Q1 2025 Amphastar Pharmaceuticals Inc Earnings Call
David Amsellem, William Peters, Timothy Chiang, Jason Gerberry, Yongfeng Zhang
Dimitrij Ovtcharov The Negro
Speaker Change: Greetings and welcome to the Amphastar Pharmaceuticals' first quarter, Erning Call. At this time, all participants are in a listen only mode. A question and answer session will follow a formal presentation.
Thank you. Thank you. Thank you.
Speaker Change: If any of them 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 the 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, Foward 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: We will also discuss certain non-GAAP measures . Important information on our use of these measures and reconciliation to US GAP 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 Marrs, 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. Dan, you may begin.
Speaker Change: Thank you, Paul. Good afternoon everyone. Before we begin our Q1 earnings call, I'd like to take a moment to acknowledge the incredible dedication demonstrated by our teams here at Amphastar.
Speaker Change: Recently in the first quarter of this year, we were honored to receive the Drug Shortage Assistance Award from the US FDA. This prestigious award recognizes our significant efforts in preventing and alleviating critical drug shortages, ensuring that patients have access to essential medications.
Speaker Change: We take great pride in how our employees understand the importance of consistent access to medicine and continue to work diligently to prevent shortages. The dedication of our teams is what strengthens our company, our company culture, and fuels our drive for success.
Speaker Change: We appreciate your continued support of Amphastar and excited to share our promise with you today, so let's get started.
Speaker Change: As anticipated, Amphastar's performance in the first quarter exhibited a mix of results.
Speaker Change: with our critical care products such as dextrose and epinephrine experiencing softened demand due to increased competition
Speaker Change: Similarly, the competitive landscape for Lupigon has intensified. As a result, we reported net revenues of 170.5 million for the first quarter, reflecting a modest 1% decline compared to the same period last year.
Speaker Change: Despite this relatively flat performance, it underscores the enduring strength and resilience of our diversified portfolio in a dynamic market environment. We recognize the cyclical nature of drug shortages and anticipate that the trends observed in the first quarter will continue throughout the year.
Speaker Change: As we mark the beginning of 2025, Vaccine Me Achieve sales of 38.3 million in the first quarter.
Speaker Change: This figure is closely aligned with the combined vaccine e-sales by Lily and Amphastar of 38.7 million recorded in the first quarter of the previous year.
Speaker Change: The first quarter of 2025 also represents the first in which Amphastar has taken full control of all vaccine operations, including distribution in all countries, following the successful conclusion of our transition from Lily.
Speaker Change: In January , we probably launched our strategic partnership with mankind whose experience sales forces has enhanced our promotional reach for backspinning.
Speaker Change: While this expansion positions us favorably for sustainable long-term growth, we remain focused on the fact that the majority of the benefits and returns from these initiatives are expected to materialize in the second half of 2025.
Speaker Change: Climate Team Myth continues to be a cornerstone of our branded portfolio, demonstrating remarkable performance with sales reaching $29 million this quarter, a 20% increase compared to $24 million in the same period last year.
Speaker Change: This growth can be attributed to significant increase in unit volumes and sustain demand across our distribution channels.
Speaker Change: In tandem with this success, we have expanded our position sampling program which was enhanced earlier this year by launching a pilot initiative aimed at improving outreach to primary care
Speaker Change: We are confident that these strategic efforts will further bolster the growth of market position for primatine nest.
Speaker Change: Together, with vaccine me, we anticipate that both products will serve as key drivers of revenue growth throughout 2025, further solidifying our commitment to expanding our branded product portfolio.
Speaker Change: As we assess the glucagon and epinephrine markets, we recognize the ongoing competitive pressures influencing our performance. This remains, we remain committed to navigating these challenges while focusing on delivering quality and value to our customers and stakeholders.
Speaker Change: In the first quarter, our pipeline is strategically focused on capturing several promising near-term opportunities. We are encouraged by the FDA's recent communication concerning our AMP002 filing.
Speaker Change: While we typically refrain from providing details on FDA communication and do not intend to set a precedent in doing so, we feel it is important to share this exception due to the extended time since our filing has exceeded its original Gadufa date.
Speaker Change: We responded to a simple FDA request properly within one day and maintain a positive outlook on the progress of AMP002's submission.
Speaker Change: As we look ahead to our upcoming ANDA filings, we'd like to provide an update on the progress.
Speaker Change: For AMP007, our inhalation product, we are on track to submit our response to the recent recently received complete response letter or CRL in the second corner.
Speaker Change: Additionally, for AMP015, our Chair of Paratite Product, we are pleased to report that the could do for Goldate and still on schedule for the fourth quarter of this year.
Speaker Change: Furthermore, concerning AMP01A, our GLP1 ANDA, we anticipate submitting our response to the recently received CRL in the second half of this year.
Speaker Change: We are pleased to announce that the FDA has accepted our Biologics License Application or BLA for insulin-aft part, identified as AMP004, with a Bio-Similar User Fee Act or Supergoldate set in the first quarter of 2026.
Speaker Change: This acceptance represents a significant milestone in our efforts to expand our portfolio of interchangeable biosimilar influence offerings, demonstrating our commitment to enhancing patient access to vital treatments.
In light of the current tariff discussions,
Speaker Change: We, as a domestic manufacturer, are closely monitoring the evolving situation We hope policy makers will take into account the distinctive aspects of the pharmaceutical sector and the vital role we play in the health care system as they attempt to level the playing field and shape trade policy
Speaker Change: while we manufacture all of our finished product in the United States.
Speaker Change: We do import some components and API. As the tariff currently stands, it will not materially impact our costs.
Speaker Change: We understand that transitioning from a generic driven business model to a more diversified portfolio that includes proprietary and interchangeable biosimilar products is a process that requires time and strategic effort.
Speaker Change: Our expertise in critical care areas like immunogenicity and product characterization demonstrated through the successful development of complex products such as glucogon and anoxoparent underscores the robust capabilities of our R&D team.
Speaker Change: As we move forward, we remain optimistic about the potential to strengthen our commercial positions and enhance our portfolio of products awaiting approval.
Speaker Change: We are particularly excited about the future of our pipeline within high-value therapeutic areas which we believe will drive significant value for our stakeholders.
Speaker Change: Our commitment to operational excellence will be the cornerstone of our strategy as we navigate the path ahead Thank you for your continued support and we look forward to sharing our progress in the coming quarters Now I will turn our call over to our CFO and Executive Vice President of Finance Bill Peters
Thank you, Dan.
Bill Peters: Revenues for the first quarter decreased 1% to $170.5 million from $171.8 million in the previous year's period. Paxini Revenues for products shipped by Amphastar through $177% is $38.4 million compared to $13.8 million from the prior period.
Bill Peters: As we have now fully assumed responsibility for distribution in all countries around the world we no longer have a net economic benefit booked to other revenues which in the prior year period accounted for sales of $14.2 million.
Bill Peters: Lukugan injection sales declined 27% to $20.8 million from $28.5 million due to increased competition.
Bill Peters: Epineference sales decreased 29% to $18.6 million from $26.1 million to increase competition for a multi-dose file product.
Bill Peters: Other finished pharmaceutical products sales decreased $2.2 million to $50 million from $52.2 million due to the competition for an oxoparine, naloxone, and dextrous.
Bill Peters: This trend was partially offset by sales of Elbuterol, which we launched in August last year, and increased unit sales if I don't deny them.
Bill Peters: Cost of revenues increased to $85.3 million from $81.7 million.
Bill Peters: Gross margins declined to 50% of the revenues in the first quarter of 2025 from 52.4% in the previous year.
Bill Peters: Additionally, pracing declines for our epinephrine multidose vial product, which is one of our higher margin products, contributed to this change.
Bill Peters: These changes were partially offset by an increase in sales of primatine mist and phytonodiam, both of which are higher margin products.
Bill Peters: Dealing distribution and marketing expenses increased 27% to $11.9 million from $9.4 million in the previous year's period due to the expansion of our sales and marketing efforts related to Baximi, particularly the co-promotion agreement with mankind, as well as increased marketing efforts for primacy and mess.
Bill Peters: General and administrative spending increased 2% to $16 million from $15.7 million.
Bill Peters: Research and development expenditures increased 18% to 20.1 million dollars from 17 million dollars due to the timing of clinical trials and FDA filing fees.
Bill Peters: Our non-operating expense at $6.4 million compared to a non-operating expense last year of $100,000. Primarily due to foreign currency fluctuations.
Bill Peters: Net income decreased to $25.3 million or 51 cents per share on the first quarter from $43.2 million or 81 cents per share in the first quarter of 2024.
Bill Peters: Adjusted that income decreased to $36.9 million or $74 cents per share to an adjusted income of $55.3 million or $1.4 cents per share in the first quarter of last year.
Bill Peters: Adjusted earnings excludes amortization, equity compensation, impairments of long-lived assets, and one-time events.
Bill Peters: In the first quarter, we had cash flow from operations of approximately $35.1 million and we used the portion of our cash to buy back $11 million worth of shares.
Speaker Change: Before I turn the call back over to Dan, I wanted to address the first question on investors' minds this year, which is the potential impact of tariffs
Bill Peters: Well, we don't know where tariffs will end up. We believe we are in a good position because we manufacture all of our finished product in the United States. Our current exposure is on certain active ingredients and components which we import in various countries.
Bill Peters: At this time, we estimate that the impact to Amphastar under the current tariff situation is an increasing cost of about $500,000 per quarter. The impact in the first quarter was less than half of that amount. I will now turn the call back over to Dan.
Thank you.
Okay, Paul, we'll take questions now.
David Amsellem, David Amsellem, David Amsellem
Speaker Change: Thank you. Well now we can conduct any question and answer session.
Bill Peters: If you would like to ask a question, please press star 1 on your telephone keypad.
Bill Peters: A confirmation town won't indicate if your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your hand step before pressing the star keys.
Bill Peters: In the interest of time, we ask the participants to limit themselves to one question and one [inaudible]
One moment please, while we pull for questions.
Our first question is from David Amsellem with Piper Sandler
Hey, thanks. So I just wanted to...
Talk more about the...
Bill Peters: Expectations for the rest of the year as it relates to new launches. I think you'd say at least the potential for a couple of launches before the end of this year and with CRLs and just the multicycle.
Bill Peters: Nature of these filings, can you just talk about how you're thinking about impact from new launches this year and the extent to which that could cushion the impact?
I guess
IS THE...
the uptick and volumes that you're expecting.
Bill Peters: also a function of you assuming full responsibility. Over the asset, in other words, there's some disruption that muted volume growth and now assuming full responsibility gets you to a better place in terms of volume growth. I'm just trying to understand, you know, how you're getting there just beyond these commercial initiatives. Thanks.
Speaker Change: Hey, David, I'll take the first part of your question relating to approvals.
Thank you.
Speaker Change: We have our first cycle CRL for our AMP 007. That's the one that we really feel very positive about. We plan to respond to that CRL.
Speaker Change: in the second quarter of this year. So I think from that perspective is giving us a lot of optimism.
Speaker Change: The second is the meetings that Dan referred to for AMP002.
Speaker Change: Action Day for AMP 015 for the fourth quarter of this year, and that one as far as a revenue driver, I think given that this would be the third generic in that space, although it's a desucesize product.
Speaker Change: In the timing of that, I think the revenue optimism wouldn't be too high for this year
Speaker Change: And just to follow up on that, so going back to that again, so we think that 00702 and 015 are all things that have a possibility to be approved in time to get
Speaker Change: and our assumption to get to flat revenue for the year was based on sales from two of those products later on in the year.
Speaker Change: So at this time I will say, given that you didn't ask it, but we're still comfortable with our flat revenue for the year guidance that we gave at the last conference call.
Speaker Change: And then for your second question, the vaccine support, so, you know,
We took over all of the-
Speaker Change: The Selling Responsibilities for it and the Promotional Responsibilities for it at the end of 2023. So we've been doing that for more than one year now. What's changed over the course of last year, we did increase the sales for size, and then this year we also added the co-promote agreement with mankind. So we over time have been increasing the outreach that we have, and most of that is focused on endocrinologists. The Selling Responsibilities for it at the end of 2021.
Speaker Change: not really on primary care, so just to clarify that as well. And then additionally with the script growth, we did see, or if you remember last year, as we transitioned from Lily to Amphastar at the end of the first quarter, we did have a couple hiccups that we mentioned in the second quarter call last year, where there was a couple...
Speaker Change: Pharmacy that showed the product has been to continue, a couple of states, Medicare took a little longer to get stuff online, so all of those things are past us now, so we're still comfortable with the guidance that we gave on that product as well, which was the high single digit unit growth for this year.
Thanks!
Our next question is from Serena Chen with Wells Fargo
Serena Chen: Hi, thanks for taking my question and congrats on the filing acceptance for AMP004.
Serena Chen: Can you talk more about the insulin-asspart opportunity specifically of the insulin pipeline and what are some of the competitive dynamics to keep in mind? And also just wanted to ask what you think might be the challenges, but also benefits of pursuing inter-changeability. Thank you.
Speaker Change: © 2020 The University of Georgia College of Agricultural and Environmental Sciences UGA Extension Office of Communications and Creative Services
Yes, so, um,
With, first of all, it's a large...
Speaker Change: A large sales product, so when we take a look at the opportunities out there, it's one of the bigger products out there with sales of the IQV level sales of over $1.4 billion and it's
Speaker Change: and Peter Walsh. Thank you. Thank you. Thank you. Thank you.
Speaker Change: 40 million units, so it's a big unit draw as well. So what we're seeing is a really big market opportunity. Right now, there's the brand and there is one generic. However, even the generic out there is.
It's not an interchangeable bias in one.
Speaker Change: So our goal is to become the first product that's interchangeable and that's been our...
Speaker Change: our goal all along, and maybe Tony can elaborate on the interchangeability aspect.
Tony Mars: Yeah, we see the value of interchangeability is being able to get an immediate replacement whenever the patient needs one. They don't have to write a script to a specific type of insulin.
It would be just-
Tony Mars: A new equivalent of a generic. So from a sales force perspective, we wouldn't have to have any kind of branded name, like the biosimilers that you see are.
Tony Mars: So it would be just a simple switch whenever a physician wrote.
Tony Mars: Our perspective is that we want to have the interchangeability only.
and our target at first approval for this.
Tony Mars: would be for interchangeability rather than what we often see, which is companies get approved as a biosimilar and then later meet the threshold for the interchangeable.
Thank you.
Jason Gerberi: Our next question is from Jason Gerberry, with Bank of America.
thank you
Jason Gerberi: Hey guys, thanks for taking my question. Just wanted to come back to the outlook for sales to be flat in 2025, so on the pipeline comment, just wanted to make sure I heard this right, so that assumes that there's some second F contribution from one or both.
of O02, O07.
Jason Gerberi: and from time of like spending a response, what's the turnaround time for getting you to do
and then with that semi, I think... [inaudible]
Jason Gerberi: You've mentioned, I think, high single digit volume growth for the product and a little bit of the price benefit carrying over in 25 but...
Jason Gerberi: If I'm looking at the $38 million this quarter, isn't the comparable year-on-year number, roughly $38.5 so kind of flat growth when a year-on-year basis in one queue, and so we just need to buy into the second half, kind of uptick from the mankind-driven promotion.
Speaker Change: So just to clarify the first thing is that we have the possibility of sales from MP002, MP0015, 15, and MP007.
Speaker Change: So those are the three that we believe that we have the possibility and our forecast, the most said is that we would need sales from two products, and Tony can tell you a little bit more about the grant for the good doofa, which right now would be really for OS7, which we plan
Yeah, the turnaround depending on what…
Speaker Change: Categorization, the agency would put these in two, would either be a minor or a major. If it's a major response, it would be 8 to 10 months. If it's minor, it would be 90 days.
Speaker Change: Got it. And then maybe just on the margin pressure that we see in one key on gross and net income, just are these good run rates in the absence of pipeline surprises or or a major inflection in back semi when we look to the next couple quarters.
Speaker Change: So let me ask you your previous vaccine question first. So you're right, we were relatively flat year-to-year with the sales dollars. And what, you know, in the first quarter of last year, what we saw was that there was...
uh
Speaker Change: A little bit of a channel load as both Lily was selling products in the United States and we launched so there was a little bit of extra inventory in the channel by the end of the first quarter so that was...
Speaker Change: Part of the reason for that. And then we saw a little bit of weakness in the second quarter because it's some of the software issues with certain pharmacies and some of the
State Medicaid Issues
So what we've seen in the first quarter is...
Speaker Change: from the AKB data, as well as other low single digit growth year over year, but so far in the second quarter every week has shown a low double digit growth rate so far this quarter. So I think we're getting back to that number. So I think you'll see some of those trends reverse and that we're still confident that we will get to this high single digit.
Speaker Change: Did you crow? Now back to the margin question, there's a couple things that are going against each other there. One is we have not seen all of the price pressure on glue gun in the first floor. That was something where
Speaker Change: The launch didn't happen at the beginning of the quarter, so the lower price for that product.
Speaker Change: but only in there for maybe one month out of the court or not.
Speaker Change: Not three. So we will see margin pressure on that product and pricing pressure on that product as we go forward. But we're also, you know, as we mentioned, we're still growing primacy myths and Baximi, which are higher margin products.
Speaker Change: and we're taking some actions internally to make sure that we're cost-competitive so we're focusing on a lot of things that could help us.
Speaker Change: to operate the business a little bit more efficiently. It was a little less cost, so those are things that were management exact to do, was working on over the last several months and that was already taken action on this time.
Speaker Change: Thank you. Our next questions from Ekaterina Knyakova with K.P. Morgan.
Ekaterina Knyazkova: Thank you so much. So first is just on the regulatory landscape, there have obviously been a lot of changes at the FDA with the new administration. Do you see that kind of impacting review timelines or the approval process more broadly or for kind of complexion or specifically?
Ekaterina Knyazkova: And then the second question is just your own tariff. Depending on what they end up looking like, is there an opportunity for you guys to leverage your youth's footprint to potentially pick up more share in certain markets? How much spare capacity do you potentially have that you could leverage for this? Thanks.
Ekaterina Knyazkova: Yeah, as far as the switches and the changes that we've seen at the FDA.
We...
Ekaterina Knyazkova: We've seen some changes to some persons and some of those are our public and we've seen it and some are at the project management level.
Ekaterina Knyazkova: And we really haven't seen an impact to our end of our timings for our applications in the past few years.
the only difference.
Ekaterina Knyazkova: The only change we've seen are just minor, sometimes it would take.
Ekaterina Knyazkova: A few days for a project manager to get back to us with a question and now it may be a week, but I would categorize that as a really minor. It really has an effect that we've had a few action dates that the agency has met in responding to, so we haven't seen any impact with that.
Speaker Change: The second thing on CAREF is, yeah, because we are a U.S. manufacturing company, I think we're in a much better place than a lot of...
Companies are, so it really depends on how the care of...
Speaker Change: are implemented. At the moment with tariffs on certain components and APIs, right now we are paying a tariff on the API that we bring in from our China facility. And so that's what's leading mostly to that cost increase that I mentioned.
Speaker Change: However, if we take a look at if those go away and they focus on the finished product we're in a much better position.
Speaker Change: So we're definitely hoping that the government focuses more on where the finished product is made so but on the
Speaker Change: The components and raw materials, the good thing is that we source from a variety of countries around the world. We make several of our APIs in the United States as well, so we're not really overexposed to any single country.
Thank you.
Now our next question is from Serge Belanger with Needham.
Speaker Change: Multi dose vial presentation last year, so with that you know that.
Speaker Change: The pricing impact is fully baked in there in our margin our share losses fully baked into the epinephrine. However, we also saw the.
Speaker Change: A pre filled syringe as well for epinephrine. So right now we're still the only company, making that United States. So there's always the possibility that someone returns to that so that's certainly is a risk to that on glucagon as I mentioned earlier, a competitor on that product didn't launch at the beginning of the quarter. So we only have about.
Speaker Change: A third of the quarter baked into that to that extra competition going from really a two player to a three player market. So I would expect.
Speaker Change: No.
Speaker Change: Our products are declining faster and also keeping in mind that as we've said our.
Speaker Change: People are moving from for the people that are using the glucagon injection kit as an anti hypoglycemic product, which is about 30% of our market now those people are generally moving over to ready to use products like vaccine me. So that was a declining market anyway. So.
Speaker Change: We do expect that once it continue to decline as far as the rest of the portfolio goes we do see the growth in vaccine and privacy missed most.
Speaker Change: Most of our other you know we have some have some pressure on dextrose as a company returned to competition there.
Speaker Change: <unk> seen competition on Enoxaparin and naloxone.
Speaker Change: And we're expecting competition on phytonadione in the coming years as well so.
Speaker Change: There's about a handful of products with increased competition.
Speaker Change: A couple of products with you know.
Speaker Change: Where we think we're going to have growth in the rest of the products should remain relatively flat.
Speaker Change: Okay.
Speaker Change: 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.
Speaker Change: Thank you all for joining US today, we appreciate your support and we look forward to sharing more updates in our next call have a great day.
Speaker Change: Yes.
Speaker Change: This concludes this concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.
Speaker Change: Yeah.