Amphastar Pharmaceuticals, Inc.

Greetings and welcome to the Amphistar Pharmaceuticals, Inc. third quarter earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. At this time, if anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that certain statements made during the call regarding matters that are not historical facts including but not limited to management outlook or predictions for future periods are forward-looking statements. These statements are based solely on information that is now available to us. We encourage you to review the section entitled forward-looking statements in the press release issued today and the presentation on the company's website. Also, please refer to our SEC filings which can be found on our website and the SEC's website for a discussion of numerous factors that may impact our future performance. We will also discuss certain non-GAAP measures. Important information on our use of these measures and reconciliations to U.S. GAAP may be found on our earnings release. Please note that this conference call is being recorded. Our speakers today are Mr. Bill Peters, CFO, Mr. Dan Dischner, Vice President of Corporate Communications, and Mr. Tony Marrs, Senior Vice President of Regulatory Affairs and Clinical Operations. I will now turn the conference over to your host, Mr. Dan Dischner, Vice President of Corporate Communications. Dan, you may begin.

Thank you, Paul. I'd like to thank everybody for joining us this afternoon. As you have seen, Amphistar recently reported our financial results, and I am pleased to announce that the upward momentum from last quarter's strong execution was sustainable and carried over into the third quarter. With that said, we saw another great quarter of top-line and bottom-line growth, as we remain generally insulated from the typical challenges facing our sector in the pharmaceutical space. Again, this is another validating quarter highlighting the importance of Amphistar's core strengths as our vision, strategy, and vertical integrated platforms continue to deliver on our growing commercial proficiencies. After my portion, I will turn the call over to our CFO and Executive Vice President of Finance, Bill Peters, who will provide an update on the company's financials. After Bill's remarks, we'll move on to the Q&A portion of the call, where Tony Marrs, Senior Vice President of Regulatory Affairs and Clinical Operations, Bill and myself will answer any questions. I want to begin with our commercial results, where the third quarter saw net revenues just over $112 million, which is a 10% increase from last quarter and an impressive 34% increase on an annualized basis. Amphistar has seen remarkable growth on a quarterly basis, and annualized in revenue, gross profit, net income and earnings per share. I want to emphasize that Amphistar has a bright 2022 ahead based on this trajectory. While R&D expenses enhance our base business in setting up a foundation for more successful future quarters performances from an operations perspective, equally important is our vision with specific regards to our pipeline strategy coupled with our vertical integrated platform continues to be a proven by our more recently launched products. Since the beginning of 2021, we have observed that our glucagon, primatine mist, and epinephrine products have been key revenue drivers. We continue to believe that these three products will be significant growth drivers for the remainder of the year due to their recent performance. Regarding our glucagon product, sales of the product were 12.1 million in the third quarter. We're very pleased with the performance of this product and the ability to capture market share. since its launch in February of this year. With that said, we believe Glucagon is still positioned to have a positive trajectory for the remainder of the year. On the topic of primatine mist, sales maintain a positive trend, seeing a 38% increase compared to Q3 in 2020. As trends continue, primatine mist's annualized sales will likely exceed our goal of 65 million this year, as our continued nationwide TV, digital, and radio marketing efforts coupled with our physician sampling program have proven effective. On epinephrine, sales of both the pre-filled syringe and the multi-dose vial presentations grew to 13.9 million due to our ability to capitalize on opportunities when they are presented. As we have said before, Amphistar can consistently supply the product when our competitors cannot. This is mainly due to our investment in our recently added state-of-the-art production line. We anticipate similar opportunities continuing into 2022. On another note, our careful planning and supply management has allowed our commercial portfolio sales to remain strong regardless of the impact felt from COVID-19. However, the impact from COVID was not without its limitations, especially in regards to the clinical site impact. On the clinical front, our clinical and other third-party vendors continue to face various COVID-related restraints that are out of our control. Therefore, we anticipate refiling for intranasal naloxone in Q1 of 2022. The same can be said for our intranasal epinephrine, which is now expected of filing in 2023. As for our filed ANDAs, AMP002 and AMP006 both remain on track to have a GDUFA date for the first quarter of 2022. If a preapproval inspection is necessary for either product, The GDUPA date may be postponed for two months. For our Terra Paratide ANDA, our first Penn product, we have had continued dialogue with the agency. It is still on a first cycle review, which is now anticipated to have a GDUPA date in the second quarter of 2022. Concerning our paragraph four filings, AMP008, our first inhalation ANDA, is anticipated to be filed in the fourth quarter of this year. We continue to believe we have a strong non-infringement position. Likewise, we feel the same with AMP-009, another paragraph 4 filing that is currently being litigated. With regard to our products in our diabetes portfolio, specifically our insulin program, we believe that through the advanced technologies we have developed, we can create a more standardized process in developing these types of products to have a robust diabetes portfolio. To accomplish this, We have developed a framework based on FDA guidance and our extensive complex molecule experience. In closing, I would like to reiterate that we continue to make significant progress in our commercial portfolio's revenue growth trajectory, with a further emphasis on our pipeline. Amphistar sees our future progress towards interchangeable biosimilar and proprietary products. We are confident we can achieve these goals as our long-term vision, proven strategy, and vertically integrated platform serve as complementary forces in building momentum towards its future as we head off into 2022 with a great start. I will turn the call to Bill to discuss the third quarter's financial results. Thank you, Dan.

Sales for the third quarter increased 34% to $112.2 million from $83.4 million in the previous year's period. which we launched in the first quarter once again led to growth with sales of $12.2 million. Primatine Mist saw sales growth of 28% to $16.6 million from $13 million in the third quarter of last year with strong sales to all of our current customers. Epinephrine sales increased to $13.9 million on strong sales of both the multi-dose vial and the pre-filled syringe, the latter of which saw a surge in demand due to competitor shortages. We have been consistently able to meet the demand caused by competitor drug shortages quarter after quarter, which is why we increased the capacity in our IMS facility. Anoxaparin sales decreased to $8 million, primarily due to increased competition, which led to reduced volumes and lower average selling prices. Other finished pharmaceutical products saw a sales increase of $5.6 million, driven by increases in medroxyprogesterone, crotrosin, and amphidase. Our insulin API business had sales of $3.2 million up from $2.1 million last year primarily due to the timing of orders. Cost of revenues increased to $61 million from $46.9 million. Gross margins improved to 46% of revenues from 44% as newer higher margin products such as glucagon, primatine mist, and epinephrine multi-dose vials more than offset the lower pricing for anoxaparin. Selling, distribution, and marketing expenses increased 29% to $4.7 million from $3.7 million due to increased advertising distribution costs, including television commercials for Primatine Mist. General and administrative spending decreased 7% to $10.9 million from $11.7 million due to lower legal expenses. Research and development expenditures decreased 39% to $10.8 million from $17.6 million as lower clinical trial expenses and a decrease of R&D costs in China due to the restructuring of our subsidiary, Amphistar Nanjing Pharmaceuticals, or ANP, and the deconsolidation of its subsidiary, Hansen. Our non-operating income line includes a one-time gain on the divestiture of 80% of ANP's subsidiary, Hansen. The strong results this quarter show the significant operating leverage available to the company as we grow sales faster than our expenses. The company reported net income attributable to Amphistar shareholders of $29.5 million, or 59 cents per share, in the third quarter, a significant increase from $3.9 million, or 8 cents per share, in the third quarter of 2020. The company reported an adjusted net income of $23 million, or $0.46 per share, compared to an adjusted net income of $7.6 million, or $0.15 per share, in the third quarter of last year. Adjusted earnings exclude amortization, equity compensation, impairments of long-lived assets, and one-time events, including the gain on the divestiture of 80% of our interest enhancement. In the third quarter, we had cash flow from operations of approximately $2.6 million, and we used a portion of our cash to buy back approximately $6.1 million of stock. As mentioned on the last conference call, we completed a syndicated debt offering in the third quarter, borrowing $70 million and increasing our lines of credit to $70 million. In the process, we lowered our interest rates significantly and have paid off approximately $36 million of higher interest rate debt. I will now turn the call back over to Dan.