Today’s ad for our consideration and de-teasification is from Jeff Yastine for his Total Wealth Insider newsletter over at Banyan Hill — that’s one of their “entry level” newsletters ($79/year), and this time he’s promising that he’s got a $5 stock from New Jersey that’s going to knock our socks off.
OK, fine, he didn’t mention socks. He did say that he thinks big money is about to flood in… and “even a modest capital infusion” could send it to $10 or $20 “in a matter of days.”
That’s not the kind of thing that happens very often, of course, and it probably won’t happen this time — but one never knows, so I thought we’d look into it and see if we can name the stock for you, and give you a little head start on your research… then you can decide if this little guy is “revolutionizing health care” or just another hype-y story that won’t pan out (or something in between).
Here’s a bit of the tease, to whet your appetite:
“Frankly, there’s no time to waste, so here are the details…
“This New Jersey company’s stock is priced at just $5.
“And once institutional investors see the impact this device will have on the medical community — big money will begin to flood in.
“And given the small market capitalization of this company and its relatively inexpensive stock price, even a modest capital infusion could drive its share prices to $10 … $15 … even $20 in a matter of days.:
As with pretty much all medical stock teasers, we get the comparisons of past wealth-makers trotted out to spur our little greed impulses… with the implication that this device maker has the same kind of big potential as Medtronic or Intuitive Surgical.
More from Yastine:
“While I can’t guarantee this opportunity will make you over $3 million, like Medtronic could have, I can guarantee that the potential is certainly there.
“Because there’s currently no device like it on the market today.”
OK… so what is this device?
“This device was first developed by the U.S. military in the 1970s for soldiers to use in case of exposure to nerve agents or chemical warfare toxins. Its simplistic design allows for a soldier to quickly and safely inject a lifesaving medicine.
“Hence why it’s small.
“It’s only 4 inches long and weighs just 12 ounces.”
And there’s a photo of the device, so this is not a real “secret” or surprise kind of device — pretty much everyone would immediately see that and say, “hey, that’s an Epipen!”
More from the ad:
“Those in the medical field call this a prefilled auto-injector….
“… it looks like an EpiPen — its uses go way beyond helping those with allergies, and it’s made with the precision you’d expect from a fine Swiss watch….
“… the metallurgy of the auto-injector spring and the engineering of its other components are of the utmost importance, and it’s different for every drug.
“This is why there are very few companies that focus on the manufacturing of auto-injectors.
“And that’s why I’m so excited about this $450 million company — with its stock trading near $5 — that has over 100 auto-injector patents in its arsenal.”
We also get some feel-good stories, which balance out the ‘greed’ impulse of biotech investors with the warm-belly feeling of also doing something good for humankind…
“Laurie Mann, was with her husband when she suddenly began struggling to breathe. If not for the medicine in this device, she might not have survived. As she said: ‘I’m here because of it … [it] saved my life.’
“Carissa Pak needed this device for her 15-week-old infant, Jack. She was holding her newborn when he suddenly began coughing and vomiting uncontrollably. This device ‘saved my son’s life,’ she declared.
“And Jordan McDonald couldn’t breathe until she was inside an ambulance, and this device was administered. ‘I nearly died,’ she recalled.”
Those all sound like allergic reaction stories, though I didn’t run down the specifics — there are no end of the “epipen saved a life” stories, and they were particularly publicized in recent years when the pricing controversy over Mylan’s Epipen got onto the front pages and into Congressional hearing rooms.
And some more big claims:
“I am confident this device will go down in the history books as the most important…
“More important than…
“The X-ray machine
“Than artificial limbs
“Than the pacemaker
“Than the hypodermic needle
“And way more important than the thermometer. Unlike a thermometer, that simply shows you some basic information … this device gets results — potentially saving up to 54 million lives each and every year.”
And, of course, the always-present ridiculous short-term promises:
“… if you were to invest … say … $10,000 in this company today, you could watch your investment jump to over $40,000 by the end of the month.
“And if you decided to hold your shares and wait for the stock price to reflect the potential profits this device could generate, you could watch your investment grow to more than $80,000 over the coming 12 to 18 months … and $160,000 over the long haul.”
OK, so it’s some kind of maker of autoinjector pens, with lots of patents, but it’s pretty small and Yastine thinks the stock can climb 300% in a month and 800% in a year.
Any other clues? Indeed yes…
“… it recently signed two massive deals.
“One with Teva Pharmaceutical, the world’s largest generic drugmaker … a firm with a $12.5 billion market cap.
“The other with Pfizer, the world’s largest pharmaceutical … a company with a $228.5 billion market cap.”
And he drops some hints about the Pfizer deal, including the key word “royalties” that always makes my ears perk up… apparently they have some development deal where Pfizer gets access to the technology, but also has to pay all the drug development costs:
“All of these costs are the sole responsibility of the firms whose drugs go into its devices … Teva Pharmaceutical and Pfizer.
“Meanwhile, our little company simply sits back and collects royalties on every auto-injector sold.
“It’s a zero-risk transaction for our little $5 stock.”
And a few other specific clues:
“… this company’s earnings soared 768% year over year last quarter, and it expects its earnings per share (EPS) to surge even more in the coming years.”
They show a graph of “revenue estimates” for the company, indicating that 2019 revenue will be somewhere near $100 million, and that it will more than double by 2022 to about $230 million.
And we’re also told that the company is “sitting on nearly $30 million in cash….”
And that new FDA regulations will bring a “record number of uses for auto-injectors,” so the market is likely to grow.
Which has to be plenty of clues, right?
Indeed, the Thinkolator sez this one is Antares Pharma (ATRS), which is a little maker of auto-injectors… and which is well under $5 (about $3 at the moment), and with a market cap of just under $500 million.
The “$30 million in cash” is roughly accurate — as of the end of 2018, at least… right now it’s down to about $22 million, despite having raised $14 million with share sales in the past couple quarters, so I guess they’re into a heavier-spending time these days.
Antares has been publicly traded for more than 20 years, and so far has not created any wealth for anyone — so although the revenue has ramped up in the past few years (it is expected to hit $101 million this year, and they’ve grown the revenue almost every year over the past decade), it could be that investors are a bit cautious… after all, they’ve never come close to breaking even, and costs have consistently risen to keep up with revenues over the years.
So… is that about to change now? Is there some windfall expected from new products, or from these Pfizer and Teva deals?
I dunno. Their recent investor conference presentation is here, telling the story they want investors to hear, and that’s all about their newer products — they released three products in 2018, including their Xyosted auto-injector for testosterone therapy that they seem most excited about. The more likely driver of sales this year, though, is the generic EpiPen from Teva — the big boost in revenue this year is mostly going to come in the second half, assuming a “full commercial launch” for the product (including “EpiPen Jr.” in time for back-to-school). They also have some other products that are relatively small, but certainly could grow — like Makena for a variety of injectable progesterone to reduce preterm birth risks, and there are also two other Teva products that are close to approval — Teriparatide and Exenatide.
Antares also has a Pfizer “Rescue Pen” deal, disclosed last year, though it’s early stage… as far as I can tell, they haven’t even disclosed what drug will be used in the pen, or what it might be expected to rescue you from.
I do generally prefer partnership deals and royalties when you’re talking about pharmaceutical investments, but I can’t say that I have any great insight into Antares and whether it will eventually be hugely successful — I’m a little skeptical that the value of these patents will turn out to be overwhelming, if only because basic autoinjectors have been around for decades and work well, and clearly those designs are not all “owned” by Antares… maybe their technology is better enough to make a splash, and it does speak well for them that they got the “Rescue Pen” deal with Pfizer, since Pfizer is also perfectly capable of making its own autoinjectors (Pfizer makes EpiPens for Mylan already, for example).
So since I’m no in way an expert on the specifics or the auto-injector market, I’ll rely on the analyst estimates to get some quick perspective — the half-dozen analysts who publish estimates on Antares expect them to go from $102 million in revenue in 2019 to $157 million in 2020 and $195 million in 2021… so that’s pretty impressive. I assume that optimism is mostly from taking market share from the EpiPen, but perhaps the new products are bigger than I’m guessing.
And from that revenue, they expect earnings per share of of 22 cents from ATRS next year, and 40 cents in 2021. That sounds downright fantastic for a company that has never posted a profit before, so there’s clearly some optimism from the analysts… though the fact that the shares are still down at $3, which would be a forward PE of 13 if the analysts are right (and only 7.5X 2021 earnings), tells us that the investors are not really believing in the “going to grow revenues for real and become profitable” transition for Antares.
I don’t blame them, after 20 years of being a “development stage” company, with some flirtation with near-profitability that has so far ended in tears each time, including the delayed hope that their testosterone pen would make them profitable in 2018, I’d be a little skeptical, too… but if they can really make the transition, as analysts expect, then that’s an easy buy at this valuation.
And with that, I’ll turn it back over to you — expect great things this month (or year) from Antares? Do you see the potential for massive and rapid growth? Are we looking at a little medical device bargain? Or is this an over-sold story from a company that has spent forever trying to make it to “prime time?” I won’t be buying this one, but I can see the appeal if you think the analysts are on the ball at all… let us know with a comment below. Thanks for reading!
P.S. We still also get questions every few days about Jeff Yastine’s “$20 tech stock” that could make you a “one stock millionaire” — that’s one we first covered back in January, if you’re curious about it you can see that older story here.
Disclosure: I do not own any of the stocks mentioned above, and will not trade in any covered stock for at least three days per Stock Gumshoe’s trading rules.