Q4 2019 Earnings Call

March 12, 2020

[music].

Ladies and gentlemen, today's conference is scheduled to begin shortly please continue to stand by and thank you for your patience.

[music].

Ladies and gentlemen, thank you for standing by and welcome to the into Star fourth quarter earnings call.

This time, a participant lines are in listen only mode. After the speakers presentation. There will be a question and answer session. That's a question during the session you need to press star one on your telephone.

I would now see some forward looking statements all statements on this conference call that are not historical are forward looking statements, including among other things statements relating to the company's expectations regarding future financial performance backlog sales and marketing of its products market size in growth.

The timing of the F.D.A. filings or approvals, including a D. N S. O M. P. The timing of product launches acquisitions and other materials related to the its pipeline of product candidate each share buyback program and other future events. These statements are not historical facts wed rather are based on it starts historical performance.

And its current expectations estimates and projections regarding its stars business operation and other similar overlay to factors words, such as May might will could would should anticipate predicts potential continue expect intend plan project the lease after me and.

Other similar or relayed expression or use to identify these forward looking statements. Although not all forward looking statements contained these words you should not place undue reliance on forward looking statements because they involve known and unknown risks uncertainties and assumptions that are difficult or impossible to predict and in some cases beyond amistar.

Joel.

Actual results may differ materially from those in forward looking statement as result of a number of factors, including those described and and stars filings with Securities and Exchange Commission you can locate these reports to the company's website at Ace TTP colon fourth last sports Slash IR dot ample start dotcom and.

I see eve website at Www Dot FCC dotcom.

If the star undertakes no obligation to revise or update information in this press release or the conference call referenced above to reflect events or circumstances in the future if new information becomes available or if subsequent events called after stars expectations to change I would now like the hand the conference over to your speaker.

Thanks, and Sandell President. Thank you. Please go ahead Sir.

Thank you operator.

Good afternoon, and welcome to Amphastar Pharmaceuticals fourth quarter earnings call. My name is Jason Sandell, President of Amphastar I'm joined today by our CFO Bill Peters. We appreciate you joining us on the call today and look forward to speaking with you in answering any questions you may have.

As you can see from our financial results ever so how to stop here and there's been a position of operational and financial strength driven by continued execution of our long term strategy and focus on our key growth drivers and complex pipeline.

Our net revenues for 2019 increased by more than 9% to approximately $322 million and our gross profit increased more than 23% to approximately $132 million driven by strong sales the private seen mezz and our critical care portfolio, which continues to show.

So strong demand due to competitors shortages.

Net cash provided by operating activities in 2018 was $41.8 million.

Gross margins also increased year over year from 36% to 41% as private teen missed and our other high margin products continue to increase as a percentage of our total sales.

We expect this margin expansion trend to continue and believed that our continued focus on our pipeline and investments in research and development will allow us to deliver even greater value to patients and shareholders over the long term.

Since our last earnings call I'm happy to announce that the FDA has accepted to more A.N. deejays, which have good Dupont dates in the fourth quarter of 2020.

One of the 18 days is for a regnum zone, which is a generic of Lexus scan the San Diego included a paragraph four certification and we were sued by the brand sponsor, which triggered a 30 months day.

We now have seven and da's on file with the agency targeting products for the market size of approximately $1.9 billion based on acute good data for the 12 months ended December 31st 2019.

The strong momentum of Primatene missed sales continues to increase at a greater rate as we launch the product into Walmart in November 2019, and we continue to increase consumer awareness through our marketing strategies.

As we discussed on the last earnings call traditional television advertising has been extremely effective in building consumer awareness about primatene missed.

We began our television advertising campaign in July 2019 on cable channels and saw very good return on investment.

Therefore, beginning in January 2020, we expanded airing of our commercials on the major broadcast networks talk.

Or getting prime yet cost effective advertising slot within national recognize TV shows, including judge Judy.

Dr. Phil the prices right and many other widely viewed programs.

This strong advertising put.

This combined with an allergy season that arrived earlier due to the mild winter resulted in very strong same store sales across all of our retail partners.

Weekly store sales as of the last week of the fourth quarter of 2019 have increased by more than 140% compared to the first week of the third quarter 2019, which was just before the TV as began airing.

We're very excited about the long term prospects of this brand and are currently in discussions with other large potential retail partners.

Based on the continued effectiveness of our advertising strategy and the continued positive trend in retail store sales, we maintain our guidance of private seen missed achieving an annual rate of revenue of $65 million by 2021.

We expect the injectable products from our I am that's facility to be another strong driver of revenues in 2020.

We recently issued a press release announcing that the FDA approved our supplemental and D.A. for sodium bicarbonate, which is for manufacturing the product in our news state of the our production line did I Miss.

This FTC approval further validates our strength in scaling up our manufacturing capabilities in response to increased demand for our products and greatly increases our manufacturing capacity at our IMS facility.

Our recent approval will help us meet the high demand for our critical care injectable products and provide us with capacity for future pipeline products, which will be a source of significant revenues going forward.

With respect to our App enough rent 30 ml vial and da we received a minor CRL in January 2020, and responded to the agency in one business day.

As a result, we have a good do for date in the second quarter of 2020 and are confident that we will receive approval.

Regarding our complex injectable product, which has been through three review cycles with the agency. We received the CRL in Q4 2019 and responded to the FDA in January 2020, as a result, we have a new can do for date in Q3 or Q4 2020, depending if another pre approval inspection.

And as needed.

As we discussed last earnings call, we have another NDN file with the FDA for a very complex injectable product that is off patent and has never had generic competition due to its complexity. We had a productive mid cycle review meeting with the agency earlier this year and have a good do for date for this product in the second.

Quarter 2020.

With respect to our insulin programs, our first human clinical trials using our insulin began in Q4 2019 and is ongoing.

On recent guidance and direct communications with the agency, we remain hopeful that our strong analytical tools, including characterization of complex molecules will result in the FDIC determining that Immunogenicity studies would not be required this determination would save significant time and expenses.

Thereby allowing us to enter the market sooner than previously expected.

Furthermore, based on recent FDA guidance and the purity of our products. We believe that we have the ability to achieve interchangeable status for our insulin products.

Turning to our Intranasally analog stone and DJ we have a meeting with the agency scheduled for later this month. The purpose of this meeting is to confirm with the agency that we've addressed all the issues identified in the CRL and FDA is general advice letters. If the agency agrees that we've addressed all issues, we could resubmit the San Diego.

This year.

Finally, I would like to address the impact of the Corona virus announced the star at this time over 99% the Labor force in our China facility has returned to work and thankfully none of our employees have contracted the virus. Furthermore, our supply chain is well intact as we had previously built up.

Significant inventory of starting material and Apiay from China, as we strategically planned for potential disruptions related to trade negotiations and the African swine flu as result of these planning efforts, we have at least two years inventory of starting material and Apiay located in our California facility.

Yes, so the crowd of Irish did not impact our commercial operations in the U.S.

Furthermore, it should be emphasize that amphastar manufacturers all of our finished products in the United States, which further inflates. The company is commercial operations from supply disruptions related to global instability.

I will now turn the call over to Bill to go through the fourth quarter financial results.

Thank you Jason.

Sales for the fourth quarter of 2019 decreased 7% to $83.4 million from $89.7 million in the previous years period Importantly, primatene missed achieved very strong sales of $9 million as we loaded our product nationally into Walmart and had large orders from all.

Of the other national drugstore chains.

Inox apparent sales dropped to $8.8 million in the fourth quarter from $19.1 million in the prior years fourth quarter at the market shortage in 2018 resulted in a temporary surge in an experienced sales last year.

Gross margins improved to 40% of revenue in the fourth quarter Forney 19 from 39% of revenues in the fourth quarter of 2018 due to sales of higher margin products such as Primatene missed.

Selling distribution and marketing expenses increased to $3.5 million from $2.6 million on television and radio expenses for marketing private investor.

General and administrative spending decreased 24% to $10.5 million from $13.8 million, primarily due to decrease the legal expenses since we settled our lawsuit with Momenta and Sandoz in June of 2019.

Research and development expenditures increased 17% to $19.6 million from $16.7 million due to increased clinical trial expenses for inhalation products and increased expenses associated with a pad development at our Amphastar Nanjing pharmaceutical subsidiary.

The company reported a net loss of $1 million or two cents per share compared to last year's fourth quarter net income of $1.9 million or four cents per share.

The company reported adjusted net income of $3.6 million or seven cents per share compared to an adjusted net income of approximately $6.2 million or 13% per share in the fourth quarter last year.

Adjusted earnings include or exclude amortization equity compensation impairments in one time events.

In the fourth quarter, we had cash flows provided by operations of approximately $5.7 million.

During the quarter the company repurchased approximately $13.8 million of stock to bring the total repurchases for the year to over $22 million.

Let me review a few of the financial assumptions that we are using as we look to 2020.

We expect sales growth to be driven by price he missed and one or two and Deejays, which may be approved later this year.

Our sales have already gotten a boost this year from the approval of the supplemental anda for sodium bicarbonate, which effectively increases the capacity for Prefilled syringes, many of which are in drug shortage by allowing us to manufacture in our newly modernize facility. We have already begun shipping product from this new room and bulk.

Leaves that the sales opportunity for these shredded product for these shortage products is approximately $20 million annually.

We expect additional sales growth to come from our and piece subsidiary last year, we booked $1.5 million in third party sales from our MP business and at this time, we believe that sales from this facility will more than double in 2020.

We expect gross margins to increase as we sell more of our high margin primacy missed and we anticipate higher margins from new Anda approvals.

Our selling and distribution expense will rise as we plan to increase our advertising for private seen missed however, the advertising expense will decrease as a percentage of primatene the sales to provide earnings leverage.

We expect gionee spending to decrease as a percentage of sales due to lower spending on legal matters.

We expect research and development spending will continue to increase in both dollar terms and as a percentage of sales as we currently have to inhalation and one insulin clinical trials ongoing and we continue to increase the R&D work at our and P. facility.

I will now turn the call back over to the operator for questions and answers.

Thank you as our minor ask the question you need to press Star one on your telephone to withdraw your question press. The pound key please standby we've compiled the kuni roster and we do ask that you limit yourself to one question and one follow up.

In the first question is going to come from Gary Nachman from BMO capital markets. Your line is now open.

Hi, good evening, it's roughly on for Gary.

Hi.

Hi, there how much of prime at teen wasn't Walmart stocking in the quarter and then can you comment on how reorders are trending overall.

Sure. So just under $2 million was stocking for Walmart and we've seen continued orders from them. Since then so it's going very well there.

Thanks, and then for FNF front vials I think you had previously indicated.

We could get a response from the FDA by the end of April is that still the expectation and Dan if approved how should we think about that potential market opportunity and that market sure you're targeting.

Sure. So yes, we've said that we have a good do for date for the second quarter and you know we were able to respond within one day of that minor CRL and so when you do the math that does come out to April and in terms of market opportunity.

We believe that we will be the sole generic and should have a reasonable share of the market.

Thanks, do you anticipate any additional competition on data over the next couple of years.

It's hard to say.

Okay. Thank you.

Thank you and our next question comes from Elliot Wilbur from Raymond James Your line is now open.

Hello.

Hi, guys does this look actually on for Elliot Thanks for taking questions.

So on Prime a teen missed what do you think we should expect saying in terms of Salesforce 20.

All you know what we've said so far is that.

We had 9 million in sales and the fourth quarter of just under $2 million of that was stocking for.

From Walmart and we expect significant growth this year and we're targeting our goal of a you know the run rate of $65 million next year. So those are the parameters. We've given yeah. So with those parameters you on the 9 million in the fourth quarter and as I've said in my prepared remarks, we just started airing on network.

Our television commercials, beginning just in January so with the Walmart launch and the push into mainstream television. We think that the growth will continue at the rate that we've seen.

Got it.

What really appreciate you touched on.

Thanks, Eric.

Thanks.

Thank you.

I'm, sorry, we couldn't hear that question or you're breaking up on this and.

Do you think you to comment on the trends or is it fair.

Well.

Jeff strong.

Okay.

Yes, so we see those being fairly constant from the fourth quarter of 2019.

Thank you.

And again, ladies and gentlemen, if you'd like to ask a question that is star one and ladies and gentlemen, like that's a question that is star one and our question come next question comes from David Steinberg from Jefferies.

Your line is now open.

Thanks two questions.

You mentioned the ramp up in DTC.

The national TV.

For prime attained curious.

Will this be a year long phenomenon or is it just this quarter and relates that looks like you've talked about 10 million SG. They each of the last two quarters with this ramp up should we expect.

Kind of higher quarterly run rate to initiate a.

Secondly.

You mentioned you have the to do for dates is here for these large.

Multiple hundred million dollars branded products that don't currently have generic can you give us some more color on the timing of the current due for dates as you know them. Thanks.

Sure. So in terms of the advertising pushy I think we do want to continue this throughout the year. The return on investment has been really good and we think it will continue and again as I was saying in my prepared remarks that although it is the broadcast TV and national television, it's still very.

Cost effective so were tight targeting the prime yeah cost effective advertising slots. So so we will continue with that and in terms of the Gionee I'll I'll turn that to bill yes. So we have our and we break out our gionee from our selling so the selling distribution and marketing line.

I'm, you've seen some significant growth in that and that growth is really all advertising for primatene missed and as I said earlier, we are going to grow that.

Those dollars relative this year, however, as a percentage of sales of promising missed that will drop so we will get earnings leverage on that.

And then.

In terms of the two undisclosed complex injectable products without generic competition.

First of all that we've been talking about for quite awhile now that's the one that's been through three reviews cycles, and we did a pretty fast turnaround on the last call. You know we had talked about getting the CRL in the fourth quarter at that point, we were just assessing it and we felt confident that it was very addressable.

And we predicted that we would respond in January which we did and so as a result, they could do the date, we don't give a specific day, but it is Q3 of this year. However, if there was another pre approval inspection that was needed then it would be Q4.

With respect to the other one that.

Just was on file recently this is still the first cycle review. So that one is a Q2 good do the date and because it does have the competitive generic status. We had a very productive mid cycle review meeting and I got a lot of clarity through that meeting so.

We are looking forward to a response on that in the second quarter.

Thank you.

And our next question comes from David Amsellem Piper Sandler Your line is now open.

Thanks, So I'm I'm proud to tune I mean, this is a promotion sensitive product and in this period now.

More restrictive movements and social distancing.

What are your thoughts on the potential impact to to demand on on Prime mid teen is that something you're contemplating in anyway, that's number one number.

Number two.

I joined late so maybe I missed there's been any update on your inhalation pipeline and what portion of your file pipeline, there inhalation products and give us some color on mix on makes sense. It was you're going to be filing later this year on inhalation.

Generics thanks.

Definitely so let's start with private teen it's really exciting I mean to your point and this is Dan age of the Corona virus people are reluctant to go even to their doctors office or into a hospital facility and the fact that you know you can order either online or very quickly.

Go into your your local retail or what were seeing very strong demand actually in San Francisco, we heard that there's a shortage of private team people are just buying up as much Madison over the counter as they can so there there's sort of been a panic due to the Corona virus and you know we are.

Our seeing a an increase in demand also we believe that increases related to the mild winter and the early allergy season, but it is interesting and we do believe that we have a competitive advantage is the only over the counter asthma inhaler.

So you can avoid the need to go see the doctor and at least have this for your temporary relief of intermittent asthma.

And then with respect to our inhalation portfolio.

I know bill has talked about some of the clinical trial expenses and so we do have to generic insulation products that are currently in ongoing clinical trials and of those so right now we don't have any and da's on file they're actively in the clinics and.

Going through trials, and we still are targeting filing one inhalation and D.A. this year.

Okay. Thank you.

Thank you and our next question comes from surge.

I wonder from Needham enhance company.

Hey, This is 10 on for Sears I just had a few.

So I think the FDA recently just approved the first I'm generic for Proair in late February So I just wanted to get your thoughts on.

Maybe how this might impact to compete with permitting sales in the near term.

And then in terms of other retailers for Prime and team is do you have any other updates regarding additional stores, where even online.

Being discussed at this point.

Definitely definitely so let me I'll, let me address the Proair question, because it's an interesting one well first I want to emphasize that after private teen mast was approved in late 2018 in early 2019 the brands.

Launched authorized generics so technically there have been generic I'll bureaus on the market for over a year and really has not had impact to our product again I think the real benefit here is because you do not need to go the Doctor you do not need a prescription and and this is.

Historical phenomenon, because even back during the CFC days, when albuterol was only $2 and we were actually not promoting private teen there was still strong sales of 65 million. So so we still feel very confident with our private teen Miss being.

The only over the counter asthma inhaler available and out with respect to other retail are definitely we are currently in discussions with several retailers.

And we should have updates for that in the coming quarters.

Great. Thank you.

Thank you.

And I would now like to turn the call back over to Jason Shandell President for closing remarks.

Thank you operator, so I just want to again, thank everybody for joining us today I know, it's been a a very difficult time recently with the Corona virus and you know this is sort of what we deal with in the world and we're going to get through it wanting to make sure everybody stays healthy in safe and.

I want everybody to realize that Amphastar continues to grow and our China facility is strong and we look forward to providing future updates on a go forward basis. So we'll talk to you soon thanks everybody.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

[noise].

[music].

Ladies and gentlemen, thanks Christine.

Star fourth quarter earnings call.

As Tom will participate in line or listen only mode.

The speakers presentation, there will be a question answer session. That's question. During this session you need to press star one on your telephone.

I would now see <unk> that's.

All statements on this conference call that are not historical are forward looking statements, including.

Statements relating to the company's expectations regarding future financial performance backlog sales and margin up its products.

Good size and growth.

<unk> <unk> or including a D.

Pete.

<unk> product launches acquisitions, and other materials related to the its pipeline product candidate it share buyback program and other future events. These statements are not historical facts wed rather based on it starts to store formats and its current expectations.

And projections regarding at Starz business operation and other similar overlay to factors.

Such as May might will like what should anticipate predicts potential continue expect engine plant project belief.

And other similar or related expressions are used to identify these forward looking statements. Although not all forward looking statements contained these words you should not place undue reliance on forward looking statements because they involve known and unknown risks uncertainties and assumptions that are difficult or impossible to predict and in some cases.

Beyond after starts control.

Actual results may differ materially from those in forward looking statements as result of a number of factors, including those described and and starts filings with Securities Exchange Commission you can locate these reports to the company's website <unk> http. Colon sports Lash sports last I always thought at the start dot com and on the.

I see <unk> website at Www <unk> Dot com.

You have to start undertakes no obligation to revise or update information in this press release or the conference call referenced above to reflect events or circumstances in the future if new information becomes available or if subsequent events called at Starz expectations to change.

I would now like to handle conference over to your Speaker, Jason Shandell President. Thank you. Please go ahead Sir.

Thank you operator.

Good afternoon, and welcome to Amphastar Pharmaceuticals fourth quarter earnings call. My name is Jason Shandell President of Amphastar I'm joined today by our CFO Bill Peters. We appreciate you joining us on the call today and look forward to speaking with you and answering any questions you may have.

I have you can see from our financial results habits, I had a strong here and it's in a position of operational and financial strength driven by continued execution of our long term strategy focus on our key growth drivers and complex pipeline.

Our net revenues for 2019 increased by more than 9% to approximately $322 million and our gross profit increased more than 23% to approximately $132 million driven by strong sales the private team best and our critical care portfolio, which continues to show.

Strong demand due to competitor shortages.

Net cash provided by operating activities in 2018 was $41.8 million.

Gross margins also increased year over year from 36% to 41% as private team missed and our other high margin products continue to increase as a percentage of our total sales.

We expect this margin expansion trend to continue and believe that our continued focus on our pipeline and investments in research and development that will allow us to deliver even greater value to patients and shareholders over the long term.

Since our last earnings call I'm happy to announce that the FDA has accepted to more A.N. deejays, which have good bupa dates in the fourth quarter of 2020.

One of the India is for a Regnum zone, which is a generic of Lexus scan that San Diego included a paragraph four certification and we were sued by the brand sponsor, which triggered a 30 months day.

We know about seven and da's on file with the agency targeting products for the market size of approximately $1.9 billion based on our Q via data for the 12 months ended December 31st 2019.

The strong momentum of private team missed sales continues to increase at a greater rate as we launch the product into Walmart in November 2019, and we continue to increase consumer awareness through our marketing strategies.

As we discussed on the last earnings call traditional television advertising has been extremely effective in building consumer awareness about private team messed.

We began our television advertising campaign in July 2019 on cable channels and saw very good return on investment.

Therefore, beginning in January 2020, we expanded airing of our commercials on the major broadcast networks targeting prime yet cost effective advertising slot within national recognize TV shows, including judge Judy Dr. Phil the prices right and many other wide.

Really viewed programs.

This strong advertising push combined with an allergy season that arrived earlier due to the mild winter resulted in very strong same store sales across all of our retail partners.

We're very excited about the long term prospects of this brand and are currently in discussions with other large potential retail partners.

Based on the continued effectiveness of our advertising strategy and the continued positive trend in retail store sales, we maintain our guidance of private team as to achieving an annual rate of revenue of $65 million by 2021.

We expect injectable products from our I am that's facility to be another strong driver of revenues in 2020.

We recently issued a press release announcing that the FDA approved our supplemental and D.A. for sodium bicarbonate, which is for manufacturing the product in our new state of the our production line did I Miss.

This FTC approval further validates our strength and scaling up our manufacturing capabilities in response to increase demand for our products and greatly increases our manufacturing capacity at our Imus facility.

Our recent approval will help us meet the high demand for our critical care injectable products and provide us with capacity for future pipeline products, which will be a starts of significant revenues going forward.

With respect to our App and net rent 30 ml vial and da we received a minor CRL in January 2020, and responded to the agency in one business today.

As a result, we have a good due to date in the second quarter of 2020 and are confident that will receive approval.

Regarding our complex injectable product, which has been through three review cycles of the agency. We received the CRL in Q4 2019 and responded to the FDA in January 2020, as a result, we have a new could do for date in Q3 or Q4 2020, depending if another preapproved.

And as needed.

As we discussed last earnings call, we have another Andy on file with the FDA for a very complex injectable product that is off patent and has never had generic competition due to its complexity. We had a productive mid cycle review meeting with the agency earlier this year and have a good do for date for this product in the second.

Quarter 2020.

With respect to our insulin programs, our first human clinical trials using our enslin began in Q4 2019 and is ongoing.

On recent guidance and direct communications with the agency, we remain hopeful that our strong analytical tools, including characterization of complex molecules will result in the FDA determining that Immunogenicity studies would not be required this determination would save significant time and expenses.

Thereby allowing us to enter the market sooner than previously expected.

Furthermore, based on recent FDA guidance and the purity of our products. We believe that we have the ability to achieve interchangeable status for our insulin products.

Turning to our Intranasally to lock stone and da we have a meeting with the agency scheduled for later this month. The purpose of this meeting is to confirm with the agency that we've addressed all of the issues identified in the CRL and FDA General advice letters. If the agency agrees that we've addressed all issues, we could re submit the NDA.

This year.

Finally, I would like to address the impact of the Corona virus UNEV. The star at this time over 99% the Labor force in our China facility has returned to work and thankfully none of our employees have contracted the virus. Furthermore, our supply chain as well intact as we had previously built up.

Significant inventory of starting material on Apiay from China, as we strategically planned for potential disruptions related to trade negotiations and the African swine flu as a result of these planning efforts we have at least two years inventory of starting material on Apiay located in our California facility.

So the crowd of Irish should not impact our commercial operations in the U.S.

Furthermore, it should be emphasize that amphastar manufacturers all of our finished products in the United States, which further insulate the company is commercial operations from supply disruptions related to global instability.

I will now turn the call over to build to go through the fourth quarter financial results.

Thank you Jason.

Sales for the fourth quarter of 2019 decreased 7% to $83.4 million from $89.7 million in the previous years period importantly, promising messed achieved very strong sales of $9 million as we loaded our product nationally into Walmart and had large orders from all.

All of the other national drugstore chains.

Gross margins improved to 40% of revenue in the fourth quarter 2019 from 39% of revenues in the fourth quarter of 2018 due to sales of higher margin products, such as private seen missed.

Selling distribution and marketing expenses increased to $3.5 million from $2.6 million on television and radio expenses for marketing private investor.

Research and development expenditures increased 17% to $19.6 million from $16.7 million due to increased clinical trial expenses for inhalation products and increased expenses associated with applied development at our analyst start Nanjing pharmaceutical subsidiary.

The company reported a net loss of $1 million or two cents per share compared to last year's fourth quarter net income of $1.9 million or four cents per share.

The company reported adjusted net income of $3.6 million or seven cents per share compared to an adjusted net income of approximately $6.2 million or 13 per cents per share in the fourth quarter of last year.

Adjusted earnings include or exclude amortization equity compensation impairments in one time events.

In the fourth quarter, we had cash flows provided by operations of approximately $5.7 million.

During the quarter the company repurchased approximately $13.8 million of stock to bring the total repurchases for the year to over $22 million.

Let me review a few of the financial assumptions that we are using as we look to 2020.

We expect sales growth to be driven by private CMS and one or two anda is which may be approved later this year, our sales have already gotten a boost this year from the approval of the supplemental anda for sodium bicarbonate, which effectively increases the capacity for Prefilled syringes, many of which are on drug shortage by allowing us.

Texture and our newly modernize facility, we have already begun shipping product from this new room and believes that the sales opportunity for these shorted product for these shortage products is approximately $20 million annually.

We expect additional sales growth to come from our NP subsidiary last year, we booked $1.5 million in third party sales from our and Pete.

Yes, and at this time, we believe that sales from this facility will more than double in 2020.

We expect gross margins to increase as we sell more of our high margin primacy missed and we anticipate higher margins from new Anda approvals.

Our selling and distribution expense will rise as we plan to increase our advertising for private seen messed. However, the advertising expense will decrease as a percentage of private team the sales to provide earnings leverage.

We expect DNA spending to decrease as a percentage of sales due to lower spending on legal matters.

We expect research and development spending will continue to increase in both dollar terms and as a percentage of sales as we currently have to installation and one insulin clinical trials ongoing and we continue to increase the R&D work at our and P. facility.

I'll now turn the call back over to the operator for questions and answers.

Thank you as a reminder, ask the question you need to press Star one on your telephone so John Your question press the pound.

Please stand by the compiled the Kuni roster and we do ask that you limit yourself to one question and one follow up.

In the first question is going to come from Gary Nachman from BMO capital markets. Your line is now open.

Hi, good evening its rothsay on for Gary.

Hi, Hi, there how much of prime at teen was Walmart stocking in the quarter and then can you comment on now Reorders are trending overall.

Sure. So just under $2 million was stocking for Walmart and we've seen continued orders from them. Since then so it's going very well there.

Thanks, and then for FNF friend Vials I think you had previously indicated.

Sure. So yes, we've said that we have a good do for date for the second quarter and.

We were able to respond within one day of that minor CRL and so when you do the math that does come out today Raul and in terms of market opportunity. We believe that we will be the sole generic and should have a reasonable share of the market.

Thanks, do you anticipate any additional competition on that over the next couple of years.

It's hard to say.

Okay. Thank you.

Thank you.

Next question comes from Elliot Wilbur from Raymond James Your line is now open.

Hello.

Hi, guys does this look actually on for Elliot Thanks for taking questions.

So on prime obtain Miss what do you think we should expect thing in terms of Salesforce 20.

All you know what we've said so far is that.

We had 9 million in sales in the fourth quarter, just under $2 million of that was stocking for.

For Walmart and we expect significant growth this year and we're targeting our goal of the run rate of $65 million next year. So those are the parameters. We've given yes, so with those parameters, yes, the 9 million in the fourth quarter and as I've said in my prepared remarks, we just started airing on network.

Television commercials, beginning just in January so what the Walmart launch and the push into mainstream television. We think that the growth will continue at the rate that we've seen.

Got it.

That.

I would really appreciate.

Thanks.

Sure.

Each.

Yes.

I'm, sorry, we couldn't hear that question or you're breaking up on that sand.

Do you think you to comment on the trends bar.

And.

Jeff strong.

Okay.

Yes, so we see those being fairly constant from the fourth quarter of 2019.

Thank you.

And again, ladies and gentlemen, if you'd like to ask a question that is star one and ladies and gentlemen, like Thats a question that star One and question come next question comes from David Steinberg from Jefferies.

Your line is now open.

Thanks two questions.

You mentioned the ramp up in DTC.

The national TV.

For Primatene curious.

This be a yearlong.

Phenomenon or is it it's just this quarter and relates that looks like you've done about 10 million SG. They each of the last two quarters with this ramp up should we expect.

Kind of higher quarterly run rates and SJ.

Secondly.

You mentioned you have the to do for dates is here for these large.

Multiple hundred million dollars branded products that don't currently have generic can you give us some more color on the timing of the current due for dates as you know them. Thanks.

Cost effective so we're targeting the prime yet cost effective advertising slots. So so we will continue with that and in terms of the DNA ill turn that to bill yes. So we have our we breakout our gionee from our selling so the selling distribution and marketing line.

We've seen some significant growth in that and that growth is really all advertising for primatene mast and as I said earlier, we are going to grow that.

Those dollars relative this year, however, as a percentage of sales of private seen met that will drop so we will get earnings leverage on that.

And then.

The two undisclosed complex injectable products without generic competition.

First one that we've been talking about for quite a while now that's the one that's been through three review cycles, and we did a pretty fast turnaround on the last call. We had talked about getting the CRL in the fourth quarter at that point, where adjust assessing it and we felt confident that it was very addressable.

And we predicted that we would respond in January which we did and so as a result, they could do the date, we don't give a specific date, but it is Q3 of this year. However, if there was another pre approval inspection that was needed then it would be Q4.

With respect to the other one that.

Just was on file recently this is still the first cycle review. So that one is Q2, good do the date and.

Because it does have the competitive generic status, we had a very productive mid cycle review meeting and got a lot of clarity through that meeting. So we are looking forward to response on that in the second quarter.

Thank you.

Our next question comes from David Amsellem.

Piper Sandler your line is now open.

Thanks, So I'm trying to tune I mean, this is a promotion sensitive product and then this period now.

More restricted luminance and social distancing.

What are your thoughts on the potential impact to.

The demand on on trying to teen is that something you're contemplating in anyway, that's number one.

Number two.

Joined late so maybe I missed this but any update on your inhalation pipeline and what portion of your file pipeline, there inhalation products and give us some color on mix on makes sense. It was you're going to be filing later this year on installation.

Thanks.

Definitely so let's start with private seen it's really exciting I mean to your point and this is Dan age of the Corona virus people are reluctant to go into their doctors office or into hospital facility and the fact that you can order either online or very quickly go.

And to your local retail or we're seeing very strong demand actually in San Francisco, we heard that there's a shortage of private team people are just buying up as much Madison over the counter as they can so there there's sort of been a panic due to the corona virus and ill we are.

Seeing.

Increase in demand also we believe that increases related to the mild winter and the early allergy season, but it is interesting and we do believe that we have competitive advantage as the only over the counter asthma inhaler. So you can avoid.

The need to go see the Doctor and at least have this for your temporary relief of intermittent asthma.

And then with respect to inhalation portfolio.

No Bill has talked about some of the clinical trial expenses and so we do have to generic inhalation products that are currently in ongoing clinical trials and of those so right. Now we don't have any anda is on file they are actively in the clinics and.

Going through trials, and we still are targeting filing one inhalation and da this year.

Thank you.

Thank you and our next question comes from surge.

Cleanser from Needham enhance company.

Hey, This is 10 on Chris there I just had a few.

So I think the FDA recently just approved the first generic for Proair in late February So I just wanted to get your thoughts on.

Maybe how this might impact to compete with permitting sales in the near term.

And then in terms of other retailers for Prime and team is do you have any other updates regarding additional stores or even online.

Being discussed at this point.

Definitely definitely so let me I'll, let me address the pro our question because it's an interesting one well first I want to emphasize that after private teen mast was approved in late 2018 in early 2019 the brands.

Historical phenomenon, because even back during the CFC days when albuterol is only $2 and we were actually not promoting private team. There was still strong sales of 65 million. So so we still feel very confident with our private teen Miss being.

The only over the counter asthma inhaler available and with respect to other retailers definitely we are currently in discussions with several retailers.

And we should have updates for that in the coming quarters.

Great. Thank you.

Thank you.

And I would now like to turn the call back over to Jason Shandell President for closing remarks.

Thank you operator, so I just want to again, thank everybody for joining us today I know, it's been very difficult time recently with the Corona virus and no. This is sort of what we deal with in the world and we're going to get through it why don't make sure everybody stays healthy in safe and.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

Q4 2019 Earnings Call

Request a DemoDemo

AMPH

Amphastar Pharmaceuticals

Earnings