Pavan Patel

Pavan Patel asked for clarification on Amphastar's 2026 gross margin expectations, specifically how BAQSIMI growth might offset pricing pressures on glucagon, epinephrine, and other legacy products, and the relative magnitude of these factors. He also questioned the planned use of Amphastar's $300 million cash position for stock buybacks versus business development, seeking insight into the priority between these two capital allocation strategies.

Answer

Bill Peters, CFO, detailed that while BAQSIMI growth and the discontinuation of unprofitable international sales would positively impact gross margins, these gains would be largely offset by significant sales declines in high-margin products like glucagon, epinephrine, and Cortrosyn, along with higher input costs and lower-margin API sales from the China subsidiary. Regarding capital allocation, Bill Peters mentioned that last year's buybacks were around $75 million, with $15 million remaining on the current authorization, and future buybacks would depend on the proximity and need for cash for business development opportunities, which could slow down buyback activity.

Pavan Patel asked for a deeper understanding of the expected lower gross margins in 2026, specifically how BAQSIMI growth might offset pricing pressure on glucagon, epinephrine, and other legacy products, and the relative sizing of these pushes and pulls. He also inquired about the allocation of the $300 million cash position between share buybacks and business development, and which is a higher priority.

Answer

Bill Peters, CFO, explained that while BAQSIMI growth (especially in the U.S. and the discontinuation of negative-margin international sales) would help gross margins, this would be offset by significant reductions in high-margin products like glucagon, Epi vial, and Cortrosyn, along with increased input costs from suppliers and lower-than-corporate-average gross margins from increased API sales. Regarding capital allocation, he noted $75 million in buybacks last year as a high end, with $15 million remaining on the current authorization, and that buybacks might slow if cash is needed for business development opportunities.

Pavan Patel, on behalf of Jason Gerberry at Bank of America, asked for guidance on the gross margin trajectory for the second half of the year and clarification on whether the decline in epinephrine PFS sales was due to pricing pressure or market share loss.

Answer

CFO Bill Peters explained that margins are expected to contract due to increased price competition for glucagon, absent new product launches. Regarding epinephrine, he stated the sales decline was caused by a combination of both pricing erosion and a drop in unit volume, and that this competition is already reflected in the current quarter's results.

Pavan Patel asked about the primary driver for lower epinephrine revenue and how the company plans to offset this pressure. He also questioned the reasons for BAQSIMI's year-over-year sales decline, the nature of its competitive headwinds, and the specifics of the planned sales force expansion.

Answer

CFO William Peters attributed the epinephrine pressure to increased competition in the multi-dose vial market, which was partly offset by new prefilled syringe sales in Canada. For BAQSIMI, he clarified the year-over-year decline was due to a temporary European supply shortage and lower U.S. net pricing from higher wholesaler fees, not competitive issues. He confirmed a larger, outsourced sales force expansion is planned for January, with some costs occurring in Q4.

Pavan Patel questioned the implications of the median age of new AGAMREE enrollees dropping by one year, specifically regarding its use as a first-line steroid and its impact on long-term patient durability. He also sought clarification on the pushback encountered in the 15% of AGAMREE reimbursement cases and the potential for the 85% approval rate to increase in 2026.

Answer

Jeff Del Carmen, EVP and Chief Commercial Officer, explained that the lower median age (closer to 11) is significant as younger patients show greater adherence and longer-term benefits, with about 10% of new enrollees being first-time steroid users. Rich Daly, President and CEO, noted that dosing remains consistent. Regarding reimbursement, Jeff Del Carmen stated that the approval rate is closer to 90%, with pushback primarily due to step-edit requirements, which are managed with bridge treatment, and expressed confidence in continued strong rates.

Pavan Patel from Bank of America inquired about the implications of the median age of new AGAMREE enrollees dropping by one year, specifically regarding first-line use and long-term patient durability. He also asked for details on the pushback seen in the remaining 15% of AGAMREE reimbursement cases and expectations for future approval rates.

Answer

Jeff Del Carmen, EVP and Chief Commercial Officer, confirmed AGAMREE's strong reimbursement approval rates (closer to 90%), noting that remaining pushbacks are primarily step edits, which are managed with bridge treatment. He explained that the decrease in median age to around 11 years is significant as younger patients show greater adherence and longer-term benefits, with about 10% of patients using AGAMREE as their first steroid. Rich Daly, President and CEO, confirmed that dosing remains consistent despite the younger age, which is positive for persistency.

Pavan Patel, on for Jason Gerberry, asked about the new indications being pursued for AGAMREE and whether the company's M&A strategy includes gene therapy assets to further revenue diversification.

Answer

Chief Medical Officer Dr. Gary Ingenito stated that the company is focused on further characterizing AGAMREE's unique corticosteroid profile to assess its potential in other rare diseases that could benefit from its immunosuppressive qualities. CEO Richard Daly addressed M&A, confirming that Catalyst tracks gene therapy closely. He outlined a cautious approach, stating any potential deal must be close to market, have very clean CMC (Chemistry, Manufacturing, and Controls), and address a clear, unmet need, given the challenging uptake seen with other gene therapies.

Pavan Patel asked if initiating 700 patients from the ONAPGO queue would cause a temporary drag on gross-to-net in the first half of 2026 due to bridge supply or quick start programs. He also questioned if ONAPGO sales could exceed $70 million with the current supplier's capacity and the commercial strategy for Zurzuvae in 2026, focusing on repeat prescribers versus expanding new prescribers.

Answer

Jack A. Khattar, President and CEO, reiterated that ONAPGO's gross-to-net is expected to be 20-30%, with Q1 typically higher due to incentives. He stated that while exceeding $70 million in ONAPGO sales is a potential, it's not currently reflected in the guidance. For Zurzuvae, he emphasized that the product is still in its launch phase, focusing on market building, education, and driving both new and repeat prescribers, noting high satisfaction among the 70% of prescribers who are repeat writers.

Pavan Patel asked if initiating the 700 patients from the ONAPGO queue would cause a temporary drag on gross-to-nets in H1 2026 due to bridge supply or quick start programs. He also questioned if more than $70 million in ONAPGO sales is possible with the current supplier alone in 2026. For Zurzuvae, he asked if the 2026 commercial efforts would prioritize deeper penetration among existing repeat prescribers or expanding the absolute number of new OBGYN/psychiatrist writers.

Answer

Jack A. Khattar (President and CEO, Supernus Pharmaceuticals) indicated ONAPGO gross-to-nets would likely be 20-30%, with Q1 typically higher due to incentives. He stated that based on current information, the $45 million-$70 million guidance for ONAPGO is the current expectation, without comfort to project above $70 million with the current supplier. For Zurzuvae, he explained the focus is still on market building, educating consumers (DTC efforts), and expanding both new prescribers and frequency among repeat writers, noting high prescriber satisfaction.

Pavan Patel asked about the expected steady-state gross-to-net discount for full-year 2026, considering Q1 pressures, and what favorable dynamics might offset these. He also sought clarification on the drivers behind the increased conviction for the $2 billion+ peak sales target, specifically if it's due to expanding prescriber breadth, deeper engagement with top-tier writers, or the addition of new key account leaders.

Answer

Jeffrey Farrow, Chief Financial Officer and Chief Strategy Officer, projected Q1 gross-to-net pressure, followed by a stepwise decrease in Q2 to settle within the 43-45% range. Bobak Azamían, CEO and Chairman, attributed the raised peak sales target to XDEMVY's breakthrough performance over two years, its low market penetration (less than 10% of 25 million Americans), the transformation of eye care practice, and consistent, flawless commercial execution across education, access, and evidence.

Pavan Patel inquired about the expected steady-state gross-to-net discount for full-year 2026 and the factors driving the increased conviction for XDEMVY's peak sales target of over $2 billion, specifically asking if it's due to expanding prescriber breadth or deeper utilization by top-tier writers.

Answer

Jeffrey Farrow, Chief Financial Officer and Chief Strategy Officer, stated that the gross-to-net discount is expected to return to the 43%-45% range by mid-2026 after Q1 pressure. Bobak Azamian, Chief Executive Officer and Chairman, attributed the increased $2+ billion peak sales conviction to XDEMVY's breakthrough performance, low market penetration (less than 10% of 25 million Americans), transformed eye care practice, and flawless commercial execution across education, access, and evidence.

Pavan Patel inquired about the market reception of new clinical data (Orion, Ersa, Rhea) and requested details on the upcoming Phase II trial design for TP-04 in Ocular Rosacea.

Answer

CCO Aziz Mottiwala reported a positive reception to the new data at recent conferences, noting it encourages physicians to diagnose more and consider XDEMVY for broader patient segments like dry eye. COO Seshadri Neervannan explained that the Ocular Rosacea trial will focus on objective measures like prominent blood vessels and erythema, which are key diagnostic features and endpoints aligned with the FDA. CEO Bobak Azamian emphasized the high physician enthusiasm for an Ocular Rosacea treatment.

Pavan Patel asked how Organon plans to bridge the $275 million in annualized cost savings to a flat 2026 adjusted EBITDA, questioning if the savings are absorbed by gross margin deterioration or reinvestments in VTAMA and the Nexplanon REMS program. He also inquired about potential volume bottlenecks or certification friction for Nexplanon's REMS program in H2 2026 and if distributor registration provides cleaner data.

Answer

Matt Walsh, Organon's CFO, explained that a portion of the gross cost savings was reinvested into growth drivers like VTAMA, and further OpEx savings are planned for 2026 to offset gross margin compression. Juan Camilo Arjona Ferreira, Organon's Head of R&D, expressed confidence in maintaining Nexplanon volume through the REMS program due to planned recertification efforts and minimal physician requirements.

Pavan Patel asked how Organon's $275 million in annualized cost savings are being absorbed, given the flat 2026 adjusted EBITDA guidance, and whether the Nexplanon REMS program launching in 2026 assumes any volume bottlenecks or certification friction.

Answer

Matt Walsh, Organon's Chief Financial Officer, clarified that a portion of the gross cost savings is being reinvested into growth drivers like Vtama, while the company continues aggressive OpEx management. Juan Camilo Arjona Ferreira, Organon's Head of R&D, expressed confidence that the REMS program's grace period and planned efforts would prevent significant volume bottlenecks or friction.

Pavan Patel, on behalf of Jason Gerberry, asked for specifics on the FDA's concerns in the RTF letter for pitolisant in IH and how that informs the new Pitolisant HD trial. He also asked for evidence supporting that higher doses lead to greater efficacy.

Answer

CEO Dr. Jeffrey Dayno stated the RTF was based on the primary endpoint of the INTUNE study not being met, a conservative view that discounted the totality of evidence. He said the focus is now on the Pitolisant HD trial, which will use a parallel-group design. Dr. Kumar Budur added that evidence from all prior pitolisant trials shows a clear dose-response, and a Phase 1b study showed doses up to 180mg were well-tolerated.