Good morning, ladies and gentlemen, and welcome to the Amphastar Third Quarter Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference call maybe recorded. All statements in this press release and in the conference call referenced above, that are not historical are forward-looking statements. Including among other things, statements relating to the Company's expectations, regarding future financial performance, backlogs, sales, and marketing of its products size and growth. The timing of FDA's filings or approvals including the DMFs of AMP, the timing of the product launches, acquisitions and other matters related to its pipeline of products quantities. It's share buyback program and other future events, such as the impact of the COVID-19 pandemic. And really the responses of business and governments to the pandemic on our operations and personnel and on commercial activity and demand across the business operations, and results of operations. These statements are not historical facts but rather Amphastar 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 may contain these words, you should not please undue reliance on forward-looking statements, because of they involve known and unknown risks, uncertainties, and assumptions that are difficult or impossible to predict. And in some cases Amphastar's control. After all results may differ materially from those in the forward-looking statements as a result of 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, 2018 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 expand of the pandemic, as well as actions taken by the covenants, businesses, and consumers in response to the pandemic, all of which continued to evolve and remain uncertain at this time. You can locate reports through the Company's website at http://ir.amphastar.com, and on the SEC's website at www.SEC.com. The forward-looking statements in this press release, speak only of the date of release. Amphastar undertakes no obligation to revise or update information or any forward-looking statements 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. I would now like to turn the conference over to your host, Mr. Dan Dischner, Vice President of Corporate Communication. Please go ahead, sir.

Thank you, Operator, and good morning everyone. Welcome to Amphastar's Third Quarter Earnings Call. My name is Dan Dischner, VP of Corporate Communications. Joining me on the call are Bill Peters, CFO; and Tony Mars, Senior Vice President of Regulatory Affairs and Clinical Operations. We appreciate everyone joining us today, and we look forward to sharing some of our very exciting pipeline updates, how well Primatene has trended, and other great news. I would like to first start by sharing the exciting pipeline updates, I just mentioned. I am pleased to announce our intranasal Epinephrine and NDA that will target the Epinephrine auto injector market. Thus far our intranasal Epinephrine product has completed its Phase 1, clinical trial, and we plan to begin Phase 2, clinical trials in the first quarter of 2021. While we usually do not discuss Phase 1 clinical trial results, I'd like to share that we believe our novel formula of Epinephrine significantly increases drug absorption rate while using and intranasal route of delivery for anaphylaxis treatment. This offers a very attractive and non-invasive delivery option compared to the currently marketed Epinephrine products. That being of course as an intramuscular injection with a -- with the auto injector. We are excited about the potential opportunity this brings to strengthen our portfolio, and provide a new treatment option for patients having an anaphylactic reactions. For epinephrine auto injectors, the 2020 equity a data annualized sales has an addressable market of over $4 billion. Moving on to business our third quarter saw sales growth of 4% compared to the same period in 2019. Net revenues in Q3 compared to the prior quarter saw a decrease of 3%. We are attributing primarily due to the impact of our IMS product portfolio, which previously had benefited from market shortages. And…

Thank you, Dan. Sales for the third quarter increased 4% to $83.4 million from $80.1 million in the previous year's period. Primatene MIST, saw sales growth of 255% to $13 million from $3.7 million in the third quarter of last year, with strong sales to our current customers growing online sales at Amazon.com, as well as the launch of Primatene MIST and Kroger, which is one of the largest grocery chains in the country. Enoxaparin sales increased 22% to $11.6 million from $9.6 million as to have a left the Enoxaparin marks. Epinephrine multi-dose vials and sales of $2.8 million in the second quarterback on the market. Other finished pharmaceutical products and saw a sales decline of $4.1 million as a competitor, who had previously had supply issues return to the market. Our insulin API business and sales of $2.1 million, down from $4.4 million last year as last year's sales numbers included a $1.5 million amendment fee for mankind. Cost of revenues increased to $46.9 million from $44.9 million. Gross margins were relatively unchanged at 44% of revenues. We had increased gross margins related to newer higher-margin products such as Primatene MIST, and epinephrine multi-dose vials, which were offset by lower sales of Naloxone and other finished pharmaceutical products. Selling, distribution, and marketing expenses increased 14% to $3.7 million from $3.2 million, due to advertising and distribution costs including television commercials for Primatene MIST. General and administrative spending increased 6% to $11.7 million from $11 million due to higher legal expenses. Research and development expenditures, decreased 5% to $17.6 million from $18.6 million dollars as lower expenses in China were partially offset by increased costs related to our biosimilar insulin program, our generic inhalation program and our newly disclosed intranasal Epinephrine product. The company reported net income attributable to Amphastar shareholders of $3.9 million or $0.08 per share in the second quarter, compared to net income of $1.3 million or $0.03 per share in the third quarter of 2019. The Company reported an adjusted net income of $7.6 million or $0.15 per share compared to an adjusted net income of $5.2 million or $0.10 per share in the third quarter of last year. Adjusted earnings exclude amortization, equity compensation, impairments of long-lived assets and one-time events. In the third quarter, we had cash flow from operations of approximately $8.8 million, as we reduced inventory and accounts receivable level. During the quarter, we used a portion of our cash to buy back approximately $4.3 million of stock. I will now turn the call back over to Dan.

Yes, operator, we're ready for the Q&A.

[Operator Instructions] Your first question comes from Jacob Hughes of Wells Fargo Securities. Your line is open.

Hey, thanks for taking the question. I wonder, if you could just comment on the trends for Primatene in the quarter, it looks like the growth slowed a bit sequentially, and we had the leveling off in the pantry load at the beginning year. I think you launched Kroger at the beginning a quarter. So, if you could just touch on how that's going, if there's any other retailers you could launch, and how you're thinking about the upside to the $65 million sales target?

Sure. Great, yes, we still Primatene still the trajectory is still good. There might have been some slow because the pantry loading as we've talked about in the past, but we still feel like you the trajectory is kind of return to what we expected it to be. Kroger introducing at the Kroger has gone really well, we see that there, Amazon has been doing well as well. Even though we still believe that this product is more in the physical stores has as we've seen it better there. But, we do believe Amazon will continue to be an important component of it. We are planning, we're hoping to launch in the first or second quarter of next year into a major retailer. So, we hope that will also help this there and with the growth of the sales. And as we've said, we believe that the advertising campaign, and that we've done with the commercials, adding a new commercial. We believe that, that's really going to help us and we believe that those peak sales of $65 million that we had previously. We believe we can get back there really easy.

Yes. And just a couple of more points. One is that, we're updating the slide on the -- that shows this in-store sales levels to our investor presentation, if it's not out there, now it will be by the end of the day. Additionally, i said Kroger early in the quarter, actually wasn't earlier in the quarter is actually delayed in the quarter. So while we did have some load in sales to Kroger they did not have the opportunity to put in reorders during as well.

Got it. That's helpful. And then just on [indiscernible], really good coverage; what's causing this still with the FDA? Thanks.

Yes, hi, this is Tony. We don't really -- we don't really see anything that's triggering delay, it's not as though we go we're going through cycles with the agency. Right now we're in routine communication with the agency essentially just getting kind of routine updates. What they're telling us is just that they have not met their action date. So, we're not really clear, we just, we just expect it's part of their normal review cycle for a complex product like this.

Hi, Gary Nachman with BMO Capital Markets. Your line is open.

Good morning, Gary, there?

Can you hear me?

Are you there hello? Operator, we don't hear anything on our end?

One moment, sir.

Operator, can we just move to the next question?

Okay. Gary Nachman, your line is now open.

Hi there, can you hear me?

Yes, there we go.

Great. I don't know what happened there, but it's roughly Sadder [ph] on for Gary. Regarding the intranasal Epinephrine opportunity, I'm curious how long do you expected with Phase 2 run the Phase 2 trial, and what additional studies will be required after that?

Yes, hi, this is Tony again. Well, we've been working pretty closely with the agency on this product. What I can say is we're very encouraged for -- from some of the comments that we've received from the agency. They're very, very positive, there very clear on what the expectations are. As Dan said, we've completed our Phase 1. The results are very promising, PK profile is very encouraging. And we're planning to go into the Phase 2 trials very shortly thereafter, rather than get into the complexities and the scale of the trials what I could say is, that broadly is things go according to our plans, we would anticipate to be filing this application sometime in 2022.

Thanks. And then, I was also hoping you could comment on gross margin heading into 2021. I know there is an incremental benefit in 2020 for Primatene that won't reoccur. So, just any color there would be helpful? Thank you.

Yes. So, while we did have the issue with Primatene, where we had expense many of the components that were purchased prior to the approval in that did help the gross margins last year, and this year we've burned through those components, we're still using API which had been expensed prior to launch. But, that's becoming a smaller and smaller amounts of the cost of goods. However, the Primatene MIST is still going to be growing next year. And because of that will have higher sales of product that is well above our corporate average. So that will help the gross margins in general. Also the products that we expect to be on the market next year AMP 001 and AMP 002 should have higher gross margins than our corporate average as well. So we think that those trends will help us increase our gross margins next year.

Thank you.

Our next question comes from Tim Chiang of Northland Capital. Your line is open.

Hi, thanks. It looked like your third quarter was came in a little short versus expectations at least consensus expectations, that sort of wondering if some of the revenue that we thought you were going to get in the third quarter might be shifting into the fourth quarter or even the first or second quarter of next year. Obviously, you are still waiting for 001 maybe 002, but what do you guys think the likelihood is, that these product approvals really shift into and 2021?

Yes. So the first thing there Tim, is that yes, we there is definitely always timing some of these things are one-time thing some are just timing with the other finished pharmaceutical products. We did mention that we did have a competitive return to the market. So that was what was causing the sales decline there and that should continue in the future, but things like Primatene are very strong and we expect growth in that product very definitely into the fourth quarter and well into next year, as we still are talking about $65 million as our sales target for next year. And on AMP 001 and 002, at this point in the approval cycle. Since, we don't have approval today, I would say that there, it's unlikely that we would have any material sales from either of those products in 2020.

Okay. And then could you talk a little bit about just the Epinephrine multi vial injection product. I mean, how is that doing in the hospital market, I know you in basically the first generic into that market. Well, there are other competitors that entered?

No, we're the only one. So we have a 6-month exclusivity. So happy about to be in that position, we are gaining market share and the sales last quarter were primary load into the wholesalers in the sales this year, which were higher than last quarter were restocking, and then indicate the actual sales levels that we have now. Our sales; our market share grew over the course of the quarter. So we think that, that product will also continue to grow sales as we look into the 4th quarter next year.

Okay. And then, maybe just one last question on this intranasal epinephrine given the Phase 1 data that you have I mean what's your plan in 2021, I mean, are you going to need, I mean what additional studies, will you need to run I'm assuming you've met with the FDA recently or you plan on meeting with them to sort of discuss what other clinical studies you'd have to run here?

Yes, hi, this is Tony we have had correspondence with the agency we have an IND that we filed with them, and they've seen our clinical plan and gone through it, 2021 will have a number of trials that we'll be performing. We have a pretty good grasp of what those trials are they're types of trials that we've done before we're familiar with doing intranasal type trials. We're familiar with epinephrine and doing trials with epinephrine. So, I think 2021 is where the bulk of our trials will be completed. They'll be Phase 2 and Phase 3 trials that will be performed during that time. But the emphasis is, we've been working with the agency on it, and they're really the comments that we've received from the agency on this have been very positive. I really want to emphasize that it seems there very hungry for a product like this. Some of the strengths that we have for this product, I think they've been able to see, we really have created a special enhancement agent that we're going to be using with this. That really will give us good differentiation in our product we'll have a superior product that will be used for the consumers and we're very encouraged by that and we think the agency has as well.

Okay, great. Thanks.

Thank you.

Our next question comes from David Amsellem of Piper Sandler. Your line is open.

Thanks. So, on the good to injectable pipeline products or what to know, I may have missed this, but did you said or can you say whether you've had pre-approval inspections for one or both of these products? That's number one. And then number two is on the market shortages, I think you had sided potential I forget what the figure was but some potential revenue benefit from market shortages. So can you talk through what resolved, what hasn't been resolved and what you think, what kind of benefit, if any, you can derive from any market shortages going forward? Thanks.

Yes, hi, can speak to that pre-approval inspection for is two products AMP 001 and 002. We previously disclosed that we've had inspections for both of these, AMP 002 in particular is the most recent set and these were very rigorous inspections were they inspected every possible facility or component of our operations, including manufacturing, our clinical site where these trials have been performed, and the laboratories where the analysis has been done. So those are very positive. And overall, we don't anticipate to have additional inspections associated with these. The results were positive for all of those and your second question related to the shortages. There were multiple shortages in many of our critical care products that are on the hospital fresh herbs, includes products like dextrose, sodium bicarbone, Epinephrine. So a lot of these products, had we had a competitor, who was frequently out of the market that competitor was shipping it seemed like for most of the quarter and-or near the end of the quarter. So we did not have the same level of sales because of their return to the market. They've had multiple outages and shortages over the last 10 years. And we really can't predict whether they will or will not be able to satisfy the demand that's out there for these products. But, we do know that we have the ability to do that and we have the increased capacity that we put on earlier this year. So, so we do have the capacity and the ability to meet demand should they have shortages.

Okay, great. Thanks, guys.

Our next question comes from Elliot Wilbur of Raymond James. Your line is open.

Thanks, good morning. Just first question I wanted to ask was around the intranasal Epinephrine development program. I'm presuming the path to approval is via a BE study versus injectable epinephrine, but just wanted to ask you to confirm it, that's the case?

While, we're doing the route of approval is the NDA through the 505 B2 route. So I wouldn't quite call it a BE. And so, we're not comparing it to just a general epinephrine injection. We'll be looking at the, intramuscular EpiPen type of device. As far as what will be comparing it here.

Okay. So I guess so trying to say is this a PK-based study or is it, or do they actually. I mean, there is not an endpoints in studies like this. That's impossible. I'm just trying to get a little bit better sense of what has to happen given sort of the relatively short timeline that you have outlined in terms of potential filing?

I want to be careful about not disclosing too much. What I, what I will say is, it's, there is a strong PK component to it. Maybe that will, that will give you enough.

Okay. And is this just, an internally developed program or is it, is it partnered?

No, this is part of the capabilities that we have. This was completely developed internally our scientists here came up with the concept and what they've done is pretty extraordinary. And as we get closer, and we'll be able to disclose a little more about it. You'll get a sense for some of that. It is something that we have IP that we have filed for, and once, once that comes to light, I think you'll get a real good sense of what we're trying to do. But, essentially we're using a special enhancement excipient to assist in the absorption of the epinephrine in and once you see what that is and how we're doing, I think it's going to really, it's going to be clear how advantageous this product will be.

Okay, thanks for that. And I just want to ask a question on [indiscernible] in the quarter. You may have addresses your prepared commentary. I apologize I got a little bit late here. But in terms of the incremental step up, we've seen this in the past basically, when you've had the opportunity to kind of go after off contract sales on a short-term basis. It doesn't seem like that's the case, in terms of what drove the upside this quarter. Just trying to get a sense of how, how sustainable this increase is?

Yes. So it's not off contract sales basically went have left the market. There were some we be able to gather a portion of what they had. So hopefully our sales level can stay at this level. But, yes, this market has seen a lot of twists and turns. But as Dan, did say in his prepared remarks where this is a product that we're in, for the long-term. And we, and we make the API, we make the finished product both here in the US and we're very confident about our prospects for this product and as a long-term generator of value for us.

So speaking in Berlin on the lines of long-term value generation with [indiscernible] leaving the market, any chance that this product starts behaving more like to biosimilar that is rather than the commodity generic in terms of pricing?

Yes, that's our hope. But we haven't necessarily seen that yet.

Okay, fair enough. Just real quickly on Primatene haven't seen the updated slide deck yet to get kind of the latest date in terms of sort of the uptake here, but any other metric that you could share with us in terms of how many stores. The product is on the shelf on. And I guess in terms of some of the early launch sites, kind of what you're seeing in terms of, in terms of pull-through per week. I guess you sort of how we look at that?

Yes, I think, I think we're, it's been every two everywhere we launched the product, it's been well received. And so, we feel like we've recently launched in Kroger that was towards the end of the quarter. We expect that to do well. We're really close to being able to add another large retailer to our distribution points. And so, we believe that that will also be a big thing and we continue to invest in the advertising because we do see a very positive trend. When we, with our advertising both television and digital media. And I think with our digital media, we're really going to target kind of the 18 to 34 demographic and expand that market. So, we're excited to see how that, how it's received in that group.

And just the chart that will be in on the investor slide just does show continued upward growth in the weekly sales with [ph] that.

Okay. And just last question, you are ANDA filers on Vasopressin been a lot of discussion about that product in financial markets as of late given that we're approaching a trial date for a group of filers, as well as the possibility that Eagle may in fact not have a blocking exclusivity position and is also suggested it may be in a position to launch at risk. Just any updated developments or thoughts on your filing with respect to some of these recent emerging facts would be helpful? Thanks.

Sure. So will be, it will be in our 10-Q, which we hope to get filed by the end of the day today. But we did settle during the quarter and that settlement is confidential and it would be typical to other settlements that you've seen and these cases where there are multiple filers, so that's all we can really say at this point.

Okay, good. Thank you.

Have a good day.

Our next question comes from Serge Belanger of Needham. Your line is open.

Hey, good afternoon. A couple of questions on the Epinephrine opportunity here. I guess the first one is once you're 180-day exclusivity expires. How many generics. Do you expect to enter the market? And then just more broadly, how big is this market, and as you think of your new Epinephrine product in development. What kind of role, do you think it could play in this Epinephrine market?

Yes, okay. So, the size of the market, I do know it's currently over $100 million dollars and size. And so, we expect to get our fair share of the market. And we are not probably there yet but we're happy with the gains that we've gotten over the course of the time so far. As far as competitors go, this is a product that it was a grandfathered product for a long time yet there is really only two competitors in it for a very long period of time so. We're not, we don't know of any other competitors, and so I would our best guess is that even though we have a six month exclusivity that--that goes into the well in the fourth quarter here. We're not expecting any significant number of competitors in the near future. So, we think this is going to be remain a strong product with relatively high margins. And we think that we will get our reasonable share in the not too distant future. And that's on our multi-dose vials.

Yes.

I think the other question or second part of your question was about the intranasal epinephrine? Is that correct?.

Yes, that's correct.

Okay. And how, now can you revisit that question because I think it yes. Yes, kind of got mix in there was the first part?

Just your overall thoughts on what kind of opportunity you see with the intranasal products competing against these various injectables?

Well, I think, as we said, we do believe that it -- it presents a new way of and a safer way maybe of -- of having epinephrine, and we're excited by it because the technology that's behind it is, what we've seen has been very, very, very positive. i think we said, I think we said was I think the equivalent data for 2020 for the auto injector Epinephrine market is $4 billion. So, that's the addressable market that we're targeting. Does that help?

Yes. And then, can we revisit the IMS, UK products it is well-recorded, quite a while back, is can we just get an idea of how many products and the opportunity. We will present?

Yes, it was about eight products. And I think we've said, this is an annualized mid to high single-digit million-dollar opportunity for us. We've, we waited until we had the new capacity online earlier this year to really focus on those because we really didn't have enough capacity to satisfy the domestic market. But, now that we have that [indiscernible] had hope to have that on mine earlier. But, now that we have that capacity we have turned our focus back to the UK market, and Tony can give you a little bit of an update on where we are with some of that and getting those products relaunch.

Yes. We have a number of products on file with the MHRA, they're going through a little bit of a shuffle between Brexit as well as Cobia, they're essentially on locked down in most of the MHRA are working remotely. But nonetheless we're working with them on that, we are addressing any issues that come out, but the applications are on file with them, and we just continue to work through questions that they may have on that.

All right. Thank you.

Thank you.

Our next question comes from David Steinberg of Jefferies. Your line is open.

Hi guys, it's actually [indiscernible] on for Dave. Couple of questions, you haven't talked about your, I think you talked about your first risk respiratory inhalation, and the filing. Is there an update on that. And then, also just a quick question on your SG&A spend on kind of sequentially kind of what we should expect going into the fourth quarter. And then kind of in 21, the investments that you're looking to add on to this year.

Yes, hi, this is Tony. I can address the inhalation filing. The trials are wrapped up all of the trials that we needed to do for that product. They are completed, and we're just compiling information is we prepare for the filing that we anticipate to do later this quarter.

And as far as the SG&A spend a lot of that in the quarter is related to legal expenses. Specifically, we were getting closer, we had a lot of expenses along for the Vasopressin case and also the Lexus scan case and out of the Vasopressin cases settled those go away. So that should flatten out somewhat, but in the selling expense line. We are targeting an increase in spending in the fourth quarter for advertising on Primatene MIST, and we're also looking to increase that spending next year as well. But in both of those cases, our belief is that sales is going to sales are going to increase faster than our spend. So that will have increasing operating margins from that product.

Great. Thank you, so much.

No problem.

Operator, if that's it?

At this time, I would like to turn it back to the speakers for any further comments.

Great. I want to thank everybody for joining us today to share in our exciting news on our pipeline, specifically with our intranasal epinephrine product. We look forward to continuing to update you as these programs progress. And we look forward to a good net in Q4, and meeting with everybody then. Everybody, please stay safe, and have a have a good weekend.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and have a wonderful day. You may all disconnect.