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

Hello, everybody. I'm Ekaterina Knyazkova from JPMorgan. I'm pleased to be introducing Amphastar. And from Amphastar, we have Jack Zhang, CEO; and Bill Peters, CFO, who will be doing a presentation, and then we will jump into Q&A. And with that, I will turn it over to Jack and Bill.

Thank you, Ekaterina, and thanks for having us here today. We really appreciate that and I always enjoy this conference. I'm Bill Peters. I'm the Chief Financial Officer of Amphastar Pharmaceuticals. I'm going to be jointly presenting today with Jack Zhang, our CEO and one of our co-founders. Just always start off the forward-looking statements, some of these things that we're going to say are forward-looking, so please read this in your press release or in your presentation or on our website. Amphastar is a fully integrated business. We have really one-stop shopping for everything here. We do our extensive in-house product development capabilities, analytical techniques, very advanced. We have in-house animal studies. We can do fully integrated manufacturing. We manufacture several of our own APIs in key materials. We also manufacture devices and components for many of our products. And all of our finished product is made in the United States at 1 of 3 of our plants. We have a complete front-end integration with marketing and distribution as well. So we have a dual growth strategy. Primary is development internally. Examples of this include our Primatene Mist, our Glucagon injection, which was a product that was developed and the only generic on the market for about 4 years, which really highlighted some of our advanced capabilities in this area. And we're also developing insulin analogs for BLAs and some other biologics. Additionally, we have a secondary prong, which is strategic acquisitions, which includes things like our Armstrong facility, which we acquired many years back, our French facility, which manufactures or recombinant human insulin and also the acquisition in 2023 of BAQSIMI, which was an NDA we acquired from Eli Lilly, and we'll talk a little bit more about that later. Additionally, we in-licensed several early-stage NCEs in August of 2025. And also we announced one earlier this week. So we'll talk about those as well later on. The company likes to focus on what we could consider our 3 Hs, which are high quality for products, high efficiency in operations and high technology for our pipeline. So focusing on the harder-to-do products allows us to have strong growth and also earn a higher margin than many of our competitors in the business. And you can see the adjusted net income margin growth we've had over the years as we've been able to focus on these areas. One of the things we get a lot of questions about right now is our pipeline evolution. 5 years ago, we were 63% -- 63% of our products were generic. And in the pipeline and 21% were proprietary, 16% were biosimilar. And at that time, we saw increased competition on the complex generics where we were working. And we decided that our time would be better suited focusing more on proprietary products. So we set up a goal at that point to be 50% proprietary by this year 2026. And we're well on our way to doing that, and I think we'll achieve that in a near order. So our goal this year is 50% proprietary, 35% biosimilar and 15% generic. Our technical platforms include particle engineering and novel formulations as evidenced by Primatene Mist, characterization and immunicity which is multiple peptide and protein products, including AMP028. Our DNA, insulin analogs, BLAs and biosimilar changeables, highly purified peptides and proteins, including Glucagon, which I mentioned earlier, and then novel devices, including the dry powder inhalation for BAQSIMI. And all of these slides are on our website. So feel free to take a look at the website when you get a chance. So along with this shift that I mentioned earlier from the generics to the proprietary that includes many steps along the way. And starting with the complex generics, focusing then on expanding our commercial opportunities, our commercial capabilities. So we expanded our footprint into 26 countries with the acquisition of BAQSIMI. And we also have now a sales force which markets that product, which sets us up for future proprietary products as well. Expected and actually actual launches, including teriparatide, which we were able to get launched by the end of the year last year. AMP-007, which we plan to launch in midyear this year and AMP-018, which we plan to launch in 2027. Additionally, the biosimilar portfolio, which includes AMP-020 and two biosimilar insulins is the next step towards the proprietary pipeline. And then finally, the proprietary pipeline itself, which is the ultimate goal in this transition. It includes products like the intranasal epinephrine we've been working on. Three early-stage products that we've developed internally that we'll talk a little bit about later. And then Primatene Mist, which we're reformulating with a new green propellant and three early-stage in-licensed NCEs that we in-licensed last year and then also the new synthetic corticotropin product that we licensed in this week. I'll turn the presentation over to Jack Zhang.

Thank you. Bill. Good afternoon. I will continue to report research and development and our proprietary products. So our company focus on the R&D investment from these 2 plots, you can see that every year, Amphastar spent $60 million to $75 million on usage development. And here, I'll introduce some of our promising new peptide pipeline, this NDA new chemical entity. First one is called is AMP-015. So this is an oncology product and potentially novel mechanism of action targeting sell and those and Mita status in improved safety profile, reduce toxicity and also improved efficacy. So I will explain more later. And the number four is AMP-110, so this is a novel synthetic human corticotropin, or ACTH, it is highly profiled and we improve that impurity and also improve the safety profile. So currently, Phase I clinical development has been done. So this peptide product is based on our companies that have proven track record in peptide development and manufacturing. So we have multiple products on market or pending FDA and these take high growth therapy area, including oncology, opthalmic product. So this accelerated shift toward the normal proprietary and innovative products is supported also by our GMP manufacturing and clinical development expertise. This example for the -- our recent results obtained for MP-107. So this is the new mice as a model and graph model. And we made that incubation rate. So our product, AMP-109, is the green one that -- we have three green one. And one 50% is a low dose. In the middle 82%, 87% is the mid-dose and the -- on the right side. The blue one is the high dose. So you may notice that extrusion rate as high as 99.6%. And on the right side is the positive control. It is the marketed product with indication of treatment of pancreatic cancer, only 56.8%. So this plot showed a more detailed results. So we have 7 different groups of mice treated by the product for 21 days first of the finish treatment continue for 2 new 1 days, so a total of 42 days. So these results first line is a negative control. That means without any treatment so that cancer size is pretty big. Next, the 2 lines is for the taxane product at low-dose and the middle-dose. The next 3 lines and treated by AMP-109 with low-dose, mid-dose and high dose. The last of high-dose, you can see many green circle. So this green circle results make we and we are excited because usually, the efficacy is sure that cancer sites will become smaller. But for the high-dose AMP-109, so this cancer, most of mice, actually 9 of 10 that pancreatic cancer disappeared cannot be observed. So only one mice to find a smaller cancer. The last one is the currently marketed product indicated for the equipment of pancreatic cancer, 6 mice show that very -- still a very large cancer and the other 2 died before 42 days. So this slide shows our AMP-110, a normal corticotropin being studied. So this shows the efficacy study. The left side is that show the number of the fraction spasms in 60 minutes. And first, the red color is shown is a model that's not any treatment. One uses a small amount, small dose of AMP-110, you can see this reduced a lot. And then when we increase the dose and this spasms reduced to only 0.1 events then become only 0 at the dose of that and 1 unit per kilogram. The last one is a marketed product. On the right side, this is the mice tail flics in number of 60 minutes, you can see without any treatment that the model that make the mic shake their tails 158x. When you use a very minor dose that is 0.75 units per kilo this reduced. Then for the larger dose, for example, 3 units per kilo to only become 40, then further increase to 12 unit per kilo has become 0. And besides the peptide, Amphastar also has multiple pipeline candidates in development by international delivery technology. So we have a novel technology for both powder and spray solution formulation. And this formulation is strong absorption enhancement and dedicated device platform. So as you see, we use powder and solutions we have dedicate that device includes on complex technology. Also, we have controlled the PK sustainability for this category of pipeline after have proven cases, including BAQSIMI and REXTOVY. Also has the multiple pipeline candidate in development using MDI mid-dose inhaled delivery technology. So this is -- we also have the lower formulation technology, to solution and spent, high delivery efficiency, advanced particle engineering and we use green parent technology. We own state-of-the-art manufacturing facility. So we also have the proven case Primatene Mist. So now I will pass to our CFO, Bill Peters. Thank you.

Thank you, Jack. Anybody that follows from while I've seen this chart before, it's our biosimilar and generic pipeline. At the top, we have the injectables in the middle inhalation at the bottom biosimilar, the injectables, we just launched teriparatide. We got that approved at the end of December, and that launch is underway. AMP-018, it's a GLP-1 that's planned to launch in 2027. AMP-007, we talked about a little bit earlier. We do expect that to launch in mid-'26. That's an exciting product for us. It's a meter-dose inhaler where there's no generics on the market yet. So we think we have an opportunity to be the first and only generic in that market. Additionally, we're developing two other inhalation products, 017 and 023. On the biosimilar side, we have AMP-004 insulin aspart, which is filed, and we expect a commercial launch in 2027. AMP-005, which is in development of our combinant human insulin. The insulin double deck is something we're probably going to put on hold given the market conditions there. But AMP-028 is another product, the biosimilar, where we believe we have a competitive advantage because of the API involved in this allows us to make that better and easier than most companies. The diabetes portfolio is very important to us, which includes those insulins that we're working on as well as the Glucagon both the kit that we have and the vaccine in nasal powder and the GLP-1 that we have in our pipeline as well. Our insulin pipeline covers $1.7 billion in sales as measured by IQVIA. So it's a nice, very large target market that we're going after with those products. On the sales and marketing side, we've had very strong revenue growth over the past several years, very strong EPS growth. One of the great things about Amphastar going back to the time of our IPO over half of our product sales were in one product, enoxaparin, you can see that, that product has shrunk, but the company is almost -- has more than tripled in size. So right now, it's a very small share, and we've really diversified our portfolio last decade. One of the transformative deals for Amphastar was acquiring BAQSIMI from Eli Lilly, expanded us into a proprietary commercial Rx products that allowed us to establish a proprietary branded sales team. It strengthened our presence in an underutilized market and expanded our international footprint to '26 countries and also enhanced our intranasal delivery portfolio with a product that has strong intellectual property protection. We're still reiterating our peak sales guidance for this product, the $250 million to $275 million. We expect mid-single-digit growth this year, and that's going to be driven by 2 things: One, in the United States, we expect low double-digit growth, but we're not planning to take a price increase this year like we did last year; And internationally, we expect a small decline because we're going to withdraw from a handful of countries later on in the year. Because they're money-losing countries where we believe we'll have a better margin profile once we get out of them. Selling expense is projected at about 15% of vaccine sales. And at peak, we expect this product to add $2 to $2.50 of incremental EPS. Primatene Mist another one of our great branded products. It's the only FDA-approved as an OTC asthma inhaler that's available, we're growing that market with an increased physician sampling program, and we're also shooting our fourth commercial on that product right now. And we're developing a new version with a patented green formula for the propellant. So with that one, we'll even have lower global warming potential with that propellant. And we're forecasting high single-digit growth this year for this product. Some of the highlights and catalysts. The key growth drivers this year are going to include BAQSIMI, Primatene Mist, 002 and 015 and the upcoming milestones include the launch of 007, which will really be one of the key growth drivers as well for this year. And then upcoming milestones include probably launches in 2027 for AMP-004 and AMP-018. And with that, I'll turn it over to Ekaterina for some Q&A.

Great. So first question is, just looking back at 2025, what were the key highlights for the company. What went better than expected? Worse than expected? And what are you most focused on heading into 2026?

2025 was a solid execution year for us. BAQSIMI and Primatene mist performed well. We had two new product launches, which progressed also well. And we continue to strengthen our manufacturing and pipeline development with more proprietary product. However, we saw the pricing pressure to our generic portfolio and some timing related delays. Heading into 2026, our focus is growing BAQSIMI, Primatene and newer products while focusing on that proprietary pipeline development and stay in control on cost.

I think you previously mentioned targeting double-digit revenue growth in '26. Is that something that you're still expecting? And the main drivers as we think about outlook?

Yes. We're modifying that slightly to be mid-single digit to low double digits. So that's the range that we're forecasting now. And the drivers of that will include the launch of AMP-007. So that's going to be the biggest driver of growth this year based on our forecast, and so we do expect to launch that midyear this year. Additionally, we're still seeing the vaccine growth that I mentioned, the Primatene Mist growth. The other factors include products such as teriparatide, which barely had a chance to sell any of it at the end of last year. We'll have a full year of sales of that. And then iron sucrose, which we launched in August, we'll have a full year of sales for that product as well. Those are going to be the big drivers. Additionally, one thing that we'd like to highlight now is that we're also going to be selling some APIs in China from that business. So we've developed a couple of different GLP-1 APIs, and we're going to have third-party sales of those materials, which is a change from our strategy historically was that, that business was built to supply EPIs to ourselves.

And then on BAQSIMI, just going back to 2025, growth has accelerated nicely. Just main drivers of this, and I think you've touched upon this, but just how you think about the U.S. side of the business and trajectory for BAQSIMI?

Yes. We're really encouraged by the momentum we've seen on that product, and it's been great. We've captured a majority of the prescription market for the ready-to-use glucan. So we're very proud of that. The primary growth driver is really just going to be expanding that commercial footprint. We have our own internal set. We have our sales force that we have the contract for. And then additionally, we have the co-promotion with mankind, which is going very well. But one of the main drivers of this year and long-term growth is really going to be just the penetration of people that are on insulin. So when we bought BAQSIMI, remember that only 10% of people who were getting an insulin script were getting a Glucagon script fill. We've grown that to 12% now, but you can see going from 10% to 12% is great growth there's still a large market opportunity out there, which gets to the growth this year, but also the long-term potential for this product.

And then your outlook ex U.S. for the product, I think you mentioned that you're going to be scaling back some geographies. Just talk a little bit about that as well as what you can do to maximize the U.S. opportunity in the regions you're staying?

Yes. So right now, in most countries outside of the United States, the pricing environment is not as strong, but in many cases, it's to the point where we're actually losing money, and we can't sustain that. So we did have a provision in our contract when we bought the product from Eli Lilly to continue selling the product for at least 3 years as part of their commitment and really our commitment to patients that were on this product. We wanted to give them an opportunity for this. However, given the economics in certain countries, we just can't maintain that on a long term basis. So that commitment ends at the end of June this year. So our plan is to withdraw from a handful of countries, and those countries are ones losing money. So it's actually going to increase our profitability to withdraw from those areas.

And last question on BAQSIMI, $250 million to $275 million. Is that still kind of the good peak sales number?

Yes, we're very comfortable with that.

Perfect. And then switching gears a little bit, just quick thoughts on some of the recently approved products, ProAir, which was, of course, a little bit later, but the Venofer and Forteo, just how are they performing versus your expectations? And how significant will these be for growth?

Yes. So they're really performing rate as we ended up kind of some of our adjusted forecast. So ProAir took -- was a little bit of a slow sort had nice growth last year, we'll see that growth carry into this year with the iron sucrose. Prior to the approval, we were hoping to be the only or 1 of 2 generics. Unfortunately, there were three approved at the same time. So that one is a little bit lighter than we had originally thought. But since we knew that, we're right on track for what we had the comments we've said that. And Forteo, it's really just a new product just getting that out there. But right now, it's performing as we would expect.

And then pipeline updates you're expecting this year, particularly AMP-007, just your confidence in that application?

AMP-007 remain on track for mid-'26 launch. We feel confident in the approval path based on the strength of our data and our experience with complex submissions.

Perfect. And then switching gears again. Primatene Mist. Just any thoughts with the patent expiring? Just have you heard anybody kind of working on a generic? And actually, the next part of the question is, what does generic competition typically look like in an OTC market?

Yes. So right now, we're not aware of anybody working on this, but that's not to say that there isn't. But the way we've framed the math around this problem is that it's probably not a top priority for anyone given the economics of it. So when we take a look at it, let's just using round numbers, it's a $100 million market. if a generic was to come in, because it's an OTC product, there's not automatic substitution. So the brand is likely to retain half the market. So that leaves half for a generic part of the market. And then if there was a generic that came in and we could launch our own generic as well. So our expectation was that we get half of that generic market. So then that leaves only 25% of the market for someone to come in on. And then if -- because getting a kind of market share, they have to cut the price in at least half. So now you're talking something that's about a $12 million market or so. And instead of what is $100 million a high margin, you're talking about a $12 million market at a moderately low margin. So it's really -- we don't think the economics are there for someone to do that. And not to say that they won't, but it just doesn't seem to make sense to us. But then as we mentioned earlier, the other thing that we have going on here is that we are working on a new formulation. And we've already had a patent that's been issued for that formulation. And the formulation is going to be for a new propellant and the new propellent will be a local global warming propellant. So that's one that's going to be more environmentally friendly. So we're really excited about working on that right now.

Perfect. And then just on Glucagon Epinephrine, just how much further erosion are you expecting '26 and maybe looking beyond '26, what did the tail end of these opportunities look like?

Yes. So let me start with the epinephrine, actually. So remember epinephrine, we've got two different products there. We've got the multi-dose file and the prefilled syringe. So on the multi-dose file, 2 years ago, it was a 2-player market. Unfortunately, it's devolved into a 5-player market. So we have lost market share. The pricing has come down pretty significantly. But on the prefilled syringe, 2 years -- it was a 2-player market, but the other player in that was having some supply issues and wasn't in the market for 2024. That supplier came back in the market for 2025. But now they've indicated that they're going to exit the market. So it's going to go, I think, back to a 1-player market again. So -- but as far as that market goes, we saw most of the price and market share erosion for the total market last year. So we don't really see that changing significantly from last year to this year. Glucagon, however, a slightly different story. We had one competitor launch at the end of the first quarter last year and then two more get approved later on. So year-over-year, the first and second quarter, we do expect to see some significant sales declines in that product, but it should level out in the second half of the year, we see some declines with relatively smaller declines.

And then just switching to your biosimilar portfolio, AMP-004, just level less for that program and maybe some of the other programs you have in there, just any time lines as we think about some of the other assets.

We remain excited about project AMP-004, and I believe our product will be recognized as the U.S. manufactured product on the market. In terms of the time lines, our insulin Amphastar BIA for AMP-004 is progressing. Meanwhile, we have multiple biosimilar pipeline at active development

And then just how do you think the company's biosimilar strategy evolves over the next 5 to 10 years? Will you remain largely focused on the insulin space? Or are you considering other therapeutic areas?

We expect biosimilar to become a meaningful durable growth pipeline for our company. We plan to grow into related areas where we have strength and there are opportunities regardless of the thoracic area. So this is a portion of our pipeline strategy.

And then talk a little bit about the Nanjing Anji deal that you did last year, which are the three assets that you're most excited about and when we'll we see initial data?

The Anji deal aligns with our strategy for selective partnership and enhancing our proprietary pipeline. All three projects or attractive with one particular standing out due to its progress. We have just shared some initial any more data for the first time, and we plan to continue to share data as it becomes available.

And then on the deal you announced earlier this week for AMP-110 with Hanxin. Talk a little bit about what the development path for that one looks like obviously a very big market, but just what kind of studies will you have to run for that?

Yes. So that's a new one we just announced that this week. But in some ways, it's an old one as well because this is a product that we were actually developing internally at our China business before we split off and divided that into two business funnel off. At the time we spun it off, the market was declining, and it was -- we thought highly risky and expensive to get to market. So the subsidiary we spun off was -- kept working on the product and really derisked it and spend a lot of them with their own money on it and took it to a point now where we think it is derisked and also on a nice path for approval. So as far as the time line and the thing of other R&D work that we have to do on it, that's a little bit up in the air. So what we plan to do is put together all the data that we have on it. and then go to the FDA and have a conversation with them about what's necessary. They already did human studies in China. So we're going to be able to take some of that development work and bring that along to the FDA and show them part of the pathway of what they've done there. So we're really excited about the work that was done and the future market opportunity for this product. Given it's growing so quickly right now, it's a product that when we will split the company's apart. It was a declining asset on the way down, and now it's a growing asset, a growing market. And so it's something that we are excited about.

Perfect. Perfect. And then the last few minutes, just business development, just talk about your level appetite, what kind of assets you would be most interested in early stage versus later stage branded, non-branded and anything transformational that you could potentially see yourself doing?

Yes. So really transformational for us was just the BAQSIMI deal. So I don't see us likely to do anything that's transformational. However, because we have in-licensed several early-stage proprietary products, if we were going to do something, it would probably be something that's either later stage or something that's already commercialized. So right now, when we take a look at what we have, what we might want to do, I think deals that are probably smaller than BAQSIMI, but up to that size would be the right way to think about size-wise. And areas, we look at it two ways. One is our capabilities. So we have strong injectable inhalation and intranasal capabilities. So building on those would be certainly something that we'd be interested in doing. And then from therapeutic categories because we have the vaccine product and the entrotechnology space, that's a natural fit for us. And in some place, something that we'd be looking at. We've looked at several things in that area. And then also because we have the new wet AMD licensed product, ophthalmology is an interesting area for us. So it's something that we would consider in that area. And then probably to a lesser extent, but also in our mind now that we have a couple of these oncology products as something in that area. But like I said, it's not as likely to be transformational like the BAQSIMI deal was.

Perfect. Thank you so much. And I think we're right on time. So thank you so much.

All right. Thank you.