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 a 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 US 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 Mars, Executive Vice President of Regulatory Affairs and Clinical Operations. I'll now turn the conference over to your host, Mr. Dan Dishner, Senior Vice President of Corporate Communications. Dan, you may begin.

Thank you, Paul, and good afternoon, everyone. Before we begin our Q1 earnings call, I'd like to take a moment to acknowledge the incredible dedication demonstrated by our teams here at Amphistar. Recently, in the first quarter of this year, we were honored to receive the Drug Shortage Assistance Award from the US FDA. This prestigious award recognizes our significant efforts in preventing and alleviating critical drug shortages, ensuring that patients have access to essential medications. We take great pride in how our employees understand the importance of consistent access to medicine and continue to work diligently to prevent shortages. The dedication of our teams is what strengthens our company, our company culture and fuels our drive for success. We appreciate your continued support of Amphistar and excited to share our progress with you today. So let's get started. As anticipated, Amphistar's performance in the first quarter exhibited a mix of results. With our critical care products such as dextrose and epinephrine experiencing softened demand due to increased competition, similarly, the competitive landscape for glucagon has intensified. As a result, we reported net revenues of $170.5 million for the first quarter, reflecting a modest 1% decline compared to the same period last year. Despite this relatively flat performance, it underscores the enduring strength and resilience of our diversified portfolio in a dynamic market environment. We recognize the cyclical nature of drug shortages and anticipate that the trends observed in the first quarter will continue throughout the year. As we mark the beginning of 2025, vaccine achieved sales of 38.3 million in the first quarter. This figure is closely aligned with the combined vaccine sales by Lilly and Amphistar of 38.7 million recorded in the first quarter of the previous year. The first quarter of 2025 also represents the first in which Amphistar has taken full control of all vaccine operations, including distribution in all countries following the successful conclusion of our transition from Lilly. In January, we proudly launched our strategic partnership with Mankind whose experienced sales forces have enhanced our promotional reach for Baximi. While this expansion positions us favorably for sustainable long-term growth, we remain focused on the fact that the majority of the benefits and returns from these initiatives are expected to materialize in the second half of 2025. Primatine Mist continues to be a cornerstone of our branded portfolio, demonstrating remarkable performance with sales reaching 29 million this quarter. a 20% increase compared to $24 million in the same period last year. This growth can be attributed to significant increase in unit volumes and sustained demand across our distribution channels. In tandem with this success, we have expanded our physician sampling program, which was enhanced earlier this year by launching a pilot initiative aimed at improving outreach to primary care physicians. We are confident that these strategic efforts will further bolster the growth of market position for primatine mist. Together with Vaximi, we anticipate that both products will serve as key drivers of revenue growth throughout 2025, further solidifying our commitment to expanding our branded product portfolio. As we assess the glucagon and epinephrine markets, we recognize the ongoing competitive pressures influencing our performance. We remain committed to navigating these challenges while focusing on delivering quality and value to our customers and stakeholders. In the first quarter, our pipeline is strategically focused on capturing several promising near-term opportunities. We are encouraged by the FDA's recent communication concerning our AMP002 filing. While we typically refrain from providing details, on FDA communication and do not intend to set a precedent in doing so, we feel it is important to share this exception due to the extended time since our filing has exceeded its original GDUFA date. We responded to a simple FDA request promptly within one day and maintain a positive outlook on the progress of AMP002's submission. As we look ahead to our upcoming ANDA filings, we'd like to provide an update on the progress. For AMP007, our inhalation product, we are on track to submit our response to the recently received complete response letter, or CRL, in the second quarter. Additionally, for AMP015, our teriparatide product, we are pleased to report that the GDUFA goal date is still on schedule for the fourth quarter of this year. Furthermore, concerning AMP018, our GLP-1 ANDA, We anticipate submitting our response to the recently received CRL in the second half of this year. We are pleased to announce that the FDA has accepted our biologics license application, or BLA, for insulin aspart, identified as AMP004, with a biosimilar user fee act, or BESUFA goal date, set in the first quarter of 2026. This acceptance represents a significant milestone in our efforts to expand our portfolio of interchangeable biosimilar insulin offerings, demonstrating our commitment to enhancing patient access to vital treatments. In light of the current tariff discussions, we, as a domestic manufacturer, are closely monitoring the evolving situation. We hope policymakers will take into account the distinctive aspects of the pharmaceutical sector and the vital role we play in the healthcare system as they attempt to level the playing field and shape trade policies. While we manufacture all of our finished product in the United States, we do import some components and API. As the tariff currently stands, it will not materially impact our costs. We understand that transitioning from a generic driven business model to a more diversified portfolio that includes proprietary and interchangeable biosimilar products is a process that requires time, and strategic effort. Our expertise in critical care areas like immunogenicity and product characterization demonstrated through the successful development of complex products such as glucagon and enoxaparin underscores the robust capabilities of our R&D team. As we move forward, we remain optimistic about the potential to strengthen our commercial positions and enhance our portfolio of products awaiting approval. We are particularly excited about the future of our pipeline within high-value therapeutic areas, which we believe will drive significant value for our stakeholders. Our commitment to operational excellence will be the cornerstone of our strategy as we navigate the path ahead. Thank you for your continued support, and we look forward to sharing our progress in the coming quarters. Now I will turn our call over to our CFO and Executive Vice President of Finance, Bill Peters.

Thank you, Dan. Revenues for the first quarter decreased 1% to $170.5 million from $171.8 million in the previous year's period. Paximi revenues for product shift by Amphistar grew 177% to $38.4 million compared to $13.8 million from the prior year's period. As we have now fully assumed responsibility for distribution in all countries around the world, we no longer have a net economic benefit booked to other revenues, which, in the prior year period accounted for sales of $14.2 million. Primatine mist sales grew to $29.1 million in the quarter, which represents sales growth of 20% from $24.2 million in the first quarter of last year. Glucagon injection sales declined 27% to $20.8 million from $28.5 million due to increased competition. Epinephrine sales decreased 29% to $18.6 million from $26.1 million due to increased competition for our multi-dose vial product. Other finished pharmaceutical product sales decreased $2.2 million to $50 million from $52.2 million due to competition for anoxaparin, naloxone, and dextrose. This trend was partially offset by sales of albuterol, which we launched in August last year, and increased unit sales of phytonadione. Cost of revenues increased to $85.3 million from $81.7 million. Gross margins declined to 50% of revenues in the first quarter of 2025 from 52.4% in the previous year. The primary driver of the change was the shift in distribution of Baximi from Lilly to Amphistar, as Baximi sales from Lilly were booked net of expenses, giving them a gross margin of 100%. Additionally, Pricing declines for our epinephrine multi-dose vial product, which is one of our higher margin products, contributed to this change. These changes were partially offset by an increase in sales of primatine mist and phytonadione, both of which are higher margin products. Selling, distribution, and marketing expenses increased 27% to $11.9 million from $9.4 million in the previous year's period due to the expansion of our sales and marketing efforts related to Baximi, particularly the co-promotion agreement with Mankind, as well as increased marketing efforts for primatine mist. General and administrative spending increased 2% to $16 million from $15.7 million. Research and development expenditures increased 18% to $20.1 million from $17 million due to the timing of clinical trials and FDA filing fees. Our non-operating expense of $6.4 million compared to a non-operating expense last year of $100,000, primarily due to foreign currency fluctuations. Net income decreased to $25.3 million, or 51 cents per share in the first quarter, from $43.2 million, or 81 cents per share in the first quarter of 2024. Adjusted net income decreased to $36.9 million, or 74 cents per share to an adjusted net income of $55.3 million, or $1.04 per share in the first quarter of last year. Adjusted earnings excludes amortization, equity compensation, impairments of long lived assets, and one time events. In the first quarter, we had cash flow from operations of approximately $35.1 million, and we used a portion of our cash to buy back $11 million worth of shares. Before I turn the call back over to Dan, I wanted to address the first question on investors' minds this year, which is the potential impact of tariffs. While we don't know where tariffs will end up, we believe we are in a good position because we manufacture all of our finished product in the United States. Our current exposure is on certain active ingredients and components which we import from various countries. At this time, we estimate that the impact to Amphistar under the current tariff situation is an increasing cost of about $500,000 per quarter. The impact in the first quarter was less than half of that amount. I will now turn the call back over to Dan.