0001297184falseDE00012971842023-11-082023-11-08

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event Reported): November 8, 2023

Amphastar Pharmaceuticals, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware

001-36509

33-0702205

(State or Other Jurisdiction of
Incorporation)

(Commission File Number)

(I.R.S. Employer Identification
Number)

11570 6th Street

Rancho Cucamonga, California

91730

(Address of Principal Executive Offices)

(Zip Code)

Registrant's telephone number, including area code: (909) 980-9484

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

AMPH

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 2.02. Results of Operations and Financial Condition.

On November 8, 2023, Amphastar Pharmaceuticals, Inc. issued a press release announcing its financial results for the three months ended September 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits:

Exhibit No.

    

Description

99.1

Press release, dated November 8, 2023, issued by Amphastar Pharmaceuticals, Inc.

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: November 8, 2023

Amphastar Pharmaceuticals, Inc.

By:

/s/ WILLIAM J. PETERS

William J. Peters

Chief Financial Officer, Executive Vice President and Treasurer

EXHIBIT 99.1

Amphastar Pharmaceuticals Reports Financial Results for the Three Months Ended September 30, 2023

Reports Net Revenues of $180.6 Million for the Three Months Ended September 30, 2023

RANCHO CUCAMONGA, CA – November 8, 2023 – Amphastar Pharmaceuticals, Inc. (NASDAQ: AMPH) (“Amphastar” or the “Company”) today reported results for the three months ended September 30, 2023.

Third Quarter Highlights

Net revenues of $180.6 million for the third quarter
GAAP net income of $49.2 million, or $0.91 per share, for the third quarter
Adjusted non-GAAP net income of $61.9 million, or $1.15 per share, for the third quarter

Dr. Jack Zhang, Amphastar’s President and Chief Executive Officer, commented: “We are pleased to announce strong results driven by the success of our diabetes portfolio, particularly following the strategic acquisition of BAQSIMI® and the continued strength of our generic glucagon product. As we move forward, we anticipate that our strong pipeline will continue to drive growth in the future.”

Three Months Ended

Nine Months Ended

 

September 30, 

September 30, 

 

2023

2022

2023

2022

 

(in thousands, except per share data)

 

Net revenues

    

$

180,556

    

$

120,129

    

$

466,290

    

$

363,964

GAAP net income

$

49,222

$

15,874

$

101,378

$

57,473

Adjusted non-GAAP net income*

$

61,898

$

20,232

$

128,823

$

65,548

GAAP diluted EPS

$

0.91

$

0.30

$

1.91

$

1.09

Adjusted non-GAAP diluted EPS*

$

1.15

$

0.38

$

2.43

$

1.24


* Adjusted non-GAAP net income and adjusted non-GAAP diluted EPS are non-GAAP financial measures. Please see the discussion in the section entitled “Non-GAAP Financial Measures” and the reconciliation of GAAP to non-GAAP financial measures in Table III of this press release.

Third Quarter Results

Three Months Ended

September 30, 

Change

2023

2022

Dollars

    

%

(in thousands)

Product revenues:

    

    

    

    

Glucagon

$

29,514

$

14,224

$

15,290

107

%

Primatene MIST®

24,834

18,359

6,475

35

%

Epinephrine

20,199

19,502

697

4

%

Lidocaine

15,522

12,621

2,901

23

%

Enoxaparin

7,702

7,983

(281)

(4)

%

Phytonadione

7,449

13,978

(6,529)

(47)

%

Naloxone

4,715

6,818

(2,103)

(31)

%

Other finished pharmaceutical products

 

37,730

 

23,635

 

14,095

 

60

%

Total finished pharmaceutical products net revenues

$

147,665

$

117,120

$

30,545

 

26

%

API

4,190

3,009

1,181

39

%

Other revenues

28,701

28,701

N/A

Total product revenues, net

$

180,556

$

120,129

$

60,427

50

%

Changes in product revenues as compared to the third quarter of the prior year were primarily driven by:

Glucagon sales increased primarily due to an increase in unit volumes, as a result of two suppliers discontinuing their glucagon injection products at the end of 2022

Primatene MIST® sales increased due to an increase in unit volumes
Lidocaine sales increased primarily due to an increase in unit volumes, as a result of supplier shortages
Phytonadione sales decreased due to lower unit volumes, as a result of increased competition
Sales of naloxone decreased due to lower unit volumes, as a result of increased competition
Other finished pharmaceutical product sales increased primarily due to:
oHigher unit volumes of dextrose, atropine, calcium chloride, and sodium bicarbonate, due to increased demand caused by supplier shortages during the quarter
oA full quarter of sales for vasopressin, which was launched in August 2022
oLaunch of regadenoson in April 2023
Active Pharmaceutical ingredient (“API”) sales increased primarily due to the timing of customer purchases

Other revenues are comprised of net revenues from the sales of BAQSIMI® of $28.7 million during the three months ended September 30, 2023, which was recognized on a net basis similar to a royalty and based on Eli Lilly & Company’s (“Lilly”) reported BAQSIMI® net sales of $48.7 million. Currently, BAQSIMI® is being sold by Lilly on our behalf under the Transition Services Agreement (“TSA”) with Lilly, whereby Lilly would provide certain services to support the transition of the BAQSIMI® operations to us. Once Amphastar takes over the distribution of BAQSIMI®, Amphastar will recognize the entire revenue amount. This revenue recognition change is expected to be phased in by country during 2024.

Three Months Ended

September 30, 

Change

2023

2022

Dollars

    

%

(in thousands)

Net revenues

$

180,556

$

120,129

$

60,427

50

%

Cost of revenues

72,153

61,619

10,534

17

%

Gross profit

$

108,403

$

58,510

$

49,893

85

%

as % of net revenues

60%

49%

Changes in the cost of revenues and gross margin were primarily driven by:

Increased sales of higher-margin products such as glucagon and Primatene MIST®, the sales of ganirelix and vasopressin that were launched in 2022, as well as the sales of regadenoson, which we launched in April 2023
As a result of the TSA, the revenue relating to BAQSIMI® is recognized on a net basis within net revenues.

Three Months Ended

September 30, 

Change

2023

2022

Dollars

    

%

(in thousands)

Selling, distribution, and marketing

$

6,407

$

4,784

$

1,623

34

%

General and administrative

12,654

11,984

670

6

%

Research and development

16,664

18,514

(1,850)

(10)

%

Non-operating income (expense), net

(9,041)

(632)

(8,409)

NM

Selling, distribution, and marketing expenses increased primarily due to expenses related to the expansion of our sales force related to BAQSIMI®, as well as an increase in advertising spending for Primatene MIST®
General and administrative expenses increased primarily due to an increase in salary and personnel-related expenses, as well as costs related to the acquisition of BAQSIMI®, which was partially offset by a decrease in legal fees
Research and development expenses decreased due to:
Decrease in clinical trials expense
Decreases in materials and supply expense, as a result of a ramp-up of expenses in 2022 for AMP-018 and our insulin pipeline products
This decrease was partially offset by an increase in salary and personnel-related expenses
The change in non-operating expenses, net is primarily a result of:
Foreign currency fluctuations
Costs incurred in connection with the syndicated credit agreement we entered into with Wells Fargo Bank, as syndication agent, to finance the acquisition of BAQSIMI®

Mark-to-market adjustments relating to our interest rate swap contracts

Cash flow provided by operating activities for the nine months ended September 30, 2023 was $159.6 million.

Pipeline Information

The Company currently has three ANDAs on file with the FDA targeting products with a market size of over $3 billion, three biosimilar products in development targeting products with a market size of over $10 billion, and six generic products in development targeting products with a market size of over $8 billion. This market information is based on IQVIA data for the 12 months ended September 30, 2023. The Company is developing multiple proprietary products with injectable and intranasal dosage forms.

Amphastar’s Chinese subsidiary, ANP, currently has 17 Drug Master Files, or DMFs, on file with the FDA and is developing several additional DMFs.

Company Information

Amphastar is a bio-pharmaceutical company that focuses primarily on developing, manufacturing, marketing, and selling technically-challenging generic and proprietary injectable, inhalation, and intranasal products. Additionally, the Company sells insulin API products. Most of the Company’s finished products are used in hospital or urgent care clinical settings and are primarily contracted and distributed through group purchasing organizations and drug wholesalers. More information and resources are available at www.amphastar.com.

Amphastar’s logo and other trademarks or service marks of Amphastar, including, but not limited to Amphastar®, BAQSIMI®, Primatene MIST®, REXTOVY®, Amphadase®, and Cortrosyn®, are the property of Amphastar.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company is disclosing non-GAAP financial measures when providing financial results. The Company believes that an evaluation of its ongoing operations (and comparisons of its current operations with historical and future operations) would be difficult if the disclosure of its financial results were limited to financial measures prepared only in accordance with GAAP. As a result, the Company is disclosing certain non-GAAP results, including (i) Adjusted non-GAAP net income (loss) and (ii) Adjusted non-GAAP diluted EPS, which exclude amortization expense, share-based compensation, impairment charges, expenses related to our acquisition of BAQSIMI®, debt issuance costs, legal settlements, and other one-time events in order to supplement investors’ and other readers’ understanding and assessment of the Company’s financial performance because the Company’s management uses these measures internally for forecasting, budgeting, and measuring its operating performance. Whenever the Company uses such non-GAAP measures, it will provide a reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures. Investors and other readers are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP measures to their most directly comparable GAAP measures set forth below and should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP.

Conference Call Information

The Company will hold a conference call to discuss its financial results today, November 8, 2023, at 2:00 p.m. Pacific Time.

To access the conference call, dial toll-free (877) 407-0989 or (201) 389-0921 for international callers, ten minutes before the conference.

The call can also be accessed on the Investors page on the Company’s website at www.amphastar.com.

Forward-Looking Statements

All statements in this press release and in the conference call referenced above that are not historical are forward-looking


statements, including, among other things, statements relating to our expectations regarding future financial performance and business trends, our future growth, sales and marketing of our products, market size and expansion, product portfolio, product development, the timing of FDA filings or approvals, including the DMFs of ANP, the timing of product launches, acquisitions and other matters related to our pipeline of product candidates, the timing and results of clinical trials, the prospective benefits of the acquisition of BAQSIMI®, and other future events, including potential contingent consideration amounts and terms related to the acquisition of BAQSIMI®, the anticipated benefits of BAQSIMI® to our product portfolio, Amphastar’s commitment to strategically maximizing the commercial potential of BAQSIMI®, and other future events. These statements are not facts but rather are based on Amphastar’s historical performance and our current expectations, estimates, and projections regarding our business, operations, and other similar or related factors. Words such as “may,” “might,” “will,” “could,” “would,” “should,” “anticipate,” “predict,” “potential,” “continue,” “expect,” “intend,” “plan,” “project,” “believe,” “estimate,” and other similar or related expressions are used to identify these forward-looking statements, although not all forward-looking statements contain these words. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and assumptions that are difficult or impossible to predict and, in some cases, beyond Amphastar’s control. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in Amphastar’s filings with the Securities and Exchange Commission, including in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 1, 2023, in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May 9, 2023, and in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, filed with the SEC on August 8, 2023. In particular, there can be no guarantee that the acquisition of BAQSIMI® will be beneficial to our business, that any event, change or other circumstance could cause the results of the acquisition and integration of BAQSIMI® into our product portfolio to differ from Amphastar’s expectation, that all or any of the contingent consideration will be payable on the terms described herein or at all, or that Amphastar can reliably predict the impact of BAQSIMI® on its financial results or financial guidance. You can locate these reports through our website at http://ir.amphastar.com and on the SEC’s website at www.sec.gov. The forward-looking statements in this release speak only as of the date of the release. Amphastar undertakes no obligation to revise or update information or any forward-looking statements in this press release or the conference call referenced above to reflect events or circumstances in the future, even if new information becomes available or if subsequent events cause our expectations to change.

Contact Information:

Amphastar Pharmaceuticals, Inc.

Bill Peters

Chief Financial Officer

(909) 476-3416


Table I

Amphastar Pharmaceuticals, Inc.

Condensed Consolidated Statement of Operations

(Unaudited; in thousands, except per share data)

Three Months Ended

Nine Months Ended

 

September 30, 

September 30, 

 

    

2023

    

2022

    

2023

    

2022

 

Net revenues:

Product revenues, net

$

151,855

$

120,129

$

437,589

$

363,964

Other revenues

28,701

28,701

Net revenues

    

180,556

    

120,129

    

466,290

    

363,964

Cost of revenues

 

72,153

 

61,619

 

211,309

 

186,272

Gross profit

 

108,403

 

58,510

 

254,981

 

177,692

Operating expenses:

Selling, distribution, and marketing

 

6,407

 

4,784

 

20,234

 

16,059

General and administrative

 

12,654

 

11,984

 

38,418

 

34,433

Research and development

 

16,664

 

18,514

 

53,322

 

57,535

Total operating expenses

 

35,725

 

35,282

 

111,974

 

108,027

Income from operations

 

72,678

 

23,228

 

143,007

 

69,665

Non-operating income (expenses), net

 

(9,041)

 

(632)

 

(12,993)

 

5,115

Income before income taxes

 

63,637

 

22,596

 

130,014

 

74,780

Income tax provision

 

14,025

 

6,559

 

27,160

 

16,187

Net income before equity in losses of unconsolidated affiliate

49,612

16,037

102,854

58,593

Equity in losses of unconsolidated affiliate

(390)

(163)

(1,476)

(1,120)

Net income

$

49,222

$

15,874

$

101,378

$

57,473

Net income per share:

Basic

$

1.01

$

0.32

$

2.10

$

1.18

Diluted

$

0.91

$

0.30

$

1.91

$

1.09

Weighted-average shares used to compute net income per share:

Basic

 

48,701

 

48,904

48,368

48,635

Diluted

 

53,921

 

52,788

52,997

52,665


Table II

Amphastar Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(Unaudited; in thousands, except share data)

    

September 30, 

    

December 31, 

2023

2022

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

266,778

$

156,098

Restricted cash

4,259

235

Short-term investments

33,098

19,664

Restricted short-term investments

 

2,200

 

2,200

Accounts receivable, net

 

118,990

 

88,804

Inventories

 

109,978

 

103,584

Income tax refunds and deposits

 

1,506

 

171

Prepaid expenses and other assets

 

6,196

 

7,563

Total current assets

 

543,005

 

378,319

Property, plant, and equipment, net

 

280,836

 

238,266

Finance lease right-of-use assets

610

753

Operating lease right-of-use assets

32,666

25,554

Investment in unconsolidated affiliate

1,026

2,414

Goodwill and intangible assets, net

 

619,351

 

37,298

Long-term investments

972

Other assets

 

25,299

 

20,856

Deferred tax assets

 

40,868

 

38,527

Total assets

$

1,544,633

$

741,987

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$

222,719

$

84,242

Income taxes payable

 

31,092

 

4,571

Current portion of long-term debt

 

433

 

3,046

Current portion of operating lease liabilities

3,719

3,003

Total current liabilities

 

257,963

 

94,862

Long-term reserve for income tax liabilities

 

7,225

 

7,225

Long-term debt, net of current portion and unamortized debt issuance costs

 

638,206

 

72,839

Long-term operating lease liabilities, net of current portion

30,199

23,694

Deferred tax liabilities

 

201

 

144

Other long-term liabilities

 

15,699

 

14,565

Total liabilities

 

949,493

 

213,329

Commitments and contingencies

Stockholders’ equity:

Preferred stock: par value $0.0001; 20,000,000 shares authorized; no shares issued and outstanding

 

 

Common stock: par value $0.0001; 300,000,000 shares authorized; 59,220,178 and 47,898,466 shares issued and outstanding as of September 30, 2023 and 58,110,231 and 48,112,069 shares issued and outstanding as of December 31, 2022, respectively

 

6

 

6

Additional paid-in capital

 

477,880

 

455,077

Retained earnings

 

373,102

 

271,723

Accumulated other comprehensive loss

 

(8,411)

 

(8,624)

Treasury stock

 

(247,437)

 

(189,524)

Total equity

595,140

528,658

Total liabilities and stockholders’ equity

$

1,544,633

$

741,987


Table III

Amphastar Pharmaceuticals, Inc.

Reconciliation of Non-GAAP Measures

(Unaudited; in thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2023

    

2022

    

2023

    

2022

GAAP net income

    

$

49,222

    

$

15,874

    

$

101,378

    

$

57,473

Adjusted for:

Intangible amortization

 

6,168

 

392

 

6,651

 

1,088

Share-based compensation

 

4,644

 

4,299

 

15,620

 

13,556

Impairment of long-lived assets

 

474

 

 

3,174

 

Expenses related to BAQSIMI® acquisition

2,182

3,682

Debt issuance costs

3,019

6,043

Litigation settlements

800

(4,929)

Income tax provision on pre-tax adjustments

 

(3,811)

 

(1,133)

 

(7,725)

 

(1,640)

Non-GAAP net income

$

61,898

$

20,232

$

128,823

$

65,548

Non-GAAP net income per share:

Basic

$

1.27

$

0.41

$

2.66

$

1.35

Diluted

$

1.15

$

0.38

$

2.43

$

1.24

Weighted-average shares used to compute non-GAAP net income per share:

Basic

 

48,701

 

48,904

 

48,368

 

48,635

Diluted

 

53,921

 

52,788

 

52,997

 

52,665

Three Months Ended September 30, 2023

Selling,

General

Research

Non-operating

Cost of

distribution

and

and

income

Income

    

revenue

    

and marketing

    

administrative

    

development

    

(expense), net

    

tax provision

GAAP

$

72,153

$

6,407

$

12,654

$

16,664

$

(9,041)

$

14,025

Intangible amortization

(6,149)

34

(53)

Share-based compensation

(1,004)

(213)

(2,975)

(452)

Impairment of long-lived assets

(470)

(4)

Expenses related to BAQSIMI® acquisition

(357)

1,825

Debt issuance costs

3,019

Income tax provision on pre-tax adjustments

3,811

Non-GAAP

$

64,530

$

6,194

$

9,352

$

16,159

$

(4,197)

$

17,836

Three Months Ended September 30, 2022

Selling,

General

Research

Non-operating

Cost of

distribution

and

and

income

Income

    

revenue

    

and marketing

    

administrative

    

development

    

(expense), net

    

tax provision

GAAP

$

61,619

$

4,784

$

11,984

$

18,514

$

(632)

$

6,559

Intangible amortization

(206)

(186)

Share-based compensation

(915)

(178)

(2,810)

(396)

Litigation settlements

(800)

Income tax provision on pre-tax adjustments

1,133

Non-GAAP

$

60,498

$

4,606

$

8,188

$

18,118

$

(632)

$

7,692


Nine Months Ended September 30, 2023

Selling,

General

Research

Non-operating

Cost of

distribution

and

and

income

Income

    

revenue

    

and marketing

    

administrative

    

development

    

(expense), net

    

tax provision

GAAP

$

211,309

$

20,234

$

38,418

$

53,322

$

(12,993)

$

27,160

Intangible amortization

(6,582)

(16)

(53)

Share-based compensation

(3,868)

(649)

(9,323)

(1,780)

Impairment of long-lived assets

(3,170)

(4)

Expenses related to BAQSIMI® acquisition

(1,857)

1,825

Debt issuance costs

6,043

Income tax provision on pre-tax adjustments

7,725

Non-GAAP

$

197,689

$

19,585

$

27,218

$

51,489

$

(5,125)

$

34,885

Nine Months Ended September 30, 2022

Selling,

General

Research

Non-operating

Cost of

distribution

and

and

income

Income

    

revenue

    

and marketing

    

administrative

    

development

    

(expense), net

    

tax provision

GAAP

$

186,272

$

16,059

$

34,433

$

57,535

$

5,115

$

16,187

Intangible amortization

(660)

(428)

Share-based compensation

(3,238)

(540)

(8,389)

(1,389)

Litigation settlements

(800)

(5,729)

Income tax provision on pre-tax adjustments

1,640

Non-GAAP

$

182,374

$

15,519

$

24,816

$

56,146

$

(614)

$

17,827