Okay, let's get started. Good morning, everyone, and welcome again to the 36th Annual Piper Sandler Healthcare Conference. This is David Amsellem from the biopharma team, and we're delighted to have Amphastar as our next company fireside chat. We have Dan Dischner and Bill Peters with us, so thanks, gentlemen, for joining us.
Thanks for having us.
Always, always a pleasure. I'll just jump in with questions. How's that sound?
Good.
Okay, let's do that. Lots to talk about. So maybe let's start with Baqsimi, which you acquired, branded asset, clearly an important part of the business. And I think there has been in the past some confusion about the commercial infrastructure that you've had and what you're building, and also your efforts to return the product to more significant prescription volume growth. So just help us better understand where the infrastructure is, what you're doing to jumpstart prescription growth for the product.
Yeah, so right now what we've done is, as of last October, we took on an external sales force that's a third-party sales force that's fully dedicated to Baqsimi. And that sales force has been out there detailing the product to endocrinologists. What we've just started talking about is that we plan to have a significant increase in the strength of that sales force and increase in the market share of that sales force. We haven't disclosed what that is yet and how that's going to work, but it's in the works, and we hope to have that up and running by January.
Okay. What has happened in terms of the prescription growth trajectory of the product? If you look at this market, the glucagon rescue market, I mean, it's highly underpenetrated. Your competitors, Xeris, I mean, that product, Gvoke, is growing significantly. So is the lack of growth just the function of the transition from Lilly to Amphastar? Is that really what it is, or is there something else happening here?
You know, so I think we did have a couple hiccups in the transition. So a couple things happened. There were some glitches in the computer networks from some of the pharmacies that said the product was discontinued when people went to fill some scripts in the second quarter. And there were also some other transition issues in the second quarter. I believe we have all that squared away now, though. So we've worked through those issues that did hold back some of the sales at that time period. And like I said, we are planning to, I'll say, significantly increase the sales efforts next year. So I think now that we have, we're more comfortable. We've got all the logistical issues through on the selling side. I think next year we'll return to a larger sales growth than we've had this year.
And remember, this year, on a dollar volume, we were also constrained because we have a higher fee that we have to pay to the wholesalers than Lilly has. So that led to a negative pricing impact this year, which does not happen next year. So next year we're likely to take a small price increase.
Okay, so I guess with all that in mind, maybe talk to overall promotional spend associated with the product as we move through 2025, or maybe another way of asking is what portion of Baqsimi sales are spent on commercial support?
Yeah, so right now we're targeting something in the 15% of sales neighborhood. So we think that that gives us a nice comfortable area where we'll still have this be a very profitable product. So one of the things that we've talked about from the beginning is that we are not spending as much money as the percentage of revenues as some competitors are because we want to focus on profitable growth. So we want to grow the product, but we want to grow it profitably and have strong cash flows.
Okay. Manufacturing of Baqsimi, I believe that's third-party, but what's the potential that you could bring that in-house down the line?
Yeah, so right now it's a very difficult manufacturing process. And at this point we have no plans to bring that in-house. With the packaging, however, the packaging is currently done, the secondary packaging is done by Lilly. So at the end of the year we're going to transition that to a third-party packaging company. But at the same time we're also going to buy Lilly's one of the lines that packages Baqsimi for them. So we will have the opportunity to do that packaging ourselves at some point in the future.
What are your gross margins for Baqsimi?
Yeah, so the gross margins are what we've said in the 70% range right now.
Okay. And that's with third-party, any third-party obligations?
That's with those third-party obligations. And remember, the way that contract manufacturing works is that we pay a per-unit price, but then we also pay a suite fee because we have a dedicated portion of their factory. So that suite fee does not go up. So as we increase the volume of Baqsimi, the average price will drop.
Okay. I wanted to take a step back and ask you about just M&A and business development in general. So Baqsimi was a big transaction for the company. And now you have this anchor product, this brand asset, higher margin. And you've got commercial infrastructure to support the product. So I guess the question here is how are you thinking about additional biz dev/M&A and the extent to which you can bring in other assets where you can leverage that commercial infrastructure?
Yeah, so we definitely are looking at acquiring other things as well, especially if they fit well into the endocrinology branded space where we can leverage that sales force that we have right now. Because right now the sales force is only marketing Baqsimi, so it'd be really nice to have a second product for them to market as well. But that said, we're also looking at other opportunities. And really the three areas that we like to look at are injectables, inhalation, and intranasal. We think that those, that's where we're, that's where we operate today. And we think that those are nice differentiated areas that have large moats around them. So that's where we'd like to stay.
Okay. To the extent that you do look to execute on a transaction, do you have a certain net leverage, pro forma net leverage target beyond which you would not go?
You know, right now we're very comfortable where we are now and under two times leverage. So we have a lot of opportunity to increase that, especially if the acquisition was EBITDA positive, which most of the things that I think we'd look at would be. So we'd be willing to go beyond the three range if we saw the right opportunity.
Okay, so moving on to other products, Primatene, that's an important product, so wanted to get your thoughts on the growth trajectory going forward. The growth here has been less aggressive than earlier in its commercial life. Wondering out loud if the product has hit something of a ceiling or maybe put differently, do you have to put more promotional resources behind it to drive continued growth?
Yeah. In 2024 we set a goal of about getting to that $100 million sales, and I think we're on pace to get there this year. So that's an important milestone because that represents about a 12% annual increase in sales there. As we look, kind of we haven't really given guidance out yet on the next milestone, but we've been thinking about sort of a mid- to high- percentage point in growth there. We did mention that we are going to expand our physician sampling program. In the past, we've actually seen that this physician sampling program has been really effective in bringing brand awareness to the product, which is really important for an OTC product like Primatene Mist. Expanding that program made a lot of sense to us. We'll be doing that starting in 2025.
Okay. What about DTC? I mean, I noticed the other night I saw a TV commercial for Primatene. I mean, is that something you're expanding, broadcast media DTC for the product?
I think we'll keep with what we're doing now and just keep focusing because, again, because it's an OTC and bringing that brand awareness is just really key. So we'll look for all the opportunities, whether it be commercial television or online somehow. We'll look for all those opportunities to continue to grow that.
Okay. Walk us through the exclusivity runway for Primatene. I think in the Orange Book, the last patent, if I'm not mistaken, expires in 2026. So help us understand the potential for competition.
Right. So the Orange Book patent expires in January of 2026, as you know. We have not received a paragraph four notice on that yet. So it kind of signals that it's not in anybody's pipeline at this time. But obviously it could. We feel like it's a difficult product to manufacture, both from an MDI standpoint, but also from a regulatory standpoint, getting an OTC designation for a product is that. And then as we think about the marketing element of an OTC, it's much different than a prescription generic where you rely a lot on brand recognition. You rely on distribution channels and things like that, which is much different than a prescription generic. So I think it might, we feel comfortable where Primatene is right now. Yeah.
I think that last point is really the most important one of all for this because if you take a look at the margins that someone would expect to get should they try to genericize this. First of all, it's a lower-priced product than the prescriptions. Second of all, in all likelihood, a majority of people will want to continue with the brand. They're not going to take the generic. If someone else comes in to genericize, we could always put it in a private label ourselves. That really limits their potential revenue and margin for the product.
I don't know if you can say this, but what are your gross margins like on Primatene relative to the rest of the business?
Oh, it's well above the rest of the business. And as we've mentioned earlier, as we bring on more products to the inhalation site, like the albuterol this year and hopefully AMP-007 next year, the costs go down for Primatene, so it becomes even more profitable.
Okay. So let's move on to glucagon, the injectable glucagon, not intranasal. So that's in and of itself also an important product. And it's grown a lot. You have a retail component, there's an institutional component. Help us understand where the growth is coming from and what the mix is between retail and institutional?
Yeah. So two years ago it was two-thirds anti-hypoglycemic, one-third institutional diagnostic. Now it's flipped. So right now two-thirds of our sales are diagnostic, one-third is anti-hypoglycemic. And the way to look at it is that that anti-hypoglycemic portion is probably going to shrink over time as people move to ready-to-use products. So I believe that that one-third shrinks over time. So that's why we saw actually year-over-year sales decline in the third quarter. And our expectation is that on a going-forward basis we'll see declines in that product.
Overall, so you don't envision on the diagnostic side growth?
If it grows, it's probably going to be more in line with population growth than anything else. So it's not a major growth driver.
What about a potential for an entrance here? I mean, I think Viatris in the past has talked about glucagon. They don't talk about it as much lately, but is that something that you are thinking about?
You know, we don't know where their application is. We can't comment on theirs. But we do know that it's a very hard product to genericize. As of right now, we're the only generic for the glucagon kit that's generic for Lilly's. And it's been that way for almost four years now. So it's a very complex product, very difficult to do, very difficult to make. So it's certainly possible, but right now we're doing well with it and we're happy with where we are.
I know I've asked about gross margins for other products. Might as well throw in a question about margins for glucagon. But I mean, given that you're the only generic here, being is it safe to say that your gross margins are above where you are for corporate?
Yes, they definitely are well above the corporate average.
Okay. So you mentioned Albuterol HFA. I definitely wanted to spend some time talking about that product. I know it's early days, but maybe talk about when we'll start to see contribution from that product and how you're thinking about the overall opportunity here.
Yeah. So we anticipate, we've started to sell it now, but we'll start seeing meaningful contribution probably in 2025. But it is a very, as you mentioned, it's a very competitive landscape. I mean, I think there's multiple RLDs. There's, I think the last count, at least nine people selling an HFA albuterol inhaler. So it's going to be a very competitive market. I think one thing it does do is we make this product in our Armstrong facility where Primatene is made. And so having another product in there sharing the same, it helps with the margins on both of those products. And I think it's a big use. And as we look at our pipeline with AMP-007 coming, that would be another product added to that same factory. So it's meaningful in that way.
So it's less about the opportunity specifically for Albuterol HFA and it's more about just the economies of scale associated with building an inhalation business. Is that how you think about it?
It's both.
Okay, so there is an opportunity for Albuterol.
There is.
Okay. Okay. Fair enough. So now I'm going to go kind of run through just the whole hodgepodge of different products and pipeline. Let's talk about injectable products on shortage. Everyone loves to ask this question. But maybe speak to the sales impact of shortage products in 3Q and how we should think about the impact of shortage products in 4Q and as we move through 2025.
Yeah. So one of the things that we've been doing at our IMS business has been to increase the capacity there through attacking bottlenecks of different things, whether it be rubber stopper production or plastic injection molding. So we've been working through all of the different bottlenecks we have there to increase the throughput. And over the last couple of years, we've been able to increase our output at that facility by about 10% a year each the last couple of years. And so we've been able to attack the shortage issue. And we've gotten to the point now where we've been able to supply the country with all of the epinephrine prefilled syringes and there's no more backorder. And we're getting close to doing that on sodium bicarbonate as well. And that would just leave dextrose.
So there's about half a dozen products that are technically on shortage that we make. But a lot of those we've been able to increase our output and be able to handle all of the market ourselves. So we've been able to increase our sales that. And the other thing that's allowed us to do is that we're now selling epinephrine into Canada as well. So it's been a big impact for us, but it's also enabled us to take on more than we've been able to in the past.
Epinephrine's an interesting one. I mean, what is so challenging about epinephrine? Why does it continue to be such a big shortage product?
First of all, epinephrine is a difficult API to deal with because it has issues with shelf life. So it's not stable in liquid form. So a lot of times you'll see it only have an 18-month shelf life and sometimes meeting that shelf life is difficult. So the formulation has to be good and you have to have the right manufacturing processes as well. So it's easier to do in vial. That's why we've seen a couple of new approvals in the vial recently. But the prefilled syringe is difficult and not many people have the technology to do the prefilled syringe.
Is the prefilled syringe a high-margin product for you guys?
It is a high-margin product. The multi-dose vial was higher, but now that's probably going to come down with new competition there.
Got it. Okay. So let's move on to pipeline and I'm going to ask the obligatory question on AMP-002. And I don't know if you have anything new to share on that one, but it's a unique one because you had a GDUFA that came and went without any action on the part of the agency. So it's not a CRL and we're in the age of user fees and generics, but yet here is one of those that reminds me of the bad old days. So what is happening with 002?
Yeah. I feel like this falls into the category of products that we'd like to develop, right? Things that are going to have some weird complication with it. Certainly this is one, as you mentioned, but we have had a lot of scheduled meetings with the FDA, which is nice to have actual scheduled dialogue, and it has accelerated and moved up the chain at the FDA to a level that we feel like we have made some collaboratively. We've talked about some key things that they'd like to see, so we're feeling more comfortable about some movement on this application, whether it be a CRL or an approval, whatever. At least there'll be some pathway forward, and we really feel confident that it could be this year still that we see something.
When you say this year though, it could mean a decision, not necessarily an approval.
Correct. That is right.
Okay. So a real possibility is after all this a CRL.
Yep. They may ask us for something different or something new. But we would look at that as a success because we could actually have something to work for, work towards.
Yeah. Well, I suppose it depends how long it takes for you to turn it around.
True. But it still remains a great opportunity. There's not another generic out there. There's not, you know, so it still remains a good opportunity for us.
To your knowledge, are there any other filers out there? Anyone else trying to do this?
Not that there is at least one other company we know of trying to do this, but we're not sure where they are.
Huh. Okay. That's interesting. I'm not going to try to speculate on what that might be, but I have some thoughts, but I'll leave it there. In terms of 015, that's the teriparatide generic. I know that that's one where there is competition already. How should we think about that opportunity given that there is competition, right?
I think you're right. It's not the opportunity we thought it would be when we initially filed because there has been a couple of other generics. And I think the way to really look at it as we move forward is what you would typically see in a generic market that has three or four players in it. I think that's, you know, so you'll have some price erosion and narrow margins and things like that.
Okay. But your level of confidence that it'll get approved is still pretty. I know there's been a couple of cycles here, but.
Yeah. I mean, we feel like they sort of moved the goalposts on us. After the other people got approved, they asked us for some additional work that they didn't ask initially. But we responded and we feel like we can get it approved.
Okay, and you have AMP-018. That's your GLP-1 generic. Just remind us if you can, any color on the underlying sales for the brand and how competitive that market will be once you enter it?
Yeah. We haven't disclosed which one it is. So we haven't discussed that at all. I think if we gave those numbers, you'd know.
It's really one of two products. It's really one of two.
It's about $2 billion in sales, like IQVIA.
In IQVIA sales.
Yeah. And undoubtedly we'll be competitive with this type of market. GLP-1 is a really skyrocketing area of interest. So we anticipate it'll be a competitive market.
How are you thinking about generics of other GLP-1s? Like for instance, Trulicity goes off patent, I think in 2027. So it's only natural to wonder if you guys are going to pursue that opportunity. But how are you thinking about just GLP-1s more broadly?
I think as we look at it, understanding the technology around developing GLP-1s and how we can use some of our technology that we've developed within our company, how we can maybe look at those opportunities and can we, as we've talked about, as we move forward in the evolution of our business, we're looking more towards proprietary type products, 505(b)(2). So maybe we can look at it in that way, how we can improve it.
Just continuing along the lines of metabolic, there's your insulin pipeline. So you have AMP-004, that's your biosimilar to insulin aspart. Can you just talk about the resubmission there and how we should think about the review cycle or cycles? I mean, this is glucagon was tough, right? You got it through. Is this going to be as tough, a little easier, harder? How should we think about that?
Yeah, that's a good question. We're going to refile it this year, and I think that the fact that the FDA came back to us and gave us some additional guidance really helps us understand what they're really looking for. I've always felt that this insulin pipeline is really kind of in our lane with the enoxaparin and what they asked for there and the guidance for biosimilars, what they're looking for is really kind of in our lane. It's what we've done, but I mean, I would be a fool to think that this won't be a multi-cycle review.
Yeah. And you have the others. Just remind us on those other insulin products when we should expect filings.
We've talked about kind of a cadence of one every year after we get this one filed.
Now, you recently talked about a biosimilar in development. You call it AMP-028. Any color whatsoever on maybe not the molecule, but just the type of molecule is it a monoclonal, for instance? And just any light you can shed on that?
So the only thing we've said about this, and this is for competitive reasons because it is patent protected and we want to keep our cards close to our vest on this one, is that it is something where we believe we have a competitive advantage because of our current capabilities and manufacturing processes. We have an advantage, we believe, over other people in doing this specific product.
Okay. To be clear, there are others that have filed or are working on this?
No. As of right now, we don't believe that there are any, we're not aware of anybody that's filed it and there's no current biosimilar equivalents on the market.
And it is not a monoclonal.
We haven't said whether it is or it isn't.
Oh, I tried. All right. I've got time for one more. Just real quick, how many filings should we expect in 2025?
Yeah. Typically, I think we say we try to target three, but I'm going to say one to three because we really changed our focus more towards the proprietary type products and we're using our resources more that way. So one to three.
All right. I'll leave it there. Thanks, Dan. Thanks, Bill. Thank you. It's an honor.
Thanks, David.
All right.