Amneal Pharmaceuticals, Inc. Q1 FY2020 Earnings Call

Good morning and welcome to the Amneal Pharmaceuticals’ First Quarter 2020 Earnings Conference Call. Please note this event is being recorded. At this time, I'd like to turn the conference over to Tasos Konidaris, Chief Financial Officer at Amneal. Please go ahead.

Good morning. Earlier this morning, we issued a press release reporting our quarterly results. The press release as well as the slides on this call are available on our website at www.amneal.com. We are conducting a live webcast of this call and a replay of it will be available on our website after its conclusion. Please note that today's call is copyrighted material of Amneal and cannot be rebroadcast without the company's expressed written consent. I would also like to remind you that statements made during this call, stating management's outlook or predictions for future periods 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, cautionary statements and forward-looking statements in our earnings release and presentation, which applies to this call. Our future performance may differ due to numerous factors, many of which are listed on our most recent annual report on Form 10-K and are revised and updated on our quarterly reports on Form 10-Q and current reports on Form 8-K, which you can also find on our website, or on the SEC's website at sec.gov. We also discuss certain non-GAAP measures. You will find important information on our use of these measures in our reconciliations to GAAP in our earnings release. Included in the appendix of today's presentation, you will find U.S. GAAP financial statements that correspond to some of our non-U.S. GAAP measures we referenced throughout the presentation. On the call this morning are Chirag Patel and Chintu Patel, our Co-CEOs. In addition, Andy Boyer, our Executive Vice President of Commercial Operations; Joe Todisco, Senior Vice President of Specialty Commercial; and Steve Manzano, our General Counsel and Corporate Secretary are on the line and will be available for the Q&A session. I would like to note that all of us are at different locations due to COVID-19. So please bear with us if there are any technical issues. And with that, I'd like to turn the call over to Chirag.

Thank you. Thank you, Tasos, and good morning everyone. Tasos joined Amneal as a CFO in March and we are pleased to have him on our team. I will begin by addressing our response to COVID-19. First, I want to acknowledge the difficult environment we are all navigating, as individuals, as a company, and in our communities around the world. Our thoughts go out to those impacted by this global pandemic, and we hope all of you are healthy and safe. We are deeply proud of how Amneal has and continues to respond to the COVID-19 crisis. We were proactive and mobilized quickly to evolve our business to protect the health of our colleagues and communities while sustaining the supply of medicines for patients. We established a strategic task force made up of top leaders across all business functions to ensure our preparedness, oversee our response, and enable mitigation and continuity across our business operations. I want to recognize the exceptional efforts of our employees. Our operational teams have kept our facilities running to ensure our products get across the finish line. We have also ramped up production in certain areas to help meet new demand. Our distribution teams have done an incredible job getting our products out to our customers. Additionally, our sales and marketing teams have been innovative and productive as they work remotely. For example, they have created new procedures and automated processes to deliver samples to physicians and launched virtual launch sessions to continue physician engagement. Importantly, our supply chain also continued to perform well. Our procurement teams have done a great job of sourcing the pharmaceutical ingredients needed to keep our manufacturing and production operations running as smoothly as possible. As we continue strengthening our supply chain, we are pleased with how we operated during the quarter and confident in our ability to continue procuring materials and delivering finished products. Given the nature of our business and Amneal's commitment to patient access, we believe it is our responsibility to help combat the global COVID-19 pandemic. We quickly accelerated production of hydroxychloroquine sulfate to move beyond our traditional 4% market share, which helped us meet demand from states and government agencies and continue supplying this medication to lupus and rheumatoid arthritis patients. While we have seen some disruptions as a result of this pandemic, our teams have done an outstanding job minimizing the impact on patients, customers, and Amneal. With a diversified supply chain, substantial U.S. manufacturing footprint, and track record of quality, we are well positioned for the unique challenges of COVID-19. That said, this crisis is shining a spotlight on the dependency of the American pharmaceutical supply chain on foreign manufacturing. The U.S. is almost completely reliant on other countries' supply chains and manufacturing for the production of active pharmaceutical ingredients and key starting materials to produce finished drugs. It has become more apparent than ever that there is a need for more drug manufacturing to be in the United States. We want to ensure that when another global emergency arises, we are ready and able to ramp up production and manufacture life-saving medicines. We know there is bipartisan support around this issue, and people on both sides of the aisle understand its importance for national security. As the largest U.S.-domiciled generic drug manufacturer, we believe Amneal is uniquely positioned to be a key part of the solution. We look forward to participating in the dialogue. Now, let me review the first quarter. We are pleased with our operational and financial performance, which demonstrates continued progress in our efforts to build Amneal 2.0. We are focused as ever on improving our operational execution by strengthening our supply chain, increasing plant utilization, reducing costs, and addressing inefficiencies. All of this is expanding our margins. We are also continuing to execute against the strategic priorities we laid out last quarter. These include revitalizing our generic business, growing our specialty franchise, and diversifying the business intelligently. We remain focused on these initiatives; even as we navigate the challenges created by COVID-19, and we believe we will continue building our momentum in 2020 and beyond. Let me now provide an update on our business segments. Our generics had a solid start to the year. It achieved a 42% adjusted gross margin during the quarter, which is ahead of our long-term goal of 40%. We have two main priorities in this business: strengthen the base business and drive new product launches with enhanced preparedness and execution. We have continued building on our large portfolio of products and remain on track in terms of new product launches. We are growing our market share as we continue shifting our focus to developing and commercializing more complex high-value products. Last August, we set out to launch at least 15 high-value generics products by August 2021. We have already launched five, including most recently the generic Butrans transdermal system. Our two recent first-to-market launches of generic versions of NuvaRing and Carafate are up and running, and we are pleased with the results to date. Chintu will provide more details on our R&D pipeline and what we have coming up in generics. In specialty, we are continuing to grow our franchise. We outperformed expectations on almost all our products during the first quarter. Looking at some highlights, dietary saw year-over-year revenue in TRx growth of approximately 31% and 17% respectively, driven by continued traction in our marketing initiatives. Unithroid revenues and prescriptions also increased year-over-year by 33% and 18% respectively. This reflects continued success of our existing marketing programs and a favorable comparison to the prior year period. Through the weekend of May 1st, we have seen minimal negative impact from COVID-19 on all major specialty products. Prescription refills have remained strong, while new patient starts have dipped slightly. Looking ahead, we expect new patient starts to resume growth, although at a different rate than we experienced in the first quarter. Turning now to our efforts to diversify the business intelligently through new distribution channels. We completed our acquisition of a majority stake in AvKARE on January 31st. As planned, it is operating as an independent subsidiary, and we have essentially completed the integration. With this differentiated platform, we are identifying new opportunities to better serve government agencies, and our strategy of selling more unit dose products, which is a niche business, continues to be a core part of our strategy for the AvKARE platform. We will continue to evaluate opportunities for value-creating partnerships and smart, accretive M&A transactions. We believe there will be exciting inorganic growth opportunities as a result of recent dislocation in the market. Amneal remains opportunistic and disciplined, which we believe positions us for continued growth, whether through new distribution channels, new geographies, or complementary additions to our specialty business. As we look ahead to the rest of the year, there is no question that COVID-19 has added complexity and a degree of uncertainty to our business and to the overall industry. For example, in the second quarter, social distancing and the reduction in physician visits and elective surgeries may impact volumes of certain products across both specialty and generics. Importantly, however, we have a diverse business, and our solid first quarter results demonstrate that our strategy to revitalize this business is working. We are confident in the strength and resilience of our team, and our focus on execution will enable us to achieve our operating and financial goals. With that, I'll now turn the call over to Chintu.

Good morning everyone. Thank you, Chirag. I would also like to acknowledge the tremendous efforts of our team during the COVID-19 pandemic. We have taken a number of actions to help mitigate the impact of the crisis on our company and stakeholders and to provide support to the industry and government where we can. This includes strengthening our own supply chain and working closely with federal and local agencies to avoid shortages of essential drugs. At our core, we have always been a mission-driven organization, and our culture of making healthy possible has never been more important than today. As you can see from our first-quarter results, our focus on operational excellence is bearing fruit. We have strengthened our supply chain and improved the processes and systems by which our products come to market. We have managed inventory more efficiently and worked with customers and suppliers to manage volume forecasts. While these efforts are not finished, we are proud of our progress to date. Our generic business is firing on all cylinders, and we have seen very strong results in both our base business and recent launches. We have worked aggressively to expand sales in the base business, where we have approximately 250 products currently marketed. We continue to work closely with our customers and analyze opportunities to grow market share. At the same time, we remain hyper-focused on new launches. Over the last six months, we have launched 16 products, including multiple high-value complex generics; these efforts have substantially improved our gross margin. Finally, as the current crisis has demonstrated, in-house manufacturing and quality infrastructure are more important than ever. Our ability to develop and manufacture products in-house positions us to take advantage of changes in the market very swiftly. As a result, in the last few months, we have been able to address numerous product shortages resulting from the pandemic. On the R&D front, our generics pipeline is progressing nicely. Earlier this year, we filed our first inhalation product, which is a drug-device combination. We have procured exclusive first-to-file status for this product, and it is just the latest example of our commitment to develop Tokyo Regulatory Approval and launch complex, high-value products that have high barriers to entry and offer more attractive margins. Moreover, we are on track to meet our target filing of 20 to 25 products in 2020, and many of these are potential first-to-market opportunities. We currently have 95 products in the pipeline awaiting FDA approval, and approximately 94 products in development. Our ability to develop these many new and high-value products reflects the strength and breadth of our R&D organization. Our decentralized R&D model allows us to take advantage of dosage form specialization and create multiple centers of excellence across the globe. For instance, our sterile injectable-focused R&D and manufacturing center has already successfully developed and launched multiple products since its inception a few years ago. As a result, we have a growing injectable business that gives us access to attractive institutional and hospital-based markets. Importantly, we are actively working to increase our injectables manufacturing capacity in both the U.S. and India as part of our long-term growth plans to become a key player in the U.S. market. We expect this will be a significant growth driver over the coming years. Finally, we continue to evaluate opportunities to utilize our R&D and regulatory infrastructure to pursue opportunities outside the U.S. While COVID-19 has impacted those efforts to an extent this quarter, the process of expanding geographically still starts with R&D. As a reminder, last year, we entered into a partnership with Fosun which will help us grow our international presence. We are expected to file our first product in the coming weeks with more to follow. I will touch on our specialty business, which continues to grow substantially and where we will continue to allocate more of our R&D budget. We are focused on a strategic selection of products and leveraging our strong infrastructure, as well as opportunities to selectively in-license products from external partners and acquire businesses that would be accretive to ours and make strategic sense. One of our key pipeline assets is the IPX-203 development program. Though we have slowed patient enrollment in our Phase 3 study in response to COVID-19, we still expect topline data in the second half of 2021. We remain excited about this product's potential and expect commercialization in 2023. As we announced last quarter, our agreement with Kashiv BioSciences has expanded our CNS pipeline into neuromuscular disorders. We now have the exclusive rights to the new drug application and commercialization of K-127 for the treatment of Myasthenia Gravis, which we expect to file by the fourth quarter of 2021. With respect to biosimilars, we are advancing three candidates in our pipeline: biosimilar versions of Neupogen, Neulasta, and Avastin, and we are actively working to add additional products. This is an exciting area for growth, and we are pushing forward to become one of the key biosimilar players in the United States market. Our goal is to allocate capital towards mid and late-stage assets through partnerships and not to spend a significant sum on early-stage development and manufacturing risk. In summary, we remain passionate about our specialty business and look forward to leveraging our commercial operations as we continue to grow. I want to again thank our dedicated employees for everything they have done to support our business as we work to confront this crisis. I also thank our customers and suppliers for their continued partnership. We are all soldiers in the same fight. Together as a company, industry, and as Americans, we are going to overcome this pandemic. Now, let me turn the call over to Tasos to discuss our financial results for the quarter.

Thank you, Chintu. Let me just dive straight into the results. From a topline perspective, net revenue in the first quarter of 2020 was $499 million, up 4% compared to Q1 2019 and up 25% sequentially. This growth was driven by the acquisition of AvKARE and the growth of new generic products and specialty brands, which offset generic competition and the sale of our international business last year. Hydroxychloroquine sales were not a meaningful factor in the quarter as we mostly donated our production. Our net revenue was slightly ahead of our expectations, mostly at AvKARE, and it reflects strong execution by our commercial and supply chain teams in meeting the substantial volatility of customer needs. Wholesaler inventory levels for our products were at normal levels at the end of Q1 2020. But there may have been some early filter prescriptions due to customer supply concerns with COVID-19. Adjusted gross profit of $225 million was up 5% compared to Q1 2019 and 30% sequentially driven by the topline growth. The first quarter 2020 margin of 45% was down from Q1 2019, due to higher profitability of our new products and higher manufacturing absorption rates, partially offsetting price erosion and the inclusion of AvKARE which has a lower margin profile. The sequential margin expansion reflects favorable product mix, partially offset by the addition of AvKARE. Moving on to operating expenses, R&D of $35 million and SG&A of $69 million declined in the first quarter, due to our efforts to reduce unproductive activities and focus our R&D spend. R&D expense was slightly lower due to COVID-19 disruption and timing of project spend has been geared more towards the latter part of the year. Adjusted EBITDA of $134 million is up from $112 million in Q1 of 2019 and $81 million of the fourth quarter of last year. This growth reflects the positive revenue trajectory, our focus on operating expenses and AvKARE which contributed $7 million in the quarter. Adjusted diluted EPS of $0.20 is up substantially from Q1 and Q4 of 2019 where we delivered $0.14 and $0.08 respectively. Finally, we are pleased with our operating cash flow of $49 million, a substantial improvement to prior periods. This reflects favorable comparison to Q1 2019 along with topline growth and lower restructuring integration expenses. In summary, this was a very good start to the year reflecting our sound strategy and solid execution. Let me now move to our segment results starting with generics where net revenue of $353 million was down $30 million from Q1 2019 but up $53 million sequentially. The prior year decline primarily reflects three dynamics: first, a $29 million reduction due to the divestment of our international operations and the shifting of oxymorphone to the specialty segment last year. Second, sales increase from the launch of generic versions of NuvaRing and Carafate, which offset lower sales of Levothyroxine Sodium and Diclofenac Gel due to competition that emerged late last year. Adjusted gross margin of 42.1% was stable relative to Q1 of 2019 and substantially ahead of Q4. The growth compared to Q4 of last year was driven by new product launches, higher manufacturing absorption, and operational efficiencies. As we have discussed, we're targeting 40% plus long-term gross margin for the generic business. And while we're pleased with the first quarter, there is more to be done before we achieve 40% plus in a sustainable way. Finally, adjusted operating income of $103 million reflects our topline growth, favorable product mix, focused investments, and some favorable expense timing. Let me now turn to our specialty segment with net revenue of $88 million in the quarter, up 38% compared to Q1 2019. Adjusting for the classification of oxymorphone, net revenues grew 14% driven by Rytary and Unithroid. This performance reflects the ability of our sales and marketing teams to stay productive while working remotely and shift activities such as sampling and training to a virtual basis. The decline from the prior quarter was expected and reflects seasonal factors. Adjusted gross margin of 74.6% was in line with our expectations, and the unfavorable variance the prior year is driven by the reclassification of oxymorphone, which has a lower margin profile. Finally, operating income of $39 million reflects topline growth, tight management of expenses, and seasonality compared to the prior quarter. Let me now move on to healthcare, with $58 million in net revenue in the quarter. This new segment only reflects third-party product sales, which account for approximately 80% of AvKARE's total sales. The Amneal products sold via this channel are reported in the generic segment consistent with prior years. As you may recall, we closed this acquisition on January 31. While this period includes just two months of sales, we believe the business benefited from strong demand from the Department of Defense and the DA to build inventory in anticipation of COVID-19 supply challenges. Let me now turn to our cash flow balance sheet and also discuss two discrete events in the quarter. First, as you can see, we ended Q1 with $407 million of cash. This reflects solid operational performance and temporarily borrowing $300 million from our $500 million ABL facility. This temporary borrowing was driven by an abundance of caution as COVID-19 led to substantial disruptions in the financial markets. As markets improved, we returned $200 million and expect to return the remaining $100 million in the next few months, providing markets continue to function properly. The second discrete event relates to a $110 million cash tax refund we expect to receive in the second half of 2020. This is driven by new legislation and IRS guidance, which allows companies to carry back net operating losses to offset taxable income and taxes paid over the last five years. Consequently, we plan to utilize approximately $330 million of existing net operating losses in support of this tax refund. Considering the discrete nature of this event, we have taken the prudent step to exclude it from our AvKARE operating cash flow guidance. Moving on to our balance sheet, we have substantial financial liquidity in excess of $600 million and no near-term debt maturities. In addition, continued strong financial performance and smart uses of cash will provide a natural reduction of leverage over time. Looking ahead, we remain comfortable with the financial guidance we provided in February. It may be helpful to provide some insight to our thinking. First, we have a broad generic product portfolio that is not overly concentrated in one or two products in a robust supply chain. Having said that, we have assumed a slowdown in the second quarter as patients may postpone preventive care or healthcare visits due to COVID-19. Second, we're not overly reliant on pharmaceuticals administered within hospitals, and our commercial teams plan to be opportunistic in pursuing new business and leveraging new product introductions. Third, AvKARE provides a stable platform for growth with long-term contracts and good visibility. Their business is typically five years, and we can increase volumes over time. Finally, we continue to focus on improving our efficiency and operating expenses. With that, let me turn the phone over to Chirag.

Thank you, Tasos. Before we open the floor to Q&A, I want to emphasize that we are relentlessly focused on reinvigorating the company and building a new Amneal 2.0. Despite the added complexity and uncertainty created by COVID-19, we delivered a strong quarter. Thanks to the hard work and resilience of our team, we are positioned to achieve our goals and drive growth in 2020 and beyond. Thank you. With that, I'll turn the call to the operator to open it up for questions.

Our first question comes from Greg Gilbert from SunTrust. Please go ahead.

Hi, good morning, guys, and welcome Tasos. I wanted to start with you Chirag. On your comments about a U.S. centric supply chain, how feasible and practical is it to have a more U.S. centric supply chain? And what do you plan to do as a company to make that happen in a bigger way than you already have? My follow-up will be for Chintu, since you brought up the first-to-file opportunity. Is there anything more you can say about that inhaled product? Presumably you filed it and we're not sued. Can you give us any more color about that? Thank you.

Thank you, Greg, and good morning. The U.S. centric supply chain, look, it took years to get to this level, this position where the supply chain is highly reliant, and there are reasons and you guys know the history for the last 50 years, how it moved overseas, with antibiotics in China, and a lot of finished goods production in India, then Europe and the U.S. not having much of API manufacturing. It is a long-term event. It's not going to happen overnight. But what we are hearing from Congress and the administration is that they do want to bring back certain essential medicines, maybe not to 100% capacity, but let's say 30%, 40%, or 50%. So we can, in case of an emergency, ramp up the production, and not be completely reliant on foreign sources. The essential drug list would probably include 50 products, 100 products; it would require incentives for the manufacturers to invest in the U.S. supply chain, and those cannot be temporary. They must be long-term and permanent changes. We, as Amneal, are well-positioned because we already have large production facilities here. We do not have API facilities; we do have API facilities in India and we would build those, whether it is fermentation sites or small molecules. Again, it will be a project that would have to start with the support of Congress and then continue on for three years, certain production; after that, five years, seven years, ten years, but we believe that in that timeframe, we can bring back certain capacities and capabilities as we need to train people and bring the skill sets here as well. Chintu, do you want to answer the FTF?

Sure. Hi, Greg. Good morning. As I mentioned in my opening remarks, we have procured the exclusive first-to-file status on one of our first inhalation products. We have not been sued as we can see from public events. So, it is a potential launch and approval. We have beautiful infrastructure in Ireland both for MDI and DPI and at an appropriate time, we will disclose details and do a press release on this product. But at this time, we are not disclosing the name of the product.

Should we think about this as a potential 2021 opportunity?

Yes.

Okay. Thanks, gentlemen. I'll get back in line.

Thank you, Greg.

The next question comes from Randall Stanicky from RBC. Please go ahead.

Great. Thanks, guys. Hey, Chirag. I want to pull up on the last question. You called out Amneal being one of the largest U.S. generic manufacturers. Is it your view that any economic incentives from the government could be limited to U.S.-domiciled companies? So that's the first question. And then Tasos on the generic gross margin coming in at 42%, can you get into some more detail on what you're expecting around some of the factors affecting margin this year? It sounds like you're still holding to that 40% target. Now, what are the factors that could push that generic gross margin higher? Thanks.

So, Randall, good morning. Yes, there will be certain incentives given to domestic companies, and this is all work in progress. We are part of a dialogue. But it's going to need more than just U.S. companies; it's going to need the companies that already have certain expertise and capabilities somewhere else to bring back production at a faster pace. The entire industry needs to work together to make this happen.

Hey, Randall, this is Tasos. So a couple of things. As you said, Q1 generic adjusted gross margin was 42%. Just to put it in context, that's essentially flat to the same period last year. We had overall price pressures that came in during the latter part of last year. Some of our key products launched last year face generic competition. Offsetting that were the launches of our new products, like generic Carafate and Sucralfate. Additionally, in Q1, we benefitted from favorable manufacturing absorption. Our manufacturing teams worked incredibly hard to keep up with the demand in the marketplace, which benefitted us in Q1. There may be slight offsets in Q2, but that's more of a timing issue from Q1 to Q2 regarding the generic gross margin. Overall, we feel optimistic about the gross margins. We're still aiming for meaningful progress in adjusted gross margin growth this year.

Yes, are you seeing the ability to take price in this current market as COVID-19 may have brought back some pricing power that the generics have lost over the last couple of years?

So, just to reiterate the gross margin increase, we focused on increasing our base business since August of last year, and that has ramped up. We continue to see higher efficiencies at every plant. While we are facing price increases from our API suppliers and freight costs, we are currently not able to pass those increases onto our customers. We are in dialogue with them, and hopefully, we will work to get that done. The market remains highly concentrated from the buying power, which creates challenges, but there seems to be a shift in customer focus towards securing reliable supply sources, which could improve the pricing environment in generics.

Got it. Thanks, guys.

The next question comes from Balaji Prasad from Barclays. Please go ahead.

Hi. Good morning, everyone. Thanks for taking the questions. Good to speak again, Chirag. So a couple of questions on the generic side. Firstly, since you commented on the pricing erosion, what kind of erosion did you see on your existing products versus what you're seeing in the last one or two years? And are you seeing any fundamental dynamics change between the buyer-seller relationships? Lastly, can you also comment on what you’ve thought of competitor launches into the guidance, especially for NuvaRing and Carafate, and how it may impact the range of providers? Thanks.

Hi, Balaji. Good morning. The price erosions we are seeing now are less than in prior years, and we hope that this trend continues because, frankly, there's not much room left. Otherwise, we would have to discontinue products. There are fundamental changes happening. Customers are now more focused on evaluating all their options regarding supply chains, considering long-term partnerships particularly with reliable partners. Longer-term contracts are in the works with more diversified options for API and finished products. All the questions are being asked about where Amneal stands with respect to these strengths. Regarding your third question on NuvaRing and Carafate, we had a solid first quarter and continue to build on it. With Carafate, we already have a great market share—almost 60%. For NuvaRing, we've built capacity to get up to 30%, which we will now start utilizing. The automated process has been approved by the FDA, and we've already begun producing more products.

The next question comes from Ami Fadia from SVB Leerink. Please go ahead.

Hi. Good morning. Thanks for my question. Just with regard to bringing manufacturing back to the U.S., can you help me quantify the increase in cost if manufacturing of certain products were brought to the U.S.? What's the appetite, either in the government or among key buyers, regarding that increased cost? Also, regarding timelines, you mentioned this is a long-term process, but is there an ability to respond faster on certain products or certain transitions, given your existing manufacturing footprint in the U.S.? Lastly, could you comment on your current thoughts regarding business development or partnerships? Where would you prioritize that? Would it be in the specialty side or generic, if you could sort of elaborate on that? Thank you.

Good morning, Ami. As I mentioned earlier, bringing U.S. manufacturing back requires certain capabilities and capacities to be built here. Congress is exploring various bills and working on a task force with the National Academies of Sciences to come up with a list of essential products. It will involve the entire industry and it's a large undertaking, but it is being considered seriously. The cost analysis would have to be undertaken, as material and raw material costs should remain similar regardless of where they are processed. However, operating costs in the U.S. and labor costs will be higher. We haven't quantified how many products would comprise this essential list, nor do we know how Amneal would play a role in it. It will require competitive processes and, importantly, Amneal is solely focused on the U.S. market, having a strong manufacturing position for finished dosage forms. The company is well-equipped to participate in the competitive process. Regarding business development, specialty remains our focus. We are looking for complementary assets to our movement disorder franchise as well as endocrinology. Our approach remains cautious, aiming for accretive smaller transactions that align with our current strategic initiatives in both generics and specialty areas.

The next question comes from Elliot Wilbur from Raymond James. Please go ahead.

Thanks. Good morning. I wanted to ask a couple of questions around future pipeline opportunities and specifically any potential disruptions to ongoing reviews. Just wondering if you're noticing any impact in terms of FDA timelines, especially regarding your higher barrier to entry or complex generic products. It certainly seems like the FDA continues to approve a lot of generics, but I wanted to hear your view on potential delays for more complicated products, considering issues such as the inability to conduct inspections. Also, could you give us an update on some pipeline products that you've talked about previously but haven't mentioned in the last couple of calls, specifically thinking about generic versions of Copaxone, Restasis, and whether or not you still see those as 2020 opportunities? Thanks.

Hi, Elliot. Yes, good morning. Regarding your first question, we have not seen any delays on our goal dates from the FDA. It is company-specific, and Amneal enjoys a strong quality track record over the last 18 years, which I believe goes a long way. Whether it’s a complex or regular product, we have not experienced any shifts in goal dates, and the FDA is working diligently. I want to thank the agency for their effort under the current circumstances, and we remain optimistic about our new launches for the remainder of the year. Regarding your second question on Copaxone and Restasis: Restasis is kind of in a regulatory limbo, so I can't currently comment on it. But regarding Copaxone, we are anticipating that to be a 2021 launch for us.

The next question comes from David Amsellem from Piper Sandler. Please go ahead.

Hi, Chintu. Good morning. Regarding Durezole, it's a very complex product with limited competition, given the high barriers to entry. We're tracking nicely with the FDA, and we expect a potential late Q4 or early 2021 launch for it. Regarding our injectable pipeline, we are excited about it; there are many areas within injectables today. We're working aggressively on various DEPO and complex injectable products, including many ophthalmic products. We are working to expand our manufacturing capabilities in the U.S. and India for our injectable pipeline. We have about 30 to 40 products in our pipeline for injectables, and we are looking at differentiated high-end injectable products that will provide value to patients and doctors.

The next question comes from Gary Nachman from BMO Capital Markets. Please go ahead.

Thanks. Good morning. First, can you quantify how much COVID-19 benefited in Q1? How much stockpiling was there in the quarter? How much could that reverse in the coming quarters? A bit more color on that would be helpful. And now that you've owned AvKARE for two months, what opportunities have you identified for that business? How much could you potentially drive incremental volume through Amneal's network for AvKARE? Thank you.

Good morning. Regarding COVID-19 support, it was a non-material impact on Q1. We were very socially responsible in managing our inventory to avoid stockpiling in the commercial marketplace. So there was no material impact in Q1 from COVID-19. Regarding AvKARE, they're set up to serve government contracts with generics, but are also looking to secure longer-term contracts with products such as biosimilars and specialized products. Additionally, there are initiatives being taken by BARDA to address potential shortages. While the unit dose business is small at this point, we are planning significant infrastructure development that will enable growth in the unit dose liquid sector by next year, paving multiple avenues for contributing to AvKARE’s growth. Thanks.

The next question comes from Chris Schott from JPMorgan. Please go ahead.

Great. Thanks so much for the questions. Just two for me. First, you mentioned some share recapture in the base businesses helping the generic results. Can you elaborate a bit more on the trends you're seeing there? More importantly, as we think about it, is there more opportunity to further improve share on the existing portfolio going forward? My second question was on biosimilars, and I think you referenced a desire to pursue licensing deals or partnership deals. Could you provide a bit more color there? Should we view these as near-term product launches or longer-term opportunities? Also, do you consider targeting assets that have already completed clinical programs, or could these partnerships result in a step-up in R&D spending? Thank you very much.

Good morning, Chris. Your first question on base business trends: we are experiencing steady growth in our integrated supply chain, especially as COVID-19 makes people want to diversify their sourcing of products. Customers are beginning to buy from multiple suppliers to ensure more stability rather than relying completely on one source, especially those outside the U.S. This gives us opportunities to expand our market share. Regarding biosimilars, we have three products in the pipeline, with launches expected in 2021 and 2022. We are methodically adding products as we learn more about the market dynamics, focusing primarily on oncology, as we aim to leverage our infrastructure built from specialty branded products. We seek select partnerships for growth without incurring much early-stage development risk.

I'm sorry, this concludes our question-and-answer session. I would like to turn the conference back over to Tasos Konidaris for any closing remarks.

I really want to thank our team for doing an incredible job in Q1 and staying focused on the business for the rest of the year. I also want to thank our investors for being with us and our customers that rely on our products and services. Thank you, and have a great night.

Thank you.

Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.