Hello, everybody. I'm Ekaterina Knyazkova at J.P. Morgan, and pleased to be introducing Amphastar, and from Amphastar, we have Jack Zhang, CEO, and Bill Peters, CFO, who will be doing a presentation, and then we will jump into Q&A, and with that, I will turn it over to Jack and Bill.
Thank you.
Thank you for joining this presentation of Amphastar. We also appreciate J.P. Morgan organizing this conference. Now, I will introduce Company Overview. Our Company Overview can be described in a few words: One- Stop, Dual Strategy Growth Model, Three-H Focus . Specifically, One Stop means fully integrated business model, R&D, manufacturing, and distribution. For the Dual Strategy Growth Model, that means the pipeline development and the strategic acquisition. Our Three-H Focus , means high quality, high efficiency, and high technology. With more details, the fully integrated business model, One- Stop, means we have intensive in-house product development capability, including technical platform, state-of-the-art instruments, animal studies, and a clinical research team. Also, we have fully integrated back-end manufacturing capability, including API and key components, device and key components. We also have complete front-end integration, including marketing and distribution.
Our company can perform product development, API, key components manufacturing, U.S. based finished product manufacturing, marketing, and distribution. This will control over the quality and the compliance throughout the production development and manufacturing cycle. For the dual strategies, we have two arms: primary organic growth pipeline development and a secondary arm that is inorganic growth strategic acquisition. For the primary arm, we have several examples here. This is including Primatene MIST that is an NDA, MDI inhalation, and distributing the OTC asset. This is deployed under marketing in 2018. Next example is glucagon injection. This is an NDA, highly purified peptide, and launched on the market in 2020. The third example is multiple ANDA, NDA development still in process. The number four example is insulin analog. This is the BLA, the recombinant DNA, also ongoing for development. For secondary arm, strategic acquisition, we have three examples: Armstrong acquisition.
This is MDI facility, and we acquired in 2002, 2003. Second example is AFP. This is for recombinant DNA facility. We acquired from Merck in 2014. And the last one is the Baqsimi. This is NDA-approved intranasal delivery, and we acquired from Eli Lilly in 2023. So Amphastar's management team operates this company to insist on high quality, to emphasize high efficiency, and to rely on high technology to develop pipelines. This focus results in high net income margin. So the plot shows our net income margin from 2018 to 2023. From the beginning, only 3.5% to more than 20%. Leveraging strategic vision and core strengths. So our pipeline in 2021, majority pipeline is generic. So 63%. The other are proprietary and biosimilar product. So our plan in 2026, 50% of pipeline will be proprietary product, and generic becomes only 15%.
Our technical platforms, including particle engineering, novel formulation, characterization, immunogenicity evaluation, DNA recombinant, highly purified peptide and protein, and also the novel device. In these slides, we have five examples showing the use of this platform. The first one is Primatene MIST. So this is an NDA, and it's the only FDA-approved asthma inhaler available in the OTC market in the U.S. And the next one is the multiple peptide protein products, including AMP-028, which is still at development. And the third example is insulin analog. This is the BLA, biosimilar, interchangeable. And the number four example is glucagon NDA, this is injection. The last one is Baqsimi, and this is acquired from Eli Lilly. And this is the novel formulation and the novel device. This slide shows our strategic shift toward proprietary and biosimilar drugs. So our effort is to expand our commercial capability through acquisition of Baqsimi.
And so our global footprint will be in 26 countries and more. We also invest on CapEx investment, so increase the product capacity, so prepare the coming increase of manufacturing. We also explore our biosimilar portfolio and also develop the MDI product with new green propellant. So this is a portion of our strategy shift to the new direction. Next, I will forward to our CFO. We are pleased for the rest portion of this presentation. Thank you.
Thank you, Jack. I'll be discussing the R&D pipeline, some financial information, and our proprietary products. We're a company that's focused on R&D investment. We have a strategic focus to make substantial R&D investments to expand our product portfolio, and this can be seen on the graphs on the right there. You can see the R&D expense that we have is pretty significant, and especially on the bottom part when you see the R&D as a percentage of revenue. At times, we've had R&D as a percentage of revenue over 21%. Now, that's dropped a bit over the last few years, but that's more because our sales have expanded as opposed to a decrease in R&D. We've continued to increase the R&D spend.
You can see 2021, that was a little bit of an anomaly that down year because that was the year right after COVID, and we had a difficult time getting certain clinical trials underway and to get those fully staffed up. So that was difficult for us at that time. But other than that, we've had a very strong focus on R&D, and that differentiates us from our competitors because we're able, because of that focus, we're able to do the things that other people can't do, especially for companies our size. The other thing that we have is that our R&D is not only on finished products, but also on API and early stage things as well. So we've developed many APIs for our own products, and we also are in the process of developing APIs for use in several of our pipeline products.
Our pipeline right now includes a certain number of injectable products and inhalation products that are ANDAs. So this slide lists the ANDAs and BLAs, and this presentation is available on our website. So we have a few people taking pictures there. So AMP-002 is a product that we haven't disclosed what it is, but we have disclosed that it's a product with over $500 million of IQVIA sales. It had a GDUFA date, which means the FDA is supposed to respond in the second quarter of 2023. However, we haven't had an action from them yet. We are in discussions with them, and those discussions are on a regular basis with our CEO and our head of regulatory and some senior officials with the FDA. So we hope to make progress with that product this year. The next two AMP-015 and AMP-018 are teriparatide and our first GLP-1 product.
We have for the AMP-015 product, we did receive a CRL last year. We're in the process of responding to that. We hope to have that responded to this in the first quarter. The GLP-1, we have a GDUFA date in the second quarter. AMP-007, the first, the inhalation products that we've listed, that we have a GDUFA date that the FDA extended to the second quarter of this year. That's a product that we're really excited about because it's a product where there's currently no generics on the market. It was a Paragraph IV product. However, the innovator did not sue us. So hopefully that should clear the way for us to be able to launch upon approval. Additionally, we have three other inhalation ANDAs that we have in development. One of those we plan to file by the end of this year.
The final product we have listed here is our first biosimilar that's not an insulin. So this is a product we're designating as AMP-028. It's in development right now. It has sales of over $2 billion for the brand. It's in an area that we don't think there'll be significant competition, and we believe that we have a strategic advantage to manufacture the API for this product. So this is one where we think we can do something that other people probably can't do. So we hope that that might be one where we're one of only one or maybe only a couple of people that could make that product. Our diabetes portfolio is one of the highlights of our program. We've already developed and commercialized the glucagon injection kit. We purchased Baqsimi. For the GLP-1, we filed our first GLP.
But we're also working on interchangeable insulins, three of those BLAs. For AMP-004, that's our first one. We have filed that one in the fourth quarter of last year. So we're excited to get that going. We've had many meetings with the FDA about that, and it's an exciting product with a large sales profile, insulin aspart. NovoLog is the brand for that one. The second one we have is the recombinant human insulin. That's a product where we make the API in our French facility. So we're excited to work on that one. And also the final one is AMP-025 or insulin degludec. That one we make the API in our facility in China. So we really cover with those three BLAs. We cover the full spectrum of insulin, and it covers a significant amount of sales. So the sales potential for these products are very large.
The brands cover over $6 billion in sales and over $70 million or 70 million units. So not only does it offer to us a large target market, but the fact that we could significantly ramp up our production would make our efficiencies of our facility at Amphastar be much more efficient than they are today. Our sales have trended nicely over the last several years. You can see on average our compound annual growth rate is 19% for our revenues from 2019- 2023, a nice increase there, and our EPS is up even more with 74% compound annual growth rate going from $0.36- $3.32 last year, so very strong growth for the company, both the top and the bottom line. Additionally, our quarterly growth is also strong.
You can see growing from $120 million in the third quarter of 2022 to $191.2 million in the third quarter of 2024, or 6% annual or quarterly growth rate there, and the gross profits also growing strong at over 7% in a compound quarterly growth rate over that time period. New launches, one of the things that we've focused on over the time is that we've really diversified our portfolio primarily through new approvals, but also with the acquisition of Baqsimi. You can see on the left there, the first pie chart is the sales that we had in the year we went public, so 2014. Now, nine years later, we have a completely different mix of products. When we went public, we were highly dependent on the enoxaparin. It was over half of our sales. Now we have a very diversified portfolio of products.
It really diversifies the company and lowers the risk that we have of any one product having generic competition. Turning to our proprietary products, the first one we'd like to talk about today is Baqsimi. This was one of our largest acquisitions ever. We closed that in June of 2023. We wanted to talk about why we did this. It's a novel intranasal glucagon product. It really fits well into Amphastar's proprietary and our total product portfolio. It expands our diabetes portfolio. It builds on our commercial intranasal product portfolio and expands our international footprint into 26 countries. We initiated a commercial sales team with Baqsimi, and it's one of our biggest branded products with growing sales. On the patient side of this, glucagon is an underutilized product.
Right now, when we purchased it, only about 10% of patients who were getting insulin were getting a glucagon script. Now, it's recommended by the American Diabetes Association that everyone who gets an insulin script should get a glucagon script. So we see there's a significant market penetration opportunity for the company with this. We're starting to take advantage of that, and we've seen that percentage grow up since that time. So we're very happy about that. And Baqsimi is currently the leader in use for this, the ready-to-use products. It's a very simple nasal administration. It's the only non-injectable glucagon approved by the FDA. It's absorbed through the nose and has a low barrier to administration versus the injection. So it's one that's friendly to people.
People with hypoglycemia frequently, if they're not able to act themselves to counteract that, so they have to have someone else administer the product to them. Now, someone else might have a difficult time administering an injectable product. So therefore, we think that the intranasal route is one that's much better for people that are friends, teachers, relatives of the potential patient. It's ready to use with no reconstitution, and it's also a smaller product size. So it fits nicely into someone's pocket or purse. So it's been a strong grower since it was launched by Lilly, and we took over in 2023. The previous year, two years when we were selling it partially from us, partially from Lilly, we were receiving what we call a net economic benefit from them, just getting into some of the accounting for this.
That was basically we were only recognizing the revenues as basically the net check that we would get from Lilly. So in the countries where they were selling it, they would take their sales, deduct the cost of sales, deduct their cost of selling and distribution, and then give us a check for what was left. And that was what we were recognizing as revenue. In the countries where we distributed it, we would recognize all of the revenue just like you would any other product. Now, as of January 1st, we distribute Baqsimi in all countries. So in 2025, all of the revenues will be booked through Amphastar on the top sales line. And now 2024 was a little bit complicated because on a country-by-country basis, we had to switch over. So it depended on the month in which we switched for the distribution.
So we have and still continue to say that our projection for this product is to reach peak sales of $250 million-$275 million, which is what we've been saying for about a year now. When we originally purchased the product, we had said $225-$250, but we realized shortly after getting the product that it was trending higher than we expected. So we raised that about a year ago. One of the things that we're doing going into 2025 is that we are announcing a collaboration with MannKind to increase Baqsimi's sales footprint with their endocrinology-focused sales force. We think this is a win-win for both companies. They get a new product to detail, and we're paying them to do that. And we get a distribution sales force that's significantly larger than the external one that we have right now.
Now, we plan to continue with our current outsourced sales footprint that we have across the country, but this new footprint will more than double the number of people that are detailing Baqsimi, so we think that the sales growth of Baqsimi will be significantly higher this year, so we're expecting this year unit sales to increase to the high single-digit range, and we also expect, or we also took a 3% sales price increase on January 1st, so we have that as well, so we're looking at, with that sales plus the units plus the price increase, we're looking at a low double-digit sales increase for this year. We're still reiterating the projected EPS at peak as being between $2 and $2.50 on an adjusted basis. Primatene MIST. We're happy to announce that we did hit our $100 million sales target in 2024. We surpassed it.
Preliminary unaudited numbers are at about $101 million of sales. So we're very happy to say that we not only hit it, but we exceeded our sales target. So Primatene MIST, just a reminder, is the proprietary patent-protected over-the-counter epinephrine inhalation product. It's the only OTC product for asthma that's approved by the FDA. We launched it in 2018, and it's had a nice sales growth profile over that time period. There's 20 million adults that have asthma in the United States per the CDC. So it's a very large market for us that we believe we can continue to penetrate. Starting this year, we've decided to increase our physician sampling program to primary care physicians to make sure that they're aware that there's an option for patients that they don't have to get a prescription. So about 60% of people with asthma have mild asthma.
That's what the target market for Primatene MIST is. That's what it's indicated for. We think that there's a nice market that is still unpenetrated for this product. We do continue to see growth in there, and we're expecting units to grow in the high single digits this year. We also are announcing that we're developing a proprietary green propellant formulation for the product. We've developed the new formulation with a new propellant, and we've filed a patent for that as well. We have a patent pending for this product. We plan to launch that at some point in the future, but we're excited about that product that will have better low global warming propellant. Just to discuss some of the growth drivers and upcoming milestones. As we turn to 2025, what's going to happen?
Well, Baqsimi, we're going to see the growth that I mentioned from that in the probably low double-digit range. Primatene MIST, we have the advertising campaign and the increased physician sampling. So we're seeing unit growth in the high single digits. Albuterol, we've launched that in August, and we're starting to see some traction there. So we do expect that to be a growth driver this year. Additionally, we have potential expected approvals of AMP-002, AMP-015, AMP-007, and AMP-018, all are potentially approvable and could contribute later on in the year. Our recent filings include AMP-007, AMP-018, and then also resubmitting the BLA for our first insulin product. We plan to file this year our naloxone Rx-to-OTC switch and our AMP-017 ANDA. That wraps up our presentation. We'll take some questions now.
Looking back to 2024, what do you think went better than expected, and what do you think went worse than expected for the company?
In 2024, what went better than our expectations is we filed the AMP-004 BLA. So this is first interchangeable biosimilar insulin for the FDA under this program. We have multiple meetings with the FDA. And so we filed this one, this confirmed. We have the mutually agreed upon submission requirements with the FDA. This is number one. Number two, the company smoothly transferred Baqsimi distribution to Amphastar. And this is also important for our company because we expanded our distribution capacity to additional 25 countries. Number three, our distribution of Primatene MIST reached our goal of $100 million in 2024. What went worse than our expectations is for the AMP-002.
And this further delayed, and actually, this delayed from the action date almost two years. And this is a special case. And for the FDA, we never saw the FDA have this long time delay because the structure of the product is very complicated. So the FDA have more than carefully think about the requirement for regulatory. So we have regular meeting with the FDA. So exchange the consideration on both the FDA and applicant. So we are confident the FDA have a very clear strategy and move on it. We believe in the near future, the FDA will have a final determination for this product.
And then on Baqsimi, I think you've had the asset for more than a year now.
Just tell us the product, I guess, perform relative to your initial expectations and also just any changes in how you're thinking about the size of the opportunity, the peak sales potential, and how quickly you can get there?
Yeah, Baqsimi has performed very close to our initial expectations, so we're very happy about that. We've made a lot of progress over the last year with the infrastructure that we had to put in place to get distribution around the globe. It's our first product that we're selling in 26 countries. Previous to that, we were only selling finished product primarily in the U.S. and for a couple of products into Canada. So it was a big change and a lot of work for us to get that done. We're very proud of the work that we had to do to get that done.
And we still continue to see the strong growth in Baqsimi. As I mentioned in the presentation, we've reiterated our forecast for the peak sales of $250 million-$275 million in the U.S. for $250 million-$275 million. So we're very happy to be in that range.
And then just maybe elaborate a little bit on what happened in 2024. I think Q3, I think came in a bit lighter than expected. Have those issues been largely resolved? And I guess, how should we think about the growth for Baqsimi over the next few quarters?
Yeah, so those were primarily some limited events that happened. So there were two things that happened in the third quarter. First, in the U.S., there were some hurricane delays of products that were shipped from our facility should have been received but were not received.
That was just a timing, a small shift from the third quarter to the fourth quarter. The other issue was that there were some supply chain issues and so that we ran out of product for Baqsimi in 14 countries in Europe. That was disappointing, and that's not a timing issue. We're not sure whether those sales come back or not. But we've worked through those logistical issues. We've fixed them. Now we've taken over the distribution and the logistics for Europe. I think we're, I think we can keep that under control on a going forward basis.
Then on the decision, I guess, to expand the commercial support for the product, just how in general do you approach setting the appropriate level of spend and where do you think spend can go over time to kind of maximize the opportunity?
Yeah, good question.
So when we launched Baqsimi ourselves and took it over from Lilly, we had mentioned that our sales would be strong and that our spend on it would be about 17% for the SG&A side, which was about what Lilly had spent the year before we purchased it. So that was our target. We actually underspent a little bit last year, but this year we do plan to spend about 2% on G&A type of items and about 15% on selling expense. And the big driver of growth from last year for that selling expense is the MannKind agreement that we have, which we think is a great agreement that will really get to more than double the number of people that are out there detailing the product.
We're really excited about what they can do for us to help increase the footprint and the share of voice out there to make sure that people realize and patients and physicians realize that Baqsimi is really the best choice for people that are looking for an antihypoglycemic product.
Then turning to Prim atene MIST, you're going to be hitting $100 million for the product this year, or I guess now it's last year. What do you think growth can look like from here? I guess. Do you think there's an opportunity to do kind of DTC as well to maximize the asset?
Yeah, we have announced we did hit that $100 million. We're really proud of that. We were probably closer to $101 million, maybe even slightly above that, so based on our preliminary unaudited numbers.
So we'll have our final numbers when we release earnings at the end of February. But we're really happy with the expansion there, and that's why we are expanding the DTC effort that we have. So we are going to be sampling physicians to make sure that they realize there's a good over-the-counter option for patients that have mild asthma. And we think it's so. What we've said for this year is that we're going to grow in the high single-digit range, which we feel very comfortable with. I know some people have taken our $100 million goal as a peak sales number, but it's not a peak sales number. So we continue to see significant. We still see significant growth from here. So we're really happy with it and think the product has a lot of opportunity for growth.
A nd then on epinephrine, another strong year last year.
Just talk about the competitive dynamics you're seeing for both the prefilled syringe and the vials and just what you're seeing from a competitive standpoint and what revenues could look like this year?
Yeah, first, let me start with the prefilled syringe, where we are the only company selling it in the United States right now, and we've also been able to increase our capacity at our international medications facility so that we can not only sell that in the United States, but we're also selling it on an emergency basis into Canada, so we've really expanded the sales of that product to take advantage of the opportunities out there. Unfortunately, on the vial side, we've had two competitors, two recent launches of competitors, so that's going to bring down the sales for that SKU,
and then turning to glucagon, I believe there was also a recent competitive approval here.
Just what should we expect for that product this year just in terms of revenues or erosion?
Yeah, so it's hard to say. We know that there was a product approved. We haven't seen it launched yet, so we don't know when it will be launched. We do assume that it will be launched in our forecast. So we do see sales declines for that product this year. Additionally, we expected sales declines because when you take a look at the market for this product, it's now about previously it was about one-third diagnostic that grew to two-thirds. Now it's at about 70% diagnostic. So the remaining 30% that's antihypoglycemic, we expect that market to shrink over time because we now have a better option out there in Baqsimi.
We expect that a significant portion of that remaining 30% moves over to Baqsimi or another ready-to-use product at some time because the ready-to-use products are really the better solution for that.
And then turning to the pipeline and the generic ProAir launch, I think in August, just how has that launch gone relative to your expectations and how big of an opportunity is it this year?
Yeah, so I'll say it's a little bit slower than we expected, but we did expect a slow launch. We're not one of the top or one of the first generics. So when you launch into an existing market, you have to go contract by contract and bid, and the incumbents have a right of first refusal.
So because of that, they can take some time and think about it and then decide whether they want to keep the market at a given price or not. So that always takes time when you're not the first. So that's to be expected. We probably are getting a little slower than we expected, but we still see this as being a meaningful growth driver in the coming year.
And then on AMP-002, I know Jack addressed a little bit of this, but just any interactions with the FDA. I know this gets asked like every single time, but just any interactions with the FDA and just latest thoughts or sense of when you guys can hear back on that opportunity?
Yeah, for this product, we have the regular meeting with the FDA to discuss how to solve the regulatory issue. As I explained, this is a very special case.
FDA missed the action date for almost two years. And so FDA, due to the structure of the product, is very complicated. And FDA needs more consideration to keep consistency on multiple similar products. So we understand that FDA needs more time, but time just too long. So through the regular meeting with FDA, both the agency and our company are in the same direction, same understanding. We believe in a short period, FDA will solve the problem.
And then just on AMP-028, I think the biosimilar that you guys announced recently, just can you talk a little bit more about the opportunity and maybe we should expect more biosimilars outside of the insulin world for you guys?
Yeah, we continue to make an effort on other biosimilar products besides insulin. And one of the examples is the AMP-028.
This is a product with more than $2 billion sales based on actual data. We are very excited and work on this project with our more experience work on the protein and biosimilar. So we have more knowledge and a better understanding for FDA requirement, including the stability, independent alert, and user stability, the comparative analytical assessment, clinical trial, device. So we believe we are in a strong position than a few years ago to develop more than biosimilar products.
And then thoughts, I guess, on the broader GLP-1 opportunity for generics and what role do you think the company can play in that space?
Okay. Yeah, GLP-1 is a hot topic and we work on it. And what we fired is ANDA and there are multiple competitions. And so the marketing for this one will be very crowded. Yeah.
Then in the last few minutes, just latest thinking on business development priorities and what kind of assets you guys are looking for.
Yeah, similar to Baqsimi, we'd like things that really fit well with our strategy. That's what we're focusing on right now. Our strategy does, as Jack had mentioned and showed in the pie charts, we're leaning more towards the proprietary side. Things that are proprietary are things that we'd be more likely to purchase and also things that fit well with our manufacturing expertise in the injectable, inhalation, intranasal space. Those are things that we think are more difficult to do, as well as things that have a limited footprint for marketing them. We're not looking for things in the primary care area.
But that said, if we saw a generic portfolio or generic product that fit well within what we're doing and we could manufacture ourselves, then w e'd also be interested in that.
Great. Well, thank you so much. I think we're just about out of time.
All right, great. Thank you.