Q1 2020 Earnings Call
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Oh statement and see me conference call that are not historical or <unk> or other things eight mix with latent TB competence expectations regarding feature find knowledgeable format backlog, salt and marking others products market size.
<unk> F.F.T.A. falling approvals, including B.P.M.S.N.P.B. testing <unk> watches acquisition and other matters related to pipeline of product candidates.
Share buyback program and other fish for events, such as the impact of cause it 19, but didn't make and related responses that business and government to be pecan make an operations and personal personnel and on a commercial activity and demand across our business operations and results as operations. These.
Statement for not historical facts, but rather are based on upstairs historical performance and it's <unk> current expectation estimate.
Projections regarding.
Abstracts business operations and other similar or related factors.
Work, such as May might well cut what should anticipate <unk> potential continue expect intend plan project believe estimate and other similar or related expressions are used to identify the sport licking statement.
Although not all for leaking statements cutting these word you should not place and do reliant on port waking statements because they involve known and unknown breast uncertainties and assumptions that are difficult or impossible to predict and in some cases.
<unk> abstracts control actual results may differ materially from those <unk> as a result of a number of factors, including those described.
And I'm stressed followings with these securities and Exchange Commission encoding of the I work part on form 10 K.
Ended December 31st 2019, <unk> March 16th 2020.
In particular, the extent of covet 19th impact.
That's nice will depend on several factors, including disability duration to an extent a beep again make as well as actions taken by governments that message and consumers and response to the epidemic.
All of which continue to your balls and remain and started at this time.
You can locate these reports through the company website I <unk>.
H.T.T.P. back for flash for Slash I.R. Dot <unk> dot com at Ami sex website at W.W. Dot <unk>.
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Part working statements and this really you speak only as I'd be date I'd be release.
And start undertake snow application to you buys a date information and this press release or the conference call methods Abbas to reflect events or circumstances, a new feature.
Even if new information becomes available or at subsequent events calls abstract s. petitions to change.
Oh, Thank you all know <unk> ice precedent corporate communications.
Thank you operator first or acknowledge that there have been some technical difficulties and we apologize for the delay.
Good afternoon, or welcome to Amistar Pharmaceuticals first quarter earnings call. My name is Dan disturbed VPO corporate communications.
Wanting me on the call our Bill Peters, fearful and Tony Mars Senior Vice President of regulatory Affairs and clinical operations. We appreciate your joining us today and look forward to sharing our latest updates.
But that assaults dark three year and I've seen organic grow up on multiple fronts, which I'll speak to later overall, our first quarter performance at a sales growth of 6% and a gross profit increase of 19 per se as compared to the first quarter of 2019.
This girl is the result of the commercial strain of our technically challenging sterile injectable portfolio.
Bounded by the increasing sales of prime a female that benefit from our digital T.V. marketing strategy with that I want to say, we've made significant progress in our pipeline in the first quarter since our last earnings Golf I'll go ahead and address our recent F.D.A. approval and upcoming launch of our up enough run injection multidose by.
With our recent approval and play andriana adoption of the Multidose up enough or product, we stand to benefit from the growth of the up enough friends bio market, which is growing into 131 million dollar opportunity based on it clearly a data.
At the same time, we stand to benefit and are pleased to have also received 180 days of market exclusivity as the first and Eric Beyeler.
Turning to <unk> sales have continued to increase because of the rising consumer awareness of the product as a result of our marketing efforts. We believe more consumer stayed home due to covert 19 orders and there was significantly more viewership of our digital M.T.V. ads.
Additionally.
Silver pantry loading cause an uptick and primatene sales at approximately $1 million to $2 million in the short span of just three weeks.
Although we have been a surgeon sales during the first weeks of the pandemic.
Team is continues to achieve a steady inconsistent increase and it's baseline of sales.
The increase consumer awareness from our media campaign adds another layer of the products strength and adds well meant something to the products trajectory. Our sales have increased across all of our retail partners.
Furthermore, I'm pleased to announce we have launched the product on to Amazon in late March.
Results from our performance on Amazon are still too early to tell however, we will continue to build our presence as well as strive to capture an even greater market as we target other retail chains, including supermarkets.
And now like the turned or I.M.S. products for the first quarter of 2020 demand for R.I.M.S. products as drawn.
And our manufacturing output has increased due to our recently approved new production line and continued competitor shortages because we manufacture many of the emergency room crash cart products. We expect this trend into man to continue as the F.D.A. is communicated their continued need for many of our products.
Bar complex injectable product that has gone through three review cycles, which we will begin referring to as M.P. 001. The review process is ongoing as we said on our last call. The good Duper date for this product is in the third quarter or fourth quarter of this year, depending on whether or another.
Preapproval inspection is needed.
For the more recently submitted other complex injectable and it's first review cycle, which will be referring to as A.M.P. 002.
We had in mid cycle review meeting with the F.D.A. that like well initially we added could do for date. This year. However, the agency a shifted the could do for days out to either the fourth quarter of 2020 or the first quarter of 2021, if an inspection is needed.
For our Interleaves on the locks and N.B.A., we had a productive meeting with the agency in March and we are progressing on the products development. The agency has clearly outlined it clear path towards the products acceptance and as a result, we plan to resubmit next year.
<unk> insulin bio similar products, we are continuing to make progress for the multiple products that we haven't development the new guidance outlined by the agency affirms that if we properly characterize the product.
Energy density trials will not be necessary. We believe we have a proven history of performing characterization and therefore, we will be able to avoid extensive immunogenicity trials.
And I more pressing topic I would like to communicate about coping 19 impact on out the star in summary, I want to say there is very minimal to almost no impact on the operation of Amistar and all of our global facilities. We've implemented some policy change it to comply with C.D.C. recommendations and current.
All of our manufacturing facilities are operating at normal status.
We have learned from the measures adopted by R.A. and P. facility in China, which has made early adoption of prevention measures at our U.S. in France facilities seamless and effective.
With that regard we will continue to ensure that our workforce remains healthy and safe. Furthermore, I would like to remind you that our strategic stockpiling of at least two years of some of our critical A.P.I.N. starting material is intended to insulate the company's commercial operations from supply disruptions created by issues such as cold.
In 19.
Finally.
But now like to address the strengthen resiliency of our business strategy, whose effect of this is partially due to our vertically integrated business model along with our disciplined management as you've seen from recent events in the industry. Some products are declining sales due to disruptions related to cope with 19 part of this is due to coded 19.
Specialist doctors to operate at a limited capacity and limit interactions with pharmaceutical sales reps, reducing sales. However, this is not the case with amphastar, while our products are indeed specialized benefiting from high technical barriers to entry the products that we focus on combined with our business.
Structure safeguards us from disruptions like cold at 19 for one our business model is designed to easily mitigate against wrists and supply disruptions, partially through our vertical integration, where all of our finished products are produced in our U.S. facilities and secondly, our products are often in high demand.
Where are we target large markets taking the example of this case is again are up enough for an approval, but the product growing into 131 million dollar opportunity. Moreover are six A.N.D.A.'s filed at the F.D.A., which target branded sales of approximately $1.8 billion.
I will now turn the call to our CFPO build Peters to discuss the first course financials.
Thank you do sales for the first quarter increased 6% 84 $7 million from $79.8 million in the previous years period.
Mischelle search to $12.9 million from $2.9 million in the first quarter of 2019 as strong advertising support.
Bind with a quarter and pantry loading as a result of covert 19 and that I lifted sales dramatically.
And that's enough friends also had strong growth.
So I mean bicarbonate, which we are now producing on the new feeling lines approved by the F.D.A. in February.
And lots of parents sales decline by 37% to to $9.2 million.
Short range from 2019, no longer has a positive impact to our business.
Strong privacy, Michelle had the additional benefits of increasing or gross margin.
Remember that promising Mr. The naturally high margin product.
Still benefiting from the components in A.P.I., which for spends prior to the products approval in 2018.
This benefit will decrease during the course of the year as we sell through these components promising this will remain a high margin product for us.
Selling distribution and marketing expenses increase five per cent, that's $3.3 million, primarily due to marketing and distribution costs associated with prime keen mess.
General and administrative spending decreased by 34% to $10.7 million as we no longer have to bear.
Related to the patented anti trust.
Cases with supplement then Sanders.
Research and development expenditures increase $15.3 million from $14.6 million due to the increase clinical trials expenses for installation and insulin pipeline.
The company recorded net income attributable to amphastar shareholders at $3.9 million or eight cents per share in the first quarter compared to net income of $900000 for two cents per share in the first quarter of 2019.
The company report and adjusted net income $8.4 million or 17 cents per share compared to an adjusted that income of $4.9 million for 10 cents per share in the first quarter of last year.
Adjusted earnings exclude amortization equity compensation and the impairment of long ones assets.
In the first quarter Cashflow provided by operations was approximately $1.5 million.
During the quarter.
Purchase $10.9 million worth stock as we took advantage of the lower stock price increase purchases.
On the last call, we discussed our financial assumptions for the year.
We know that a lot of companies have withdrawn guidance to uncertainty related to code to cope with 19 $10, but today, we maintain what we said on our last call most of our products increase demand at the end of the quarter and April we are not certain how long these increases will continue.
Second quarter stars as strong as the first one and it.
This trend coupled with a recent approval of our up enough for the multi those files, which we plan to launch within weeks into that business remains strong.
I'm not trying to call back or the operator begins you and I.
At this time I would like to remind everyone me to pastor I went to ASCII question.
[noise] [noise] and here first question comes from Tim Chang wouldn't northern Securities.
Hi, say.
Two questions first and foremost I'm trying to 10 minutes. You know are you are.
I'm still planning to do direct to consumer advertising on this product this year and sort of how'd, you expect to get to additional retail retailers. I know you guys are I bet. I know you guys are in Walmart C.B.S. Walgreens right right eight I mean are there other retailers that you plan on getting Argentine missed into.
Yeah. The next to him yeah, we are depending on the direct consumer advertising and we've shift and some of the focus from some of the shows that we were doing and we're doing we're on some of the news networks. Now is more attention is on those who we'd set on previous calls the our our budget was going to increase this.
Year for advertising, including both.
C.M.R.T.V. and radio as well as the digital campaign and would be in the mid to high single digit millions of dollars to be spent.
As far as other retailers, we are actively working on some large grocery chains as well as some other mass merchandisers as well. So the good thing is that we recently.
Launched into 'em, Amazon Dot com, so we're on that platform as well as the the major drug store chains and Walmart.
And they'll just one follow up the up and us when injection.
Update as to when you expect to have capacity to watch that product. So.
Yeah. So as I mentioned on on my and my comments were going to be launching that within weeks, but we've already begun manufacturing the product we've already begun the marketing effort and talking to customers. So it will just be as I said within a few weeks.
Tim This is great I add can I add that we we expect this wants to go smoothly as we've made this product in the past. So we expect it to go smoothly.
You know and <unk> and I noticed I mean annual report.
It's pretty good grows so in the first quarter. So I'm sort of wondering if markets, probably a 200 million dollar plus market, though so you don't have a capacity issue at all too.
No. We don't have the capacity issue to say whether their sales were impacted my colleague as I know, we didn't see some increased up enough for the sales in the quarter above what we usually see so I don't know if that's a temporary thing or will be an ongoing thing, but it is a large and growing market before the first quarter sales.
Vandalizing up for I.Q.V. is over $130 million, so no matter, where it is between 130 or 200, it's going to be very good product for us and it's a high margin product for us as well.
Okay great.
Yeah.
And your next question when it comes from Gary knock maybe B.M.O. capital market.
Hi, Good afternoon, guys back I'm trying to teen how terrible do you think the benefit is that you got some code bid.
You know how much was the stockpiling in front of the pandemic. So maybe comment on how it's been trending more more recently in the last few weeks to give us a sense.
Yeah. So yeah, we said what else is that about a million to $2 million in sales in the quarter. We believe are related to the <unk> pandemic and it's it's a little bit hard to to to display for you know how much exactly was but based on the store trends that we saw that was that was it and and subsequent.
That we will update the a chart that we have on our investor presentation within the next couple of days to show some of the weekly sales tries to the definite spike up at the end of March beginning of April, but if you take a look at the current trend and you just even if you take those that we're still on upward trend from where we were throughout the year.
Okay. So where are you thing is I mean, if we took out a a couple million then just call it 10 million or so in the first quarter, a little bit higher than that I mean, it should go up sequentially from their based on there or are we orders that you're seeing and the way you just sort of describes it.
Yeah, Yeah, Yeah, Yeah, we haven't really seen you know the trajectory still going upward and so we we think the trend is still positive for the product and yeah. I don't think it'll probably consistently be that way I work for casting is.
Okay.
Ah that's great and then how are you thinking about expenses going forward, especially in this environment.
Some areas that you think you might want to scale back a little bit to to try and improved profitability. You know so just I don't know yeah. It seems like you had a good quarter. So maybe that's on top of mind, but.
So.
Only back expenses I think you know, we're we're we're growth company and we plan to grow keep investing for the future. So we're we're not going to be scaling back we're going to be increasing our r. and d. spend as we go forward. So that's that's that's that's a definite but yeah, we've no plans to.
Huh.
To any significant cutbacks and on and the other areas.
Okay and then just last question in in terms of you know any clinical trials that you need to do in the pipeline anticipating Andy any major delays as a result of coded system of the important programs.
I mean, that's across the industry, so I'm, assuming that that might impact you guys as well.
So actually also on the call today, we have Tony Mars, who was as as we mentioned before his are in charge of regulatory and and clinical trial. So I'll, let him answer that question.
Yeah, Hi, Gary speaking generally about our clinical trials I think like the rest of the industry, we do see some minors laziness.
And overall no new clinical trials aren't able to be started during this time, but the ones that we have going continue to be ongoing certainly there'll be a delay in those trials for a month or two as we have much slower enrollment.
And we don't know how long this will last obviously when we talk to our sites that are actually performing the trials. Their estimates are some time as as we all might estimate the end of made the beginning of June it should start slowly returning so we really would see that is just being a few months delay.
Okay, Alright, great. Thank you.
Thank you.
And your next question it comes from Elliott Wolbert Raymond James.
Hi, Thanks. This this Lucas Leon for Eliot I'm, sorry, I might have in the cities from your prepared remarks, but.
I was wondering if any part of the <unk> benefit it directly from called it in terms of utilization such as not for parents.
Well, we saw spike in in well there was a small that's burned knots, apparently was a small increase but I think it's already returned back to the normal trends that we saw in Q. for and then we obviously with Primatene as we saw a.
Three weeks bike and in in sales on on Primatene missed and then of course some of our our our hospital based products out of <unk> the crash car product.
Small increases there, but most of that already returned back to normal.
Also that I'm hearing that a lot of deals will be coming to market soon based on to the salaries increasingly needing cash how are you thinking about acquisitions, given cash and I'm strong balance sheet.
You know we we we always said, we we will look at opportunities you know, it's really important when we look at these types of transactions that day synergistically fit in with us that they compliment our company and somehow benefit that we can add value to the company.
So, we'll always entertain and look at those possibilities, but there's really nothing right now directly on our radar.
And lastly.
So ready as recently launched in the locks on hydrochloride and Lords, yet configure it and.
How much of your.
Okay.
Thank you.
I think you you cut out we didn't really get all of it but I think you're asking us about no locsin and and the recent launch.
Dr. Reddys is that correct, yes, yes.
Yeah Okay.
We do anticipate some competition there this year, it's hard to tell exactly what you know what the impact is gonna be but we do see we we we do acknowledge that and we know that there'll be some competition there.
God. Thank you.
Oh.
In your X. question comes from that Speaker with <unk>.
Hi, there.
Two.
Sort of multiple hundred million dollar.
Generic opportunities, where there you know <unk> brands, where there's no current generics and and I believe at least one of them is already a patent.
I think you calm M.P.O., one or two and I forget which is which one has had two or three C.R.L.'s and one is more recent.
For M.P.O. to what you called out you know why did you kind of white the.
So it was pushed out and.
Whichever one is the one that you've had two or three C.R.L.'s <unk>.
What's your.
Confidence that the third or fourth time will be the charm.
This is Tony Mars I can address your first question. This is for the A.M.P. 002, you got that crack that stuff first cycle review is it's historically been called this is really in response to some questions that they had a is part of the normal review process one of the reasons we.
Targeted this product was because it was such a complex molecule one of the reasons that no. Other competitors had been able to at this point be approved for this product is because it's so complex and so is part of the normal review process as the agency asked us in what we had discussions with the agency.
When we responded to some of the questions that they had during the normal review process. They just wanted to.
View those questions and respond to those questions and so that's really the reason for doing that to give them the opportunity to review those are responsive to those questions.
And then on the other one with this had multiple cereals.
So your question is why how how do we felt and then if if we were to look yet. If we were look look at the comments that are received during those see arouse as a funnel.
If I could use this analogy we've seen through this process that the number of comments that we've received as part of dash to significantly decreased.
And so that gives us an indication that we are very much making clear to the agency about this product and getting down to understand what we're doing.
To where we can respond to all of their their open issues. So essentially we're seeing lots and lots of does.
Got it just.
Mm.
<unk>.
Both sound like they're already off patent and there are no. Other generics given the size I think you said there are two to 300 million and brand sailors wouldn't each of these be at least $75 million to $100 million peak sales opportunity for you.
I think what we've said over time, yeah. The the the value of these things is changed over time. So I think you're partially going back to some statements who might have made a few years ago, but I will say that both of these are 100 million dollar plus branded opportunities and both of them are off patents and both of them.
I have no generics on the market and both of them are so complex that they've been off patent for many years with no generics and we think that <unk> very difficult for both of them. So because of that our expectation is at once we get approval on these that we will have unlimited competition.
Right and then just one final.
Question.
<unk> so.
He did 12 million in the corridor I think you said one to 2 million relates to the pandemic.
Was this I'll pull through is there's some or did you have you disclose what the pipeline Phil on that 12 is.
Yeah. This is all pole through David So we had very strong a store sales in the corridor. So we we really you know while we did launch an Amazon in the corridor I will say that the there's really not much of a a an inventory they're committed to kinda adjusted.
Time is sort of situation with our the company that we're working with on that so there really was no channel. So this is all and store and customer demand.
Okay, well, so truly accelerating thank you.
Great. Thank you.
In your final question comes from search Blanchard played me haven't <unk>.
I think for the question does this 10 officers so with the multiple files.
It's going to launch within the next few least can you just give us I guess the general sense of how.
Take this market could grow in the next several years I think in the past has mentioned about you know 120 $830 million.
And then in terms of the outspend for printing. This can you give us a break down it here I guess current spend on T.D. versus radio versus you know the digital ads and I guess, how do you expect your current trend to to change for the rest of 2020. Thank you.
I'm sure. So I'm yuppie vile you know we've been using I.Q.V. a data out there, though you know the 12 months data was about 131 million and we did here Endo mentioned that their sales were up significantly this quarter. So we did hear a number that was 15 million or so this quarter. So did seem like that.
Very good for in it it's difficult to say you know if that that quarterly number is going to hold or not but you know given the fact that we have a six month exclusivity given the fact that we saw this product in the past. We we think that this is a good product for us we expect that we'll get there.
Reasonable market share.
And you know it'll be <unk> m- remain a very profitable product as far as the the D.T.C. span goes the biggest of those categories is now T.V. and Ah radio and digital we spend less <unk>.
We've been you know we we this is something that we analyze every quarter and we take a look at how we're gonna advertising were run advertises the decision that we make depending on the costs at the time and the good thing is that the costs have not been going up. So we think we're actually reaching more viewers than we have in the past for the dollars that.
Spending so we're very happy with the performance and privacy has been a great product for us so far.
Oh.
Are we done operator, I will turn the call back over to Dan African closing remarks.
Okay.
Thank you.
One for all your participation in our Q1 update.
Let's say, we're excited about the opportunities ahead of Amistar as we continue to focus on advancing our pipeline and strengthening primatene Miss trajectory remain focused that our employees and business stay strong in sustainable in light of the unfortunate circumstances that the world and our nation face with Kobe 19 stay healthy stay say.
Thank you.
Ladies and gentlemen, Cruces conference call.
Dissipating you may know disconnect.
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