Amphastar Pharmaceuticals (NASDAQ:AMPH) executives said the company is taking steps to address rebate and discounting pressure on BAQSIMI while maintaining its full-year revenue outlook, according to remarks at the BofA Annual Healthcare Conference.
Bill Peters, chief financial officer of Amphastar, said the biggest surprise coming out of the first quarter was the impact of “double discounting” tied to 340B programs on BAQSIMI, the company’s nasal glucagon product acquired from Eli Lilly. Peters said certain buyers were purchasing BAQSIMI at mandated 340B prices while still collecting rebates when dispensing to insured patients.
“That was the biggest change,” Peters said. “It reduced the BAQSIMI sales significantly from where we thought they would be in the quarter.”
BAQSIMI Pricing Pressure and Mitigation Steps
Peters said Amphastar began using an external firm at the start of May to adjudicate and validate claims, a process the company believes should eliminate most inappropriate claims. The company also implemented a 3% price increase for BAQSIMI on May 1.
While Peters said the second quarter will still reflect some of the same challenges seen in the first quarter, he said the company expects pricing to improve over the next couple of quarters.
“We believe that if we can stop this pricing behavior, then we can return to growth for the product for the rest of the year,” Peters said.
He added that BAQSIMI prescription trends remained positive, with an 8% increase in units during the quarter. Peters said the company expects the third-party adjudication process to remain in place going forward, adding some general and administrative expense but helping protect future revenue recognition.
International BAQSIMI Footprint to Narrow
Peters said BAQSIMI is sold in about 25 countries, with the United States representing roughly 80% of revenue. Amphastar had committed to Lilly to continue selling BAQSIMI in every market where Lilly had sold it for at least three years, a period that ends in June.
After reviewing its international markets, Peters said Amphastar identified a handful of countries where BAQSIMI was unprofitable and plans to begin discontinuations in July. He said the process will be gradual in some markets due to inventory and notice requirements, including one country where sales will continue until the first quarter of next year.
“None of these countries are really that meaningful or material to our top line, and they’re all negative to the bottom line,” Peters said. “By reducing our footprint, while we’ll have a reduction in sales of BAQSIMI, we’ll have an increase in profitability.”
Longer term, Peters reiterated Amphastar’s peak sales target of $250 million to $275 million for BAQSIMI. He said the key growth driver is improving compliance with glucagon prescriptions among insulin users. According to Peters, annual glucagon prescription fills among insulin users have increased from about 10% when Amphastar acquired BAQSIMI to 12% today, and the company’s forecast assumes reaching 15% to 16% compliance.
Legacy Products and Margin Outlook
On Amphastar’s base business, Peters said glucagon has faced new competition over the past year and a half, but the rate of decline has softened. He said the company believes the product is close to a floor, though upcoming quarters may still be below first-quarter levels.
Peters also discussed epinephrine, noting pressure in multi-dose vials as the market expanded from two competitors to as many as five. However, he said Amphastar’s prefilled syringe epinephrine product benefited in the first quarter because another supplier has not been shipping.
Gross margin was 41% in the first quarter, which Peters described as a temporary low point. He said the company expects margins to recover, helped by higher-margin product launches and growth from BAQSIMI and Primatene MIST. He noted that sales of active pharmaceutical ingredients from Amphastar’s China facility will add revenue but at lower margins.
Peters also said insulin, expected next year, may carry a margin near or slightly below the corporate average on its own but should improve factory utilization in both the U.S. finished-product facility and the China API facility.
AMP-007, Biosimilars and Inhalation Pipeline
Peters said AMP-007 launched in mid-April and has shown strong factory sales so far. He said Amphastar is currently the only generic on the market and has Hatch-Waxman six-month exclusivity until mid-October, unless an authorized generic launches. He added that the product’s sales are expected to exceed the assumptions used in Amphastar’s initial 2025 guidance, helping offset lower-than-expected BAQSIMI sales.
Amphastar reaffirmed its expectation for full-year revenue growth in the mid-to-high single digits.
Tony Marrs, executive vice president of regulatory affairs and clinical operations, said Amphastar’s development history in aseptic manufacturing, complex generics, immunogenicity work and clinical trials has positioned it to take on more complex programs, including biosimilars and proprietary products.
Marrs said the company is developing insulin aspart and believes insulin is a middle ground between traditional generics and more complex biologics. Peters added that Amphastar is working on three biosimilars, including two insulins, and is targeting areas where it believes it has manufacturing or API advantages rather than crowded biologic categories.
On GLP-1 products, Peters said Amphastar expects certain markets to be crowded but noted that the company plans to sell at least two GLP-1 APIs this year from its China facility, one tied to a proprietary product and another as a more generic API.
The company also continues to view inhalation as a key technology area. Peters said Amphastar is working on a next-generation Primatene MIST using a “green propellant,” while Marrs said the company’s Boston-area inhalation manufacturing facility has capacity and room for expansion.
Capital Allocation
Peters said Amphastar’s first priority remains funding its growing research and development program, followed by capital expenditures and business development. However, he said the company has accelerated share repurchases because management views the stock as undervalued.
During the first quarter, Amphastar spent nearly $30 million buying back shares, representing almost 3% of shares outstanding. Peters said that with the stock price in a similar position to March levels, investors should expect the company to accelerate purchases again.
About Amphastar Pharmaceuticals (NASDAQ:AMPH)
Amphastar Pharmaceuticals, Inc is a specialty pharmaceutical company headquartered in Rancho Cucamonga, California. Founded in 2004, Amphastar focuses on the development, manufacturing and commercialization of injectable and inhalation products. The company's manufacturing facilities in California produce both generic and proprietary formulations designed to address urgent and chronic medical conditions.
Amphastar's portfolio includes a range of injectable generics such as epinephrine, naloxone and lidocaine, serving hospital, emergency medical and retail pharmacy channels.
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