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AP

Amphastar Pharmaceuticals, Inc. (AMPH)·Q1 2020 Earnings Summary

Executive Summary

  • Q1 2020 delivered solid top-line and margin expansion: net revenues $84.69M (+6% YoY) and gross margin 43% (vs 39% YoY), driven by Primatene Mist and hospital products; GAAP diluted EPS $0.08, adjusted diluted EPS $0.17 .
  • Primatene Mist sales surged to $12.88M (from $2.90M YoY), boosted by DTC advertising, Amazon launch in late March, and ~$1–$2M “pantry loading” tied to COVID-19; gross margins benefited as Primatene carries structurally higher margins .
  • Management maintained prior-year financial assumptions despite COVID-19, cited strong demand into April and an imminent launch of epinephrine multi-dose vial with 180-day exclusivity “within weeks” (near-term catalyst) .
  • Pipeline timing mixed: AMP-002 GDUFA date shifted to Q4’20/Q1’21 (delay), while intranasal naloxone NDA resubmission moved to next year; R&D spend to increase as trials continue with minor COVID delays .
  • Shareholder returns continued: $10.9M stock repurchased in Q1; cash from operations $1.5M; balance sheet cash $54.85M at 3/31/20 .

What Went Well and What Went Wrong

What Went Well

  • Primatene Mist momentum: “Sales have continued to increase because of the rising consumer awareness… Additionally, consumer pantry loading caused an uptick… approximately $1 million to $2 million” and Amazon launch in late March .
  • Margin expansion from mix: gross margin up to 43%, “primarily driven by increased sales of Primatene Mist and phytonadione,” with Primatene margins magnified by pre-launch expensed components .
  • Near-term product catalyst: recent FDA approval and planned reintroduction of epinephrine injection multi-dose vial with 180-day exclusivity; launch “within weeks,” high-margin product in a ~$131M+ market .

What Went Wrong

  • Enoxaparin declined 37% YoY to $9.17M as temporary 2019 competitor shortages ended; lower volumes and price weighed on category revenues .
  • AMP-002 timing pushed out: mid-cycle review went well, but GDUFA date shifted to Q4’20 or Q1’21 if inspection needed (timeline extension) .
  • Clinical trials experienced minor COVID-related enrollment delays of “a month or two,” and new trials could not start during restrictions (execution risk) .

Financial Results

MetricQ3 2019Q4 2019Q1 2020
Revenue ($USD Millions)$80.14 $83.38 $84.69
Gross Profit ($USD Millions)$35.25 $33.38 $36.82
Gross Margin (%)44% 40% 43%
Income from Operations ($USD Millions)$2.40 -$0.24 $7.48
GAAP Diluted EPS ($USD)$0.03 -$0.02 $0.08
Adjusted Diluted EPS ($USD)$0.10 $0.07 $0.17
Net Income Attributable to Amphastar ($USD Millions)$1.31 -$1.03 $3.95

Segment/product revenues (Q1 2020 vs Q1 2019)

ProductQ1 2019 ($USD Millions)Q1 2020 ($USD Millions)
Primatene Mist$2.90 $12.88
Phytonadione$10.12 $11.03
Lidocaine$11.98 $10.66
Enoxaparin$14.48 $9.17
Naloxone$7.36 $8.88
Epinephrine$2.68 $3.99
Other finished pharma$25.02 $24.70
Total finished pharma$74.54 $81.30
API$5.25 $3.39
Total net revenues$79.79 $84.69

KPIs and cash/returns

KPIQ4 2019Q1 2020
Cash from Operations ($USD Millions)$5.7 $1.5
Share Repurchases ($USD Millions)$13.8 $10.9
Cash & Equivalents ($USD Millions)$73.69 $54.85
Gross Margin (%)40% 43%

Drivers (Q1 vs YoY): Primatene Mist up 344% amid DTC campaign and pantry loading; naloxone/phytonadione volumes higher; epinephrine volumes and ASP higher; enoxaparin down on normalization post-2019 shortage . Operating expense mix: SD&M up on Primatene marketing; G&A down on lower legal post-litigation settlements; R&D up on inhalation ANDAs and insulin programs .

Non-GAAP adjustments: adjusted net income excludes amortization, share-based comp, impairment, and tax effects; reconciliations provided (adjusted diluted EPS $0.17 vs GAAP $0.08) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Epinephrine multi-dose vial launchQ2 2020GDUFA date in Q2’20; confident on approval “Launching within weeks”; manufacturing begun; 180-day exclusivity Timing confirmed/accelerated to immediate launch
AMP-002 (complex injectable) GDUFAQ4 2020 / Q1 2021Q2 2020 GDUFA date (first-cycle review) Shifted to Q4’20 or Q1’21 if inspection needed Delayed
Intranasal naloxone NDA resubmissionFY 2020/2021Could resubmit NDA this year (pending meeting) Plan to resubmit next year Delayed
Primatene Mist DTC advertising spendFY 2020Increase DTC (TV/radio/digital); leverage improves vs sales Mid- to high single-digit $M; shift toward news networks; Amazon channel live Maintained/increased emphasis
2020 outlook assumptionsFY 2020Sales growth driven by Primatene + ANDAs; margin expansion; rising R&D Maintain prior assumptions; Q2 started strong; R&D to increase; no formal numeric guidance Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3/Q4 2019)Current Period (Q1 2020)Trend
DTC advertising for Primatene MistTV/radio campaign started Jul’19; Walmart launch drove Q4 sales; targeting cost-effective national slots Budget mid- to high single-digit $M; more news networks; Amazon launch late March; broader retail expansion Intensifying spend; expanding channels
Supply chain/COVID operational impactStockpiled APIs; US manufacturing insulates operations “Minimal to almost no impact”; facilities operating; strategic stockpiling of ≥2 years critical APIs Stable operations; risk mitigation holding
Product performance: Primatene MistStrong growth; $9M in Q4; runway to $65M run-rate by 2021 $12.88M in Q1; ~$1–$2M pantry loading; trajectory still upward ex-spike Accelerating baseline demand
Epinephrine injection multi-dose vialMinor CRL responded; Q2 GDUFA; expected sole generic Approval received; 180-day exclusivity; launch “within weeks”; market ~$131M+ Near-term launch; high-margin contributor
Regulatory/pipeline (AMP-001/AMP-002)Two complex injectables; Q3/Q4 GDUFA (AMP-001); Q2 GDUFA (AMP-002) AMP-002 GDUFA pushed to Q4’20/Q1’21; expectation of limited competition post-approval Timing slippage; competition likely limited
R&D executionIncreasing spend; inhalation + insulin trials ongoing R&D to increase; trials continue with 1–2 month COVID delays; FDA biosimilar guidance reduces immunogenicity trial needs Continued investment; manageable delays

Management Commentary

  • “The first quarter of 2020 was very strong… strong sales from Primatene Mist and… hospital products, including Sodium Bicarbonate… filled in our newly approved finished product facility in South El Monte” .
  • “We… stand to benefit… from epinephrine injection multi-dose vial… a $131 million opportunity… received 180 days of market exclusivity as the first generic filer” .
  • “There is very minimal to almost no impact on the operation of Amphastar… all of our manufacturing facilities are operating at normal status… strategic stockpiling of at least two years of… critical API” .
  • “Most of our products saw increased demand at the end of the quarter and into April… we maintain what we said on our last call… second quarter started as strong as the first one ended” .

Q&A Highlights

  • Primatene Mist DTC spend: budget mid- to high single-digit $M; increased focus on news networks; expanding into large grocery chains; Amazon live .
  • Epinephrine multi-dose vial: manufacturing and marketing started; launch “within weeks”; capacity sufficient; high-margin product in $130–$200M market .
  • COVID impact on Primatene: ~$1–$2M pantry-loading spike; baseline trajectory continues upward ex-spike .
  • Expenses: no scaling back; R&D spend will increase; leverage expected as Primatene sales grow .
  • Clinical trials: minor delays (1–2 months) and slower enrollment; ongoing trials continue; new trial starts paused during restrictions .
  • Competitive dynamics: anticipate naloxone competition from Dr. Reddy’s; impact uncertain .
  • Complex injectables: AMP-002 GDUFA delayed; management expects limited competition given complexity .
  • Channel fill: Primatene growth is end-customer demand; “no channel fill” .

Guidance Changes

See table above; notably, near-term epinephrine launch confirmed, while AMP-002 and intranasal naloxone timelines extended .

Estimates Context

  • Wall Street consensus from S&P Global for Q1 2020 EPS and revenue was unavailable at the time of this analysis due to a temporary data limit; as a result, comparisons vs consensus cannot be provided. Values would normally be retrieved from S&P Global.
MetricQ1 2020 ActualConsensus (S&P Global)Surprise
GAAP EPS ($)$0.08 N/AN/A
Revenue ($USD Millions)$84.69 N/AN/A

Key Takeaways for Investors

  • Primatene Mist has transitioned from launch to a durable, advertising-driven growth brand; with Amazon entry and expanded retail, expect continued mix-driven margin benefits .
  • Epinephrine multi-dose vial launch with 180-day exclusivity is a near-term earnings catalyst; management indicates high margin and adequate capacity to capture share in a growing market .
  • Enoxaparin headwind normalizes post-2019 shortage; diversified hospital portfolio and new capacity (sodium bicarbonate) support IMS category resilience .
  • Operating discipline evident: G&A down on resolved litigation; R&D ramp supports inhalation and insulin pipelines; minor COVID trial delays manageable .
  • Balance sheet and buybacks: $54.85M cash, $10.9M repurchases in Q1, providing flexibility; cash generation moderated in Q1 but demand trends into Q2 are favorable .
  • Trading setup: near-term focus on epinephrine launch trajectory and Primatene weekly sales; medium-term monitors include AMP-001/002 approvals and naloxone competitive impact .
  • With formal numeric guidance absent, use observed demand momentum and upcoming launches to frame estimate revisions once consensus data is available .

All figures and statements are sourced from Amphastar’s Q1 2020 8-K and earnings calls, Q4 2019/Q3 2019 materials, with citations provided.