Amphastar Pharmaceuticals is Monday's IBD Stock Of The Day as the biotech stock revs up marketing of Baqsimi, a drug purchased this year from Eli Lilly that raises blood sugar levels in diabetes patients. AMPH stock, part of the flagship IBD 50 list of leading growth stocks, broke out of a cup-with-handle base in today's stock market action.
Deal With Eli Lilly Transforms Amphastar
Amphastar acquired Baqsimi from Eli Lilly in a deal that closed in June for $625 million in cash. Lilly could also receive up to $450 million in sales-based incentive payments.
So far, the sales outlook is looking good. Amphastar, based in Rancho Cucamonga, Calif., said in its Nov. 9 Q3 earnings call that it now sees a peak annual sales range of $250 million to $275 million for Baqsimi. That's up from an expected peak of $225 million to $250 million when the deal with Eli Lilly was announced in April.
The $25 million increase to the peak range "is still just the forecast that we have at this point," CFO Bill Peters told analysts. "Could we beat that forecast? I think we possibly could."
So why was Eli Lilly willing to part with Baqsimi? "This was the third product in their bag for their diabetes sales force," Peters said in a Piper Sandler health care conference presentation on Nov. 29. LLY stock is part of the IBD Leaderboard portfolio of elite stocks amid excitement over tirzepatide, a drug that is behind its Mounjaro diabetes treatment and its Zepbound weight-loss treatment that just received FDA approval.
"For Amphastar, this is going to be our core asset, our number one priority," he said. "With that additional focus, we think we can grow this much larger."
Amphastar Sales
Baqsimi is a rescue treatment for severe hypoglycemia for people who take insulin. But it is a nasally administered alternative to injectable treatments, including Amphastar's generic glucagon product.
Baqsimi had $139.3 million sales in 2022. In Q3, Baqsimi had sales of $48.7 million, benefiting from the strongest seasonal quarter of the year. Under a transition agreement, Eli Lilly sold the drug on behalf of Amphastar, which recognized $28.7 million in revenue, subtracting $20 million for Lilly's expenses.
Overall Amphastar revenue, including the addition of Baqsimi, rose 50% to $180.6 million in Q3. Primatene Mist, the only over-the-counter asthma medication, saw sales rise 35% to $24.8 million.
On Nov. 17, Bank of America started coverage on AMPH stock with a neutral rating and 63 price target, following a 97% year-to-date rally. Still, BofA analysts said that Amphastar is "winning on two fronts," citing its acquisition of Baqsimi and pipeline of generic drugs.
In its latest company presentation, Amphastar notes its pipeline is increasingly tilting toward biosimilar and proprietary drugs.
AMPH Stock
AMPH stock rose 3.4% to 59.91 on Monday afternoon. The move cleared a 58.35 buy point from a 17-week cup-with-handle base, according to MarketSmith. Volume on the breakout was 80% above the stock's 50-day average number of shares traded daily.
IBD had been highlighting Amphastar as among the top five biotech stocks to watch. AMPH stock has a perfect Composite Rating of 99, a single rating that combines both technical and fundamental factors.
