ATRS: Valuation Getting Frothy

Antares Pharma Inc. (NASDAQ – ATRS - $3.90) has been on a tear of late, reaching new 52-week highs, including a new one today.  We love the story and the technology but are concerned that the vlautaion may be getting a little ahead of itself. Therefore, think twice before chasing it.

ATRS designs and markets self-injection pharmaceutical products and technologies as well as topical gel-based products.  It offers Vision/Tjet reusable needle-free injectors that deliver precise medication doses through high-speed pressurized liquid penetration of the skin without a needle; Vibex disposable pressure assisted auto injector devices that are used for the controlled pressure delivery of drugs into the body utilizing a spring power source; disposable pen injection systems, which are needle-based devices designed to deliver multiple drugs by injection through needles from multi-dose drug cartridges; and Advanced Transdermal Delivery (ATD) Gel System that penetrates the skin to deliver treatments.

Very cool stuff. Interestingly, the company is partnered with some big players that are using the technology via collaboration and licensing agreements to deliver some of their drugs.  They include Teva (NASDAQ – TEVA), Watson (NASDAQ – WATS), Pfizer (NYSE – PFE) and others.

The stock is currently trading at a market cap of $400M but Street revenue estimates for next year are only $50M, making the 2013 price/revenue multiple nearly 10x. While ATRS has an amazing list of partners, other products in the pipeline, an exciting technology, and a great chart, we are probably getting close to a point where the valuation is getting a little frothy. Investors could get some more juice out of ATRS but the near-term upside looks a bit limited.

Accumulate on drops but be mindful of moves higher.

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