Welcome to the Amphastar Pharmaceuticals Inc. First Quarter Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press 0 on your telephone keypad.
All statements on this conference call that are not historical are forward looking statements, including, among other things, statements relating to our expectations regarding future financial performance, backlog, sales and marketing of our products, market size and growth, product development, the timing of FDA filings or approvals, including the DMF of A and P, the timing of product launches, acquisitions, and other matters related to our pipeline of product candidates, our share buyback program, and other future events, such as the impact of the COVID nineteen pandemic and related responses of business and governments to the pandemic on our operations and personnel and on commercial activity and demand across our business operations and results of operations. These statements are not facts, but rather are based on Amphastar's historical performance and our current expectations, estimates, and projections regarding our business, operations, and other similar or related factors. Words such as may, might, will, could, would, should, anticipate, predict, potential, continue, expect, intend, plan, project, and believe, estimate, and other similar or related expressions are used to identify these forward looking statements, although not all forward looking statements contain these words. You should not place undue reliance on forward looking statements because they involve known and unknown risks, uncertainties and assumptions that are difficult or impossible to predict and in some cases beyond Amphastar's control.
Actual results may differ materially from those in the forward looking statements as a result of a number of factors, including those described in Amphastar's filings with the Securities and Exchange Commission, including in our annual report on Form 10 ks for the year ended 12/31/2020 filed with the SEC on 03/15/2021. In particular, the extent of COVID nineteen's impact on our business will depend on several factors, including the severity, duration, and extent of the pandemic, as well as actions taken by governments, businesses, and consumers in response to the pandemic, all of which continue to evolve and remain uncertain at this time. You can locate these reports through our website at ir.amphastar.com and on the SEC's website at www.sec.gov. Forward looking statements in this release speak only as of the date of the release. Amphastar undertakes no obligation to revise or update information or any forward looking statements in the conference call referenced above to to reflect events or circumstances in the future even if new information becomes available or subsequent events cause our expect expectations to change.
Please note this conference is being recorded. Our speakers are Bill Peters, CFO Dan Dishner, VP Corporate Communications and Tony Mars, Senior VP of Regulatory Affairs and Clinical Operations. I will now turn the conference over to your host, Dan Dishner, VP of Corporate Communications. You may begin.
Thank you, operator, and good afternoon, everyone. Earlier this afternoon, Amphastar reported a very strong start of the year in executing our growth strategy with another quarter of solid revenue growth. We look forward to sharing details behind the quarter's growth and provide a company's update regarding our pipeline. Following my prepared remarks, Bill Peters, CFO, will provide an update on the company's financials and will open up for Q and A with Tony Mars, Senior Vice President of Regulatory Affairs and Clinical Operations, Bill and myself. To begin, we've ended the first quarter with the continuing trend of our diverse portfolio materializing to drive top line and bottom line growth.
With the first quarter seeing $103,000,000 in top line net revenue and our bottom line increasing substantially to $5,000,000 This represents a back to back period of record net revenues. Against the backdrop of a 7% increase in revenues versus the fourth quarter, we saw the successful execution of glucagon's launch, growth with Primatene Mist sales and our epinephrine products continuing to gain momentum. Regarding glucagon, while the product saw its launch in mid February, we've seen tremendous progress with its intake in the retail pharmacy space as we've executed on the same launch platforms as our enoxaparin and medroxyprogesterone products and expect this trend to be durable into the year. Likewise, the same trend can be observed with our epinephrine products as growth in this area was driven organically by higher unit volumes, prompted by a competitor shortage, seeing a 52% increase in total sales compared to previous quarter. Though competitor shortages tend to resolve themselves, we can consistently supply the product when our competitors cannot.
Turning back to glucagon, while its launch and its initial loading can be seen to offset a mid quarter launch, we're keeping an eye on important factors, such as its 72% share in the retail market, according to Equivia data as of March 2021. Nonetheless, we continue to believe the fundamentals are strong for glucagon, epinephrine and Primatene. Our vertically integrated business and planning efforts afford a reasonable resiliency to support the product's growth and demand around the potential supply chain bottlenecks seen among suppliers. Turning to Primatene Mist, the product reached $65,000,000 in annualized sales this year, seeing a strong increase of 27% compared to the fourth quarter as week over week retail sales have continued to trend strongly as observed in the updated slide in our company presentation. Recall that Primatene in the first quarter of last year was driven by significant COVID pantry loading.
We've closely reached those levels organically through our updated nationwide TV, radio and digital advertising campaigns before launching into Target's retail stores. Adding another layer to our marketing strategy, we'll be relaunching a physician sampling program this month to increase awareness of the product as we continue with our digital media campaign to add to our consumer awareness strategy amongst asthmatics in the eighteen to thirty four year old demographic. Turning to products in the pipeline. We received a minor CRL for AMP006 in late April, and we have already responded to it. While this product has a plus $50,000,000 opportunity based on annualized Equivia sales, we are still confident to anticipate a GDUFA date in the third quarter of this year, pending the agency's usual response after minor CRLs, roughly within ninety days.
We believe we are in the closing stage of this product's development. AMP-two, a plus $300,000,000 opportunity based on annualized Equivia data, continues to have no generic for this product. We announced earlier in April that the FDA has reclassified our CRL status to minor. Therefore, we now have a second quarter GDUFA date. We have no reason to believe that this product will not meet the newly established action date.
However, given that this is a complex that there could be additional questions about the development of AMP-two. As for AMP 15 product, we announced in mid April that our paragraph four filing saw no legal challenges as the forty five day window expired in the same month. Again, this product remains a plus $500,000,000 opportunity with no generics on the market. At the same time, we have a GDUFA date in the fourth quarter of this year or the first quarter of next year if a preapproval inspection is needed. Likewise, this is another complex product, and we can anticipate further review given the product's complexity.
Concerning our proprietary product in development, intranasal epinephrine continues to progress well, as our second clinical study has started after a positive response from the FDA was received regarding its safety and efficacy profile. Therefore, the product remains on track for filing in 2022 as planned. Finally, with updates in intranasal naloxone and AMP-eight, we still anticipate our intranasal naloxone to be refiled in the fourth quarter as we are closer to completing our stability studies. Regarding AMP-eight, the product is still on track to be filed in the coming months as this is another Paragraph IV filing where we believe we have strong non infringement position as stated last quarter. However, notwithstanding the usual possibility of a thirty month stay could be triggered regardless of our IP strength.
Regarding previously discussed business items, our insulin program update is still anticipated to occur in the second half of the year. And our IMS UK products launch is now anticipated to occur in the third quarter of this year as MHRA has afforded more flexibility following COVID restrictions being subsided in The UK. Lastly, I'd like to conclude by noting that our pipeline continues with a clear path forward. AMP-two's reclassification, the recent news on the legal clearing for AMP-fifteen, the continued progression of our intranasal epinephrine product through its clinical process, an update on our insulin programs soon to be announced, and a filing expected for intranasal naloxone sets an ambitious yet achievable schedule. Meanwhile, our already launched growth drivers have time to mature in gaining market share.
We've seen tremendous execution on Primatene Mist, epinephrine and glucagon and anticipate this trend to be durable while aligning their success with the progression of our pipeline, which in turn ultimately strengthens our growth driver portfolio. I will now turn the call to our CFO, Bill Peters, to discuss the first quarter's financial results.
Thank you, Dan. Sales for the first quarter increased 22% to $103,000,000 or $84,700,000 in the previous year's period. The launch of glucagon in February was the biggest driver of this increase with sales of $8,000,000 including an inventory buildup by most major retailers. Primatene Mist once again showed strong growth with sales up 43% to $18,400,000 from $12,900,000 in the prior year. Epinephrine sales nearly quadrupled to $15,600,000 from $4,000,000 in the prior year as we increased the market penetration of multi dose vials and had strong demand for our prefilled syringe product as it was in a shortage situation with competitors unable to fill orders.
And opicapairin saw sales increase to $10,700,000 from $9,200,000 in the prior year, primarily due to a pickup of a new customer after Teva left the market in 2020. Naloxone sales declined to $6,300,000 from $8,900,000 on increased competitive pressures, while lidocaine products and phytonodion saw sales declines due to weaker market demand. Our insulin API business had sales of $5,100,000 up from $3,400,000 in the prior year, primarily due to the timing of shipments. Gross margins increased to 44% of sales from 43% as increased sales from high margin products such as glucagon, primatine mist and epinephrine more than offset lower prices and higher costs related to enoxaparin. Selling, distribution and marketing expenses increased to $4,500,000 from $3,300,000 primarily due to marketing costs as we implemented a second commercial campaign for Primatene Mist.
General and administrative spending increased to $15,300,000 from $10,700,000 due to increased legal costs for Paragraph IV cases and employment related lawsuits. Subsequent to the quarter, we settled various employment lawsuits and arbitrations for $1,300,000 which was booked G and A expense. On a related note, we booked a $4,400,000 charge to other expenses for additional reserve for our litigation with Aventis after the court order increased the fees, interest, and costs. We intend to appeal this case. Research and development expenditures increased to $14,800,000 from $15,300,000 due to the timing of clinical trials.
We anticipate that these expenditures will increase in the upcoming quarters. The company reported net income attributable to Amphastar shareholders of $5,000,000 or $0.10 per share in the first quarter compared to a net income of $3,900,000 or $08 per share in the first quarter of twenty twenty. The company reported an adjusted net income of $13,600,000 or $0.27 per share compared to an adjusted net income of $8,400,000 or $0.17 per share in the first quarter of last year. Adjusted earnings excludes amortization, equity compensation, impairment of long lived assets and onetime events. In the first quarter, cash flow from operations was 22,800,000 We used a portion of this cash flow to repurchase $3,800,000 of treasury stock during the quarter, leaving $13,600,000 remaining on our buyback authorization.
I will now turn the call back over to the operator to begin Q and A.
We will take our first question from Gary MacMahon from BMO Capital Markets. Your line is open.
Hi. This is Evan Hoa filling in for Gary. Thanks for the update, and thanks for taking my question. So first, for Primatene, how much stocking was there in the quarter for Target launch in March? And do you expect any sort of step down in 2Q or 3Q?
And secondly, is there any seasonality component with asthma or allergy? And should we be considering that for the next few quarters as well? Thanks.
So for the first question, there was some stocking for Target because they had to load the product into all of their stores across the country. And we would say that this is between $500,000
and $1,000,000 of impact for the quarter. I think the next question was around seasonality. Is that correct?
Yes.
It's still hard to say on seasonality. We do see a little bit of seasonality, but nothing definitive.
One thing I'll point to is the we've updated the presentation, our corporate website. So you can see that the Primatene uptrend there has has been very strong right now. So I advise you all to take a look at that.
Yep. And I also have another follow-up. Can you provide some more color on the strength of epinephrine and where exactly that revenue came from? Was it more volume or price? And were you able to take more share?
Yeah. Yeah. It was it was all volume, not price. And the issue was two things. First of all, we picked up, you know, we're up to our, what we consider a good volume now for the, multidose vials, but the prefilled syringe was in a shorter situation.
So some of our competitors weren't shipping this quarter. And, subsequent to the quarter, that that trend has ended, but we had a very strong quarter because of that.
Thanks for taking my question. Sure.
We will take our next question from Elliot Wilbur from Raymond James. Your line is open.
Hi, good afternoon. This is Lucas Lee on for Elliot and thanks for taking the questions. The first question I have is regarding glucagon. Are there any news on competitive entries or response from Lilly? And where do you expect your share to ultimately settle?
And I have a follow-up.
Right now, we haven't seen any other entries. As we've talked about many times, this is a very complex product. It was off patent for twenty plus years, and there was no other generic. And we haven't seen any other generic at this time. We think that it's fairly sustainable.
The market share that we're seeing right now, we feel that it's sustainable and not much else there. I mean, it's doing really well for us.
Thank you. That's very helpful. Next question is regarding AMP 15. Is this a five zero five or five zero five(two) filing? And are there any other filers ahead of you with potentially blocking exclusivity?
Thank you.
Yes, this is an ANDA product. It's not a five zero five(two). So this is a generic product. And we don't have when they had an opportunity for the paragraph four, We did not see any litigation coming from that. We weren't provided notice that time has expired.
We do know that there is another, product that has an application in, but it's been in for quite some time, and and so there's there's a potential for that.
We will take our next question from David Ensulam from Piper Sandler. Your line is open.
Hey. Thanks. Just a few pipeline questions. So and I apologize if I missed this because I joined late. But number one is on the, you know, on the inhalation pipeline.
Just remind us when what we should expect in terms of the the pace of filings, not just this year, but also but also next year as well. And then secondly, on on the on on epi, you know, on that program, can you just talk about kind of the you know, how you're envisioning, you know, clinical development? Is it just the PK path forward or, you know, or something else? And update us on filing timeline for that. Thanks.
Yeah, for the first one for the inhalation, we anticipate one to two this year and then two to three and three or more in subsequent years. So it is a focus and an emphasis of us. For your second question around the intranasal epinephrine, it is more of a PK type of clinical program. That is, we're not specifically measuring efficacy, directly. And a lot of the trials are around special populations, special circumstances with the use of the product.
We've got a clinical plan that we've presented to the agency and we've discussed it with them in multiple occasions. And so they're aware of what our strategy is and we think we have a pretty good grasp on it. Most of the sites and the physicians that are in this arena, we have great relationships with. We're consulting and we've been working with people that are highly knowledgeable in it. So we we feel pretty confident in in what our clinical plan looks like.
We will take our next question from David Steinberg from Jefferies. Your line is open.
Thanks and good afternoon. I have a couple of questions. First is on Primatene Mist. So even when you adjust, I think you said it was about a half a million to a million in stocking through Target. So even when you adjust for that, it looks like it's annualizing at around $70,000,000 or slightly more.
And I think your expect the expectations for the year were around 65. So given that, what what do you think sales could be achieved for this year? In addition, are there any other major chains besides Target that you're planning on entering this year or have the big chain entries pretty much played out? And then also on o o '2, you know, we've lived through three cycle reviews for Primatene and glucagon, and you got them both across the goal line. Definitely less cycles with this product.
What's your conviction that you'll get approval on the GDUFA date? And then secondly, since you would be the first generic, can you remind us what the current peak sales of that product are? And then how many years has it actually been generic or off patent? Thanks.
Yes, sales so the first one, Primatene Mist sales, yes, while we the first quarter was very strong, we got off the year to a great start. We're still our target for the year is still $65,000,000 Not sure how much of that first quarter had some may have some seasonality involved in that as well. So our target remains
65,000,000. And we've said that we do think it can grow due to, you know, three major factors being that the price point on it is higher than it used to be, there's more asthmatics, and there's less doses in the canister as before. So we do believe there's still room to grow. The next question, remind me again, you asked several questions. We have all
of the major chains now with the Target out there, and we even have availability into the, you know, smaller retailers through our our program through the the major wholesalers. Yeah. Think there's room
on online sales to grow a little bit there. For the for the question on AMPO two, we remain confident. This is a complex product that's been out patented. I think maybe a long time. Yeah.
I did. Quite a long time. I I I don't know exactly when, but it it's been some time. And I think to to gauge a level of confidence, if if we I I think for just having this one CRL to have approval, we would be extremely satisfied and and and very happy, at this point. It it was categorized as a minor so I think you a minor CRL, so I think you can kind of gauge that, and what that means.
And to us, I think that speaks quite a lot, for, how the agency views this
product. And and just one follow-up. On glucagon, looks like you did about $8,000,000 in its first quarter. Was that all demand based, or was there some pipeline fill in that glucagon number? Thanks.
I'll say there's definitely a pipeline fill involved in in that number. But remember, we didn't launch until about halfway through the quarter. So even though there was, you know, a pipeline launch, there's probably a month worth of of the of the pipeline stock in that.
Once again, Our next question comes from Tim Chang from Northland Securities. Your line is open.
Hi, thanks. Just on Primatene Mist, I mean, there any other additional channels that you might be able to take advantage of on a distribution side for that product? I mean, obviously, you've hit all the major retailers. You're at Amazon. I mean, have you guys thought about any other avenues to where private team missed haven't really hasn't been made available?
I mean, you know, we've
hit the major ones as as you know. And Amazon hasn't been very long. I think the biggest point of growth for the product is expanding the demographics as we're changing focus. Initially, it was just to kind of reintroduce the product. Our initial marketing strategy was to introduce the product, recapture the demographic that knew the product well.
And then now, expand it into other demographics using different mediums such as media to and and and even the TV. The TV ads have been really working, so we added another TV ad, but really kind of branching into different demographic groups. We think that's where the growth will be most.
And then maybe just a financial question, Bill. I mean, I think your gross margins this quarter were at around 44%. You know, how how do you sort of think of gross margins, you know, through the course of this rest of this year? I mean, is a 44% gross profit margin, is that sort of going to stay at that level? Or do you think it has some opportunity to increase later this year?
Yeah. It has some opportunity to increase. Part of, you know, we do have, with enoxaparin, there's, whenever we buy inventory, we have to, take a write down because we're selling at the low cost. So that that process can be lumpy because we're not buying it in exactly the same rate that that we're selling it. So this this quarter, there's probably a little bit more of that reserve involved in that than there is on the average, quarter.
So there's some opportunity for that. And also, we think that, as glucagon sales go up, from the rest of the year, we believe that, because that's a high margin product, we'll get a benefit out of that as well. And should we get one of these other, products at the FDA right now approved, all of them have higher margins than our corporate average so that there's an opportunity to go up, for that reason as well. And then also Primatene Mist says we, you know you know, if that can grow further from where it is today and we believe it will grow further, you know, the that's a higher than average margin product too.
You know, just one last question. Just on this, you know, this this facility you guys have in China. I mean, obviously, you have a number of DMFs, filed there. I mean, when do you guys expect to actually start to generate some meaningful revenue out of the Chinese market?
Yes. So, you know, last year we had, you know, first of all, the biggest customer of that facility is our Amphastar US and we buy some APIs from them and also we contract them to do some R and D work for us, around the R and D of APIs. But last year we had over 3,000,000 in sales which was up significantly from the prior year. And I think what we said this year was that we expect that number to double this year and and so so we should have more revenues this year. It wasn't reported in the the press release, but we had a little over $1,000,000 in third party sales from that facility in the first quarter of this year.
So it's already on a trend higher than the quarterly run rate from last year, and we do expect continued growth out of that facility.
Okay. Great. Thanks.
We will we will take our last question from Sergey Ballinger from Needham and Company. Your line is open.
Hi. Good afternoon. Thanks for squeezing me in. So, Bill, you received approval for a grandfathered product earlier this week. Any more of these grandfathered ANDAs in front of the FDA right now?
And then in terms of the the rest of the pipeline, you've talked extensively about o two, o one five, o six, and some of the p four products. Maybe just give us an idea of which ones you expect could receive approval in 2021.
Well, since you addressed that first question to me, I'll take that. So we do have one more grandfathered product out there, but it is the epinephrine prefilled syringe which is a very important product to us. However, we have filed that as an NDA, not an ANDA. So that application is pending. And then I'll turn it over to Tony for the rest of that question.
Yeah. You had mentioned AMP 15, and that one has, a goal date in the fourth quarter of this year. We have a couple of other products, AMP006 which is the third quarter anticipated or action date. We have another AMP009 which we have an action date later this year as well. And then AMP 13 that has an action date later this year.
The last two of those, are filings that are paragraph four filings and so there there'll be some some issues surrounding those. But but from an approval perspective, those are what we are anticipating. We also have a GDUFA date for zero zero two. So that one is also '30 q three, I think.
No. It's q two. Oh, q two. Sorry.
You're right. My mistake.
And then just on the biosimilar insulin program, any new developments or or FDA interactions regarding the development path for for that program?
I'm sorry. Can you repeat the question?
Yeah. Regarding the biosimilar insulin program, any new developments or FDA interactions regarding the developmental pathway?
We're planning on providing more color to that insulin program in the second half of this year. We want to roll out the entire program and kind of give a more complete update at that time.
All right. Got it. Thanks.
Thanks.
We have no further questions at this time.
Okay. Thank you, Jamie, and thanks, everybody, for joining us today on our Q1 call. It was a good year or it was a good quarter for us. We hope to continue that success into the next quarter and look forward to sharing it to you at that time. Have a great day.