Amphastar Pharmaceuticals, Inc.

All statements in the conference call that are not historical or forward-looking statements, including, among other things, statements relating to the company's expectations regarding future financial performance, backlog, sales, and marketing of its products, market size, and growth, the timing of FTA followings or approvals, including the DMS of ANP, the timing of product launches, acquisitions, and other matters related to its pipeline of product candidates. a shared buyback program and other future events such as the impact of COVID-19 pandemic and related responses of business and governments to the pandemic on our operations and personal personnel and on commercial activity and demand across our business operations and results of operations. These statements are not historical facts but rather are based on AMSTER's historical performance and its current expectations, estimates, and projections regarding Amster's business operations and other similar or related factors. Words such as may, might, will, could, would, should, anticipate, predict, potential, continue, expect, intend, plan, project, believe, estimate and other similar or related expressions are used to identify these forward-looking statements. Although not all forward-linking statements contain these words, you should not place undue reliance on forward-linking statements because they involve known and unknown risks, uncertainties, and assumptions that are difficult or impossible to predict and, in some cases, beyond Amster's control. Actual results may differ materially from those in the forward-linking statements as a result of a number of factors, including those described in Amster's filings with the Securities and Exchange Commission including in the annual report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 16, 2020. In particular, the extent of COVID-19's impact on our business will depend on several factors, including the severity, duration, and extent of the pandemic, as well as actions taken by governments, businesses, and consumers in response to the pandemic. all of which continue to evolve and remain uncertain at this time. You can locate these reports through the company website at http://ir.mstar.com and on the SEC's website at www.sec.gov. The forward-looking statements in this release speak only as of the date of the release, AMSTAR undertakes no obligation to revise or update information in this press release or the conference call referenced above to reflect events or circumstances in the future, even if new information becomes available or if subsequent events cause AMSTAR's expectations to change. Thank you. I'll now turn the conference over to Dan Dischner, Vice President of Corporate Communications.

Thank you, Operator. First, I want to acknowledge that there have been some technical difficulties, and we apologize for the delay. Good afternoon, and welcome to Amphistar Pharmaceuticals' first quarter earnings call. My name is Dan Dischner, VP of Corporate Communications. Joining me on the call are Bill Peters, CFO, and Tony Marrs, Senior Vice President of Regulatory Affairs and Clinical Operations. We appreciate you joining us today and look forward to sharing our latest updates. Thank you for joining us. With that, I want to say we've made significant progress in our pipeline in the first quarter. Since our last earnings call, I'll go ahead and address our recent FDA approval and upcoming launch of our epinephrine injection multi-dose vial. With our recent approval and planned reintroduction of the multi-dose epinephrine product, we stand to benefit from the growth of the epinephrine vial market, which has grown into a $131 million opportunity based on Equivia data. At the same time, we stand to benefit and are pleased to have also received 180 days of market exclusivity as the first generic filer. Turning to Primatine Mist, sales have continued to increase because of the rising consumer awareness of the product as a result of our marketing efforts. We believe more consumers stayed home due to COVID-19 orders, and there was significantly more viewership of our digital and TV ads. Additionally, Consumer pantry loading caused an uptake in Primatine sales at approximately $1 to $2 million in the short span of just three weeks. Although we have seen a surge in sales during the first weeks of the pandemic, Primatine Mist continues to achieve a steady and consistent increase in its baseline of sales. The increased consumer awareness from our media campaign adds another layer of the product's strength and adds momentum to the product's trajectory. Our sales have increased across all of our retail partners. Furthermore, I am pleased to announce we have launched the product onto Amazon in late March. Results from our performance on Amazon are still too early to tell. However, we will continue to build our presence as well as strive to capture an even greater market as we target other retail chains, including supermarkets. I would now like to turn to our IMS products. For the first quarter of 2020, demand for our IMS products has grown. and our manufacturing output has increased due to our recently approved new production line and continued competitor shortages. Because we manufacture many of the emergency room crash cart products, we expect this trend in demand to continue as the FDA has communicated their continued need for many of our products. For our complex injectable product that has gone through three review cycles, which we will begin referring to as AMP001, The review process is ongoing. As we said on our last call, the GDUPA date for this product is in the third quarter or fourth quarter of this year, depending on whether another pre-approval inspection is needed. For the more recently submitted other complex injectable in its first review cycle, which we will be referring to as AMP002, we had a mid-cycle review meeting with the FDA that went well. Initially, we had a GDUPA date this year, However, the agency has shifted the GDUFA date out to either the fourth quarter of 2020 or the first quarter of 2021 if an inspection is needed. For our intranasal naloxone NDA, we had a productive meeting with the agency in March, and we are progressing on the product's development. The agency has clearly outlined a clear path towards the product's acceptance, and as a result, we plan to resubmit next year. For our insulin biosimilar products, We are continuing to make progress for the multiple products that we have in development. The new guidance outlined by the agency affirms that if we properly characterize the product, immunogenicity trials will not be necessary. We believe we have a proven history of performing characterization, and therefore, we will be able to avoid extensive immunogenicity trials. On a more pressing topic, I would like to communicate about COVID-19's impact on Amphistar. In summary, I want to say there is very minimal to almost no impact on the operation of Amphistar and all of our global facilities. We have implemented some policy changes to comply with CDC recommendations and currently all of our manufacturing facilities are operating at normal status. We have learned from the measures adopted by our A&P facility in China, which has made early adoption of prevention measures at our U.S. and France facilities seamless and effective. With that regard, we will continue to ensure that our workforce remains healthy and safe. Furthermore, I would like to remind you that our strategic stockpiling of at least two years of some of our critical API and starting material is intended to insulate the company's commercial operations from supply disruptions created by issues such as COVID-19. Finally, I would now like to address the strength and resiliency of our business strategy. whose effectiveness is partially due to our vertically integrated business model along with our discipline management. As you have seen from recent events in the industry, some products saw a decline in sales due to disruptions related to COVID-19. Part of this is due to COVID-19 forcing specialist doctors to operate at a limited capacity and limit interactions with pharmaceutical sales reps, reducing sales. However, this is not the case with Amphistar. While our products are indeed specialized, benefiting from high technical barriers to entry, the products that we focus on, combined with our business structure, safeguards us from disruptions like COVID-19. For one, our business model is designed to easily mitigate against risks in supply disruptions, partially through our vertical integration, where all of our finished products are produced in our U.S. facilities. And secondly, our products are often in high demand Thank you, Dan.

Sales for the first quarter increased 6% at $84.7 million from $79.8 million in the previous year's period. Primacy missed sales surge to $12.9 million from $2.9 million in the first quarter of 2019 as strong advertising support combined with quarter-ended pantry loading as the result of COVID-19 pandemic lifted sales dramatically. Naloxone and epinephrine also had strong growth, as did sodium bicarbonate, which we are now producing on the new filling lines approved by the FDA in February. Anoxaparin sales declined by 37% to $9.2 million as the competitor shortage from 2019 no longer has a positive impact to our business. Strong primatine mist sales had the additional benefit of increasing our gross margin. Remember that Primatine Mist is a naturally high-margin product, but we are still benefiting from the components and APIs which were expensed prior to the product's approval in 2018. This benefit will decrease during the course of the year as we sell through these components, but Primatine Mist will remain a high-margin product for us. Selling, distribution, and marketing expenses increased 5% to $3.3 million this year. primarily due to marketing and distribution costs associated with primatine mist. General and administrative spending decreased by 34% to $10.7 million as we no longer have to bear the huge expenses related to the patents and trust cases with Lamenta and Sandoz. Research and development expenditures increased $15.3 million from $14.6 million due to the increased clinical trial expenses for inhalation and insulin pipeline. The company reported net income attributable to Amphistar shareholders of $3.9 million, or $0.08 per share in the first quarter, compared to net income of $900,000, or $0.02 per share in the first quarter of 2019. The company reported an adjusted net income of $8.4 million, or $0.17 per share, compared to an adjusted net income of $4.9 million, or $0.10 per share, in the first quarter of last year. Adjusted earnings exclude amortization, equity compensation, and the impairment of long-lived assets. In the first quarter, cash flow provided by operations was approximately $1.5 million. During the quarter, we repurchased $10.9 million worth of stock as we took advantage of the lower stock price to increase purchases. On the last call, we discussed our financial assumptions for the year. We know that a lot of companies have withdrawn guidance due to uncertainty related to the COVID-19 pandemic, but today we maintained what we said on our last call. Most of our products saw increased demand at the end of the quarter and into April. We are not certain how long these increases will continue, but the second quarter started as strong as the first one ended. This trend, coupled with the recent approval of our epinephrine multi-dose vial, which we plan to launch within weeks, means that our business remains strong. I will now turn the call back over to the operator to begin Q&A.