Q2 2022 Amphastar Pharmaceuticals Inc Earnings Call
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Thank you for joining the conference today, our call will begin in just a few moments. Please remain on the line. Thank you.
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Greetings and welcome to the amphitheater Pharmaceuticals second quarter earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please.
Please note that certain statements made on this call regarding matters that are not historical facts, including but not limited to management's outlook or predictions for future periods are forward looking statements. These statements are based solely on information that is available to us. We encourage you to review the section entitled forward looking statements in the press release.
Issued today and the presentation on the company's website.
Also please refer to our SEC filings, which can be found on our website and the SEC's website for a discussion of numerous factors that may impact our future performance. We will also discuss certain non-GAAP measures important information on our use of these measures and reconciliations to U S. GAAP may be found in our earnings release. Please note that this call.
Call is being recorded.
Our speakers today are Mr. Bill Peters CFO , Mr. Dan Dishner VP of corporate communications, Mr. Tony Marrs.
As VP of regulatory affairs, and clinical operations I will now turn the conference over to your host Mr. Dan Dishner, Vice President of corporate Communications.
You may begin.
Thank you Paul I'd like to thank everyone for joining us for our second quarter earnings call for 2022.
We believe we made great strides in the first half of 2022 towards portfolio diversification with approvals, while driving our existing portfolio revenue growth. We look forward to discussing the specifics behind the quarter's commercial success and our regulatory developments on the call with me today is Doug <unk> CFO and executive Vice.
This president of finance and senior Vice President of regulatory Affairs, and clinical operations Tony Marrs.
Following the prepared remarks from management well open up for Q&A.
I will first discuss our financial and commercial strengths supported by our portfolio that remained strong and the changing volatile market landscape. The second quarter saw net revenues of $123 5 million, representing a solid 21% increase compared to Q2, 2021 with a significant increase.
And net income are existing products have again provided a solid baseline.
The strength.
Private <unk> mist sales recorded solid revenue is representing a 14% increase over the same period in 2021, our existing IMAX product sales recorded strong revenues validating our planned increased capacity designed to meet the increased market demands our competitors remain troubled in supporting.
We remain confident that our current capacity will meet the increased demand for our products, even if competitor shortages remain for an extended period, we believe that demand for our IMS products will remain robust into the second half of 2022.
Glucagon remains a valued asset in our portfolio as the only FDA approved generic as the product continues to have strong sales.
Looking to Q3, we look forward to our Ghana relics product, which will see a full quarter of sales of the product was launched late in June and we are excited about the imminent launch of our vasopressin product this month.
Regarding our regulatory efforts I would like to bring our discussion towards our ANP 002, and a filing to which we received a C. R. L. Last month, we believe the issues raised our addressable and will be fully responded to this quarter. Therefore, we anticipate the <unk> action date for this filing in the first quarter of 2020.
No.
While this news is certainly not one we would've liked to receive.
I'm confident with the ANP zero-zero twos future commercial prospects as it remains without any generic we aimed to work closely with the F. D. A to make this important first generic available to the market and patients as quickly as possible.
Two our a M. P 015, an anda filing terror apparel tied and let's see are all received in June we anticipate filing our response in the fourth quarter.
Likewise, we remain confident that the inquiries made for this filing is are entirely achievable.
It's important to remember that these products are highly complex remained without any generics and are in line with ample starz business model in pursuit of challenging to develop products and hopes of increasing patient access to these high in demand products, while benefiting from its difficulty as it creates market sustainability insulating insulating our port.
Polio from substantial price erosion and product sales life cycles that occur with traditional generic products.
We remain committed to the pursuit of approvals for these two andaz.
On our a M P 008, and our first and our inhalation filing it's important to point out that this filing received audit if you buy the F. D. A M. P 008 development remains positive with a positive mid cycle review received and conducted last quarter.
All of the clinical site inspections that have been performed were completed without observation. This maintains our confidence.
And ANP 008 remains on track for a fourth quarter to date.
While I'm on the topic of our inhalation pipeline I'm excited to announce that another inhalation pipeline candidate has progressed and is anticipated to be filed by Q1 2023, which is our a M. P. 007 product. This represents two of our five announced yet undisclosed inhalation andas as seen in our updated.
Corporate presentation, representing over an $8 billion market opportunity and combined equip yourself.
As our proprietary products in development, we continue to make progress on our Internasal Naloxone response, which is that we expect to be filed this month.
Speaking briefly on this product we continue to believe that there is a community need for intranasal naloxone.
Target supply continues to be part of our nation's strategy combined with several state and local strategies for combating the opioid abuse epidemic.
As for inter nasal epinephrine, another proprietary product, representing a potential plus $1 billion Mark.
The opportunity the pipeline candidate continues to progress well within several studies and discussions with the agency, we anticipate inter nasal epinephrine to be on track to be filed in 2020 as planned and finally, turning to our Biosimilar pipeline as part of our three pronged strategy or diabetes.
Portfolio with our insulin candidates aiming to all achieve interchangeable designation, we continue to see positive development on the fraud, and an increasingly constructive and encouraging regulatory landscape that supports biosimilar interchangeable.
We are seeing more biologic products achieve interchangeable status status, which is generally encouraging it supports our strategy and shows the fda's willingness to provide approval to different scientifically logical approved pathways. We remain confident that the insulin market remains robust at the same time.
Our extensive complex molecular development experience, most notably our proven sophisticated characterization technology and achievements and highly purified peptides along with an in house developed API platform supports a full scale under the well as we continue to invest in R&D.
We are excited to announce that we plan to file our first BLA for an interchangeable insulin product a M. P 004 in 2023.
Again, I'd like to reiterate while our pipeline remains challenging and.
And pursuing difficult to develop products. It is made with a deliberate purpose supported by extensive thought and research investments and self funding.
As proven with our current product portfolio, we continue to be supported by complex products that.
Solid support base for the further development of complex proprietary and Biosimilar candidates. We foresee. This three pronged strategy is an enduring stronghold for the company backed by our commitment towards quality and high purified product as all of our finished products continue and will be produced in the United.
States.
Likewise with current volatile market landscapes that seemingly will persist for some time, we see this U S focused strategy as increasingly beneficial and advantageous to the company as a long term driver for further sustainability within our business.
And the commercialization of our portfolio.
We have seen with previous approvals and launches such as the impressive execution on prime a teen mist epinephrine and glucagon all of which were exampled in recent quarters and driving growth, while being supplemented with our high end demand I M. S products, we are confident that challenges met to approval.
The company has reached to overcome.
I'd like to turn the call to our CFO and executive Vice President of Finance Bill Peters to discuss the second quarter's financial results and give further details behind this quarter's commercial success.
Thanks, Dan we're just going to pause for a second because I think theres, some beeping around and see if we can solves us a second.
Yeah.
Yeah.
Okay.
Okay.
Okay.
Thank you everyone for your patience one moment as we deal with this technical difficulty.
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Okay. Bill you are now reconnected you may continue the call.
Thank you very much sorry about that annoying beefing that was going on before I'm not sure exactly what happened there but.
But hey.
Turning back to our our plans call our sales for the second quarter increased 21% to $123 $5 million from $101 $7 million in the previous year's period private teen mist continues to show strong growth compared to the second quarter of last year with sales up 14% to $19 million from $16 seven.
Yeah.
Due to increased marketing efforts.
Wrong sales of epinephrine marked the biggest increase totaling $18 $1 million nearly double the prior year's $9 $2 million due to strong unit volume.
<unk> sales increased to $16 million from $11 $6 million on strong unit growth.
<unk> sales increased to $13 $4 million from $10 4 million in the second quarter of last year due to increased volumes at higher average selling prices.
Our other finished pharmaceutical product category also had strong growth due to products, such as dexterous, and sodium bicarbonate, which benefited from market shortages as well as the launch of our Ghana relics Prefilled syringe in late June late June .
Our insulin API business had sales of $3 $3 million down from $6 $9 million in the prior year, primarily due to the timing of shipments.
As we've discussed in the past the products, we've launched in the last few years, including private seen mist epinephrine multi dose vial and glucagon and have higher margins than our corporate average and that trend continued this quarter with gross margin increasing to 51% of sales in the second quarter of 2022 from 47%.
Sales in the same quarter last year.
We also had the benefit of fewer purchase commitments for heparin enoxaparin components, which are reserved at the lower of cost or net realizable value at the time of commitment.
Selling distribution and marketing expenses increased $5 8 million from $4 $1 million, primarily due to increased advertising a primacy mist and increased freight expenses.
General and administrative spending decreased $10 million from $14 $6 million, primarily because of a decrease in legal expenses and a decrease in expenses in China due to the restructuring of our ANP subsidiary in 2021.
Research and development expenditures increased to $22 $8 million from 2022 from $18 $1 million last year as we made significant purchases of raw materials and components for our a M. P 018, and insulin pipeline products.
Other income expense flipped to a $1 5 million dollar expense from an income of $3 $6 million due to currency fluctuations this year as opposed to a gain associated with lowering the litigation accrual for our lawsuit with Aventis, which we booked in the second quarter of last year.
The company reported net income attributable to <unk> shareholders of $17 3 million or <unk> 33 per share in the second quarter compared to a net income of $7 8 million or <unk> 16 per share in the second quarter of 2021.
The company reported an adjusted net income of $27 million or <unk> 39 per share compared to an adjusted net income of $10 $6 million or 21 per share in the second quarter of last year.
Adjusted earnings exclude amortization equity compensation and impairment of long lived assets and one time events.
In the second quarter cash flow provided by operations was $2 $8 million and year to date, it was $53 $6 million.
We used a portion of our cash to repurchase $6 $1 million of stock during the quarter.
I'll now turn the call back over to the operator to begin Q&A.
Thank you we will now be conducting a question and answer session.
If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
The interest of time, we ask the participants limit themselves to one question and one follow up and re queue. If they have additional questions. One moment. Please while we poll for questions.
Thank you. Our first question is from Tim Chiang with capital. One. Please proceed with your question.
Hello, Thanks Bill.
Bill could you just comment on the high gross margins this quarter I know you talked about it but.
Think a 51% gross margins sustainable in the back half of this year and my follow up questions is on A&P all too.
Thank you said that.
Your plan is to try to re file that.
In the first quarter next year. When do you think you could get a response from the FDA would that be sometime in the back half of 'twenty three.
Yeah. Thanks, Tim So I think the better way to look at the gross margin does not.
Taking a look at this one quarter, but rather taking a look at the six month.
Number instead and so our six month.
Gross margin was 49%.
So I think that's a better way to look at it because there were certain one time events or certain events related to the commitments that we mentioned on the heparin enoxaparin.
Components, which hit higher in the first quarter than in the second quarter. So those those skewed our results a little lower in the first in a little higher in the second so that a six month number is.
It's the right way to look at it as far as your second question goes Yeah Tim.
Do you want me to ANP is real good too.
We're going to respond this quarter with an action date, we anticipate an action date in Q1 of next year 2023.
I see I see so it should be pretty quick response.
I guess it wasn't a major.
It wasn't major items in the CRO is that right.
Tony do you want to handle that.
Yes, its not something thats going to take us a long time to response here.
So we don't believe it is a complex issue that yes.
Quite a long time to response, okay, great Super Thanks.
Yes.
Thank you. Our next question is from Elliot Wilbur with Raymond James. Please proceed with your question.
Thanks, Good afternoon.
First question for for Bill just looking at a couple of the <unk>.
Individual products and performance in the quarter, specifically lidocaine epinephrine I know you mentioned strong unit sales, but the numbers just kind of so far above.
Historical levels and baseline maybe you can just elaborate a little bit more in terms of what.
What is driving the strength.
Just an expansion in overall utilization of the.
Of the molecule itself for you gave you you are gaining share vis vis competitor was there pricing involved there.
At all and then the second question is.
With respect to your intranasal epinephrine program.
The company recently emerged from I guess semi stealth mode.
A competing product and potentially a competing product that they're looking to file this year.
Just wondering if you have.
Any any thoughts on that as a competitive.
Product looking to do essentially the same thing I'm, assuming you're not.
Thinking that the competitive profile of that product is so superior that would stop you from developing your own asset, but just anything that you.
You could share with respect to your view on that.
Competitor would be helpful. Thanks.
Yeah, I'll start with the question about epinephrine and lidocaine.
<unk> is just a volume and a lot of that is because of shortages from competitors that we have on that product.
All lidocaine was almost all volume a little bit of pricing, we did take a price on one of the skus there, but there is.
Half a dozen different skus that we sell in that.
Area and also lidocaine also got a little bit of a boost this quarter too.
We had been back ordering some of the lidocaine products are in the previous quarter.
Some supplier issues, but we got that out of the way during the quarter.
And then as far as.
Yeah.
We're very confident in that product and we're very excited about that product and we have a excellent that works very well and we have been.
Yeah, we're aware of.
Arris is product.
I'm not really sure we Wanna say much else about their product this time.
No. We just continue to execute our strategy.
Because we do believe we have.
A great product that.
It was targeting a large market and.
Yeah, we're very confident with ours and we're continuing.
To develop it regardless of what <unk> is doing.
Okay.
Thank you. Our next question is from Serge Belanger with Needham <unk> Company. Please proceed with your question.
Hey, good afternoon.
A couple of questions on A&P.
H.
No. We havent provided much details around this program probably by design, but.
As we get closer to this for Q4, and maybe talk a little more about the market opportunity could address and secondly.
Since it's your first inhalation product.
Yes.
What is your confidence or first Ron approval.
She can talk maybe about the complexity of it and weather.
That will play a role around that you could do for a decision.
Yeah.
Yes, I think as we get closer to it I think we are going to play our cards, a little closer to our best on the market opportunity because.
This is one we think it could really.
The effect of the marketing part.
The prospects of the product so, we're probably not going to discuss too much on the market opportunity.
On the on your second part of your question, Tony do you want to give a little more detail around that.
Yes for us it's an exciting.
Same product the.
The agency has been very very positive, but just when we look at all the aspects on all of the interactions. We've had with the agency crime mid cycle review meeting from them putting them in priority review products.
The number of inspection timing of the inspection side clinical side all of it's been very positive.
Of course first cycle approvals are always something that we strive for and we're prepared for.
And for Prada.
Product that it is.
A combination product of this nature.
It provides a little more complexity, but.
We're very positive about it and all of our interaction with the agency it seems to be aligned with that as well.
Okay.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Our next question is from David Epsilon with Piper Sandler.
Please proceed with your question.
Okay.
Hey, Thanks, So just had a few so first on the depression.
Just given the competitive dynamics.
It's a fairly crowded market can you just talk about the extent to which you think that's going to be a meaningful driver in the back half of the year.
Number one.
Number two Paul does.
If I missed this but on Oh, seven which you are planning to file in the first quarter can you say if that is going to be a paragraph four.
Or something else and.
Are you willing to.
Identify what they are largely underlying brand sales are.
For that product.
And then just back to O two.
Hmm.
You know this is a multi cycle review no surprise complex product all of that but are you still expecting it to be.
First to market.
Limited competition or no competition opportunity.
I just wanted to get an update on your latest thoughts there. Thank you.
Yeah, David on Vasopressin.
I think as you know it wasn't a product that we really are.
Targeted though it is a peptide and and we are making our own API and the products along with this product.
So it kind of is something that.
It's a good product for us, but it wasn't it didn't it doesn't necessarily 100% fit into our our business model. Yeah. I think as you know the market is crowded and it could get even more crowded, but I think both will fit ourselves in in and do the best we can with that product and it will have some revenue.
For us.
On.
A&P was it Oh seven that was your next question about weather.
At this time, where we haven't disclosed whether its a paragraph four filing or any of the market.
Data behind it for competitive reasons and.
I think we're going to keep it at that at this time.
As for ANP Zero-zero too.
Yes, there is.
I mentioned in my prepared remarks, it still remains without any generic competition. So we're still very excited about it we think it still has a great opportunity for us.
As I said you know this was the CRM wasn't the outcome, we were looking for but it's understandable as a complex generic.
There are different questions that come up and we feel we can address them and.
And we will do it in the fourth quarter of this year.
Next month, I guess and then we will have we're anticipating an action date in the first quarter of <unk>.
Next year 2023, yeah, its not just a complex product I think the other issue is that it's the first approval of a complex product and I think sometimes there's extra work that the FDA has to do around that one there's not a clear pathway going into the approval process. So I think that that has a lot to do with it.
Yeah, Okay. Thank you.
Thank you.
Yes.
Yeah.
Thank you there are no further questions at this time I'd like to turn the floor back over to management for any closing comments.
Great. Thanks, again, Paul and thank you all very much for joining us today, we appreciate it and we look forward to updating you on our progress next quarter as always if you have any questions. Please don't hesitate to contact contact us.
As those questions arise and again, thank you for your time today.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.