Q1 2021 Amphastar Pharmaceuticals Inc Earnings Call
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Greetings and welcome to the Anther Star Pharmaceuticals, Inc. First 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 the euro on your telephone keypad.
All statements on this conference call that are not historical are forward looking statements, including among other things statements relating to our expectations regarding future financial performance backlog sales of marketing of our products market size and growth product development, the timing of FDA filings or approvals.
Including the DMF of A&P, the timing of product launches acquisitions, and other matters related to our pipeline of product candidates, our share buyback program and other future events, such as the impact of the COVID-19, pandemic and related responses of businesses and governments to the pandemic on our.
<unk> and personnel and on commercial activity and demand across our business operations and results of operations. These statements are not facts, but rather are based on emphasis of ours historical performance and our current expectations estimates and projections regarding our business operations and other similar or.
The related factors words, such as May might will could would should anticipate predict potential continue expect intend plan project and believes estimate and other similar or related expressions are used to identify these forward looking statements, although not all forward.
Looking statements contain 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 <unk> control.
Actual results may differ materially from those in the forward looking statements as a result of a number of factors, including those described in answer the stars filings with the Securities and Exchange Commission, including in our annual report on form 10-K for the year ended December 31st 2020.
Filed with the SEC on March 15th 2021.
In particular, the extent of COVID-19 is the impact on our business will depend on several factors.
Including the severity duration and extent of the pandemic as well as actions taken by governments businesses and consumers in response to the pandemic all of which continue to evolve and remain uncertain. At this time you can locate these reports through our website at IR dot emphasis on dot com and on the <unk>.
C C S website at Ww Dot SEC dot Gov for.
Looking statements in this release speak only as of the date of the released after the start the undertakes no obligation to revise or update information or any forward looking statements in the conference call referenced above.
To reflect the events or circumstances in the future, even if new information becomes available or of subsequent events cause our expat expectations to change.
Please note. This conference is being recorded our speakers are Bill Peters CFO, Dan edition of <unk>, VP corporate communications and Tony Marrs Senior VP of regulatory affairs and clinical operations I will now turn the conference over to your host Dan Dishner VP of corporate communications.
You may begin.
Yes.
Thank you operator, and good afternoon, everyone earlier. This afternoon now for STAAR reported a very strong start of the year in executing our growth strategy with another quarter of solid revenue growth. We look forward to share in detail behind the quarters of growth and provide the company update regarding our pipeline for.
Following my prepared remarks, Bill Peters CFO will provide an update on the company's financials and we'll open up for Q&A with Tony Marrs, Senior Vice President of regulatory Affairs, and clinical operations Bill and myself.
To begin we ended the first quarter with the continuing trend of our diverse portfolio materializing, the drive topline and bottom line growth with.
But the first quarter of seeing 100 of 3 million in top line net revenue on our bottom line, increasing substantially the $5 million. This represents a back to back period of record net revenues.
Against the backdrop of of 7% increase in revenues versus the fourth quarter. We saw the successful execution of glucagon launch growth with prime of teen Miss sales.
On our epinephrine products continuing to gain momentum.
Regarding glucagon, while the product thoughts launch in mid February we have seen tremendous progress with its intake in the retail pharmacy space as we've executed on the same launch platforms as our Enoxaparin and medroxyprogesterone products and expect this trend to be durable into the year.
Likewise, the same trend can be observed with our epinephrine products as growth in this area was driven organically by higher unit volumes prompted by a competitor shortage.
52% increase in total sales compared to previous quarter.
The competitor shortages tens of resolve themselves, we can consistently supply of the product when our competitors cannot.
Turning back the glucagon, while it's the launch and its the initial loading can can be seen the offset a mid quarter launch we're keeping an eye on important factors such as at 72% share in the retail market. According to equity of data as of March 2021.
Nonetheless, we continue to believe the fundamentals are strong for glucagon epinephrine and prime of team our vertically integrated business and planning efforts of Florida reasonable resiliency to support the products growth in demand around the potential supply chain bottlenecks seen amongst suppliers.
Turning to the primacy and missed the price.
The $65 million in annualized sales this year seeing a strong increase of 27% compared to the fourth quarter as week over week retail sales have continued the trend strongly as observed in the updated slide in our company presentation.
Recall that prime of Dean on the first quarter of last year was driven by significant COVID-19 pantry loading we've closely reached those levels organically through our updated nationwide television radio and digital advertising campaigns before launching and the targets retail stores.
Adding another layer to our marketing strategy will be Relaunching, a physician sampling program. This month to increase awareness of the product as we continue with our digital media campaign to add to our consumer awareness of strategy amongst asthmatic and the 18th of 34 year old demographic.
Turning the products in the pipeline we received the minor CRM for <unk> 006 in late April and we have already responded to it while this product has a plus $50 million opportunity based on annualized equivalent sales. We are still confident to anticipate a <unk> date in the third quarter of this year.
Pending the agency's usual response after minor crlf's roughly within 90 days. We believe we are on the closing stage of this product's development.
A&P zero zero to a plus $300 million opportunity based on annualized equivalent of data continues to have no generic for this product we announced earlier in April that the FDA has reclassified our CRM status to minor. Therefore, we now have the second quarter of <unk> date.
We have no reason to believe that this product will not meet the newly established action date. However, given that this is a complex product.
That there could be additional questions about the development of the A&P zero-zero too.
As for <unk> zero, one byproduct, we announced in mid April that are paragraph four filings saw no legal challenges as the 45 day window expired in the same month.
Again, this product remains the plus $500 million opportunity with no generics on the market at the same time, we are of good do per day in the fourth quarter of this year or the first quarter of next year, if a preapproval inspection of needed.
COVID-19 restrictions being subsided in the UK.
Lastly, I'd like to conclude by noting that our pipeline continues with a clear path forward.
Zero zero twos reclassification. The recent news on the legal clearing for A&P 015, the continued progression of our international epinephrine product through it's clinical process on update on our insulin programs soon to be announced and a filing expected for internasal on the locsin set an ambitious.
Achievable schedule.
Meanwhile, are already launched growth drivers have time to mature in gaining market share we've seen tremendous execution on prime of teen missed epinephrine and glucagon and anticipate this trend to be durable while aligning their success with the progression of our pipeline, which in turn ultimately strengthens our growth dry.
Of our portfolio I will now turn the call to our CFO Bill Peter's to discuss the first quarter's financial results.
Dan sales for the first quarter increased 22% to $103 84 $7 million in the previous year's period.
The launch of glucagon on February but the biggest driver of this increase with sales of $8 million, including in the inventory buildup by most major retailers.
Privacy missed once again showed strong growth with sales of 43% to $18 for million dollars from $12 $9 million and the prior year.
Epinephrine sales nearly quadrupled the $15 $6 million from $4 million from the prior year as we increase the market penetration of multi those files and had strong demand for our pre filled syringe products as it was in the shortage situation with competitors unable to fill orders.
And on the parents saw sales increased to 10 $7 million from $9.2 million on the prior year, primarily due to a pickup of the new customer after 10 of of left the market in 2020 and.
The locks on sales declined to six $3 million from $8 $9 million on increased competitive pressures, while lidocaine products and phytonadione sort of sales declines do the weaker market demand.
Our insulin API business had sales of five $1 million up from $3.4 million on the prior year, primarily due to the timing of shipments.
Seven cents per share compared to an adjusted net income of $8 $4 million of <unk> 17 per share in the first quarter of last year adjusted.
Adjusted earnings excludes amortization equity compensation and impairment of long lived assets and the onetime events.
In the first quarter cash flow from operations was $22 $8 million, we use the portion of this cash flow to repurchase $3 $8 million of treasury stock during the quarter, leaving $13 $6 million remaining on our buyback authorization.
I will now turn the call back over to the operator to begin Q&A.
Okay.
At this time, if you would like to ask a question. Please press star and one on your Touchtone phone that is star one on your Touchtone phone.
And we will take our first question from Gary Nachman from BMO capital markets. Your line is open.
Hi, This is Evan <unk> filling in for Gary.
Thanks for the update and thanks for taking my question.
So first for Premier team.
How much stocking was there in the quarter for target launch in March and do you expect any sort of step down and to cure the re queue.
And secondly is there any seasonality component with asthma or allergy and should we be considering that for the next few quarters as well.
Thanks.
So for the first question.
There was some stocking for target because they had the load the product and for all of their stores across the country.
And we would say that this is between the $5 million on a $1 million of.
<unk> for the quarter.
I think the next question was around seasonality is that correct.
Yep.
It's still hard to say on the seasonality, we do see a little bit of seasonality, but.
Nothing definitive.
One thing I'll point to is the we've updated the <unk>.
Presentation, our corporate website. So you can see that the private team.
Uptrend, there has been very strong right now so.
As you all to take a look at that.
Yep.
I also have another follow up.
Can you provide some more color on the strength of epinephrine.
And where exactly of that revenue came from was it more volume of price.
And where are you able to take more share.
Yes. It was it was all volume.
On that price.
And the issue was on two things first of all we picked up.
We're up to our what we consider of good volume now for the.
Multi dose vials, but the pre filled syringe was in a shortage situation. So some of our competitors werent shipping this quarter and subsequent to the quarter of that that trend has ended but we had a very strong quarter because of that.
Thanks for taking my question.
Sure.
We will we will take our next question from Elliot Wilbur from Raymond James Your line is open.
Hi, Good afternoon. This is Lucas Lee on for Elliot and thanks for taking the questions.
The first question I have is regarding glucagon are there any news on competitive entries or response from Lilly.
Where do you expect your share of tool can at least settle and I have a follow on.
Right now we haven't seen any other entries.
As we've talked about many times this is a very complex product.
It was off patent for 20 plus years and the.
There was no other generic and we haven't seen any other generic at this time.
Do we think that the that's fairly sustainable of the market share that we're seeing right now we feel that it's sustainable.
And non much else there I mean, it is doing really well for us.
Thank you that's very helpful.
Next question is regarding.
A&P zero on one five is the same.
The 505, <unk> or 505 filing.
And are there any other filers ahead of you with potentially blocking exclusivity. Thank you.
Yes. This is an anda product.
It's not a five of <unk>.
So this is this is the generic product.
And we don't have win when they had an option on opportunity for the paragraph for we did not see any.
The litigation coming from that.
Werent, we werent provided notice in that time has expired.
We do know that there is another product that is an application and but it's been in for quite some time.
So there is a potential for that.
Again, if you would like to ask the question. Please press star one on your Touchtone phone.
We'll take our next question from David Epsilon from Piper Sandler Your line is open.
Hey, thanks.
Sue pipeline questions. So.
And I apologize if I missed this because I joined late but number one is on the.
On the inhalation pipeline just remind us when.
What we should expect in terms of the the pace of filings not just this year, but also.
But also next year.
And then secondly.
On.
On the on.
On the.
On them that program.
Can you just talk about.
The how youre envisioning clinical development is it just the PK path forward or no.
Or or something else.
And update us on filing time line for that thanks.
Yes for sure.
For the first one for the installation we anticipate one to two this year.
And then two to three and.
And three or more in subsequent years.
So it is a focus and an emphasis of ours.
For your second question around the intranasal epinephrine.
It is more of the PK type of clinical program.
That is we're not specifically measuring efficacy.
Directly.
And a lot of the trials are around special population special circumstances with the use of the product.
We've got a.
The clinical plan that we've presented to the agency and we've discussed it with them in multiple locations.
So they're aware of what our strategy is and.
We think we have a pretty good grasp on it more.
Most of the sites and the physicians that are in this arena, we have great relationships with them.
Our consulting and we've been working with people that are highly knowledgeable on it so we feel pretty confident in what our clinical plan looks like.
We will take our next question from David Steinberg from Jefferies. Your line is open.
Thanks, and good afternoon I have a.
Couple of questions first.
Is on Prime attainments, so even when you adjusted I think you said it was about a half a million two of $1 billion in stocking.
Target so even when you adjust for that it looks like it's.
The annualized Inc.
At around $70 million or slightly more than I think you expect the expectations for the year on 65.
So given that.
Or do you think sales could be achieved for this year.
In addition.
Are there any other major chains, besides target that youre planning on entering this year or perhaps the big chain entry has pretty much played out and then also on the <unk> two.
Lived through three cycle of reviews for prime of teen and glucagon and you've got the both across the goal line.
Definitely the last cycles with this product what's your conviction that.
Youll get approval on the GTO per day, and then secondly, since you'd be the first generic can you remind us.
What the current peak.
Peak sales of that product are and then how many years has it actually been generic or off patent.
Okay.
The sales the first one privacy and missed sales, yes, while we are the.
The first quarter. It was very strong we got off of the year to raise the start we're still.
The year is still $65 million not sure how much of that first quarter had some may have some seasonality and involved in that as well. So so our target is remains the.
$65 5 million and we've said that we do think of can grow due to the three major factors being that the price point on it is higher than it used to be there is more asthmatic and theres less doses in this in the canister as before so we do believe there is still.
Our room to grow.
The next question remind me again you asked several questions. There is there's really we have all of the major change in our target out there on.
We even have availability into the smaller.
Retailers through our program through the the major wholesalers.
Yes the thing.
One of them on the online sales to grow a little bit there for the for the question on A&P O Zero-zero too.
We remain confident.
This is a complex product thats been our patented Inc.
<unk>.
The longtime.
I will provide a lot of time.
No exactly when but it's been some time.
And I think to to gauge the level of confidence.
I think for just having this one CRM to have approval, we would be extremely satisfied and very happy.
At this point.
It was categorized as a miner.
Response, so I think of minus BRL. So I think you can kind of gauge that.
And what that means to us I think that speaks quite a lot.
For her.
The agency views as of this product.
And just one follow up on glucagon it looks like you did about $8 million.
In its first quarter was that all of demand base or was there some pipeline fill in that glucagon number. Thanks.
I will say there is definitely a pipeline fill involved in that number but remember we didnt launch until about halfway through the quarter. So even though there was.
The pipeline launch, there's probably a month worth of of the of the pipeline stock on that.
Once again.
To ask the question Press Star one.
Our next question comes from Tim Chiang from Northland Securities. Your line is open.
Alright. Thanks.
Just on Prime on 10 minutes I mean are there any other additional channels that you might be able to take advantage of.
On the distribution side for that product I mean, obviously, you've hit all of the major retailers share in Amazon I mean have you.
You guys thought about any other.
Avenues, where private interest.
Haven't really hasnt been made available.
I mean, we've hit the major ones as you know.
And Amazon.
It hasn't been very long I think the biggest point of growth for the product is expanding the demographics is changing.
Changing focus of initially it was just the kind of reintroduce the product of our initial marketing strategy was the introduced the product kind of recapture.
The the demographic that that new the product well and then now expanded into other demographics using different mediums, such as media and even the TV. The TV ads have been really working so we added another TV AD, but really kind of branching into different demographic.
<unk>, we think that's where the growth will be most.
And then maybe just a financial question Bill.
Thank you for gross margin this quarter.
We're around 44%.
How do you sort of think of gross margins.
Through the course of the for the rest of this year I mean is the 44% gross profit margin.
Is that sort of you're going to stay at that level of do you think it has some opportunity to increase later this year.
It has some opportunity to increase.
Part of the yes, we do have with Enoxaparin. There is whenever we buy inventory we have to.
Take a write down because of we're selling it below cost for that process can be lumpy because we're not buying it in exactly the same rate that we're selling it. So this quarter there was probably a little bit more of the reserve involved on that than there is on.
On the average quarter. So there's some opportunity for that and also we think that the.
On the sales go up.
From the rest of the year, we believe that the because thats the high margin product will get a benefit out of that as well and should we get one of these other.
Products at the FDA right now approved all of them have higher margins on our corporate average so that there is an opportunity to go up for that reason as well and then also promising missed says.
If that can grow further from where it is today and we believe it will grow further.
That is the higher than average margin product.
Just one last question just on the.
The facility you guys have in China, I mean, obviously you.
The number of Dms on file.
<unk> filed there I mean, when when do you guys expect to actually start to generate some meaningful revenue out of the.
Chinese market.
Yes, so last year, we had first of all of the biggest customer of that.
The facility is our <unk> U S and we buy some API from them and also we contract them to do some R&D work for us mostly around the R&D of Apis.
But last year, we had over $3 million in sales which was.
Up significantly from the prior year on I think what we said this year was that we expect that number to double.
Double this year.
So we should have more revenues this year.
It wasn't reported in the in the.
The press release, but we had a little over $1 million in third party sales from that facility in the first quarter of this year. So it's on.
Already on the trend higher than the quarterly run rate from last year, and we do expect continued growth out of that facility.
Okay, great. Thanks.
Meanwhile, we will take our last question from the surrogate Bellinger from need Ham and company. Your line is open.
Hi, good afternoon, Thanks for squeezing me in.
So bill you.
We received the approval for <unk>.
The grandfather product earlier this week.
More of these.
Further the.
Okay.
It does.
In front of the FDA right now and then.
In terms of the the rest of the pipeline you've talked extensively the oh, two or one five.
Six and some of the pay for products can you just give us an idea of which.
Once you are you expect to receive approval.
The 2021.
Well since you addressed the first question to me I'll take that so we do of one more grandfathered product out there, but it's.
It is the epinephrine prefilled syringe, which is the very important product for US. However, we have filed that as an NDA not an anda. So that application is pending and then I'll turn it over to Tony for the the rest of the the that question.
Yes.
You had mentioned A&P 015, and that one has.
Our goal date.
The.
Fourth quarter of this year.
We have a couple of other products.
<unk> 006.
Which is the third quarter anticipated or action day.
Another A&P.
Zero.
Zero nine, which we have a an action date later this year as well.
And then A&P 013.
It has an action date later this year.
The last two of those.
There is their filings that are paragraph four filings.
And so there'll be some some issues surrounding knows.
But from an approval perspective, those are what we are anticipating.
We also have a good deal for date for zero zero too.
So that one is also.
Our Q3 a day.
No its Q2.
Q2, sorry my.
My mistake.
Yes.
And then just on the bio similar to this one program and the new developments or FDA interactions regarding the development path for <unk> for the program.
Okay.
I'm sorry can you repeat the question.
Yes regarding the Biosimilar insulin program and the new developments for FDA interactions regarding the development of tool pathway.
We're planning on providing more color.
Two that insulin program in the second half of this year, we want to rollout the entire program and kind of give a.
More complete update at that time.
Alright got it thanks.
Thanks.
We have no further questions at this time.
Okay.
Okay. Thank you Jamie.
Thanks to everybody for joining us today on our Q1 call.
It was the Goodyear are the good quarter for US we hope to continue that success into the the next quarter and look forward to sharing it to you at that time of a great day.
This does conclude our program. Thank you for your participation you may disconnect.
Yeah.
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