Amphastar Pharmaceuticals, Inc.

Greetings and welcome to the Amphistar Pharmaceuticals first quarter earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that certain statements made during this call regarding matters that are not historical facts, including but not limited to management's 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 in our earnings release. Please note this conference call is being recorded. Our speakers today are Mr. Bill Peters, CFO, Mr. Dan Dishner, Senior Vice President of Corporate Communications, and Mr. Tony Morris, Executive Vice President of Regulatory Affairs and Clinical Operations. I will now turn the conference over to your host, Mr. Dan Dishner, Senior Vice President of Corporate Communications. Dan, you may begin.

Thank you, Paul. Good day, everyone, and welcome to Amphistar Pharmaceuticals Q1 earnings call for the year 2024. We're thrilled to have you all join us today as we reflect on the company's performance over the past quarter. Amidst the dynamic landscape of the pharmaceutical industry, we are eager to share our progress, milestones, and strategic insights with you. Thank you for your ongoing support and interest in Amphistar. Joining me on the call today are two key members of our leadership team. Bill Peters, our Chief Financial Officer and Executive Vice President of Finance, and Tony Mars, our Executive Vice President of Regulatory Affairs and Clinical Operations. Let's get started. Amphistar's performance remains robust, evidenced by our impressive financial results. We are pleased to report a notable year-over-year increase in net revenue, soaring to $171.8 million, making a substantial increase of 23% over the same time last year. This achievement underscores our product portfolio's enduring strength and adaptability amidst an ever-changing environment. As expected, our products such as glucagon injection, vaccine, primatine mist, and our hospital and clinical use offerings continue to experience steady growth. This reflects their ongoing importance and relevance in the market. Of particular note is the consistent demand trend for our hospital products, which we anticipate will remain robust throughout the year. Our glucagon injection saw changes in demand specifically in the diagnostic sector due to another manufacturer's product availability. However, our recent entry into the Canadian market underscores our ability to adapt and mitigate market fluctuations effectively. Regarding primatine mist, although there have been fluctuations in distribution orders from stores, The product has maintained a steadily positive growth trajectory with consistent weekly in-store sales. Furthermore, we remain committed to achieving the 100 million sales milestone for this product in 2024. Shifting our focus, I'd like to highlight our proprietary prescription product, Vaccimi, our intranasal glucagon. The transition from Eli Lilly continues as expected. which is evident in the 22% year-over-year sales increase compared to the first quarter of 2023. This achievement underscores our proficiency in integrating acquired products into our portfolio and driving growth. At the same time, the sales also benefited from initial stockings as we started Baximi distribution in the United States. Baximi has swiftly become a cornerstone of our diabetes portfolio offering patients a convenient and effective solution to severe hypoglycemia. We believe the glucagon market remains underserved with significant growth potential as vaccine continues to be underutilized among diabetic patients. Similarly, our global transition of vaccine has continued to make progress. Our dedication to broadening our capabilities to provide vaccine accessibility for patients worldwide remains steadfast. Furthermore, we persist in prioritizing investments in sales and marketing endeavors to bolster Vaximi's market standing, seizing upon the existing underutilization of glucagon. Looking forward, Vaximi remains a primary focal point for Amphistar, and we eagerly anticipate its significant impact on individuals navigating diabetes management. Turning our focus to our pipeline products, Our efforts are directed towards potentially launching four to five products this year. We are pleased to announce the recent launch of Rextovi, our intranasal naloxone product. In terms of teriparatide, we have received a minor complete response letter, and we anticipate responding to this in the second quarter. Additionally, we anticipate a GDUPA date in the third quarter for this filing, noting that it is still in its second review cycle. Moving on to AMP008, our first inhalation ANDA has a GDUFA goal date in the second quarter, while our other inhalation ANDA filing, AMP007, has a GDUFA goal date in the fourth quarter. FDA has designated this application as a competitive generic therapy. With regard to AMP002, we are actively engaging in a positive, routinely scheduled dialogue with the regulatory agency with the FDA affirming its commitment to prioritizing the review of this application. In our diabetes portfolio, we are on track to refile insulin aspart or AMP004 in the second quarter. Additionally, we plan to file AMP018, a GLP-1 abbreviated new drug application, in the coming months. In conclusion, It's vital to highlight our remarkable performance during the first quarter. The transition and year-over-year growth of Baximi showcase our ability to foster expansion. This achievement underscores our adaptness in integrating acquired products efficiently and reaffirms our commitment to growth. Beyond Baximi, our diverse portfolio and strategic initiatives position us well for sustained success amidst market fluctuations. With vaccine meeting our expectations, and as we anticipate upcoming product launches and continued constructive dialogue with regulatory agencies, we are optimistic about our growth perspectives. Now, I'd like to hand the call over to our CFO and Executive Vice President of Finance, Bill Peters, to further discuss the financial results for the first quarter. Bill Peters Thank you, Dan.

Revenues for the first quarter increased 23% to $171.8 million. from $140 million in the previous year's period. Zuccagon injection sales increased 11% to $28.5 million from $25.7 million as we had our first full quarter of sales in Canada during the quarter. Primatine mist sales grew to $24.2 million in the first quarter, which represents a sales growth of 3% from $23.5 million in the first quarter of last year. Epinephrine and phytonodion sales increased 30% and 29% respectively due to other supplier shortages for part of the quarter, with epinephrine sales increasing to $26.1 million from $20.1 million and phytonodion sales increasing to $10 million from $7.7 million. Other finished pharmaceutical product sales decreased $1.4 million to $29.2 million due to the API shortage for MPA which caused us to temporarily stop selling the finished product. This was partially offset by increased sales of other products, such as dextrose and sodium bicarbonate, as well as newer launches, such as regadenosine. Vaccinia revenues now fall into two categories as we began shipping the product in the United States and a few European countries. The first category relates to products we ship directly to our customers, for which we recorded net revenues of $13.8 million. These revenues are recorded in our product revenues net line on the income statement. The second category relates to products sold by Lilly on our behalf under the TSA agreement, totaling $24.6 million, which had a cost of sales and expenses of $10.4 million. This resulted in net revenues of $14.2 million in our other revenues category which corresponds to Amphisar's net economic benefit from Baximi. Total worldwide Baximi sales were $38.4 million in the quarter, up 22% from $31.4 million in sales reported by Lilly in the first quarter of 2023. We will continue to book revenue on a net basis for those countries where Lilly continues to distribute the product on our behalf. Our own distribution in Baximi will increase throughout 2024 on a country-by-country basis, once Lilly has finished their inventory and we have Amphistar labeled inventory available. This will result in an increase in product sales and a decline in the net economic benefit recognized in our other revenues. Our insulin API business had sales of $1.7 million, down from $4 million last year, as mankind cut purchases while they qualified the API produced on our new production line. Cost of revenues increased to $81.7 million from $66.4 million. Gross margins were essentially unchanged at 52.4% of revenues in the first quarter of 2024 and 52.7% of revenues the previous year. Changes include increased amortization and depreciation of vaccine assets and an increase in labor and certain component costs. These changes were partially offset by vaccine sales as well as increased sales of glucagon, primatine mist, and epinephrine, all of which are higher margin products. Selling, distribution, and marketing expenses increased 32% to $9.4 million from $7.1 million in the previous year's period due to Salesforce expansion and marketing expenses related to Baximi. General and administrative spending increased 16% to $15.7 million from $13.5 million due to increased expenses related to Baximi. Research and development expenditures decreased 14% to $17 million from $19.8 million due to the timing of clinical trials and lower material expenses related to our insulin and inhalation pipeline products as a result of a ramp-up in 2023. Our non-operating expenses of $100,000 compared to a non-operating income last year of $100,000 as a $5.2 million gain on our interest rate swap associated with our term loan offset higher net interest expense. Net income increased over 66% to $43.2 million or 81 cents per share in the first quarter from $26 million or 50 cents per share in the first quarter of 2023. Adjusted net income increased to $55.3 million or $1.04 per share compared to an adjusted net income of $32.1 million or $0.62 per share in the first quarter of last year. Adjusted earnings exclude amortization, equity compensation, impairments of long-lived assets, and one-time events. In the first quarter, we had cash flows from operations of approximately $55.3 million. I will now turn the call back over to Dan.