Q3 2024 Amphastar Pharmaceuticals Inc Earnings Call
Greetings and welcome to the Amphastra Pharmaceuticals in 3rd Quarter on In Skoll. At this time all participants are in a list in Olimot, a question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference, please press star 0 on the telephone keypad.
Please note that certain statements made during this called 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 a discussion of numerous factors that may impact our future performance.
Speaker Change: and Dan Dischner. Thank you. Thank you.
We will also discuss certain non-GAAP measures. Important information on our use of these measures and reconciliation to U.S. GAAP may be found in our earnings release.
Speaker Change: Please note, this conference call is being recorded.
Speaker Change: and Dan Dischner. Thank you. Thank you.
Speaker Change: Our speakers today are Mr. Bill Peters, CFO, Mr. Dan Dischner, Senior Vice President of Corporate Communications, and Mr. Tony Maas, EVP of Regulatory Affairs and Clinical Operations.
Speaker Change: I will now turn the conference over to your host, Mr. Dan Dischner, Senior Vice President of Corporate Communication. Dan, you may begin.
Thank you, Zico. Good afternoon and thanks for joining us for our third quarter's earnings call of 2024. Today I'm joined by Bill Peters, our CFO and Executive Vice President of Finance, and Tony Mars, Executive Vice President of Regulatory Affairs and Clinical Operations.
Speaker Change: In the third quarter of 2024, Ampistar reported net revenues of $191.2 million, marking a 6 percent increase year-over-year, reflecting the resilience and growing strength of our diversified product portfolio and the strategic initiatives.
Speaker Change: Despite facing challenges such as the impact of Hurricane Helene, which impacted our logistics and resulted in delayed shipments, the core business of Amphistar remains robust.
Speaker Change: leading the path to end this year with a solid footing for the execution of our portfolio.
Our strategic initiatives regarding our regulatory filings and commercial portfolio execution remain on track, and we are well positioned to continue the growth of our key revenue drivers with Vaximi.
Speaker Change: primatine mist, and our core hospital and clinical use products in the critical care arena.
Speaker Change: A key highlight for the quarter was primatine mist.
Speaker Change: which achieved its highest quarterly sales since the launch, reaching $26 million in sales.
This performance is a significant step toward our goal of $100 million in annual sales for this product by the end of 2024.
Speaker Change: We believe there are additional growth opportunities with primatine MIS, and therefore, in 2025, we will expand our current physician sampling program by initiating a pilot sales program targeting more primary care physicians.
Speaker Change: The transition for Baksimi is progressing smoothly, with sales performance meeting expectations. Baksimi remains an essential part of our portfolio, and we are dedicated to expanding this market's presence.
Speaker Change: To enhance the brand's visibility in the United States, we plan to strengthen the sales force for Baksimi.
Speaker Change: This product exemplifies the kind of innovative, user-friendly solutions we strive to develop and serve as a benchmark for our impactful products we are committed to advancing through our pipeline.
Speaker Change: As anticipated, competition in the glucagon injection kit market has intensified.
Speaker Change: leading to a 9% decline in sales from the previous year, seeing $26.7 million in sales for the third quarter. We believe the increased competition reflects the rising awareness of effective hypoglycemia management options and the attractiveness to the market.
Speaker Change: On a different note, we are pleased to announce the launch of our albuterol MDI product occurring in the third quarter of 2024, marking a significant expansion of our respiratory portfolio and operations in our Armstrong facility.
Speaker Change: This launch positions us to meet the growing demand for affordable, high-quality asthma management options. Entering a competitive market, we continue to actively pursue business opportunities.
Speaker Change: On a regulatory front, we have continued routine, productive discussions with the FDA regarding AMP002 and believe that a clear path forward for approval is near. The generic teriparatide ANDA, AMP015, we received a CRL for this filing and we are on track to submit our response by the end of this year.
Speaker Change: Turning to our diabetes portfolio, we are scheduled to refile our BLA for our first insulin product, AMP-004, or insulin aspartate, in the fourth quarter of this year.
Speaker Change: for our GLP-1 ANDA, AMP-018.
Speaker Change: which was filed in the second quarter of 2024, we are pleased to announce that this filing was granted Competitive Generic Therapeutic Designation and Priority Review. As mentioned on our last call, this product remains on track for a GDUFA goal date in the second quarter of 2025.
Speaker Change: Regarding AMP 007, our second inhalation ANDA, as previously announced, has experienced an extension in the GDUFA goal date to the second quarter of 2025, and there are currently no pending items with the agency regarding this application.
Speaker Change: Thank you for watching!
Speaker Change: On a separate note, we are proud to announce or introduce AMP-028, a new biosimilar addition to our pipeline. This product has equivious sales of plus $2 billion with no current biosimilars.
Speaker Change: We believe our unique capabilities will limit the potential number of competitors in the market and it marks our first BLA target outside of insulin. Additionally, it highlights the strategic transition towards more advanced therapeutic areas where we can maximize value and impact.
Speaker Change: This shift represents a deliberate move to focus our efforts on high-value projects that have the potential to drive sustainable growth and utilize our in-house expertise and resources.
Speaker Change: As we close 2024 and look towards 2025, our focus remains on advancing our portfolio through proprietary filings and high-value areas like biosimilars, positioning us for sustainable growth and reduced competitive pressures.
Speaker Change: In the coming year, we plan to announce additional candidates in our proprietary and biosimilar pipelines aligning with our strategic direction.
Speaker Change: Our R&D expertise and self-funded investments continue to drive progress while strong sales from Baximi and Primatene Mist provide a solid foundation.
Speaker Change: were confident in the potential of our upcoming projects.
Speaker Change: including AMP 002, Teraparatide, AMP 007, and our first GLP-1 ANDA.
Speaker Change: With a clear strategy and an expanding pipeline, we are excited about the opportunities ahead and remain committed to delivering long-term value. With that, I'd like to turn the call to our CFO and Executive Vice President of Finance, Bill Peters, to discuss the second quarter's financial results.
Bill Peters: Thank you, Dan.
Bill Peters: Revenues for the third quarter increased 6% to $191.2 million from $180.6 million in the previous year's period.
Bill Peters: Vaximi sales through Amphistar totaled $40.4 million in the third quarter.
Bill Peters: Sales of Vaximi by Eli Lilly totaled $6.4 million during the same period, and we recorded a net economic benefit in our other revenues line of $2.4 million, net of their expenses of $4 million.
Speaker Change: Our product sales have increased, while the net economic benefit has decreased throughout the year as we have taken over distribution responsibilities for Baximi in various countries around the world.
Speaker Change: We will assume distribution of Baximi in the remaining territories on a country-by-country basis through the end of this year.
Speaker Change: During the quarter, while this distribution transition was ongoing, we faced a temporary supply disruption in 14 European countries and ran out of Lilly-labeled Vaximi before we were able to receive any Amphistar-labeled product.
Speaker Change: This temporary disruption limited European sales of Vaximi by approximately two to three million dollars.
Speaker Change: Glucagon sales decreased 9% to $26.8 million from $29.5 million due to a decrease in units shipped as more hypoglycemia patients moved to ready-to-use products such as Baximi.
Speaker Change: Primatine missed sales grew to a new record of $26.1 million in the third quarter compared to $24.8 million in the third quarter of last year, which represented sales growth of 5%.
Speaker Change: Epinephrine sales increased 6% to $21.3 million from $20.2 million, primarily due to an increase in units of our prefilled syringe product as we entered the Canadian market this quarter.
Speaker Change: Phytonodione sales increased 57% to $11.7 million from $7.4 million due to an increase in demand this quarter.
Speaker Change: Anoxaparin and naloxone sales decreased primarily due to a decrease in unit volumes.
Speaker Change: Other finished pharmaceutical product sales decreased $2.2 million to $35.5 million from $37.7 million on lower sales of products such as atropine and calcium chloride.
Speaker Change: Thank you.
Speaker Change: These decreases were partially offset by higher unit volumes of sodium bicarbonate due to an increase in capacity at our international medication subsidiary as well as the launch of our albuterol MDI in August 2024.
Speaker Change: Thank you for watching!
Speaker Change: Overall, sales were negatively impacted by Hurricane Helene as between $2 million and $4 million in sales that were expected in the third quarter were not recognized due to delayed deliveries.
Speaker Change: Revenues for these shipments are expected to be recognized in the fourth quarter.
Speaker Change: Cost of revenues increased to $89.3 million from $79.2 million.
Speaker Change: Gross margins declined to 53% of revenues from 60% in the prior year, primarily because vaccine sales in the prior year were made by Lilly and were booked net of cost of goods, which contributed to higher gross margins in the previous year.
Speaker Change: This year, most sales are made by InfoStar, which books the cost of goods.
Speaker Change: Additionally, we had an increase in labor costs and certain component costs.
Speaker Change: Selling, distribution, and marketing expenses increased 40% to $9 million from $6.4 million in the previous year due to our BAC-CME sales force expansion.
Speaker Change: General and administrative spending increased 17% to $14.8 million from $12.7 million, primarily due to increased expenses related to vaccinee and personnel.
Speaker Change: Research and development expenditures increased 26% to $21.1 million from $16.7 million due to increases in material expenses related to our insulin pipeline products.
Speaker Change: Our non-operating expense of $9.4 million compared to an operating expense of $9 million.
Speaker Change: in the third quarter of last year.
Speaker Change: Adjusted net income decreased to $49.6 million, or $0.96 per share, compared to an adjusted net income of $61.9 million, or $1.15 per share, in the third quarter of last year.
Speaker Change: Adjusted earnings excludes amortization, equity compensation, impairments of long-lived assets, and one-time events.
Speaker Change: I will now turn the call back over to Dan.
Dan Dischner: Thanks, Bill, for the updates. With that, we will now take your questions.
Speaker Change: Zico, please open the lines for Q&A.
Zico: Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Speaker Change: You may press star and 2 if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Ladies and gentlemen, we will wait for the moment while we poll for questions.
Bill Peters: David Amsellem, David Amsellem, David Amsellem
Speaker Change: The first question comes from Ekaterina Knyazkova with JP Morgan. Please go ahead.
Ekaterina Knyazkova: Thank you so much. So just two questions if I may. So first, just on Baxini, you've had the asset for several quarters now. Just any surprises in terms of where you're seeing uptake or the competitive dynamics you're seeing in the market? And I guess any updates as you're thinking about peak sale potential for that product?
Ekaterina Knyazkova: and Dan Dischner. Thank you. Thank you.
Ekaterina Knyazkova: And then the second question is just on the GLP-1 category.
Ekaterina Knyazkova: Can you just talk a little bit about the role that the company can play in this category over time? You obviously have AMP018 potentially coming in 2025, but more if we think about some of the bigger GLP-1 molecules eventually going generic.
Ekaterina Knyazkova: just any color there would be appreciated. Thank you.
Speaker Change: So, as far as Baximi, right now, it's going relatively smoothly other than what I mentioned in my comments, which was the slight disruption that we had in supply going to
Ekaterina Knyazkova: Europe this quarter. So we were expecting to get all of the Vaximi with Amphistar labeled product out to those countries in time before the Lily labeled product ran out but unfortunately that didn't happen which left us
Speaker Change: short in 14 countries, so we were unable to deliver anywhere between four to six weeks for a lot of those countries.
Speaker Change: So that's unfortunate, but these things happen when you're transitioning to a new product and a new...
Speaker Change: distribution center, so no real big surprises. As far as peak sales, I'll say no. Right now we're still on target for what we had said previously on peak sales.
Speaker Change: which was $250 to $275 million in peak sales. So right now, our annual sales are trending, we believe, really close to the RSA, our base case that we put in at that time.
Speaker Change: and Dan Dischner. Thank you very much.
Speaker Change: And then on the GLP-1 strategy, that's a great question.
Speaker Change: You know, as you know, that it's getting to be a really crowded market. There's a lot of people coming up with new GLP-1 type products. We're not alone in thinking about it. It's probably a little too early to really discuss any potential things in that group for us right now.
Speaker Change: We'll update people as we as we get closer. Yeah, maybe we'll have an update for you at your conference in January. Yeah
Speaker Change: Perfect, thank you so much. Thanks.
Speaker Change: Thank you.
Speaker Change: The next question comes from David Amselin with Piper Sandler. Please go ahead.
Speaker Change: Hey David, you there?
Speaker Change: David, may we request that you unmute your line, please?
Speaker Change: I think he's gone, so let's go on to the next one.
Speaker Change: The next question comes from Pavan Patel from Bank of America. Please go ahead.
Pavan Patel: Hey guys, thanks for taking my questions. First, on epinephrine, can you speak to the main driver of lower revenue in the quarter? Was it more the BPI vial competition or Pfizer supply shortage that may start, you know, becoming resolved? And where should we look in other areas of the business to offset this going forward? Will it be, you know, competitor supply shortages and other products?
Pavan Patel: or is the focus going to be on driving banks to meet growth such that the fluctuations of base business
Pavan Patel: are smoother. And then the second question is on Beck-Simi, maybe the year-over-year decline relative to what Lilly booked.
Speaker Change: in prior year. What's driving the competitive headwinds there? Is it other branded products or generic glucagon? And can you frame what the investment in Salesforce will look like and timing of onboarding those sales reps? Thank you.
Speaker Change: and Dan Dischner. Thank you. Thank you.
Speaker Change: Sure, so Epi, I think you're comparing to second quarter, so we did have a decrease in the multidose vial, as there's been two competitors that have launched multidose vials this year, driving prices and some of our volumes down. However, that was partially offset this quarter and a year-over-year increase in epinephrine sales as we began shipping the prefilled syringes to Canada this quarter.
Speaker Change: As far as the vaccine, the year-over-year decline, I wouldn't say it's related to any competitive issues. It's partially driven by what I mentioned earlier, which was, you know, we were out of stock.
Speaker Change: for several weeks in 14 countries in Europe, so that's limited sales there. And what I had mentioned earlier this year, which is the pricing that we have in the U.S. has declined this year because of the increased fees that we have to pay to wholesalers.
Speaker Change: So, we had said that for the year that you should expect sales would be, would be, you know, up single digit, or up, up.
Speaker Change: Dan Dischner, Timothy Chiang, William Peters, Dan Dischner, Dan Dischner, Dan Dischner, Dan
Speaker Change: down low single digits in pricing. And if we look at it on a year-long basis, I think you get to something that's closer to what we said. So I think this one quarter is...
Speaker Change: is more of an aberration than anything else.
Speaker Change: Thank you.
Speaker Change: So, as far as the investment goes, we have had a very small increase in our sales force in the third quarter of this year, but we're planning a larger sales force.
Speaker Change: increase beginning in January but there'll be some expenses related to that that will hit in the fourth quarter as well and once again that sales force will also be an outsourced one and so we haven't we might be able to dispose a little bit more about that later but
Speaker Change: This is a new initiative that we're just starting right now.
Speaker Change: By utilizing or outsourcing the Salesforce, it gave us some flexibility to expand if we identified opportunities where we thought it would make sense. And so it allows us to keep more control over the Salesforce. So yeah, we're excited about this opportunity of increasing that footprint.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: The next question is from David Amselin with Piper Sandler. Please go ahead.
Speaker Change: Thank you.
David Amselin: Hey, thanks and sorry about that. So, a couple of questions.
Speaker Change: First
Speaker Change: Can you talk about the Albuterol generic, the Albuterol HFA, and, you know, what kind of footprint, sales-wise, do you envision for that as we move through 2025? So that's number one. Number two, I know I ask this a lot, but AMP 002, just anything new there or any latest thoughts?
Speaker Change: on
Speaker Change: who wrote ahead for that product.
Speaker Change: And then lastly, I don't know if you addressed this, I apologize if you did, on AMP007, I know the jidupa got extended.
Speaker Change: out to the second quarter, but just wondering out loud, you know, anything there that you can talk about that gives you confidence that you're going to get that across the finish line, and then given that there are a couple of entrants in that market, how do you think about the opportunity for that product? Thanks.
Speaker Change: I'll start with the albuterol, the sales footprints.
Speaker Change: That is, you know, we had said earlier that we thought it would be a little bit of a slow start as we ramp up. We also had some capacity issues as we're bringing on new capacity to that facility, so that should time up well. So we do expect...
Speaker Change: You know this to be a meaningful product for the company in 2025, but not not in the fourth quarter
Speaker Change: So, hopefully, that's helpful for you. We haven't given specific sales guidance. And the reason is that when you launch a new generic into an existing generic market, you're not there at market formation. We like to...
Speaker Change: not disrupt the market too much and to try to take that market share effort slowly. So I think that's what we're trying to do with that.
Speaker Change: Yeah, and I'll take for AMP002, we continue to have the high-level meetings with FDA officials and they've been encouraging and I know it's kind of the repetitive statements that I make about it, but we feel more encouraged. We suspect that in the near future we should be receiving some sort of action to move the application along.
Speaker Change: But, you know, the good news is that we continue to be engaged with the agency in this dialogue and I think soon we should see some things shake free on that.
Speaker Change: for AMP 007. This is our first cycle.
Speaker Change: In the agency, he's simply provided a late cycle IR, and as a result of that, they've extended the action date. There's nothing in there that gives us any alarm.
Speaker Change: We talked to many of our colleagues and it seems that this is...
Speaker Change: a pattern that the agency has been taking a lot lately.
Speaker Change: But again, it would be our first cycle on this combination product, so nothing alarming to us on the conversations that we've had with them. So we're still optimistic, as we usually are for a first cycle.
Speaker Change: And actually, if I may just sneak in a follow-up, I think I asserted that there might be entrance in that market for OO7 actually, might have been mistaken there. But can you say if there already is competition? And then secondly, when you say combination product, does that mean that it's a, would you mean just drug-device combo, or you mean actual like two compounds like an Advair, for instance? Any color you can share there would be helpful. Thanks.
Speaker Change: I'll take the combination product question. So it's just a device-drug combination like the majority of our inhalation products.
Speaker Change: and Dan Dischner. Thank you. Thank you.
Speaker Change: We haven't really said about the competition or not on that one, so we'd like to not answer that one at this time.
Speaker Change: Okay, fair enough. Thank you.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, a reminder to all the participants that you may press star and 1 to ask a question.
Speaker Change: Ladies and gentlemen, you may press star and 1 to ask a question.
Speaker Change: Zika let's wrap it up
Speaker Change: Thank you. As there are no further questions, I would now like to hand the conference over to Dan Dischner for closing comments.
Dan Dischner: Thank you everyone for joining us today. We remain confident in delivering on our pipeline while executing on Baximi and primatine mist. We look forward to updating you all again next quarter and have a great day.
Dan Dischner: Thank you. Thank you.
Speaker Change: Thank you.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time.
Speaker Change: Thank you for your participation.