Amphastar Pharmaceuticals, Inc. (AMPH) Earnings Call Transcript & Summary

Welcome to the 2020 Annual Meeting for Amphastar Pharmaceuticals. Our host for today's call is Dr. Mary Luo, Chairman, COO and Chief Scientist. [Operator Instructions] I will now turn the call over to your host, Dr. Luo, you may begin.

Good morning, ladies and gentlemen. I am Mary Luo, Chairman, Chief Operating Officer and Chief Scientist of Amphastar Pharmaceuticals. And it is a pleasure to welcome you to Amphastar Pharmaceuticals' Annual Meeting of Stockholders. We especially welcome you to this virtual meeting of Stockholders and hope that you and your families are well at this unique time in our nation's history. As provided in the company's bylaws, I will act as Chairperson of this meeting. I have asked that Jacob Liawatidewi, our Corporate Secretary, to act as secretary of this meeting and record the minutes. Before proceeding further, let me introduce the other directors and director nominees of the company who are with us today: Jack Yongfeng Zhang, PhD, Chief Executive Officer, President and Chief Scientific Officer; Richard Koo; Howard Lee, PhD; Floyd Petersen, MPH; Richard Prins; Michael Zasloff, MD, PhD; Diane Gerst; David Maris. I would also like to introduce the other corporate officers who are in attendance virtually: William Peters, Chief Financial Officer, Senior Vice President and Treasurer, and President of International Medication Systems, Limited; Rong Zhou, Executive Vice President of Production Center and President of Armstrong Pharmaceuticals; Jacob Liawatidewi, Executive Vice President of Administration Center, Sales and Marketing and Corporate Secretary. I would also like to introduce other members of company management who are also in attendance virtually: James Luo, Senior Vice President of New Engineering Research Center and President of Armstrong -- of Amphastar France Pharmaceuticals; Tony Marrs, Senior Vice President of Regulatory Affairs and Clinical Operations; Daniel Dischner, Vice President of Corporate Communications and Human Resources; Albert Cuadra, Associate Vice President of Accounting and Controller; Steven Johnson, Associate Vice President of Quality Assurance; William Wong, Acting General Counsel, Associate Vice President of Legal Department; Eva Wen, Senior Director of System Control; [ Jim Batten ], Director of Taxes; Amro Elatrozy, Director of Financial Reporting. Also in attendance, virtually, today are: Andrew Hoffman, representing Wilson Sonsini, outside corporate counsel; Lynton Brazell -- Lynton Rowsell; [ Greg Robilla ]; and Joemy Alvarado, representing Ernst & Young, our independent public accounting firm; Christel Pauli, representing American Election Services, LLC, and who is serving as the inspector of election. I will now turn to the meeting over to Daniel Dischner who will conduct the formal portion of the meeting. Dan?

Thank you. The annual meeting is being held for the following purposes: one, to elect 3 Class I directors to hold office for a 3-year term and until their representative successors are duly elected and qualified; two, to approve on an advisory basis, the compensation of our named executive officers; three, to approve on an advisory basis of the frequency of future stockholders' advisory votes on the compensation of our named executive officers; and four, to ratify the appointment of Ernst & Young LLP as Amphastar's independent registered public accounting firm for our fiscal year ending December 31, 2020. As indicated in the proxy statement, our Board of Directors has recommended that our stockholders vote for each of the nominees for director; for, approval on an advisory basis of the compensation of the company's named executive officers; 1 year for the frequency of future advisory votes on the compensation of the company's named executive officers; and for, the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm. To ensure that the business of the meeting proceeds in an orderly fashion, we ask that you please observe the rules. I want to remind you that attendance at this meeting is by invitation only. If there is anyone here who is not a stockholder of the company, a designated proxy of a stockholder of the company, or expressly invited by the company to attend this meeting, please kindly leave the webcast. Thank you. The annual meeting is being held in accordance with Amphastar's bylaws and Delaware law. During the formal meeting, we will address the matters described in Amphastar's proxy statement dated April 15, 2020. After the voting, we will announce the preliminary results of the meeting, and then the formal meeting will be adjourned. After we complete the formal meeting, there will be an opportunity for stockholders to ask questions regarding Amphastar. During the formal virtual meeting, questions should be restricted to the procedures for the meeting and the proposals under consideration. Thank you for your understanding. I have proof by affidavit that notice of this meeting has been duly given and that notice of Internet Availability of the Proxy Materials was mailed on or about April 29, 2020 to all stockholders of record at the close of business on April 13, 2020, the record date for this meeting. We have a complete list of the stockholders of record on our corporate website until the end of this virtual annual meeting. The affidavit, together with copies of the notice of Internet Availability of Proxy Materials, the proxy statement and the proxy will be filed with the minutes of the meeting. We have appointed Christel Pauli, a representative of American Election Services, to act as the inspector of election for this annual meeting. The inspector of election has signed an oath of office, which will be filed with the minutes of this meeting. The inspector of election has advised me that we have present virtually or by proxy a sufficient number of shares to constitute a quorum. Therefore, the meeting is duly constituted, and we may proceed with business. If you have already submitted a proxy or voted in the manner outlined in the proxy statement, we have already received your vote and there is no need to vote at this virtual meeting. Your vote will be counted. Those stockholders who have not submitted proxies and who wish to vote virtually or if you want to change your vote, please follow the instructions provided online. Each holder of common stock is entitled to one vote for each share of common stock held of record at the close of business on the record date. The votes cast today will be counted in the final tally along with the proxies previously received. After voting has completed on all matters on the agenda, we will close the polls, and the inspector of election will provide their preliminary report. We will announce the preliminary results of the voting at the end of this meeting. Does anyone have any questions regarding voting procedures? Okay. It is now 11:11 on June 8, 2020 and the polls for each matter to be voted on at this meeting are now open. [Voting]

The first item of business is the election of directors. Stockholders do not have the right to cumulate their votes in the election of directors. Our Board of Directors has 9 members and is divided into 3 classes, each with a 3-year term. There are 3 directors in each class. As indicated in our proxy statement, David Maris, Richard Koo and Floyd F. Petersen are nominated by the Board of Directors to serve as Class I directors until the Annual Meeting of Stockholders in 2023. Mr. Koo and Mr. Petersen are currently serving as members of our Board of Directors. The Board of Directors recommends that stockholders vote in favor of these nominees, and the proxy solicited by the Board will be voted in favor of these nominees. Are there any questions concerning director elections? The second item of business is the advisory vote on the compensation of our named executive officers. Although this vote is nonbinding, the Board will consider the outcome when making future compensation decisions for our executive officers. The Board of Directors recommends that stockholders vote in favor of this proposal and the proxy solicited by the Board will be voted in favor of this proposal. Are there any questions concerning the advisory vote on executive compensation? The third item of business is the advisory vote on the frequency of future stockholder advisory votes on the compensation of our named executive officers. Although this vote is nonbinding, the Board will consider the outcome when making future decisions regarding the frequency of holding future stockholder advisory votes on this matter. The Board of Directors recommends that stockholders vote to hold an advisory vote each year, and the proxy solicited by the Board will be voted in favor of this option. Are there any questions concerning the advisory vote on future advisory votes on executive compensation? The fourth item of business is to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2020. If the stockholders do not ratify the selection of Ernst & Young LLP as independent auditors, the Board may reconsider the appointment. The Board of Directors recommends that stockholders vote in favor of this proposal, and the proxy solicited by the Board will be voted in favor of this proposal. Lynton Rowsell is present virtually from Ernst & Young LLP and is available to answer any appropriate questions that you may have at this time. Are there any questions concerning the proposal? If you are voting today, you must submit your votes online at this time in order for them to be counted by the inspector of election. The inspector of election will not accept votes or any changes or revocations submitted after the closing of polls. It is now 11:15, and the online polls for each matter to be voted on at this meeting are now closed. No additional ballots, proxies or votes and no changes or revocations will be accepted. At this time, Christel Pauli, the inspector of election, will provide us with a preliminary report on the voting results.

Regarding proposal #1, the election of directors. David Maris, Richard Koo and Floyd F. Petersen have been elected as directors to serve as Class 1 directors. Regarding proposal #2, the advisory vote on the compensation of the named executive officers has been approved. Regarding proposal #3, the advisory vote on the frequency of stockholder advisory votes regarding executive compensation frequency of 3 years has been approved. Regarding proposal #4, the ratification of Ernst & Young LLP to serve as the independent auditor has been approved.

Thank you. These are the preliminary results of voting. The final count may vary following the final examination of the proxies and ballots. The final results of voting, including any ballots and proxies recorded during this meeting, will be set forth in the report of the inspector of election and will be included in the minutes of the meeting. The final results will also be reported on a Form 8-K to be filed with the SEC within 4 days of this meeting. This Annual Meeting of Stockholders is now adjourned. Thank you for your attendance. We will now proceed with the question-and-answer period. We will now entertain questions concerning matters that any of the stockholders submitted via the web portal. In the interest of time, it is appropriate that we limit questions to only those stockholders of record that have a right to vote at today's meeting. If I believe that another Director, officer or other representatives of Amphastar can answer a question more thoroughly, I will direct the question to one of them. I would like to note that during the course of the question-and-answer period, representatives of the company may make forward-looking statements regarding future events or the future financial performance of the company, which involve risks and uncertainties. Such statements are only predictions, and actual events or results could differ materially from those predictions due to a number of risks and uncertainties, some of which are outside the company's control, including Amphastar's expectations regarding sales and marketing of its products, the timing of FDA filings and other matters related to Amphastar's pipeline of product candidates and other future events. I refer you to the documents Amphastar files from time to time with the Securities and Exchange Commission, specifically Amphastar's most recent annual report on Form 10-K that was filed on March 16, 2020, and the most recent quarterly report on Form 10-Q that was filed on May 11, 2020. These documents contain and identify important factors that could cause actual results to differ materially from those contained in our projections and forward-looking statements. There are no questions today from our stockholders.

I want to thank you all of you for attending today's meeting and for the interest you have shown in the affairs of Amphastar Pharmaceuticals. We very much appreciate your attendance, and as always, thank you for your support.

This now concludes the meeting. Thank you for joining, and have a pleasant day.