Q3 2023 Amphastar Pharmaceuticals Inc Earnings Call

Speaker 1: Greetings and welcome to the Amphistar Pharmaceuticals 3rd Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode.

Greetings and welcome to the Amphistylar Pharmaceuticals third quarter earnings Conference 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.

Speaker 1: If anyone should require operator assistance during the conference, please press star zero on your telephone.

Speaker 1: Please note that certain statements made during this call regarding matters that are not historical facts, including but not limited to management's outlook or predictions for future periods, are forward-looking statements. These statements are based solely on information.

Please note that certain statements made during this call regarding matters that are not historical facts, including but not limited to management's outlook or predictions for future periods are forward looking statements. These statements are based solely on information that is now available to us and we encourage you to review the section entitled forward looking statements in the press release issued today.

Speaker 1: We encourage you to review the session entitled Forward-Looking Statements in the Press Release issued today and the presentation on the company's website.

The presentation on the company's website.

Speaker 1: Also, please refer to our SEC filings, which can be found on our website and SEC's website for a discussion of numerous factors that may impact our future performance. We will also discuss

Also please refer to our S E T filings, which can be found on our company on our website and I think he'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, maybe found in our earnings release.

Speaker 1: Important information on our use of these measures and reconciliations to U.S. GAAP may be found in our earnings release. Please note this

Please note that this conference call is being recorded.

Speaker 1: Our speakers today are Mr. Bill Peters, CFO , Mr. Dan Dishner, Senior Vice President of Corporate Communications, and Mr. Tony Mars, Executive Vice President of Regulatory Affairs and Clinical Operations.

Our speakers today are Mr. Bill Peters CFO, Mr. Dan Dishner Senior Vice President of corporate Communications, Mr. Tony Marrs Executive Vice President of regulatory regulatory affairs and clinical operations.

Speaker 1: I will now turn the conference over to your host, Mr. Dan Dishner, Senior Vice President of Corporate Communications.

I'll now turn the conference over to your host Mr. Dan Dishner Senior Vice President of corporate Communications, Dan you may begin.

Speaker 2: Thank you, Paul. Good afternoon, and thank you all for joining us today on our third quarter earnings call of 2023. Joining me today will be Bill Peters, CFO and Executive Vice President of Finance, and Tony Mars, Executive Vice President of Regulatory Affairs and Clinical Operations.

Thank you Paul Good afternoon, and thank you all for joining us today on our third quarter earnings call of 2023, joining me today will be Bill Peters, CFO and executive Vice President of Finance and Tony Marrs Executive Vice President of regulatory affairs and clinical operations.

Speaker 2: 2023 has been characterized by maintaining the momentum of our key high-margin products, by fulfilling our commitment, by advancing our portfolio's proprietary, biosimilar, and complex product segment.

2023 has been characterized by maintaining the momentum of our key high margin products, while fulfilling our commitment by advancing our portfolio of proprietary bio similar and complex product segments.

Speaker 2: In terms of sales, the third quarter ended with $180.5 million in revenue, representing a 50% increase on an annualized basis with the added net sales of our recently acquired proprietary product, Vaximi, and the continued strength of our core products, specifically glucagon, primatine mist, and epinephrine.

In terms of sales the third quarter ended with $180 5 million in revenue, representing a 50% increase on an annualized basis, but the added net sales of our recently acquired proprietary products vaccine and the continued strength of our core products, specifically glucagon prime at 10 minutes and epinephrine.

Speaker 2: Since we closed the vaccine acquisition on June 30th, we've been working hard transferring operations in 27 countries worldwide. On October 1st, we began marketing the product in the United States using a contract sales force combined with our internal sales team. Around the world, we have signed agreements with third-party logistics and local companies to help us set up the needed distribution network.

Since we closed the vaccine me acquisition on June 30th we've been working hard transferring operations in 27 countries worldwide. In October 1st we began marketing the product in the United States using a contract sales force combined with our internal sales team around the world. We have signed agreements with third party logistics and local companies.

To help us set up they needed distribution networks, we have already transferred the NDA in the United States. The Amp Istar and we are working on transferring the marketing authorizations in other countries as quickly as possible we plan to transfer distribution in the United States in the first quarter of next year and other countries as soon as possible.

Speaker 2: We have already transferred the NDA in the United States to Ampistar, and we are working on transferring the marketing authorizations in other countries as quickly as possible.

Speaker 2: We plan to transfer distribution in the United States in the first quarter of next year and other countries as soon as possible after that.

After that.

Speaker 2: Vaximi recorded its highest sales ever this quarter, continuing a growth trend we expected. Due to the seasonality of the product, the third quarter represents approximately 31% of the annual sales.

Excuse me recorded its highest sales ever this quarter, continuing our growth trend, we expected due to the seasonality of the product the third quarter represents approximately 31% of the annual sales and.

Speaker 2: In addition to the commentary on our glucagon and primatine mists.

In addition to the commentary on our glucagon and private team missed offerings.

Speaker 2: The sustained performance of these products from the previous financial quarters is notable, specifically Glucagon, which generated $29.5 million in revenue, marking a substantial 107% increase over the same period last year.

The sustained performance of these products from the previous financial quarters is notable specifically glucagon, which generated $29 5 million in revenue, marking a substantial 107% increase over the same period last year. However, we know the glucagon sales peak in the third quarter was due to the increased back to school.

Speaker 2: However, we note that glucagon sales peak in the third quarter was due to the increased back-to-school demand and will typically normalize after the seasonal period.

Demand and will typically normalized after the seasonal period.

Speaker 2: As for primatine mist, the product realized an impressive 24.8 million in sales in the third quarter. This represents a noteworthy 35% increase compared to the corresponding period in the previous year. Primarily due to restock.

We're promising missed the product realized an impressive $24 8 million in sales in the third quarter. This represents a noteworthy 35% increase compared to the corresponding period in the previous year, primarily due to restocking by retailers. We continue to see unit retail growth in the 5% to 6% range.

Speaker 2: We continue to see unit retail growth in the 5% to 6% range and still project that Primatine Mist will reach the milestone of 100 million in sales by the end of 2024.

And still project that privacy Miss will reach the milestone of $100 million in sales by the end of 2024.

Speaker 2: Regarding our epinephrine and other finished pharmaceutical products, once again, we have been able to capitalize on competitor supply shortages.

Regarding our epinephrine and other finished pharmaceutical products. Once again, we have been able to capitalize on competitor supply shortages.

Speaker 2: Specifically epinephrine, which achieved a notable 19% increase in sales over the prior quarter and a 4% increase annually, amounting to $20.2 million in sales.

Specifically epinephrine, which achieved a notable 19% increase in sales over the prior quarter and a 4% increase annually amounting to $22 million in sales.

Speaker 2: Our lidocaine product also saw sales growth within our injectable products and shortage, registering a 10% increase over the last quarter. This performance reflects our agile response to market dynamics and the strategic positioning of our products to serve unmet market needs effectively.

Our lidocaine product also saw sales growth within our injectable products in shortage registering a 10% increase over the last quarter. This performance reflects our agile response to market dynamics and the strategic positioning of our products to serve unmet market needs effectively our commitment to providing.

Speaker 2: Our commitment to providing continuity of supply during periods of competitor shortage exemplifies our role as a reliable provider in the pharmaceutical landscape and supports our projection for sustained performance.

Continuity of supply during periods of competitor shortage exemplify exemplifies our goal as a reliable provider in the pharmaceutical landscape and supports our projection for sustained performance.

Speaker 2: As we address our adaptive response to evolving market conditions, the launch of Rexcovi, our proprietary naloxone nasal spray, is now scheduled for release in the first quarter of 2024 due to production needs for shortages projects.

As we address.

Our adaptive response to evolving market conditions, the launch of Rex Tovey, our proprietary naloxone nasal spray is now scheduled for release in the first quarter of 'twenty 'twenty four.

Two production needs for shortages project projects.

Speaker 2: products. Furthermore, due to the API supplier for our MPA injection, having discontinued manufacturing this API, we will have minimal to no sales of MPA over the insuring quarter.

Products. Furthermore, due to the API supplier for our M. P. A an injection having discontinued manufacturing. This API, we will have minimal to no sales of M. P. A over the ensuing quarters.

Speaker 2: We plan to resume manufacturing MPA following the anticipated FDA approval for qualification of the new API, which will be produced at our A&P facility. The FDA authorization will enable us to leverage our in-house production capabilities, ensuring a steady supply of MPA.

We plan to resume manufacturing M. P. A following the anticipated FDA approval for qualification of the new API, which will be produced at our A&P facility. The FTA authorization will enable us to leverage our in house production capabilities.

Ensuring a steady supply to meet market demand.

Speaker 2: I would now like to shift our dialogue on the progress within our pipeline and the regulatory endeavors related to our proprietary biosimilar and complex generic products.

I would now like to shift our dialogue on the progress within our pipeline and the regulatory endeavors related to our proprietary biosimilar and complex generic products regarding the regulatory progress of a M. P. 002, we acknowledged the delay beyond its initial could do for goal date we.

Speaker 2: Regarding the regulatory progress of AMP 002, we acknowledge the delay beyond its initial GDUFA goal date. We are currently engaged in the

We are currently engaged in discussions with the agency. The agency remains committed to moving the application forward in the regulatory review process as quickly as possible. There remains a significant market demand for this product, which would present itself as the first generic in the market niche exceeding 600 billion. According to our quiver.

Speaker 2: The agency remains committed to moving the application forward in the regulatory review process as quickly as possible.

Speaker 2: there remains a significant market demand for this product, which would represent itself as the first generic in the market niche exceeding 600 million, according to Equibion.

Speaker 2: Recognizing the need for generic options, we are dedicated to advancing our dialogue with the FDA.

Recognizing the need for generic options, we are dedicated to advancing our dialogue with the F. D. A.

Speaker 2: For our Terra Peritide ANDA, referenced as AMP 015, as previously stated, we have responded to the CRL. We have a goal date in the first quarter of 2024. This date adheres to the conventional schedule, allowing for an additional quarter's extension should a pre-approval inspection be necessary.

For our turret paratype Anda referenced this a M. P 015 as previously stated we have responded to the C. R. L. We have a goal date in the first quarter of 'twenty 'twenty four the state adheres to the conventional schedule, allowing for an additional quarters extension should a preapproval inspection would be necessary.

Speaker 2: In reference to our AMP008 inhalation ANDA, which received priority review status, we believe we have addressed the issues identified in the minor CRL. As a result, we have a GDUFA goal date set for the fourth quarter of this year.

In reference to our a M. P 008, inhalation Anda, which received priority review status. We believe we have addressed the issues identified in the minor C. R. L. As a result, we have it could do for goal date set for the fourth quarter of this year concurrently our a M. P 007 application.

Speaker 2: Concurrently, our AMP 007 application is progressing as planned and is scheduled for submission by the end of the year.

<unk> is progressing as planned and as scheduled for submission by the end of this year rich.

Speaker 2: Regarding our proprietary product intranasal epinephrine, identified as AMP019, we are diligently advancing through the clinical development phases in collaboration with the FDA.

Regarding our proprietary product inter nasal epinephrine identified as M. P 019, weird delight, we are diligently advancing through the clinical development phases in collaboration with the F. D. A.

Speaker 2: In alignment with our strategic objectives for our biosimilars, I am pleased to report today steady progress with AMP004, our Insulin Aspart Biosimilars.

In alignment with our strategic objectives for our Biosimilars I am pleased to report today steady progress with M. P zero zero for our insulin as part Biosimilar candidate we are on track to submit the BLA for this product by the end of this year with the intent of securing interchangeable status.

Speaker 2: We are on track to submit the BLA for this product by the end of this year with the intent of securing interchangeable status.

Speaker 2: In summary, the solid performance and strategic advancement detailed today underscore the strength and adaptability of our product portfolio in response to the competitive and regulatory environments we operate within.

In summary, the solid performance and strategic advancement detailed today underscore the strength and adaptability of our product portfolio in response to the competitive and regulatory environments. We operate with that our strong sales growth strategic pipeline advancements and regulatory foresight align with our company's sustained.

Speaker 2: Our strong sales growth, strategic pipeline advancements, and regulatory foresight align with our company's sustained growth and value creation vision.

And value creation vision well.

Speaker 2: We remain dedicated to advancing unmet medical needs as we continue to invest in our high-margin products and innovate in proprietary, biosimilar, and complex products. We are confident in our ability to capitalize on market opportunities and navigate industry challenges strategically.

We remain dedicated to advancing unmet medical needs as we continue to invest in our high margin products and innovate and proprietary Biosimilar and complex products. We are confident in our ability to capitalize on market opportunities and navigate industry challenges strategically.

Speaker 2: I would now like to turn the call over to our CFO and Executive Vice President of Finance, Bill Peters, to discuss the third quarter's financial results.

I would now like to turn the call over to our CFO and executive Vice President of Finance Bill Peters to discuss the third quarter's financial results. Thank you Dan.

Speaker 2: Thank you, Dan. Revenues for the third quarter increased 50% to $180.6 million and $120.1 million in the previous year's period.

Revenues for the third quarter increased 50% to 100 point $186 million from $121 million in the previous year's period, glucagon sales increased 107% to $29 $5 million from $14 $2 million as two suppliers left them.

Speaker 2: Lucagon sales increased 107% to $29.5 million from $14.2 million as two suppliers left the market and we experienced seasonally strong growth.

Market and we experienced seasonally strong back to school sales.

Speaker 2: Primatine mist sales grew to a new record of $24.8 million in the third quarter, which represents a sales growth of 35% from sales of $18.4 million in the third quarter of last year as retailers replenished their inventory.

Primacy net sales grew to a new record of $24 $8 million in the third quarter, which represents a sales growth of 35% from sales of $18 $4 million in the third quarter of last year as retailers replenish their inventories.

Speaker 2: Lidocaine sales increased to $15.5 million from $12.6 million due to higher unit volumes as a result of continued supplier shortages during the quarter.

Lidocaine sales increased to $15 $5 million from $12 $6 million due to a higher unit volumes as a result of continued supplier shortages during the quarter.

Speaker 3: Pythonodion saw increased competition as sales decreased 47% to $7.4 million from $14 million.

I tend to die on saw increased competition as sales decreased 47% to $7 $4 million from $14 million other.

Speaker 3: Other finished pharmaceutical product sales increased $14.1 million to $37.7 million on increased sales of legacy products such as dextrose, atropine, calcium chloride, and sodium bicarbonate, and on sales of newer launches including regadensin, ganarelx, and vasoprassin.

Other finished pharmaceutical product sales increased $14 $1 million to $37 $7 million on increased sales of legacy products, such as dexterous, atropine calcium chloride and sodium bicarbonate and on sales of newer launches, including rugged Denison Cana relics and vasopressin.

Speaker 3: This marks the first quarter of revenues from Vaximi. We recorded net revenues of $28.7 million, which corresponds to Ampthestar's net economic benefit from Vaximi.

This marks the first quarter revenues from vaccine me, we recorded net revenues of $28 $7 million, which corresponds to emphasize net economic benefit from vaccine me.

Speaker 3: This net economic benefit was calculated based on Eli Lilly's sales of $48.7 million, less their expenses of $20 million, which included cost of goods, selling expenses, and research and development expenses.

This net economic benefit was calculated based on Eli Lilly sales of $48 $7 million less their expenses of $20 million, which included cost of goods selling expenses and research and development expenses.

Yeah.

Speaker 3: We will continue to book revenues on a net basis until we begin distributing vaccine meat in 2024. This change will occur on a country-by-country basis.

We will continue to book revenues on a net basis until we begin distributing back see me in 2024.

This change will occur on a country by country basis.

Speaker 3: Our Insulin API business had sales of $4.2 million, up from $1.2 million last year, primarily due to the timing of order.

Our insulin API business had sales of $4 $2 million up from $1 $2 million last year, primarily due to the timing of orders.

Speaker 3: Cost of revenues increased to $72.2 million from $61.6 million. Gross margins improved to 60% of revenues from 49% on increased sales of higher margin products such as glucagon, primatine, mist, canna relics, and vasopressin.

Cost of revenues increased to $72 $2 million from $61 $6 million gross margins improved to 60% of revenues from 49% on increased sales of higher margin products, such as glucagon private team, Mr Kantor, Alex and vasopressin. Additionally.

Speaker 3: Additionally, revenues from vaccinia reported net of related expenses.

Additionally, revenues from vaccine me are reported net of related expenses.

Speaker 3: Selling, distribution, and marketing expenses increased 34% to $6.4 million from $4.8 million in the previous year's period due to Salesforce expansion expenses related to Baximi and increased advertising expenses for PrimateenMess.

Selling distribution and marketing expenses increased 34% to $6 $4 million from $4 $8 million in the previous year's period.

Due to sales force expansion expenses related to the vaccine me.

And increased advertising expenses for privacy mess.

Speaker 3: General and administrative spending increased 6% to $12.7 million from $12 million due to increased compensation and expenses related to Vaximi, which were partially offset by lower legal expenses.

General and administrative spending increased 6% to $12 $7 million from $12 million due to increased compensation and expenses related to vaccine me, which were partially offset by lower lower legal expenses.

Speaker 3: Research and development expenditures decreased 10% to $16.7 million from $18.5 million due to the timing of clinical trials and material expenses related to our insulin and inhalation pipeline products.

Research and development expenditures decreased 10% to $16 $7 million from $18 $5 million due to the timing of clinical trials and material expenses related to our insulin and innovation pipeline products.

Speaker 3: Our non-operating expense of $9 million compared to a non-operating expense last year of $600,000, primarily due to interest expense and costs incurred for the term loan we entered into to complete the vaccine acquisition and convertible debt issued this quarter.

Our non operating expense of $9 million compared to a non operating expense last year of $600000, primarily due to interest expense and cost incurred for the term loan we entered into to complete the vaccine me acquisition and convertible debt issued this quarter. These.

Speaker 3: These expenses were partially offset by mark-to-market adjustments related to our interest rate swap.

These expenses were partially offset by mark to market adjustments related to our interest rate swaps.

Speaker 3: Net income increased over 200% to $49.2 million, or $0.91 per share, in the third quarter, from $15.9 million, or $0.30 per share, in the third quarter of 2022. Adjusted net income also increased significantly to $61.9 million, or $1.15 per share, compared to an adjusted net income of $20.2 million, or $0.38 per share, in the third quarter of last year.

Net income increased over 200% to $49 $2 million or <unk> 91 per share in the third quarter from $15 $9 million or <unk> 30 per share in the third quarter of 2022. Adjusted net income also increased significantly to $61 $9 million or a dollar figure.

<unk> per share compared to an adjusted net income of $22 million or <unk> 38 per share in the third quarter of last year.

Speaker 3: Adjusted earnings excludes amortization, equity compensation, impairment of long-lived assets, and one-time events.

Adjusted earnings excludes amortization equity compensation, a permanent impairment of long lived assets and one time events.

Speaker 3: In the quarter, we had cash flow from operations of approximately $64.3 million. We issued $345 million of convertible notes in September and used $200 million of the proceeds to concurrently pay down our term loan and $50 million to buy back approximately 1.1 million shares of our common stock.

In the quarter, we had cash flow from operations of approximately $64 $3 million, we issued $345 million of convertible notes in September and used $200 million of the proceeds to concurrently pay down our term loan and $50 million to buy back approximately one 1 million shares of our common stock.

Speaker 3: Subsequent to the end of the quarter, we paid down an additional $50 million of our term loan.

Subsequent to the end of the quarter, we paid down an additional $50 million of our term loan.

Speaker 3: When we entered into the term loan, we hedged $250 million of the loan by swapping into a fixed rate for five years. At this point, we do not have any more floating rate debt, which will enable us to lower our interest expense in the coming years.

When we entered into the term loan we hedged $250 million alone by swapping into a fixed rate for five years at this point, we do not have any more floating rate debt, which will enable us to lower interest expense in the coming years.

I'll now turn the call back over to Dan.

Speaker 2: Thank you, Bill, for the updates. With that, we'll now take your questions. Operator, please open the line for Q&A.

Thank you bill for the updates.

That will now take your questions operator, please open the line for Q&A.

Speaker 1: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate you're lined into the question queue.

Thank you well now be conducting a question and answer session. If you'd 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'd like to remove your question from the queue for participants using speaker equipment may be necessary to pick up your handset before pressing the star keys.

Speaker 1: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment, please while we poll for questions.

Speaker 1: Thank you. Our first question is from Glenn Santangelo with Jeffreys. Please proceed with your question.

Thank you. Our first question is from Glen Santangelo with Jefferies. Please proceed with your question.

Speaker 4: Oh, yeah. Thanks, guys. Thanks for taking my question. Hey, Bill, I want to start out talking about vaccine because obviously I think this is a bigger result than most of all of us were expecting. You know, when you look at the sales generated, you know, by literally 48, 49 million dollars, I mean, I thought, you know, at least in your in your most recent sort of marketing deck, we were talking about, you know, closing out this year at 145 to 155 million annualized.

Oh, yeah. Thanks, guys. Thanks for taking my question Hey.

Hey, Bill I wanted to start out talking about back see me because obviously.

This is a bigger result, and most of all of US were expecting you know when you look at the sales generated by Lilly 48, $49 million I mean, I I thought you know at least in your in your most recent sort of marketing deck. We were talking about you know closing out this year at 145 to 155 million annualized.

Speaker 4: you know, with the potential to get the peak sales of 250 to 275. I mean, how do you think about those targets that you had previously laid out relative to, you know, the fact that Lilly almost did 49 million in residence quarter?

You know with the potential to get to peak sales of $2 50 to $2 75, I mean, how do you think about those targets that you had previously laid out relative to you know.

The fact that that's literally almost paid $49 million and raised this quarter.

Speaker 3: Well, two things. One, first of all, thanks for noticing the.

Well two things one first of all thanks for noticing the the projections and seeing the updated slide deck, because we did update the projections from previous Ah number to increase that slightly and the big thing about this is that this is a back to school quarter. So the third quarter has historical.

Speaker 3: the projections and seeing the updated slide deck because we did update the projections from a previous number to increase that slightly. And the big thing about this is that this is a back-to-school quarter, so the third quarter has historically been the high point of the year.

Lee.

Been the high point of the year. So we expect sales will drop going into the fourth quarter and that's just been the trend. If you take a look at the graph of the the script. There. It gives you a script data you see it really doesn't have a big peak in the August September time frame. So so we expect it to decrease but but that said.

Speaker 3: So we expect sales will drop going into the fourth quarter, and that's just been the trend. If you take a look at the graph of the.

Speaker 3: The script that I give you a script data you see it really does have a big peak in the August September time frame

Speaker 3: So we expect it to decrease, but that said, the $250 million to $275 million is...

The $2 50 to $2 75 million.

A million is it still just a forecast that we have at this point and we think we have a very good plan to get to that could we beat that forecast I think we possibly could so its just right now are certainly something that we could do and we didn't want to set a forecast that was something that we'd ever have to lower so.

Speaker 3: Is still just a forecast that we have at this point and we think we have a very good plan to get to that um, could we uh beat that forecast I think we possibly could so um, it's just right now, uh, certainly something that we could do and we didn't want to set a forecast that was

Speaker 3: something that we'd ever have to lower. So I'm glad to say that we did increase it once already.

I'm glad to say that we did increase it once already.

Speaker 4: All right, that's helpful. I appreciate that. Maybe I should ask one other quick question, maybe a high-level question.

Alright, that's helpful. I appreciate that maybe just one other quick question, maybe a high level question you know the quarter. You know there is always benefits to some extent from shortages in one product or another and it's always you know hard sitting in our seats to sort of forecast which ones.

Speaker 4: You know, the quarter, you know, it always benefits to some extent from shortages in one product or another, and it's always, you know, hard sitting in our seats to sort of, you know, forecast which ones.

Speaker 4: You know, is there anything specifically you'd call out going on in the market this quarter like

Is there anything specifically you'd call out going on in the market this quarter like.

Speaker 4: You know, obviously, lidocaine benefited again, epinephrine benefited. Bitonavine, obviously, was the opposite. And, you know, we know that Pfizer had some manufacturing issues.

Obviously lidocaine benefited again epinephrine benefited cytarabine, obviously was the opposite.

We know that the Pfizer had some manufacturing issues.

Speaker 4: So unfortunate issues, but is there anything specifically this quarter that you you may call out that that may have a little bit more

So unfortunate issues, but is there anything specifically this quarter that you you may call out that that may have a little bit more sustained a more sustained impact or or something you know.

Speaker 4: a more sustained impact or something, you know, to the opposite, might have a little bit of a shorter duration to it.

To the opposite might have a little bit more of a shorter duration to it.

Speaker 3: Yes, so you did mention the lidocaine. One of our lidocaine SKUs is on shortage, and we're producing as much of that as possible. But there's three right now where we're the only one in the country making them, and that's.

Yeah. So you did mention the lidocaine one of our lidocaine Skus is on shortage and we're producing as much as that is possible, but yet there's three right now where we're the only one in the country, making them and that's dextra sodium bicarbonate and also the ERP a syringe prefilled syringe that's used in our emergency rooms.

Speaker 3: dextrose, sodium bicarbonate, and also the epi.

Speaker 3: syringe, prefilled syringe that's used in emergency rooms. So those three things are, we're just making as much of those things as we can. And we don't know when our competition will be back on the market, but it looks like that's gonna at least go into at least the second quarter of next year from what we understand for those products.

So those three things are we're just making as much to those things as we can and we don't know when our competition will be back on the market, but it looks like that's going to at least go into at least the second quarter of next year from from what we understand for those products. So that that's what we.

Speaker 3: That's what we can garner out of that. And, you know, as I think we mentioned and also as in the presentation, because of our attempt to...

We can garner out of that and you know as as I think we mentioned and also as in the presentation because of our attempt to take.

Speaker 3: Take care of the market for these shortages. We've had to delay once again the launch of our intranet and the lock zone because it runs on the same equipment at our IMS facility. So, you know, we had an opportunity to.

Take care of the market for these shortages we've had to delay once again the launch of our intranasal naloxone because it runs on the same equipment at our IMS facility. So you know we had the opportunity to.

Speaker 3: launch that or satisfy some of the demand for these shortage products, we decided it was more prudent to make more of the shortage products to try to help the market out of the situation that it's in right now.

Launch that or satisfy some of the the demand for these shortage products and we decided it was more prudent to make more of the shortage products to try to help the market out of the situation of 10 right now.

Perfect. Thanks for the update I appreciate it.

Yeah.

Speaker 1: Thank you. Our next question is from Tim Chang with Capital One. Please proceed with your

Thank you. Our next question is from Tim Chiang with capital. One. Please proceed with your question.

Speaker 5: All right. Thanks, Bill. Good quarter. Maybe you could talk just a little bit about the rebound in primatine miss sales, how that might have contributed to your higher gross margins this quarter as well.

Hi, Thanks, good quarter.

Maybe you could talk just a little bit about the rebound in prime attained missed sales you know how that might have contributed to higher gross margins this quarter as well.

Speaker 3: Yeah, so two things. One, really the biggest thing to the gross margin is the fact that vaccine is on a net basis. So it's 100% margin product right now. So all the expenses are taken out before we book that revenue because of the accounting guidance that we have to follow. So that's really the big driver to get to that 60%. But as far as primatine missed goes, it's basically what we've been saying the last two quarters.

Yeah. So two things one really the biggest thing to the gross margin was the fact that vaccine is on a net basis. So its 100% margin product right now so all the expenses are taken out before we book that revenue because of the new accounting guidance that we have we have to follow so that that's really the big driver to get to get to that.

At 60%, but as far as private seen missed goes I mean, it's basically what we've been saying in the last two quarters is yeah. It's it was growing at the retail level in the first quarter, but our sales were down it was growing at the retail level in the second quarter, but our sales were down that indicated to us that there was a contraction in the law.

Speaker 3: You know, it was growing at the retail level in the first quarter, but our sales were down. It was growing at the retail level in the second quarter, but our sales were down. That indicated to us that there was a contraction in the level of inventory at retailers.

Level of inventory at retailers. It reversed this quarter are the growth has actually been relatively steady at about five or 6% a quarter. This year, five or 6% every quarter. This year and that you've seen this big fluctuation in our volumes and that's just really has to do with the inventory. So this is we believe in inventory stocking.

Speaker 3: it reversed this quarter. The growth has actually been relatively steady at about five or six percent a quarter this year, five or six percent every quarter this year.

Speaker 3: And but you've seen this big fluctuation in our vines and that's just really has to do with the inventory. So this is.

Speaker 3: believe an inventory stocking ahead of what's usually the biggest two quarters of the year for primacy. Mr. Usually the fourth quarter and the first quarter. So I think we got a little bit of that carryover into the first quarter because the retail

Head of what's usually the biggest two quarters of the year for privacy, Mr. Usually the fourth quarter and the first quarter. So I think we got a little bit of that carryover into the first quarter because of the retailer retailers had lowered their inventory levels going into this quarter.

Speaker 3: Retailers had lowered their inventory levels going into this quarter

Speaker 5: Got it. And I guess with Baximi, you're still going to report net economic benefit from Baximi in the fourth quarter, but obviously that number probably will be less, right? Because the third quarter obviously was the strongest quarter for the year. Is that right?

Got it.

With back to Jimmy.

You're still going to report net net economic benefit from <unk> in the fourth quarter, but obviously that number probably will be less right because.

The third quarter, obviously, it was the strongest quarter for the year is that right.

Speaker 3: That's correct. The other thing, well, there's going to be a couple forces that kind of go in different directions for that because starting in the fourth quarter, we are doing our own marketing.

That's correct, but the other thing.

Theres going to be a couple forces that kind of go in different directions for that because starting in the fourth quarter, we are doing our own marketing our own selling for that so that's where the expenses that will now be our selling line and it will not be borne by Lilly. So they will have a lower expense that's that's.

Speaker 3: our own selling for that, so that's going where the expense for that will now be on our selling line and it will not be borne by Lilly. So they will have a lower expense that's that that's usually deducted. So there, you know, as we saw the Lilly sales were, you know, close to 49 million dollars, so we expect that that their top line number to decrease.

That's used to deduct that so there you know as we saw the Lilly sales. We're now close to $49 million. So we expect that that their top line number to decrease and as Dan had mentioned that you know historically been about 31% of the annual sales into the third quarter. So it's definitely higher than the other quarters, but the.

Speaker 3: And as Dan had mentioned, it's historically been about 31% of the annual sales in the third quarter. So it's definitely higher than the other quarters, but the deductions will be a little bit lower.

<unk> will be a little bit lower as well so the selling expense that they the tactical Mafia is high so we'll still have their cost of goods distribution expenses and a little bit of R&D work that as they continue at a couple of the R&D studies that were ongoing so those expenses will still be borne in that gross that number and I know, it's a little bit.

Speaker 3: So the selling expense that they deduct will not be as high. So we'll still have their cost of goods, their distribution expenses.

Speaker 3: and a little bit of R&D work as they continue out a couple of the R&D studies that were ongoing.

Speaker 3: So those expenses will still be borne in that gross net number. And I know it's a little bit confusing, but it's a moving piece. And as we've mentioned, we plan to take our distribution in the United States in the first quarter.

Confusing, but yeah, it's a moving piece and as you know and.

We've mentioned, we're going to we plan to take over distribution in the United States in the first quarter of next year. So and then the rest of the world will follow depending on the timing of it.

Speaker 3: So, and then the rest of the world will follow depending on the timing of.

Speaker 3: signing of certain contracts and also the transfer of the marketing authorizations and various locales.

Signing of certain contracts and also the transfer of the marketing authorizations in various locales.

Speaker 5: Okay, just one last question then, Bill. Is the 60% gross margin, is that sort of your new going forward?

Okay. Just one last question then.

Is the 60% gross margin is that sort of your new.

Going forward.

Speaker 5: type of run rate, now that you have vaccine?

Type of run rate.

Now that you have that semi.

No because remember because vaccine me that that debt.

Speaker 3: had our net economic benefit was at 100% margin. So the net economic benefit that we get next quarter will also be at 100%

We had a net economic benefit was at 100% margin. So the net economic benefit that we get next quarter will also be at 100% margin, but how.

Speaker 3: we move forward, we will, you know, we will have to start incurring the revenues and the cost of goods. So in the future...

As we move forward, we will we will have to we will start.

Incurring the revenues and the cost of goods. So in the future our revenue number goes up but our cost of goods number goes up as well so instead of a vaccine being 100% margin product, it's going to be something that's well above our corporate average, but it will still have a cost associated with it once we begin distributing in locales.

Speaker 3: well. So instead of vaccine being a hundred percent margin product, it's going to be something that's well above our corporate average, but it will still have a cost associated with it once we begin.

Around the world and I know, that's a little bit complicated and a little bit that's gonna be country by country basis. So it's not all of it doesn't all happen at once.

Speaker 3: uh... and country by country basis so it's not all of them all happen at once

Speaker 5: Right, got it. I think historically, what, U.S. vaccine sales had made up about, what, 80% of the total vaccine pie? That's correct.

Right got it and I think historically, what U S. <unk> had made up about 80% of the total back to me.

Hi.

Okay.

Okay.

Yeah.

Speaker 1: Thank you. Our next question is from David Anselm with Piper Sandler. Please proceed with your question.

Thank you. Our next question is from David Ansell them with Piper Sandler. Please proceed with your question.

Hey, this is Tim on for David Thanks for taking the questions a few from us and apologies if there's a little overlap here.

So on vaccine Mi I guess stepping back what's your overall view on the glucagon rescue market growth, both near term and longer term.

With respect to your sales force what do you think in terms of sizing I mean is that going to be a contract sales organization or will be internal and when do you expect for them to hit the field and then second on the glucagon injections generic could you speak to how penetrated you are in the institutional setting and the extent to which you've been able to.

Speaker 6: uh... and then second on the group of on injection generic

Speaker 6: Could you speak to how penetrated you are in the institutional setting and the extent to which you've been able to leverage your expanded manufacturing capacity? And over time, how big do you think the opportunity is in that setting?

Leverage our expanded manufacturing capacity and over time, how big do you think the opportunity is in that setting and then last on the shortage products can you talk to the extent to which you will continue to benefit from shortages in 2024, and I know you've called out those three products.

Speaker 6: And then last, on the shortage products, can you talk to the extent to which you'll continue to benefit from shortages in 2024? I know you called out those three products that the competitors aren't making right now, but beyond that, what is the impact of the shortages gonna look like next year relative to this year? Thanks.

Its competitors aren't aren't making right now, but beyond that what what is the impact of the shortage is going to look like next year relative to this year.

Speaker 3: Okay, so the first one I got was overall glucagon growth. And so, you know, as we've said, we think that Baximi is going to grow for us. It's going to be somewhere in the $250 to $275 million revenue range product for us.

Hey, so the first one I got was overall glu overall glucagon growth and so you know as we've said we think that vaccine. He is going to grow for us it's going to be somewhere in the $250 million to $275 million revenue range product for us at peak.

Speaker 3: So that's really strong growth from where we are today, which is some are annualizing around 150 million dollars.

So that's really strong growth from where we are today, but just some are annualizing around $150 million.

Speaker 3: revenues. We do think that some of that market share comes out of the traditional glucagon, the generic glucagon that we're selling today. However, our current glucagon generics is also used as a diagonal.

Revenues, we do think that some of that market share comes out of the traditional glucagon the generic glucagon that we're selling today. However, our current glucagon generic is also used as a diagnostic aid and because it's used as a diagnostic aid that doesn't go.

Speaker 3: because it's used as a diagnostic aid, that doesn't go away with the conversion to vaccine because it's...

[noise] away with the conversion to vaccine because it's and vaccines is not indicated for that.

Speaker 3: On the sales force, we haven't said how many sales people we have, but we do have said that we have a contract sales force that we did engage. They began selling on October 1st, so they're out there right now marketing the product, so we'll have that expense in our P&L and the selling expense line from now on. We've also repurposed some of our internal sales force to be backseam-y.

On the sales force, we haven't said how many sales people we have but we do have said that we have a contract sales force that we did engage they began selling on October 1st so they're out there right now marketing the products. So the we will have that expense in our P&L in the selling expense line in from from now on we are also.

Reed you repurpose some of our internal sales force to be vaccine my salespeople as well. So there also one on the job, but they're there they're already doing this you know they trained.

Speaker 3: failed people well so they're also on on the job but they're they're they're already doing that you know they trained uh... all the people were trained during the uh... the third quarter and ready to hit the ground running at the beginning of the fourth quarter so that definitely something that's uh...

All of these people were trained during the third quarter and ready to hit the ground running at the beginning of the fourth quarter. So that's definitely something that's ongoing.

Ongoing.

Speaker 6: And the glucagon injection, the second...

On the glucagon injection.

The segment that I think.

Speaker 6: I think the glue gun injection sales about 31% in the retail space and about 69% in the non-retail space.

Got injected sales about 31% in the retail space and about 69% in the non retail space.

Speaker 6: So that's the different breakup there.

So that's the different break up there and then.

Speaker 2: One of the last questions, shortage on the shortage products. We see shortage products every single quarter for as long as we've been...

What was the last question the shortage on the shortage products.

We see shortage products every single quarter for as long as we've been.

Speaker 6: reporting, reporting our sales. So, you know, somewhere, some product somehow is always in need. Currently, because of certain issues, we have a little more shortage products, and we're just happy that we planned accordingly and are able to meet those needs at this time.

[laughter] reporting reporting.

[noise] ourselves so.

You know somewhere some products somehow it is always Ah indeed, currently because of a certain issues Oh.

We have a little more shortage products and were just happy that we planned accordingly and are able to.

Meet those needs at this time, Yeah, and then just going back to <unk> to elaborate on what Dan said, Yeah, I've I've been at the company now a nine and a half years and every quarter, we've had some benefit from other.

Speaker 3: Yeah, and just going back to elaborate on what Dan said, you know, I've been in the company now nine and a half years and every quarter we've had some benefit.

Speaker 3: from other competitors having shortage problems. And it's frequently the dextrose and the sodium bicarbonate. Sometimes it's epinephrine. Sometimes it's phytonodione. Sometimes it's linocaine. Sometimes it's atropine or calcium chloride. But there's always something that's going on in the market. And because we've built that extra capacity about three or four years ago, we've been able to capitalize on it over the last several years. And it's something that we did.

Other competitors, having shortage problems and it's frequently the dexterous and the sodium bicarbonate, sometimes it's up in that friends, sometimes it's phytonadione, sometimes it's Atlanta can sometimes its atropine calcium chloride, but there is always something that's going on in the market and because we you know we built that ex the extra capacity about three or four.

Two years ago, we've been able to capitalize on it over the last several years and that's something that.

Speaker 3: And, you know, it's working out well for us.

We did a strategic decision and it's working out well for us.

Yeah.

Great. Thanks for taking the question.

Yeah.

Speaker 1: Thank you. There are no further questions at this time. I would like to hand the floor back over to Mr. Dan Dishner for any closing comments.

Thank you there are no further questions at this time I would like to hand, the floor back over to Mr. Dan Dishner for any closing comments.

Speaker 2: I want to thank everyone for joining us today. We would like to characterize 2023 as a year of execution amongst our key high margin products.

I want to thank everyone for joining us today, we would like to characterize 2023 is a year of execution amongst our key high margin products.

Speaker 6: and the further enhancement of our company portfolio within the proprietary product segment, especially with Vaximi. We look forward to updating...

And the further enhancement of our company profile portfolio within the proprietary products segment, especially with vaccine me. We look forward to updating you all again have a great day.

Speaker 1: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

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

Okay.

Yeah.