AMPH - Earnings call transcript Q3 2019 | Amphastar Pharmaceuticals, Inc.

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Operator

[Call starts abruptly]

This conference call may contain forward-looking statements, including statements relating to Amphastar Pharmaceuticals. These statements are not historical facts but rather based on Amphastar Pharmaceutical's current expectations, estimates and projections regarding Amphastar Pharmaceuticals' business, operations and other similar or related factors. Words such as may, will, could, would, should, anticipate, predict, potential, continue, expects, intends, plans, projects, believes, estimates and other there similar or related expansions are used to identify these forward-looking statements. These statements are only predictions and/or such are not guarantees of future performance. uncertainties that risks, impossible difficult involve predict. to they and are assumptions or And differ those materially statements. may results Actual from in forward-looking the

As in number from a the a including result described these SEC. of time Pharmaceuticals' Amphastar factors, time filings with to of

time, the over At Jason I'd to ahead. go to Amphastar. of President Please like Mr. turn this call Shandell,

Jason Shandell

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

the a our will Mist increasing our XX% to the TV ads last as plan third quarter, increased greatly commercials announce Mist a airing. the our quantity was quarter sales on third our We a be November The retail CFC of distribution began given advertising which the third sales by commence spend a view Walmart company to on of compared have had Monday, as Mist store great made increase we TV at which up the we to Walmart's of significant that on sales product Walmart, Once in Primatene of product, demonstrable just quarter, XX. sales. first XX% had this before Primatene October, happy that has the in and Weekly impact Primatene stores. I'm on will week in the historically, Walmart milestone, week shelves shipped of significant and

to Mist next selling on Primatene continued maintain positive in store further of significantly increase our we week. that from launch generated $XX X consumer guidance trend by years once weekly awareness the of Walmart from the the begins X expect the retail in revenues in sales, and approximately being is product. to store achieving Based advertising sales the We million product

to have majority contracts in market. Naloxone the and increased supply second as growth XX% the to The helped increased new compared the in to the sales primarily of by second third quarter weakness offset our margin to competitors. medroxyprogesterone of and sales well to compared issues injectable XX% Sales as strong customers. continued portfolio quarter enoxaparin timing commercial large by purchases due the quarter, due some of to

as contracts We also had of this new for isoproterenol, we increased product. some sales secured

competitor many to unit for demand products ongoing cases, our which, issues, strong to resulted IMS Finally, in has in due supply continues higher be very sales.

we which calls, this stay With billion has IV XXXX. to $X.X ANDAs respect ANDAs mL the the data pipeline, quarter. addressable respect to with currently litigation, represent file of based third September XX, X market our ANDAs the to and vial. Two of been remain have on of due we X X previous we X to the ANDA, the disclosed, previously file CRL XX near-term FDA. to our X With on IQVIA received track ANDAs is second conference These is year. as have Per a epinephrine epinephrine Paragraph XX-month a the total one on approximately vasopressin, in

the address able resubmitted However, issues the we were to the and quickly application. by agency identified

date a GDUFA we As a in XXXX. have January result,

CRL. a on Regarding our received we complex injectable third-cycle product, a review, recently which was

XXXX. assessment ANDA addressable, CRL in currently preliminary are reviewing to January are plan our the We is resubmit and issues we the and that the

trials. to our and been commence on make to following communications of a continue human green We insulin progress clinical the given with have the series light programs agency

receiving active begin on general that insulin and resubmit advice letters, the CRL communications we have advice is of responding and continue issues the our remain to in intranasal agency all addressed several respect NDA XXXX. we identified and FDA's clinical general using letters. to later Our We the trial of track this middle have naloxone including NDA, believe we With our first to scheduled to human to with quarter. the the in

Wells Conference in we Fargo FDA off accepted its product the never injectable very for that had another ANDA the competition that due At September, to disclosed complexity. is but has patent, complex generic our had

we have the recommended in our clinical new critical completed the inspection remain and approval. a of this product. at There's many We attention syringe care this inspection This lot of product product prefilled facility our a line line a agency our for drug at been site this greatly pre-approval shortage XXXX. GDUFA and as on manufacturing of second quarter FDA's have on list. drugs, date manufacturing for FDA the also new IMS will increase The inspected for capacity successfully which

agency's communications We continue focus Drug important one the and FDA these the with to products top recent have in become priorities as on alleviating years. of drug frequent shortages has Staff Shortage

sodium prefilled Amphastar hospital prefilled the purchasing with our our sterile and validates chloride, will States believe and the XXXX. We recent emergency our organization company as reliable significant new regard, Premier inspection the in supply the discussions syringes increased in collaboration produce will source manufacturer calcium ProvideGx dextrose atropine, injection for Based high-quality manufacturing be that the and of has to further Premier, markets. both and injectables for capacity with a And epinephrine, in bicarbonate, this that of going of of States partnered lidocaine. a this agency, phytonadione with United forward. United revenues second confident secured Kingdom are syringes United we to line, largest on have the contract which group we we is recently and

financials. to to the I go Bill call turn will through now quarter third the over

Bill Peters

to in the million of shortage XXXX, Enoxaparin market for sales year the Phytonadione the Jason. quarter was last Sales million quarter increased you, Mist from $X.X Thank calcium of prior million average XX% ended $XX.X saw unit increased million. average, increases period. to XXXX. in products. million to $X.X which $XX.X chloride Naloxone in Higher on the to third and due sales XX% epinephrine selling X% sales increase contributed volumes. higher pharmaceutical quarter products there finished atropine, other sales for sales had dextrose, to of $XX.X higher to third shortages previous and decreased our due market year's had to from million as sales other a of prices. a $XX.X third Primatene

for December. XX% third of launches. quarter had include of revenues an anticipate of business in API Gross which and sales $X.X of the $XX.X $X.X insulin additional million have We of revenues amendment from higher-margin in from to receiving follows amendment MannKind. million from $X.XX year fee to Our Cost sales $X.X million, decreased up of a fee MannKind million $XX.X payment last from we million. XX% trend as products XXXX, we new margins our the with of increase increased revenues predicted million

as while the was newer Primatene higher-margin Specifically, higher-margin such sales products, isoproterenol gross Mist, phytonadione, and to related products, trend. of such as increased margin improved helped this

increased from distribution million expenses. to costs, Mist. $X.X advertising to for million Selling, to million legal including lower $XX.X spending $XX Primatene due commercials expenses due and million General television $X decreased administrative from marketing and to clinical key XX% and due APIs to the million pipeline components inhalation expense increased of to ANDAs. expenditures trial to in Research our million related increased development from from and $XX.X our items multiple $XX.X development and

net earnings share million of to $X.XX to compared The or third $X.X $X.XX adjusted million quarter long-lived or of a and income an net or share shareholders XXXX. per $X.XX amortization, exclude net in the in and adjusted share assets the of per of year. million income income compensation $X.X Adjusted the of impairments third attributable onetime last in The events. equity company Amphastar's million quarter compared per reported share quarter or an third to net per of of $X.X income $X.XX reported company $X.X

third our $XX as cash operations In flow used we quarter, of in levels the increased of had we million approximately inventory.

buy we million used a approximately $X.X cash of our quarter, During portion to stock. of worth the back

Additionally, has repurchase Amphastar's year, second the this additional of the plan, million confidence authorized authorization reflects Board have now we future. which the in Directors an $XX

over will the I Jason. to back now call turn

Jason Shandell

Bill. Thanks,

Q&A. stage, So at prepared take this we're to

Operator

from line The of Amsellem question Jaffray. Instructions] comes Piper first [Operator David the from

David Amsellem

So, in the market, around shortage you thinking place. Depo-Provera. to generics could two, a could have But in that long it wanted your that's know be do any specifics know regarding on capacity that number will sense persist? on run handful your I supply have And more I I put or just get as couple. issues of place it, But higher some there's here given products? with way to understand just some think maybe metrics -- put the many how you how question is? supply the Help competitors how competition? is opportunity rate what's one. is or kind what target. can just how sustainable issues. to there opportunities, that number us around could quantitatively metrics product of you the sustainable shortage any With products then And a how on is you

Bill Peters

Sure. the many question I'll how on start and prices. with -- first

from products a are the dozen which time. to on We subject facility shortages Including been sold have time half IMS about have shortage dextrose, calcium that bicarbonate. these been chloride, have sodium and that atropine, the been a list. products off to Those have at

products, them of could XX% These to increase these sales in biggest and our $X supply by sales these XX% products. million I'll are -- during $XX products. by selling there we shortages, products times or shortage easily those think we even our but them were to million all All million of of were now, are annual more. if say, none of on range any our if -- None able to are the products, we $X right possibly,

those begin capacity to, few for other we'll that we away And to XX online, that sales we and this we of site purchased we alluded once right -- on get those. have we the here we think $X to a get once stability now, meaningful for think opportunities, million in the around have we for to the those X The from we're that additional we annual get we have Once the run way X those that way think a the is approvals for. our good going about targeting back products U.S., products. about a for things of those apply can Once $X we supplier X But facility U.K. then or out as maybe for year previous be we might Jason that can have those are to we first first, launched. right an in making get those years and those to apply their rate, sale, transfer then million is on those start the -- supplying

Jason Shandell

respect your generic Yes. this to -- Jason. And second then Depo-Provera. is With the about question

sales that supply a disruption was to there led So increased for us.

very that's However, surprising. not

get approved, have to past even As difficult in very to a product calls, once it's I've complex discussed difficult you but manufacture. is it only very not and approval,

by, the so And disruptions. surprised as years of to go not be see we such more would

in recent fact, have some launched that more been And have companies so there approvals, some yet. the -- not of even

So even perhaps those or one, are difficult to it's to difficult increasing product. our for get approved; two, factors, this confident manufacture. we Based share maintaining on in it's market

Operator

of Our next the from comes Capital Nachman line BMO Markets. Gary question from

Unidentified Analyst

in [ph] you Gary. stocking Can portion on quantify retailers? versus were the quarter Walmart Rafay at for It's you just... sales at existing And can what of reorders Primatene

Bill Peters

That is Nothing fourth -- that's quarter. was at was the Walmart. all in so stocking October, October

Unidentified Analyst

versus Okay. year? expenses Can for then how should are tracking reorders how the on generally we marketing And expectations? about product you up ramping think comment next your

Jason Shandell

And reorders, expenses. marketing are a And we're commercials it's getting lot the seeing that the -- discuss in my stated, But well. are we Bill of prepared of seeing following a remarks then as let the where increasing. in steady of terms airing July, I'll especially, we sales. state, as reorders same-store Yes,

this we're will confident So that continue.

Bill Peters

Yes.

not been to come on, advertising As high as mentioned, to on -- far extremely the we to Walmart distribution single originally up digits the had expenses, we mid-single-digit the this targeting digits, slowed definitely ramp-up the marketing expenses. quarter, more as Jason we But went board of with we in We high acceleration single We're got range. marketing on further going saw universal probably down wanted year before closer we mid- spend that until in to as advertising. wait this had very that. well strong marketing the of ramped

YouTube things, other looking advertising some as that. campaigns expand and media So with of some social we go to along that. We're to are well to other increase some type looking commercials

will quarter at So far increase in the we're spend running year-to-date increasing and more is be -- will quarter so But running fourth is that point. the than or $X which where that year. million next so, been we've we a

Unidentified Analyst

color more run quarters. a some we can normalized to rate? enoxaparin. a also you X% could pressure Or And Okay. of there? for around couple It's provide see further trended XX% down Is

Bill Peters

tend-- there. There's has long-term the experienced see we'll it's competition. market that definitely couple But last. increased what long and really we will short up how additional in further competition. the market Don't Yes, over and pressure of been trend years, market some down this say be. hard term, will last the The have know to been

expect the into the fourth we drop quarter. therefore, So going sales to

Operator

Our from question comes line Steinberg next from David the of Jefferies.

David Steinberg

couple A of questions.

that sort date that and settlement then when with second on timing when next be? issue you -- Momenta, you -- of, related Sandoz undisclosed from M&A. give no marketplace? term? guess, of got you had the cash first type and work generics the something you you're just when is the to on -- that? you to you for what's January, the you is, around more going got when be the a in it on what you CRL development, refile Could your Secondly, First, I'm little curious, second the might your that the you to could good were the say announced and on timing I indicated would assets for? seeing and -- us thing GDUFA that to GDUFA Is your there business you're the first? longer just what's And relates considering a date. color valuations in it versus to it looking Are so happen are And for still still near-term putting there

Jason Shandell

Sure.

out confident the And that recently got I generics. the on start Yes, which will the So CRL the first confirm we market. there we let's undisclosed yes, with are ANDA, we generic for. be can no remain still

the and get approval and we that each so FDA, complex of -- continue drug, this issues are Yes, will product. January. we with the each respond think is narrow confident with that CRL we a that can we So but we interaction to ultimately by

stage, be the date months. So of business remain and we just of that Then are reasonable something some strong. for both the it confident terms is suspicion see do will that as companies terms We And as we sheet would is looking. of It's we first prices couple a would in half assets generic. balance still XXXX there, out actively of in acquisition. And well our early be second definitely in on. development, are but our that working GDUFA be

David Steinberg

Okay.

a like quick And supply on this a Just for XXX(b)(X) two if this a follow-ups; relating to And epinephrine, the got API looked Hospira Hospira $X.X be Any updates or revenue is million? the secondly, what payment in the with uptick it tentative repeatable? Belcher. for event MannKind so, then week. their litigation would of onetime more approval and of

Jason Shandell

Sure.

agreed litigation The So we with parties of with the that case. Hospira stayed respect await the to that would the outcome we've trial. Belcher,

a quite now. stayed has been that for so while And

Bill Peters

the And second one was...

Jason Shandell

MannKind. Was the

Bill Peters

another we gotten yes, million fourth million in fees hard past. onetime that quarter, forward is at will with would say -- some the so path to $X.X what getting in -- payment. be We're the time. a which amendment them. $X.XX what It's We've the recognize Yes their the

the where future, We it want us. might they then forward. certain of they amount moving for amendment have potentially marketing that they us if to can buy of if be have the in increase get where their a supply from another And product to -- amend a product there they purchases, fee contract can

there. we've think business got from different revenue get And to opportunities so X I that

Operator

from Our Raymond James. Lucas next of Lee the comes from question line

Unidentified Analyst

[ph] Lucas is couple of Lee Elliot. A questions. on for This

form qualify And about terms -- Walmart filing? IV we Could prominence of innovator so, will talk and have question notification in you the Paragraph positioning. in And infringement And of at a freestanding for still space First, this period product on shelf this the terms of within filing. and the action? on recent regarding some second Was displays? approval? if the Walmart I is are accelerated filing of ANDA the

Jason Shandell

Sure.

a So will launch. in to for been like and they with this yes, successful some going them they looks that promotion of with regarding the is amount be of good putting in do want in opinion, respect We've product. to our displays a very the be, to Walmart, discussion it

So we're it. excited by

this we're the ANDA just increase so our been prominence while. the In that advertising addition and feel actually accepted to off-patent we're having forward. it's product, which that's the a the complex, XX% between commercials we their this was really the the by of agency historically and to sales -- our very sales that airing, targeting, displays -- for that With in Walmart, that that a going really is and of will is complex was it's respect recent demographic

but that of than There's and we'll the does market, -- they review it's generic designation a have means than have means therapy on we from qualitative So a application. although competitive that actual qualitative quantitative, quantitative. Paragraph that no more a will generic on essentially, mid-cycle priority not IV. what more meeting the a it and with it's it so put have an a the lot interaction FDA, priority a is But

of getting date. decision amount having you have of in but you the in advance aim the at a same a GDUFA months So of they terms date, GDUFA

Operator

Sameer Our Kandola next from question comes the from Securities. Wells of line Fargo

Sameer Kandola

were it Can work NDA? relates you to naloxone I the as us the for trying to update around dosage. give patents intranasal believe an on you Narcan your

FDA? that to able So the were out with figure you

Jason Shandell

Sure.

yes, been forth several so with we that back letters that us given So extensively going the they've and advice and FDA, product, with respect have topic. to around

sort of confirm they we that a are be feel, few issues with that's consider, application. amount extensive we what data we discussions we we in will we're and if the and of feel we them more going these this resubmitting so have the that point, that middle sent them have addressed at to why and an And of to XXXX, have and

Sameer Kandola

Okay. How still competitive on are And for maybe it was opioid XX X, sort of ago? you XX just as a opportunity that. Do size months think rescue it's the overall about of the the landscape follow-up quick you thinking or same market? an

Jason Shandell

interesting an Yes, it's question.

continues On due market, generic not but in to may are you Narcans they've expand. see on the the there launched Eventually, one products the more the to patent. market the queue, hand, but

extremely it's this large And the an opportunity -- think so so opportunity very large for a company. the that same we remains market net-net,

Operator

from Our Serge from Needham. Instructions] [Operator next question comes of line the Bellinger

Unidentified Analyst

Tian This couple. is had Serge. a just [ph], on for I

provide the for revenue ANDA described XXXX? this first agreement how And that Premier. update more GDUFA little then on Walmart agreement? partnership the Mist, products with retailers us So this is XXXX. the in regarding lastly, updates the one products. any XXXX? filing? still Primatene MDI on there the on the Is additional getting just the Is impact it Could inhaler far that might in the stores, is as X any for on of track are the a besides timing into And for then there And general you bit going detail with regarding the as

Jason Shandell

Sure.

respect Yes, the with we track. are to on inhaler? first, So dose metered

clinical our inhalation Bill's actually remarks, had call, he discussed products. spend increased for in our On discussed prepared the in that did trials size increase that last I relate sample to for the we trial and the R&D

XXXX a are are to XXXX. for we currently in With with in filing -- in So discussions Primatene, additional yes, we retailers. track on still respect

Walgreens; we Walmart wanted big obviously, and get X: now. So to CVS;

that and to retailers above large independent discussions you of got as is well. we've and well in other in the believe the course, the XXXX, online, retailers and all at commonly as the Aid time as in we yes, of in retailers. this that process in expand do Rite are some ones, Of of think But there additional addition, could

Bill Peters

supply our great. but to not on going and I'd the and products tens is is, does competitors of troughs, thousand sales, a the lot Okay, And thousand hundred it's of our that, it quarter units next only issues. like to The peaks have it what as Premier agreement. necessarily one about now, right sell we'll than increase units these way some have think several

supply that, So be level it to where that is going what they're does because well. from that little times. a keep out stock. it customers of purchase aren't their a guaranteeing their process certain on to we'll of as of And us able customers also they'll also all to that bit inventory kind at sure minimum be guaranteed smooths out make And more on inventory hand we've of amount keep to a hand

and will there. facility So have into we does that increased the -- tie it at and going that's -- our capacity IMS

smoother So a and and while we manufacturing times standpoint when a it's slower, think us for little sales a inventory bit the little so have more in we'll from them. a evens maintaining win-win for manufacturing that out bit and makes production are just things

So it's really win-win. a

Operator

showing am closing would to for questions no I I Mr. like Shandell Jason back remarks. to turn now at further time. his this the conference

Jason Shandell

questions. appreciate answered a We day. and Thank of the have hope I beyond all And you, time everybody to soon. I Talk you your great you operator. really hope with today, that, we

Operator

Thank Ladies this today's concludes your and you participation. for gentlemen, conference.

You disconnect. may all

Amphastar Pharmaceuticals (AMPH) 10 Nov 192019 Q3 Earnings call transcript