AMPH - Earnings call transcript Q2 2019 | Amphastar Pharmaceuticals, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Amphastar Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call may be recorded.

This conference call may contain forward-looking statements, including statements relating to Amphastar Pharmaceuticals. related historical estimates rather Pharmaceuticals' and and similar not Pharmaceuticals' on business, are other expectations, current projections or statements facts based but Amphastar operations These factors. regarding Amphastar will, statements. Words such continue, intends, used or projects, plans, to would, similar anticipate, estimates, other expressions predict, expects, and could, believes, related as potential, should, identify might, may, are these forward-looking

with are future uncertainties and and SEC. are -- a such materially that of only and from of guarantees the number risks, involve predictions differ are of including or result predict. performance statements the to they time-to-time these These not and may filings as impossible Actual described difficult assumptions Amphastar are in factors, a forward-looking results statements those from Pharmaceuticals'

host conference, introduce now Jason Mr. to I would like for today's your Shandell.

may You begin.

Jason Shandell

operator. quarter second the We President with and Thank and forward of Peters, Amphastar and Jason earnings have. look call Amphastar. CFO call. afternoon answering my I'm you you, speaking to Shandell, us name to you on joined you today may joining questions is Bill of welcome Pharmaceuticals any with today Good colleague, appreciate My Amphastar.

a from the XXXX. XX% sales quarter second gross profit compared and increasing The with second had XX% Company as great XX% in to increasing to quarter

our net our pipeline the Amphastar insulin and June on future continue XX, This total strengthened trials and funds including to short-term and parties. and between to XX. products. invest pipeline settle significantly $XX.X the with for we research outstanding million plan expand development, for capacity received settlement all from to balance investments Additionally, We of in litigation clinical June also million at cash as use to to Sandoz inhalation and of Momenta our $XXX.X sheet

dramatically complex and candidates, core pipeline products. forward, complex combination be advancing peptides, to on team focus and going our Furthermore, proteins business including robust of growing reduced will product our allowing management expenses further our legal our inhalation

continues the pipeline products to market with approximately market We $XX make $XX billion. targeting of products in million, currently development, size products ANDAs with progress. size with have over market products good $XXX products and four generic targeting in the XX targeting size biosimilar Our of development, of the on approximately file, billion three

the ANDAs With with our significant generic which respect targeting markets. pipeline, one in disclosed. proprietary and therapy other epinephrine our could vial. have noted of to help the of four on speed NDAs be and granted the previously has were XX-month that to have XX-ml a should a One IV Two file is been agency vasopressin, competitive the development, on designations, we the file four It ANDAs is approval. which second due three time to in NDA Paragraph litigation stay

have We this which We on the PDUFA epinephrine file for our year, undisclosed all in this track ANDA year of second and injectable another two product. remain half two dates products. ANDAs to injectable are to complex

robust discussions had first development which us strategy. the agency, helped our respect With our ANDA, to have have enhance continued inhalation we with

of our that Therefore, As our interactions, is a provide trial in the planned ongoing filing these increased result now of meeting endpoints. confidence more number have for we in clinical order to in XXXX. subjects

has there previously aware, metered ANDA. be dose HFA may you inhalers an As under been no approved

ANDA. a discussions our that successful first for believe we agency to with the inhalation However, our will trial lead

team the to biologic. the is a at from further quarter. particularly drug the our have having programs with We progress insulin we filed been and with positive we program the These active a a establish as making This focus important as considering and relationship our in agency on first regarding also IND as exchanges transitions information good BLA agency that development insulin communications the agency. are are the

advice. and respect We naloxone we NDA, and product of based in our to advice agency in product believe continuing the our that from the by anticipate With XXXX. their letters NDA this agency's improved all will strong the received we product continues intranasal to resubmitting address on general improve agency had are There previously the the be to interest concerns.

unit believe With see July, Walmart quarter the Mist, smooth product Primatene the stores with national respect a quarter. our we radio In will the and successful XX% to positive commercials trend the increase first on we quarter. launch for the fourth television and into level running to in a We presence retail to online continue that on in launched provide a second store from also in walmart.com. began transition sales walmart.com a

return In addition excited million with in the of retailers to and prospects awareness beginning pharmacies, the remain product expand and consumer three to to to independent small large We pharmacies focusing distribution also $XX are of to the sales retail next Primatene and very continue forecast selling to more and two we peak the chains. we years. on Mist to increasing for

pipeline, we the complex, to us from risk short-term by sales Finally, to trade compliance pursuit to from has integrated and our products. produce tensions from strive while political of which and stemming gains. long-term quality should rise the hard help model and us on and to current strategy profit that business legal the management above focusing vertically in achieve We [indiscernible] growth believe continue insulate enabled disciplined risks posed

I our second go will quarter Bill Peters, the call CFO, through to that, over the With to results. financial turn

Bill Peters

volumes the selling selling the prices. $XX.X of to had Lidocaine primarily our Sales million average higher XX% product you, Phytonadione from second due year $XX.X from increase $XX small in million Thank quarter $XX a declines. to up $XX.X selling previous sales million, unit lower the from prices million, for million with in was increased sales million as period. quarter, Jason. biggest to year's Naloxone $XX.X lower than million $X.X declined increase to higher saw average sales at offset $X.X sales million. prior, selling $XX more from prices. the million Enoxaparin million in from on to $X.X average unit

of to product part as sales million drug $X.X chains. increased the of Cortrosyn, launched market million and began and was sodium dextrose, plan quarter Primatene of our other to of XXXX, from sales from marketing for sales Mist independent wholesalers million. $X.X third finished in other Sales totaled into products isoproterenol, stores contributed $X.X due increased loading to which and smaller shortages bicarbonate our pharmaceutical Higher calcium chloride, products. sales higher target as we Medroxyprogesterone also the to

margins of as high sales down sales had from products business of XX% due margin sales to XX% in prior API million the Gross and had medroxyprogesterone, insulin year, increased Mist, to like Cortrosyn, million, from $X.X shipments. the $X.X timing increased of of sales we Primatene of isoproterenol. primarily Our

costs marketing associated ads, increased the Momenta distribution July. million These antitrust administrative $X to $XX.X and increased launch to spending and were due development Selling, expenses expenditures primarily of in and Primatene Sandoz. because legal for million, Mist. to the digital $X.X with primarily to our expenses million, television begin marketing airing and from million of campaign case related General $XX.X our slightly from against the which of marketing higher

products of related spending. clinical lower pipeline both Amphastar first the lower R&D China two from settled million quarter this our were spending than Two, to to the expenditures One, projects Research for million Pharmaceuticals first decrease pre-launch subsidiary, and were case $XX.X we $XX of the expenses was quarter the increases finished Chinese to However, expansion and to to ANDA. expenses partially for inventory. planned development increased due the in at million of reasons. our for offset as able establish our $XX.X Nanjing inhalation the amount trial significantly and team market. increase These by expansion

on We usually mention because earnings don't usually our material. it other call, not income is

with our Sandoz income. payment received million quarter, I book settlement, for million. taxes which $XX.X amount booked to rate this at of to the that this federal a However, want -- Momenta settled was long-standing XX% taxes we our and about or close for this other note will US $XX normal to state be an while and while and case

loss a will the an of million. for and significant tax and of actual are tax at for our carryforwards to to a tax California. cash including This amount larger State planning of the amount We credits, closer to assets, paid $X amount and level research federal use net of small portion the settlement bring operating the both deferred development

we about $XX net will in So, million cash the settlement. from

Amphastar of impairments of assets million $X.X or $X.XX net adjusted second share, in of Company reported $XX.X or The of per the income long-lived the in earnings income million a to attributable to exclude $X.X last quarter shareholders million XXXX. settlements. $X.XX income of per share amortization, per $X.XX an and legal of in year. Company Adjusted of second compared $X.X compensation, to share million adjusted net or quarter loss reported The the second an net $X.XX quarter, compared or share equity per

In we XXXX. to stock, authorized $XXX was quarter, the And of at an increased buyback XX.X%. by increase provided the $X.X of the approximately million million million. million end cash June equity $XXX of repurchased at from at XXXX the the the end $XXX second flow to of end program XX, -- which XXXX, operations in Total $XX.X million during quarter, completed

Board As call, the plan future. we last the which $XX an utilize the on buyback to authorized program, we additional in mentioned million

I turn to Q&A. the to operator over the begin back call will now

Operator

with Wells Our first David Instructions] [Operator from Maris question comes Fargo.

Your line is open. now

David Maris

afternoon. Good

DMF the that for teriparatide noticed during the I First, filed quarter. you

And expect you file FORTEO? the for would intended will a international So, FORTEO the outside it is lot a questions. Secondly, the question. sells just US? be product to and have a or since few markets another When this US for I then US

Jason Shandell

to at Sure. look good Yes. our filings. Definitely always DMF

sell developing And to active, has subsidiary both do to Drug and additional. intend with Master Chinese Files ultimately Our US we question, we're have and your respect currently been very XX internationally. six

David Maris

thumb? to And follow-up, filing product? good a what's usual from DMF a timeline then Is rule a filing the of a just there as

Jason Shandell

definitely good thumb. the and on I don't the with the focus complexity to rule produce. a there is It difficult product We depends the of really agency. discussions more think on of

is to thumb. So, years say a we be going several launch. It's until I of rule there wouldn't

David Maris

shortages do be Or did don't and is you that more of some forward but step-up pharmaceutical of those quickly those my or what if that you those enough a or where but the for a benefit whether maybe And continue it Can had sales them, nature then again like something you of components since while? are you should was are sequentially? is not through this products Bill, least in should products going big ran number that level characterize mentioned of a other too finished that was well, expected the -- to for and large one-time kind some just it at very describe typing.

Bill Peters

bicarbonate, sodium that right sales the and products that a I now. those I'm and trying Cortrosyn, had products but So, lidocaine shortages was four the also mentioned there SKUs shortages, calcium other of to had dextrose, [Indecipherable] the of to also including highest specifically, few due increases some were and chloride one

Some shortages. of products experiencing market are those still

However, facility of our Monte. that shipping South out. as are of can as we we The do sold those Amphastar, to they're products out Cortrosyn At out constraints have the because most have where capacity much some we sold capacity due we El the IMS in here.

satisfy the able But So, keep demand can't the sodium even with -- of to up things that. product we that really like we still. bicarbonate, meet are up on fully

was is a quarters shortages which while of coming quarter little then also shortages. care a level a Cortrosyn, But bit were are different for products few products. the in and and of -- history shortage critical It these have mix level, that a back higher experiencing had that the experiencing is margin at a higher products also price just different then this happened a and having

that have online that factory validating we've just the And still hope on as end by that to and We factory people capacity extra the is in that. been of process the word built recently year. another telling at we're we've of that

David Maris

Great. Thank much. very you

Operator

Instructions] Our Capital [Operator with question Nachman Gary next from BMO comes Markets.

open. now is line Your

Gary Nachman

Primatene stalled a Hi. XQ bit sales to and XQ. in relative XQ

will that the could quarter? July. I was that get I be? then that expect in And what And are in in follow-up four say after. TV early, and when them it's And we you reorders sort Did quarter to and coming you that. Walmart? ads see still impact much would you will do be the expecting When that us an but through? then just the a You into magnitude So, of from are impact give stocking versus radio have? additional sense have know of a just how started

Jason Shandell

Sure.

So, let is me this begin, Jason.

Walmart Bill. So, advertising start and question, I'll the question to turn stocking the with then question the I'll over

quarter. yes, set Walmart, the in to launch respect with So to we're fourth

that. to about the increase of excited very I've XX% Company. a They really historically Primatene, sales. stores the we're intend previous and sales in made said yes, to think Walmart be in going So that product Walmart for good place the version we all that's call the of up CFC in

the So point, that our good excited ads, seem they even but We may early be good it indication sales we in surge are some up product we're excited, big and should working. we're and that. ramp by promotion some very your we in-store saw the because there very to -- of ads are seeing both with is

significant the we So traffic retailer the the in major since a saw major our increase highest we to get following launching from of We've the major the sales websites. data retailers one lagging retailers, at seen weekly and also advertisement.

working are getting we So, consumer and that we're do ads awareness. more the believe

Bill Peters

if were stocking, characterize, I to stocking. question on quarter to And entirely fourth had sales the your

sales this quarter primarily reorders reorders. bit a bit quarter it primarily stocking, a were with little but and stocking of was of First little was

Gary Nachman

is for going normalized rate Okay. forward? And then Enox, a this run was so, XQ. significantly now from down It

the you than said So, then XQ. lose G&A did price share you And lighter was contract? lot a like or

out I that's that now sense spend a rate just a run of So, you of the have you. new to Thank get some the if way? want litigation

Bill Peters

the we competition all of -- is in first the market did increased So enoxaparin, on now. there

will that both pricing. a to and a the and we of number units So sell took toll toll on the continue take

of that over So the come did the down quarter. course

that. is So, there

they down little compliance were, have and the do part well that some second. will legal spending high, the in some pretty where from expenses we On bit on will a quarter, as that were come very especially first G&A, in significantly they where more but our increased offset ramp the of and up costs

Operator

from comes Steinberg question David Jefferies. with next Our

line is Your open. now

David Steinberg

of couple I a have Thanks. Great. questions.

cash. you had the First but you've development. have you instead but I debt that know past in been on used acquirer used business equity an not typically and thankfully

$XX now small. of So, most you I relatively been your and just think in cash transactions have million got

load near to So of assets, Does something you the fact term? you been your QX Walmart QX in clarify on still in it does you and are this still what also what be before the QX, be valuation will increase pipeline the for in said high? the Walmart, Thanks. increase mean launch asked sort Gary of had in pricing would is saying Primatene And And just if likelihood regarding have that or looking the the Primatene? be appetite? does then for

Jason Shandell

Sure. Yes.

it we So, with now have do increase strong does respect a and to sheet appetite. business development, our balance

the We valuations. are very disciplined. we of synergistic. very It's be When opportunities just are seeing out it There some has to better acquisition, matter there. valuation. an We're do

and to we'll provide updates we So look as we're go. continuing

is have though, clinical we organic do now trials. competency our For obviously growth core some and expensive

would appetite and products toward that synergistic. be increased So right we'll right development our money that. have some we some put price of business the at definitely the the yes, for But

Bill Peters

closer And did a the credit. cash because from have it's million are have nice be just we a quarter tax to as -- as goes, to in We probably $XX clarify, And far settlements. really fourth going a into to load we'll event. it utilizing the nice that was Walmart flow really

David Steinberg

Okay.

Just a couple follow-ups. quick of

mentioned you like And reasons one So on it that the clip large Any weaker of -- in product. for that? looks it half for for expect. the secondly, your margin, perhaps second decent would undisclosed the was than gross year a PDUFA

you is And the you've a past, close half clarify So anything about the timing million described in a of or in secondly, has it million? just I changed of, the year? It's the to Could think product, big either that. off while, no approved still a ask about window. in generic you for second size a generics. been is terms sales there to Has patent $XXX $XXX the

Jason Shandell

So. Sure. Yes.

we year. that the two one half this have of second for PDUFAs the So in The is epinephrine.

a We'd point just at general August. rather undisclosed other for The this product. keep -- yes, large since it's is this

have both probability next the PDUFA perhaps in So, four But will approved. dates by possibility getting months, remaining. and of we excited we're the the months have and these of four two we

So, be drivers. those could

We the are in confident approvals.

if trying Bill. fourth to soon with the back and I'll question, then to sales then next we're great. respect could get see quarter, And we to launch for thereafter which would So can turn the be we

Bill Peters

yes. Gross margins,

So, gross had on the than margin, is we it higher been experiencing.

weakness So price of we also enoxaparin then we coming products down little the have margin and sales the more medroxyprogesterone. [Indecipherable] a Primatene bit. naloxone higher did quarter that little higher and coming the that with But have were this products down like on a did price

new two And But PDUFA the expect we there. product. the and have of have expect at So, expect rest quarters would dates there this growth hope year, margin up both that's to gross products to of definitely the some to and high that offset keep very gross for high that take very margins look to have Mist Primatene just we was of ramping products those a we the drivers the well. year launch later as we that this come,

we gross margin So, that continues trend to as go that go think on. up we

Operator

comes next Piper from Our Jaffray. David question Amsellem from

Your line is now open.

David Amsellem

Thanks.

dynamics this addressed of competitive Thanks. trend the the an think late, the will of your might joined think product on already, thoughts Primatene level, the about back and expansion I inhalation just color but is of there the year. and half year? Last on should and but of more pace portfolio? year or so we products? question filings pipeline longer the have beyond we just Depo-Provera, generic, advancement into update that and this on you on term you how is specific I mean, the inhalation have thinking any -- So higher in the the products you the And next where this how for year about filings this just later inhalation think should

Jason Shandell

if pick was what actually anyone Sure. Yes. ANDA. a on new up was first inhalation disclosure I wondering would to our related

competitive a have metered it's dose vest For and we've reasons, whether inhalers. the never to been disclosed on that or always close dry powder pretty

So, today did in say inhaler. prepared will dose my HFA an remarks, be it I metered that

So for with lot CFC an in terms got of in of Primatene reformulating the of Amphastar. area knows, HFA. to We've that's, expertise -- expertise everyone as that's a

that so we've it is And MDI. something HFA is that that new disclosed an

late call, we discussions last prepared the it of ongoing in the decided Now and in on order filing discussed trial, discussing meeting endpoints. increase subjects the have an after clinical had number in I we was the that year, remarks, my we this FDA, with but further more to confidence provide to

good of making to are XXXX. XXXX end file opposed progress, we're forecasting but to now So now the ANDA in we that as

couple And then, sort terms we've pipeline, over the we in let's of to last see the cadence the the similar of to years. future of of keep what want -- a had

complexity three file to So seeing get what approvals basis hope products we're an on basis finally... three of company two year. the to approvals, on then for opportunities is size, annual about to we're the then large and annual focusing company think every market a these approximately is And looking to our on, three an be and large cap. our a And very with we are our given markets products will it that for

David Amsellem

Specifically more filing inhalation, on of -- I going through inhalation mix. that the to is on be

Jason Shandell

Yes.

next targeting one filing that is about working I -- on the ongoing MDI another There inhalation got clinical a now right year. that trial parallel. now this lot has right focused are we So product that talked in we're in

got the you'll into you as of But that XXXX. next of be of and large coming and part more the year we've mix inhalation will as mix see a So know, number well. those

for but that always it's manufacture great competition allow come. a the generic place then us we've so Depo-Provera, there is because to really and more in have produce we market, is felt product good many to years so difficult think produce to in this to the quality a And product we process will

we we as think do to expect see we respect strongly with product. to competition, So generic especially compete, but a can this company more

David Amsellem

Thanks. Okay.

Operator

Needham. with question comes Serge Belanger from next Our

now line open. Your is

Tian Sun

Serge. Hey, This the is question, thanks for guys. Tian for on

then So Walmart, or think three looking there pharmacies Aid? and independent even these for? like big terms is looking online which lastly, quarter, pharmacies you sales pharmacies, of big in the the about any for fourth the you're the you besides you're are retailers smaller that permitting. And secured mentioned discount retailers Rite at, supermarkets CVS, other relative to big markets of And chain and Walgreens how then that I

of reach have So do to that any future? online you sales you're Thank breakdown in-store the of you. in terms in expecting near versus

Jason Shandell

Sure. Yes.

XX% Walmart. mean, I up earlier, of made So sales. our said excited historically as we're by really I that

to when want across comes all out exploring independent online pharmacies. And it this to the pharmacies, so get We independent the board we're avenues.

like XX/XX retailers we discussions in are the We with other really it groceries. and large rule. But see is

get a You as market, the well. in are exploring CVS, the percentage opportunities, Walmart, that's but including Amazon all huge we of long Walgreens and run

this as upcoming see very a Walmart. we So the very to and exciting encouraged are product launch by

Operator

for no back I'm to this to further the closing over any time, questions. would turn Jason At showing I like remarks. call

Jason Shandell

I to today. everyone you, us Thank for again operator. thank want joining

We progress and we've the look made forward a shareholder remain our are confident in talking the with pleased everyone day. goals and great achieving hope recently in to with We has future long-term you value. and enhancing that

Operator

This thank have day. today's now may conference. gentleman you great conclude in and for you participation your program does disconnect. Ladies and Everyone the

Amphastar Pharmaceuticals (AMPH) 11 Aug 192019 Q2 Earnings call transcript