Amneal Pharmaceuticals, Inc. (NYSE:AMRX) Q3 2023 Earnings Call Transcript

Amneal Pharmaceuticals, Inc. (NYSE:AMRX) Q3 2023 Earnings Call Transcript November 7, 2023

Amneal Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $0.19, expectations were $0.12.

Operator: Good morning, and welcome to the Amneal Third Quarter 2013 Earnings Call. I will now turn the call over to Amneal Head of Investor Relations, Anthony DiMeo.

Anthony DiMeo: Good morning, and thank you for joining Amneal Pharmaceuticals Third Quarter 2023 Earnings Call. Today, we issued a press release reporting our Q3 results. We announced certain unaudited preliminary results for Q3 on October 23. Our earnings press release and presentation are available at amneal.com. Certain statements made on this call regarding matters that are not historical facts, including, but not limited to management’s outlook or predictions are forward-looking statements, that are based solely on information that is now available to us. Please see the section entitled Cautionary Statements on Forward-Looking Statements in the earnings presentation and our SEC filings for a discussion of factors that may impact our future performance.

We also discuss non-GAAP measures. Information on our use of these measures and reconciliations to US GAAP are in the earnings presentation. On the call today are Chirag and Chintu Patel, Co-Founders and Co-CEOs, Tasos Konidaris, CFO; our commercial leaders, Andy Boyer for Generics, Joe Renda for Specialty, Harsher Singh for Biosciences; and Jason Daly, Chief Legal Officer. I will now hand the call over to Chirag.

Chirag Patel: Thank you, Tony and good morning everyone. We delivered another very strong quarter with $620 million of revenue, which is up 14%, adjusted EBITDA of $154 million, up 22% and adjusted EPS of $0.19, up 36%. We saw growth in all three of our business segments and reduced net leverage to 4.6 times. Given the strength of our year-to-date performance, we are pleased again to raise our full year 2023 guidance. We are excited about our continued momentum, which underscores the strength of our strategy and solid execution. As we have discussed throughout the year, we believe Amneal is at an inflection point, poised to drive significant top and bottom line in 2024 and beyond. I’ll start with a quick overview of our company and then walk through what we saw in each of our businesses during the third quarter.

At a high level, Amneal is a world-class global diversified pharmaceutical company, fulfilling our mission to provide access to high-quality and affordable essential medicines. In our affordable medicines business, our generic segment, we have retail, injectables, biosimilars and international. Our strategy continues to focus on expanding our portfolio with impactful complex and high level high-value products. For the first nine months of 2023, generics revenues were up 7% compared to last year, reflecting a meaningful acceleration from the steady 3% CAGR we delivered from 2019 to 2022. We expect high-level digit — high single-digit top line growth in generics to continue, driven by our diverse portfolio and cadence of over 30 new product launches every year.

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Q&A Session

In injectable, our goal is to be top five in the United States institutional market. There are two key factors that we believe differentiates Amneal and will drive our success. The first is expanding capacity and capabilities and the second is an expanding portfolio. In 2023, we have executed on both. We successfully brought online two new sites, which doubled our manufacturing capacity. Currently, we have 35 commercial injectables with over 25 new launches planned by 2025, as we continue increasing production and expanding our portfolio in a market, plagued by shortages, we are well positioned for higher injectables revenues in 2024 and over $300 million by 2025. In biosimilars, our three commercial products continue to see strong uptake. Our largest product ALYMSYS was at 6% market share as of September, which is remarkable in the first three quarters post launch.

We expect $60 million in biosimilar sales this year more than double that next year and over $200 million in 2025. In addition, we expanded our partnership with mAbxience who we work with on ALYMSYS to add two formulations of denosumab and oncology biosimilar to our pipeline. This is part of the next basket of biosimilars for Amneal. By 2024, we look to add two to three more biosimilars to the pipeline. We see biosimilars as the next wave of affordable medicines and are committed to being a leader in this space. Internationally, we are leveraging our US FDA proved portfolio to expand our reach and drive profitable growth. In India, we have our local infrastructure and are expanding our local portfolio. In other geographies, we are working with partners to commercialize our products.

For example, we now have two products approved in China. We expect international expansion will add $50 million to $100 million revenues by 2027 and scale further over time. In our affordable innovations business, our specialty segment, we are focused on neurology and endocrinology therapeutic areas. Our commercial teams continue to drive growth in our key branded products RYTARY for Parkinson’s and UNITHROID for hypothyroidism. As you know we received a CRL for IPX-203 seeking additional data in July. I’m pleased to report that we had a successful type A meeting with FDA last month and we are working diligently towards the 2024 approval and launch which Chintu will discuss shortly. We expect specialty revenues to be over $500 million by 2027.

Finally, in our healthcare segment we continue to see robust growth across all three channels: distribution government VA/DoD unit dose. We expect AvKARE revenue of $500 million in 2023 and over $600 million by 2025. I’ll now pass it to Chintu.

Chintu Patel: Good morning, everyone. Thank you, Chirag, and thank you to the global Amneal family who work hard every day to help make healthy possible for so many. We are laser focused on executing our strategy to be an innovative and diversified global pharmaceutical company capable of driving sustainable growth in the key areas of medicine. The successes of 2023 are clear proof points that we are on the right track. I will touch on how operational excellence, strong supply chain and highly productive R&D engine profiler strategy. First, we remain focused on driving operational excellence and efficiency as Amneal has one of the best service levels in the industry. As part of our efforts to drive continuous cost efficiencies globally, we are transferring production for about 30 products for cost improvement and also working on many operational excellence programs for long-term savings.

In addition, we have strengthened our supply chain by expanding our infrastructure, particularly in injectables. We have doubled our injectables capacity with four facilities and 19 production lines, while the injectables market continue to face supply shortages. Importantly, about 30 of our commercial ANDA and pipeline injectable products are on the US FDA shortage list. Amnneal is very well positioned to help address drug shortages in the US. At the same time, we remain committed to maintaining our stellar quality track record. Since 2005, the US FDA has conducted nearly 100 successful inspections with no observations or only minor 483s. Overall, our high-quality global operations are at scale to support sustainable long-term growth. Second, innovation is the lifeblood of any growing pharmaceuticals company and that’s certainly the case for Amneal.

In generics, we are on track for over 40 new launches in 2023 with 33 year-to-date. This is well above our normal cadence of 30 per year. Also, it’s more than just the number of new launches. It is the complex idea of these products, less competitors and the increased value of our diversified portfolio. Our pipeline is deep with 166 products pending approval or in development. Accordingly, we expect over 30 new launches next year and for years after that. In addition, while we have shifted towards complex innovations, we have also improved the efficiency of our R&D operations. We are doing more R&D with less spend, which results in a better ROI on projects. Let me share some more details on R&D. Overall, we have 88 ANDAs pending with FDA, of which 64% are non-oral solid products.