Amphastar Pharmaceuticals Reports Financial Results for the Three Months and Full-Year Ended December 31, 2023

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* Adjusted non-GAAP net income and adjusted non-GAAP diluted EPS are non-GAAP financial measures. Please see the discussion in the section entitled “Non-GAAP Financial Measures” and the reconciliation of GAAP to non-GAAP financial measures in Table III of this press release.

Fourth Quarter Results

Changes in product revenues as compared to the fourth quarter of the prior year were primarily driven by:

• Glucagon sales increased primarily due to an increase in unit volumes, as a result of two competitors discontinuing their glucagon injection products at the end of 2022
• Epinephrine sales increased primarily due to an increase in unit volumes, as a result of supplier shortages
• Lidocaine sales increased primarily due to higher unit volumes as supply chain issues eased allowing us to fulfill backorders
• Primatene MIST^® sales increased $1.3 million due to an increase in unit volumes, with the remainder of the increase due to an increase in average selling price
• Enoxaparin and naloxone sales decreased primarily due to a decrease in unit volumes
• Other finished pharmaceutical product sales increased primarily due to:
  • Higher unit volumes of atropine, calcium chloride, and sodium bicarbonate, due to increased demand caused by supplier shortages during the fourth quarter
  • Launch of regadenoson in April 2023
• Active Pharmaceutical Ingredient (“API”) sales increased primarily due to the timing of customer purchases

Other revenues are comprised of net revenues from the sales of BAQSIMI^® of $22.5 million during the three months ended December 31, 2023, which was recognized on a net basis similar to a royalty arrangement and based on Eli Lilly & Company’s (“Lilly”) reported BAQSIMI^® net sales of $37.6 million. Currently, BAQSIMI^® is being sold by Lilly on our behalf under the Transition Services Agreement (“TSA”) with Lilly, whereby Lilly provides certain services to support the transition of the BAQSIMI^® operations to us. Once Amphastar takes over the distribution of BAQSIMI^®, Amphastar will recognize the entire revenue amount. This revenue recognition change is expected to be phased in by country during 2024.

Changes in the cost of revenues and gross margin were primarily driven by:

• Increased sales of higher-margin products such as glucagon and Primatene MIST^®, as well as the sales of regadenoson, which we launched in April 2023.
• As a result of the TSA, the revenue relating to BAQSIMI^® is recognized on a net basis within net revenues.
• These factors were partially offset by charges included in cost of revenues to adjust our inventory and related purchase commitments to their net realizable value, which includes a $3.6 million inventory reserve as a result of amending the Supply Agreement with MannKind Corporation in December 2023.

• Selling, distribution, and marketing expenses increased primarily due to expenses related to the expansion of our sales and marketing efforts related to BAQSIMI^®.
• General and administrative expenses increased primarily due to an increase in salary and personnel-related expenses, as well as costs related to the acquisition of BAQSIMI^®, which was partially offset by a decrease in legal fees.
• Research and development expenses increased due to an increase in materials and supply expenses, primarily related to our inhalation pipeline products.
• The change in non-operating (expenses) income, net is primarily a result of:
  • Interest expense in the fourth quarter of 2023, which was primarily related to our Wells Fargo Bank syndicated loan, as well as our convertible debt
  • Foreign currency fluctuations
  • Mark-to-market adjustments relating to our interest rate swap contracts.

Year-End Results

Changes in product revenues were primarily driven by:

• Glucagon sales increased primarily due to an increase in unit volumes as a result of two competitors discontinuing their glucagon injection products at the end of 2022
• Primatene MIST^® sales increased due to an increase in the average selling price
• Epinephrine and lidocaine sales increased primarily due to an increase in unit volumes as a result of supplier shortages
• Phytonadione sales decreased due to lower unit volumes as a result of increased competition
• Enoxaparin sales decreased primarily due to a decrease in unit volumes
• Sales of naloxone decreased due to lower unit volumes, reducing sales by $4.6 million, as well as a lower average selling price, reducing sales by $2.7 million as a result of increased competition
• Other finished pharmaceutical product sales increased primarily due to:
  • Higher unit volumes of dextrose, atropine, calcium chloride, and sodium bicarbonate due to increased demand caused by supplier shortages during the year
  • A full year of sales for ganirelix and vasopressin, which was launched in June 2022 and August 2022, respectively
  • Launch of regadenoson in April 2023
• API sales increased primarily due to the timing of customer purchases

Other revenues are comprised of net revenues from the sales of BAQSIMI^® of $51.2 million during the year ended December 31, 2023, which was recognized on a net basis similar to a royalty and based on Lilly’s reported BAQSIMI^® net sales of $86.3 million.

Changes in the cost of revenues and gross margin were primarily driven by:

• Increased sales of higher-margin products such as glucagon and Primatene MIST^®, the sales of ganirelix and vasopressin that were launched in 2022, as well as the sales of regadenoson, which we launched in April 2023
• As a result of the TSA, the revenue relating to BAQSIMI^® is recognized on a net basis within net revenues.
• These factors were partially offset by an impairment charge of $2.7 million related to the impairment of the IMS (UK) international product rights, as well as charges included in cost of revenues to adjust our inventory and related purchase commitments to their net realizable value, which includes a $3.6 million inventory reserve as a result of amending the Supply Agreement with MannKind Corporation in December 2023

• Selling, distribution, and marketing expenses increased primarily due to expenses related to the expansion of our sales and marketing efforts related to BAQSIMI^®, as well as an increase in advertising spending for Primatene MIST^®
• General and administrative expenses increased primarily due to an increase in salary and personnel-related expenses, as well as costs related to the acquisition of BAQSIMI^®, which was partially offset by a decrease in legal fees
• Research and development expenses decreased due to:
  • Decreases in materials and supply expenses as a result of a ramp-up of expenses in 2022 for AMP-018 and our insulin pipeline products
  • This decrease was partially offset by an increase in salary and personnel-related expenses
• The change in non-operating (expenses) income, net is primarily a result of:
  • Foreign currency fluctuations
  • Costs incurred in connection with the syndicated credit agreement we entered into with Wells Fargo Bank, as syndication agent, to finance the acquisition of BAQSIMI^®
  • Mark-to-market adjustments relating to our interest rate swap contracts

Cash flow provided by operating activities for the year ended December 31, 2023 was $183.5 million.

Pipeline Information

The Company currently has four abbreviated new drug applications (“ANDAs”) and one biosimilar insulin candidate on file with the U.S. Food and Drug Administration (the “FDA”) targeting products with a market size of over $3 billion and $4 billion, respectively, three biosimilar products in development targeting products with a market size of over $10 billion, and six generic products in development targeting products with a market size of over $8 billion. This market information is based on IQVIA data for the 12 months ended December 31, 2023. The Company is developing multiple proprietary products with injectable and intranasal dosage forms.

Amphastar’s Chinese subsidiary, Amphastar Nanjing Pharmaceuticals, Co., Ltd. (“ANP”), currently has multiple Drug Master Files (“DMFs”), on file with the FDA and is developing several additional DMFs.

Company Information

Amphastar is a bio-pharmaceutical company that focuses primarily on developing, manufacturing, marketing, and selling technically-challenging generic and proprietary injectable, inhalation, and intranasal products. Additionally, the Company sells insulin API products. Most of the Company’s finished products are used in hospital or urgent care clinical settings and are primarily contracted and distributed through group purchasing organizations and drug wholesalers. More information and resources are available at www.amphastar.com.

Amphastar’s logo and other trademarks or service marks of Amphastar, including, but not limited to Amphastar^®, BAQSIMI^®, Primatene MIST^®, REXTOVY^TM, Amphadase^®, and Cortrosyn^®, are the property of Amphastar.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company is disclosing non-GAAP financial measures when providing financial results. The Company believes that an evaluation of its ongoing operations (and comparisons of its current operations with historical and future operations) would be difficult if the disclosure of its financial results were limited to financial measures prepared only in accordance with GAAP. As a result, the Company is disclosing certain non-GAAP results, including (i) Adjusted non-GAAP net income (loss) and (ii) Adjusted non-GAAP diluted EPS, which exclude amortization expense, share-based compensation, impairment charges, expenses related to our acquisition of BAQSIMI^®, debt issuance costs, legal settlements, and other one-time events in order to supplement investors’ and other readers’ understanding and assessment of the Company’s financial performance because the Company’s management uses these measures internally for forecasting, budgeting, and measuring its operating performance. Whenever the Company uses such non-GAAP measures, it will provide a reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures. Investors and other readers are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP measures to their most directly comparable GAAP measures set forth below and should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP.

Conference Call Information

The Company will hold a conference call to discuss its financial results today, February 28, 2024, at 2:00 p.m. Pacific Time.

To access the conference call, dial toll-free (877) 407-0989 or (201) 389-0921 for international callers, ten minutes before the conference.

The call can also be accessed on the Investors page on the Company’s website at www.amphastar.com.

Forward-Looking Statements

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 our expectations regarding future financial performance and business trends, our future growth, sales and marketing of our products, market size and expansion, product portfolio, product development, the timing of FDA filings or approvals, including the DMFs of ANP, the timing of product launches, acquisitions and other matters related to our pipeline of product candidates, the timing and results of clinical trials, the prospective benefits of the acquisition of BAQSIMI^®, and other future events. These statements are not facts but rather are based on Amphastar’s historical performance and our current expectations, estimates, and projections regarding our 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 risks, 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 our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 1, 2023, in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May 9, 2023, in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, filed with the SEC on August 8, 2023, and in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed with the SEC on November 8, 2023. In particular, there can be no guarantee that the acquisition of BAQSIMI^® will be beneficial to our business, that any event, change or other circumstance could cause the results of the acquisition and integration of BAQSIMI^® into our product portfolio to differ from Amphastar’s expectation, that all or any of the contingent consideration will be payable on the terms described herein or at all, or that Amphastar can reliably predict the impact of BAQSIMI^® on its financial results or financial guidance. You can locate these reports through our website at http://ir.amphastar.com and on 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 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 our expectations to change.

Contact Information:

Amphastar Pharmaceuticals, Inc.

Bill Peters

Chief Financial Officer

(909) 476-3416

Table I
Amphastar Pharmaceuticals, Inc.
Condensed Consolidated Statement of Operations
(Unaudited; in thousands, except per share data)

SOURCE: Amphastar Pharmaceuticals, Inc.