Greetings, and welcome to the Amphastar Pharmaceuticals fourth quarter earnings call. 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 performance 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 U.S. GAAP may be found in our earnings release. Please note this conference call is being recorded. Our speakers today are Mr. Bill Peters, CFO; Mr. Dan Dischner, Senior Vice President of Corporate Communications; Mr. Tony Marrs, Executive 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 thank you all for joining us today. On the call with me will be Bill Peters, CFO and Executive Vice President of Finance; and Tony Marrs, Executive Vice President of Regulatory Affairs and Clinical Operations. Throughout 2023, our strategic focus remained on driving momentum across our core high-margin offerings while bolstering our presence in the complex product segments of our portfolio. This includes our strategic acquisition of BAQSIMI and recent advancements in our interchangeable biosimilar development with our first BLA filing for insulin aspart or AMP-004. Earlier today, we announced financial results for the 2023 fiscal year highlighted by our net revenues, which have surged to an impressive $644 million, representing a substantial 29% increase annually. This remarkable growth is further seen by a notable 41% increase in gross profit and a 51% increase in net income compared to the previous year. Our growth is attributed to our high-margin products, notably within our diabetes portfolio featuring glucagon injection and our recent addition of BAQSIMI alongside our other branded product, Primatene MIST. Moreover, our hospital and clinic use products, such as epinephrine, dextrose and sodium bicarbonate, continue to experience heightened demand driven by shortages amongst other suppliers. Looking towards 2024, we expect our glucagon injection, BAQSIMI and Primatene MIST products to continue to drive revenues, and we anticipate a sustained demand for our hospital and clinical use products. We anticipate potentially four product launches this year. We are excited about our upcoming launch of REXTOVY, our intranasal naloxone, which uses our proprietary device; for AMP-015, or teriparatide. Our progress towards its GDUFA date remains on track for a second quarter. This filing is undergoing a pre-approval inspection, marking a step forward in the regulatory process. As for AMP-002, ongoing dialogue with the agency in pursuit of a favorable determination indicates the agency's commitment despite a delay in a GDUFA date. The market demand for this product remains robust, presenting an opportunity as the first generic contender in a market exceeding $500 million according to IQVIA. As for AMP-008, our first inhalation ANDA which received priority review status, we have a GDUFA goal date in the second quarter of this year. And our AMP-007 inhalation ANDA, which was filed in the fourth quarter of 2023, we have a GDUFA date in the fourth quarter of 2024. There is a Paragraph IV certification with this ANDA. As for updates on BAQSIMI, the progress of the transition from Lilly continues as planned, and sales totaled $28.7 million in the fourth quarter, a figure slightly impacted by anticipated seasonality factors. As expected, the transfer is going smoothly as we took over U.S. marketing in October. We began shipping the 2-pack of BAQSIMI in the United States at the beginning of February and will start shipping the 1-pack in March. Looking forward, we remain optimistic about the trajectory of this product as we continue to take over worldwide distribution from Lilly throughout 2024. Having discussed the main drivers of our revenue and the impact of market nuances on our quarterly performance, I want to pivot the discussion towards our pipeline and regulatory affairs concerning our proprietary biosimilar and complex generic products. Starting with our insulin aspart filing, we firmly believe our BLA application aimed at securing interchangeable status will not only mark a significant advancement for our diabetes portfolio, but will also demonstrate our commitment to leveraging our robust U.S.-based capabilities. This strategic move is poised to solidify our position as a frontrunner in being a proud U.S.-finished interchangeable biosimilar insulin manufacturer and supplier. This aspect sets us apart in an increasingly competitive landscape. As the demand for more affordable options for diabetic patients continues to surge, we are poised to meet this need with our U.S. manufacturing site. Furthermore, we believe this milestone will pave the way for success of our other insulin products currently in development, including AMP-004m, or insulin aspart M, AMP-005 recombinant human insulin and AMP-025 insulin degludec, which development continues to advance. Additionally, while on the topic of our diabetes pipeline, our GLP-1 ANDA in development known as AMP-018 remains on track for a filing this year. In reference to our proprietary product, intranasal epinephrine or AMP-019, this product continues to progress through the various development stages. Concluding my remarks and looking ahead, Amphastar has significant opportunities in front of us, supported by our sustained growth and strategic initiatives. With the imminent launches of REXTOVY and promising candidates like teriparatide, AMP-002 and AMP-008, we are optimistic about our trajectory. Our annualized performance underscores the resilience and diversity of our portfolio, signaling growth potential. Moving forward, our dedication to growth is evident through our R&D advancements, which is the engine of our company, and our planned expansion efforts within our inhalation pipeline at our Armstrong facility, our continued API expansion at our ANP facility, which is anticipated to be completed this year, and our capacity expansion at our headquarters to capitalize on our insulin and complex injectable opportunities. I would like to turn the call over to our CFO and Executive Vice President of Finance, Bill Peters, to discuss the fourth quarter and year-end financial results.

Thank you, Dan. Sales for the fourth quarter of 2023 increased 32% from $178.1 million from $135 million in the fourth quarter of 2022. BAQSIMI contributed $22.5 million to net sales based on Eli Lilly's sales of $37.6 million less cost of revenues and transition service fees of $15.2 million. Glucagon sales increased 70%, growing to $31.2 million from $18.3 million as the discontinuation of other injectable glucagon products from two suppliers at the end of 2022 positively impacted demand. Primatene MIST continued to show strong sales growth during the quarter, with sales up 10% from $22.3 million in the prior year period, totaling $24.5 million. Epinephrine showed strong sales in the fourth quarter amid continued shortages by our competitors, growing to $24.6 million from $21.4 million in the previous year's period. Lidocaine showed growth of 13% to $15 million in the current quarter from $13.3 million in the fourth quarter of 2022 as we were able to increase capacity and decrease our backlog. Other finished pharmaceutical product sales increased 6% to $35 million in the fourth quarter of 2023 compared to $33.1 million from 2022, as the company recorded stronger sales due to the launch of regadenoson earlier in 2023 and increased unit sales of atropine, calcium chloride, sodium bicarbonate and ganirelix, which were partially offset by lower sales of medroxyprogesterone as the company was in the process of transferring the API production for that product to its facility in China. Gross margins increased to 54% of revenues in the fourth quarter of 2023 from 53% of revenues in the fourth quarter of 2022 due to BAQSIMI sales, which are recorded net of Lilly's expenses, and to strong sales of higher-margin products like glucagon and Primatene MIST. These positives were partially offset by an inventory reserve of $3.6 million for insulin API due to our amended contract with MannKind, which delays required purchases. Selling, distribution and marketing expenses increased to $8.6 million from $5.5 million due to the expansion of our sales and marketing efforts for BAQSIMI, as we began detailing the product at the beginning of October. General and administrative expenses increased to $13.1 million from $10.6 million in the prior year due to BAQSIMI-related expenses and higher personnel costs. Research and development expenditures increased in the quarter to $20.4 million from $17.2 million in the comparable quarter of 2023, primarily due to spending on materials and supplies for our inhalation programs. Non-operating expense in the fourth quarter of 2023 was $12.6 million, primarily related to interest expense on the debt used to finance the BAQSIMI acquisition, foreign currency fluctuations and mark-to-market adjustments on our interest rate swaps. This compares to non-operating income of $3.4 million in the fourth quarter of 2022 due to a remeasurement gain on foreign currency. The tax rate this quarter was lower than usual, due to a mix of one-time events combined with an updated review of our international tax structure. The company reported net income of $36.2 million or $0.68 per share, which was up 7% and 3%, respectively, compared to the previous year's fourth quarter net income of $33.9 million or $0.66 per share. The company reported an adjusted net income of $46.9 million or $0.88 per share compared to an adjusted net income of approximately $37.6 million or $0.73 per share in the fourth quarter of the previous year. Adjusted earnings exclude amortization, equity compensation, impairments of long-lived assets and one-time events. In the fourth quarter, we had cash flow provided by operations of approximately $23.9 million, and for the full year, cash flows from operations were $183.5 million. Let me review a few of the financial assumptions we are using as we look to 2024 and beyond. BAQSIMI will drive sales growth in the coming year. We anticipate continued unit growth in the high single-digit range. Average selling price will be impacted slightly due to the difference between the wholesaler fee structure for Amphastar compared to that of Eli Lilly. As for Primatene MIST, we are reiterating our forecast of hitting $100 million in sales this year. We are forecasting up to four product launches this year, including REXTOVY, which will be launched in the coming weeks. We are also expecting approvals in 2024 for AMP-002, AMP-008 and teriparatide. We expect gross margins to be slightly lower primarily due to the shift in accounting for BAQSIMI from net economic benefit, in which sales are booked net of cost of goods sold, to typical revenue recognition with cost of goods sold, thus increasing both the sales and the cost of goods line on the income statement. We've already begun this transition in the United States, where we began shipping the 2-pack of BAQSIMI at the beginning of February, and we will begin shipping the 1-pack in March. Last week, we also started distributing BAQSIMI in Italy, the first country outside of the United States, with the remainder of foreign countries converting to our distribution network one by one throughout the remainder of 2024. Our selling and marketing expenses will increase due to efforts related to BAQSIMI. We expect G&A spending to increase due to expenses associated with BAQSIMI and legal expenses associated with Paragraph IV patent challenges. Turning to research and development, we plan to ramp up spending on clinical trials, purchases of materials and supplies and FDA filing fees this year as we increase spending on our insulin portfolio, two inhalation candidates and our intranasal epinephrine product. We also anticipate a significant increase in capital spending this year as we continue our project to double the capacity for our inhalation products at our Armstrong facility to align with our pipeline development. Additionally, we plan to finish our insulin API production capacity expansion at our ANP facility in China this year. At our Amphastar facility, we are in the process of an expansion project which will significantly increase the capacity of our Rancho Cucamonga complex as we look to major insulin and complex ingestible opportunities. Spending on this major project will begin this year, but will ramp up more significantly in 2025, reaching $40 million a year for three years. We plan to finance this expansion with cash flows from operations. We will use a portion of our cash this year to make the $125 million payment due to Lilly in June. At the same time, we plan to utilize our strong cash position to continue our stock buyback program.

Our first question is from Jason Gerberry with Bank of America.

This is Pawan on for Jason. Two questions from us. First, can you provide some color as to the line of sight into competitor supply shortages, namely as it pertains to the tailwind we're seeing with generic epinephrine and a handful of products in the other finished pharmaceutical products segment? When can we expect that trend to reverse? And then second question on BAQSIMI growth. Are you on track for the transition from Lilly in Q1 in the U.S.? And do you expect any sort of headwind during this transition phase while your sales force gets more comfortable with getting out there and driving uptake with prescribers?

Yes. Thanks for the question. Yes, in regards to shortages, we always seem to come across this. There's always a shortage of some products in this portfolio at one time or another. We don't have any additional insight or color on the status of whether or not they'll be back online or come back online, but what we can tell in the near future, at least for the next quarter or two, that our demand for the products that we were talking about is still necessary for us to provide.

And some of those products are supposed to be back online according to the communications that we get from the FDA. But the reality is, and I think what Dan was getting to, is that we've had these shortage issues for over 10 years now. Every quarter, there's been some product or another where there's been a shortage, and we've been able to be there and supply our customers for that. Our customers have appreciated and supported us because of that. I think the second question was BAQSIMI, and yes, as I said in my remarks, we started selling the 2-pack in the United States in February, and we're going to start selling the 1-pack of BAQSIMI in the United States in March. That's already taken care of in Italy, already transferred in February as well. And the rest of the countries in Europe are going to move on a one-by-one basis. The marketing program is going as planned in the United States.

Our next question is from Tim Chiang with Capital One.

Bill, I had a question just on the net economic benefit figure for BAQSIMI just going forward. I know you'd indicated you expect sales to be up more than the single digits, single-digit growth. I mean is that sort of the net economic benefit figure that we should be modeling single-digit growth for going forward on a quarter-to-quarter basis?

What I'm discussing relates to the actual sales figures, such as the $37 million in BAQSIMI sales reported by Eli Lilly in the quarter. This is the level we are considering. In the United States, which accounts for 80% of BAQSIMI sales, we transitioned to the 2-pack in February and plan to move to the 1-pack in March. The first quarter will see a combination of both the NEB and our standard sales for the U.S. and Italy. Most other regions will continue with the NEB until the third quarter, when we anticipate the majority of transitions to happen in other countries.

I see. And then you mentioned higher sales and marketing expenses going forward. Is it too early to sort of peg just sort of a ballpark increase rate for selling and marketing expenses this year?

Yes. So what we've said is that the increased SG&A costs are going to be similar to what Lilly spent for them, which is around 17% of revenue. So I think if you're taking a look at something that's in that neighborhood of BAQSIMI revenues, it's going to be the range of that increase.

Okay. And maybe just one pipeline question, which is AMP-015, teriparatide, obviously, there are some other existing generic companies in that market. I mean do you still think you'll have the ability to get meaningful share in that market once you get approval sometime in the second quarter?

Yes, we expect it to be in line with what you would anticipate from a generic product that has multiple competitors, with three other generics currently available in the market. Therefore, we see it as a market opportunity for us, and we still believe it holds significant potential. However, we acknowledge that there are other competitors that have received approval.

Our next question is from David Amsellem with Piper Sandler.

So a few pipeline questions. AMP-002, what is underlying your confidence in getting it across the finish line? I notice the action date came and went and nothing has happened there. So I guess can you talk more about your interactions with the FDA? Or what just gives you confidence that you can get there? And then on the inhalation product 008, just want to clarify that it is indeed a first-to-market opportunity and how you're thinking about that, and particularly to the extent it is a first-to-market opportunity, what are margins going to look like relative to the overall business? And then lastly, on the GLP-1. I guess I'll just ask it straight up. Is it liraglutide or is it something else?

David, thanks for the question. For our AMP-002 product, we continue to have discussion with the agency. We view it as positive movement. They have not asked us for any new information or any new data as of yesterday or today. So we just continue to engage with them and have discussions with them. We're optimistic about it. We feel we understand what the issue is and just work with them as they try to overcome that issue. So from our perspective, we remain optimistic about it.

And on the second one for AMP-008, we haven't decided whether or not it's a first-to-market. And for the third one, GLP is, we haven't said what the molecule is, but it will be subject or likely to be subject to a Paragraph IV litigation, so after it's filed, it's likely to become known. And also as Dan had mentioned, our AMP-007 is also subject to Paragraph IV filing, so it's possible that that becomes known through that process at some point in the not-too-distant future as well.

Okay. If I may ask a follow-up on 002. You describe it as an issue, but there’s no CRL here. Should we take that as a positive sign? Or is this just an isolated case that makes comparison difficult?

Yes. I think maybe it's just a one-off issue. We have what we believe is our understanding that we think is the issue they're trying to overcome. And we engage them on that and try to just keep pressure, keep discussion, keep engaging with them. But we think that it's just the one issue that when they're able to address that issue, that, that's the only thing that is holding up this application. Once it's relieved, then it should be very positive.

Our next question is from Glen Santangelo with Jefferies.

Bill, I want to follow up on a couple of modeling questions. You provided some insight on BAQSIMI, but I'm curious if you could clarify 2024 with regards to the TSA that's in place and how it's going to roll out in different countries. This will significantly affect your revenue and expenses, so any high-level guidance on that transition throughout 2024 would be appreciated. I may also have a follow-up.

Sure. It's a bit confusing for us as well. As I mentioned, 80% of the revenues from BAQSIMI come from the United States, and we are making that transition partway through the year. Internally, we are budgeting as if there is no NEB, going with straight sales and expenses, knowing that the net income impact will be the same either way. The spending and sales at the top line will remain consistent, and while our revenues may vary slightly, the income will ultimately be the same. With 80% of the sales transitioning in the first quarter, I view it as half of that quarter being NEB and the other half not. Most of the remaining countries will come online in the third quarter, which will only account for about 20% of the worldwide sales. We don't have exact dates for most of these transitions, as this is tied to inventory levels and the winding down of Lilly inventory labeling versus Amphastar-labeled products, ensuring we have enough inventory to launch. It is a somewhat confusing process, so we cannot provide specific dates either.

All right. Well, listen, we can maybe explore a little bit more off-line. But maybe as my follow-up, I wanted to ask about glucagon. Obviously, you've been posting some pretty sizable growth in '23 as a couple of those players exited the market late in '22. Do the comps get much stiffer here now as you enter into the first quarter? And as I think about maybe growth slowing in that product and the four new product launches and sort of BAQSIMI sort of phasing in as we just discussed, you said we should expect gross margins to be trending down this year. Could you maybe just give us a little bit more color on the direction of glucagon and the impact of all these launches on gross margin?

Glucagon faces some challenges with tougher comparisons as we've just completed the last significant growth quarter and the trend is shifting. We anticipate that glucagon will now capture one-third of the anti-hypoglycemic market, with two-thirds focused on diagnostics. We expect the anti-hypoglycemic segment to decline as products like BAQSIMI gain more market share in the coming years. Although we're seeing a decline in the U.S. market, we are launching the glucagon product in Canada, which should help mitigate some of that decrease. Canada represents about 10% of the U.S. business, providing a buffer against the downturn. We didn't highlight glucagon as a growth driver due to this expected decline in the U.S., balanced by the Canadian performance. Regarding gross margins, on a GAAP basis, we'll incur costs for BAQSIMI that we didn't have previously, leading to a significant impact on our margins. Additionally, we will face a full year of amortization for BAQSIMI's intangible assets in our GAAP calculations, even though it won't affect the adjusted cost of goods. Overall, we aren't expecting to see much of a price increase across our product lines, while some cost pressures may lead to a slight decline in margins. However, the upcoming launches of newer products like REXTOVY, AMP-002, 008, and teriparatide should bring in gross margins that exceed our corporate average, ultimately helping to stabilize and improve our overall gross margin this year. Thus, we have various factors influencing our gross margins in both directions this year.

Our next question is from Serge Belanger with Needham and Company.

First question, can you just talk about your outlook for shortage opportunities this year? I guess whether the ones you've been able to capture will remain, and if you have the capacity to take on additional ones that may materialize? And then secondly, on teriparatide. What's your level of confidence for approval at the second quarter GDUFA? And how does that market opportunity look like now that there's been a couple of other approvals?

Yes. Regarding the shortage opportunities, we have been aware of these for quite some time. This is one of the reasons we decided to expand our manufacturing capacity at IMS. It seems that every quarter, one or more of our products encounters some shortage issue. We are prepared to manage this and ensure supply when needed. I believe Bill mentioned that there might be a situation where one product returns, but this may inadvertently lead to a shortage in another product. We estimate that the expansion of our capacity will generate around $20 million, and we are on track with that forecast. We anticipate facing similar situations in the future, specifically referring to teriparatide.

Yes, we remain confident in this, the CRL that we addressed, related mostly to a study which we performed, and we performed studies of that nature before. So we remain optimistic about the approval for that.

And as far as the market opportunity goes, there are two other participants in that now, two new generics. So the market is crowded, and definitely the price has come down pretty significantly and will come down even further with ours. But that said, it's still a product that has a relatively high price and relatively high margin, so we still see this as a good opportunity, but not as big an opportunity as it seemed six months ago.

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

I want to thank you all for joining us on today's call. We're excited about the opportunities ahead with the upcoming launches like REXTOVY and other potential launches with teriparatide, AMP-002 and AMP-008, and we look forward to updating you all in the next call. Have a great day.

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