Greetings and welcome to the Amphastar Pharmaceuticals Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that certain statements made during this call regarding matters that are not historical facts including, but not limited to management's outlook or predictions for future periods are forward-looking statements. These statements are based solely on information that is now available to us. We encourage you to review the section entitled Forward-Looking Statements in the press release issued today and the presentation on the company's website. Also please refer to our SEC filings which can be found on our website and the SEC's website for a discussion of numerous factors that may impact our future performance. We will also discuss certain non-GAAP measures. Important information on our use of these measures and reconciliations to US GAAP may be found in our earnings release. Please note this call is being recorded. Our speakers today are Mr. Bill Peters, CFO; and Mr. Dan Dischner, Senior Vice President of Corporate Communications; and Mr. Tony Marrs, Vice President of Regulatory Affairs and Clinical Operations. I will now turn the conference over to your host Mr. Dan Dischner, Senior Vice President of Corporate Communications. Dan, you may begin.

Thank you, Paul. Good afternoon and thanks for joining us for our second quarter earnings call of 2023. Joining me today will be Bill Peters, CFO and Executive Vice President of Finance; and Tony Marrs, Executive Vice President of Regulatory Affairs and Clinical Operations. To start, I'm pleased to highlight the successful completion of our acquisition of BAQSIMI, which has advanced our diabetes portfolio and added to Amphastar's strategy to focus on proprietary products, biosimilars, and complex products. We are excited about this acquisition's opportunities and have experienced a smooth transition to-date. In terms of sales, we ended the quarter with $145.7 million in revenue, representing an impressive 18% increase compared to the same period last year. This quarter's standout performer has been our glucagon injection product, which has achieved an exceptional sales milestone reaching $27.3 million. This remarkable achievement can be attributed to our expanded market share in this space, gaining market share in the diagnostic market, and our carefully planned capacity increase, resulting in an impressive 131% growth on an annualized basis. We anticipate the glucagon injection demand to remain durable. Concerning our other key high-margin products that have been usual contributors to our quarterly success, Primatene Mist and epinephrine, sales for the quarter reached $16.5 million and $16.7 million, respectively. We note that our retail in-store Primatene Mist weekly sales maintained a positive growth trend with a 5% increase from Q2 of last year. However, retailers have readjusted their inventory levels leading to a decline in sales at the factory level. As for epinephrine's total sales, we note that this shift was attributable to competitors returning to their normal distribution levels. Shifting our focus to our other finished pharmaceutical products, especially regarding our products in our portfolio benefiting from competitor shortages, we have seen a significant increase…

Thank you, Dan. Sales for the quarter increased 18% to $145.7 million from $123.5 million in the previous year's period. Glucagon sales more than doubled to $27.3 million from $11.8 million in the prior year, primarily due to continuing strong market demand as some suppliers discontinued selling glucagon. Phytonadione sales increased to $17.9 million from $13.4 million in the second quarter of last year as a result of supplier shortages. Primatene MIST declined to $16.5 million from $19 million in the previous year due to inventory drawdown by retailers. Sales of Primatene MIST continued to grow at the retail level, increasing by 5% in the second quarter. Lidocaine and epinephrine saw sales declines as competitor returned to these markets. Our other finished pharmaceutical products category also had strong growth due to higher unit volume sales of dextrose, atropine, calcium chloride and sodium bicarbonate as well as sales of new products such as ganirelix and vasopressin and regadenoson. Since we closed our BAQSIMI acquisition on June 30, 2023 we do not have any sales of BAQSIMI in the quarter. However, Lilly recorded sales of $34.9 million, up 20% from the second quarter of 2022. While we usually don't talk about quarterly sales trends, there are a few items I would like to point out for our third and fourth quarters. First, in the third quarter, we will begin recording a net economic benefit of BAQSIMI, which will be Lilly's sales less the cost they incur on our behalf until we take over responsibility for BAQSIMI distribution. Once we have taken over distribution, we will begin recording sales and expenses as we would for any other product. We have estimated the impact of BAQSIMI on adjusted EPS will be $0.12 to $0.18 in 2023. Second, we plan to launch glucagon injection in…

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question is from Tim Chiang with Capital One. Please proceed with your question.

Thanks. Maybe just a few questions on the branded side. Obviously, BAQSIMI, you've just recently closed that product acquisition. Could you talk a little bit about the marketing strategy with that product? When is the switchover going to happen in the third quarter? And do you expect to benefit from the new school year with that product? And then on Primatene Mist, maybe just talk about do you expect a recovery in sales in the third quarter given demand trends?

Yes. So on the branded side of BAQSIMI, let me start there. Right now, this transition is going in phases. Currently, we're in the phase where Lilly is doing everything that they were doing prior to the acquisition and that will continue until the end of September. At that time, we're going to begin taking over the marketing of BAQSIMI from Lilly. We've already hired a contract sales force to begin detailing that product for us. They've begun the hiring process and they're going to begin training relatively shortly after that so they can hit the ground running on October 1. As far as the school year goes, BAQSIMI is a product that does see seasonal trends with the back-to-school time frame usually resulting in higher sales. So this is our first year, but we've seen in the past that the August, September time frame usually shows an increase in sales of that period. And the third quarter is usually the peak quarter of the year for that product. As far as Primatene Mist goes, we do expect -- it's hard to say from the second quarter to the third quarter, whether sales will be down up or flat. Historically, going from the second quarter to the third quarter, they've been flat to down slightly. But this -- what we've seen in the trend is each of the last two quarters, we've seen increasing sales at the retail level, but decreased sales at the factory level. So we believe that trend can't continue forever. So at some point, the destocking that the retailers are doing right now will have to come to an end. So eventually the sales will have to match -- the factory sales will have to match the store sales. So whether that takes another quarter or two quarters, it's hard for us to say right now. But at some point the sales growth we expect to continue.

And maybe I'll just squeeze in one follow-up. Obviously, you're still benefiting from a lot of the supply shortages that are ongoing in the US on the generic side. I mean are there specific products that you think you'll be able to benefit from outside of the products that you're currently selling at this point?

So I'm not sure what you mean products that we're not selling at this point, because in the shortage area there's a lot of products that we have benefited from the past. We expect to see those benefits in the future. There's, a number of products that -- right now we're the only company selling into the hospital market for at least the time being. So our plan is to ramp up production of those to help out the country as best we can.

Okay. That helps a lot. I'll jump back in queue. And ask another question after.

Yeah. Thanks Tim.

Thank you. Our next question is from David Amsellem with Piper Sandler. Please proceed with your question.

Hi Thanks. So on glucagon, can you talk about the mix between retail and institutional in terms of your sales mix. And talk about also how penetrated you are in the institutional setting. I'm just trying to get a sense of how big this opportunity could be? I'm not talking BAQSIMI here just the glucagon injection. And then secondly on the CRL for AMP-008, can you provide a little more color on the nature of that CRL, how complex or not complex the issues that were raised there? Just any color there would be helpful. And then, on shortage products, as we move through the back half of the year, how should we think about the impact of the damage at the Pfizer in North Carolina facility and how that could how you could benefit from that? And I guess, maybe the other -- the best way to ask it is should we see even more of an impact from shortage products in the back half of the year, compared to what we've seen thus far in the first half of 2023. Thanks.

Let me take the first one which is the glucagon question. The retail versus the institutional market the last -- we looked it was about six -- over 60% retail for us. And so we feel that we have penetrated some of the other markets. I remember, our product is slightly higher priced than some of the alternatives. And while we think it's a more convenient package, the kit is more convenient there are some people that would be unwilling to pay that a little bit extra for that. And then for the CRL, I'll turn to Tony.

Sure. Hey David for AMP-008, as Dan said it's a minor CRL. And I think the most notable item on that is we've said that our response is going to be in the third quarter this year. So from a complexity perspective and kind of the funnel analogy that I use, I think just the timeliness of our response should give an indication on the complexity of the CRL.

In regards to the shortage products David, yeah, we actually are anticipating having to pick up some of the work there. So we do think especially in the products in the hospital setting and the CCD products where we should see an increase there, and that's why we decided to postpone the launch of our intranasal naloxone product.

And while we are going to see an increase it won't be too material, because we were already running those suites pretty much full out on this. So there is a little bit of room and we are looking for ways to increase the capacity that we can push through there by doing some small steps to increase things here and there. But this isn't going to be something where we can boost sales by 20% out of that factory. It's going to be incremental, because we were already running effectively full shifts on the two lines at that IMS factory that produced product for that. And as Dan mentioned unfortunately we were planning to start manufacturing the intranasal naloxone Ruxovi [ph] this quarter. But we postponed that because of the shortages that are out there. And so we've had to stop that process.

Okay. And just on glucagon just going back there. On the institutional piece of the glucagon business, can you say how -- or quantify what the opportunity is there just on the institutional side?

I think a significant portion of the pickup that we've had there has been on the institutional side

Okay

So the increase -- so from compared to a year ago. Because remember a year ago we already had 80% of pretty much the retail market. So I'd say if you say that we've more than doubled so a big portion of that doubling was picking up some of the retail I mean the institutional side.

Okay. That’s helpful. All right. Thanks.

Thank you.

[Operator Instructions] Thank you. Our next question is from Tim Chiang with Capital One. Please proceed with your question.

Hey. Thanks. I think you mentioned on AMP-02 there's a slight regulatory question that the FDA had asked. Is it still possible that you could respond and then get that product on to the market at the end of this year?

Yes Tim it's not that the FDA is waiting for us to respond to anything. We haven't had a response that we provided to them in some time for this. So it's not that that's -- that the FDA is waiting for us to do anything. The way we have had our conversation with the agency is they're assuring us that they're working diligently on the application and we view that as seeing a path forward with this. And we do see this as something that we're very optimistic that we will have a path forward for this. I mean we do anticipate having positive news for this. And it's just based upon just dialogue that we're having with the agency and we are hopeful of that.

I see. Okay. And then I guess just back on BAQSIMI. I mean, obviously, you're inheriting a lot of the formulary access that Lilly has already established for the product. I mean is there anything else you think you will need to do once the handover occurs around what October?

Yes. So they do have -- they -- we're basically following their playbook and following the actions that they did and plan to keep marketing very similar to the way they did. We're also working with different groups throughout the country like the Juvenile Diabetes Foundation and other groups that are working with patients with diabetes. So we're -- we think they set up a good playbook. We have a lot to learn from them and we're in the process of taking what they've done and implementing it here. So it's -- we don't expect anything significantly different from what they did.

Got it. Okay. Great.

Thank you. There are no more -- there are no further questions at this time. I would like to hand the floor back over to Dan Dischner for any closing comments.

I want to thank everyone for joining us today. The second half of 2023 remains to be a highly anticipated period in terms of our filings our progression of our recent acquisition of BAQSIMI, our role in helping address the nationwide drug shortage in addition to our upcoming launch of Ruxovi in the fourth quarter. We look forward to updating you all again. And again thank you. Have a great day.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.