Welcome to the Jeffries Healthcare Conference. My name is Dennis Dane, biotech and spec pharma analyst here. I have the great pleasure of having Amphistar Pharmaceuticals here with us. We have the CFO, Bill Peters, as well as Jacob Lea-Wadadui, EVP of Corporate Administration, here with us.

Thanks, Rodriguez.

So before going into Q&A, we'd love to turn it over to you, Bill, just to talk about, you know, give an overview of the company, some of the progress, some of the challenges that, you know, have faced the company over the last 12 months, and just, you know, give a sort of state of affairs of, you know, Amphistar right now.

Sure. So, you know, Amphistar has a long history as being a company that's very focused on some hard-to-do, complex, generic products, and we have a strong base of hospital injectable products to build on as well. And recently we've been making the expansion into other areas, including proprietary and biosimilar products. So we have, you know, about a half a dozen proprietary products that were in development right now and three biosimilar products in development now. And a lot of that expansion is built on the technical toolkit that we've developed with these complex generics, particularly working on peptides and other products, running clinical trials for some of these complex generics, also using them for human factor trials. So we have a lot of experience that we now want to pull into the proprietary side as we seem to move up the, as we plan to move up the value scale there.

Okay. And, you know, going through just, you know, the business and what's driving the revenue, You have Baximi, Primatine Mist, a number of other generics like lidocaine, epinephrine, et cetera. You guys have had some new generic launches, which has been great, you know, over the last, you know, six to nine months. But maybe talk high level just around, you know, I know you guys don't necessarily give formal revenue guidance, but just remind us how you're thinking about the revenue in 2026.

Yeah, so as you mentioned, the Baximi product, we've had our guidance, our sales guidance this year is mid to high single-digit revenue growth. And what we've talked about is the largest driver of that revenue growth will be ipotropion bromide, which is a generic to Atrovent. As of today, we are the only generic on the market, and we did successfully have a paragraph four challenge to that product. So we have exclusivity for six months. We launched the product in mid-April, and as of right now, we're the only generic on the market, so we're getting probably a higher level of sales than we had originally forecast at the beginning of the year, which is really benefiting us because we did have some offsets to back-seem you with some double discounting through the 340B program. and so this is offsetting that extra revenue that we're getting from that product is offsetting that growth. Additionally, we're expecting strong contributions from Privacy Mist this year and also some API sales from our China business. Got it.

On the generic Atrivent product, right, I believe that's primarily what's driving the revenue growth guidance range. right, from mid to high single digits, right? Is that correct? Right, so, and what, and what, like, that delta is around 3%, so around 20 million, you know, difference, right? And that 20 million comes, you know, stems from whether or not the authorized generic would launch. Right, is that fair?

Correct, yes.

Okay, so, like, I guess if you were, you know, BI, right, Like, why would you not launch an authorized generic, right? I'm just curious about that.

Yeah, absolutely. So obviously we are not sure if they are going to launch or not launch the authorized generic, but as we move further away from our launch, which is mid-April, and from our approval, which is in February, the further away we are from that date, the least likely they will launch an authorized generic. We don't know what BI have in mind, but we just know BI has a wealth of respiratory products that they are focusing on, and Atroven is one of the older products that they have, so I'm not sure how much attention they put on this product. So can you help us understand how big the generic Atroven product can be to the P&L for you guys this year? so what we can provide is so the IQ via data sales data in 2025 is about 112 million of these products and IQ via tend to have overstating just because of the rebates that's not captured so maybe 30% less than 112 and if typical generic have about like 30% price lower price than the brand so you are looking at full market probably about 55 million and as a sole generic provider we believe we could capture a significant amount north of 50 percent maybe as high as 80 percent so that would be probably about like 40 years million potential sales for us in a full year but you guys launched, I think, what, back in April, is that right? Yes, mid-April.

And that $40 million is assuming that there is no other authorized generic?

That's correct, yeah. So basically we have exclusivity until October with the six months of exclusivity, and so we are comfortable that DEFMA will be able to capture that significant market share.

Okay. And maybe comment about how much visibility do you have on other ANDA filers for this product, and also, I guess, the durability of this generic catchment product in 27 and after.

Yeah, so we have not heard any ANDA filer. It doesn't mean there's none, but just because typically we only heard if the company broadcasts that they filed, So we have not heard that, or when the brand sued the company when they filed the ANDA with the Paragraph 4 certification. So we have not seen either one of them. So we believe this, and based on our development work, these products has a high bar for bioequivalent studies, which we did perform. So we think this could be durable as a sole generic for a few years before they catch up.

So on an annualized basis, assuming there's no other generic, this could be a pretty stable $40 million a year product for you guys.

That's correct, and a pretty good margin as well.

Perfect. Maybe shifting gears to back-seaming. I mean, Bill, you mentioned that Q1 had some, you know, challenging dynamics around double-dipping. So maybe clarify a little bit, you know, around what that was and, you know, I guess how, you know, what sort of steps are you taking to resolve that?

Yeah, so just a quick overview, the 340B double discount, which is not unique to Baximi, but general brand. What happened is contracting pharmacies that are serving 340B hospitals, they use the same 340B discount purchase and servicing their commercial insurance client. So they buy at the lower 340B price and then turn around, submit rebates to the insurance company or the PBMs. So that's what reflects the double discounting, which they are not supposed to, they're supposed to purchase at WAC when they service the commercial insurance. So that's, and what we have done is basically we are mitigating that risk going forward by engaging a third-party service provider. And this is not their first time they do this. They have other clients like the big pharma as well. They have a platform that we engaged them in May that the contracting pharmacy need to submit registration to this platform in order to be eligible to purchase Baximi under 340B program.

And we felt that that was probably a contributor to about a 20% pricing discount decrease in the first quarter compared to the prior year. That was one of the biggest drivers of that. And we believe that this service that we've engaged should, you know, they said they've had experience doing this for other companies, especially larger pharmaceutical companies that have had the same issue that we're having. And they believe they can prevent 80% of this discounting. So we think we'll get back, not get back, but in the future, we'll reduce that discount by 80%.

Okay.

Would that still be an impact in Q2? So Q2 will have a partial impact. You know, we engaged the firm on May 1st, so there would be really no impact for April. But after that, we think that the notification period begins, and that takes away some of the ability for them to do that. They can just pull back at that point. But then it might take a couple more months to fully engage. So that 80% is probably a good measure for the third quarter.

What do you mean by 80% specific?

So they said they could eliminate 80% of the double discounting. So of that 20%, we said the pricing decreased by 20% due to this phenomenon, and we think that we can stop 80% of that discounting. So let's call it, you know, that will probably be still a 4% net effect from this. But then at the same time, also beginning May, we've taken that, a 3% price increase to help offset that. So much of the pricing pressure that was on vaccine should be alleviated in the third quarter, some of it in the second, but most of it by the third.

I see. Okay.

And then there's also another partial offset from outside the U.S.

Is that correct? Just around, I know you guys are exiting some of these countries, but there's still some, I don't want to call it inventory, but there's still some product sales in some of those countries?

Yeah, so right now we were contractually obligated to continue selling Baximi in every country that Lilly had sold it in for three years. That three years is up at the end of June. So starting in July, we've taken a look at certain countries where we actually lose money on the product, either because the price is so low or the regulatory requirements put a significant cost burden on us. That's five or six countries that we plan to discontinue, and that discontinuation will happen after July 1st, but it's not a hard cliff. It's for some of those countries we have inventory, so we'll continue to sell that inventory into the third and maybe even the fourth quarter. And at least one country required a one-year notice period in order to withdraw the product from the market. So in that country, we'll be selling that back-semi into the next year.

Okay. It sounds like there are quite a number of moving parts here on back-semi. So just, you know, in terms of revenue, how are you thinking about 2026 back-semi revenue relative to 25?

So right now we've lowered our back-semi guidance to flat to up single digit. So that means that in the final three quarters, because it was down in the first quarter, that means in the final three quarters we expect to have some small growth out of it combined. And that's also, you know, but even with that decrease in that guidance for Baximi, we're still maintaining that mid to high single-digit revenue growth for the entire company.

Okay, and what is that being proven by?

What's that?

What is that being driven by?

That's being driven by the ipotropium is one of the big drivers. Also, primatine mist. We're seeing, you know, mid-single-digit unit growth, and we're taking a 5% price increase, so that will really impact the second half of the year. We're also seeing a few of the products where we see shortages from time to time. We're seeing some additional demand for some of those products, including the epinephrine pre-filled syringe specifically, and also we have some API sales out of the China facility.

I believe you have your first biosimilar that's being under review. Can you just comment around where you are in that regulatory process?

Yes, so it is under review, and that process is ongoing. We haven't given specific updates on that. You know, we've changed our guidance on products that aren't approved yet to potential launch dates. And so as of right now, what we've said is that we expect that we will launch this product in 2027. And, you know, we are also going for interchangeability with that, with that insulin aspart. So it is a slightly higher hurdle to get to. So it is possible that they'll approve us as a biosimilar but not interchangeable. but we believe we've provided enough and sufficient data and that we've followed the FDA guidance and responded to any concerns they've had in a way that would allow us to get that interchangeability.

This is insulin aspart, correct? So how big can this product be, assuming you guys do get approved, just on an annual basis of ballpark?

So the IQVIA data has it at about $1.4 billion in sales. And, you know, as we've said before, That tends to overstate the sales, but we'll be probably the fourth player in this market, the third biosimilar, the second interchangeable biosimilar, if all goes well. So we believe that we can have a meaningful share of that market, but we'll probably not be as high as the originator or the first interchangeable biosimilar. So we plan to, but because it is such a large market, the sales would still, we believe, still will be meaningful for Amphistar.

25 to 50, is that kind of like a reasonable range with or without interchangeability?

I think that with interchangeability, I think the higher end of that range is achievable.

Perfect. And, you know, I know you guys are now guiding to when you guys will launch, and that's going to be in early 2027, but that's also assuming a first cycle CRL, correct?

What was that question?

Like when you were thinking, when you're guiding to launching the product in early 2027, that assumes a first cycle CRL.

For insulin? It does, yes.

Okay. So, you know, have you guys disclosed when the PDUFA is for that, or BASUFA?

We have not.

Okay. But considering that, you know, some of the timelines there, and if you are assuming one CRL, because this is your first biosimilar, then perhaps the BASUFA should be in Q2.

Yeah, so we don't want to comment on the specific timing of that because, but, you know, if the timing is the second quarter or later in the year, it might take us some extra time to get the product launched as well, but we do think that next year is our best estimate of when we can launch that, and that has been our estimate for some time now.

Okay, so you guys also enlicensed a really interesting asset from China, the synthetic corticotrophin asset, right? Remind us where we are with that. Have you engaged with the FDA on the clinical development path forward?

So, with our proprietary assets development, since part of the normal process will be a lot of corresponding with FDA, at least at the moment we will not be discussing specific what's our interaction with FDA, but as we provide in our slide, this year most of our Our work for that product is basically on the preclinical studies that allow us to file the IND in 2027 or early 2027. So during this period, during this 2026 period, there most likely will be multiple correspondence with FDA with what our plan will look like and what's the animal studies that we'll be doing.

Okay. Okay, so your guys' base case is that you guys would have to start from phase one, and that phase one would potentially be in 2027. Is there also an upside case where you guys could use some of the data that you guys had in China?

So I think it's more into how FDA looked at this molecule, because our molecule is a synthetic corticotropin, so it's different than the current porcine base. So it depends how FDA look at it, whether they see correlation, corticotropin is corticotropin, or if they see it as a true new chemical entity since it's a different source. So we don't have that alignment yet with FDA just because we are still putting together our data. For the data that's done in China by our partner that we licensed from, So I think we will most likely will redo those data in the U.S. in order to submit the FDA.

Okay, understood. And what about elsewhere in your pipeline? You guys have actually acquired some interesting oncology assets. So maybe talk a little bit about those products and where they are.

Yeah, so we have in license, you know, three different products from a Chinese biotech company, including two that are oncology products and one that's a wet AMD product. We've been taking a look at those products, and as we forward, we've put some data in our deck about the first the first product there with which is a potential product for pancreatic cancer it's a peptide conjugate that it binds to an existing molecule and helps direct it towards these these molecules towards the tumors you know we've been looking at these you know for quite some time and we're pretty excited about those one of the reasons we in license these products is that we've got a lot of experience working with peptide products, and all three of those products are peptide products. So we've got a lot of experience working with them both making APIs in our facilities, so we make multiple APIs that are peptides, and we also make the finished, multiple finished product peptides as well. So we have a lot of experience working with this, and we've also had a lot of work with some of our more complex generics doing some clinical trials. So we're just taking the next step forward with these products.

Sure. In terms of capital allocation, you guys have done several of these early preclinical stage deals. Should we expect more, you know, around that sort of stage moving forward as you guys kind of think about investing, you know, for growth down the line?

Well, we feel we have a nice base of early stage products right now. And because of that, as we look at business development opportunities, what we're primarily focused now are proprietary products that are closer to the market, so things that are either currently on the market or things that are filed at the FDA or things that have been de-risked through their clinical trial program that have moved along at a sufficient pace where the money has been spent and the products have been de-resked. So we're looking for things that are, you know, much closer to being launched. Also taking a look at things where we have our, you know, are in one of the areas where we currently operate or plan to operate, including endocrinology, which is a good fit for our Baximi product, and then the three products or three areas where we've recently in-licensed early products, which include ophthalmology, oncology, and immunology. So that's what we're really looking for. At the same time, we will, from time to time, look at generic assets if they fit very well into our current business. So if they're injectable, inhalation, or intranasal, and we think that they're complex and have significant barriers to entry.

Okay. So if I can kind of summarize, you guys don't want to take clinical risk? It's okay with taking some regulatory risk?

Yeah, and, you know, we feel we are taking clinical risk with the early stage ones that we already have, So we think we need to make it more of a portfolio approach, so that's why we're looking for things that are more de-risked.

Can you just help clarify, maybe narrow the aperture a little bit in terms of capacity? How big could this product be, or how much would you be willing to spend for a product of this stage?

Yeah, so product or portfolios of products. You know, when we bought back CME, we spent $500 million up front, plus we had some deferred payments and then milestone payments. So I think that that would be the outer limit of what we could do. So anything up to that size, I think, is doable. Or we could do a couple projects that are smaller than that.

Okay. Perfect. In the last few minutes, we'd love to ask around, you know, revenue. You know, if we focus on the income statement, revenue is going to grow mid to high single digits year over a year. It seems like in terms of OPEX, there's going to be some incremental spending this year. Seems like EBITDA margin is going to be down year over a year. But I guess are we at trough levels in 2026? Should we expect a recovery in EBITDA margins in 2027? Or, like, what needs to happen for that to occur?

Yeah, so we have – so I'll say let's break it out into different components. So I think on the gross margin, I think that that first quarter is an absolute trough, and we should pick up from there under the second, third, and fourth quarter and in coming years. So I think that that's the first step.

Yeah, a big part of that is because of Baxemi.

Yes, exactly, the pricing issues with Baxemi. So that comes back up. But the R&D, we do plan to keep that spending high. And it is a higher percentage of sales than it's been in a while, but we plan to potentially increase that as well. So that's something where that continues to say high. G&A is something where we've said it's a temporary uptick this year as we take on some projects to help streamline the company's efficiency from new computer systems and other things this year. That will drop as a percentage of sales after this year. And then selling should remain a relatively consistent percentage of sales but has the potential to drop in coming years as well as we create economies of scale in the business. So overall, the EBITDA margin should have some benefit from where we were in the first quarter overall. That's really driven by the gross margin.

Where do you think EBITDA margin will be in 2026?

Well, we haven't, you know, specifically given specific guidance on that, other than to say that, you know, in the coming quarters, the gross margin will be better than it is now, and the other, the G&A and selling expense should be relatively flat. The R&D expense will be flat to up as a percentage of sales.

Okay. But where would you like EBITDA margin to eventually be?

Well, eventually we would like it to be better than it is now. However, part of that depends on the R&D spend and how we see it as contributing to our long-term growth. So if we see the right R&D opportunities, we're willing to take some additional expense now in exchange for larger outsized growth in the future.

Okay, understood. Lastly, just remind us of your capital allocation priorities.

Yeah, so first of all, we want to make sure our R&D is fully funded, and it is, and we have generated enough cash for that, and we generate enough cash for the CapEx program that we have in place. We also are generating enough cash to fund the buyback. We just added $50 million to the buyback program in March, so that's fully funded as well. So the only thing that we would potentially need to fund would be business development opportunities, and so we're looking at that as the way to use our excess cash and the excess cash that we plan to generate and potentially we might need to borrow to do some of those opportunities if we see the right ones.

Okay, sounds good. Well, thank you guys so much for being here and I hope you guys have a great day of meetings.

Great.

Thanks, Dennis.