Greetings, and welcome to the Amphastar Pharmaceuticals' Second Quarter Earnings Call. All statements made in this press release and the conference call that are not historical are forward-looking statements. These include our expectations regarding future financial performance, sales and marketing of our products, market size and growth, product development, timing of FDA filings or approvals, timing of product launches, acquisitions, and other matters related to our product pipeline. Our share buyback program and other future events, such as the impact of the COVID-19 pandemic, along with its variants and the responses of businesses and governments, may affect our operations, personnel, and demand across our business. These statements are not facts; they are based on Amphastar's historical performance and our current expectations, estimates, and projections. Terms like may, might, will, could, would, should, anticipate, predict, potential, continue, expect, intend, plan, project, believe, estimate and similar expressions identify these forward-looking statements, though not all contain these words. You should not rely excessively on them as they involve risks, uncertainties, and assumptions that are difficult to predict and may be beyond Amphastar's control. Actual results could differ significantly from those in the forward-looking statements due to various factors described in Amphastar's filings with the Securities and Exchange Commission, including our annual report for the year ended December 31, 2020. The impact of COVID-19 on our business will depend on factors such as the severity and duration of the pandemic and responses from governments, businesses, and consumers, all of which continue to evolve. These reports are available on our website and the SEC's website. The forward-looking statements in this release are valid as of the release date. Amphastar is not obligated to revise or update any information or forward-looking statements even if new information becomes available or events change our expectations. Please note that this conference call is being recorded. Our speakers today are Mr. Bill Peters, CFO; Mr. Dan Dischner, Vice President of Corporate Communications; and Mr. Tony Marrs, Senior Vice President of Regulatory Affairs and Clinical Operations. I will now turn the conference over to your host, Mr. Dan Dischner, VP of Corporate Communications. Dan, you may begin.

Thank you, operator, and thank you all for joining us this afternoon. Earlier, Amphastar reported our financial results with strong growth. As for our pipeline, I'd like to characterize the second quarter as another period in further seeing our pipeline progress. With me today is Bill Peters, Amphastar's CFO and Executive Vice President of Finance. He will provide an update on the company's financials. After Bill's update, we'll move to our Q&A portion of the call with Tony Marrs, Senior Vice President of Regulatory Affairs and Clinical Operations, Bill and myself. Starting with our financial and commercial results. The second quarter saw net revenues of $101.6 million, an 18% year-over-year increase. The company's net income remained strong and increased to $7.8 million, seeing a 56% increase from last quarter as our one-time legal expense saw considerable savings. While some of our products, enoxaparin and naloxone saw some downward pressure this quarter, we remain committed to these products in the long term as we believe that Amphastar being one of the few U.S.-based manufacturers of these products will play in our favor due to our strength in terms of quality. To that end, we believe our vertically integrated platform meets the needs, which call for the quality that emphasizes reliable API sourcing, supply chain resilience and the ability to continuously meet market demands. Looking at our newest growth driver, Glucagon based on IQVIA, sales grew to $12.1 million for the second quarter, in line with our expectations of achieving a reasonable market share at a reasonable price. This represents a 51% increase in sales compared to last quarter. And given that sales growth remains strong, we believe Glucagon sales are well positioned to be durable for the remaining half of the year. Regarding Primatene Mist, in-store weekly sales continued an upward trend, seeing a 9% increase from last quarter and a 40% increase from the same period of the previous year, thus highlighting that Primatene's success is independent of COVID-19's impact. We maintain our guidance for Primatene Mist seeing annualized sales of $65 million by the end of this year. We believe that our increased distribution channels and our digital TV and radio marketing efforts have provided a stronger base of weekly sales to build upon each other. Moreover, our marketing efforts have been complemented with our physician sampling program launched last quarter. While the sampling program results are challenging to quantify, we believe the program will be a crucial component to provide further support for Primatene to grow in the future. Moving toward our pipeline, the company saw some upward momentum. The second quarter can be best characterized as a quarter of FDA inspections amounting to 3 in total, one at each of our U.S. manufacturing facilities. Two of those inspections were routine and saw zero 483 items, highlighting the strength of our quality systems. The third was a pre-approval inspection for AMP 015, which was revealed to be generic teriparatide 10 for injection. As a result, teriparatide continues to be on track for a GDUFA date in the fourth quarter this year. Moreover, we have taken a conservative approach from a legal perspective, giving us the best path to commercialization as soon as we receive approval. Again, this product has no approved generics and has a plus $650 million annual market based on IQVIA. With respect to our other filed ANDAs, for AMP-002, we announced in June that the ANDA received a CRL to which it has now been fully responded to. We are waiting for the FDA to make a final determination on the GDUFA date. As a reminder, this product is complex with no generics and no other filers that we are aware of. As for AMP 006, a plus $50 million annual market based on IQVIA, the ANDA is still anticipated to have a GDUFA date in the first quarter of next year. On the subject of our proprietary products, intranasal epinephrine remains on track for a filing in 2022 as the product's clinical program continues to progress. To our other proprietary product, intranasal naloxone, the product is progressing further in its stability studies with an expectation to refile in the fourth quarter of this year. While we understand that an 8-milligram version was recently approved, we believe our product differentiates from others on the market. Regarding our other Paragraph IV filings, we believe AMP 008 and our generic regadenoson holds strong noninfringement positions. AMP 008 is still on track to be filed later this year. To close, I'd like to remark that while the first interchangeable biosimilar insulin was recently approved, this has not changed Amphastar's plans regarding our insulin program. It validates our strategy. There is a pathway for interchangeable biosimilar insulins. We continue to believe that the insulin market will remain robust. At the same time, our pipeline matures from focusing on complex injectable generics and into projects with longer product life cycles, namely biosimilars and inhalation products. Considering that our existing technological platforms can already support this development demonstrated by hyaluronidase, enoxaparin and most recently, Glucagon, we see the pathway as clear, attainable and profitable. I would now like to turn the call to Bill Peters to discuss our financial performance for the second quarter and give further details behind those results.

Thank you, Dan. Sales for the second quarter increased 18% to $101.7 million from $85.8 million in the previous year. Glucagon, which we launched in the first quarter, has already achieved a reasonable market share at a reasonable price and led the growth with sales of $12.1 million. Primatene Mist once again showed strong growth compared to the second quarter of last year, with sales up 34% to $16.7 million from $12.5 million. Epinephrine sales grew 32% to $9.2 million from $7 million with strong sales of the multi-dose vials. Enoxaparin saw a modest sales decline to $9.3 million as the competitor reentered the market during the second quarter. Naloxone sales declined to $6.6 million due to increased competition. Our insulin API business had sales of $6.9 million, up from $4.9 million in the prior year, primarily due to the timing of shipments and $0.5 million of revenues related to an amendment fee received from MannKind. We will recognize additional revenue of $250,000 per quarter related to this amendment through the end of 2022. As we have discussed in the past, our products launched in the last few years, including Primatene Mist, epinephrine multi-dose vials and Glucagon have margins higher than our corporate average. We showed proof of this trend this quarter with gross margins increasing to 47% of sales in the second quarter of 2021 from 39% of sales in the same quarter last year. Selling, distribution and marketing expenses increased slightly to $4.1 million from $4 million, primarily due to the marketing costs associated with our national television and radio ads, including the cost of airing our new TV commercial. General and administrative spending decreased to $14.6 million from $15.9 million, primarily because of one-time expenses associated with the separation agreement with the former executive in the second quarter of last year. Research and development expenditures increased to $18.1 million in 2021 from $16.1 million last year as we continue to develop our insulin and inhalation products. Nonoperating income increased to $3.6 million from $1.3 million as we recognized the gain associated with lowering the litigation accrual for our lawsuit with Aventis, which we settled at the end of the second quarter this year. The company reported net income attributable to Amphastar shareholders of $7.8 million or $0.16 per share in the second quarter compared to a net loss of $200,000 or $0.00 per share in the second quarter of 2020. The company reported an adjusted net income of $10.6 million or $0.21 per share compared to an adjusted net income of $7.6 million or $0.16 per share in the second quarter of last year. Adjusted earnings exclude amortization, equity compensation, impairments of long-lived assets and one-time events. In the second quarter, cash flow provided by operations was $32.2 million. We repurchased $6.4 million of stock during the quarter and made $6 million in debt repayments. Today, we announced that the Board authorized an additional $20 million buyback program, which we plan to utilize in the future. We also announced that we've entered into a $140 million debt facility, consisting of a $70 million term loan and a $70 million revolving line of credit. We used approximately $30 million of the term loan to pay off existing debt with higher interest rates. We believe this facility will help us lower interest expense and ensure financial flexibility as we grow and expand our business. I will now turn the call back over to the operator to begin Q&A.

Our first question comes from Tim Chiang with Northland Capital.

On AMP-015, do you guys expect multiple generics to gain approval around the same time later this year in terms of market formation for that product?

I'd say it's hard to say, but I would probably side with the answer of no. It's a complex product that's been unchallenged for a while. So we anticipate not too many competitors with this product.

And you guys will have enough capacity to launch this product in the fourth quarter, assuming you get the approval, is that right?

Yes. So actually, this product will be made on one of the filling lines that we built and installed a couple of years ago. So this is part of the expansion that we have at our Amphastar headquarters. So we're ready to go with this one.

And I guess AMP 009 is another injectable osteoporosis product. But that's a Paragraph IV. Do you already have a court date set for that or not?

I believe we do have a court date set for that. And the reason that we don't list the GDUFA dates on the Paragraph ones that are constrained by Paragraph IVs is because we don't want to give the impression that the GDUFA date is the gating item. So we do have a court date that's set for January of 2022.

Okay. Maybe just one last question. It's a financial question. I mean, obviously, you took this bigger term loan and revolver. I mean, I guess you have more financial flexibility, but would you have any interest in potentially pursuing some business development to bring in some additional products with some of the debt that you've now taken on?

Well, part of the reason that we took the debt is to refinance the existing debt. So during the quarter, we paid down $6 million of debt and $30 million of the new term loan went directly to pay off some of the existing debt. So that reduction over the past 3 months has been $36 million, a little bit more than half of that. Additionally, we spent $30 million buying back a portion of ANP. So we wanted to keep that as cash on the balance sheet for that. And we're also funding our buyback program and some large capital expenditures in the next couple of years. The debt agreement, which will be filed with our 10-Q in November, does allow for acquisitions, some permitted acquisitions, but those have to be within a certain framework. But we think that having this line in place and this revolver will add some flexibility and make it easier to borrow if we do see some acquisitions that we find attractive and fit well with the company. I wouldn't say that will change our attitude towards acquisitions, though.

Our next question will be from David Amsellem with Piper Sandler.

This is Zach on for David. Congrats on another strong quarter. So just for Primatene Mist, obviously, you've done well getting the product into the large retail chain so far. So just wondering if there are any other large retail chains that you're targeting at this point? Or are you focusing more on just smaller retail channels now? And then just in terms of marketing and DTC, what other investments do you plan to make for this product?

Yes. With Primatene, I think we've hit most of the major retail distribution points. We're analyzing and looking at different smaller retail stores, maybe partnerships there. But I think right now, we've hit most of the major retail.

What was the second part of the question?

Yes. So the second part of the question dealt, I think more with the marketing of it. And I think what we would say is that our focus right now is just making sure that the consumers who have mild asthma are aware of the product. So we're spending money to make sure that everyone is aware because we're in all the retail outlets that we need to be in to have this product be successful and to grow. But I think there are still people that don't know the product that well out there. So that's what our main focus is.

Okay. Great. And then if I could just ask one follow-up on epinephrine. I'm curious about the role you see for this product. Do you think it will primarily be aimed at the retail market, or do you anticipate it having some presence in institutional settings as well?

The nasal spray, intranasal?

Yes. The epinephrine nasal product.

I believe it offers a distinct presentation compared to what is currently available. Therefore, we are considering the pen market as a potential opportunity for this product. Our primary focus will be on retail, similar to the EpiPen itself.

Yes. And I think the key takeaway is I don't think there'll be any new channel created for it. Maybe it will just use the opportunity for the ease of use for it. I think that's primarily the key to that.

Our next question comes from Elliot Wilbur with Raymond James.

Questions on AMP-015. In your prepared remarks, Dan, you mentioned a PAI inspection for that. I wasn’t clear if there was a 483 issued related to that preapproval inspection. Could you clarify? Additionally, can you confirm that this filing includes an auto-injector device along with the active component? Also, a quick question for Bill regarding gross margin trends. This period has benefitted from a favorable mix, but is there anything else we should consider for the second half of the year that might cause that number to decrease?

As far as the PAI inspection, we've characterized it as a good inspection. There were some 483 items that were issued. They were primarily related to the timing of certain events. It didn't have any consequence or anything that really dealt with the quality system of us and we've fully addressed all of them. So we believe that our response will address all of the 483 issues that they've raised. As far as the pen goes, yes, it is an autopen.

I believe your last question was about gross margins and the trends for the second half of the year. We expect pricing to remain relatively stable compared to the past. There are a few potential opportunities for price increases on some products that we anticipate will benefit the company, but these increases are mainly to counterbalance some cost hikes we've encountered. Labor costs in California have risen significantly, prompting us to increase wages. Furthermore, the cost of crude heparin has continued to rise, and our average cost basis for heparin is determined by acquisition costs, which involve a long lead time and considerable product in the pipeline. Although forward prices appear to be declining, the average price factored into our cost of goods will continue to rise over the next few quarters until we can secure more product.

Our next question comes from Serge Belanger with Needham & Company.

Can you discuss the competitive outlook for Glucagon for the rest of 2021 and 2022? Do you still anticipate that the product will generate $40 million to $50 million this year?

Yes. I believe Glucagon is a complex product that has faced challenges for a long time. We were the first to address this, and at present, we haven't identified any competitors for this product, particularly in terms of our marketing and sales approach. Regarding the outlook for next year, we expect more of the same. We have no indications that things will change significantly. We believe the current performance will remain stable for quite a while.

Okay. On AMP-015, obviously, a complex product. What's your level of confidence if you get approval on the first review cycle?

I'll let Tony answer that...

It would be unexpected, but a pleasant surprise if we receive approval on the first review cycle. I can confidently say that we are well-prepared for it. We have gained valuable experience from our other complex products that have been filed and approved by the agency. Each application we submit meets the criteria established by the previous ones. As the agency's requirements change, we ensure that our applications remain in line with those updates. The more of these applications we file, the greater our chances of success. While it would be a significant achievement for us, we are ready for it. Our communication with the agency is encouraging, and I believe we should maintain a cautiously optimistic outlook.

Our next question comes from David Steinberg with Jefferies.

A couple of questions. On glucagon, you've done a really nice job in launching the product. And you made a comment that you saw the second half of the year as being, I think, you said "durable". Are you implying that there'll be no sequential increases from the $12.1 million to Q3 and then Q3 to Q4, and therefore, it should be a $48 million product until there's another competitor? Or do you see sequential increases? And then secondly, on 002, you got the CRL actually the day of the Healthcare Conference in early June at the time. You hadn't submitted your response. You may have had other discussions with the FDA since then. But at the time, you thought you were looking at either in October or early next year GDUFA date for 002. Is that still your thinking?

I will address the Glucagon question first, which is the $12.1 million. We believe that this figure represents a stable and reasonable run rate. This is our current modeling at this stage.

As far as the AMP 002, yes, you're right. We've submitted that, and we're waiting for the agency to make a final determination on that. And as you said, the best-case scenario would be based on what we believe the best-case scenario will either be later this year or early in 2022.

There are no further questions at this time. I'd like to turn the floor back over to management for any closing comments.

I want to thank everybody for joining us today and allowing us to give you an update on our Q2. We look forward to having another good quarter for Q3 and sharing those results with you in the future. Thank you again for your time today.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful evening.