Good afternoon. I'm Serge Belanger, one of the Healthcare Analysts at Needham. I want to welcome everybody to day three of Needham's 24th Annual Healthcare Conference. For our next fireside chat session, we have Amphastar Pharmaceuticals with us. From the company, the CFO, Bill Peters, and the Senior VP Corporate Communications, Dan Dischner, are joining us from California to give us an update on the company.
Before we move to Q&A, maybe I'll hand it over to Bill and Dan, just maybe to give us an overview of Amphastar for those who aren't familiar with the company. Then we'll move to, you know, to some questions. I guess I should highlight that we are able to take questions. Those listening in on the listening to the presentation on the portal can submit questions on that platform. We'll take those as they come in. With that said, Bill, Dan, thanks for, yeah, Bill and Dan, thanks for joining us. I'll let you give us an overview, quick overview of the company.
Thanks for having us, Serge. Appreciate it. Yep. Pleasure being here. Amphastar is a specialty biopharmaceutical company focused on developing, manufacturing, marketing, technically challenging injectable, inhalation, and intranasal products. We're able to do this because we have a strong foundation in developing complex generic injectables with robust, vertically integrated capabilities that include product development, things like state-of-the-art analytical technologies, animal studies, an in-house clinical research team. We have a full back-end manufacturing, including API and starting material manufacturing. We have a U.S.-based finished product manufacturing. We also have a complete front-end integration that includes in-house marketing and distribution. We cover the gauntlet when it comes to the vertical integration. We believe this gives us better cost control and supply chain security, as well as it allows us to maintain a high level of quality assurance.
We've invested in research to bring differentiated products to market across key therapeutic areas such as critical care, respiratory, and endocrinology. We have a strategic growth plan for developing branded and interchangeable biopharmaceutical products and leveraging our proven established scientific technologies. That is kind of a lot of our focus at this time. We've also shown consistent revenue growth with a solid balance sheet for future expansion. We feel like we're in a good place to do some things if we need to. That is a brief overview of Amphastar and who we are and what we're working on.
Great. Thanks for the overview. I guess first question, one of the topical topics of current of du jour of the last few weeks has been tariffs. So far, pharmaceutical products have been exempt, but I think there's expectations that it's only temporary. I know Amphastar has subsidiaries in China as well as in France. Maybe just give us an overview of kind of the manufacturing and what kind of exposure you could potentially have if tariffs were enacted on pharmaceutical products.
Yeah. So, you know, right now we're, you know, we're, we like a lot of other people aren't sure exactly what's going to happen. We've been looking at different scenarios. You know, we do have API and starting material manufacturing in China where we make five APIs or starting materials for our products, plus a couple of APIs for our pipelines. We do import those as well. I'll say of those, you know, we import them, but we make the APIs for two of those in the United States. We make the APIs for a couple other APIs for our other products in the United States as well.
Compared to most companies manufacturing multiple APIs in the U.S. and making all of our finished product in the U.S., I think the tariffs will probably have a less impact on us than they will on others. It all depends on how it plays out. For example, like on the China tariffs, if there is a tariff on API but not finished products, that is bad for us because our competitors are making, for enoxaparin for example, are making their finished product in China, whereas we are just making the starting material there. If there is a tariff on finished products from China, that will really benefit us because our competition there is primarily, on enoxaparin at least, primarily making finished product there. They have a distinct cost advantage right now. That would give us a cost advantage.
We might be able to pick up some of the market share that we had to give up due to pricing decreases recently. As far as other countries go, we source products from around the world. We buy APIs from a multitude of different other countries. We source certain components from Europe, Canada, and Mexico. All of those things have the potential to be hit by tariffs.
Right now, when we took a look at the first cut of it, we did not think the tariff exposure that we had was going to have a material impact on our financials or a significant change to the guidance that we gave in February, which was pre-tariff. You know, we have to keep monitoring this. You know, we'll take a look at what happens, you know, because, like I said, it could benefit us in some ways or it could hurt us in others. It just depends on how the tariffs in the end are actually laid out.
Okay. I think the other area where the new administration has had some impact has been with the FDA. I know Amphastar has a close relationship with the FDA, you know, for the product shortages as well as you have a number of ANDAs under review. Just curious if any of those recent changes at FDA may have impacted some of your relationships that you had either on the product shortage side or with the generics and the ANDA reviews.
Yeah. As we've said, or we're saying is, you know, we really haven't seen yet any real changes at the FDA. As we posted today in our presentation that the FDA actually met two action dates already. Actually, one of them was a week early. We saw that last week we had an inspection at one of our facilities. That was something that was, I guess, you know, projected to not happen or to cut back from the FDA on inspections. That didn't happen. We actually had an inspection last week.
What we've seen is pretty much business as usual with the FDA, maybe even, you know, like I said, a week early on an action date. I think we're anticipating there to be some slowdown at the agency. I mean, when you lose that many people, there's a good chance that it will impact us as we move forward. It is still really early in the process. I don't, you know, I know our regulatory team is there today at the FDA for a conference. Maybe we'll get some more feedback about what's happening and what he sees. Right now, it's kind of just business as usual for us.
Got it. Okay. All right. Let's talk about growth drivers for 2025. I think you highlighted some of them in your last earnings conference call. I believe Baqsimi, I think, is a big one, big one for the company. Maybe just talk about your expectations for Baqsimi in 2025, maybe by starting where the transition into Amphastar is currently.
Yeah. So the transition is fully complete. You know, as of January 1st, we were doing everything in all countries, you know, managing the supply chain, distribution, all of that was up to us. That was changed from the fourth quarter where there were still two countries out of 26 where Lilly was managing that relationship and the sales. You know, right now we're doing everything. It was a big lift for us because, you know, 24 of these countries, or 23 of these countries we hadn't been doing business in. So it's a nice change for us to have that additional work done and different relationships in those other markets. I think it really gives us an advantage as we look to expand going forward.
Maybe for those who aren't familiar, if you can just kind of outline the market opportunity for Baqsimi and, you know, what it competes against, where the market shares are currently.
Yeah. So right now, you know, just going back to one of your other questions, which was, you know, the expectations for this year was, you know, we have said that we're going to have high single-digit unit growth as our expectation and that we took a 3% price increase in the United States. So those two things together help us get to some nice growth. We've also mentioned that we've increased the marketing efforts. So some of that increase will come at the end of the year as opposed to the beginning of the year. As market share, we have about 60% of the ready-to-use market right now.
And we're, you know, we're growing that, but, you know, we're growing the ready-to-use market through our marketing efforts. So we're really happy with those efforts. You know, as far as the product itself goes, it's just to take a step back. It's a ready-to-use glucagon product for anti-hypoglycemia. If some person who's diabetic takes too much insulin and they get an insulin level that's too high, you give them this to offset that. It's, you know, a really important product out there in the endocrinology field.
Got it. In terms of competition, I believe there's only one other major player that you compete against right now.
You know, Gvoke is the only other major player that's really making an impact in the ready-to-use space. So there's ours. But we also sell our glucagon kit, which is kind of a legacy product. It's a generic product to Lilly's glucagon kit. That's one where we sell the glucagon instead of the ready-to-use product like our Baqsimi, which is a nasal spray ready-to-use right away. This is a product that is, you know, you have to take the lyophilized powder in a vial, have a diluent and squirt the diluent into the vial, reconstitute it, withdraw it into the syringe, and then inject it into a person. So it's a much longer and more difficult process. So the ready-to-use products like Baqsimi really are much better for the market and for that.
Okay. Like you said, one is a nasal spray and Gvoke is an injectable. You know, what other differentiation or why would a patient or physician choose one over the other?
You know, if you take a look at, you know, why would someone want to use the nasal spray? When you take a look at who's going to be administering the product, it's not the person who is diabetic. It's probably going to be someone else because they're going to be in a condition that makes them have some difficulty in doing it. They might be unconscious or they might be not cognizant of what's going on. You are going to be relying on someone else to administer the drug.
What we've found and what other studies have shown is that people who are bystanders that don't have training are hesitant to give an injection to someone, even if it's an auto- injector. That hesitation is a problem. What we've found is that people are more likely to want to give the intranasal product. It is a better solution for the people that are out there that are going to be actually administering. It is a safer option for people to be getting.
Okay. Now that the transition of the asset into Amphastar is complete, can you just maybe give us an idea of like the size of the internal sales effort at Amphastar and I guess also talk about the MannKind collaboration that you recently entered into?
Yeah. We haven't disclosed the size of our sales force or MannKind sales force. What we have said is that we've recently entered into a co-promotion with MannKind where all of their reps are detailing Baqsimi as their second product after Afrezza. This more than doubles the number of reps that are out there detailing the product, which is why we feel comfortable this year giving that guidance of the high single-digit growth rate. It's also why we've said in some other meetings that we expect the growth rate to accelerate this year. It'll be higher in the second half of the year and a little bit lower in the first half of the year.
It's a really good collaboration between us. As you probably know, we also sell them the insulin for their Afrezza pens. You know, we already have a good relationship with them. We've worked with them well for years. I think it's a real win-win in that we're paying them. They have a second product in the bag, so it's good for them. It more than doubles our sales force, so it's good for us. You know, we think it's a really good collaboration.
I imagine you'll focus more on endocrinologists, which frees you up to focus on other folks.
You know, we're still going to be focused on the endocrinologists and what we've been focusing on in the past was the endocrinologists. We're focusing on pediatric. They're more focused on adult just because of the labeling age for their product versus our product. Now, our product recently got extended down to one year and up. You know, we take it all the way down there.
There's as much higher than that. They're more focused on adult endocrinologists. We're very focused on pediatric endocrinologists. We do have some overlap because we also target some of the high-writing adult endocrinologists as well. There's definitely some overlap in endocrinologists that serve pediatric and adult populations. Given the number of people out there, it just increases our target coverage to new markets where we didn't have someone already marketing the product.
Got it. In terms of peak sales, if I remember correctly, you've talked about $250 million-$275 million.
Yeah, that's correct. We still think that that's a good number. We haven't said when we're going to get that. We have said it's after the five-year mark for owning the product. You know, we still see a very strong growth pattern here. One of the reasons that we see this is that when you take a look at the people who should be getting a glucagon product, the Diabetes Association recommends that everyone who gets insulin should also be getting a glucagon script. When we purchased Baqsimi, only 10% of people who were on insulin were getting a glucagon script. Now it's up to 12%.
We think that there's still a large unpenetrated market there that we have an opportunity to continue to grow this business. We think there's a large open space that we can keep doing this. One of the things that we think with these ready-to-use products is that we expect compliance to continue longer into adulthood where it sometimes drops off when you have a product that's easier to use, easier to carry. We think that that 12% has a lot of upside opportunity there.
Okay. For those who get up early every Friday to look at IQVIA data, is that data pretty reliable of the trends that you're seeing internally?
Yeah. So, you know, we actually do look at the IQVIA data. And thanks for sending that report out so early. Every Friday, we take a look at your report because I think I get it faster from you than I get it internally. So I appreciate that. Yeah, so I think in general it is. You know, there's always the oddities in the timing of sales. For example, you know, in the fourth quarter, one thing that we've noticed across pharmaceutical products is that wholesalers buy extra product going into the new year.
We always see larger purchases of those products in December than we do in January. The way I like to look at it sometimes is that December sometimes is like a 14-week sales month for our products, whereas the first quarter is a 12-week sales quarter. You know, there's always those timing differences and retailers stocking up or wholesalers stocking up. In general, you know, we do see, we think it's a pretty good long-term indicator.
Okay. If I recall, when you acquired Baqsimi now almost two years ago, you talked about it as the, you know, the Baqsimi franchise being kind of a new beachhead for the company on which you could build on with additional BD opportunities in the future. Is that still how you're thinking about the Baqsimi as an opportunity?
Absolutely. You know, a lot of things that we've looked at over the last year are things that would fit well into the endocrinology space or in this also potentially utilizing some of the relationships that we've now established in other countries. We're looking at that as a way to, you know, add value and where we can have an easier entree. It also allows us to look at more opportunities than we could have before. That's a definite plus for us.
Got it. Okay. Primatene Mist, I believe it's been on the market now for seven years. Is that correct?
Overall, but even longer than that. But yeah, with us.
I guess the return of Primatene Mist.
Yeah. Yeah.
Last year, you surpassed your guidance of $100 million annual sales. How should we think about the next leg of growth here for Primatene Mist?
Yeah. You know, like you said, we have a solid presence in the over-the-counter asthma market with Primatene Mist. We still see potential growth in that market, mostly targeting, bringing more, you know, consumer awareness to the opportunity that in looking at people that are, you know, have mild or intermediate asthma, focus on that, more targeted marketing opportunities through the physician sampling program. I think we're guiding towards a high single-digit growth for that product this year.
That's all volume?
That's volume. Yeah, sales volume.
Okay. Is this still kind of a very promotionally sensitive product, even seven years after its return?
Yeah. So, I mean, you know, we've been doing the physician sampling program for a few years now. We see that it's really working, bringing, you know, primary care physicians, you know, educating them so that they have informed discussions with their patients about OTC options for treating their intermediate asthma or their asthma. You know, we see that as being, and over the years with this physician sampling program, we've seen that be really successful. This year, we actually expanded our effort there by adding more people to go out and educate these primary care physicians so that they can have those discussions. I think it's really helpful to continue to educate the consumers about this product. It's been working for us.
Okay. Glucagon was, I think, a pretty successful part of the story a couple of years ago as we saw some significant expansion, a little bit more pressure last year. Just curious, you know, entering 2025, whether we'll still see that pressure. I believe there was also a new competitor from Viatris. I think the last time we spoke, they hadn't launched yet. Are they now in the market?
Yeah. So yeah, they have launched. They are in the market. And we expect that, you know, you had alluded to, you know, there were declines last year just due to the market dynamics, but also the shift of people moving from the ready-to-use to the ready-to-use product from the kit. Let's remember now that for glucagon, the kit, there's two markets. There is the anti-hypoglycemic market, and then there is also the diagnostic market. When we first launched the glucagon, we were, you know, 60% anti-hypoglycemic, 40% diagnostic. Now we are 70% diagnostic, 30% anti-hypoglycemic.
The market's really shifted a lot as people are moving towards the ready-to-use products for the glucagon product. What we have left is that 30% is going to continue to shrink as people move to the ready-to-use. That is something that is going to continue to happen. That 70% that right now is on the diagnostic, that's going to stay relatively flat, we believe, you know, just kind of grow as the population growth. We do have a third player now in that market. We do expect pricing to come down, and we expect our volumes to come down this year. We probably expect to see an acceleration of that decrease, which is really the biggest reason why we've said that we're going to be flat this year is because of the decline in glucagon sales.
Okay. The impact here, this was about $100 million in sales product last year, roughly?
Yeah. We had, I'm trying to think what I had in front of me a second ago, but last year we had $108 million in sales. The year before that was $114 million.
Okay. So a 20%, 30% haircut would not be unreasonable?
It would not be unreasonable.
Okay. On epinephrine, I think another product that's been, I think, a success story for Amphastar, also two kind of segments here. Just give us an overview of where both segments currently are and where you think you'll be seeing more competition in 2025.
Yeah. So we sell the, you know, first of all, Primatene Mist has an epinephrine base, but we're not going to include that one in it because that's a different product completely. In the injectable side, we sell two epinephrine products. One of those is a multidose vial, and one of those is a prefilled syringe. The prefilled syringe is primarily used in critical care. It's a hospital crash cart item that's stocked on all hospital crash carts, in ambulances, emergency rooms, that sort of thing. The multidose vial can be used in those situations, but it's also used in allergy clinics and other places like that, so more of healthcare use. What we've seen on that is that we've seen two new competitors on the vial last year. We've seen that market begin to change pretty significantly.
That was the higher margin product of the two. We have seen a unit erosion and a price erosion that started last year and has continued into this year. As of right now, on the prefilled syringe side, we are still the only player in the United States that is shipping that product. We had one competitor. That competitor had some problems and was not able to manufacture it. It has been almost two years now that we have been the only player in the United States. The good news is that we have been able to take up 100% of the market for that product. Actually, just a week or two ago, we got an award from the FDA for drug shortage for being their supplier of the year. They named us, they thanked us for being able to take out the Epi from a shortage situation.
By taking on 100% of the manufacturing there, and what we've done there is, you know, similar to some of these other shortage products, we have significantly increased our capacity at that facility. You know, we did it five years ago through putting on a second line, but we've done it since then by just taking every small bottleneck that we could out of the manufacturing process to just continually increase our production levels by double-digit rates over the last three years, even though we haven't had a big CapEx implemented to that facility.
Okay. The mix here between the multidose vials and the prefilled syringe, is it kind of 50/50 in terms of revenues?
It was about 50/50 last year.
Okay. I guess it'll lean more towards prefilled syringe this year just because of the additional competition?
Yeah. But we also, you know, we expect, you know, when we gave our forecast of flat sales for the year, we also anticipate that the other player that's in the epinephrine prefilled syringe market returns to the market at some point during the year. So we wouldn't be surprised by a decline in that in the second half of the year. And that's built into our flat sales guidance for the year.
Yeah. To follow up on your product shortages award from the agency, just curious if there's any updates on that front. I know it kind of comes and goes over time, but anything since we last spoke?
I don't think really nothing's changed since the last time we spoke. You know, right now, we're still the only company not only selling the Epi prefilled syringe, but also dextrose and sodium bicarbonate. Those three products, we're the only company in the country that makes those. You know, we've been able to do that because of that increase in capacity we've been able to get out of that facility. We're very proud of that. In addition, we make other products that are frequently on shortage, such as atropine and calcium chloride. Those are two other products that we also make that our competitors have had problems with in the past. You know, I think we're very good at making all of those products and, you know, have a very stable supply of those.
Got it. I think you said you updated your slide deck earlier today. Maybe you can give us an update on the ANDA pipelines and the GDUFA.
We want to start with AMP-002, right? Nothing really has changed there. We are continuing to have our scheduled dialogue with the agency. This is a product that had a GDUFA date two years ago, and it came and went. We're still working with the agency on finding a pathway for them to approve it. It's still a product that's a + $500 million opportunity according to IQVIA. There are no generics on it. As I said, we're continuing to have scheduled meetings with the agency. You know, these are high-level people at the agency.
We feel, and it keeps going up higher and higher. We're feeling, you know, that we know that the agency has a desire to get it approved. We're definitely going to continue to, you know, pursue this opportunity. We're hopeful that we can get it across this year sometime. AMP-015, which is our teriparatide product, we have a GDUFA date in the fourth quarter of this year. Oh, and actually, just to go back to 002, when the Director of CDER actually gave us the award, Jack and I met with her at the time. And so we brought this up, this product up.
Did they come with a voucher for approval?
She was aware of the product. She said, "I'm very aware of the product and the issues that are going on, and we're working, you know, working to get that approved." We know that it's known and at the highest levels of the FDA, the generic drug side. We're pretty happy that, you know, what we've been hearing from the lower-level people rang true, and they were saying that it was getting the highest attention.
Okay. Okay.
Okay, back to AMP-015, we have a GDUFA date in Q4. That has not changed. That's still the same. As you know, there is some competition in that market now. It's not the opportunity we originally thought it could be, but it's still a project that we see as a strategic opportunity, and it aligns with our core strengths. We're going to continue to pursue it and see what we can do there. AMP-007, which had a GDUFA date in the second quarter, we just received a CRL from the FDA. We're currently reviewing it, and we plan to respond promptly. Our first glance at this is it appears to be easily addressable. We'll update as soon as we get a new action date.
I like to caveat the CRL situation with the agency and how they use it a little bit is that, you know, it could be something as simple as clarifying an issue to having to do studies, you know, even more long-term situation. From our first review of this one, this is easily addressable. We are hopeful that it will be something we can get back to them really quickly and get a GDUFA date, and we can communicate that. Our AMP-018, which is our GLP-1, which had a GDUFA date, we also just received the CRL for that. In fact, I think it was a week early that the FDA responded to this action date. That is somewhat. Again, we are assessing it. We are looking at it, reading through what is it going to take to address the FDA's concerns.
We will update you as soon as we do that. We have our intranasal naloxone Rx to OTC submission. We are always switching over to that or submitting that very soon here this year. We have one other AMP-017, which is another inhalation product that we plan on filing this year as well. Hopefully we can get, I do not know, two to three of these products approved this year and then kind of keep that same cadence. As you know, we are transitioning. Our strategic focus has been going more towards proprietary products. A lot of our time and resources are kind of moving into that direction. The number of submissions may go down a little bit, but we really hope to update everybody on some new products that we are working on this year. That is our plan.
Okay. In terms of confidence, I guess 015 is the most likely to be approved in this year just because it currently has a GDUFA and it's been through a couple of cycles. Is that the right way to think about it?
Yeah, I think 015 has a high probability of getting approved. We think AMP-002 still has a probability of getting approved. I'm not going to give up on the other two yet. It's still possible. You know, we just need to assess. Like I said, at first glance, AMP-007 looks like we might still be able to get that done this year. And 018, it's still too early to really look at it to comment on it. I'm not sure. Yeah, I would look at it from that perspective.
Got it. As you mentioned, the strategy focusing more on branded products, proprietary branded products. Do you have any update on the inhaled epinephrine program?
Yeah. I mean, as you know, there was an advisory committee meeting for the neffy product that is on the market now. In that meeting, we learned quite a few things there. We have been able to rearrange our filing and so forth. We had some pretty big breakthroughs in that recently, but it is still a little too early to really give timelines about where we are at specifically with that product. We will just keep you updated as we can , but we are really still focused on developing it.
Okay. You've been following the company for a long time. There haven't been many years where, you know, expectations were for flat top-line growth. What do you view as the keys to reinvigorating that growth? Is it through the pipeline or BD is kind of an avenue that you're also leaning on?
I’d say it’s both. You know, we always, you know, are focused on the R&D, and that’s the most important thing to us and the most important way that we get back to that growth. Right now, we said we’re going to return to double-digit growth next year. That is only through the products that we have internally. We think we have a good stable of these products, plus the insulin products coming after those to keep that double-digit growth going more than just one year. We see multiple years of double-digit growth after this year. That’s the main thing. However, we still are looking at business development opportunities.
Now that we have, you know, a branded product out there, you know, something on the branded side is something probably more likely we would be interested in. We're also evaluating generic opportunities as well. We'll have to, you know, we're considering both things. Also, as you mentioned earlier, having the global footprint now enables us to take on some products that we couldn't in the past. It also helps us to leverage vaccine in other countries. We think that we're going to be more able to look at global assets as opposed to just the U.S. assets.
Okay. When you think of BD, I guess what is kind of your dry powder potential here in terms of cash availability and what you're willing to leverage?
Yeah. So right now, you know, we're less than 2x leveraged. So we certainly could lever up more than that. We will have a decline in EBITDA this year that we've talked about. So that does bring that ratio up a bit. As we take a look at things that, you know, if we buy something else that is an EBITDA contributor, that's certainly going to be easy for us to lever up. We're happy to take on more leverage if in the right opportunity. What we're really not happy to do is dilute the company. You know, the founders own 25% of the company, and they like the long-term aspects, and they don't want to be diluted. So unlikely that we would give up equity for anything.
Okay. I think the last quarterly update kind of outlined some of the CapEx plans to expand the manufacturing capabilities. Just curious if those have changed given the tariff environment.
No, we're very long-term focused. You know, I don't know whether these tariffs are going to be here, you know, three years or not. Yeah, next week versus four years from now. You know, we're very long-term focused. You know, building a new injectable sterile facility is not something that you do overnight. You do it for the long term, and we're very long-term focused.
We did some said we're going to spend over $125 million building a new facility that has a new state-of-the-art sterile manufacturing, state-of-the-art packaging, new labs, new offices. That $125 million was going to include money that we're going to spend on the first two lines out of the five. We're going to have three open bays that we hold on for future expansion as well. We're really excited about a lot of the opportunities that we have in the pipeline and looking forward to utilize that space for that.
All right. Maybe just to wrap up, if you feel there's anything about the story right now that is still misunderstood or underappreciated by investors.
You know, I'll add the fact, you know, when we talk about tariffs, just go back to the fact that we make all our finished product in the United States. I think that that's, you know, we're in the right environment for that to happen here.
Yeah.
I think as we continue to transition into more proprietary products, I think this is, you know, a logical transition for us. You know, we've worked on a lot of very complex products, and we've established a lot of tools that, you know, and worked with the FDA understanding the types of things they're looking for. We are excited about the opportunities that we're working on and can't wait to be able to share them with the investing community because it is kind of a bright future for us.
All right. I think we're up on time. We'll end it here. I want to thank you both for spending time with us this afternoon and telling us more about what's going on in Amphastar. Thanks for your time.
We appreciate your time.
Thank you. Bye.