[Abrupt Start] All statements on this conference call that are not historical are forward-looking statements, including, among other things, statements relating to the company’s expectations regarding future financial performance, backlog, sales and marketing of its products; market size and growth; the timing of FDA filings or approvals, including the DMF of ANP; the timing of product launches, acquisitions and other materials related to its pipeline of product candidates; its share buyback program and other future events such as the impact of COVID-19 pandemic and related responses of business and government to the epidemic on our operations and personnel and on commercial activity and demand across our business operations and results of operations. These statements are not historical facts, but rather are based on Amphastar’s historical performance and its current expectations, estimates and projections regarding Amphastar’s business operations and other similar or related factors. Words such as may, might, will, could, would, should, anticipate, predict, potential, continue, expect, intend, plan, project, believe, estimate and other similar or related expressions are used to identify these forward-looking statements, although not all forward-looking statements contain these words. You should not place undue reliance on forward-looking statements because they involve known and unknown risk, uncertainties and assumptions that are difficult or impossible to predict, and in some cases, beyond Amphastar’s control. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in Amphastar’s filings with the Securities and Exchange Commission, including in the annual report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 16, 2020. In particular, the extent of COVID 19’s impact on our business will depend on several factors, including the severity, duration and extent of the epidemic as well as actions taken by governments, businesses and consumers in response to the pandemic, all of which continue to evolve and remain uncertain at this time. You can locate these reports through the company’s website at http//ir.amphastar.com and the SEC’s website at www.sec.gov. The forward-looking statements in this release speak only as of the date of the release. Amphastar undertakes no obligation to revise or update information in this press release or the conference call referenced above to reflect events or circumstances in the future, even if new information becomes available or if subsequent events cause Amphastar’s expectations to change. Thank you. I’ll now turn the conference over to Dan Dischner, Vice President of Corporate Communications.

Thank you, operator. First, I want to acknowledge that there have been some technical difficulties, and we apologize for the delay. Good afternoon, and welcome to Amphastar Pharmaceuticals’ First Quarter Earnings Call. My name is Dan Dischner, VP of Corporate Communications. Joining me on the call are Bill Peters, CFO; and Tony Marrs, Senior Vice President of Regulatory Affairs and Clinical Operations. We appreciate you joining us today and look forward to sharing our latest updates. We’ve had a solid start to the year and have seen organic growth on multiple fronts, which I’ll speak to later. Overall, our first quarter’s performance had a sales growth of 6% and a gross profit increase of 19% as compared to the first quarter of 2019. This growth is the result of the commercial strength of our technically challenging sterile injectable portfolio compounded by the increasing sales of Primatene Mist that benefits from our digital and TV marketing strategy. With that, I want to say we’ve made significant progress in our pipeline in the first quarter. Since our last earnings call, I’ll go ahead and address our recent FDA approval and upcoming launch of our epinephrine injection multi-dose vial. With our recent approval and planned reintroduction of the multi-dose epinephrine product, we stand to benefit from the growth of the epinephrine vial market, which has grown into a $131 million opportunity based on IQVIA data. At the same time, we stand to benefit and are pleased to have also received 180 days of market exclusivity as the first generic filer. Turning to Primatene Mist. Sales have continued to increase because of the rising consumer awareness of the product as a result of our marketing efforts. We believe more consumers stayed home due to COVID-19 orders, and there was significantly more viewership of our…

Thank you, Dan. Sales for the first quarter increased 6% to $84.7 million from $79.8 million in the previous year’s period. Primatene Mist sales surged to $12.9 million from $2.9 million in the first quarter of 2019 as strong advertising support combined with quarter ended pantry loading as the result of COVID-19 pandemic lifted sales dramatically. Naloxone and epinephrine also had strong growth as did sodium bicarbonate, which we are now producing on the new filling lines approved by the FDA in February. Enoxaparin sales declined by 37% to $9.2 million as the competitor shortage from 2019 no longer has a positive impact to our business. Strong Primatene Mist sales had the additional benefit of increasing our gross margin. Remember that Primatene Mist is a naturally high margin product, but we are still benefiting from the components in API, which were expensed prior to the product’s approval in 2018. This benefit will decrease during the course of the year as we sell through these components, but Primatene Mist will remain a high margin product for us. Selling, distribution and marketing expenses increased 5% to $3.3 million, primarily due to marketing and distribution costs associated with Primatene Mist. General and administrative spending decreased by 34% to $10.7 million as we no longer have to bear the legal expenses related to the patent and antitrust cases with Momenta and Sandoz. Research and development expenditures increased $15.3 million from $14.6 million due to the increased clinical trial expenses for our inhalation and insulin pipeline. The company reported net income attributable to Amphastar shareholders of $3.9 million or $0.08 per share in the first quarter compared to net income of $900,000 or $0.02 per share in the first quarter of 2019. The company reported an adjusted net income of $8.4 million or $0.17 per share compared to an adjusted net income of $4.9 million or $0.10 per share in the first quarter of last year. Adjusted earnings exclude amortization, equity compensation and the impairment of long-lived assets. In the first quarter, cash flow provided by operations was approximately $1.5 million. During the quarter, we repurchased $10.9 million worth of stock as we took advantage of the lower stock price to increase purchases. On the last call, we discussed our financial assumptions for the year. We know that a lot of companies have withdrawn guidance due to uncertainty related to COVID-19 pandemic. But today, we maintain what we said on our last call. Most of our products saw increased demand at the end of the quarter and into April. We are not certain how long these increases will continue, but the second quarter started as strong as the first one ended. This trend, coupled with the recent approval of our epinephrine multi-dose vial, which we plan to launch within weeks, means that our business remains strong. I will now turn the call back over to the operator to begin Q&A.

[Operator Instructions] And your first question comes from Tim Chiang with Northland Securities.

Hi, thanks. Really two questions, first and foremost, on Primatene Mist. Are you still planning to do direct to consumer advertising on this product this year? And sort of how do you expect to get to additional retail retailers? I know you guys are - I mean I know you guys are in Walmart, CVS, Walgreen’s, Rite Aid. I mean are there other retailers that you plan on getting Primatene Mist into?

Yeah. Thanks, Tim. Yes, we are spending on the direct to consumer advertising. And we’ve shifted some of the focus from some of the shows that we were doing, and we’re doing more on some of the news networks now as more attention is on those. We had said on previous calls that our budget was going to increase this year for advertising, including both the consumer, TV and radio as well as the digital campaign and would be in the mid- to high single-digit millions of dollars to be spent. As far as other retailers, we are actively working on some large grocery chains, as well as some other mass merchandisers as well. So the good thing is that we recently did launch into amazon.com. So we’re on that platform, as well as the major drugstore chains and Walmart.

And Bill, just one follow-up. The epinephrine injection vials, could you just provide an update as to when you expect to have capacity to launch that product on the generic side?

Yeah. So as I mentioned in my comments, we’re going to be launching that within weeks, but we’ve already begun manufacturing the product. We’ve already begun the marketing effort and talking to customers. So it will just be, as I said, within a few weeks.

Tim, this is Dan. Can I add that we expect this launch to go smoothly as we’ve made this product in the past, so we expect it to go smoothly.

And I noticed, I mean Endo reported pretty good growth in the first quarter. So I am sort of wondering, this market is probably a $200 million plus market now. So you don’t have a capacity issue at all, do you?

No, we don’t have a capacity issue. It’s hard to say whether their sales were impacted by COVID because I know we did see some increased epinephrine sales in the quarter above what we usually see. So I don’t know if that’s a temporary thing or will be an ongoing thing, but it is a large and growing market. Before the first quarter, sales was annualizing for IQVIA of over $130 million. So no matter where it is between $130 million or $200 million, it’s going to be a very good product for us, and it’s a high-margin product for us as well.

Okay, great.

And your next question comes from Gary Nachman with BMO Capital Markets.

Hi. Good afternoon, guys. Back on Primatene, how durable do you think the benefit is that you got from COVID? How much was the stockpiling in front of the pandemic? So maybe comment on how it’s been trending more recently in the last few weeks to give us a sense.

Yeah. So Gary, we said - what I’ll say is that about $1 million to $2 million of sales in the quarter, we believe, were related to the COVID pandemic. And it’s a little bit hard to decipher how much exactly it was. But based on the store trends that we saw, that was it. And subsequent to that, we’ll update the chart that we have on our investor presentation within the next couple of days to show some of the weekly sales trends. There’s a definite spike up at the end of March, beginning of April. But if you take a look at the current trend and even if you take those out, we’re still on an upward trend from where we were throughout the year.

Okay. So what you’re saying is, I mean, if we took out a couple of million and then just call it $10 million or so in the first quarter, a little bit higher than that, I mean, it should go up sequentially from there based on the reorders that you’re seeing and the way you just sort of described it.

Yeah. We haven’t really seen, you know, the trajectory is still going upward. And so we think the trend is still positive for the product. And I don’t think it will probably consistently be that way. That’s how we’re forecasting it.

Okay. That’s great. And then how are you thinking about expenses going forward, especially in this environment. Are there some areas that you think you might want to scale back a little bit to try and improve profitability? So just - I don’t know. It seems like you had a good quarter, so maybe that’s not top of mind, but what are your thoughts there?

Scaling back expenses, I think we’re a growth company, and we plan to grow and we keep investing for the future. So we’re not going to be scaling back, we’re going to be increasing our R&D spend as we go forward, so that’s a definite. But we have no plans to do any significant cutbacks in the other areas.

Okay. And then just last question in terms of any clinical trials that you need to do in the pipeline, are you anticipating any major delays as a result of COVID for some of the important programs? I mean, that’s across the industry, so I’m assuming it might impact you guys as well.

So actually, also on the call today, we have Tony Marrs, who is, as we mentioned before, in charge of regulatory and clinical trials. So I’ll let him answer that question.

Yeah. Hi, Gary. Speaking generally about our clinical trials, I think, like the rest of the industry, we do see some minor delays in this. And overall, no new clinical trials are able to be started during this time. But the ones that we have going continue to be ongoing. Certainly, there will be a delay in those trials for a month or two as we have much slower enrollment. And we don’t know how long this will last. Obviously, when we talk to our sites that are actually performing the trials, their estimates are sometime, as we all might estimate, the end of May, the beginning of June. It should start slowly returning. So we really would see that as just being a few months delay.

Okay, great. Thank you.

Thank you.

And your next question comes from Elliot Wilbur with Raymond James.

Hi, thanks. This is Lucas Lee on for Elliot. I’m sorry, I might have missed these from your prepared remarks, but I was wondering if any part of the portfolio benefited directly from COVID in terms of utilization, such as enoxaparin?

Well, we saw a spike in - well, there was a small - for enoxaparin, there was a small increase, but I think it’s already returned back to the normal trends that we saw in Q4. And then we - obviously, with Primatene Mist, we saw a three week spike in sales on Primatene Mist. And then, of course, some of our hospital based products out of IMS, the crash cart products, there’s some small increases there. But most of that’s already returned back to normal.

Got it. Also that - I’m hearing that a lot of deals will be coming to market soon based on the sellers increasingly needing cash. How are you thinking about acquisitions given cash and a strong balance sheet?

Yeah. We always say it, we will look at opportunities. It’s really important when we look at these types of transactions that they synergistically fit in with us, that they complement our company and somehow benefit that we can add value to the company. So we’ll always entertain and look at those possibilities. But there’s really nothing right now directly on our radar.

Got it. And lastly, so Reddy’s has recently launched naloxone hydrochloride and Luer-Jet configuration. How much of your [Technical Difficulty]?

I think you cut out. We didn’t really get all of it, but I think you’re asking us about naloxone and the recent launch by Dr. Reddy’s. Is that correct?

Yes, yes.

Okay. We do anticipate some competition there this year. It’s hard to tell exactly what the impact is going to be, but we do see - we do acknowledge that, and we know that there will be some competition there.

Got it. Thank you.

And your next question comes from David Steinberg with Jefferies.

Hi, there. A couple of questions, maybe to [ph] sort of multiple hundred million dollar generic opportunities where the brands where there’s no current generics, and I believe at least one of them is already off patent. I think you call them AMP-001 and 002. And I forget which is which, one has had two or three CRLs and one is more recent. For AMP-002, which you called out, why - could you comment on why the GDUFA was pushed out? And whichever one is the one that you’ve had two or three CRLs, what’s your confidence that the third or fourth time will be the charm?

This is Tony Marrs. I can address your first question. This is for the AMP-002, you got that correct. That’s the first cycle review, as it’s historically been called. This is really in response to some questions that they had as part of the normal review process. One of the reasons we targeted this product was because it was such a complex molecule. One of the reasons that no other competitors have been able to at this point, be approved for this product is because it’s so complex. And so as part of the normal review process, as the agency asked us and we had discussions with the agency, when we responded to some of the questions that they had during the normal review process, they just wanted to view those questions and respond to those questions. And so that’s really the reason for doing it, to give them the opportunity to review those - our responses to those questions.

And then on the other one with the - that’s had multiple CRLs?

So your question is why - how do we feel confident about - if we were to look at the comments that are received during those CRLs as a funnel, if I could use this analogy, we’ve seen through this process that the number of comments that we’ve received as part of this to significantly decrease. And so that gives us an indication that we are very much making clear to the agency about this product and getting them to understand what we’re doing to where we can respond to all of their open issues. And so essentially, we’re seeing less and less of those.

Got it. And just a follow-up to [Technical Difficulty] both sound like they’re already off-patent, and there are no other generics. Given the size, I think you said they’re $200 million to $300 million in brand sales. Wouldn’t each of these be at least $75 million to $100 million peak sales opportunity for you?

I think what we’ve said over time, the value of these things has changed over time. So I think you’re partially going back to some statements we might have made a few years ago. But I will say that both of these are $100 million-plus branded opportunities. And both of them are off-patents, and both of them have no generics on the market, and both of them are so complex that they’ve been off-patent for many years with no generics. And we think that generics are just very difficult for both of them. So because of that, our expectation is that once we get approval on these, that we will have limited competition.

Right. And then just one final question on Primatene. So you did $12 million in the quarter. I think you said $1 million to $2 million relates to the pandemic. Was this all pull-through or was there some - or have you disclosed what the pipeline fill on that $12 million is?

Yeah. This is all pull-through, David. So we had very strong store sales in the quarter. So we really - while we did launch in Amazon in the quarter, I will say that the – there is really not much of an inventory there from this. It’s kind of just-in-time sort of situation with our - the company that we’re working with on that. So there really was no channel fill. This is all end-store - end customer demand.

Got it, okay. So truly accelerating. Thank you.

Great. Thank you.

And your final question comes from Serge Belanger with Needham & Co.

Hi. Thanks for the question. This is Tian on for Serge. So with the multi-dose vial epinephrine that’s going to launch within the next few weeks, can you just give us, I guess, a general sense of how big this market could grow in the next several years? I think in the past, you’ve mentioned about $120 million, $130 million. And then in terms of the ad spend for Primatene Mist, can you give us a breakdown of your, I guess, current spend on TV versus radio versus the digital ads? And I guess, how do you expect your current trend to change for the rest of 2020? Thank you.

Sure. So on the epi vial, we’ve been using IQVIA data out there. The 12-month data was about $131 million. We did hear Endo mentioned that their sales were up significantly this quarter. So we did hear a number, that was $50 million or so this quarter, so it did seem like they had a very good quarter in it. It’s difficult to say if that quarterly number is going to hold or not. But given the fact that we have a six month exclusivity, given the fact that we’ve sold this product in the past, we think that this is a good product for us. We expect that we’ll get a reasonable market share, and it will remain a very profitable product. As far as the DTC spend goes, the biggest of those categories is now TV. And radio and digital, we spend less than that. We’ve been - we - this is something that we analyze every quarter and we take a look at how we’re going to advertise and where we’re going to advertise is the decision that we make depending on the costs at the time. And the good thing is that the costs have not been going up. So we think we’re actually reaching more viewers than we have in the past for the dollars that we’re spending. So we’re very happy with the performance, and Primatene has been a great product for us so far.

Are we done?

Operator, we’ll turn the call back over to Dan now for concluding remarks.

Okay. Well, thank you, everyone, for all your participation in our Q1 update. I want to say we’re excited about the opportunities ahead of Amphastar as we continue to focus on advancing our pipeline and strengthening Primatene Mist trajectory. We remain focused that our employees and business stay strong and sustainable in light of the unfortunate circumstances that the world and our nation face with COVID-19. Stay healthy, stay safe. Thank you.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.