Q4 2023 Amphastar Pharmaceuticals Inc Earnings Call
Unknown Executive: Greetings and welcome to the Amphastar Pharmaceuticals fourth quarter earnings call. At this time, all participants are in a listen-only mode.
Greetings and welcome to the <unk> Pharmaceuticals fourth quarter earnings call.
At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Unknown Executive: 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 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. 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 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 the U.S. GAAP may be found in our earnings release.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
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. We encourage you to review the section entitled forward looking statements in the press release issued today and the presentation.
And on the company's website.
Also please refer to our SEC filings, which can be found on our website and the Sec's Mike.
For a discussion of numerous factors that may impact our future performance.
We will also discuss certain non-GAAP measures.
More information on our use of these measures and reconciliations to U S. GAAP may be found in our earnings release. Please note. This conference call is being recorded.
Unknown Executive: Please note this conference call is being recorded. Our speakers today are Mr. Bill Peters, CFO, Mr. Dan Dischner, Senior Vice President of Corporate Communications, and Mr. Tony Marrs. Executive Vice President of Regulatory Affairs and Clinical Operations. I will now turn the conference over to your host, Mr. Dan Dischner, Senior Vice President of Corporate Communications. Dan, you may begin.
Our speakers today are Mr. Bill Peters CFO, Mr. Grant Dishner senior Vice President of corporate Communications, Mr. Tony Marrs.
Executive Vice President of regulatory Affairs, and clinical operations I will now turn the conference over to your host Mr. Dan Fisher Senior Vice President for corporate Communications, Dan you may begin.
Dan Dischner: Thank you, Paul. Good afternoon, and thank you all for joining us today. On the call with me will be Bill Peters, CFO and Executive Vice President of Finance, and Tony Marrs, Executive Vice President of Regulatory Affairs and Clinical Operations. Throughout 2023, our strategic focus remained on driving momentum across our core high-margin offerings while bolstering our presence in the complex product segments of our portfolio. This includes our strategic acquisition of back, and recent advancements in our interchangeable biosimilar development with our first BLL filing for Insulin Aspart or AMP004. Earlier today, we announced financial results for the 2023 fiscal year, highlighted by our net revenues, which have surged to an impressive $644 million, representing a substantial 29% increase annually. This remarkable growth is further seen by a notable 41% increase in gross profit and a 51% increase in net income compared to the previous year. Our growth is attributed to our high-margin products, notably within our diabetes portfolio, featuring glucagon injection and our recent addition of Vaximi, alongside our other branded product, primatine. Moreover, our hospital and clinic use products such as epinephrine, dextrose, and sodium bicarbonate continue to experience heightened demand driven by shortages amongst other suppliers.
Thank you Paul Good afternoon, and thank you all for joining us today on the call with me will be Bill Peters, CFO and executive Vice President of Finance and Tony Marrs Executive Vice President of regulatory affairs and clinical operations.
Throughout 2023, our strategic focus remains on driving momentum across our core high margin offerings, while bolstering our presence in the complex product segments of our portfolio. This includes our strategic acquisition of vaccine me and recent advancements in our interchangeable Biosimilar development with our first BLA filing for insulin ASP.
Part of our a M P 004.
Earlier today, we announced financial results for the 2023 fiscal year highlighted by our net revenues, which have surged to an impressive 644 million representing a substantial 29% increase annually. This remarkable growth is further seen by a notable 41% increase in gross profit and a 51% increase.
And net income compared to the previous year.
Our growth is attributed to our high margin products, notably within our diabetes portfolio, featuring glucagon injection and a recent addition of vaccine me alongside our other branded product private teen missed Moreover, our hospital and clinic use products, such as epinephrine dextrose and sodium bicarbonate continue to experience heightened demand.
Driven by shortages amongst amongst other suppliers.
Dan Dischner: Looking toward 2024, we expect our Glucagon Injection, Vaximi, and Primatine Mist products to continue to drive revenues, and we anticipate a sustained demand for our hospital and clinical use products. We anticipate potentially four product launches. We are excited about our upcoming launch of Rextovi, our intranasal naloxone, which uses our proprietary device. For AMP015 or Teraparatide, our progress towards its GDUPA date remains on track for a second quarter. This filing is undergoing a pre-approval inspection, marking a step forward in the regulatory process.
Looking toward 2024, we expect our glucagon injection vaccine me and private mis products to continue to drive revenues and we anticipate a sustained demand for our hospital and clinical use products we anticipate.
Potentially for product launches. This year, we're excited about our upcoming launch of Rex Tobey, our intranasal naloxone, which uses our proprietary device.
For a M. P zero, one fiber carat pair tied our progress towards its can do per day remains on track for our second quarter.
This filing is undergoing a preapproval inspection, marking a step forward in the regulatory process.
Dan Dischner: As for AMP-002, ongoing dialogue with the agency in pursuit of a favorable determination indicates the agency's commitment despite a delay in its GDUFA implementation. The market demand for this product remains robust, presenting an opportunity as the first generic contender in a market exceeding $500 million, according to Equivion. As for AMP-008, our first inhalation ANDA, which received priority review status. We have a GDUFA goal date in the second quarter of this, and our AMP-007 inhalation ANDA, which was filed in the fourth quarter of 2023, we have a GDUFA date in the fourth quarter of 2024. There is a paragraph 4 certification with this ANDA.
As for a M P zero zero to ongoing dialogue with the agency in pursuit of a favorable determination indicates the agency's commitment. Despite a delay in its <unk> date the market demand for this product remains robust presenting an opportunity is the first generic contender in a market exceeding 500 million according to our quiver.
As a M. P 008, our first inhalation Anda, which received priority review status.
We have a good do for gold day in the second quarter of this year.
And our a M. P 007, inhalation Anda, which was filed in the fourth quarter of 2023, we have a <unk> date in the fourth quarter of 2024, there is a paragraph four certification with this anda.
Dan Dischner: As for updates on Baximi, the progress of the transition from Lilly continues as planned, and sales pulled $28.7 million in the fourth quarter, a figure slightly impacted by anticipated seasonality factors. As expected, the transfer is going smoothly as we took over U.S. marketing in October. We began shipping the two-pack of vaccinia in the United States at the beginning of February and will start shipping the one-pack in March.
As for updates on vaccine me the progress of the transition from Lilly continues as planned and sales totaled $28 7 million in the fourth quarter, a figure slightly impacted by anticipated seasonality factors as expected. The transfer is going smoothly as we took over U S. Marketing in October we began shipping the two pack.
<unk> see me in the United States at the beginning of February and will start shipping. The one pack in March looking forward, we remain optimistic about the trajectory of this product as we continue to take over worldwide distribution from Lilly throughout 2024.
Dan Dischner: Looking forward, we remain optimistic about the trajectory of this product as we continue to take over worldwide distribution from Lilly throughout 2021. Having discussed the main drivers of our revenue and the impact of market nuances on our quarterly performance, I want to pivot the discussion towards our pipeline and regulatory affairs concerning our proprietary, biosimilar, and complex generic products, starting with our Insulin Aspartam. We firmly believe our BLA application, aimed at securing interchangeable status, will not only mark a significant advancement for our diabetes portfolio, but will also demonstrate our commitment to leveraging our robust U.S.-based capabilities. This strategic move is poised to solidify our position as a frontrunner in being a proud U.S. finished interchangeable biosimilar insulin manufacturer and supplier. This aspect sets us apart in an increasingly competitive landscape.
Having discussed the main drivers of our revenue and the impact of market nuances on our quarterly performance I want to pivot the discussion towards our pipeline and regulatory affairs concerning our proprietary biosimilar and complex generic products.
Starting with our insulin as part filings.
We firmly believe our BLA application aimed at securing interchangeable status well not only mark a significant advancement for our diabetes portfolio, but will also demonstrate our commitment to leveraging our robust U S based capabilities. The strategic move is poised to solidify our position as a front runner in being a proud U S.
Interchangeable biosimilar insulin manufacturer and supplier.
This aspect sets us apart in an increasingly competitive landscape as the demand for more affordable options for diabetic patients continues to surge we are poised to meet this need with our U S manufacturing site.
Dan Dischner: As the demand for more affordable options for diabetic patients continues to surge, we are poised to meet this need with our U.S. manufacturing site. Furthermore, we believe this milestone will pave the way for success of our other insulin products currently in development, including AMP-004M or Insulin Aspar-M, AMP-005 recombinant human insulin, and AMP025 Insulin Degladec, which development continues to advance. Additionally, while on the topic of our diabetes pipeline, our GLP-1 ANDA, in development known as AMP-018, remains on track for a filing this, In reference to our proprietary product, intranasal epinephrine, or AMP-019, this product continues to progress through the various development stages. Concluding my remarks and looking ahead, Amphastar has significant opportunities in front of, Supported by our sustained growth and strategic initiative. With the imminent launches of Rextovia and promising candidates like Teraparatide, AMP 002, and AMP 008, we are optimistic about our trajectory.
Furthermore, we believe this milestone will pave the way for success of our other insulin products currently in development, including a M. P zero zero for EM or insulin as far M. A M. P 005, recombinant human insulin and A&P zero to five insulin deadwood deck, which development continues to advance.
Additionally, while on the topic about diabetes pipeline our G. L. P. One anda in development known as M. P 018 remains on track for a filing this year.
In reference to our proprietary product inter nasal epinephrine or a M. P. 019. This product continues to progress through the various development stages.
Concluding my remarks, and looking ahead.
The star has significant opportunities in front of us supported by our sustained growth and strategic initiatives.
With the eminent launches of Rex Tobey and promising candidates like Terra paratype M. P 002, and a M. P 008, we are optimistic about our trajectory.
William J. Peters: Our annualized performance underscores the resilience and diversity of our portfolio, signaling growth potential. Moving forward, our dedication to growth is evident through our R&D advancements, which is the engine of our company, and our planned expansion efforts within our inhalation pipeline at our Armstrong.., our continued API expansion at our A&P facility, which is anticipated to be completed this year, and our capacity expansion at our headquarters to capitalize on our insulin and complex injectable opportunities. I would like to turn the call over to our CFO and Executive Vice President of Finance, Bill Peters, to discuss the fourth quarter and year-end financial... Thank you, Dan.
Annualized performance underscores the resilience and diversity of our portfolio signaling signaling growth potential moving forward our dedication to growth is evident through our R&D advancements, which is the engine of our company and our planned expansion efforts within our inhalation pipeline at our Armstrong facility our continued API expansion.
At our A&P facility, which is anticipated to be completed this year and our capacity expansion at our headquarters to capitalize on our insulin and complex injectable opportunities I would like to turn the call over to our CFO and executive Vice President of Finance Bill Peters to discuss the fourth quarter and year end financial results.
Thank you Dan sales for the fourth quarter of 2023 increased 32% to $178 $1 million from $135 million in the fourth quarter of 2022 vaccine contributed $22 $5 million to net sales based on Eli Lilly sales of $37 six.
William J. Peters: Sales for the fourth quarter of 2023 increased 32%. $178.1 million from $135 million in the fourth quarter of 2022. Maximi contributed $22.5 million to net sales based on Eli Lilly's sales of $37.6 million plus cost of revenues and transition service fees of $15.2 million. Glucagon sales increased 70%, growing to $31.2 million from $18.3 million as the discontinuation of other injectable glucagon products from two suppliers at the end of 2022 positively impacted demand. Primacy Myths continues to show strong sales growth during the quarter with sales up, Sales of $24.5 million, up 10% from $22.3 million in the prior year period.
Yeah.
Plus cost of revenues and transition service fees of $15 $2 million.
Lukas on sales increased 70% growing to $31 $2 million from $18 $3 million as the discontinuation of other injectable glucagon products from two suppliers at the end of 2022 positively impacted demand.
I haven't seen Mis continued to show strong sales growth during the quarter with sales up.
Sales of $24 $5 million up 10% from $22 $3 million in the prior year period.
William J. Peters: Epinephrine showed strong sales in the fourth quarter amid continued shortages by our competitors, growing to $24.6 million from $21.4 million in the previous year's period. Linocaine showed growth of 13% to $15 million in the current quarter from $13.3 million in the fourth quarter of 2022, as we were able to increase capacity and decrease our back order. Other finished pharmaceutical product sales increased 6% to $35 million in the fourth quarter of 2023, compared to $33.1 million from 2022, as the company recorded stronger sales due to the launch of oregadenosin earlier in 2023, and increased unit sales of atropine, calcium chloride, sodium bicarbonate, and ganarelx, which were partially offset by lower sales of medroxyprogesterone. As the company was in the process of transferring the API production for that product to its facility in China.
I first showed strong sales in the fourth quarter amid continued shortages by our competitors growing to $24 $6 million from $21 $4 million in the previous year's period.
<unk> showed growth of 13% to $15 million in the current quarter from $13 $3 million in the fourth quarter of 2022, as we were able to increase capacity and decrease our back order other.
Other finished pharmaceutical product sales increased 6% to $35 million in the fourth quarter of 2023 compared to $33 $1 million from 'twenty to 'twenty two as the company recorded stronger sales due to the launch of rugged Denison earlier in 2023 and increased unit sales of atropine calcium chloride sodium bicarbonate in Ghana.
Alex which were partially offset by lower sales of them medroxyprogesterone as the company was in the process of transferring the API production for that product to its facility in China.
William J. Peters: Gross margins increased to 54% of revenues in the fourth quarter of 2023 from 53% of revenues in the fourth quarter of 2022, due to Baximi sales, which are a recorded net of the Lilly's expenses, and to strong sales of higher margin products like glucagon and primatine mist. These positives are partially offset by an inventory reserve of $3.6 million for Insulin API due to our amended contract with Mankind, which delays required purchase. Selling, distribution, and marketing expenses increased to $8.6 million from $5.5 million due to the expansion of our sales and marketing efforts for vaccine, as we begin detailing the product at the beginning of October. General and administrative expenses increased to $13.1 million from $10.6 million in the prior year due to vaccine-related expenses and higher personnel costs.
Gross margins increased to 54% of revenues in the fourth quarter of 2023 from 53% of revenues in the fourth quarter of 2022 due to vaccine sales, which are reported net of lilly's expenses and to strong sales of higher margin products like glucagon and privacy missed.
These positives were partially offset by an inventory reserve of $3 $6 million for insulin API to our amended contract with Mannkind, which delays required purchases.
Selling distribution and marketing expenses increased to $8 $6 million from $5 $5 million due to the expansion of our sales and marketing efforts for vaccine me.
As we began detailing the product at the beginning of October.
General and administrative expenses increased to $13 $1 million from $10 $6 million in the prior year due to vaccine related expenses and higher personnel costs.
William J. Peters: Research and development expenditures increased in the quarter to $20.4 million from $17.2 million in the comparable quarter of 2023, primarily due to spending on materials and supplies for our inhalation program. Non-operating expense in the fourth quarter of 2023 was $12.6 million, primarily related to interest expense on the debt used to finance the vaccine acquisition, foreign currency fluctuations, and mark-to-mark adjustments on our interest rate swap. This compares to non-operating income of $3.4 million in the fourth quarter of 2022 due to a remeasurement gain on foreign currency. The tax rate this quarter was lower than usual due to a mix of one-time events combined with an updated review of our international tax structure.
Research and development expenditures increased in the quarter to 24.
$4 million from $17 $2 million in the comparable quarter of 2023, primarily due to spending on materials and supplies for our innovation programs.
Non operating expense in the fourth quarter of 2023 was $12 $6 million primarily related to interest expense on the debt used to finance the vaccine the acquisition foreign currency fluctuations and mark to market adjustments on our interest rate swaps.
This compares to non operating income of $3 $4 million in the fourth quarter of 2020 to do a remeasurement gain on foreign currency.
The tax rate this quarter was lower than usual due to a mix of onetime events combined with an updated review of our international tax structure.
William J. Peters: The company reported a net income of $36.2 million or $0.68 per share, which was up 7% and 3% respectively, compared to the previous year's fourth quarter net income of $33.9 million or $0.66 per share. The company reported an adjusted net income of $46.9 million, or $0.88 per share, compared to an adjusted net income of approximately $37.6 million, or $0.73 per share, in the fourth quarter of the previous year. Adjusted earnings exclude amortization, equity compensation, impairments of long-lived assets, and one-time events.
The company reported net income of $36 $2 million or <unk> 68 per share, which was up 7% and 3% respectively compared to the previous year's fourth quarter net income of $33 $9 million or <unk> 66 per share.
The company reported an adjusted net income of $46 $9 million or <unk> 88 per share compared to an adjusted net income of approximately $37 6 million or <unk> 73 per share in the fourth quarter of the previous year.
Adjusted earnings exclude amortization equity compensation impairments of long lived assets and one time events.
In the fourth quarter, we had cash flow provided by operations of approximately $23 $9 million and for the full year cash flows from operations for $183 $5 million.
Let me review a few of the financial assumptions, we are using as we look to 2024 and beyond.
William J. Peters: In the fourth quarter, we had cash flow provided by operations of approximately $23.9 million. And for the full year, cash flows from operations were $183.5 million. Let me review a few of the financial assumptions we are using as we look to 2024 and beyond. Vaccini will drive sales growth in the coming year. We anticipate continued unit growth in the high single-digit range. Average selling price will be impacted slightly due to the difference between the wholesaler fee structure for Amphastar compared to that of Eli Lilly.
Vaccine he will drive sales growth in the coming year, we anticipate continued unit growth in the high single digit range average selling price will be impacted slightly due to the difference between the wholesaler fee structure for amphistylar compared to that of Eli Lilly.
As for privacy missed we are reiterating our forecast of hitting $100 million in sales this year.
We are forecasting up to four product launches this year, including Rex Tobey, which we launched in the coming weeks.
We are also expecting approvals in 'twenty 'twenty four for a M. P zero zero to <unk> 008, and Tara paratype.
We expect gross margins to be slightly lower primarily due to the shift in accounting for vaccine me from net economic benefit in which sales are booked net of cost of goods sold to typical revenue recognition with cost of goods sold thus increasing both the sales and the cost of goods line on the income statement we.
William J. Peters: As for Primatee Mist, we are reiterating our forecast of hitting $100 million in sales this, We are forecasting up to four product launches this year, including RecStovi, which will be launched in the coming week. We are also expecting approvals in 2024 for AMP002, AMP008, and teriparatide. We expect gross margins to be slightly lower, primarily due to the shift in accounting for Baccini from net economic benefit, in which sales are booked net of cost of goods sold, to typical revenue recognition with cost of goods sold, thus increasing both the sales and the cost of goods line on the income statement. We've already begun this transition in the United States where we began shipping the two-pack of vaccine at the beginning of February and we will begin shipping the one-pack in March. Last week, we also started distributing Vaksimia in Italy, the first country outside of the United States, with the remainder of foreign countries converting to our distribution network one by one throughout the remainder of 2024.
We've already begun this transition in the United States, where we began shipping the two pack of vaccine me at the beginning of February and we will begin shipping the one pack in March last week. We also started distributing vaccine me in Italy, the first country outside of the United States with the remainder of foreign countries converting to our distribution network one by one throughout the remainder of 2024.
Yeah.
Our selling and marketing expenses will increase due to efforts related to the vaccine me.
We expect G&A spending to increase due to expenses associated with vaccine and legal expenses associated with paragraph four patent challenges.
Turning to research and development, we plan to ramp up spending on clinical trials purchases of materials and supplies and FDA filing fees. This year as we increased spending on our insulin portfolio two inhalation candidates and our intranasal epinephrine product.
We also anticipate a significant increase in capital spending this year as we continue our project to double the capacity for our inhalation products at our Armstrong facility to align with our pipeline development.
William J. Peters: Our selling and marketing expenses will increase due to efforts related to vaccines. We expect G&A spending to increase due to expenses associated with Vaximi and legal expenses associated with Paragraph 4 patent challenge. Turning to research and development, we plan to ramp up spending on clinical trials, purchases of materials and supplies, and FDA filing fees this year as we increase spending on our insulin portfolio, two inhalation candidates, and our intranasal epinephrine products. We also anticipate a significant increase in capital spending this year as we continue our project to double the capacity for our inhalation products at our Armstrong facility to align with our pipeline development.
Additionally, we plan to finish our insulin API production capacity expansion at our ANP facility in China. This year.
And our interests are facility, we are in the process of an expansion project, which will significantly increase the capacity of our Rancho Cucamonga bump complex as we look to major insulin and complex injectable opportunities.
Spending on this major project will begin this year, but will ramp up more significantly in 2025, reaching $40 million a year for three years.
We plan to finance this expansion with cash flows from operations.
We will use a portion of our cash this year to make the $125 million payment due to Lilly in June at the same time, we plan to utilize our strong cash position to continue our stock buyback program.
William J. Peters: Additionally, we plan to finish our insulin API production capacity expansion at our ANP facility in China this year. At our Amphastar facility, we are in the process of an expansion project which will significantly increase the capacity of our Rancho Cucamonga complex as we look to major insulin and complex ingestible opportunities. Spending on this major project will begin this year, but will ramp up more significantly in 2025, reaching $40 million a year for three years. We plan to finance this expansion with cash flows from operations. We will use a portion of our cash this year to make the $125 million payment due to Lilly in June.
I'll now turn the call back over to the operator for questions.
Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Formation of total indicate your line is in the question queue.
Press Star two if he like to remove your question from the queue.
Participants using speaker equipment, it may be necessary to pick up your handset before pressing historically.
One of them in place, while we poll for questions.
Our first question is from Jason Goldberg with Bank of America. Please proceed with your question.
Hey, guys. This is bothering on for Jason two questions from US first can you provide some color as to the line of sight into competitor supply shortages, namely as it pertains to the tailwind we're seeing less generic epinephrine and then a handful of products and the other finished pharmaceutical products segment. When can we expect that trend to.
Unknown Executive: At the same time, we plan to utilize our strong cash position to continue our stock buyback program. I'll now turn the call back over to the operator for questions. Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone. The confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd 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 2.
And then second question on <unk> are you on track for the transition from Lilly and <unk> in the U S and do you expect any sort of headwind. During this transition teams. While your sales force gets more comfortable with getting out there and driving uptake with prescribers. Thank you.
Unknown Executive: One moment, please, while we poll for questions. Our first question is from Jason Gerber with Bank of America. Please proceed with your question. Hey guys, this is Bhavan on for Jason.
Yeah. Thanks for the question.
Yeah in regards of shortages.
We always seem to come across this there's always a shortage of some products in this portfolio at one time or another we don't have any additional insight or color on the status of whether or not there'll be back online or come back online.
Unknown Executive: Two questions from us. First, can you provide some color as to the line of sight into competitor supply shortages, namely as it pertains to the tailwind we're seeing with Genode, Epinephrine, and a handful of products in the other finished pharmaceutical product segment? When can we expect that trend to reverse? And then second question on Bexamy Growth, are you on track for the transition from Lilly in 1Q in the US and do you expect any sort of headwind during this transition phase while your sales force gets more comfortable with getting out there and driving uptake with prescribers? Thank you. Yeah, thanks for the question. In regards to shortages, we always seem to come across this, there's always a shortage of some products in this portfolio at one time or another. We don't have any additional insight or color on the status of whether or not they'll be back online or come back online, but what we can tell in the near future, at least for the next quarter or two, that the demand for the products that we were talking about are still necessary for us to provide.
But what we can tell in the near future at least for the next quarter or two that.
Are the demand for the products that we were talking about are still in.
Its still necessary for us to provide.
And some of those products are supposed to be back online. According to the communications that we get from the FDA, but the reality is in anyway.
Dan I was getting to is that we've had these shortage issues for over 10 years now every quarter theres been some product or another where there's been a shortage and we've been able to be there and.
Be able to supply our customers for that and our customers have appreciated that and supported us because of that I think the second question was vaccine me yeah, we as as I said in my remarks, we we started selling our the two pack in the United States in February and we're gonna start selling the one pack of vaccine in the United States in March so.
Unknown Executive: And, you know, some of those products are supposed to be back online according to communications that we get from the FDA. But the reality is, and I think what Dan was getting to, is that we've had these shortage issues for over 10 years now. Every quarter there's been some product or another where there's been a shortage, and we've been able to be there and be able to supply our customers for that. And our customers have appreciated that and supported us because of that. I think the second question was vaccine. Yeah, as I said in my remarks, we started selling the two-pack in the United States in February, and we're going to start selling the one-pack of vaccine in the United States in March. So that's already taken care of in Italy, already transferred in February as well. And the rest of the countries in Europe, we're going to move on a one-by-one basis.
That's already taken care of in Italy already transferred in February as well and the rest of the company countries in Europe, we're going to move on a one by one basis.
And the marketing program is going as planned in the United States.
Okay.
Thank you.
Thank you. Our next question is from Tim Chiang with capital. One. Please proceed with your question.
Alright. Thanks.
Bill I had a question just on the net economic benefit figure.
Floor back semi just going forward.
I know you indicated that you expect sales to be up for it in the single digits single digit growth I mean is that sort of.
The net economic benefit figure that we should be modeling.
Unknown Executive: And the marketing program is going as planned in the United States. Thank you. Thank you.
Single digit growth for them going forward.
Quarter to quarter basis.
Unknown Executive: Our next question is from Tim Chiang with Capital One. Please proceed with your question. All right, thanks.
What I'm talking about is more of the actual sales level like when I referred to the vaccine sales that Eli Lilly has.
Unknown Executive: Bill, I had a question just on the net economic benefit figure. For Baximi, just going forward, I know you indicated you expect sales to be upward in the single digits, single digit growth. I mean, is that sort of.., the net economic benefit figure that, you know, we should be modeling single digit growth for going forward on a quarter-to-quarter basis? What I'm talking about is more of the actual sales level, like when I referred to the Baximi sales that Eli Lilly had in the quarter of, what was it, $37 million. Okay.
In the quarter.
Was $37 million or.
So that's the level that we're looking at and as I mentioned in the United States, which makes up 80% of the sales of vaccine me, we transitioned to the two pack in February and we're planning to transition to the one pack in March so the first quarter is going to be you know.
Our mix and you know.
Both <unk> and our regular sales.
For the U S and for Italy, the rest of the World will still remain on any be mostly until the third quarter.
Unknown Executive: So that's the level that we're looking at. And as I mentioned, in the United States, which makes up 80% of the sales of Baximi, we transitioned to the two-pack. February and we're planning to transition to the one pack in March. So the first quarter is going to be you know a mix and you know of both the NEB and our regular sales, for the U.S. and for Italy. The rest of the world will still remain on the NEB mostly until the third quarter.
And that's when we expect most of the transitions for most of the other countries to occur in the third quarter and then you mentioned the higher sales and marketing expenses going forward.
Yeah.
Is it too early to sort of peg.
Sort of a ballpark.
The increase rate for selling and marketing expenses this year.
Yeah. So so what we've said is that the increased SG&A costs are going to be similar to what Lily scent farm, which is around 17% of revenues. So I think you've taken a look at something that's in that neighborhood of vaccine me revenues is going to be the range of that increase.
Unknown Executive: And that's, we expect most of the transitions for most of the other countries to occur on the 3rd. I see. And then you mentioned, you know, higher sales and marketing expenses going forward. You know, you know, is it too early to sort of peg?
Okay.
Unknown Executive: just sort of a ballpark increase rate for selling and marketing expenses this year. Yeah, so what we've said is that the increased SG&A costs are going to be similar to what Lilly sent for them, which is around 17% of revenues. So I think if you're taking a look at something that's in that neighborhood of Baccimi revenues, That's going to be the range of that. Okay.
And maybe just one pipeline question, which is.
A&P on five tariff parity at obviously there is some other existing generic companies in that market. I mean, do you still think youll have.
The ability to get meaningful share in that market.
Once you get approval sometime in the second quarter.
Unknown Executive: And maybe just one pipeline question, which is AMP 015, Terraparatide, obviously, there's some other existing generic companies in that market. I mean, do you still think you'll have the ability to get meaningful share in that market once you get approval sometime in the second quarter? You know, what we've said is that we sort of expect it to be as what you would expect from a generic that has multiple candidates, three other generics in the market at the same time. So it's a market opportunity for us. We still think that it's significant. But yeah, we do recognize that there are other people that got approval.
Yeah, what we've said is that we sort of expect it to be as what you would expect from a generic.
That has multiple candidates in three other generics in the market at the same time so that's.
It's a it's a it's a market opportunity for us we still think that that's significant.
But yeah. There are we are we do recognize that there are other.
People that got approval.
Thank you. Our next question is from David Amazon with Piper Sandler. Please proceed with your question.
Hey, Thanks, so cheap.
A few pipeline questions M P zero zero too.
Unknown Executive: Thank you. Our next question is from David Amsellem with Piper Simon. Please proceed with your question. Hey, thanks.
What.
Is underlying your confidence.
And getting it across the finish line and all of us.
Unknown Executive: So, a few pipeline questions. AMP-002, what is underlying your confidence in getting it across the finish line? I know the action date came and went and nothing has happened there. So, I guess, can you talk more about your interactions with the FDA or, you know, what just gives you confidence that you can get there? And then on the inhalation product, 008, just want to clarify that it is indeed a first-to-market opportunity and how you're thinking about that, particularly to the extent it is a first-to-market opportunity, what are margins going to look like relative to the overall business? And then lastly, on the GLP-1, I guess I'll just fast it straight up. Is it Liraglutide or is it something else?
Yeah.
Actually it came and went in and nothing has happened there. So I guess can you talk more about your interactions with the FDA or which just gives you confidence that you can get there.
And then on.
The inhalation products here eight.
Just wanted to clarify that it is indeed, a first to market opportunity.
And how are you thinking about that.
Particularly.
To the extent it is a first to market opportunity what are margins going to look like relative to the overall business.
And then lastly on the G. L. P. One I guess I'll just ask you to trade up is at Liraglutide.
Or is it.
Unknown Executive: Thank you. Hey, David. Thanks for the question. For our AMP002 product, we continue to have discussion with the agency. We view it as positive movement. They have not asked us for any new information or any new data as of yesterday or today as of that.
Something else. Thank you.
Hey, David Thanks for the question for our A&P 002 product, we continue to have discussion with the agency we view it as positive movement.
They have not asked us for any new information or any new data.
As of yesterday or today.
As of that so we just continue to engage with them in and have discussions with them and we're optimistic about it we feel we understand what the issue is and just work with them as they are.
Unknown Executive: So we just continue to engage with them and have discussions with them. We're optimistic about it. We feel we understand what the issue is and just work with them as they try to overcome that issue.
<unk> tried to overcome that issue so from our perspective, we remain optimistic about it.
Unknown Executive: So from our perspective, we remain optimistic. And on the second one for AMP-008, we haven't decided whether or not it's a first-to-market. And for the third one, the GLP, is we haven't said what the molecule is, but it will be subject or likely to be subject to a Paragraph 4 litigation.
And on the second one for.
N P O a way, we haven't decided whether or not.
First to market.
And for the third one the G. L. P is we haven't said what the molecule is but it will be subject or likely to be subject to a paragraph four litigation. So after it's filed its likely to be come known and also as Dan had mentioned our A&P zeros are seven is also subject to paragraph.
Unknown Executive: So after it's filed, it's likely to become known. And also, as Dan had mentioned, our AMP-007 is also subject to Paragraph 4 filing. So it's possible that that becomes known through that process at some point in the not-too-distant future as well. Okay, let me ask a follow up on 002. So you characterize it as a quote, issue, but there's no CRL here. So is that, should we interpret that as a good thing? Or just, this is just a complete one off that sort of confounds any attempt at comparison?
For a filing so it's possible that that becomes now through that process at some point in the not too distant future as well.
If I may ask a follow up on I'm sure was there too. So you you characterize it as an exact quote issue, but theres no C. R. L. A here so is that should we interpret that as.
A good thing or just this is just a complete one off that.
Sort of confounds any attempt to comparison.
Unknown Executive: Yeah, I think maybe, you know, it's just a one off, just a one off issue. We have what we believe, What we believe is our under, we have an understanding that we think is the issue that they're trying to overcome. And we engage them on that and try to. Just keep pressure, keep discussion, keep engaging with them. But we think that it's just the one issue that when they're able to address that issue that that's the only thing that is holding up this application. And once it's relieved, then it should be very positive.
Yeah, I think maybe you know it is just a one off just a one off issue we have what we believe are well.
What we believe is our we have an understanding that we think is the issue that they're trying to overtime.
And we engage them on on that and try to just keep pressure keep discussion keep keep engaging with them but.
But we think that it's just the one issue that when they're able to address that issue that that's the only thing.
That that is holding up this application and once it's relieved then it should be very positive.
Yeah.
Unknown Executive: Thank you. Our next question is from Glen Santangelo with Jeffrey. Please proceed with your question. Oh yeah, thanks for taking my questions. Hey Bill, I just want to follow up on a couple of modeling questions.
Thank you. Our next question is from Glen Santangelo with Jefferies. Please proceed with your question.
Oh, yeah. Thanks for taking my questions, Hey, Bill I, just want to follow up on a couple of modeling questions. I mean, you gave some color on bags Simi, but I you know I was kind of curious if you could maybe help.
Unknown Executive: I mean, you gave some color on Baximi, but I was kind of curious if you could maybe help us frame out 2024 a little bit more clearly in terms of this TSA that's in place and how that's going to phase in over the different countries, because that's obviously going to have a pretty material impact on your revenue and your expenses at the same time. And I just, any help you can sort of give us, you know, at a high level from a modeling perspective to think about that transition throughout 2024 would be helpful. Then I maybe have a follow-up. So it's actually a little bit confusing to us too.
Help us frame out 2024, and a little bit more clearly in terms of this TSA that's in place and how that's kind of phase in over the different countries and you know because that's obviously going to have a pretty material impact on your revenue and your expenses at the same time and I was just any help you can sort of give us a high level from a modeling perspective.
To think about that transition throughout 2024 would be helpful. And then maybe a follow up.
Sure. So it's actually a little bit confusing to us too so yeah, but here's what I'll say is that as I mentioned, you know 80% of the revenues from vaccine he come from United States and part of you know part of that we're making that transition partway through the year. The way we're budgeting. This internally is.
Unknown Executive: So, you know, but here's what I'll say, that as I mentioned, you know, 80% of the revenues from vaccine come from the United States. We're making that transition partway through the year. The way we're budgeting this internally is we're just assuming there is no NEB and we just go with the straight sales and the straight expenses because we know that the net income impact is going to be the same either way.
We're just assuming there is no any b and we just go with the straight the straight sales and the straight expenses, because we know that the net income impact is going to be the same either way. So theres going to be the same amount of money spent on same amount of sales at the very top line.
Unknown Executive: So there's going to be the same amount of money spent, or the same amount of sales at the very top line, and our revenues will be slightly different, but we know that the income, So with 80% of the sales being transitioned in the first quarter, the way I would look at it is that, you know, you know, half of the quarter is going to be NEB and half, if it's not, for 80% of it, then most of the rest of the countries will come online in the third quarter. But that's only, you know, about 20% of the sales worldwide, so, and, you know, I don't know, feel free to answer some follow-up, because we don't exactly know the exact date for most of these transitions either. Part of this has to do with inventory levels and winding down, Lilly inventory labeling versus the Amphastar labeled products and making sure that we have sufficient inventory of us to get launched. So it's a little bit of a confusing process, so we don't have exact date. All right. Well, listen, we can maybe explore that a little bit more offline.
And our revenues will be slightly but we know that the income will be will end up being the same so so with 80% of the sales being transitioned in the first quarter of the way I would look at it is that you know.
Uh huh.
Half of the quarter is gonna be any being half of its not for 80% of it then.
And then most of the rest of the countries will come online in the third quarter, but.
But that's only about 20% of the sales worldwide. So.
And.
I don't know if I could have it feel.
Feel free to answer some follow up because we don't know exactly know what the exact date for most of these transitions either part of this has to do with.
Inventory levels, and we're winding down in Lilly inventory labeling versus the emphasis star labeled products and making sure that we have sufficient inventory of us to get get launched so it's a it's a little bit of a confusing process. So we don't have exact dates either.
Alright, well listen we can we can maybe we can maybe explain a little bit more offline, but maybe as my follow up I wanted to ask you about glucagon you know obviously, we've been posting some pretty sizable growth in 'twenty. Three is a couple of those players exit the market late in 'twenty to do the comps get much differ here now as you enter into the first quarter and as I.
Unknown Executive: But maybe as my follow-up, I want to ask about glucagon. You know, obviously, we've been posting some pretty sizable growth in 2023, as a couple of those players exited the market late in 2022. Did the comps get much stiffer here now as you enter into the first quarter?
Unknown Executive: And as I think about maybe growth slowing in that product, and the four new product launches, and sort of vaccine-y sort of phasing in, as we just discussed, you said we should expect gross margins to be trending down this year. Could you maybe just give us a little bit more color on the direction of glucagon and the impact of all these launches on gross margin? So Glucagon has a couple of things, the comps are tougher now, so we've now posted the last big up quarter, so that's the end of that trend. So what we do have though is our expectation is that for Glucagon having now gone to one third anti-hypoglycemic market and two thirds of that is going to be for the diagnostic market, we see that anti-hypoglycemic market continuing to shrink as products like Baximi which we think are much better products for that, take more and more market share over the coming years.
About maybe growth slowing in that product and the four new product launches and sort of back to see me sort of phasing in as we just discussed you said, we should expect gross margins to be trending down. This year could you maybe just give us a little bit more color on the direction of glucagon in and the impact of all these launches on on gross margin yes.
So it looks kind of has a couple of things the comps are tougher now. So now we've now posted the last big quarter. So that's the that's the end of that trend. So what we do have though is our expectation is that with <unk>.
For glucagon being having now gone to one third.
Anti hypoglycemic market and two thirds of that is going to be for the diagnostic market, we see that anti hypoglycemic market continuing to shrink as products like vaccine, which we think are much better products for that and take more and more market share over the coming years. So we see that that portion of the market declining however.
Unknown Executive: So we see that portion of the market declining. However, as we mentioned in our presentation, I think we mentioned briefly, we are launching the Glucagon product in Canada. So some of the U.S. decline, the U.S. decline should be offset by the pickup in Canadian business. And the way to think about it is that Canada is about 10% of the United States, will have that offset from the decline. So we're not, and one of the reasons we didn't mention glucagon as a growth item is just because of that, you know, we think a little bit of decline in the U.S. offset by the Canada business.
As we mentioned in our presentation and then we mentioned briefly.
We are launching the glucagon product in Canada now so some of the U S declined the U S decline should be offset by the pickup in Canadian business and the way to think about it is that Canada is about 10% of the United States business.
So we'll have we'll have that offset some of the declines so or not and that's one of the reasons. We didnt mentioned glucagon as a growth item is just because of that we think a little bit of decline in the U S offset by the Canada business I'm, then going back to the gross margins.
Unknown Executive: Then going back to the gross margins on a gap basis, you know, we will have cost of goods for vaccine, which we didn't have last year. So that's the biggest impact. The second biggest impact is going back to gap again is we'll have a full year of amortization of the intangible for vaccine. You know, that gets pulled out for the adjusted cost of goods, but that's going to be in there for the gap cost. And then overall, we're probably not seeing prices increase across our product lines, much whereas we do have some cost of pressure so there's going to be a slight declined for some of those products.
On a GAAP basis.
We will have cost of goods for a vaccine, which we didn't have last year. So that's the biggest impact the second biggest impact is going back to GAAP again, as we'll have a full year of amortization of the intangible for vaccine me now that gets pulled out for the adjusted cost of goods, but that's going to be in there for the GAAP cost of goods.
And then overall, we're probably not seeing prices increase across our product line alright, much whereas we do have some costs as cost pressures, so theres going to be a slight slight decline for some of those products now once we can launch some of these newer products, though Max tow.
Unknown Executive: Now once we can launch some of these newer products though, Rextovi and AMP-002, AMP-008 and TeraParatase, all of those should have gross margins that are above the corporate average. So, you know, those will all help out pull that gross margin back up again. So there's definitely different forces pulling both ways on that gross margin.
Toby and A&P Zero-zero twos yours, or we didn't tell our parents is all of those should have gross margins that are above the corporate average. So those will all help out put pull that gross margin back up again, so there's definitely different forces pulling both ways on that gross margin this year.
Unknown Executive: Thank you. Our next question is from Serge Belanger with Needham & Company. Please proceed with your question. Hi, good afternoon.
Thank you. Our next question is from Serge Belanger with Needham and company. Please proceed with your question.
Hi, good afternoon.
Unknown Executive: First question, can you just talk about your outlook for shortage opportunities this year? I guess whether the ones you've been able to capture will remain, and if you have the capacity to take on additional ones that may materialize. And then secondly, on chiroparatides, what's your level of confidence for approval? at the second quarter, GDUFA.
First question can you just talk about your outlook for shortage opportunities. This year, I guess, whether the ones you've been able to capture will remain and if you have the capacity to take on additional ones that may materialize.
And then secondly on.
Sure <unk>.
What's your level of confidence for approval.
The second quarter due for and.
Unknown Executive: And how does that market opportunity look like now that there's been a couple other approvals? Thanks. Back to the shortage opportunities. We anticipated these for a long time. It's one of the reasons we invested in expanding our manufacturing capacity at IMS. It seems like one or several of these products every quarter have some shortage issue.
And how does that market opportunity looks like now that theres been a couple of other approvals.
Yeah.
Yeah that can this shortage opportunities we anticipated. These you know for a long time, it's one of the reasons, we invested in expanding our manufacturing capacity at that I have asked because.
Because it seems like one or several of these products every quarter.
Have some shortage issue.
Unknown Executive: We're happy to pick it up. We're happy to take it on and provide when we need to be. We don't have, you know, I think Bill mentioned that, you know, there is some that they may come back with one of these products, but it will probably create a shortage in another product somehow. So we always look at it as probably about.
You know were happy to pick it up we're happy to take.
I take it at and provide when we need to be we don't have you know I think bill mentioned that.
There is some.
That they may come back with one of these products, but it will probably create a shortage in another product somehow so we always look at it is probably about.
Unknown Executive: $20 million is what we forecasted with the expansion of our capacity. We're definitely in that ballpark around that, and I think we're still going to see similar scenarios in the future. We remain confident in the CRL that we addressed, related mostly to a study which we performed and we performed studies of that nature before, so we remain optimistic about the approval. And as far as the market opportunity goes, you know, there are two other participants in that now, two new generics. So the market is crowded, and definitely the price has come down pretty significantly, and will come down even further with ours. But that said, it's still a product that has a relatively high price and relatively high margins.
$20 million is why is what we forecasted with the expansion of our capacity or were definitely in that ballpark around that and I think we will so I think we're still going to see a similar scenarios in the future.
For Terra Paradise, Yeah, we remain.
Confident in and there's the CRA all debt that we addressed.
Related mostly to our study, which we performed and we performed studies of that nature before or so.
We remain optimistic about the approval for that and as far as the market opportunity goes up.
There are two other participants in that now two new generic so the market is crowded and definitely the price has come down pretty significantly and will come down even further with ours, but that said its still a product that has a relatively high price and relatively high margins. So we still see this as a good opportunity but no.
Unknown Executive: So we still see this as a good opportunity, but not as big an opportunity as it seemed six months, Thank you. There are no further questions at this time. I'd like to hand the floor back over to management for any closing comments. I want to thank you all for joining us on today's call. We're excited about the opportunities ahead with the upcoming launches like Rextovi and other potential launches with Terraparatide, AMP-02 and AMP-008, and we look forward to updating you all in the next call. Have a great day. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, www.globalonenessproject.org
As big an opportunity is it seemed six months ago.
Okay.
Okay.
Thank you there are no further questions at this time I'd like to hand, the floor back over to management for any closing comments.
Yeah I want to thank you all for joining us on today's call. We're excited about the opportunities ahead with the upcoming launches like Rex Dolby and other potential launches with Terra paratype A&P zero, two and A&P 008, and we look forward to updating you all in the next call have a great day.
Okay.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
Okay.