Amphastar Pharmaceuticals (NASDAQ:AMPH) Q1 2026 Earnings Call

0:00 Greetings, and welcome to the Amphastar Pharmaceuticals First Quarter Earnings Call. Please note that certain statements made during this call regarding matters that are not historical facts, including, but not limited to, management's outlook or predictions for future periods are forward looking statements. These statements are based solely on information that is now available to us. We encourage you to review the session entitled Forward Looking Statements in the press release issued today and in the presentation on the company's website. Also, please refer to our SEC filings, which can be found on our company's website and the SEC's website for a discussion of numerous factors that may impact our future performance.

0:51 We will also discuss certain non GAAP measures. Important information on our use of these measures and reconciliations to U. S. GAAP may be found in our earnings release. Please note this conference is being recorded. Our speakers today are Mr. Bill Peters, CFO Mr. Dan Dishner, Senior Vice President of Corporate Communications and Mr. Tony Mars, Executive Vice President of Regulatory Affairs and Clinical Operations. I will now turn the conference over to your host, Mr. Dan Dishner, Senior Vice President of Corporate Communications. Dan, you may begin. Thank you, Paul. Good afternoon, everyone, and thank you for joining Amphastar's first quarter twenty twenty six earnings call. Before we begin, I'd like to recognize the continued dedication of our employees across Amphastar.

1:37 Their commitment to ensuring reliable access to essential medicines remains central to who we are and how we operate. Our first quarter performance demonstrated the continued strength and balance of our underlying business amid a rapidly evolving market landscape with solid commercial execution across our branded and differentiated portfolio alongside meaningful progress in our pipeline. We are actively managing near term pricing and competitive pressures across certain legacy products with discipline and focus, and we remain confident that the strategic investments we are making today in our branded portfolio, biosimilars, complex generic pipeline, and manufacturing infrastructure are building the foundation for durable long term growth.

2:24 We reported net revenues of approximately $171,200,000 for the first quarter, reflecting a return to growth, driven primarily by contributions from recent product launches, while overall performance across the base business remained stable. We saw continued strength in key areas, partially offset by pricing pressure, product mix mix shift, and increased competition, trends that are broadly consistent with the current market environment. We continue to deploy capital towards initiatives that we believe will drive long term growth. And while the full benefits of these investments are not yet visible in our financials, we remain confident in the value they will create. From a strategic perspective, our focus remains centered on three key priorities.

3:12 One, strengthening the resilience of our business two, expanding and optimizing our branded and differentiated portfolio and three, advancing our pipeline of complex and proprietary products. First, strengthening the resilience of our core business. We continue to see variability in pricing and competitive intensity across certain legacy products. We remain disciplined in managing costs and focusing on operational efficiency, ensuring supply reliability, and maintaining our position in essential product categories. This stability provides the foundation that supports both our near term performance and our ability to invest in future growth. Second, expanding and optimizing our branded and differentiated portfolio.

4:00 Products such as Vaximi and Primatene Mist remain centered to our long term growth strategy and continue to demonstrate underlying demand in the first quarter. Vaximi generated approximately $32,000,000 in revenue this quarter. While reported revenue was impacted by higher rebates, channel mix and increased utilization of government programs, these dynamics did not reflect the underlying demand. It is also important to note that rebate pressure across these channels is an industry wide dynamic and not unique to our portfolio. Demand trends remain positive with US sales unit volumes increasing approximately 8% year over year. We are actively addressing these factors through investments in rebate management, contracting strategy, and program optimization.

4:48 We expect these pressures to moderate over time and remain confident in Vaccine's long term growth trajectory. Climate Change Mist generated approximately $30,000,000 in revenue in the quarter with performance driven by sustained consumer demand, continued commercial investment, and brand strength. The brand maintained strong momentum with store level sales increasing approximately 6.5% year over year, reflecting incremental consumer adoption and an ongoing impact of our marketing program. In addition, we recently received FDA approval for AMP zero zero seven, our ipratropium bromide inhalation product, and successfully launched the product in April. The launch is progressing as planned and reinforces our ability to execute across development, regulatory approval, manufacturing, and commercialization in technically complex product categories.

5:42 Importantly, our product is currently the first and only generic ipratropium inhalation product on the market, which we believe positions us for a meaningful near term commercial opportunity. Third, advancing our pipeline of complex and proprietary products. We are continuing to expand our efforts towards higher value opportunities, including proprietary and biosimilar programs, which now represent a significant and growing portion of our pipeline. Our strategy is built on a foundation that we have developed over many years, combining regulatory expertise, vertically integrated manufacturing, and commercial capabilities to efficiently advance complex products from development through commercialization.

6:28 This integrated platform allows us to move efficiently while maintaining control over quality, time lines, and cost. We continue to make steady progress across key programs, including our insulin aspart biosimilar and our GLP one ANDA program, both of which remain on track for planned commercial launches in 2027. At the same time, we continue to develop our next generation proprietary assets, including programs in oncology and immunology. While these programs remain in early stages, we are encouraged by the progress to date and are focused on advancing them through IND eight submissions and into clinical development. Together, these efforts reflect our broader objective of expanding into higher value therapeutic areas over time.

7:18 Our continued investment in these programs is underpinned by a strong financial position. The cash flow generated by our commercial portfolio supports ongoing internal R and D while allowing flexibility in how we allocate capital. This enables us to advance our proprietary programs in a disciplined manner without relying on external financing or partnership. We also continue to actively evaluate targeted acquisitions and licensing opportunities that align with our existing capabilities, and our balance sheet provides the capacity to pursue these in a disciplined and selective manner. Looking ahead, we expect the operate operating environment to remain dynamic, particularly regarding pricing and competitive pressures.

8:04 Against this backdrop, we are focused on disciplined execution while continuing to invest in the capabilities that underpin our long term strategy. We believe this balanced approach grounded in diversification, operational rigor, and sustained investment in our proprietary pipeline positions us to navigate near term variability and support durable long term growth. Over the next twelve to eighteen months, we expect continued contribution from our commercial portfolio supported by Baqsimi, Primatene Mist and the recent launch of our ipratropium bromide. In parallel, we are focused on executing the next phase of our pipeline strategy with several important regulatory and development milestones ahead. This includes progress across our biosimilar programs as well as our continued advancement of our emerging proprietary assets, which we believe are centered to the long term growth profile. We have updated the corporate presentation on our website with time lines for our proprietary candidate.

9:06 I will now turn the call over to Bill Peters, our CFO and Executive Vice President of Finance, for a more detailed financial review of the first quarter. Thank you, Dan, and good afternoon, everyone. In my comments today, I will discuss the first quarter results and then update some of our assumptions for 2026. Revenues for the first quarter increased to $171,200,000 from $170,500,000 in the previous year's period. Vaccine revenue decreased 15% to $32,400,000 compared to $38,400,000 in the prior year period as a result of lower average selling prices, which were partially offset by an 8% increase in units sold. The lower average selling price of Vaxini was driven by higher rebates and higher three forty b pharmacy discounts, some of which may have been duplicated.

10:02 Primatene Mist sales grew to $29,800,000 in the first quarter, up 2% from $29,100,000 in the first quarter of last year. Epinephrine sales increased 3% to $19,200,000 from 18 point $600,000 as increased demand for our prefilled syringe product was partially offset by increased competition for our multidose vial product. Glucagon injection sales declined 56% to $9,200,000 from twenty point eight million dollars due to increased competition and a shift to ready to use products. Other finished pharmaceutical product sales increased 34% to $67,100,000 from $50,000,000, primarily due to recently launched products, including an increase in albuterol sales of 2,800,000, iron sucrose sales of $1,400,000, and teriparatide sales of $2,200,000, which we launched in August 2024, August 2025, and December 2025, respectively.

11:06 Dextrose sales also increased due to shortages from other suppliers, while pisinodion sales declined due to increased competition. Cost of revenues increased to $100,800,000 from $85,300,000 Gross margins declined to 71% of revenues in the first quarter of twenty twenty six from 50% in the previous year. The primary drivers of the change were a lower average selling price for Baqsimi as well as lower sales of glucagon, phytonodion and epinephrine multi dose vials, which are higher margin products. Additionally, increased costs at our Amphastar facility negatively impacted margins. Selling, distribution and marketing expenses were relatively unchanged at $11,900,000 General and administrative spending increased 13% to $18,000,000 from $16,000,000 driven by higher legal expenses, salary and personnel related expenses, and expenses related to the implementation of our new ERP system.

12:09 Research and development expenditures increased 33%, $26,700,000 from $20,100,000 due to the $2,000,000 upfront payment made to in licensing new Corticotropin product and spending on our insulin inhalation and proprietary product pipeline. Our nonoperating expense of $3,600,000 compares to a nonoperating expense last year of $6,400,000 primarily due to foreign currency fluctuations as well as mark to market adjustments related to our interest rate swap contracts in the quarter. Net income decreased to $6,400,000 or $0.14 per share in the first quarter from $25,300,000 or 51¢ per share in the first quarter of twenty twenty five.

12:55 Adjusted net income decreased to $19,500,000 or 42¢ per share compared to an adjusted net income of $36,900,000 or $0.74 per share in the first quarter of last year. Adjusted earnings exclude amortization, equity compensation and onetime events. In the first quarter, we had cash flow from operations of approximately $47,800,000 During the quarter, we accelerated our share repurchase program and bought back $29,500,000 of shares, which represents about 3% of our share count. Before I turn the call back over to Dan, I would like to update some of our guidance for 2026. We now believe that Vaxini revenue growth will be flat to up low single digit percentages compared to last year due to the previously mentioned pricing pressures.

13:48 In response to these pricing dynamics, we have taken additional steps to strengthen the durability of this business, including engaging a third party to support data driven identification, validation, and resolution of potential three forty b duplicate discount. Additionally, we've implemented a 3% list price increase on Vaximi as of May 1. Importantly, even with this revised outlook for Baqsimi, we are maintaining our overall corporate sales guidance of mid single digit to high single digit unit growth of unit growth. This reflects the strength of our broader portfolio, including epitripri and bromide inhalation, which we launched in April and currently does not face any generic competitors. I'll now turn the call back over to Dan.

14:34 Thanks, Bill. In summary, our first quarter performance reflects our resilience and ability to execute in a dynamic market and environment. Growth was supported by new product launches and stable performance across our base portfolio while actively managing pricing and competitive pressures. Daximi and Primatene Mist continue to demonstrate solid underlying demand, and we are taking targeted actions to improve net pricing and optimize performance over time. The recent approval and launch of our ipratropium bromide inhalation product adds an important near term growth driver. We remain on track with late stage programs, including our insulin aptar biosimilar and our GLP-one ANDA, both expected in 2027 while continuing to advance our early stage proprietary pipeline.

15:25 With a strong financial position, we are focused on executing against our strategy, navigating near term variability, and positioning the business for sustained long term growth. With that, we will now take your questions. Operator? Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, Our first question is from Serge Belanger with Needham and Company.

16:19 A couple of questions on Baqsimi. So obviously, there were some headwinds in the first quarter. Just curious how much of it was seasonality peculiar to the first quarter? How much of it will continue to linger into the continuing quarters here? Specifically on price, can you talk about the price decrease and where you think you can get it to with the activities you'll be undertaking. And last one on Baqsimi. In the past, you had talked about discontinuing commercialization in some international markets. Has that started to occur, and what impact would that have on the top on sales levels? Thank you.

17:09 Yeah. So the pricing issue that we've been encountering appears to be potentially, you know, in the increase of there's multiple things going on there. One, there's some increased rebates, but also, potentially, we believe some duplicate rebates, which seems to be a three forty b pharmacy issue. So what we've undertaken is to engage an outside consultant or outside firm to basically validate these claims before they're paid. So we believe that in doing that, we will stop that practice. We just, you know, engaged that firm and that that process began at the beginning of May. So that trend continues into April, but we hope that changes in May. Additionally, the 3% price increase that we took, is also effective May 1. So we believe that we could get, at least part way back to the pricing where we were, last year, or most of the way back, at later this year, but part of the way back this this this quarter. And and seasonality did not have anything to do with that.

18:21 And as far as the discontinuation from certain international markets, we've talked about withdrawing from a handful of markets. The that situation is that we have given notice in some countries that require lengthy notice period. And, also, we have some inventory in other countries that we plan to discontinue. So the discontinuation would begin in July, but it's not going to be all at once because some like I said, so some countries are gonna have inventory that might extend into August or September, and others with a notice period requirement will keep selling probably through the end of this year and into the first quarter of next year. So it's not gonna be a a fall off. And remember, we've also characterized this as, you know, 80% of our sales were in The United States last year, only 20% were foreign, and we're only gonna drop out of a handful of countries out of the 20 something foreign countries. So we're gonna remain in most of the foreign countries, including all of the top selling markets. So it's not gonna be a significant decrease in the third quarter.

19:31 And also, the other way to think about it is that, you know, last year, US sales were 80%. This year, they're probably gonna be closer to 85%. Thank you. Our next question is from Dennis Ding with Hi. This is Anthea on for Dennis. Thanks for taking our questions. We just had two on the pipeline. First, on the synthetic Corticotropin, I see in your slides that you're thinking to go into phase one in 2027. I'm curious if you've met with the FDA and had regulatory alignment there and whether there could be an accelerated path.

20:21 And then second, any updates on o o four, the insulin aspart? I think the prior, BisUFA was planned for q o twenty six. So just curious, on any additional color there. Thank you. Okay. I'll I'll take the first one, the update on 004. It's we're just it's still in progress, and nothing's changed. We're still planning on commercializing it in 2027. On your other question regarding yeah. Tony, can you take that one? Sure. Sure. For 01:10, we have not met with the agency. For that, we think the possibility is there for among these these pipeline products for expedited, approvals.

21:10 But we haven't met with the agency, and, we don't have alignment with them on that. Okay. Thank you. Our next question is from Ekaterina Nayezhova with JPMorgan. Thank you so much. Actually, another one on AMP four. Just can you remind us how you're thinking about the size of that opportunity and just how quickly it could ramp in '27? And then second question is just on glucagon. Is the Q1 number a good kind of tail end for the product, or would you expect sequential erosion from that Q1 number? Yeah. So for the first one, you know, this is a product that still has, you know, over $1,000,000,000 in sales. So we think that it's gonna be a relatively large product for us and a a meaningful product for for us when we launch that.

22:05 We do think it'll take a little time to get sales and also will depend on whether we have the the interchangeability or not, which we would like to get right away. So there's gonna be a couple different drivers, and we should have a little more idea of that that timing and pathway, you know, next year. And as far as glucagon, I will say that, no. We have not reached the bottom of that yet, but I'll say the rate of decline is slowing significantly. So it will decline from here, but not at the same rate that it's been declining. Our next question is from David Amsellem with Piper Sandler. Hi. Thanks for taking my question. This is Naki on for David. So first on Primatene Mist, how should we think about generic competition, and do you have any updates regarding life cycle management? So that's number one. Number two, how should we think about revenue contribution from o o seven and the extent of the opportunity here? Thank you.

23:12 With with the Primatene Mist, we have not been notified or have no visibility on whether or not there is a generic in in place. We've always taken the position that we believe it would be very difficult to genericize this product. Primatene, this has sixty years of of brand recognition. The product would be, you know, it's over the counter. It would be difficult regulatory wise. It's not a similar it's not because it's retail and it's over the counter, it has its its different market dynamics than what you would see with a typical generic. So we haven't we haven't really we have no visibility outside of that. As far as our next generation, we have as we said, we have a in our pipeline, we have a a a green version that we're working on. We have one patent already and another one pending, and we continue to, advance that through development.

24:12 On On on yeah. On o seven, we haven't, given anybody, we haven't given a sales forecast on that. However, we have said that that would be our biggest growth driver this year, and we had a couple different scenarios. And we and we said that even when we thought that there might be a generic competitor on the market with us. It as of today, there isn't, and we launched this in mid April. So, right now, we're almost a month into it without a generic competitor. So, that's that's one of the reasons why we're able to maintain our our high our mid single digit to high single digit sales growth guidance for the year is that I believe that this product will outpace our original assumptions.

25:01 Great. Thank you. There are no further questions at this time. I would like to hand the floor back over to management for any closing remarks. Thank you, Paul. Thank you all for your questions and your continued interest in Amphastar. We remain focused on executing against our strategy and advancing the initiatives we discussed today. We appreciate your continued support and look forward to updating you on our progress next quarter. Have a great day. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.