Amphastar Pharmaceuticals, Inc. 2026 Q2 Earnings Call

Good afternoon, everyone. Thank you for joining Amphastar's second quarter 2026 earnings call. Earlier today, we reported the financial results for the second quarter ended June thirtieth, 2026, which are available on the Investors page of our website. The second quarter was marked by strong execution across each of our strategic growth pillars. We observed continued demand across our commercial portfolio. We expanded our manufacturing capabilities and advanced both our development pipeline and regulatory programs. As a result, we generated improved financial performance during the second quarter. Revenue increased to approximately $184 million, reflecting both sequential and year-over-year growth. Profitability also improved significantly from the first quarter, driven by increased revenue, margin expansion, and enhanced operating performance. Despite a dynamic operating environment, our strategic priorities have remained consistent.

We continue to focus on building a diversified pharmaceutical company supported by three complementary growth pillars. First, expanding and optimizing our branded and differentiated commercial portfolio. Second, advancing our pipeline of complex generic and biosimilar products. Third, progressing our proprietary development programs that have the potential to create significant long-term value. We believe this diversified business model provides multiple avenues for growth, enhances resilience, and reduces our dependence on any single product, market, or revenue stream. Turning to the first pillar of our growth strategy, expanding and optimizing our branded and differentiated commercial portfolio. We continued to make meaningful progress during the second quarter. Products such as BAQSIMI and Primatene MIST remain central to our long-term strategy and continue to demonstrate strong consumer demand. BAQSIMI remained an important contributor to our business.

Total prescriptions increased approximately 17% compared with the second quarter of last year, demonstrating continued growth in patient demand. BAQSIMI's net sales were approximately $45.5 million, a decrease of approximately 3% compared to the prior year quarter. The difference primarily reflects pricing, rebates, and commercial dynamics. Importantly, strong prescription growth continues to reinforce our confidence in the long-term strength of the franchise. In June, we also completed the third contract year following our acquisition of BAQSIMI from Eli Lilly. During the contract year, BAQSIMI generated $178.3 million in net sales, exceeding the $175 million threshold and triggering our first milestone payment to Lilly. Achieving this milestone reflects the continued strength of the franchise and the successful execution of our commercial strategy since acquiring the product.

Our focus remains on expanding patient access, supporting continued prescription growth, and managing the business with disciplined commercial execution to maximize long-term value. Primatene MIST continued to demonstrate strong consumer demand during the quarter. Each in-store sales increased compared with both the prior year quarter and the first quarter of 2026, reflecting continued brand strength and market penetration. While reported net sales declined, the decrease was largely attributable to consumer ordering patterns and the timing of shipments associated with pricing discussions with certain retailers. We believe these were temporary channel-related effects rather than a change in consumer demand. Retail performance remained healthy throughout the quarter, reinforcing our confidence in the Primatene MIST franchise and the effectiveness of our marketing investments and commercial execution. At the same time, performance across our broader portfolio reflected the competitive dynamics that are characteristic of the generic pharmaceutical market.

glucagon sales declined compared with the prior year as a result of increased competition. We believe this underscores the importance of continuing to diversify our commercial portfolio and advance new products, which can create multiple sources of growth and enhance the resilience of our business over the long term. Furthermore, during the quarter, our manufacturing facility, Armstrong, benefited from the successful launch of our ipratropium bromide product in April. The launch further demonstrates our ability to advance technically complex generic products from development through regulatory approval and into commercial production, reinforcing a core capability that differentiates our platform. Based on early demand and the current competitive landscape, we believe ipratropium bromide represents an attractive long-term opportunity for Amphastar. We continue to invest strategically across our U.S. manufacturing network to strengthen quality and efficiency, expand automation and capacity, and prepare for upcoming pipeline products.

As policymakers and consumers place greater emphasis on domestic pharmaceutical manufacturing and supply chain resilience, we believe our U.S.-based manufacturing footprint, combined with our vertically integrated development and commercialization capabilities, represents a meaningful competitive advantage. These investments not only support our current commercial portfolio, but also provide a strong foundation for future product launches and sustainable long-term growth. IMS, one of our subsidiaries, recently received an FDA warning letter related to the FDA inspection conducted in December 2025. Since the inspection, IMS has continued implementing corrective actions. We have responded to the FDA in a timely manner regarding our remediation plan and continue to work closely with the agency to address the items identified in the warning letter. The warning letter does not require IMS to stop manufacturing or distributing its products.

While the remediation effort will require additional resources, at this time, we do not currently anticipate a material adverse effect on Amphastar's overall business operations, commercial portfolio, development pipeline, or sales. We remain committed to addressing the FDA's observations thoroughly and sustainably. Quality remains a fundamental responsibility throughout Amphastar, and we will continue strengthening the overall effectiveness of our quality systems. Turning to our third pillar of growth strategy, advancing our development pipeline, we continue to achieve important regulatory and clinical milestones during the second quarter. For our insulin aspart biosimilar and interchangeable program, we continue preparing for potential commercialization in 2027, subject to regulatory approval. We have also made meaningful progress with our proprietary pipeline. During the second quarter, we initiated the phase I clinical program for AMP-101, our epinephrine nasal product. For AMP-109, our targeted oncology program, non-clinical studies are underway.

During the quarter, we received constructive feedback from the FDA and are continuing preparation for regulatory interactions in the near future and an anticipated IND submission. Development activities are ongoing for AMP-110, our synthetic human corticotropin program, and AMP-107, our eye drop program for wet age-related macular degeneration and diabetic macular edema, as we look to advance both towards a future IND submission. While these programs remain in early stages of development, we believe they represent meaningful long-term opportunities. Leveraging our scientific, regulatory, and manufacturing capabilities, these programs have the potential to expand our presence into larger proprietary markets and create additional drivers of future growth and value creation. I will now turn the call over to Bill Peters, our CFO and Executive Vice President of Finance, for a more detailed financial review of the second quarter.

Thank you, Dan, and good afternoon, everyone. In my comments today, I will discuss the second quarter results and then update some of our assumptions for 2026. Revenues for the second quarter increased 5% to $183.9 million from $174.4 million in the previous year's period. Ipratropium Bromide Inhalation, which we launched in April, led to growth with strong sales of $8.4 million. Vaccinia revenues decreased 3% to $45.5 million, compared to $46.7 million in the prior year. An increase in units sold, contributing $6.9 million in sales, was driven by our continued marketing efforts. Lower average selling prices negatively impacted sales by approximately $8.1 million, primarily as a result of higher rebates and higher 340B pharmacy discounts, some of which may have been duplicated.

In May, in response to these pricing dynamics we had seen over the past few quarters, we engaged a third party to support data-driven identification, validation, and resolution of potential 340B duplicate discounts, which led to a smaller impact than we saw in the first quarter. Primatene sales were $21 million in the second quarter, down 8% from $22.9 million in the second quarter of last year due to the timing of customer purchases. Epinephrine sales were relatively flat, as weakness in the vial product was offset by increased demand for our pre-filled syringe product. Glucagon sales declined 42% to $11.9 million from $20.6 million due to increased competition.

Sales of other products increased 25% to $66.2 million from $53.1 million, primarily due to recently launched products, including iron sucrose, with sales of $3.5 million, and teriparatide, with sales of $4.5 million, which we launched in August 2025 and December 2025, respectively. An increase in albuterol sales of $2.4 million, which we launched in 2024, also contributed to the increase. Additionally, an increase in phytonadione and sodium bicarbonate sales, driven by higher demand resulting from supplier shortages, and an increase in sales of API from our AMP subsidiary, had a positive impact on sales. Cost of revenues increased 3% to $90.4 million from $87.9 million. Gross margins increased to 51% of revenues in the second quarter of 2026 compared to 50% in the previous year period.

The primary drivers of the change were sales of recently launched products with higher margins such as ipratropium bromide, teriparatide, and iron sucrose. This trend was partially offset by a lower average selling price for BAQSIMI, glucagon, and epinephrine multidose vials. Additionally, we had increased manufacturing costs at our Amphastar facility. Selling, distribution, and marketing expenses increased 30% to $13.3 million from $10.2 million, primarily due to an increase in marketing efforts for BAQSIMI and higher freight expenses. General and administrative spending increased 30% to $18.2 million from $14 million, driven by higher legal expenses, salary and personnel-related expenses, as well as expenses related to the implementation of a new ERP system. Research and development expenditures increased 10% to $22.2 million from $20.1 million, primarily due to an increase in clinical trial expense, largely for our insulin pipeline.