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.

Hi, good afternoon. First one for Bill. Now that we're three quarters in for this year, any updated thoughts on your informal guide for a flat year-over-year top line and maybe more importantly, a return to double-digit growth for next year? And then secondly, on iron sucrose, you've now been in the market for a couple months, so maybe just highlight or give us an idea of how big the opportunity can be for you, given the competition and your manufacturing capacity for the product. Thank you.

Yeah, so we still believe that we can get the flat this year, based on some outperformance by vaccine and primatine mist and some other factors. And then next year, what we're looking at is probably either high single-digit to low double-digit growth rates. So we'll talk a little bit more about that in the next call-up. And on iron sucrose, I think the best way to look at that is that we hit $2.4 million this quarter, which is about half a quarter. And that's probably a good run rate for the time being on a go-forward basis.

Thank you. Thank you. The next question we have comes from Dennis Ding of Jefferies. Please go ahead.

Hi. Thanks for taking the question. This is Liwen Wen for Dennis Ding. We would like to ask if there's any updates on 007 and what about the communication with FDA? Has the shutdown impacted that process at all? And also, would you like to comment on the FDA bandwidth to handle these applications especially given the shutdown situation?

Sure. This is Tony. For our ANP007, we continue to have engagement with the agency on it. Given the nature of the combination and complex products like this, this is kind of the due course for these type of products. And as a result, we've aligned our guidance more precisely around the anticipated launch date, as you'll see there. And we've done this because we believe it offers a more meaningful and actionable reference point for the analyst. As far as the bandwidth from the agency, we have seen just slight delays in interaction, not necessarily directly related to any delays in products, just maybe taking a little bit longer to respond to questions. This hasn't resulted directly to anything that we've seen as far as mistakes.

Thank you. The next question we have comes from Jason Gerberry of Bank of America. Please go ahead.

Hey guys, this is for Jason Gerberry. Thanks for taking your questions. The first on generic benefit, maybe can you just speak to the competitive dynamics? I'm just wondering why it seems like the competitor generic benefit that's launched seems to have garnered a little bit more market share since the start of the launch. And what are the key pushes and pulls in working with these dialysis centers? I'm just trying to think through if there are any levers such as contracting or anything else that you can pull in order to increase the run rate headed into 2026. And then maybe as you look towards 2026, it sounds like high single-digit to double-digit growth is the new sort of commentary there. And I'm just wondering, is that baking in all the pipeline assets that you've talked about in terms of AMP007, generic Forteo, generic GLP-1, and maybe not the insulin and aspirin since that's 2027, but Is that all on a nominal basis, or is there any risk adjusting that's going on there? Thank you.

Yeah, so for the iron sucrose question, our goal is to launch it with a profitable price portfolio and hit points where we can have a nice margin on this. So we may not have gone as aggressively in some areas where there's some low margins. Also, I think we were, while we had some supply initially, I think that we were not, you know, we didn't have enough supply at the beginning of the quarter. But, you know, we were by the end of the quarter. But I still think the initial guidance I gave a little while ago, which was, you know, we were in for half a quarter. That's probably the run rate to look at on a going forward basis. I think that's the best way to look at that. As far as the guidance for next year, we do risk adjust our guidance. But I will say that the insulin product and also the GLP-1, we've assumed that those do not launch until 2027. So they're not in the guidance for next year.

Thank you. The next question we have comes from Ekaterina Knyzakova of JP Morgan. Please go ahead.

Thank you so much. So just on the licensing you did with Nanjin Anshi, just elaborate a bit more on what brought you to that portfolio of assets initially and just your level of excitement both about the science and the potential commercial opportunity. And kind of a related question, but just on business development more broadly, Just level of appetite of doing more deals kind of going forward, and maybe your preference between doing something with more clinical risk, like you just did, or something kind of closer to vaccinee that's more commercial stage. Thank you.

Yeah, when we looked at this opportunity in working with Angie and these products, this is something that's been part of our long-term plan, and that is to get more into branded products. As we've gone along over the years, we've had that toolbox has been very effective for us. Immunogenicity, preclinical, animal studies, doing a lot of work in these early development has helped us considerably. And so when we looked at this opportunity, it seemed like a very good fit. All of the pieces were in place for us to be able to actually do the development of these type of products.

And as far as business development on a going-forward basis, I would say that now that we have some early-stage assets and some commercial assets, I think what we would be looking for primarily is either assets that are already commercialized or very late-stage R&D assets.

One other thing, too, a level of excitement about these products. We're very, very excited about them. some early data for us on some of these animal models. It looks very encouraging for, as Dan had mentioned, some potentially broad applications for some of these cancer treatments. It seems very exciting for us to have this opportunity.

Thank you. The next question we have comes from David Anselm of Piper Sandler. Please go ahead.

Thanks. Two for me. One on insulin aspart. What's the competitive landscape going to look like in your view once you're in a position to launch in 27? And how are you thinking about just the size of that opportunity and how impactful that could be to your portfolio? That's number one. And then secondly, on primatine mist, notice that you're one R into a patent. expires in 26. Are you expecting competition there? How are you thinking about exclusivity for that product? Thank you.

As far as the insulin ask part goes, we originally hoped that we'd be there first or second, but it's likely to be three or more competitors in that market. But it's a large market and a lot of volume, so there's a couple of things going for us, which are we make the API ourselves and we also make the finished product ourselves. And with a large volume market like that, it's going to really help our cost structure to get another high volume product like that out here will affect our overall cost structure. So we still see that as being a good market that we can invest in. have strong sales, and it would be something that will move the needle for our company, so it's not just another launch. And primating this, yeah, the patent for the current product does expire next year. Two things on that. One, we don't know of any competition, but generic competition, but there won't be because there always could be. But we also have been saying all along that we think it's unlikely that we'd get competition early on because of this product being you know, because it's an OTC product, a lot of the sales would stay with the brand. So if there's a generic come in, we assume that the brand gets half the market anyway. Of the other half of the market, if there was generic, we would also launch our own generic version of it and probably capture half the generic market. So any competitor would be limited to one quarter of the market and it has to cut the price at half or more to get any of that market share. So we're talking maybe it's a $10, $12 million sales market, and it's also now not a high-margin product, so it's a low-margin product. So spending $10-plus million to get to that low-margin product, low-sales, low-margin product, we don't think is a great idea for most players, so we don't see that as being a big opportunity for generics. We think it's not the most likely target for generics to go after. And then secondly, we've also discussed how we are working on a follow-on product that has an even lower global warming propellant. And so we're working with the FDA right now. We've already filed one patent on that and are working on some others as we plan to get that product moving forward. We'll probably give some more information about timing of that next year.

Thank you, Phil. The final question we have comes from Ben Burnett of Wells Fargo. Please go ahead.

Thank you very much. I want to go back and ask a follow-up question around the in-license products that you just got. I wonder if you could maybe just kind of map out for us sort of the market or the regulatory and development path. And is there one of these is could one maybe be developed before the other or have a shorter path to market? Like how do you see sort of the timing there?

Yeah, what I could say about these, these will be new chemical products. So these would be going through the routine new product, new chemical entity pathway from the agency. We do, from a prioritization, we have some that we think might be a little bit easier than others. And it's kind of early for us to give any kind of prioritization guidance on that. other than it's going to be some animal studies that we'll have to do and followed by some human studies, obviously kind of the normal pathway that you would expect. How much prioritization the agency gives in that remains to be seen. We're very encouraged by some of the early data and we think perhaps the agency will too, which will help expedite the approval process of that. But we're still early in it and we're still kind of evaluating some of the preclinical data that we're getting, although we're very encouraged by it.

And one thing I'd like to add to that is that this has been a plan of ours for a while. As we've illustrated in our presentation, our intent was always to get our pipeline to be 50% proprietary. So we've staffed up, we have the resources to work on all of these independently at the same time. And as we start hitting our stride with them and we'll have a better outlook on how we'll report it and when we'll report it and what we'll report going forward.

Okay, great. Thank you very much for that. And if I could just maybe follow up with a vaccine question. I guess what is your estimate for kind of the share of the ready-to-use market that you have? I feel like in the past you've talked about the glucagon market as potentially expanding. I'm curious if you're still seeing that, and if so, what are the drivers of that? Thank you.

Yes. Right now, depending on the month, we usually have between 55% and 60% of the ready-to-use market, and that's how we're defining that segment of the market. We have said that the the glucagon market is expanding. And going back to the data on that, which was when we purchased vaccine, only 10% of people who are on insulin were getting a glucagon script filled. And at that time, the Diabetes Association recommended that every person who is on insulin get a glucagon script filled. We've seen that increase pretty steadily and we're now up to 12% of people getting a glucagon script filled. So it has increased pretty significantly, but we think that there's a lot of opportunity for that number to keep increasing. Therefore, we're very excited about the long-term cash flows from this product and long-term growth of that product. We still have our forecast of peak sales of $250 to $275 million, and we think that that's very achievable. We're still excited about this, and Baximi is our number one growth product for next year.

Thank you, Sol. There are no further questions at this time. I would now like to turn the floor back over to Dan Dishner for closing comments. Please go ahead, Sol.

Thank you, Operator. Thank you all for joining us today. We remain excited about closing 2025 on a positive trajectory and remain focused on delivering innovation and value as we enter 2026. I look forward to sharing updates next year. Have a great day.

Thank you. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.