Q4 2024 Amphastar Pharmaceuticals Inc Earnings Call
Speaker Change: Greetings, and welcome to the Amphistar 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. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
Speaker Change: 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.
Speaker Change: These statements are based solely on information that is now available to us.
Speaker Change: 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.
Speaker Change: 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: We will also discuss certain non-GAAP measures. Important information on our use of these measures and reconciliations to U.S. GAAP may be found in our earnings release. Please note this conference call is being recorded.
Speaker Change: Our speakers today are Mr. Bill Peters, CFO, Mr. Dan Dischner, Senior Vice President of Corporate Communications, and Mr. Tony Mars, Executive Vice President 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 Communications.
Speaker Change: Dan, you may begin. Thank you, Paul. Good afternoon and thank you for joining us today for our fourth quarter earnings call of 2024. Joining me on the call will be Bill Peters, CFO and Executive Vice President of Finance, and Tony Mars, Executive Vice President of Regulatory Affairs and Clinical Operations.
Speaker Change: Earlier today, we announced our financial results for the 2024 fiscal year, achieving revenues of $732 million, a strong 14% increase compared to the prior year.
For the fourth quarter alone, we recorded 186 million.
demonstrating a solid 5% year-over-year growth.
Speaker Change: This performance highlights the resilience of our portfolio, driven by contributions from key products such as primatine mist and the integration of Vaximi into our expanding diabetes franchise.
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Speaker Change: As we concluded the fourth quarter, vaccine operations have fully transitioned to Ampistar, and distribution responsibility is now completely under our control.
Speaker Change: Building on this momentum, we are thrilled to announce a new strategic partnership with mankind. Effective January 1st of this year, mankind's experienced sales force has started promoting Baksimi, expanding our sales reach.
Speaker Change: This collaboration represents a strategic step forward in amplifying Baximi's growth trajectory and strengthening our position in the diabetes care market.
Speaker Change: Continuing to build on that momentum, we are pleased to announce that as of late January, our physician sampling program has been expanded with the launch of our pilot sales program targeting primary care physicians.
Speaker Change: and enhancing our market penetration and engagement with health care providers.
Speaker Change: As we look to the future, we remain confident that Primatene Mist and Baximi will continue to be key contributors to our revenue growth through 2025. These products highlight our ability to innovate and meet market demands, reinforcing our commitment to sustaining growth through branded products.
Speaker Change: Turning to glucagon, we recorded annual sales of 108 million in 2024. While this represents a modest 5% decline in the previous year, we expect glucagon to face increasing competitive pressures.
Speaker Change: Nevertheless, we view this as a natural evolution in a dynamic market for a generic product. Part of the market evolution in the Gloopygon space involves the shift to ready-to-use products such as Baximi.
Speaker Change: which we believe positions us to seize new opportunities in the coming year.
Speaker Change: Our hospital and clinic use products also experienced heightened competitive pressures in the fourth quarter. Despite these obstacles, we continue to benefit from ongoing drug shortages in other areas of our product portfolio.
Speaker Change: Given the cyclical nature of these shortages, we anticipate that similar market dynamics will persist throughout the coming year.
Speaker Change: Our diverse product portfolio and proactive supply chain strategy supported by our vertically integrated business structure are designed to effectively navigate these fluctuations, ensuring a consistent supply and strong competitive positioning in the market.
Speaker Change: Shifting the discussion to our regulatory and pipeline development, we are optimistic about the potential approval of four key products in 2025, AMP002, AMP007, an inhalation product,
Speaker Change: AMP 015 which is teriparatide and AMP 018 marking RGLP1 ANDA.
Speaker Change: Regarding AMP-002, despite a delay in its GDUFA date since the second quarter of 2023, we continue to engage in proactive discussions with senior-level FDA officials.
Speaker Change: This product is still without a generic competitor and we expect further clarification on the optimal path forward in the coming months.
Speaker Change: For AMP 015 or teriparatide, we have completely responded to the CRL we received in the fourth quarter of this, as of this month, with an anticipated GDUFA goal date in the second half of this year.
Speaker Change: Regarding our remaining ANDAs, both AMP 007 and AMP 018, both are progressing well with first cycle GDUFA goal dates in the second quarter of this year.
Turning to our Insulin BLA, AMP0104.
Speaker Change: or Insulin Aspart, we have refiled this application after further requests from the FDA. Our commitment to achieving the highest technical standards remains firm, particularly as we work towards obtaining interchangeability status for our insulin product.
Speaker Change: Turning beyond our ANDAs and diabetes portfolio, I'd like to offer brief comments on recent developments concerning international trade and Ampistar's current business strategy.
Speaker Change: Regardless of current or future U.S. trade policies and trade balances, we believe our vertically integrated business model positions us exceptionally well to mitigate any significant impact.
Speaker Change: Moreover, a robust U.S.-based manufacturing footprint, where 100% of our finished products are produced domestically, shields us from tariffs on finished pharmaceutical goods.
Speaker Change: This domestic production capacity ensures supply chain resilience and aligns with potential policy initiatives to bolster U.S. manufacturing.
Speaker Change: As we look to the future, Amphistar is optimistic about our growth as we shift our focus towards our branded and proprietary portfolio and pipeline. The year 2024 was particularly significant for us as we achieved a milestone of $100 million in sales with our proprietary product, Parmatene Mist.
Speaker Change: Additionally, vaccinia has shown the expected growth potential, and we continue to see positive trends for these products.
Speaker Change: I'm also pleased to announce that we will introduce more proprietary pipeline products by the end of this year. We are eager to share recent developments regarding these products, along with updates on the progress of our current filings towards approval and launch.
Speaker Change: I would like to hand the call over to our CFO and Executive Vice President of Finance, Bill Peters, to discuss the four-quarter and year-ending financial results.
Thank you, Dan.
Speaker Change: Sales for the fourth quarter of 2024 increased 5% to $186.5 million, from $178.1 million in the fourth quarter of 2023. Total Baccimi sales at the factory level grew 12%, with Baccimi contributing $41.8 million to Amphisar's net product sales.
Speaker Change: Lilly's sales of Vaccini totaled $300,000, which led to a net economic benefit of negative $455,000 after a true-up of certain expenses.
Speaker Change: Throughout the year, Amphistar's Baximi sales have increased, while the net economic benefit has decreased, as we have taken over distribution responsibilities of Baximi in various countries around the world.
Speaker Change: As of January 1, 2025, we assume distribution responsibilities for vaccine in the final two countries.
Thank you.
Speaker Change: Primateen Mist continues to show strong sales growth during the quarter, with sales of $28.9 million, up 18% from $24.5 million in the prior year period.
Speaker Change: For the year, primatine mist sales were $102 million, surpassing our $100 million annual goal we set three years ago.
Speaker Change: Glucagon sales declined to $25.6 million from $31.2 million in the prior year period due to increased competition and a market move to ready-to-use products such as Vaximi.
Speaker Change: Epinephrine sales declined to 18.7 million dollars from 24.6 million dollars in the previous year's period due to increased competition for our epinephrine vial product.
Speaker Change: Gross margins decreased to 46.5% of revenues in the fourth quarter of 2024 compared to 54% of revenues in the fourth quarter of 2023, primarily due to Baccini sales, which were recorded net of Lilly's expenses in the prior year, so there was no associated cost of sales.
We were also impacted by higher labor and component costs.
Speaker Change: Strong sales of higher margin primatine mist partially offset this trend.
Speaker Change: Selling, distribution, and marketing expenses increased 21% to $10.4 million from $8.6 million due to the expansion of our sales and marketing efforts for Vaximi.
Speaker Change: General and administrative expenses remained relatively unchanged at $12.9 million compared to $13.1 million in the prior year.
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Speaker Change: Research and development expenditures decreased 11% in the quarter to $18.1 million from $20.4 million in the comparable quarter of 2023, primarily due to lower spending on clinical trials and materials and supplies.
Non-operating expenses in the fourth quarter of 2024
Speaker Change: were $1.2 million compared to $12.6 million in the prior year period, primarily related to the accretion of the $129 million deferred cash payment to Lilly, which was made in June 2024, as well as lower principal balance on our debt.
Speaker Change: foreign currency fluctuations, and market-to-market adjustments on our interest rate swaps. Additionally, in 2023, we wrote off unamortized debt issuance costs related to one of our term loans.
Speaker Change: The company reported net income of $34 million or $0.74 per share, compared to the previous year's fourth quarter net income of $36.2 million or $0.68 per share, which was up 5% and 9% respectively.
Speaker Change: The company reported an adjusted net income of $47.2 million or $0.92 per share compared with an adjusted net income of approximately $46.9 million or $0.88 per share in the fourth quarter of the previous year.
Speaker Change: Adjusted earnings exclude amortization, equity compensation, impairments to long-lived assets, and one-time events.
Speaker Change: In the fourth quarter, we had cash flow provided by operations of approximately $29 million, and for the full year, cash flows from operations were $213.4 million.
Speaker Change: Let me take this time now to review a few of the financial assumptions we are using as we look forward to 2025 and beyond.
Speaker Change: We took a 3% price increase on Baximi in the United States, and we anticipate continued unit growth in the high single-digit range for this product.
Speaker Change: For primatine mist, we expect sales to grow in the high single digits this year as we continue to expand our physician sampling program.
Speaker Change: We are forecasting two product launches later this year from products on file at the FDA.
Speaker Change: Offsetting these growth trends will be sales declines due to increased competition for glucagon, epinephrine, phytonodione, and inoxaparin. This will lead sales to be relatively flat in 2025 before returning to double-digit growth rates in 2026.
Speaker Change: We expect gross margins to be lower due to pricing pressures on glucagon, epinephrine, and phytonodione, which are higher margin products.
Speaker Change: Additionally, the portion of our Baximi sales made by Lilly in 2024 did not have cost of sales associated with them, and these sales will be recorded by Amphistar this year, so they will have cost of sales thus lowering our gross margin.
Speaker Change: Our selling and marketing expenses will increase slightly as a percentage of sales due to increased efforts related to Baximi.
Speaker Change: Turning to research and development, we plan to ramp up spending on clinical trials and purchases of materials and supplies as we increase spending on our insulin portfolio, two inhalation candidates, and our proprietary products.
Speaker Change: We also anticipate a significant increase in capital spending this year as we prepare to break ground on our expansion project that will significantly increase capacity at our Rancho Cucamonga facility as we look to commercialize major insulin and complex injectable opportunities.
Speaker Change: Spending on this major project began last year, but will ramp up more significantly in 2025. We plan to finance this expansion with cash flow from operations.
Speaker Change: Additionally, we plan to utilize our strong cash position to continue to buy back our stock.
Speaker Change: I'll now turn the call back over to the operator for Q&A.
Thank you.
Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Speaker Change: You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Thank you. Our first question is from Jason Gerberry with Bank of America. Please proceed with your question.
and many more. Thank you. Thank you.
Jason Gerberry: Hey guys, I know you guys aren't offering any 2025 guidance, but I was wondering if you could speak to your outlook on primatine mist and glucagon headed into the next year. Those seem like key products to me. Thanks in advance.
and Dan Dischner. Thank you. Thank you.
Jason Gerberry: So primatine mist, we're expecting to see single-digit sales growth, high single-digit sales growth for that product.
Jason Gerberry: For Baximi, as I mentioned, we took a 3% price increase in the United States. The United States is about 80% of the sales for that product.
Additionally, we're expecting to see high single-digit unit growth.
Jason Gerberry: for that product. And Glucagon, because of the increased competition, we're expecting both pricing and unit volume drops for that product.
Thank you.
Our next question is from Serena Kim with Wells Fargo.
Serena Kim: Hi, thanks for taking my question and congrats on a solid quarter. I was wondering for the products with GDUFA dates coming up in Q2, AMP 007 and 018, how prepared are you to launch these products if they do get approved?
And for the glib one, are you aware of...
Serena Kim: competitors have generally been able to get first cycle approvals or do you think this product typically requires more review cycles? Thank you.
Serena Kim: As far as preparing to launch, with these products being on their first cycle, our thought is that we probably wouldn't be ready to launch until the following quarter. So if it's a second quarter approval, then we would launch it in the third quarter.
Serena Kim: And I'll turn it over to Tony for the other portion of that question. Yeah, for the GLP-1s...
Speaker Change: We think first cycle reviews are possible, but given that these are peptide type products, I think it's optimistic for that for the majority of companies.
Thank you.
Our next question is from Ekaterina Knyazkova with J.P. Morgan.
Speaker Change: Thank you so much. So first question is just on Baccini. I know it's early but what kind of impact are you seeing from the expanded sales force and the collaboration with mankind? Are you kind of seeing the kind of traction you're expecting and maybe latest thoughts of how you're thinking about the commercial footprint beyond 2025?
Speaker Change: and then second question is just on AMP 004. Can you remind us how you're thinking about the size of that opportunity and just the latest on timing is this something that could potentially launch later this year or is this more 2026?
Thank you so much
and Dan Dischner. Thank you. Thank you.
Thank you.
Speaker Change: because we haven't disclosed the exact number, but it's quite a larger number of sales reps than what we've been utilizing, so we do expect
Speaker Change: And I also want to point out that they actually have experience in the endocrinology space.
Speaker Change: So, we really feel like it's a great fit for us so that they can get in and promote the product. So, we're looking forward to that and we'll keep you updated as that goes on. For AMP 004,
I'll have Tony kind of address that issue.
So as far as, yeah.
Speaker Change: getting ready to participate in that market, you know, we don't see that getting approved this year or, you know, probably, you know, it's unlikely to get approved until late next year, so that's something that we'll be prepared for at that time.
Thank you.
and Dan Dischner. Thank you. Thank you.
and many more. Thank you. Thank you.
Our next question is from David Amsalam with Piper Sandler
Thanks. So I'm going to come back to the
and Dan Dischner. Thank you.
informal guidance.
topic or question.
So, you've got...
Speaker Change: Two products that you expect to be launching and that's in your in your in your numbers And then there's competition from the products you called out I guess the you know a couple questions on that is you got your doofus on
Speaker Change: three products this year. Can you say which of the three is between 015, 018, and 007?
you expect to launch.
Speaker Change: Are you factoring in risk-adjusted contribution from those products and is there any way you can quantify how much in the way of new launches you're guiding to versus how much decline from competition you're expecting? I think that kind of color would be helpful. Thank you.
Sure, so we've got four candidates that could be approved.
Speaker Change: and we actually think that there's a possibility of any of them being approved, a possibility of having contribution from all of them. So this is a risk-adjusted basis for two, and what we've decided to do this year is, as we took a look at the potential timing for these things, we're expecting, I'll say, fourth quarter sales from two products.
Speaker Change: So, no new launches until then for our guidance, and that's on a risk-adjusted basis, so it's certainly possible that it happens.
Speaker Change: some in the third quarter or even all four by the fourth quarter, but on a risk adjusted basis, we think based on the way we see things and some uncertainty for some of these products, that two of them is what we're looking at for the fourth quarter.
Speaker Change: Okay, and if I may follow up, just as one of those four AMP 002, which I know has kind of been in flux since the JDUFA came and went back in 2023...
Speaker Change: So, I'll say on a risk-adjusted basis, it's possible, but we think it's probably more likely that that's a first quarter of 2026 event.
Okay, helpful. Thank you.
Serge Ballenger: Our next question is from Serge Ballenger with Needham & Company.
Thank you.
Hey, good afternoon.
Speaker Change: A few questions. I guess first on Baksimi and the mankind collaboration.
Serge Ballenger: And just give us a little more color on what the collaboration represents in terms of additional sales force regarding what you previously had and if they'll be targeting a different set of prescribers.
Serge Ballenger: And I guess, if it increases your peak sales estimates for the product, and secondly, just
Speaker Change: Can you update us on the competitive overview of epinephrine and whether you expect Pfizer to come back in the market at some point?
and one...
Speaker Change: Sure, so let me start with the sales force of mankind. With their sales force, that more than doubles.
Speaker Change: the number of salespeople that are going to be detailing the product. So it covers more of the country than it had previously. Now, keep in mind that for the Mankind portion of this, it's a secondary product for them. So, you know, they're detailing Ephraza first and Baximi second, but I think it's a really good product for them because it gets them, you know, gives them something else to talk about than Ephraza that they've been talking about for a long while. I think it gets them into doctor's offices. So I think they're really excited about it.
Speaker Change: and a lot of them were really excited about it too.
Speaker Change: So, we do think that it takes some time to get that ramp up going and that going so the way we're looking at it is that the sales should accelerate going into the later half of the year as well.
Speaker Change: So that's another thing that we're looking at there. As far as epi goes, remember we saw both the pre-filled syringe and the multi-dose vial. And now there's four or five players now on the multi-dose vial. So that's why we saw the epinephrine sales drop in the fourth quarter of last year. But on the pre-filled syringe, as of right now, we're still the only player in the United States that's...
Speaker Change: selling that product. So right now it's us, you know, our competition there has repeatedly changed the date when they expect to get back into the market, so it's hard to say, but I don't think it's a first quarter and probably not a second quarter event.
Thank you. Thank you.
Speaker Change: Thank you. There are no further questions at this time. I would like to hand the floor back over to Mr. Dan Dischner for any closing comments.
Speaker Change: Thank you all for joining us on today's call. We are excited about the opportunities ahead, especially with two upcoming GDUFA dates in the second quarter.
Speaker Change: We will also provide updates on our branded, proprietary, and pipeline products in the future quarters. We look forward to sharing more information with you on our next call. Thank you. Have a good day.
Speaker Change: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
and many more. Thank you. Thank you.