Amphastar Pharmaceuticals, Inc.

Good morning, ladies and gentlemen, and welcome to the Amphastar third quarter earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touch-tone telephone. As a reminder, this conference call may be recorded. All statements in this press release and in the conference call reference above that are not historical are forward-looking statements, including, among other things, statements relating to the company's expectations regarding future financial performance, backlogs, sales and marketing of its products, market size and growth, The timing of FDA filings or approvals, including the DMS of ANP, the timing of the product launches, acquisitions, and other matters related to its pipeline of product candidates, its share buyback program, and other future events, such as the impact of the COVID-19 pandemic, and related responses of business and governments to the pandemic on our operations and personnel and on commercial activity and demand across the business operations and results of operations. These statements are not historical facts but rather are based on Ma'am Phastar historical performance and its current expectations, estimates, and projections regarding Amphastar'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-looking statements may contain these words. You should not place any reliance on forward-looking statements because they involve unknown and unknown risks, uncertainties, and assumptions that are difficult or impossible to predict, and in some cases beyond Amphastar's control. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in AFASTAR'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 the 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's website at http://ir.amphastar.com and on the SEC's website at www.sec.gov. The forward-looking statements in this release speak only of the dates of release. Amphastar undertakes no obligation to revise or update information or any forward-looking statements in this press release or the conference call reference above to reflect events or circumstances in the future, even if new information becomes available or if subsequent events cause Amphastar's expectation to change. I would now like to turn the conference over to your host, Mr. Dan Dischner, Vice President of Corporate Communications. Please go ahead, sir.

Thank you, Operator. And good morning, everyone. Welcome to Amphastar's third 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 everyone joining us today, and we look forward to sharing some of our very exciting pipeline updates, how well primatine has trended, and other great news. I would like to first start by sharing the exciting pipeline updates I just mentioned. I am pleased to announce our internasal epinephrine, an NDA that will target the epinephrine auto-injector market. Thus far, our internasal epinephrine product has completed its Phase I clinical trial, and we plan to begin Phase II clinical trials in the first quarter of 2021. While we usually do not discuss Phase I clinical trial results, I'd like to share that we believe our novel formulation of epinephrine significantly increases drug absorption rate while using an intranasal route of delivery for anaphylaxis treatment. This offers a very attractive and non-invasive delivery option compared to the currently marketed epinephrine products, that being, of course, as an intramuscular injection with an autoinjector. We are excited about the potential opportunity this brings to strengthen our portfolio and provide a new treatment option for patients having an anaphylactic reaction. For epinephrine autoinjectors, the 2020 Equivia data annualized sales has an addressable market of over $4 billion. Moving on to business, our third quarter saw sales growth of 4% compared to the same period in 2019. Thank you for joining us. We will soon publish an updated presentation on our website where you can observe that Primatine still presents a strong growth trajectory as the product has seen sales growth of 4% compared to the previous quarter. We have great confidence in our abilities to continue to grow Primatine. Therefore, our ad spend for Primatine will increase by 20%, or to put it in dollar terms, in the range of an additional $1 to $2 million on an annualized basis. Thank you for joining us. Thank you for joining us. Thank you for joining us. or the fourth quarter if another pre-approval inspection was needed. We want to disclose that we are still awaiting a decision from the agency as they have not postponed the GDUFA date. However, the action date was not met. While AMP001 is still in the same review cycle, we continue to maintain a positive dialogue with the agency and are still excited about AMP001 as it is still on track to become the first generic to hit the market. Regarding AMP002's projections, We remain confident that the agency will find it to be therapeutically equivalent and continue to anticipate a fourth quarter GDUFA target action date. Although news about AMP001 may temper AMP002 status expectations, our GDUFA date is still in the fourth quarter. We will keep you updated if we hear a response regarding the product's progress with the agency as needed. Regarding our China facility in Nanjing, otherwise known as ANP, It continues to advance towards completing construction of its finished pharmaceutical product facility and then eventually for a finished product launch for the Chinese domestic market. Regarding an update on a timeline towards completion, we'll provide one as we approach closer to the date in the future. On a similar note to our international efforts, we continue to progress on our IMS UK products launch and anticipate our first launch in early 2021. We currently have multiple products on file and are working through the approval process. Next, I'd like to bring up our insulin programs. We have made progress on our insulin biosimilar products specifically in the characterization and clinical stage. And our final pipeline item I'd like to bring up is intranasal naloxone. We remain our guidance for refiling intranasal naloxone in 2021. On another note, I'd like to talk about Inoxaparin briefly. Although there have been exits and a new entrant into the Inoxaparin market, we have a long-term commitment to this product, and this product has shown some improvements, seeing a 22% increase compared to the same period in 2019 and a 14% increase compared to the previous quarter, attributing this to a greater market opportunity presented just recently. We are confident that our quality systems will prove to be the difference as our longstanding experience in this area since we are the only company that manufactures both the Noxaparin's API and finished product in the United States. Finally, we continue to see success in our pipeline development as demonstrated by our intranasal epinephrine products progress. We remain committed to the prospects of AMP001 and 002 while we anticipate primatine sales to trend upward as we approach allergy season. Although factors outside of Amphistars control may have tempered some expectations for now, we want to assure everyone that our success is made organically and is demonstrated by our R&D scientific and technical progress, especially regarding intranasal epinephrine and the proprietary formulation technology of this product. We are confident that our pipeline development will continue to demonstrate our technical capabilities. I will now turn the call over to our CFO, Bill Peters, to discuss our third quarter's financials.

Thank you, Dan. Sales for the third quarter increased 4% to $83.4 million from $80.1 million in the previous year's period. Primatine Mist saw sales growth of 255% to $13 million from $3.7 million in the third quarter of last year, with strong sales to our current customers, growing online sales at Amazon.com, as well as the launching of primatine myths in Kroger, which is one of the largest grocery chains in the country. Anoxaparin sales increased 22% to $11.6 million from $9.6 million as Teva left the anoxaparin market. Epinephrine multi-dose vials had sales of $2.8 million in the second quarter back on the market. Other finished pharmaceutical products sales declined of $4.1 million as a competitor who had previously had supply issues returned to the market. Our insulin API business had sales of $2.1 million, down from $4.4 million last year, as last year's sales numbers included a $1.5 million amendment fee from Mankind. Cost of revenues increased to $46.9 million from $44.9 million. Gross margins were relatively unchanged at 44% of revenues, We had increased gross margins related to newer, higher margin products such as primatine mist and epinephrine multi-dose vials, which were offset by lower sales of naloxone and other finished pharmaceutical products. Selling, distribution, and marketing expenses increased 14% to $3.7 million from $3.2 million due to advertising and distribution costs, including television commercials, for primatine mist. General and administrative spending increased 6% to $11.7 million from $11 million due to higher legal expenses. Research and development expenditures decreased 5% to $17.6 million from $18.6 million as lower expenses in China were partially offset by increased costs related to our biosimilar insulin program, our generic inhalation program, and our newly disclosed intranasal epinephrine product. The company reported net income attributable to Amphistar shareholders of $3.9 million or $0.08 per share in the second quarter compared to net income of $1.3 million or $0.03 per share in the third quarter of 2019. The company reported an adjusted net income of $7.6 million or $0.15 per share compared to an adjusted net income of $5.2 million or 10 cents per share in the third quarter of last year. Adjusted earnings exclude amortization, equity compensation, impairments of long-lived assets, and one-time events. In the third quarter, we had cash flow from operations of approximately $8.8 million as we reduced inventory and accounts receivable levels. During the quarter, we used a portion of our cash to buy back approximately $4.3 million of stock. I will now turn the call back over to Dan.