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.

One moment please while we poll for questions. Thank you. Our first question is from Dennis Ding with Jefferies.

Dennis, is your line on mute?

Our next question is from Ekaterina Nyakova with JP Morgan.

Thank you so much. So, first question is just on AMP110, the corticotrophin asset. Just have you had any conversations with the FDA on just what the development path could look like? And if there's anything you can share on that, that would be helpful. And then the second question is just on business development, just latest thoughts on appetite and priorities, just what kind of assets are you most interested in and how big of a priority is BD for you guys in 2026? Thank you.

Thank you. I'll take the first question for 110. We have not engaged the FDA with conversation on that. We're internally still having a discussion and putting our program on paper. We'll be doing that in the relative near future.

And the second one for business development, our focus will be on areas where we either have a presence or a planned presence, and that would include endocrinology because of our vaccine products, and also the oncology, ophthalmology, and immunology spaces in terms of the areas where we have early stage proprietary pipeline products.

Thank you.

Our next question is from Serge Bellinger with Needham and Company.

Hi, good afternoon. First question around vaccine expectations for 2026. Bill, I think you mentioned you expect mid-single digit growth on units, but to be offset by some discontinuation of international sales. Just curious what the level of those international sales are, what that means if you expect growth from the franchise at all for the year. And then the second question around A&P 007, you know, just how big of an opportunity is this? I guess, have you gotten any news whether there's an authorized generic coming on the market and whether you think the Ashravent market is now stabilized after a significant step down from in 2025 from 2024. Thanks.

Yeah, so vaccine we do expect to see that mid single digit increase in units in the United States and the international decline will come in the second half of the year. We had a three year commitment to keep marketing the product in all countries where Lily was selling the product and that commitment is up in July. So at that time, we're likely to discontinue from a handful of countries. There's several countries where either the regulatory requirements are very hard and expensive or their sales are just very minimal. So those are the two things that we're looking at. So that will offset some of the price, some of the growth in the U.S., but we do still see this as growing this year, especially in the first half of the year. as the international sales will keep going on until the third quarter. And for your AO7 question, the Equivia data last year was 112 million. We think that there's a meaningful market share for being the first and having 180 days of exclusivity with the product. There's a meaningful opportunity for us. We don't currently have any visibility into whether authorized generic could or will be launched. But as far as the decline, I think we saw that mostly as more of a pricing decline last year and not so much in a demand decline, demand driven. So we think it's fairly stable at this point. Usually when you see a market go generic, you'll see that tend to stabilize because of the price considerations and because of payers wanting people on a generic product. So we think that this will lead to stabilization in terms of units for the product.

Got it. So I guess just to follow up, if there's no AG, would that be an upside to this mid to high single-digit growth expectation for this year?

I'll say it's potentially one of the differences between mid and high single-digit.

Our next question is from Pizan Patel with Bank of America.

Hey, guys. Thanks for taking my questions. My first is on gross margins. I know you commented that you expected to be lower in 2026, but maybe if you can help me understand to what degree pricing pressure on group down, epinephrine, and in these legacy products can be offset buybacks and meet growth. Maybe you can just frame the sizing between those pushes and pulls there. And then my second question is with regards to buybacks. I know you said that you plan to use a portion of your cash and you have about $300 million of cash. So maybe if you're able to help me size what proportion of that is going to be used potentially for buybacks versus And if you can't speak in terms of absolute value numbers, totally fine. If you could just frame which is a higher priority, that would also be helpful. Thank you.

Yeah, sure. So vaccine, that will definitely help us grow our gross margins next year because two things. One, the growth in the United States of the sales there, and two, in the second half of the year, The countries where we'll discontinue it have negative gross margins, so we're actually losing money in those countries, so that will help our margins. However, the glucagon reduction is fairly large, and so those products, the Epivial and the Phytonavion, also are high-margin products, and we're expecting to see sales declines in those products as well, as well as we're seeing just cost increases from our vendors or our suppliers at this time. So that's also eating into the margins. Also, another thing we didn't mention is that we did mention the higher API sales from our China business next year. That's going to be at a generally lower than corporate average gross margin as well, which will impact the overall margins. And then as far as buybacks go, last year we did about $75 million in buybacks. I think that would be like the high end of the range for what we are. what we have. We have about $15 million left on the current buyback as of today. So we did buy back some stock in January and February as well. So we're likely to have another authorization later this year. But a lot of it will depend on do we have business development opportunities and how close are we to potentially executing on those. Likely to slow the buyback down if we have a need for cash utilization.

Our next question is from David Amsalem with Piper Sandlin.

Hi, thank you. This is Naoki on for David. Just a couple from us. First, regarding primatine myths, how are you thinking about competition for the product considering that the patent expires this year? And can you also remind us about lifecycle management activities for the product? So that's one. Number two, how should we think about the cadence of filings this year compared to prior years? And is your primary focus on inhalation products? Thank you.

So primatine, the patent has already expired. So we don't see any competition now. We think it's unlikely to, given the economics for this. We think, you know, it's a strong product. Yeah, I think with the OTC market, it's a different dynamic when it comes to generics. You know, Prima Team Mist has 60 years of brand equity in it. And so we feel like we're in a good position, even if there was competition there, we're in a good position of maintaining a large market share with that product. And at the same time, we're in the process of developing a new formulation of primatine mist. We've secured one patent, and we're currently working on another. That's kind of our strategy as we move through that franchise.

The second question was about the cadence of the file. So we expect late. this year, early next year to have two filings, and then next year, total three filings. And we think that should be the cadence moving forward.

Our next question is from Ben Burnett with Wells Fargo.

Hi, hello, this is Tianqi calling in for Ben. Thanks for taking our question. So I wanted to ask you about the Nanjing NGS in licensed assets. Just see if you can have any updates on that. What kind of level of confidence do you have on these assets? And what does the clinical development path look like in their respective indications? Thank you very much.

Yeah, we're very excited about those products. We are currently in the preclinical stage of those. We're getting our packages together to have conversation, early conversation with the agency on it. We think these products are very, very exciting. Internally, we have a lot of positive excitement around them. We're building teams and coming up with priorities of these projects. These will be new drugs, so they'll be going through the standard NDA process. Whether we have expedited pathways or not remains to be seen. We're optimistic that we should have some for those. We have some oncology products that we think likely will have some of that, but we've not yet engaged the FDA with conversations of that. But we're just kind of in the preclinical evaluation of that and looking at the prioritization of that. But overall, I think we're very, very excited and encouraged by these products.

Thank you. There are no further questions at this time.

I would like to hand the floor back over to management for any closing remarks.

Thank you, Paul, and thank you all once again for joining us today. We appreciate your continued engagement and support and we look forward to keeping you updated on our progress throughout 2026. Have a wonderful evening.

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