Thank you for bearing with us. For those of you who don't know me, I'm Glenn Santangelo. I'm the specialty pharmaceutical analyst at Jefferies that covers Amphastar. We're obviously excited to be hosting the company again this year, and attending from the company to my right is Bill Peters, who's the CFO of the company. And to his right, Jacob Liawatidew, who is Executive Vice President of Corporate Administration. So you may have, these guys have been here for the third year in a row, at least with us. So thank you, guys, for sort of coming back. You know, maybe, maybe Bill, let's dive right into it because I got a bunch of questions and we got 23 and a half minutes. So we're going to do some rapid-fire Q&A here. But let's start with a big picture question.
You know, when I look at where the stock is sort of trading today relative to sort of the three-year average. A little frustrating trading below that three-year average despite what's been reasonably good execution. And so I'd love to hear your thoughts on maybe sort of framing at a high level what the street may be missing. You know, there's been obviously a lot of changes at the company, different value drivers over the past kind of couple few years. Maybe just get some high-level thoughts and then we'll sort of dive right into some of the specifics.
Yeah. So over the past couple of years, we've been able to really execute on our strategy. The first thing that I'd say really was a big game changer was about four years ago when we got the generic glucagon launched. And we're still the only generic on the market in the United States right now. The second big thing is our acquisition of Baqsimi, which has added another glucagon product to our stable. And then as our first foray into a proprietary product on the prescription side, which is something where we see there's a lot of growth still in that product, as we've mentioned in the past. Also, we've had some other pipeline additions, such as albuterol. But I think right now we haven't had the cadence of approvals that we had hoped to have.
But I think that next year is looking like a good year for us with several potential approvals. So I think we'll get into it next year.
All right. So you would probably attribute to maybe converting out of the pipeline at a little bit of a slower rate, probably, is maybe where you get the sense that has created a little bit of friction with the investors. Is that?
That's my thought. And I think we'll be able to remedy that with some more approvals next year and also continuing to execute on the Baqsimi growth that we see there.
Just sort of looking at your company's growth, I mean, I know the company has been expanding its overall manufacturing capacity. I mean, where do you stand today? It just seems like it's a big focus, you know, for some of the pharma companies, obviously, to increase their sterile injectable sort of capabilities. I mean, you know, how do you compare sort of your efforts to expanding capacity to what they're doing on their side?
Yeah. So for us, you know, we had a big expansion about five years ago, adding a second prefilled syringe line in our International Medication Systems business. That was a big bonus to us as we take a bigger market share of those prefilled syringe products. And we do have a long-term plan to quadruple the capacity at our Amphastar facility. But what we've been doing in the meantime is that we've been really focusing on all the bottlenecks that we have at each of our plants. So we've been able to increase the capacity of our IMS business by about 10% a year over the last three years, overall almost a 30% increase by just focusing on the little bottlenecks, whether it be the rubber molding process, the injector assembly process. So we're working on all those.
So we've been able to squeeze out more production out of that facility. We've been able to help the FDA with their drug shortage issues. So we've been supplying a lot more of the epinephrine prefilled syringes, dextrose, and sodium bicarbonate products like that without really having to put any new CapEx into that facility.
Okay. All right. Well, let's dive into the products, and you know, when I explain this company to people, you know, there's obviously you manufacture a lot of different products, but you know, we tend to focus on the top six that, geez, make up close to three quarters of your revenues, right? And so maybe we can just sort of hit some of those because I think that's where the bulk of the questions kind of come, and then we can maybe finish up sort of talking about the pipeline and capital allocation and stuff like that. But you know, let's start with sort of Glucagon and Baqsimi. You know, I guess let's start with Glucagon. That's probably a fair place. I mean, when we go back a couple of years ago, this company was doing, you know, $50 - 60 million in sales in Glucagon.
And now, you know, you're doing pretty much almost double that. So can you talk about, you know, was that all due to capacity where there are changes in the competitive landscape? You know, and then, yeah, we'll start there and then I have a follow-up.
So part of that was capacity. We did, you know, we did file with the FDA to increase our capacity. And then that was granted because there was a shortage in the markets. The FDA actually fast-tracked that approval. So that was something that helped us out at our Amphastar facility. But you know, so now we have additional capacity for that product there that we were able to take advantage of about a year ago in particular.
So the obvious question is, you know, the growth has been tremendous over the last kind of couple of years. And so someone would naturally ask about sort of future growth and how do you think about that, the trajectory in 2025 and beyond, you know, given where you stand from a capacity standpoint and given the evolution within the competitive landscape?
So, you know, the growth, you know, first of all, for glucagon, we think that that product declines over time just because of the move towards ready-to-use products like our Baqsimi. But on our overall business, we see significant room for growth because of the pipeline that we have, particularly with some of the products like AMP-002 and AMP-007 in particular, which we think both have large market opportunities for us.
All right. Maybe let's move over to Baqsimi product. Geez, how long have you had this now? 18 months, roughly?
Almost.
Geez. Okay. All right. Could you maybe break down the geographic revenue contribution for us? Because it's obviously we follow the U.S. on the, you know, using IQVIA. So that's a little bit easier for us to see. But, you know, talk to us about the geographic breakdown. And I think when you did the deal, did you say peak sales $250 - 275 million?
That was our peak estimate.
Okay. So, you know, just give us an update on sort of where you stand and, you know, how much is the U.S. relative to the total and ultimately, you know, relative to that peak sales number?
Yeah, so Baqsimi in general is about 80% U.S. sales and the rest is outside the U.S., and with continued growth, we believe that probably will retain similar basic breakdown, about 80% U.S.
Okay, and the peak sales, is that still, that's your latest guys?
Yeah, 275. Yep.
Yeah. All right. You know, a big focus coming out of that deal, I remember, was, you know, one of your competitors in particular was actually excited to see Lilly sell that product to you because they, you know, they were frustrated themselves that Eli Lilly didn't really dedicate any resources to sort of grow in the product. And it was your competitors' view at the time that, you know, Amphastar to make this deal worth it, they're going to have to put some marketing effort behind this product. And so can you talk about sort of that process and how much money you had to spend to ramp up the marketing efforts in that area? Because it seems like it's working, but I guess, you know, we would still conclude you probably have a fair amount of room to go on that front.
Yeah, that's correct. So as of today, since last year, we have a dedicated U.S. sales team to promote the products. And in 2025, we plan to further strengthen our sales force to basically increase the brand share of voice. I think we have flexibility to continue the growth of that product. So we are very excited with that.
And 3Q in particular for Baqsimi was a big quarter relative to sort of the second quarter. And obviously, you get the back-to-school benefits, I think some seasonality into 3Q. So I don't know what that means for 4Q. And I don't know if there's anything that you can share at this point. Should we see, you know, should we see a sequential uptick or downtick relative to the back-to-school bump, you know, that you got in 3Q?
Third quarter is always the highest in the year because of the back-to-school bump. So we will see a tick down from that level. We did also, though, the 3Q sales were constrained slightly in Europe, as we mentioned on the conference call. We had a supply chain issue where we were not given product of Amphastar labeled products. So in the quarter, we had about 14 countries in Europe which were out of stock for at least a month, which was, you know, definitely detrimental to the quarter. We don't know whether we make up some of that in the Q4 or not. It's difficult to say at this point. But some of those, at least four of those countries were out for eight weeks. So that was an unfortunate problem to have at the peak of the year. But I think that's over now.
We've got the product labeled now. And we only have two more countries to transition from Lilly to Amphastar. So we're working on those in the fourth quarter right now.
Well, that was sort of my next question was, you know, do you think 4Q will be, you know, more stable sequentially given the supply impact? And I think if I just heard you, you know, it sounds like it's behind you. I mean, it's also, I don't know what today is, November 20th, 21st, whatever today's date is, November 20th. So the quarter's more than half over. Is that supply issue behind the company at this point?
The supply issue in Europe is behind us. We're still working out the last two countries. But we do have one more, I'll call a spike issue, a supply thing that we have to do is that we're, you know, converting over from Lilly packaging the product to we are having a third-party package the product for us now. So we're in that transition period now where that has to happen by the end of the year so that we can get product, you know, once Lilly.
How has that transition gone?
So that transition is ongoing and we expect to have it on time. And we're expecting to have enough inventory from Lilly to get us through that transition process.
Okay. I mean, is it fair to say that 2025 on all fronts will be a more normal year, you know, in terms of revenues and margins given the transition from Lilly and the whole TSA will be substantially complete at this point?
Yeah, absolutely. So one of the things that puzzled people, unfortunately, was the accounting issue where all the Lilly sales had to be booked as a net basis after all of their costs. So it came in at a 100% margin. But, you know, that's almost over now. And there's, like I said, there's only two countries where Lilly is selling in the fourth quarter. So that's not going to be a big issue. So next year should be more normalized for that and for other products.
Can you help us think about that, you know, quantitatively what that means? Like when you look back through the nine months, maybe how much, if we were to sort of normalize for the transition, like for, you know, I'm just trying to think if we wanted the model making this up 10% growth next year, how we would think about how 2024, maybe I'm catching you off guard with this question, but, you know, how much the transition, the TSA impacted your top line revenue year to date so far?
So the good thing from taking a look at this year is that the United States is 80% of the revenue, and the United States transitioned in the first quarter. So most of the year had it in there. So it's really a smaller amount that doesn't. But because of that little, that small 20% of the part for the first part of the year, we're only talking, you know, $10 million probably impact next year. So you add, layer that on plus the growth that we're planning to have next year. And we're looking at, you know, as, yeah, we're looking at expanding some of the marketing. So we expect to have stronger growth next year too.
All right. Sorry, I wanted to spend a fair amount of time there because it's almost 40% of the company's revenue. So I think it's important. All right. Let's move on to Primatene, not insignificant double-digit percentage, you know, contributor here as well. I mean, the company had this long-standing goal of hitting that, you know, $100 million in revenue in 2024. It seems like you're obviously going to achieve that goal. And so, you know, can you talk about maybe what got you there? Was it a mix of pricing? Was it better execution, marketing? And then, you know, how does that sort of translate into a sustainable or durable trend in 2025 and beyond?
Yeah, no, so for 2024, growth is all volume growth. We did not take any price increase in 2024. The last price increase we took is in January 2023, so we are very excited with this brand. I think with the $100 million sales this year, as you mentioned, it will be about 12% revenue increase compared to 2023. I think that speaks to a mix of our marketing effort, traditional media, digital media, physician sampling program, and collaboration with the retailers like the Walgreens and CVS on the point of sales, so in 2025, we're going to continue to supplement that with increasing physician sampling program because we think this is a durable, chronic condition product that once patients use it, they like it, they're pretty much going to use it throughout their life, basically.
Jacob, I'm just curious. Everybody raises prices on everything. Why doesn't Amphastar raise the price on Primatene? Or maybe that's coming in January 2025 and you don't want to give away the spoiler.
One thing we are being cautious because this is over-the-counter product. It's not like a reimbursed product. In that shelf, our product, Primatene, is already one of the higher-cost products. We are being careful. We think, again, volume, it's significantly more important than price increase just because once a patient likes it, they're going to continue using the products for life. That's why we are kind of balancing the two.
Okay. One of the frustrations that investors have is sort of how to model all these different products. And that's why I'm sort of going through the top six, you know, piece by piece. But, you know, epinephrine, you know, a classic example, you know, in the second quarter grew, what was that number? 67%. And then it grew 6% in 3Q. So from 2Q to 3Q, right? I mean, we have supplier shortages. One quarter may be, you know, less of an issue in the third quarter. And so, you know, how do we think about, you know, that product, you know, looking, you know, into 4Q and beyond, you know, just sort of given where the competitive landscape may be at this point?
So yeah, for epinephrine, it sort of like falls into two buckets. One is our epinephrine prefill syringe, which is till today still continues shortage out there. And in 2Q, we were able to ship more based on our capacity, a lot more than normally. And so that's sort of like being used throughout the 3Q, sort of slower because the wholesaler already has stocks. And the second bucket of epinephrine is the epinephrine multi-dose vial. That product's seeing competition. So we're seeing like price pressure and volume pressure on that. So that's where we are on that. Fortunately, we also, since we have more capacity of the prefill syringe, we are able to ship some epinephrine prefill syringe to Canada, which is under importation exception by the Health Canada because they have shortage there as well. So that's great news for us to have supplement from that point.
Okay. All right. Maybe let's just sort of finish this segment with just really quick on lidocaine and phytonadione, you know, these products, 8% and 6% of sales, respectively, rough numbers, right? I mean, is there any sort of high-level commentary you can sort of give us on these products? Like for example, lidocaine this quarter, 2% revenue growth, where phytonadione, 57% growth this quarter, you know. And obviously, if you were to look back a quarter ago, I mean, you know, those numbers would have looked very different just a quarter ago. And so, you know, put yourself in our shoes trying to model 4Q and next year, right? I mean, anything happening in the market that you think would be helpful for us to know?
Yeah. So for Lidocaine, I think it just the market dynamic, we are not seeing new competition there. We see some shortage benefit on that products. And for phytonadione, I think 2Q is lower than where we would like to be. And 3Q sort of rebounded back. That market, like we are the only phytonadione prefilled syringe, but we have competition in vial and ampoule. So like we just based on the market dynamic at that time. So it's hard to forecast as well.
Okay.
And then, going back to the lidocaine, also you have to remember that it's not one product that we're selling, but it's an injectable product that we're selling. We're selling the LOJ, which is the spray that goes down people's throat for an endoscopy. And then there's also the jellies. So at any one time, any one of those might have an issue, either a supply issue or a competition issue, a shortage issue. Sometimes there's a shortage issue on the injectable. Sometimes there's been supply interruptions for competitors on the jellies. We're the only one in the LOJ, the one that goes down the throat. So that's been a stable and good product for us.
All right. Bill, we got, and Jacob, we got five minutes left. So I want to definitely dedicate the rest of the time to the pipeline because I think this is important for folks. You know, when we look at the pipeline and we go back to 3Q, maybe there were two things that were somewhat disappointing to people. We talked about the supply issues, right, related to Baqsimi. And then maybe there are a couple of delays in the pipeline this quarter that the company detailed out on the 3Q. So could you just remind people where you saw delays in the pipeline this quarter?
Yeah, absolutely. So for our AMP-002, so the GDUFA date was 2Q 2023. So it's almost 18 months now. FDA doesn't have any action on that application. We continue having positive discussion and dialogue with FDA. And FDA kept saying this is a must-have product for them to get the approval. So we think we are at the end of it. We hope that FDA will take action sometime this quarter, but we could be wrong. But that's one.
I'm sorry, who will take action this quarter?
FDA.
You hope the FDA will take action.
Yeah, correct. So right now, basically, the applications are like in waiting mode, either CRL or approval. We don't know, but they just haven't taken any action on that application. So that's AMP-002. For AMP-015, where we had a GDUFA date in Q4, unfortunately, they gave us a CRL. So we'll be responding to that CRL by the end of this year or this quarter, basically. So hopefully the GDUFA date will be sometime next year.
I mean, when you say a minor CRL, are you somewhat optimistic that it's something that can be dealt with in a reasonable timeframe, you know, from a response perspective?
Correct. We believe so.
Maybe we're pushing that GDUFA from Q4 2024 to some point into 2025 would be the hope?
That's correct. Correct. Because we plan to respond by the end of this year.
You know, one of the other things that I think has been thematic at the company that you're trying to evolve the pipeline maybe into more proprietary products. I mean, Bill or Jacob, I don't know if you want to just sort of give a high-level sort of thematic response as to maybe strategically what the company's trying to do, and is this a shift in focus in any way that's kind of worth calling out via specific examples or anything like that?
Yeah, no, absolutely. So for us, when we shift to more proprietary, not so much for like new molecular entity, it's more like different delivery system. A classic example would be Baqsimi, right? It is a glucagon product, but instead of being injection, it's become intranasal glucagon. So those will be our focus, our delivery focus still injectable, MDI intranasal. So it will be along those lines that when we refer to proprietary where there's no reference drug that we could use as part of the application.
The other injectable product in the pipeline that's on everyone's mind is the AMP-018. I mean, the GDUFA dates in 2Q 2025. I mean, is there any commentary at this point or, you know, we're still six plus months away? I don't know if there's anything you can say about that process.
Yeah. So right now the review is ongoing. FDA accepted for review. We submitted a Paragraph IV notice to the RLD. The RLD decided not to file any litigation against us, which is great. So it will be first cycle Q2 2025. But we basically, it seems like a crowded market, right? Basically because the other companies have been sued. So that's how we know there are other ANDAs out there. But let's see if we could get approval for cycle.
And then, you know, the other on the inhalation side, you know, 007, you know, the GDUFA date is expected to be 2Q 2025. And so, Bill, I mean, just sort of back to your commentary, you're hoping that 2025 could be augmented with some product launches. Are those the four companies, you know, that you, I'm sorry, not four companies, the four products that you think sort of give you the best shots on goal for 2025 being 002, 015, 018, and 007?
Yeah, those are the four that give us the best shot. But as I, you know, would like to say that 002 and 007 are probably our biggest opportunities from a financial and sales opportunity. So those are the most important to us at this point given the, you know, competitors already in teriparatide and the competition we see on the GLP-1.
When we look at these products, I mean, do you think, you know, how would you guess the margin profile of this pipeline is going to stack up relative to the margin profile of your existing business?
We think all of these products will have margins that are above where we are today. And the other thing is that they'll also help us as we get some more capacity utilized at our Amphastar facility, inhalation facility. It'll also help generate better margins for the entire business. So we see those are the.
Maybe last question. And I know the company doesn't give historical, doesn't give guidance for a lot of the reasons that we talked about just now given some of the complexities of all the individual products. But when we sort of look at 4Q, you know, the implied sort of revenue growth, or not the implied, the actual revenue growth on consensus is about 8.5% with maybe 10% sort of growth modeled next year. Just sort of given the growth of the base portfolio, you know, with the potential augmentation from product, you know, some product approvals. Are we within a couple of zip codes? Do you think the street is sort of anything unusual that you'd call out or highlight for everybody?
I think the street has it for the fourth quarter. They're, you know, where, you know, we would expect to be and where we plan to be for the fourth quarter. And then next year, I'll say that, you know, most of our growth is going to come from vaccine, from Primatene Mist, a little bit from Albuterol, and then also from those potential new product launches. So if we take a look at the base business and what we have approved, there is some growth there. But to get to the numbers that the street has, we have to rely on at least one or more approvals.
So assuming we get one or two approvals, we're in good shape. Three or four, we're going to be in better than good shape. Okay. And anything on the margin side? Like we said, if we get these approvals, it should be accretive to the margins?
The more approvals we get, the higher the margin we'll have as well.
Okay. Well, we're out of time.