Greetings, welcome to the Amphastar Pharmaceuticals, Inc. business update. At this time, all participants are in a listen-only mode. A question -and -answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that certain statements made during this call regarding matters that are not historical facts, including, but not limited to, management's outlook or predictions for future periods, are forward-looking statements. These statements are based solely on information that is now available to us. We encourage you to review the section titled Forward-Looking Statements in the press release issued today in the presentation on the company's website. Please refer to our SEC filings, which can be found on our website and the SEC's website, for discussion of numerous factors that may impact our future performance. We will also discuss certain non-GAAP measures. Important information on our use of these measures and reconciliations to U.S. GAAP may be found in our earnings release. Please note that this conference is being recorded. Our speakers today are Mr. Bill Peters, CFO, Mr. Jacob Liawatidewi, EVP of Corporate Administration Center, Mr. Dan Dischner, SVP of Corporate Communications, and Mr. Tony Marrs, EVP of Regulatory Affairs and Clinical Operations. I will now turn the conference over to your host, Mr. Dan Dischner, SVP of Corporate Communications. Dan, you may begin. Thank you, Daryl. Good morning, and thank you all for joining us. Today, we are excited to announce that Amphastar has entered into an agreement with Eli Lilly and Company to acquire BAQSIMI, the first and only commercial intranasal glucagon approved to treat low blood sugar emergencies in people with diabetes ages four years and above. This acquisition aligns well with our core strategic vision of strengthening the portfolio of our proprietary product offerings and enhancing our diabetes portfolio. Amphastar has always taken a disciplined approach when looking at potential acquisitions. We seek to develop or acquire assets with potential for growth that complement our key focus areas. With that said, BAQSIMI aligns well with our corporate strategy as it further enhances our diabetes proprietary and intranasal categories of our portfolio. Based on IQVIA estimates, approximately seven million people are treated with insulin, and only about 10% of these patients currently utilize glucagon. We are optimistic about BAQSIMI's strong growth potential and are confident this product will create significant shareholder value. Equally important, we are excited for BAQSIMI, as our corporate footprint will expand into 26 countries. This acquisition will allow us to form a branded product commercial team which will be used for future proprietary products. Amphastar expects this dedicated commercial investment to enable more people on insulin to be prepared with a glucagon rescue treatment for severe hypoglycemia. We believe that acquiring BAQSIMI will accelerate our strategic focus on diabetes care, proprietary products, and alternative delivery systems. With that, it is my pleasure to turn the call over to our CFO and Executive Vice President of Finance, Bill Peters, our Executive Vice President of Corporate Administration and Marketing, Jacob Liawatidewi, and Tony Marrs, the Executive Vice President of Regulatory Affairs and Clinical Operations, to discuss further the details of the transaction. Thank you. Dan. Yeah, we're very excited about this transaction today, so we wanted to walk through a few slides that we have on the investor site with you this morning. First of all, the terms of the agreement, we are going to be paying $500 million for this product in cash at closing, plus another $125 million in cash 12 months after the deal is closed. Additionally, we have contingent cash payments of up to $450 million that are going to be based on sales milestones. There'll be one $100 million payment if the annual sales reach $175 million and up to two $100 million payments for each year in which the net sales reach $200 million in the first five years of the deal. There'll be a $150 million payment if the total net sales in the first five years following the closing reach $950 million. Amphastar is going to assume certain liabilities from a party that Lilly purchased this product from in the past. We think it's unlikely that we will hit those milestones, there's potentially up to $125 million in payments if net sales reach certain thresholds. This transaction fits well into our corporate strategy. With BAQSIMI, we expand our commercial proprietary product offering. BAQSIMI is the first and only approved intranasal glucagon with IP protection. It has growing sales and strong gross margins. It expands our diabetes portfolio, which is one of our strategic therapeutic focus. Expands our commercial intranasal portfolio, which we believe it's one of the important route of administration for patients' well-being. With this transaction, we'll expand our international footprint in 26 countries. We will form a commercial sales team dedicated to BAQSIMI, which will provide a base for our future branded products. With this transaction, Amphastar will receive a BAQSIMI approved U.S. NDA for U.S. distribution, BAQSIMI approved marketing authorization in-Markets, which include Canada, Germany, France, Italy, and Japan. Intellectual properties, which will include Orange Book listed patents, trademarks, and domain registration. We will also receive manufacturing equipment. We'd like to talk about the patient impact with this transaction. We believe glucagon used for treatment of severe hypoglycemia is still underutilized, even with the recent growth of glucagon use. The American Diabetes Association recommend that patients at increased risk for Level 2 hypoglycemia to have glucagon available. We will focus on BAQSIMI by having dedicated commercial team to enable more patients that are at increased risk to be prepared with having glucagon on hand. Approximately seven million people in the U.S. are treated with insulin, and only about 10% of these patients utilize glucagon. BAQSIMI is currently the category leader for ease in patient use for glucagon. It is the only non-injectable glucagon, passively absorbed in the nose, which provide lower barrier for administration than an injection. BAQSIMI is ready to use with no reconstitution required or priming. Portability. BAQSIMI is smaller product size than other glucagon products, with wider temperature storage than other glucagon products. BAQSIMI is an anti-hypoglycemic agent indicated for treatment of severe hypoglycemia in patients with diabetes ages four years and above. It has simple nasal administration, no inhalation required. It's a single fixed three milligram dose. This is just a quick overview of the novel glucagon product landscape besides BAQSIMI. The other offerings are in injection form, such as Gvoke and Zegalogue. One of the reasons why we like BAQSIMI is that it's had strong and growing sales since it was launched. As you can see from this chart, sales in 2020 were at $76 million worldwide and have grown till they were hit $139 million last year in 2022. We believe that this growth trajectory will continue this year as well. In fact, we have a projection that sales will reach $145 million-$155 million on an annualized basis in 2023. We believe that peak sales will reach $225 million-$250 million. We also want to add what we believe that this will do for the earnings of Amphastar. On an adjusted basis, we believe that we will increase our EPS this year by $0.25-$0.35 on an annualized adjusted basis for... What I mean by annualized is that if we have this for six months of the year, it'll be about half of that amount. At a peak, we believe this product will add $2.00-$2.50 to our adjusted EPS. Giving this strong sales and strong EPS growth for the company is one of the reasons we decided to do this transaction. Turning to financing and timelines. We are going to be using a $500 million loan and a $150 million line of credit to help finance the transaction. We have committed financing that was arranged by Wells Fargo Bank, Capital One, JPMorgan Chase Bank, Fifth Third Bank, East West Bank, Cathay Bank, and CIBC Bank. It's a very strong lineup of banks that are very committed and very capable of lending us the full amount of money that we need. We're going to be paying an interest rate based on SOFR with a spread based on net leverage margin. If we're able to reduce our debt during the time that we're holding this, our interest rates will drop. Additionally, we're going to be using cash on hand to retire our existing term loan that's out there right now. As far as the timeline goes, we believe that this transaction could close in the second quarter or third quarter of this year, subject to customary closing conditions, including antitrust regulatory approval, which we believe will be the thing that affects the timeline of this transaction the most. That said, that ends our formal presentation. We're going to take some questions and answers now from anybody that has some. Daryl, we're ready to go with that. Thank you. We will now be conducting a question -and -answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit yourself to one question and one follow-up question. One moment, please, while we poll for your questions. Our first question comes from the line of Elliot Wilbur with Raymond James. Please proceed with your questions. Thanks. Good morning, and congratulations on what is certainly the most significant transaction in the company's history. First question just for Bill, more specifically on the numbers. With respect to the peak sales projections that you've provided, are those just Lilly internal forecasts that you guys have adjusted based on your chance to look through the numbers and some of your own assumptions? Are those external numbers? They're reasonably consistent with street expectation, I guess, is sort of why I'm asking. Can you just walk me through the adjusted EPS impact that you're expecting from the product at peak? If I think about $2 in incremental EPS, that's about a little over $100 million in net income, which would be about $140 in pre-tax income, which translates into about a 70% contribution margin, which seems very high. I'm not sure if I'm missing something in those numbers or if you're in fact excluding the incremental interest associated with financing the product. Just, maybe help me a little bit on the math there. I do have a follow-up, but maybe I'll stop there. Yeah. Based on the peak sales, we have taken their estimates, and then we run our own estimates on that, based on what we believe we can grow the product at. I will say that, we had slightly different opinions on what the product would do than they had based on their confidential information memorandum that they put out. These are based on our forecasts. As far as the peak EPS goes, just to walk through the adjustments. We are going to be excluding the amortization. That's the real adjustment there. We are taking into account the interest payments on this, but we believe that by the time this deal is at that peak sales, that we'll have earned enough cash flow from this to have paid down the debt, so there's no more interest at that point when we're hitting that peak EPS number. That's based on the fact that we'll have paid down the debt by then. Okay, thanks. Just the follow-up, just from a high level, help us think about your confidence in and just your assessment of the regulatory risk associated with the transaction. Obviously, you will have a significant share of the glucagon market post the close of this deal, something close to 65% or even greater. Different products, different formulations, probably appropriate for different patients. You know, obviously, that's a fairly high degree of concentration. And despite the fact that you've been a consistent supplier in a market that's losing supply, always seems like the regulators would like more players in the market rather than less. Just help us from a high level, think about how you guys, or your level of comfort, I guess, in terms of not encountering significant regulatory hurdles in terms of closing the deal? Thanks. Yeah. We view our current glucagon injection and BAQSIMI is in totally two different markets. Our current glucagon injection, while it's also marketed for hypoglycemia, a lot of primary use right now is in the hospital clinics market, where it's being used for a diagnostic aid. We do not currently market our glucagon injection into the HCP calling points versus BAQSIMI, the only indication it has is for hypoglycemia. It has two other novel glucagon competitor, as we provide in the slide, which is Gvoke and Zegalogue. There are still multiple player. For the glucagon injection itself, there's also multiple player, namely Fresenius and Novo Nordisk for the legacy glucagon injection. That's the way we see the market. There are multiple players still in the market, even with this transaction. Thank you. Our next question is coming from the line, and it's David Amsellem with Piper Sandler. Please proceed with your questions. Hey, thanks. Just add a couple. Number one is, as you think about, the legacy injectable product, is it fair to say that you're mainly gonna be focused on the institutional setting, in other words, distribution of the product as a diagnostic aid? As a corollary to that, how do you think about the use of that additional capacity that you built out for injectable glucagon? Then secondly, maybe I missed this, but can you just talk about BAQSIMI manufacturing and the extent to which you're going to bring that under your umbrella and the extent to which potentially you could see margin efficiencies from doing so over time? Thank you. I'll take the first question. For our glucagon injection, since it was launched back in February 2021, we always have been marketing it as a generic product. The way we basically position the product, it is a generic glucagon injection, so we put in the contracts with the regular institutional, with the retail pharmacy as a generic glucagon. With the current glucagon injection market changes with Boehringer Ingelheim leaving the market. We view that products will continue to grow in the institutional side. That's where we position our glucagon injection. And Bill will answer the second one. Yeah. As far as, first talk about the capacity that we have internally for making the injectable and that, yeah, we doubled our capacity at the end of the first quarter this year, so we're making a lot more glucagon and seeing a definite increase in advance for that. On the BAQSIMI product, right now it's manufactured by a contract manufacturer, and it's packaged by Lilly. At this point, we are not going to manufacture the product ourselves. We plan to keep it at the existing contract manufacturer who's doing a great job with it. We're evaluating the packaging function and considering that so we can have that done by the third party as well. Okay. Thanks, Bill. If I may sneak in a follow-up. It just, you know, with this kind of transaction, I mean, now that you have commercial capabilities or building commercial capabilities, focused on, I guess, primarily endocrinologists, do you start to think more broadly about building out an endocrinology therapeutic vertical? Just what's the kind of strategic thinking here going forward? Yeah. No, absolutely, Dave. That is our plan. Basically, we plan to build a brand new commercial team that focus on endocrinologists and pediatric endocrinologists. Just to add, with our, this transaction doesn't really impact our glucagon injection. We are continuing, basically, selling that products with no change. Okay. Does. Go ahead, Dave. layer into the commercial organization? Sorry, could you repeat that? I missed that. Yeah. Does that mean that you're looking to layer in additional endocrinology-focused products into that commercial organization? That's what I was kind of getting at. Yeah. Yeah. No, definitely. I think diabetes therapeutic has been our focus. I think the past couple of years with our several insulin portfolio, even though our focus has always been interchangeable, but this commercial team definitely will be helpful on that. All right. Thanks. Thanks. Thank you. Line of Serge Belanger with Needham & Company. Please proceed with your questions. Hi, good morning. I'd like to also offer my congrats. I guess the first one, can you break down the sales of BAQSIMI between ex-U.S. and U.S.? Secondly, on the commercialization timeline... 80% U.S., 20% ex-U.S. Got it. On the commercial front, maybe highlight what kind of effort Lilly had behind this product and what you envision your commercial footprint to look like. Thanks. Yeah. Yeah, we can't really talk about what Lilly does on their side. Obviously, they have multiple insulin products include, this will fits well into their current commercial team. One thing to note, this product was launched around July 2019, right before the COVID hit. Obviously COVID hits, there's no ones can go into the office. We are very excited even with those restriction during that time, as you see the product sales continue to grow year-to-year. From our side, our commercial team will focus just on BAQSIMI. That's why we believe this will help with the patients' utilization because we'll be very focused on this product. All right. Did you have any further questions, sir? Our next questions come from the line of Tim Chiang with Capital One. Please proceed with your questions. Hi. Thanks. Maybe you could talk a little bit about, you know, timing as to when you'd be able to transfer manufacturing from the CRO to your own facilities. I mean, is that a two-year type of timeline or longer? Then could you talk a little bit about what the gross margins on BAQSIMI are at this point? As far as transferring the manufacturing, we're not planning to transfer the manufacturing. It's gonna stay at the existing CMO. We're just gonna evaluate the packaging, though, whether that will be brought in-house or whether that will also be done by a third party as well. We're taking a look at that. We haven't specifically said what the gross margins for BAQSIMI are. It is a relatively expensive product to make in that it's a dry powder product, so it's a little bit more complicated than most products. Also the device is very specific for this. It's the device is definitely one of the things that's. We also have an exclusive license to that device right now, so we're paying a little bit extra to get that exclusivity for that. The gross margins are branded level gross margins. They are well above what our corporate gross margins are today. You know, they're not as high as, say, a branded pill might make. Kind of frame it within that context. Maybe just one follow-up. I think the guidance you guys gave for BAQSIMI sales this year, $145 million-$155 million. I guess that reflects what, 4%-12% year-over-year growth. I mean, you know, three years this product's been on the market, do you think you can turbo boost that growth, like in 2024, 2025? Like, where do you see really the long-term growth rates for a product like BAQSIMI? Yeah, for year-over-year growth, there's multiple factor to it, right? Basically, I don't think we provide guidance on what's the growth, year-over-year. Yeah. Well, we've backed into it. We do believe it's going to be in that range. We're pretty comfortable. We're very comfortable in that range. Part of it has to do is the transition this year, we'll have our, you know, focus back on it. We do believe we will grow this product and it's just it's not going to be a continual, say, long into the future with a double-digit growth rate. It's something that we do think that we can have a double-digit growth rate at some point on this product. Maybe just one last question. It seems like when you guys had launched the injectable glucagon a couple of years back, you know, Eli Lilly was losing a lot of share on their brand, and then they started to promote BAQSIMI as sort of their brand. Now you guys are acquiring BAQSIMI. I'm sort of wondering, will there be some cannibalization that might happen just because you're selling your own injectable glucagon? I know you guys kind of commented that you're really focused on two different markets, but I just wanted to get clarification on that. Yeah, cannibalization of the legacy glucagon injection will happen either way with the three novel glucagon right now in the market, BAQSIMI, Gvoke, Zegalogue. That's something that is gonna happen either way. For us, we'll just continue focusing on our own glucagon injection into what we could control, mainly, the institutional market with the diagnostic aid. Okay, great. Congrats on the deal. Thank you. Yeah. Thank you. Our next question is coming from the line of Elliot Wilbur with Raymond James. Please proceed with your questions. Thanks. Just a couple of quick follow-ups here. First for Bill. When you were discussing the contingent milestone payments, I believe you suggested that the $125 million potentially payable to a third party was unlikely to be hit. In looking at the contingent payments as part of what could be due Lilly, those look like there's a reasonably high probability that those, in fact, will occur, at least based on the peak numbers that you've provided. I just wanna make sure and confirm that when you said it was unlikely that the payment will be hit, that in fact, you've referred to the third party payment. That's. Okay. you know, yeah. Okay. Second question. Could you just talk a little bit about the IP estate here? There's IP. Looks like there's three Orange Book -listed patents, 2036 - 2039. I have strong suspicion you guys probably looked at this from a generic angle at some point in time and obviously came to conclusion that you wouldn't have paid $1 billion for the asset if you thought there was a pathway to market in the next three to five years. How are you thinking about sort of the defensibility of that 2036 patent and, you know, just sort of the likelihood, at least from your perspective, that somebody could, you know, at least emerge with a filing, you know, in Paragraph IV challenge sometime during your ownership of the assets? As part of our due diligence, we looked at the Orange Book -listed patents. As you mentioned, the 2036 expiration, that is the formulation patent. We feel confident that we'll be able to defense that against a generic entry or Paragraph IV certification. I'm not sure, we could discuss further than. I'd say that the other thing I would like to add that tails into this is that when we saw this product come out, we did think it was a very complex product, and we thought it would be very difficult to genericize. This is a product where there's always a chance that someone's gonna come out with a Paragraph IV filing. We don't know if they will or they won't. When we took a look at the science behind this and what you needed to do to get this product made and the technology needed to manufacture it, the device, everything together, we saw it as something that would be very hard for people to genericize. You know, we're in the business of, you know, right now, we have been genericizing some of the most complex products out there, and we thought this was very hard. This is one of those things where we think that it's likely that this product will have a very long life to it, and that's one of the reasons why we like it. We don't think it's you know, a five-year product, we think it's a very long life product for us. Okay, one last question if I may. Have you had a chance to really kinda dig into sort of the source of RX volume for the product? I just try to get my arms around, you know, how often, in fact, glucagon's actually utilized as a rescue medication. I know with EpiPen, it's prescribed, it's carried around, but no one ever really uses it and there's never really any refills kind of within that two-year expiry period. I'm just wondering on this product, it seems like there is more actual use of it. I'm just wondering how successful, you know, Lilly has been in terms of getting patients after the expiration of the initial script to actually refill versus the product just actually being utilized as a rescue agent? We don't really have concrete data on that. Our understanding is the product is being used by patients and then they refill the products. I think that is one of the key for this product is the ease of use, where the barrier is a lot lower compared to injection, where you actually have to perform the injection versus this is a passive administration that can be performed either by the patient or the family members of the patient. That said, there is a large seasonality to this product and similar to EpiPen, in that you see back -to -school timeframe has a big surge when sales are made. You'll see that they tick up a lot in the August, September timeframe. There's definitely that component of people going back -to -school, their product, you know, something did expire, they get the new script for it. There is that component to it. All right. Thank you. Thank you. There are no further questions at this time. I would now like to hand the call back over to Dan Dischner for any closing remarks. I want to thank everybody for joining us today. We look forward to updating you on the performance of this product and all of our other products in our upcoming earnings call. Have a nice day. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.