Amphastar Pharmaceuticals, Inc.

This remarkable achievement can be attributed to our expanded market share in this space, gaining market share in the diagnostic market, and our carefully planned capacity increase, resulting in an impressive 131% growth on an annualized basis. We anticipate the glucagon injection demand to remain durable. Concerning our other key high margin products that have been usual contributors to our quarterly primatine mist, and epinephrine, sales for the quarter reached $16.5 million and $16.7 million respectively. We note that our retail in-store primatine mist weekly sales maintain a positive growth trend with a 5% increase from Q2 of last year. However, retailers have readjusted their inventory levels leading to a decline in sales at the factory level. As for epinephrine's total sales, We note that this shift was attributable to competitors returning to their normal distribution levels. Shifting our focus to our other finished pharmaceutical products, especially regarding our products in our portfolio benefiting from competitor shortages, we have seen a significant increase in sales, ending the quarter with a 47% increase. While we are aware of the recent natural disaster that affected a large sterile injectable facility, We anticipate that Amphistar will play a significant role in addressing the nationwide drug shortage, especially regarding products used in the hospital setting. We are pleased to announce that the FDA has recently approved the brand name Rokstovi for our intranasal naloxone product. After careful assessment, we plan to delay the launch of this product to the fourth quarter of this year because it utilizes the same manufacturing suite as products needed to supply the critical emergency products during this drug shortage. This will allow us to maximize our current capacity and augment our revenue opportunities with the impacted products. Having covered our revenue drivers for the quarter, I would like to turn our attention to our pipeline and regulatory activities concerning our proprietary biosimilar and complex products. In a recent development for AMP002, the action date was not achieved due to unresolved regulatory matters. However, the FDA has assured us of their commitment to progress with this application swiftly and remain in positive dialogue and are hopeful of a successful response. This product continues to be without a generic with a plus $600 million market opportunity based on annualized Equivia sales. For our teriparatide ANDA or AMP015, we responded to the CRL and have a GDUFA date in the first quarter of 2024 with the standard subsequent quarter GDUFA date if an inspection is needed. With regard to our AMP008 inhalation ANDA, which is classified under priority review, the filing recently received a minor CRL. We plan to respond in the third quarter of this year which we would expect to lead to a late 2023 action date. While our second inhalation ANDA, AMP007, we plan to file in the fourth quarter. As for our proprietary product, intranasal epinephrine, we continue working with the FDA and progressing with the clinical development. Turning to our biosimilars pipeline strategy, our AMP004 product, or our insulin ASPART, is progressing according to plan. and we expect to submit our BLA with interchangeable status by the end of 2023. If nothing else, this quarter shows the strength of our portfolio of products and the flexibility we have to adapt and take advantage of presented opportunities. We remain focused on our strategies to invest for growth, improve margins and cash flow, and stay committed to advancing our product pipeline. Research and development remain an integral part of our future, that we believe will continue to drive growth. In summary, we see significant growth opportunities ahead with new products emerging from our pipeline, and we remain committed to delivering consistently strong performance. I would now like to turn the call to our CFO and Executive Vice President of Finance, Bill Peters, to discuss the second quarter's financial results. Thank you, Dan.

Sales for the quarter increased 18% to $145.7 million from $123.5 million in the previous year's period. Glucagon sales more than doubled to $27.3 million from $11.8 million in the prior year, primarily due to continuing strong market demand as some suppliers discontinued selling glucagon. Phytonodion sales increased to $17.9 million from $13.4 million in the second quarter of last year as a result of supplier shortages. Primatine mist declined to $16.5 million from $19 million in the previous year due to inventory drawdown by retailers. Sales of primatine mist continued to grow at the retail level, increasing by 5% in the second quarter. Lidocaine and epinephrine saw sales declines as competitors returned to these markets. Our other finished pharmaceutical products category also had strong growth, due to higher unit volume sales of dextrose, atropine, calcium chloride, and sodium bicarbonate, as well as sales of new products such as Ganarelix, vasopressin, and regadenosine. Since we closed our Baximi acquisition on June 30, 2023, we do not have any sales of Baximi in the quarter. However, Lilly recorded sales of $34.9 million, up 20% from the second quarter of 2022. While we usually don't talk about quarterly sales trends, there are a few items I would like to point out for our third and fourth quarters. First, in the third quarter, we will begin recording a net economic benefit of Baximi, which will be Lilly's sales less the cost they incur on our behalf until we take over responsibility for Baximi distribution. Once we have taken over distribution, we will begin recording sales and expenses as we would for any other product. We have estimated the impact of Vaximi on adjusted EPS will be 12 to 18 cents in 2023. Second, we plan to launch glucagon injection in Canada in the near future, adding to this product sales. Finally, we've had to temporarily stop selling our medroxyprogesterone, one of our larger products in the other finished pharmaceutical products category, because our API supplier has discontinued manufacturing the product. Our AMP subsidiary has developed this API and continues to pursue an approval of the DMF. We hope to obtain FDA approval in the first half of next year, at which time we would relaunch this product. Our insulin API business had sales of $2.8 million, down from $3.3 million in the prior year, primarily due to the timing of shipments. As we've discussed in the past, the products we've launched in the last few years, including Glucagon, Vasopressin, Ganarelix, and Regadensin, have higher margins than our corporate average. While these trends continued this quarter, gross margins dropped slightly to 50% of sales in the second quarter of 2023 from 51% of sales in the same quarter last year. As we decided to impair all of our UK product rates intangible assets, which were purchased several years ago, resulting in an impairment charge of $2.7 million. These products were to be made at our IMS facility, but given better market opportunities in the US, we've decided to focus on our US products there. Selling, distribution, and marketing expenses increased to $6.7 million from $5.8 million, primarily due to increased advertising of primatine mist. General and administrative spending increased to $12.3 million from $10 million, primarily because of increased personnel-related costs and costs related to the Baximi acquisition. Research and development expenditures decreased to $16.8 million in 2023 from $22.8 million last year, as spending in the prior year was elevated due to purchases of raw materials and components for our AMP-018 and insulin pipeline products. Non-operating expenses increased to $4.1 million from $1.7 million due to one-time costs related to our credit agreement used to finance the back CME acquisition, currency fluctuations, and mark-to-market adjustments related to our interest rate swaps. The company recorded net income of $26.1 million, or 49 cents per share, in the second quarter, compared to net income of $17.3 million, or 33 cents per share, in the second quarter of 2022. The company reported a 68% increase in adjusted net income to $34.8 million or $0.65 per share compared to an adjusted net income of $20.7 million or $0.39 per share in the second quarter of last year. Adjusted earnings excludes amortization, equity compensation, impairments of long-lived assets, and one-time events. In the second quarter, cash flows provided by operations was $54.9 million. bringing our year-to-date cash flow provided by operations to $95.3 million. I will now turn the call over to the operator to begin Q&A.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question is from Tim Chang with Capital One. Please proceed with your question.