Amphastar Pharmaceuticals, Inc.

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 session 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 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 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 afternoon, and thank you for joining our second quarter 2025 earnings call. I'm pleased to share that Amphistar delivered a solid performance in the second quarter of 2025, highlighting the continued strength of our commercial execution, the resilience of our diversified portfolio, and our strategic focus on long-term growth. For the second quarter, we reported net revenues of $174.4 million and a gap net income of $31 million, or $0.64 per diluted share. On a non-gap basis, adjusted net income was $40.9 million, or $0.85 per diluted share. The performance was primarily driven by the strong momentum of Vaximi, which has quickly established itself as a reliable top performer for Amphistar. Total revenue for Vaximi increased by 21% year-over-year. The growth reflects our successful integration of global commercialization at the start of 2025. as well as the increase in unit volume and higher average selling prices. Additionally, we observed stable performance for primatine mist, indicating consistent consumer demand. Turning to our capital investment strategy, we recently announced a significant expansion at our California headquarters aimed at quadrupling domestic manufacturing capacity at that facility. In today's geopolitical environment, Expanding our U.S. manufacturing footprint is essential to mitigate risks associated with international supply chains. This investment not only strengthens our operational resilience, but also supports the advancement of our R&D pipeline. Our vertical integrated infrastructure, backed by U.S.-based production, has long been a cornerstone of our operational excellence, as we focus on maintaining control of quality and upholding high standards. Shifting our discussion to our regulatory initiatives, our product candidate, AMP002, has been under FDA review for an extended period. We have engaged in productive and ongoing dialogue with the agency and value the collaborative nature of these interactions. Based on the progress of our discussions and the feedback received to date, we remain optimistic for a near-term approval and look forward to the opportunity to deliver this important product to patients as soon as possible. We continue to advance several additional key regulatory programs. For our AMP007 inhalation filing, we have received additional feedback from the FDA and now expect a GDUFA date in the first half of 2026. We're pleased to report that our teriparatide product, AMP015, remains on track and is expected to meet our previously communicated guidance with a GDUFA action date in the fourth quarter of this year. As for our GLP-1 ANDA or AMP-018, we are on track to respond to the complete response letter in the second half of this year. Additionally, we're incredibly excited about the long-term potential of our Insulin Aspart BLA, AMP-004. As we continue to advance this program with interchangeability as our ultimate goal, while the recent approval of the first interchangeable Insulin Aspart product triggers a marketing exclusivity period, We view this as a meaningful milestone for the entire category. The FDA's decision to grant interchangeability not only validates the regulatory pathway, but sets a strong precedent that supports the potential for future competing interchangeable biosimilars in the United States insulin market. This development underscores the growing importance of accessible and affordable insulin options, a trend we expect will accelerate beyond 2026. Amphistar is exceptionally well-positioned to benefit from this shift. With all U.S.-based finished product manufacturing and a deep expertise in developing and manufacturing complex injectables, we are confident in our ability to be a major contributor in this evolving market. We believe the long-term implications of this program could be transformative, both for Amphistar and for the millions of patients who depend on high-quality insulin therapies. As we look beyond our core pipeline and diabetes portfolio, we are actively driving Amphistar's evolution into a more diversified, innovation-led company with a growing emphasis on branded and proprietary products. Operationally, we continue to balance fiscal discipline with strategic investment, ensuring our resources are allocated to high impact opportunities. Our R&D expense rose 14% year-over-year, driven primarily by increased material and clinical trial costs, reflecting our deliberate investment in future growth. We view R&D as a critical engine of long-term value creation that enhances and extends our commercial capabilities. Looking ahead, our strategy remains firmly anchored in sustainable growth, with a strong focus on advancing our pipeline. both through internal innovation and carefully selected external opportunities that align with our vision and expertise. In summary, Amphistar's unique blend of scientific innovation in developing high-quality complex products, operational excellence, and deep commercial expertise positions us as a standout leader in the pharmaceutical industry. We believe that our strategic shift towards proprietary product development supported by an all-U.S.-based finished product manufacturing that bolsters supply chain resilience, and our strong commercial franchise focused on sustainable shareholder value collectively form the foundation of Amphistar's growth. Driven by these unique strengths and disciplined execution, we are well-positioned to confidently accelerate into the next phase of long-term transformative growth. Thank you again for joining us today. With that, I'll turn the call over to Bill Peters, our CFO and Executive Vice President of Finance, to walk through the financials in more detail. Thank you, Dan. Revenues for the second quarter decreased 4% to $174.4 million from $182.4 million in the previous year's period. We're proud to share that while revenue was impacted by increased competition in our legacy products, this was largely offset by vaccine needs. which recorded its highest quarterly sales since the product's acquisition. Vaccine sales grew to $46.7 million compared to the prior year period of $30.9 million, as Amphistar assumed full commercialization responsibilities globally at the beginning of 2025. Keep in mind that during the same period last year, Lilly had vaccine sales of $7.6 million. Therefore, total vaccine sales for the period grew by 21%. Primatine mist sales held steady at $22.9 million in the second quarter, and we are pleased to report that our year-to-date sales have grown by 10%. Glucagon injection sales declined 25% to $20.6 million from $27.4 million, primarily due to increased competition and a move to ready-to-use glucagon products, such as Baximi. Epinephrine sales decreased 42% to $16.2 million, from $27.9 million due to increased competition on the multi-dose vial and the sales of the pre-filled syringe drop due to another supplier returning to the market. Sales of lidocaine increased 17% to $15 million from $12.8 million, primarily due to an increase in unit volumes as a result of an increase in demand caused by shortages from other suppliers during the quarter. Other pharmaceutical product sales decreased $53.1 million from $57.6 million, primarily due to a decrease in sales of anoxaparin, dextrose, and sodium bicarbonate, as a result of increased competition. This trend was partially offset by sales of albuterol, which we launched in August 2024. Cost of revenues increased to $87.9 million from $87.2 million, with gross margins declining to 49.6% from 52.2% in the previous year's period. Back to sales in the prior year period were recorded under a transition service agreement with Lilly and were booked at 100% gross margins. So now that the transition to Amphistar has been completed, cost of revenues for all product shifts are included in this line, which negatively impacts margin rates. Additionally, pricing declines due to Competition for glucagon and our epinephrine multi-dose vial product negatively impacted margins. Because of these trends, management focused on cost control efforts across the business, which mitigated the impact of these pricing declines. Selling, distribution, and marketing expenses increased 14% to $10.2 million from $9 million in the previous year's period due to the sales and marketing efforts related to Baximi, including the co-promotion agreement with Mankind, as well as sales efforts related to primacy and MIS. General and administrative spending increased 5% to $14 million from $13.3 million, primarily due to increased personnel-related expenses. Research and development expenditures increased 14% to $20.1 million from $17.7 million due to an increase in material and supply expenses for inhalation pipeline products and expenses related to our proprietary projects. Non-operating expenses decreased to $2.8 million from $5 million due to a decrease in interest expense and currency fluctuations. Net income decreased to $31 million or 64 cents per share in the second quarter from $37.9 million or 73 cents per share in the second quarter of 2024. Adjusted net income decreased to $40.9 million or 85 cents per share compared to an adjusted net income of $48.7 million or $0.94 per share in the second quarter of last year. Adjusted earnings exclude amortization, equity compensation, impairments of long-lived assets, and certain one-time events. In the second quarter, we had cash flow from operations of approximately $35.6 million. We used a portion of our cash on hand to buy back $39.2 million worth of shares. These purchases finished our previous authorization So our board of directors approved an additional $50 million stock buyback program. I'll now turn the call back over to Dan. Thank you, Bill, for the updates. We'll now turn the call over to questions. Operator?

We'll now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. you may press star two to remove your question from the queue. For participants using speaker equipment, it 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 Serge Belanger with Needham & Company.

Hi, good afternoon. Thanks for taking my questions. I guess the first one's for Bill. I think in the past you've indicated you expected the top line to be flat year over year. Just curious if those expectations have changed now that we're halfway through the year. And secondly, maybe if you can highlight what we should expect from vaccine over the second half of the year and are you starting to see some of the mankind collaboration impacts on those sales? Thanks.

Sure, yeah. We still are guiding to flat sales year over year, and we still anticipate that two products could be approved and contribute to that level. So we're still comfortable with that flat sales. And secondly, vaccine, we're still consistently saying that the guidance that we gave at the beginning of the year, which was high single-digit unit growth and a 3% price increase in the United States, we're right on track for that. And We're really pleased with the strong growth we had in the second quarter.

I guess in terms of potential approvals, A&P 02, I hate to ask again, but has your level of confidence increased or changed at all from the last quarterly update?

We still remain optimistic about the approval of it. We continue to engage with high-level officials at the FDA, and it keeps us optimistic about an approval.

Thank you. Our next question is from Serena Chen with Wells Fargo.

Hi, thanks for taking my question. I wanted to ask about AMP 018, the GLP-1. I saw that the IQVIA trailing 12 month sales that used to be 1.1 billion at the start of the year, now that's moved down to 400 million. So I was wondering how you're thinking about this opportunity, especially with the recent CRL delaying approval timelines. Thank you.

Yeah, this is one where we think there's going to be a very crowded generic market. We expect it to be a relatively small contributor to our sales. Okay, helpful.

Our next question is from Jason Gerberry with Bank of America.

Hey, guys. This is for Jason Gerberry. Just two questions from us. Maybe first, if you could walk us through the expected margin trajectory for the second half of the year, and then second, on epinephrine PFS competition. Maybe if you could speak to, you know, the competitive environment. Has pricing eroded significantly, or is this primarily a market share issue? Just the latest there. Thank you.

Sure. So, the expected margin trajectory. We do expect that the new products that we have will either be at or above the corporate average margin that we have right now. But what we are expecting to see is increased price competition on a go-forward basis. Therefore, we expect margins to contract absent the new approval launches. And as far as epitrephil syringe goes, that competition is really baked into the current quarter numbers that we have there. So, you know, the pricing and the unit drop have both happened for that, we believe. And it's been both. It's been both pricing and unit drops that have contributed to this overall sales decline.

Thank you. Our next question is from Ekaterina Niyakova with JP Morgan.

Thank you so much. So first question is just on glucagon. Just as you think about, you know, the revenues for the product from here, is Q2 kind of a good runway to think about going forward, or would you expect to see some sequential erosion as we think about Q3 and Q4? And then second question is just on your plans to expand your manufacturing capacity. Could you talk about, you know, what motivated the decision? I'm assuming, you know, some of that was probably tariffs. And just thoughts on how you could leverage this capacity over time. Thank you.

Yeah, I'll take the first one. And no, glucagon is not at a run rate yet. So while we did have the competition come in from one competitor, a second or another competitor was recently approved. So our expectation is that they'll launch in the near future, therefore bringing down both our units and our pricing on this. So we expect to see glucagon drop on a go-forward basis, and not to mention the fact that the overall market on the anti-hypoglycemic side of that is shrinking as people move towards ready-to-use products like our Baxamy. As for the expansion, it's been in our plans for quite a while to expand here at our headquarters. Certainly, the geopolitical environment is ripe for us to do that at this time. But it is designed more to support our pipeline. All the products that are currently on file at the FDA are already supported with manufacturing here at our facilities that we already exist. But for our pipeline, and specifically our pipeline as we move more into proprietary products and stuff, that's where we're looking at expanding the manufacturing, supporting that.

So that's the reason behind it. Thank you. Our next question is from David Amsalon with Piper Sands.

Thanks. Wanted to circle back on the informal revenue guide. Does that contemplate contribution from AMP002 and as a follow-up to the question on on revenues for the year, how many launches or even if you can say this, which launches are you actually contemplating before the end of the year? So that's number one. And then number two, why don't I get some more color on AMP007, the extent to which that's going to be a crowded market and how should we think about the size of that opportunity to the extent that you ultimately get approval next year? Thanks.

Yeah, so for the revenue guide, it does include, you know, we, I think we weight the expectations of these products as we take a look at them. And so we risk adjust them. And it includes two launches on a risk adjusted basis. And those include 002 and 015. So right now, those are the only two that we believe could be approved this year. But could we get to that flat in other ways? We could, depending on competition on other products and also just the vaccine growth, if that exceeds our expectations as well. So that answers that question. And on 007, as far as the contribution, we don't know of any other file or anybody else working on it or close to it. We haven't seen anything about it. So as far as we know, we could be the approval on that, and if we're the first approval, we think that this has the potential to be a significant market opportunity, potentially the biggest in the near term.

Thank you.

Thank you. There are no further questions at this time. I'd like to hand the floor back over to management for any closing comments.

Well, thank you, Paul, and thank you, everyone, for joining us today. We look forward to sharing more updates in the near future. Have a great day.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.