Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) Q2 2021 Earnings Conference Call August 9, 2021 5:00 PM ET Company Participants Dan Dischner - VP, Corporate Communications William Peters - CFO, Treasurer & EVP, Finance Tony Marrs - SVP, Regulatory Affairs and Clinical Operations Conference Call Participants Timothy Chiang - Northland Capital Markets Zachary Sachar - Piper Sandler & Co. Elliot Wilbur - Raymond James & Associates Serge Belanger - Needham & Company David Steinberg - Jefferies Operator Greetings, ...

Company Overview - Amphastar is a biopharmaceutical company focused on developing and manufacturing technically challenging BLAs, NDAs, and ANDAs in injectable, inhalable, and intranasal formulations[38] - The company has a strong base business with approximately $350 million in 2020 revenue and approximately $143 million in 2020 gross profit[38] - Amphastar has a robust pipeline of over 20 product candidates, including insulin products, in markets with barriers to entry[38] - The company has vertically integrated infrastructure and technical expertise for products with high barriers to market entry[38] Financial Performance - In 2020, Primatene MIST® contributed $52 million to net revenue[16] - Enoxaparin contributed $49 million to net revenue in 2020[16] - Vitamin K1 contributed $43 million to net revenue in 2020[16] - Lidocaine contributed $41 million to net revenue in 2020[16] - Naloxone contributed $33 million to net revenue in 2020[16] - Epinephrine contributed $24 million to net revenue in 2020[16] - Insulin API contributed $18 million to net revenue in 2020[16] - Other Pharma Products contributed $90 million to net revenue in 2020[16] - The company's self-funded R&D investment was approximately $280 million in the recent 5 years[17] Pipeline and R&D - The company has 12 generic pipeline candidates with technical barriers, including products with IQVIA sales of +$300 million, +$50 million, +$580 million, +$750 million, +$500 million, and +$2.5 billion[25] - The company is developing three insulin and protein candidates, targeting a US market with IQVIA sales of ~$13 billion[26] - Sales of Eli Lilly's Glucagon Emergency Kit were approximately $144 million[30]

Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) Q1 2021 Earnings Conference Call May 6, 2021 5:00 PM ET Company Participants Dan Dischner - Vice President, Corporate Communications Bill Peters - Chief Financial Officer Tony Marrs - Senior Vice President of Regulatory Affairs & Clinical Operations Conference Call Participants Evan Hua - BMO Capital Markets Lucas Lee - Raymond James David Amsellem - Piper Sandler David Steinberg - Jefferies Tim Chiang - Northland Securities Serge Belanger - Needham & Company O ...

[Part I. FINANCIAL INFORMATION](index=6&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited financial statements, management's analysis, market risk, and internal controls for Q1 2021 [Financial Statements (unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Amphastar Pharmaceuticals reported **Q1 2021 net revenues of $103.0 million**, a **21.6% increase**, with net income at **$5.0 million** Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Q1 2021 | Q1 2020 | Change (%) | | :--- | :--- | :--- | :--- | | **Net Revenues** | $103,020 | $84,688 | 21.6% | | Gross Profit | $44,946 | $36,823 | 22.1% | | Income from Operations | $10,306 | $7,480 | 37.8% | | **Net Income Attributable to Amphastar** | $5,041 | $3,949 | 27.7% | | Diluted EPS | $0.10 | $0.08 | 25.0% | Condensed Consolidated Balance Sheets Highlights (in thousands) | Metric | March 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $101,601 | $92,642 | | Total Current Assets | $300,164 | $279,682 | | **Total Assets** | **$645,738** | **$631,236** | | Total Current Liabilities | $127,096 | $112,201 | | **Total Liabilities** | **$194,778** | **$182,513** | | **Total Stockholders' Equity** | **$450,960** | **$448,723** | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $22,825 | $1,477 | | Net cash used in investing activities | ($8,695) | ($8,722) | | Net cash used in financing activities | ($6,639) | ($11,449) | | **Net increase (decrease) in cash** | **$7,329** | **($18,840)** | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section details accounting policies, revenue recognition, segment performance, customer concentration, and the ANP restructuring - The company's business involves developing, manufacturing, and selling generic and proprietary injectable, inhalation, and intranasal products, as well as insulin API products[32](index=32&type=chunk) - The company's production facilities continued to operate during the quarter with enhanced safety measures due to the COVID-19 pandemic, with minimal operational changes[38](index=38&type=chunk) Provision for Chargebacks and Rebates (in thousands) | Description | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Beginning balance | $20,380 | $21,644 | | Provision for chargebacks and rebates | $47,031 | $35,987 | | Credits and payments issued | ($46,881) | ($39,353) | | **Ending balance** | **$20,530** | **$18,278** | Segment Net Revenues and Gross Profit (in thousands) | Segment | Q1 2021 Net Revenues | Q1 2020 Net Revenues | Q1 2021 Gross Profit | Q1 2020 Gross Profit | | :--- | :--- | :--- | :--- | :--- | | Finished pharmaceutical products | $97,882 | $81,298 | $45,286 | $38,810 | | API | $5,138 | $3,390 | ($340) | ($1,987) | | **Total** | **$103,020** | **$84,688** | **$44,946** | **$36,823** | Major Customer Concentration (as % of Total) | Customer | % of Accounts Receivable (Mar 31, 2021) | % of Net Revenue (Q1 2021) | | :--- | :--- | :--- | | AmerisourceBergen | 14% | 25% | | McKesson | 21% | 20% | | Cardinal Health | 16% | 15% | - In May 2021, the company approved a plan to restructure its ownership of its Chinese subsidiary, ANP, acquiring an additional **18% ownership for ~$29.4 million** to reach approximately **85% ownership**[132](index=132&type=chunk)[133](index=133&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes **22% Q1 2021 revenue growth** to strong finished pharmaceutical product sales, improved gross margin, and robust liquidity [Results of Operations](index=47&type=section&id=Results%20of%20Operations) Net revenues increased **22% to $103.0 million** in Q1 2021, driven by key product sales, with gross margin stable at **44%** Net Revenues by Key Finished Pharmaceutical Product (in thousands) | Product | Q1 2021 | Q1 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Epinephrine | $15,578 | $3,990 | $11,588 | 290% | | Glucagon | $7,984 | $0 | $7,984 | N/A | | Primatene Mist® | $18,383 | $12,877 | $5,506 | 43% | | Enoxaparin | $10,658 | $9,168 | $1,490 | 16% | | Naloxone | $6,341 | $8,875 | ($2,534) | -29% | | Lidocaine | $9,071 | $10,657 | ($1,586) | -15% | | Phytonadione | $9,565 | $11,029 | ($1,464) | -13% | - The increase in epinephrine sales was primarily due to the launch of a new multiple-dose vial product in Q2 2020 and higher demand from a market shortage for pre-filled syringes[150](index=150&type=chunk) - The increase in Primatene Mist® sales resulted from a successful nationwide marketing campaign and expanded distribution channels, including Target[149](index=149&type=chunk) - Gross margins were positively impacted by higher-margin products like Primatene Mist®, glucagon, and epinephrine, but were offset by lower pricing and increased raw material costs for enoxaparin[154](index=154&type=chunk) [Liquidity and Capital Resources](index=52&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital increased to **$173.1 million** as of March 31, 2021, with **$22.8 million** operating cash flow - Working capital increased by **$5.6 million** to **$173.1 million** at March 31, 2021, from **$167.5 million** at December 31, 2020[166](index=166&type=chunk) Summary of Cash Flows (in thousands) | Activity | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net cash provided by Operating activities | $22,825 | $1,477 | | Net cash used in Investing activities | ($8,695) | ($8,722) | | Net cash used in Financing activities | ($6,639) | ($11,449) | - As of March 31, 2021, the company had **$56.0 million** in unused borrowing capacity under its credit facilities[179](index=179&type=chunk) [Quantitative and Qualitative Disclosure about Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) No material changes in market risk exposure from 2020, with key risks in investments, interest rates, and foreign currency - The company is exposed to market risk from changes in the value of its investments, interest rate changes, and foreign currency exchange fluctuations[184](index=184&type=chunk) [Controls and Procedures](index=56&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of March 31, 2021, with no material changes to internal control - The CEO and CFO concluded that as of March 31, 2021, the company's disclosure controls and procedures were effective[185](index=185&type=chunk) - No material changes to internal control over financial reporting occurred during the first quarter of 2021[188](index=188&type=chunk) [Part II. OTHER INFORMATION](index=58&type=section&id=Part%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, and unregistered sales of equity securities and use of proceeds [Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) Detailed information on ongoing legal proceedings, including patent disputes, is provided in Note 18 - For detailed information on legal proceedings, the report directs readers to Note 18 of the Condensed Consolidated Financial Statements[190](index=190&type=chunk) [Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from 2020, with updated details on COVID-19, China operations, and unapproved epinephrine - The COVID-19 pandemic continues to pose risks by potentially disrupting operations of customers and suppliers, affecting clinical trial recruitment, and creating supply chain pressures for materials like glass vials[192](index=192&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) - Manufacturing operations in China expose the company to risks including supply disruptions, political instability, trade tariffs, and health epidemics, potentially impacting raw material supply like crude heparin[199](index=199&type=chunk)[202](index=202&type=chunk) - The company's epinephrine prefilled syringe product is marketed without formal FDA approval, subjecting it to potential FDA enforcement actions, with net revenues of **$9.3 million** in Q1 2021[205](index=205&type=chunk)[206](index=206&type=chunk)[210](index=210&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **204,698 shares** in Q1 2021, with **$13.6 million** remaining for future repurchases Issuer Purchases of Equity Securities (Q1 2021) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2021 | 48,705 | $19.36 | | Feb 2021 | 53,328 | $18.57 | | Mar 2021 | 102,665 | $17.98 | | **Total Q1** | **204,698** | **-** | - As of March 31, 2021, **$13.6 million** remained available for repurchase under the company's share buyback program[211](index=211&type=chunk)

Company Overview - Amphastar is a biopharmaceutical company focused on developing and manufacturing technically challenging BLAs, NDAs, and ANDAs in injectable, inhalable, and intranasal formulations[37] - The company has a strong base business with approximately $350 million in 2020 revenue and approximately $143 million in 2020 gross profit[37] - Amphastar has a vertically integrated business model, from R&D to clinical trials, manufacturing, marketing, and distribution[6] Product Portfolio and Pipeline - The company has a diverse core of over 20 commercial products, including injectables and MDI products[11] - Amphastar has a robust pipeline of over 20 product candidates, including insulin products, in markets with barriers to entry[37] - Five filed ANDAs with IQVIA sales of approximately $2.4 billion, including AMP-002 with > $300 million IQVIA sales[23] - Five Inhalation ANDAs in development targeting products with IQVIA sales of approximately $8 billion[23] - Three candidates of Insulins with IQVIA sales ~$13 Billion[25] Financial Highlights - The company's net revenue has a CAGR of 13% from 2017 to 2020[14] - Self-funded R&D investment of approximately $280 million in the recent 5 years[18] - As of December 31, 2020, the company had $109684000 in cash, cash equivalents, restricted cash, and short-term investments[36]

Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) Q4 2020 Results Conference Call March 15, 2021 5:00 PM ET Company Participants Dan Dischner - Vice President of Corporate Communications Bill Peters - Chief Financial Officer, Treasurer, and Senior Vice President of Finance Conference Call Participants Timothy Chiang - Northland Securities Gary Nachman - BMO Capital David Amsellem - Piper Sandler Elliot Wilbur - Raymond James David Steinberg - Jefferies Serge Belanger - Needham & Co Operator Greetings, and wel ...

Company Operations - The company operates 60 buildings across six locations in the U.S., France, and China, totaling 1.9 million square feet for manufacturing, research and development, and distribution[484]. - The company continues to expand its facility in Nanjing, China, expecting further significant investment[484]. - The company has properties leased with expiration dates ranging from 2021 to 2030, with significant facilities in Nanjing, China, and Rancho Cucamonga, CA[486]. Financial Performance - Net income attributable to Amphastar Pharmaceuticals, Inc. for the year 2020 was $1,403,000, a significant decrease from $48,939,000 in 2019[625]. - Total net revenues for the year ended December 31, 2020, were $349.846 million, an increase from $322.357 million in 2019, representing an 8.5% growth[687]. - Revenue from the United States was $333,093,000, representing 95.2% of total net revenue for 2020[692]. - The company reported a total comprehensive income of $2,369,000 for 2020, down from $48,265,000 in 2019[625]. - The company reported a net loss of $3.721 million in accumulated other comprehensive income[629]. Taxation - The Tax Act enacted on December 22, 2017, reduced the federal statutory tax rate from 35% to 21%, impacting the company's effective tax rate and operating results[462]. - The effective tax rate for 2020 increased to 76.3% from 22.8% in 2019, primarily due to differences in pre-tax income positions and a valuation allowance on deferred tax assets[753]. - The company's total provision for income taxes in 2020 was $3.540 million, compared to $13.723 million in 2019[752]. - The company is subject to income taxes in many foreign jurisdictions, and the final determination of tax audits could materially differ from historical provisions[463]. Assets and Liabilities - Total assets increased to $631,236,000 as of December 31, 2020, up from $586,971,000 in 2019, representing an increase of 7.5%[618]. - Total liabilities increased to $182,513,000, up from $159,443,000 in 2019, marking a rise of 14.5%[620]. - Long-lived assets totaled $280,709,000 as of December 31, 2020, compared to $253,548,000 in 2019, reflecting a growth of 10.7%[692]. - The company had $46.4 million in long-term debt and finance leases outstanding, with $13.2 million having variable interest rates at a weighted-average interest rate of 4.4%[591]. Cash and Investments - The company maintained $58.7 million in cash equivalents, including money market accounts, as of December 31, 2020[589]. - The company’s cash equivalents and short-term investments amounted to $72,269,000 as of December 31, 2020, up from $44,968,000 in 2019[699]. - The company had $71.147 million in total accrued liabilities as of December 31, 2020, compared to $51.990 million in December 2019[723]. Research and Development - Research and development costs were charged to expense as incurred, with no specific figures provided for 2020, but the company continues to invest in R&D activities[646]. - The company acquired 14 abbreviated new drug applications from Hikma Pharmaceuticals for $4.0 million, with an estimated fair value of $4.0 million, amortized over approximately 15 years[668]. Market Risks - The company is exposed to market risk for changes in the market values of its investments, interest rate changes, and foreign currency exchange changes[587]. - A 10% unfavorable change in the exchange rate of the U.S. dollar would result in approximately $4.8 million reduction of foreign currency gains and $5.6 million reduction in other comprehensive income[596]. Inventory and Sales - The company's inventories totaled $96.8 million as of December 31, 2020, which included provisions of $9.4 million related to enoxaparin inventory[611]. - The provision for chargebacks estimate totaled $16.4 million at December 31, 2020, impacting product sales[607]. - Finished pharmaceutical products segment generated net revenues of $331.368 million in 2020, up from $302.000 million in 2019, reflecting a 9.7% increase[689]. Debt and Financing - The company has a line of credit facility with China Merchant Bank allowing borrowing up to $14.6 million, with a fixed interest rate of 4.35%[728]. - The company has long-term debt maturities totaling $45.923 million over the next five fiscal years, with the largest amount due in 2021 at $11.950 million[748]. - The company entered into a secured term loan with Cathay Bank for $21.9 million in April 2014, which was amended in July 2019 to extend the maturity date to June 2024[740][741]. Compliance and Legal Matters - The company has recorded reserves for litigation-related contingencies based on estimates of probable future costs, which could result in substantial further costs[460]. - The company may incur substantial expenses due to the limited nature of its disaster recovery and business continuity plans, especially in earthquake-prone areas[468]. Changes in Accounting Standards - Changes in financial accounting standards may significantly affect reported results and could impact transactions completed before the changes are effective[461].