Amphastar Pharmaceuticals, Inc.

Greetings and welcome to the AMPA Star Pharmaceuticals fourth 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 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, everyone, and thank you for joining Amphistar's fourth quarter 2025 earnings call. 2025 was a pivotal year for the company, demonstrating the strength and balance of our business model with our continued focus on both commercial execution and scientific innovation. Saximi maintained its strong double-digit growth trajectory reinforcing the durability of our franchise and continued execution, while FDA approvals for iron sucrose and teriparatide highlighted our technical depth in complex generics. And just this week, we achieved another major regulatory milestone with the FDA approval of our ipatropium bromide HFA inhalation aerosol, previously referenced as AMP007. The FDA also confirmed that this product is eligible for 180 days of generic drug exclusivity, as we were the first ANDA applicant with paragraph four certification. This approval reinforces the strength of our integrated R&D and manufacturing model and represents a meaningful addition to our respiratory portfolio. We expect to launch this product commercially early in the second quarter of 2026, positioning it as a significant near-term growth driver. Across the pipeline, we advanced and expanded our proprietary portfolio with the addition of three novel peptides in oncology and ophthalmology and a fully synthetic corticotropin program in immunology. These additions support our transition towards a portfolio increasingly anchored in high-value proprietary and biosimilar assets. On the commercial side, we remain attentive to the competitive pressures in certain legacy products and continue to prioritize resources towards our strongest growth opportunities. Our performance this year was driven by three core pillars, resilient commercial momentum, strategic pipeline progress, and disciplined operational execution supported throughout our U.S.-based manufacturing advantage. For the full year, net revenues were $719.9 million. Vaccine remained a key contributor, generating $185.4 million in revenue, up 12% year-over-year, driven by higher U.S. unit volumes and the successful transition to direct global distribution. Primatine Mist also performed well, with sales rising 7% to $108.7 million, supported by strong consumer demand and continued marketing investments. We saw additional contributions from newer and expanding products, including 4.4 million from iron sucrose following its August launch, and a strong growth in albuterol driven by market demand. These gains helped offset competitive pressures in epinephrine and glucagon. Full-year revenue declined modestly by 2%, reflecting greater than expected headwinds in legacy products. Even so, We maintained strong operational discipline, tightening expenses, prioritizing long-term investments, and mitigating margin pressures in areas facing pricing challenges. Operating cash flow totaled $156.1 million, demonstrating the resilience of our model and our ability to continue investing in strategic priorities. On the pipeline side, we achieved several major regulatory milestones with approvals for iron sucrose, terapertides, and most recently, ipratropium bromide HFA. These achievements broadened our capabilities across complex injectables and inhalation products. We also expanded our proprietary pipeline with high-value assets, including AMP 105, AMP 109, AMP 110, and AMP 107, programs that collectively opened more than $60 billion in addressable market opportunity and strengthen the long-term foundation of our portfolio. We also continue to advance several high-impact programs that remain on track for near-term launches. Our Insulin Aspart BLA for AMP-004 and our GLP-1 ANDA for AMP-018 are moving steadily through regulatory proceedings with anticipated commercialization for each expected in 2027. Together, these programs represent meaningful near- and mid-term value drivers as we expand our presence across complex formulations and high-demand therapeutics. To support this expanding pipeline, our U.S. manufacturing investment in Rancho Cucamonga remains a critical pillar of our long-term strategy. The expansion will quadruple production capacity at the site, significantly enhancing scalability and improving supply reliability. The upgraded footprint positions us to meet future demand as our proprietary programs and complex generic advance forward commercialization, ensuring we can execute with the speed and consistency required in these high-growth markets. I will now turn the call over to Bill Peters, our CFO and Executive Vice President of Finance, for more detailed financial review of the fourth quarter and full year. Thank you, Dan. And good afternoon, everyone. In my comments today, I will discuss the fourth quarter results and then our assumptions for 2026. Sales for the fourth quarter of 2025 decreased 2% to $183.1 million from $186.5 million in the previous year's period. Vaccine sales grew 12% to $46.7 million from $41.8 million in the prior year period as we continue our sales and marketing efforts in the United States. Primatine mist sales dropped 3% to $27.9 million from $28.9 million in the prior year period. Glucagon sales declined 45% to $14.1 million from $25.6 million in the prior year period due to increased competition as well as a market move toward ready-to-use products such as vaccine. Epinephrine sales declined 9% to $17.1 million from $18.7 million in the previous year's period to increase competition for our epinephrine multi-dose vial product. This decrease was partially offset by an increase in unit volumes for our epinephrine pre-filled syringe, driven by increased demand caused by shortages from other suppliers during the quarter. Other pharmaceutical product revenue grew 8% to $62.4 million from $57.5 million in the previous year's period. primarily due to increased sales of albuterol and iron sucrose, which we launched in August 2024 and August 2025, respectively. Those margins remained flat at 47% of revenues as we saw increased sales of baximi and iron sucrose. This is offset by a decreasing pricing of glucagon and our epinephrine multi-dose vial products. Selling, distribution, and marketing expenses were essentially unchanged at 10.8%. $3 million in the fourth quarter of 2025 compared to $10.4 million in the previous year's period. General and administrative expenses increased 27% to $16.5 million compared to $12.9 million in the prior year, primarily due to increased legal expenses and expenses related to the implementation of a new ERP system. Research and development expenditures increased 29% in the quarter to $23.3 million from $18.1 million in the comparable quarter of 2024, primarily due to increased spending on our insulin and proprietary pipeline. Non-operating expenses in the fourth quarter of 2025 were $3.7 million compared to $1.2 million in the prior year period, primarily as a result of foreign currency fluctuations, mark-to-market adjustments related to our interest rate swap contract. We reported net income of $24.4 million, or 51 cents per share, compared to the previous year's fourth quarter net income of $38 million, or 74 cents per share. Adjusted net income was $34.2 million, or 73 cents per share, compared to an adjusted net income of $47.2 million, or 92 cents per share, in the fourth quarter of the previous year. Adjusted earnings exclude amortization, equity compensation, and one-time events. In the fourth quarter, we had cash flows provided by operations of approximately $32.9 million, and for the four-year cash flow from operations were $156.1 million. As we look ahead to 2026, we are basing our outlook on several key financial assumptions. For vaccine, we expect mid-single-digit unit growth in the U.S., partially offset by a planned reduction in international volume, as we exit a handful of unprofitable markets later in the year. We do not expect to take any price increases in 2026, as our primary focus is on unit growth. For primatine myths, we expect unit growth in the mid to high single digits this year, and we plan to take a 5% increase in price in the second quarter. We expect the largest driver of growth will be the launch of Iphiterbium bromide. With a planned launch in early the second quarter, Our third-meter dose inhalation product is poised to be a meaningful contributor as sales ramp up. We also expect increased contributions from third-party API sales from our ANP subsidiary. Offsetting these growth trends will be expected sales declines due to increased competition for glucagon and, to a lesser extent, epinephrine and cytonadione. Overall, we expect these dynamics to drive consolidated revenue growth in the mid- to high-single-digit range for 2026. We expect gross margins to be lower, primarily driven by continued pricing pressure on glucagon, epinephrine, and phytonadione, which are high-margin products. In addition, we are seeing higher input costs, including labor and supplier-related increases, which will further impact margins. Our selling and marketing expense will increase slightly the percentage of sales due to increased sales and marketing efforts for both vaccine and financing myths. General and administrative spending will be flat up as a percentage of sales due to one time of spending associated with implementations of our new ERP system. Turning to research and development, we plan to wrap up spending on clinical trials and purchases of materials and supplies for inhalation and proprietary pipeline products. We also anticipate a significant increase in capital spending from the expansion project at our Rancho Zucamanga facility, which we announced last year. Spending on this major project was slower than we anticipated in 2025, but will ramp up more significantly in 2026. We plan to finance this expansion with cash flow from operations. As of today, we have over $300 million in cash and short-term investments on our hands, and we plan to utilize a portion of our strong cash position to continue our stock buyback program. Additionally, we continue to look for business development opportunities which fit Amplistar's strategy. I will now turn the call back over to Dan. Thank you, Bill. In summary, 2025 was a year of meaningful progress and disciplined execution. We strengthened our commercial foundation with resilient performance from Baximi and Primatine-MID. Advanced our regulatory pipeline with FDA approvals of iron sucrose, teraparotide, and most recently, epitropium bromide HFA inhalation aerosol. and made significant progress across our AMP004 and AMP018 near-term commercial product candidates. We also expanded our proprietary pipeline portfolio into high-growth therapeutic areas through the addition of novel product candidates in oncology, ophthalmology, and immunology. These achievements reinforce the depth of our scientific capabilities, the strategic value of our U.S. manufacturing footprint, and our commitment to delivering high-quality therapies that improve patient access and outcomes. The momentum we've built to position Campus Star for significant long-term value creation through focused execution, innovation, and a robust pipeline designed to support sustainable growth. With that, we'll take your questions. Paul?

Thank you. Well, now we conduct a question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys.