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. If anyone should require operator assistance during the conference, please press star then 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 the 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 websites. 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 the U.S. GAAP may be found in our earnings release. Please note that this conference is being recorded. Our speakers today are Mr. Bull Pieces, 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. Please go ahead, sir.

Thank you, operator. Good afternoon, and thank you for joining Amphistar's third quarter 2025 earnings call. I'm pleased to share that the company delivered another strong quarter, underscoring the continued success of our vertically integrated strategy and steadfast commitment to science-driven innovation. Our performance this quarter was anchored by three core pillars, strong commercial execution, the strategic expansion of our pipeline, and focused regulatory progress, all reinforcing our long-term growth trajectory. For the third quarter, Ampistar achieved net revenues of $191.8 million, with GAAP net income of $17.3 million, or $0.37 per diluted share. On a non-GAAP basis, adjusted net income was $44.6 million, or $0.93 per diluted share. This performance was primarily driven by sustained momentum in our core products, Baximi and Primatine Mist. Faximi delivered 53.6 million in total sales, up 14% year-over-year. This growth was driven by seasonal demand and expanded sales execution through our partnership with Mankind's Salesforce. Additionally, total revenue from Primatine Mist increased by 11% year-over-year, validating persistent consumer engagement in the OTC respiratory space as the product consistently sees a positive growth trend. Turning to our proprietary pipeline, I'm excited to highlight a significant expansion this quarter, fueled by exclusive in-licensing agreement with Nanjing Angie Biotechnology, securing US and Canadian rights to three early-stage novel peptide candidates targeting high-growth markets across oncology and ophthalmology. The first candidate, AMP105, is a first-in-class oncology peptide targeting tumor proliferation and metastasis, representing a novel mechanism of action with broad clinical potential. Early studies have shown anti-tumor activity across multiple cancer types. The second candidate, AMP109, is a peptide-coupled doxotaxel with improved selectivity and bioavailability, targeting lung, colorectal, gastric, and pancreatic cancers. It is designed to reduce doxotexil-induced toxicity, and has the potential to improve the efficacy and safety of current taxane therapies. Lastly, the third candidate is AMP107, which is a non-invasive eyedrop therapy for wet age-related macular degeneration and diabetic macular edema, offering a patient-friendly alternative to injectable treatment and the potential to improve treatment adherence and quality of life. AMP107 has the potential to be the first non-injectable antivascular endothelial growth factor receptor or anti-VEGFR eye drop in a $9.4 billion market. These newly added assets broaden our pipeline beyond diabetes and complex generics, unlocking a combined market opportunity of over $60 billion. To capitalize on this growth, Our U.S. manufacturing expansion will quadruple production capacity at our Rancho Cucamonga headquarters, strengthening operational agility and positioning us to capture greater value across our portfolio. Our investment in domestic capacity reflects a strategic commitment to resilience and scalability as we navigate an increasingly dynamic landscape. We are delighted to share that we are well positioned to reach our target of proprietary products comprising 50% of our pipeline by 2026. Shifting our discussion to our regulatory initiative, we made meaningful progress this quarter, highlighted by FDA approval of iron sucrose injection, or AMP002, which is now commercially available as one of the generic options in the United States. This milestone expands patient access to affordable therapies while contributing to our revenue growth. During this quarter, iron sucrose injection generated total sales of 2.4 million. Beyond these launches, we continue to advance several high-impact regulatory programs across our portfolio. For our AMP007 inhalation filing, we are on track for a launch in mid-2026, with the potential to be the first to market generic in a 1.5 billion addressable market. We're also pleased to report that our generic teriparatide product, AMP015, is also on track for a launch in the first half of 2026. Additionally, our GLP-1 ANDA AMP018 is on schedule for a 2027 launch. The obesity and diabetes markets continue to attract significant competition, and as a result, we expect the commercial opportunity to be limited and we will focus on maintaining cost and quality leadership in this space. And finally, our Insulin Aspart BLA or AMP004 is moving steadily towards a launch in 2027. The recent approval of biosimilars in this space helps de-risk the opportunity by establishing a proven pathway for market acceptance and adoption. Collectively, these programs position us to expand patient access and deliver sustainable growth across multiple high-demand therapeutic areas in the coming years. I will now turn the call over to Bill Peters, our CFO and Executive Vice President of Finance, for a more detailed financial review of the third quarter. Thank you, Dan. Revenues for the third quarter increased slightly to $191.8 million last from $191.2 million in the previous year's period. Vaccinia recorded its highest quarterly sales ever, growing to $53.6 million compared to the prior year period of $40.4 million. And Amphistar assumed full commercialization responsibility globally at the beginning of 2025. Keep in mind that during the same period last year, Eli Lilly had Vaccinia sales of $6.4 million, Therefore, total vaccine sales for the period grew by 14%. Primatine mist sales grew 11% to $28.8 million in the third quarter, compared to $26.1 million in the prior year period, primarily due to our increased marketing efforts. Glucagon injection sales declined 49% to $13.6 million from $26.8 million, primarily due to a decrease in unit volumes and increased competition and a shift to ready-to-use glupeon products such as Vaximi. Epinephrine sales decreased 12% to $18.8 million from $21.3 million in the prior year period due to increased competition on our multi-dosed vial product. This decrease was partially offset by an increase in unit volume for our epinephrine pre-filled syringe as a result of increased demand caused by shortages from other suppliers during the quarter. Sales of lidocaine decreased 19% to $12.9 million from $15.9 million in the prior year period, primarily due to a decrease in unit volume as a result of other suppliers returning to historical distribution levels. Other pharmaceutical product sales increased to $64.1 million from $58.3 million, primarily due to a $4.7 million increase in sales of albuterol during the period, as well as $2.4 million in sales of iron sucrose injection, which we launched in August 2025. This increase was partially offset by a decrease in unit volumes of enoxaparin and dextrose, primarily due to increased competition. Cost of revenues increased to $93.2 million from $89.3 million, with gross margins declining with 51.4% from 53.3% in the previous year's period. Vaccine sales made by Lilly in the prior year were recorded under the transition service agreement with Lilly and were booked at 100% gross margin. With the completion of the transition to Amphistar, cost of revenue for all product shifts are included in this line, which negatively impacts margin rates. Additionally, pricing declines as well as a decrease in unit volume due to competition for both our glucagon kit and epinephrine multi-dose vial product, negatively impacted margins. Because of these trends, management implemented cost control measures across the business, mitigating the impact of pricing pressures. Selling, distribution, and marketing expenses increased 28% to $11.5 million from $9 million in the previous year's period due to the sales and marketing efforts related to vaccine meat. including the co-promotion agreement with Mankind, as well as sales and marketing efforts related to Privacy Invest. General and administrative spending increased to $39.5 million from $14.8 million, primarily driven by a litigation provision related to a recent jury verdict in a civil case against the company. While we plan to appeal the decision, accounting standards require us to book provision for the full amount, and that is applicable insurance coverage. Research and development expenditures increased 6% to $22.4 million from $21.1 million in the prior year period due to the $5.25 million upfront payment we made to Nanjing Angie Biotechnology to license three peptide products for our proprietary product portfolio. This increase was partially offset by a decrease in material and supply expenses. Non-operating expenses decreased $3.8 million from $9.4 million, primarily due to currency fluctuations. Net income decreased to $17.4 million, or 37 cents per share, in the third quarter from $40.4 million, or 78 cents per share, in the third quarter of 2024. Adjusted net income decreased to $44.7 million, or 93 cents per share, compared to an adjusted net income of $49.6 million.96 per share in the third quarter of last year. Adjusted earnings exclude amortization, equity compensation, impairments of long-lived assets, and certain one-time events, including the aforementioned litigation provision that was recorded this quarter. In the third quarter, we had cash flow from operations of approximately $52.6 million. We used a portion of our cash on hand to buy back $4.9 million worth of shares. I will now turn the call back over to Dan. Thank you, Bill, for the update. In summary, Amphistar's performance this quarter reflects the power of our integrated strategy and our commitment to long-term transformative growth. We demonstrated enduring commercial momentum with strong performance from our leading proprietary products, Vaccini and Primatine Mist. We advanced our regulatory pipeline with the approval and launch of iron sucrose injection, alongside steady progress on our interchangeable insulin aspart BLA. Furthermore, we strategically enriched our proprietary portfolio with novel peptide candidates in high growth indications across oncology and ophthalmology. These achievements underscore our unique combination of scientific innovation, US-based manufacturing capabilities, and deep commercial expertise. With a disciplined focus on proprietary product development and a robust R&D engine powered by our advanced technology, we believe we are positioned to accelerate into the next phase of sustainable growth and value creation. Thank you for your continued support and for joining us today. With that, we will now take your questions. Operator?

Thank you, Sal. We will now be conducting our question and answer session. If you would like to ask a question, please press star and then 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then 2 if you would like 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. Please note, participants are limited to one question and one follow-up. The last question we have comes from Serge Bellinger of Needham & Co. Please go ahead.