Okay, good afternoon. This is David Amsellem from the Piper Sandler Biopharma team. Day two of the 37th Annual Piper Sandler Healthcare Conference, and we're delighted to have the team from Amphastar here, Bill Peters, CFO, Tony Marrs, EVP, Regulatory Affairs and Clinical Operations. So thanks, gentlemen, for joining us. So I have a high-level question that I wrote out as I was preparing for our discussion. So you've talked about shifting the composition of your pipeline towards proprietary products, and you've taken steps towards this with the in-licensing of products from Nanjing Anji, for instance. So I guess, walk us through the evolution of Amphastar in the next, call it, five years as you see it, and the roles of both your generics business and your proprietary brand products within it.
It's always been important for us to be ahead of our competitors, and strategically that's been something that we constantly look at: where are our competitors, how are they doing for the products that we have? And in 1996, when Amphastar formed, the products that they started manufacturing were injectable syringes, and they picked it over the tablets because they felt they had a competitive advantage of technology. And that worked out for quite a while for them and for us. And then shortly thereafter, companies started coming in and competing with those, and so we switched to more complex products. And so we have some of our products like enoxaparin and glucagon kits, and those products have been pretty effective for us. And now, as we develop those products, we learned quite a lot about the development of more complex products, and so it seemed natural for us to switch into these more proprietary products. We have the capabilities to do it, and so the direction that we are planning to go is to. It's actually four years ago that we made the decision to do it, to get more into these proprietary products. And so by 2026, we expect and we're hoping to have 50% of our pipeline to be proprietary. And as far as generics goes, we'll always be committed to the generic products that we have. We'll continue to develop select generic products, but also have a good mix of approved proprietary products.
Got it. How about providing more color on the three peptide assets that you recently in-licensed? And when could those go into the clinic?
Yeah, we're really excited about those. In August, we purchased three products from Anji Biopharmaceuticals in China, and these are really exciting molecules. They're new chemical entities. The first one is AMP-105, and this is a novel peptide that has great targeting of tumors and very widespread targeting across a lot of different tumor categories. The second one is AMP-109. This one is, we're using it with a linker to combine with a taxane product, and from this we see and we expect to have great toxicity. And then we have finally AMP-107, and this product is one that is going to be used for wet AMD. And the idea of this product is an eye drop, and so we're excited that it has the anti-VEGF properties to be able to do the targeting and just with the use of eye drops. All of them, we're very excited.
They're in the preclinical stages now. The next update we'll give will be when we get them to the IND stage.
Got it. How should we think about R&D spend going forward? I mean, proprietary drug development is more expensive, at the risk of stating the obvious. So can you talk generally about the cost structure and R&D spend and how that plays into it, and also cost optimization efforts?
Yeah, so as Tony mentioned, we're going to get to the point where 50% of our pipeline is proprietary products. We will be spending more on those products, and we've been guiding people that our R&D spend will be going up because of that. But when we take a look at the expense that we have associated with those, we're going to have some optionality if these products continue to move forward. And so our thought is that at some point, if they're all moving together and they're all moving forward, we might want to either license out the products or partner the products with someone else at some point, depending on the spend and the data that we've gotten. On the cost optimization side, because of some of the pricing pressures we had on a couple of existing products, glucagon and epinephrine, we this year have really focused on cost optimization, both at our Amphastar and our IMS facilities. So we've really focused on making sure that we have the right size staffing and making sure that we have any expense as an actual necessary expense. So really focused on that this year, and that's really helped us maintain some of the operating margin at the level that we are now, even in the face of pricing pressure.
So just looking at new products, you entered the iron sucrose space recently with one of the first generics. Can you talk about what the competitive landscape looks like currently, how to think about that opportunity, and what's your expectation for additional competition as we move later into 2026?
Yeah, we're happy with where we are with that product. Obviously, there were a number of other competitors that were approved at the same time, but we're happy with where we are for the sales given that. This is a product that we manufacture both the API and the finished product in the U.S., and we believe that's a strength for us from a manufacturing distribution perspective. We think there might be limitations for capacity overall. It's a very difficult product, and so we just rely on the fact that we manufacture it in the U.S. at one of our facilities there. From a margin perspective, the margins are higher than our average generic product.
Okay, helpful. What about AMP-007? I know you can't totally go into the opportunity, but is this? I know it's an inhalation product. Is it a potential first-to-market generic? Are you aware of potential other entrants down the road?
Yeah, this would be the first approved generic product. So right now, there are no other approved generic products for it, so it would be the first. There is the potential for 180-day exclusivity. There's an Orange Book patent associated with it and the Paragraph IV filing that would be, if there was a filing and a litigation, we would know about that, but we're currently not aware of any other company that has this in their pipeline.
Okay. And you've also talked about your teriparatide generic as another launch opportunity next year. I mean, do you see it as a meaningful driver given that the space has gotten pretty competitive? You have a handful of generics there, so how do you think about that?
Yeah, we still think that there's room for another generic. We think that it will be meaningful to us, but certainly not as meaningful as 007. When I take a look at 007, Tony was just talking about, that has the opportunity to be the biggest growth driver for us next year, and so we think that that's going to drive the growth while teriparatide will add incremental growth. I think that's the way to look at it.
Okay. I'll come back to sort of overall 2026 expectations, but just wanted to go through specific product opportunities. So looking further ahead, there's also insulin aspart, your biosimilar. I think you've cited that as a 2027 opportunity. So again, as a similar question to the others, how competitive will this landscape be upon launch? How crowded will the product be? How are you thinking about that as a consequential driver?
Yeah, it's obviously a giant market, and so we feel there's room in that market for some competitors. We manufacture the product in the U.S. again, and so we feel that that is a strength. We know historically there have been distribution manufacturing issues with these products, particularly the pen component of it, and we're positioned well. We're on the first cycle with this application, but as we said, we expect to have in 2027 a launch for it.
Okay, and then there's your GLP-1 generic, which you've talked about as a 2027 launch. Is that liraglutide?
Yeah, so we haven't specifically said what the product is. We've said that the sales for IQVIA have shrunk over the last year, and so—but we do know it's something that we were granted competitive generic therapy, so we've been working closely with the FDA on this, and we do believe that we'll be able to be in a position to launch that next year as well. We're in 2027, so it is a smaller opportunity again, more on the size of like a teriparatide type of opportunity. As I mentioned before, for 2026, 007 is probably the biggest opportunity, and for 2027, I think that the insulin aspart is a bigger opportunity.
So the GLP-1 is already generics in that market?
Yes.
Yeah, okay. Fair enough. So let's sort of look at 2026 at a high level, and I know you don't guide, but I do want to try to help understand how you're thinking about it. If 007 were to launch next year, will the overall top line grow essentially?
Yeah, so right now, we believe that we can get to either high single or even low double-digit growth, depending on the timing of the launch of 007 and the ability for us to capture market share of that product. Additionally, we think the second biggest driver of growth next year is going to be Baqsimi growth. We see that as another opportunity for very significant growth next year. Following that, we'll also have growth from Primatene Mist, which we expect to have significant growth on as well, and then you layer on teriparatide, and additionally, the iron sucrose. We just launched that in August of this year. There's room for that to have growth as we haven't had sales in the first two quarters and then limited sales in the third quarter. So we think those are going to be the drivers for growth, and some of that high single-digit or low double-digit will depend on the specific timing of those and whether or not there are other people competing in those markets with us. But right now, and it does also depend on, as you know, we've had competition on glucagon and the epinephrine vials, so we've seen the epinephrine vial market kind of stabilize, but it's not fully annualized, that stabilization, whereas the glucagon, I don't think it's really stabilized yet. So we see that continuing to come down. So we do have some headwinds there, but we think with these new launches that we can, and the continued growth of Baqsimi, we think that we can power through that to that growth.
Okay. All right, that's helpful. So yeah, let's talk about Baqsimi. So I think this is an interesting market. I've always thought it could grow more than it has. There should be more adoption, if you will, of ready-to-use glucagon. So I guess can you talk about what you're doing to sort of raise awareness? And I know there's some promotion intensity, but can you talk about salesforce sizing, promotional activities? How are you thinking about the competitive dynamic for Gvoke? I think that would be helpful context.
Yeah, first of all, we agree that there is a lot of room for this product to grow. So right now, it is the largest ready-to-use glucagon product out there. So we have almost 60% of the ready-to-use market. So it's obviously the premier product out there in a needle-free, intranasal delivery. I think it's a great option for everyone. And the other thing is that when we bought it, we mentioned that only 10% of people who were on insulin were getting a glucagon script filled, and the Diabetes Association recommends that everyone who's on insulin should be getting a glucagon script filled. So that's gone from 10% when we bought it to 12% now. So we think that there's significant room and upside for that product, and as we take a look at it, we've talked about $250 million-$275 million peak sales level.
To get to that sales level, we just need to be in that 15% or 16% of those scripts being filled, so we have room to go from where we are, but it's not that far, and with only that 15%-16% level, there is opportunity to theoretically go past that. To your question about the salesforce size, we have a contract sales organization that we control. The only product they're detailing is Baqsimi. They're detailing it to endocrinologists, really focusing specifically on pediatric endocrinologists so that we can get compliance at the younger level and then keep that compliance going as they grow, and then this year, we signed the agreement with Mankind to have them co-promote our product as well, so they have, I'll say, more than twice as many reps as we have, so with that additional salesforce, we see significantly more growth.
Now, if you take a look, you said about the growth before. Last year, we were going through some transition things with some software issues. We had some Medicare issues in some of the states that were holding back our growth. But if you take a look at our growth this year, it's significantly higher than it was last year. So we do have this year double-digit growth in the United States, which is the biggest market. So we're pretty happy with that growth, and we see that growth continuing.
Yep. No, that's fair. Do you have a sense of the extent to which you're pulling in more type 2 diabetes patients who are insulin-dependent versus type 1 patients? I mean, one of the things that historically, I mean, glucagon is something that there's much more penetration in type 1 patients. Type 2 is always more of a challenge. What are you seeing in the field?
So we don't have hard data on it, so it's more anecdotal, but we see that the glucagon penetration for the type 1 is very high. So that is a very high percentage. So where we see the opportunity is the type 2 market. So we think that that's something that we'll really focus on going forward. But really, the main thing for us is that continued compliance. Start early. Now that they have a product that's not a kit, that's difficult to carry around, difficult to use, difficult for other people to use, they've got an easy-to-use product. They can carry it in their pocket. They can carry it in their purse. They can carry it in a backpack. So it's just a much easier product. So we think we've got the solution to people's problems and to the compliance problems.
We think that compliance of refilling the script every year is going to continue to grow.
What does payer access to Baqsimi look like, and what's the gross to net like?
Yeah, it's very high. We have high 90% coverage. So the great news for us, and when we bought this product, was that Lilly did all the heavy lifting getting it out there. We added a couple of small things when we first started. Hasn't been a lot of movement there. The gross-to-net really hasn't changed much since we took over from Lilly, other than for that first year where we had—we have a higher fee that we have to pay to the wholesalers than Lilly does. It's a volume issue, and their volume is a lot higher than ours. So we had that gross-to-net issue the first year. Second year, we took a price increase in the United States. We've given very little bit of that back. It's very, very small, really not material.
So the gross-to-net continues to remain strong, and it's being paid for well. So we're really happy with that as well.
Just remind us how you're thinking about the exclusivity runway on Baqsimi?
Yeah, so there's patents going out to 2036 and 2039 on the formulation and the drug-device combination. So we think that that gives us very long patent protection. Additionally, even without that, this is an extremely difficult product to formulate. When you take a look at glucagon, we were the first company to be able to genericize the glucagon test kit. It took four years for someone else to come along, and we were able to copy what we were able to do. So it's so much harder than that. Additionally, on the device side, it's not like intranasal naloxone where the device manufacturer also sold it to all the generics. We have an exclusivity period with the device manufacturer where we pay an extra fee per unit, and we paid an upfront fee to make sure that we're the exclusive user of that device with glucagon.
So therefore, other generics can't—they would have to get a different device or make their own device, which would be very difficult. So with those hurdles, we think genericization is going to be pushed well out from where we are today.
One sort of obvious question, and you get this a lot, is what is your appetite for adding another brand asset where you can leverage your Baqsimi-focused commercial infrastructure? I mean, you're calling on endocrinologists, diabetologists, and so it's a leverageable asset, that sales force. How do you think about that as a priority?
Yeah, it really is a priority for us. I'll say we're focusing more on external business development this year than we have in the past, and we think that the endocrinology space is a great one for it. We've looked at a few assets, but either they weren't the right asset for us or the price wasn't the right price for us, so it's been a combination of things on why we haven't done something else in that space, but overall, we are looking more on the proprietary side. We would like to do more business development, especially on the proprietary side, because we did in-license these early-stage products. If we did something else, we would likely want to do something that is either very late-stage or something that's already on the market, and getting those assets is difficult.
Yeah. And when you did the Baqsimi deal, I mean, you did access some debt capital. So you do have an appetite to take on leverage, but I guess the question is, how high up would you lever to get something done, and how are you thinking about what's a net equity beyond which you wouldn't go?
Yeah, so right now, it's a complex calculation that we have. We're just over two times per our agreement that we have with our current bank group, and so it's not exactly what you've seen. Someone looking on the outside would look because there's give and take. But I think we could go up to four times and be pretty comfortable with that. Beyond that, the problem is that the debt gets a little bit too expensive for us, and then we didn't want to take that on.
Understood.
And also, our founders, Jack and Mary, they own 26% of the company. They're not big fans of dilution, so they would prefer debt financing over equity financing as well. So for us to take on any kind of convert or equity, we'd really have to love the asset. It would have to fit perfectly with what we want to do.
Yep. Wanted to touch on Primatene. So I guess the first question here is just on the growth runway for the product. I mean, at one point earlier in its commercial life, it really was a high-growth product. I mean, that's kind of slowed since then, but what are you doing to try to continue to drive that business?
Yeah, so we've got a couple of programs going on. We've got the TV commercials that we've run, and additionally, this year, for the second time, we're running a physician sampling program on a targeted basis, limited test basis in different parts of the country to see how the product reacts to that, and so far, it's doing very well, so it's meeting our expectations or beating our expectations, so we're very happy with how that program is performing, so we see that you're right. The growth has slowed, but we see it as something that can keep growing, and we think that there's very strong brand equity to that, so we think that it's something that's going to keep going, and additionally, we have mentioned that we are working on a follow-on version that has a new propellant that has even lower global warming potential.
So because of that, we have some life cycle management things in our mind. We've already filed our first patent for that as well.
So I've got a question about just exclusivity. So with the Orange Book listed patent expiring next year, do you expect generic competition coming in?
We think it's unlikely, given the economics of the money that you'd have to spend to do this. The fact that it's an OTC product, so a significant portion of the sales would remain with the brand. The fact that we could launch our own authorized generic as well, and the fact that someone has to cut the price pretty significantly, we think the remaining market opportunity, the profit potential from doing that is relatively low, given the potential of someone that had those capabilities. They could go after an Rx MDI instead and have a much better return on their investment. So I don't want to say we don't know of anybody working on it, but we can't say for sure about that. So we think it's unlikely.
Okay. And with the next-gen product with the new propellant, I mean, is that something that, I mean, if there was a generic in the market, I mean, is that next-gen product something that you'd ultimately have to compete on price? Because ultimately, it's not a clinically different product. It's just a different propellant.
The FDA considers it a different NCE, so.
All right. Fair enough.
So that's where we'd be looking at it.
When's the earliest they think that could reach the market?
With the new propellant?
Yeah.
We're in discussions with the FDA right now on how to bring that the best way to the market. So we're working on that right now. We don't have a timeframe yet.
Okay. Coming back to the base business, I mean, you had some comments on epinephrine and glucagon for next year. But wanted to ask you about other base business products and potential pressure points that we should be thinking about.
Yeah. So most of our base business is relatively stable. So we do have one or two other products, phytonadione and enoxaparin, that we have had increased pressure over the last year. But other than that, most of our base business is relatively stable, and we have the capacity to take any upside if there's any shortages from competitors, which we've had every quarter, basically, since I've been here, so.
Okay. Last question on my end. How many filings should we expect in 2026? And any specifics on products that could be filed next year? I mean, mix between injectable and inhalation, for instance.
Yeah. We think it'll be one to two products, inhalation and biosimilar products. So we've been focusing on the biosimilar, working with the FDA, particularly with our insulin product to really develop that pathway for interchangeability. It's just been a big effort for us, and we think we could take advantage of that with some follow-on products.
And any color in the inhalation product, would that be a first-to-market opportunity?
Yes.
Okay. All right. Well, I'll leave it there. Thanks, Will. Thanks, Tony. Thanks, everyone on the other end.
Thanks, David.
Take care.
All right.