expectations.

Okay, that’s helpful. The last question I have is just any updated thoughts on timing for generic Forteo? Thanks.

The challenge with partnerships is that while we benefit from their development and success, we don’t control file disclosures or launch timings. That holds true for Forteo. Teva is still expecting FDA approval for Forteo; we’re waiting alongside everyone else. Hopefully, we will see approval shortly. It’s a significant product, and Teva does well in the market, being first to file gives them a great commercial advantage once FDA approval occurs.

Hey, thanks. So on XYOSTED, I apologize if I missed this, but can you go through the switch mix? What I mean by that is, these days, what portion of the switches are coming from intramuscular versus the gels? As the pandemic eases, Delta COVID notwithstanding, how do you expect that switch mix to shift, if at all? That’s number one. And then secondly, a follow-up question on OTREXUP. I know you don’t get a lot of questions on that. But you don't have a broader rheumatologists business, so can you talk about the overall fit of OTREXUP within the organization? Do you want to add more rheumatology-focused assets where you can leverage that sales infrastructure? Or is that an asset that potentially could be passed on to another company down the road? Thanks.

Thanks, David. This is Joe. With regards to the switch mix, post-pandemic, we anticipate seeing new patients coming into the market, and most of our switches currently are from intramuscular injections. We’re focused on continuing to drive switches as more physicians become familiar with XYOSTED. As more physicians encounter our product, we expect that will have a favorable impact moving forward. We don't foresee a major shift in the mix post-pandemic; we’re hopeful we will observe rising new patient numbers.

On the OTREXUP question, David, while OTREXUP isn’t central to our core therapeutic areas of endocrinology and urology, it’s been in the market for seven years. It makes up a very small percentage of our sales team’s time, less than 10%. However, it continues to perform steadily without significant decline. It’s a valuable asset in our portfolio. In the long run, we’re investigating other options for OTREXUP as we want to concentrate on strengthening our presence in endocrinology and urology, especially given our pipeline with ATRS-1901 and ATRS-1902.

Thanks. Good morning. I apologize if I missed this in your prepared commentary, but can you help me sort of reconcile the continued strong upward trajectory in XYOSTED or excess with revenue trends over the last couple of quarters? Given what we’re seeing in terms of dispense data.

Sure, Elliot. This is Fred. We had several large payers that we work with, and one of the largest delayed their billing. In fact, their fourth-quarter invoice for rebates didn’t occur during the year and didn’t close until close to the end of the second quarter. The same is true for the first-quarter invoice from that payer, which we didn’t get until the end of the second quarter. When we looked at the actual amounts received vs. what was accrued, we fell short in both the fourth quarter as well as the first. As a result, you see that the revenue increase did not match the script increase we saw from Q1 to Q2. We believe this was a one-time item that hit in Q2, and we’re caught up now.

As for payers, it largely depends on patient demographics. The mix can change every quarter depending on which major PBM or plans are seeking products. This is why you see a larger increase in scripts than in revenue; we expect this dynamic to normalize moving forward.

Okay. Just to clarify, so it was an understatement based on specific trends at one particular payer rather than a general assumption mix? Correct?

That's exactly right.

Okay, turning to the hydrocortisone asset for adrenal insufficiency. I assume this is a relatively small prescriber base that can largely be covered with existing sales force assets. Can you talk about the potential incremental overlap with respect to the prescriber base for that asset and what you currently have in the market? Can you cover the entire opportunity with existing infrastructure?

In terms of the prescribers for adrenal insufficiency, these tend to be endocrinologists, a group we do engage with today. We've established relationships with these customers already.

Yes, thanks, Elliot. We'll be able to focus on both endocrinologists and primary care physicians who manage patients with adrenal insufficiency. When you look at the market, the Solu-Cortef market is around 60,000 TRxs, presenting a significant opportunity. Patients generally dislike the cumbersome methods of administration for standard therapies, thus creating a pivotal opening for our easier-to-use solution.

Moreover, we are exploring pediatric considerations, as we plan to expand into this area. We might consider adding about a dozen representatives when the product launches, especially focusing on pediatric endocrinologists, as we currently don’t call many of them for XYOSTED. That may be a modest increase relative to our overall team but could enhance our access significantly.

What are your thoughts on exclusivity avenues and request for an abbreviated approval pathway regarding this product?

It’s an orphan population, and we want to explore that with the FDA. Our goal is to pursue orphan designation, as it provides potential commercial advantages. Until we meet with the respective department at the FDA for orphan designations, we don’t want to promise anything. But we aim for the orphan status.

Additionally, we developed a novel formulation, and we’re progressing with this new auto-injector platform, which distinguishes our offering and may serve as a barrier to entry.

Going back to your previous commentary on the EpiPen marketplace. As we see increasing numbers of patients, epinephrine remains essential for many, especially relating to allergies. Overall, we believe the market will continue to expand. Teva is positioned well to retain and even grow their market share. What started as a target to capture 50% share is now exceeding that. As pandemic conditions permit, we assume a standard back-to-school season, which remains vital as students return to schools with their EpiPens. The Delta variant is a variable factor, but we’re optimistic about upcoming trends. So far, July trends appear strong, pointing to ideal situations for toning and growth.

Thank you! This concludes our question-and-answer session. This concludes today’s presentation. You may now disconnect.