Amphastar Pharmaceuticals NasdaqGS:AMPH Stock Report

Amphastar Pharmaceuticals: Compelling Growth Prospects For H2 2022 And Beyond

Amphastar currently has seven drugs under development, two drugs awaiting launch, and a base of over nine FDA-approved products in production. With the recent approval of generic ganirelix and vasopressin, which have a TAM of $850 million, AMPH could nearly double its revenue by YE 2023 with proper execution. Investors with a long time horizon should consider investing in AMPH to benefit from the strong growth prospects presented by the company. Investment Thesis With a diversified portfolio of drugs, Amphastar Pharmaceuticals Inc. (AMPH) is continuously operationalizing its drugs that receive FDA approval and filing new applications. With 3 ANDAs under review by the FDA and seven more under development, AMPH has promising growth prospects in 2H2022 and beyond. Furthermore, with recent approvals, AMPH can anticipate nearly doubling its revenue by the end of 2023 with proper operationalization and execution of the approved drugs. Investors with a broad time horizon and the ability to weather some modest near-term volatility should consider investing in AMPH. Background Amphastar Pharmaceuticals, Inc. is a diversified drug manufacturer that produces various products, including injectibles, biosimilars, complex generic, inhalation, and proprietary products. The main product lines operated by Amphastar are as follows: Enoxaparin: an anticoagulant that prevents blood clots. This drug is abbreviated Enox. Lidocaine Injection and Jelly: Helps reduce patient discomfort during peripheral nerve blocks. Vitamin K1: vitamin K1, obtained from leafy greens and other vegetables, is used to prevent blood clots. Primatene Mist: FDA-approved asthma inhaler is projected to add $100 million to sales by the end of 2024, with an annualized growth rate of 34%. The success is mainly attributable to the physician sampling program and national TV and radio marketing campaigns. Glucagon: Glucagon is a hormone that prevents blood sugar from becoming too low. It is a mature product for Amphastar and is projected to have a positive trajectory in terms of sales and growth. Epinephrine: This drug is used to treat life-threatening allergic reactions. Like glucagon, this product is on a continued growth trajectory for the foreseeable future. This drug is abbreviated "Epi." in the chart below. Naloxone: Similar to suboxone, Naloxone is used to reverse opioid overdose. Naloxone is the second half of suboxone designed to reverse overdoses. Naloxone is also non-addictive because it only works if the person has opioids in their system. The relative contribution of these medications to the overall portfolio of AMPH is shown below. Amphastar Drug Manufacturing Portfolio (Source: Amphastar) Amphastar has the following approved drugs on the horizon in the pipeline for launch and production: Generic Ganirelix: Ganirelix was approved by the FDA on April 4th, 2022. The medication was initially developed by Bristol-Myers Squibb's (BMY) subsidiary Abraxis Bioscience under Abraxane. This drug goes by the generic name albumin-bound paclitaxel. The drug is used to cure female infertility. Amphastar plans to launch the drug production in 2Q2022, which would start to add revenue AMPH production portfolio. Generic Vasopressin: Amphastar received the final approval for its generic vasopressin on July 19th, 2022. Vasopressin controls the body's osmotic balance, blood pressure, sodium homeostasis, and proper kidney functioning. Amphastar anticipates this product's production and subsequent launch in the 3Q2022. In 2Q2022, the price action of Amphastar saw increased volatility due to the rejection of the following ANDA: Generic Teriparatide: On June 14, 2022, Amphastar received a complete response letter, also referred to as CLR, from the FDA, which indicated the drug would not be approved. Teriparatide was the generic version of Eli Lilly's Forteo, used to treat osteoporosis in postmenopausal women. Change in Price for AMPH as a Result of FDA's Rejection of AMP-015 application. (Source: Seeking Alpha) Company Fundamentals The company's quarterly revenue has grown at a rate of 7.7%. The EPS has grown at 37%, as shown below. AMPH Quarterly Revenue Growth Profile (Source: Amphastar) Amphastar Earnings Growth Profile (Source: Amphastar) Although AMPH has been able to accelerate the pace of its ANDA requests, the overall R&D expense has reduced to 14%. This reduction is attributed mainly to the shift from receiving GDUFAs for existing drugs to requesting ANDAs for proprietary products and biosimilar drugs. R&D Spend Optimization by Amphastar (Source: Amphastar) R&D Optimization Transition While Accelerating FDA Requests and New Drug Development (Source: Amphastar) Growth Catalysts The company has 12 Abbreviated New Drug Applications (ANDAs) in progress: Number of ANDAs or Patent Certifications (Paragraph 4 or P-IV) filed with the FDA: 4 Number Rejected: 1 Number Remaining: 3 Number of ANDAs in Development/Clinical Trial Stage: 7 Fully Approved: 2 A complete breakdown of the ANDAs is given below. AMPH R&D Development Breakdown: ANDAs in Progress and ANDAs submitted for FDA Approval (Source: Amphastar)