Amphastar Pharmaceuticals Inc

NASDAQ:AMPH

Earnings Call Transcript 2020-Q3

[Operator]

[00:00:03] Good morning, ladies and gentlemen, and welcome to Amphastar Pharmaceuticals third quarter earnings call. At this time, all participants are in only mode. We will conduct a question and answer session and instructions will follow at that time. If anyone should require assistance to the conference, please. Press star then zero on your telephone as a reminder of this conference call may be recorded. All statements and a press release and in the conference call referenced above that are not historical. Our forward looking statements, including, among other things, statements relating to the company's expectations regarding future financial performance. Mark loves sales and marketing of its products, market size and growth. The timing of FDA filings are approvals, including the BMF of AMC, the timing of the product launches, acquisitions and other matters related to its pipeline as part of the. Its share buyback program and other future events, such as the impact of the pandemic and really the responses of business and government to the pandemic operations and personnel and on commercial activity and demand across the business operations and results of operations. These statements are not historical facts, but rather are based on our historical performance and its current expectations, estimates and projections regarding ancestors, business operations and other similar or related factors. Words such as me might, well, could, would, should anticipate, predict what Bombshell could expect. Instead, that Project Delays estimate and other similar or related expressions are used to identify these forward looking statements, although not all forward looking statements may contain these words. You should not leave until reliance on forward looking statements because they involve a known and unknown risks, uncertainties and assumptions that are difficult are impossible to predict and in some cases, the as control.

[00:02:47] After all, the results may differ materially from those in the forward looking statements as a result of a number of factors, including those described in other star's filings with the Securities and Exchange Commission, including in the annual report on form 10K for the year ended December 31, being filed with the FEC FEC on March 16 in 2002. And in particular, the extent of covid-19 impact on our business will depend on several factors, including the severity, duration and extent of the pandemic, as well as actions taken by the governments, businesses and consumers in response to the pandemic, all of which continues to evolve and remain uncertain at this time. You can look at these efforts through the company's website at. Each EPS calling for wi fi writes I that obsessed by that call and on the FCC website, w w w that FCC that golf before making statements in these to at least speak only of the needs of economies that are under no obligation to revise or update information or any forward looking statements in the press and or the conference call reference Abath to flag events or circumstances in the future, even if more information becomes available or if subsequent events, plus ancestress expectation to change. I would now like to turn the conference over to your host, you and Vice President of Corporate Communication. Please go ahead, sir.

[Dan Dischner]

[00:04:47] Thank you, operator. And good morning, everyone. Welcome to the Star's third quarter earnings call. My name is Dan Auditioner, VP of Corporate Communications. Joining me on the call, our Bill Peters, CFO, and Tony Mars, senior vice president of regulatory affairs and Clinical Operations. We appreciate everyone joining us today. And we look forward to sharing some of our very exciting pipeline updates, how well primitive has trended and other great news. I would like to first start by sharing the exciting pipeline updates I just mentioned. I am pleased to announce our intranasal epinephrine and NDA that will target the epinephrine auto injector market. Thus far, our intranasal epinephrine product has completed its Phase one clinical trial and we plan to begin phase two clinical trials in the first quarter of twenty twenty one. While they usually do not discuss phase one clinical trial results, I'd like to share that we believe our novel formulation of epinephrine significantly increases drug absorption rate while using an international route of delivery for anaphylaxis treatment. This offers a very attractive and noninvasive delivery option compared to the currently marketed epinephrine products, that being, of course, as an intramuscular injection with a with the auto injector. We are excited about the potential opportunity this brings to strengthen our portfolio and provide a new treatment option for patients having an anaphylactic reaction for epinephrine auto injectors, the Twenty twenty equivalent data annualized sales has an addressable market of over four billion dollars. Moving on to business, our third quarter saw sales growth of four percent compared to the same period in 2019.

[00:06:35] Net revenues in Q3 compared to the prior quarter solid saw a decrease of three percent. We are attributing this primarily due to the impact of our IMS product portfolio, which previously had benefited from market market shortages, and the third quarter saw lower demand due to the market shortage resolution. Regarding primitivist, we continue to see progressive growth on this product due to our recent Kroger store launch and our nationwide TV, radio and digital marketing campaigns. We will soon publish an updated presentation on our website, where you can observe that Primanti still presents a strong growth trajectory as the product has seen sales growth of four percent compared to the previous quarter. We have great confidence in our abilities to continue to grow primitive 18. Therefore, our ad spend for promoting will increase by 20 percent or to put it in dollar terms, in the range of an additional one to two million on an annualized basis. Moreover, I am I'm pleased to announce that we are working on adding an additional distribution point for Primitivist with a nationwide mass marketing retailer, which we anticipate to launch sometime in the first or second quarter of twenty twenty one. We will continue to explore other opportunities in large retail chains. And on a final note on promoting, I'd like to announce that will be investing in a new TV commercial.

[00:07:56] We also will invest in digital media to broaden our market reach in the 18 to 34 year old demographic. We continue to reiterate our guidance for Private Tene, which is to which is expected to reach prior peak sales of 65 million annualized next year in 2021. As we advance, we continue to expect our marketing spend to be a lower percentage of sales. Regarding our recently launched epinephrine multi dose viral product, Q3 has demonstrated that this product still benefits from its one hundred and eighty days of market exclusivity. As we still make our reintroduction into this market, demonstrating this, our epinephrine multi dose vials saw incremental growth by seven percent compared to the previous quarter. We previously stated that we want to be competitive in this market without severely disrupting it. And the goal has been going as planned with our AMPE zero zero one product. We were given a good Dupa target action date for the third quarter of this year or the fourth quarter if another preapproval inspection was needed. We wanted we want to disclose that we are still awaiting a decision from the agency as they have not postponed the update. However, the action date was not met, while S&P zero zero one is still in the same review cycle. We continue to maintain a positive dialog with the agency and are still excited about AMPE zero zero one as it is still on track to become the first generic to hit the market regarding AMPE zero zero two's projections, we remain confident that the agency will find it to be therapeutically equivalent and continue to anticipate a fourth quarter, the DOF and Target action date.

[00:09:33] Although news about AMP zero zero one may temper AMP zero zero two status expectations are good dofor date is still in the fourth quarter. We will keep you updated if we hear a response regarding the product progress with the agency as needed regarding our China facility in Nanjing, otherwise known as S&P, it continues to advance towards completing construction of its finished pharmaceutical product facility and then eventually for a finished product launch for the Chinese domestic market. Regarding an update on a timeline towards completion, we'll provide one as we approach closer to the date in the future. On a similar note to our international efforts, we continue to progress on our IMC UK products launch and anticipate our first launch in early twenty twenty one. We are currently have. We currently have multiple products on file and are working through the approval process. Next, I'd like to bring up our insulin programs. We have made progress on our insulin biosimilars products, specifically in the characterization and clinical stage. And and our final pipeline item. I'd like to bring up intranasal naloxone. We remain our guidance for refiling intranasal naloxone in twenty twenty one. On another note, I'd like to talk about it. Not apparent briefly, although although there have been.

[00:10:54] And a new entrant into the enoxaparin market, we have a long term commitment to this product and this product has shown some improvements. Seeing a 22 percent increase compared to the same period in 2019 and a 14 percent increase compared to the previous quarter, attributing this to a greater market opportunity presented just recently. We are confident that our quality systems will prove to be the difference as our long standing experience in this area, since we are the only company that manufactures both Enoxaparin API and finished product in the United States. Finally, we continue to see success in our pipeline development as demonstrated by our intranasal epinephrine products progress. We remain committed to the prospects of AMPE zero zero one and zero zero two while we anticipate prime time sales to trend upward as we approach allergy season. Although factors outside of Apostolis control may have tempered some expectations for now. We want to assure everyone that our success is made organically and as demonstrated by our R&D, scientific and technical progress, especially regarding intranasal epinephrine and the proprietary formulation technology of this product. We are confident that our pipeline development will continue to demonstrate our technical capabilities. I will now turn our call the call over to our CFO, Bill Peters, to discuss our third quarter financials.

[Bill Peters, Chief Financial Officer]

[00:12:18] Thank you. In sales for the third quarter increased four percent to eighty three point four dollars million from eighty point one dollars million in the previous year period. Premising Miss saw sales growth of two hundred and fifty five percent to 13 million dollars from three point seven dollars million in the third quarter of last year. With strong sales to our current customers growing online sales at Amazon.com, as well as the launching of privacy and missing Kroger, which is one of the largest grocery chains in the country, enoxaparin sales increased 22 percent to eleven point six dollars million from nine point six dollars million as Teva left the enoxaparin market, epinephrine, multi dose files and sales of two point eight dollars million in the second quarter. Back on the market, other Finnish pharmaceutical products sales decline of four point one dollars million as a competitor who had previously had supply issues returned to the market, our insulin API business and sales of two point one dollars million, down from four point four dollars million last year, as last year's sales numbers included at one point five million Dollar Amendment fee for mankind, cost of revenues increased to forty six point nine dollars million from forty four point nine dollars million. Gross margins were relatively unchanged at forty four percent of revenues. We had increased gross margins related to newer, higher margin products such as preventing MS. and epinephrine, multi-device vials which were offset by lower sales of naloxone and other finished pharmaceutical products. Selling distribution and marketing expenses increased 14 percent to three point seven dollars million from three point two dollars million due to advertising and distribution costs, including television commercials.

[00:14:06] For in this general and administrative spending increased six percent to eleven point seven dollars million from eleven dollars million due to higher legal expenses. Research and development expenditures decreased five percent to seventeen point six dollars million from eighteen point six dollars million, as lower expenses in China were partially offset by increased costs related to our biosimilars insulin program, our generic inhalation program and our newly disclosed intranasal epinephrine product, the company reported net income attributable to emphasize our shareholders of three point nine dollars million or eight cents per share in the second quarter, compared to net income of one point three dollars million or three cents per share in the third quarter of twenty nineteen. The company reported an adjusted net income of seven point six million dollars, or fifteen cents per share, compared to an adjusted net income of 5.2 million dollars or ten cents per share in the third quarter of last year. Adjusted earnings excluding amortization, equity, compensation, impairments of Longland assets and onetime events. In the third quarter, we had cash flow from operations of approximately eight point eight dollars million. As we reduced inventory and accounts receivable levels during the quarter, we used a portion of our cash to buy back approximately four point three dollars million of stock. I will now turn the call back over to Dan Dam operator.

[Dan Dischner]

[00:15:38] We're ready for the Q&A.

[Operator]

[00:15:43] Ladies and gentlemen, if you have a question at this time, please press the star and then the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the rest, the our. Our first question comes from Jacob use of Wells Fargo Securities. Your line is open.

[Jacob Hughes, Wells Fargo Securities]

[00:16:15] Hey, thanks for taking the question, if you could just comment on the trends for Primanti in the quarter, it looked like the growth slowed a bit sequentially and we had the leveling off in the pantry loading the beginning of the year. I think you lost Kroger at the beginning a quarter or so that you could just touch on how that's going if there's any other retailers you could launch in and how you're thinking about the upside to the sixty five million dollars annual sales target.

[Dan Dischner]

[00:16:45] Sure, great. Yeah, we still maintain still the trajectory is still good, you know, there might have been some, you know, slow because, you know, the pantry loading, as we've talked about in the past, but we still feel like, you know, the trajectory is kind of return to what we expected it to be. You know, Kroger introducing at the Kroger has gone really well. We see that there. Amazon has been doing doing well as well, even though we still believe that this product is more in the physical stores as we've seen it better there. But we do believe Amazon will continue to be an important component of it. We are planning where we're hoping to launch in the first or second quarter of next year into a major retailer. So we hope that will also help with the growth of the sales. And as we said, you know, we believe that the advertising campaign that we've done with the commercials adding a new commercial, we believe that that's really going to help us. And we believe that those peak sales of sixty five million that we had previously, we believe we can get back to their really easy.

[Bill Peters, Chief Financial Officer]

[00:17:57] Yeah, and just a couple more points. One is that we're updating the slide on the that shows in-store sales levels to our investor presentation. If it's not out there now, it will be by the end of the day. Additionally, as I said earlier on in the quarter, actually wasn't earlier in the quarter is actually in the lead in the quarter. So while we did have some Lodin sales, Kroger, they did not have the opportunity to put in reorders during the quarter as well.

[Jacob Hughes, Wells Fargo Securities]

[00:18:27] It's also just one 001 is know what's causing the.

[Tony Marrs]

[00:18:34] Yeah, hi, this is Tony. We don't really we don't really see anything that's that's triggering a delay. It's not as though we go we're going through cycles with the agency right now. We're in routine communication with with the agency essentially just getting kind of routine updates.What they're telling us is just that they have not met their action day. So we're not really clear. We just we just expect it's part of their normal review cycle for a complex product like this.

[Operator]

[00:19:26] Rafay Sardar, BMO Capital Markets spend. Gary.

[Dan Dischner]

[00:19:39] Good morning, Gary. There.

[Rafay Sardar, BMO Capital Markets]

[00:19:47] Can you hear me?

[Dan Dischner]

[00:19:49] There you are. Are you there? Hello, operator. We don't hear anything on our end. Operation, we just move to the next question.

[Operator]

[00:20:41] If ministers are in agreement, your line is now open.

[Dan Dischner]

[00:20:46] Hi there. Can you hear me?

[Unidentified Analyst]

[00:20:48] Yes, there we go. Right, I don't know what happened there, but it's Sarda on for Gary regarding the intranasal for an opportunity. I'm curious, how long do you expect it would take to run the phase two trial and what additional studies would be required after that?

[Tony Marrs]

[00:21:13] Yeah, hi, this is Tony again, where we've been working pretty closely with the agency on this project, what I can say is we're very encouraged for from some of the comments that we've received from the agency, they're very, very positive. They're very clear on what the expectations are. As Dan said, we've completed our phase one. The results are very promising. It is the peak profile is very encouraging. And we're planning to go into the phase two trials very shortly thereafter rather than get into the complexities and the scale of the trials. What I could say is that broadly, if things go according to our plans, we would anticipate to be filing this application sometime in twenty, twenty two.

[Unidentified Analyst]

[00:22:11] Thanks. And then I was also hoping you could comment on gross margin heading into twenty twenty one. I know there was an incremental benefit in Twenty twenty for prime a team that won reoccurred. Just any color there would be helpful. Thank you.

[Dan Dischner]

[00:22:29] Yes. So while we did have the issue of crime scene where we had expense, many of the components that were purchased prior to the approval and that did help to gross margins last year. And this year we've burned through those components. We're still using API, which had been expensed prior to launch, but that's becoming a smaller and smaller amounts of the cost of goods. However, privacy is still going to be growing next year, and because of that, we'll have higher sales of a product that is well above our corporate average. So that will help the gross margins in general. Also the products that we expect to be on the market next year. Apple one and Apple two should have higher gross margins than our corporate average as well. So we think that those those trends will help us increase our gross margins next year.

[Unidentified Analyst]

[00:23:23] Thank you.

[Operator]

[00:23:28] Our next question comes from the charm of Capitol Hill. Your line is open.

[Unidentified Analyst]

[00:23:35] All right, thanks. You know, it looked like your third quarter came in a little short versus expectations, at least consensus expectations and sort of wondering if some of the revenue that we thought you were going to get in the third quarter might be shifting into the fourth quarter or even the first or second quarter of next year. You know, obviously, you're still waiting for, oh, one maybe or two. But, you know, what do you guys think the likelihood is that that is part of the problem is really shift into Twenty twenty one.

[Dan Dischner]

[00:24:15] So the first thing there, Tim, is that, you know, we you know, there's definitely always timing. Some of these things are a one time thing. Some are just timing, you know, with with the other fish pharmaceutical products. We did mention that we did have a competitive return to the market. So that was what was causing the sales decline there. And that should continue in the future. But things like privacy and are very strong and we expect growth in that product very definitely into the fourth in the fourth quarter and well into next year. We still are talking about sixty million dollars as our sales target for next year and on April one, low to at this point in the approval cycle. Since we don't have approval today, I would say that it's unlikely that we would have any material sales from either of those products in Twenty twenty.

[Unidentified Analyst]

[00:25:06] Ok, and then you talk a little bit about just the epinephrine multi vial injection product, I mean, how is that doing in the hospital market? I know you were basically the first generic into that market. Were there other competitors and entered?

[Dan Dischner]

[00:25:24] No, we're the only ones, so we have a six month, you know, exclusivity, so happy about to be in that position, we are gaining market share and the sales last quarter were primarily load into the wholesalers in the SCIF. Sales this year, which were higher than last quarter, were restocking and indicate the actual sales levels that we have now. Our sales, our market share grew over the course of the quarter. So we think that the that product will also continue to grow sales as we look into the fourth quarter of next year.

[Unidentified Analyst]

[00:26:02] Ok, and then maybe just one last question on this intranasal epinephrine, you know, given the phase one data that you have, I mean, what's your plan? And Twenty twenty one? I mean, are you going to need I mean, what additional studies will you need to run? I'm assuming you've met with the FDA recently or you plan on meeting with them to sort of discuss. What other clinical studies you have to run here?

[Tony Marrs]

[00:26:31] Yeah, hi, this is Tony. We we have had correspondence with the agency. We have an EMT that we filed with them. They've seen our clinical plan and gone through it. Twenty twenty one. We'll have a number of trials that will be performing. We have a pretty good grasp of what those trials are. It's there types of trials that we've done before. We're familiar with doing intranasal type trials and we're familiar with epinephrine and doing trials with epinephrine. So I think twenty, twenty one is where the bulk of our trials will be completed. They'll be phase two and phase three trials that will be performed during that time. But the emphasis is we've been working with the agency on it. And they're really the comments that we've received from the agency on this have been very positive. I really want to emphasize that it seems they're very hungry for a product like this. Some of the strengths that we have for this product, I think they've been able to see. We really have created a special enhancement agent that we're going to be using with this that really will give us good differentiation and our product will have a superior product that will be used for the consumers. And we're very encouraged by that. And we think the agency is as well.

[Unidentified Analyst]

[00:28:00] Ok, great. Thanks. Thank you.

[Operator]

[00:28:08] Our next question comes from David Amsellem of Piper Sandler. Your line is open and so on me.

[David Amsellem, Piper Sandler]

[00:28:19] The two injectable pipeline products, one and two, I may have missed this, but you said or can you say whether you've had preapproval inspections for one or both of these products? That's number one. And number number two is on the market shortages. I think you cited potential forget what the figure was, the sum total revenue benefit from market shortages. So can you talk through what resolved, what hasn't been resolved and what you think what kind of benefit, if any, you can derive from any market shortages going forward? Thanks.

[Dan Dischner]

[00:29:08] Yeah, hi. Can I speak to the preapproval inspections for these two products and zero zero one zero zero two? We previously disclosed that we've had inspections for both of these empty 002 in particular is the most recent set and these were very rigorous inspections where they inspected every possible facility or component of our operations, including manufacturing, our clinical site, where where these trials have been performed and the laboratories where the analysis has been done. So those were very positive. And overall, we don't anticipate to have additional inspections associated with these. The results were positive for all of those.

[Bill Peters, Chief Financial Officer]

[00:29:59] And your second question related to the shortages, there were multiple shortages in many of our critical care products that are on the house. Will crash carts includes products like dextrose, sodium bicarbonate, epinephrine. So a lot of these products had we had a competitor who was frequently out of the market. That competitor was shipping like for most of the quarter and or near the end of the quarter. So we did not have the same level of sales because of their return to the market. You know, they've had multiple outages and shortages over the last 10 years. And we really can't predict whether they will or will not be able to satisfy the demand that's out there for these products. But we do know that we have the ability to do that and we have the increased capacity that we put on earlier this year. So so we do have the capacity and the ability to meet demand. Should they have shortages.

[David Amsellem, Piper Sandler]

[00:31:06] Thanks, guys.

[Dan Dischner]

[00:31:09] Thanks.

[Operator]

[00:31:11] I think question comes from the opening line is open.

[Unidentified Analyst]

[00:31:20] Thanks. Good morning. Just the first question I want to ask was around the intranasal epinephrine development program. I'm presuming the path to approval is to be a big study versus injectable epinephrine. But just wanted to ask you to confirm if that's the case while we're doing the route of approval, is the FDA through the five or five to wrap?

[Dan Dischner]

[00:31:49] So I wouldn't quite call it a B, so we're not comparing it to just a general epinephrine injection. We'll be looking at the the intramuscular EpiPen type of device as far as what we'll be comparing it to.

[Unidentified Analyst]

[00:32:12] Ok, so I guess subtraction is this. You know, a PKB study overseas or actually I mean, there's not endpoints and studies like this that that's that's impossible. But I'm just trying to get a little bit better sense of of, you know, what has to happen, given sort of the relatively short timeline that you have outlined in terms of potential violence.

[Dan Dischner]

[00:32:43] I want to be careful about not disclosing too much. What I what I will say is it's there's a strong piqué component to it. Maybe that will that will give you enough.

[Unidentified Analyst]

[00:32:55] Ok, and is this an internally developed program or is it is it partnered now?

[Dan Dischner]

[00:33:02] This is this is part of the capabilities that we have. This was completely developed internally. Our scientists here came up with the concept and what they've done is pretty extraordinary. And as we get closer and we'll be able to disclose a little more about it, you'll get a sense for some of that. It is something that we have IP that we have filed for. And once once that comes to Tili, it I think you'll get a real good sense of what we're trying to do. But essentially we're using a special enhancement excipients to assist in the absorption of the epinephrine. And and once you see what that is and how we're doing, I think it's going to really it's going to be clear how advantageous this product will be.

[Unidentified Analyst]

[00:33:56] Ok, thanks for that. And I just want to ask a question on doctor parent trends in the quarter. And I may have addresses your prepared commentary. I apologize. I got a little bit late here. But in terms of the the incremental step up, we've seen this in the past. Basically, when you've had the opportunity to kind of go after off contract sales on a short term basis, doesn't seem like that's the case in terms of what drove the upside this quarter. Just trying to get a sense of, you know, how how sustainable this this increase is.

[Dan Dischner]

[00:34:32] Yes. So it's not off contract sales. Basically, when Teva left the market, there was some you know, we were able to gather a portion of what they had. So hopefully our sales level can stay at this level. But, you know, this market has seen a lot of twists and turns. But, you know, as Dan did say in his prepared remarks, in a word, this is a product that we're in for the long term. And we and we make the API, we make the finished product both here in the U.S. And we're very confident about our prospects, this product, and as a long term generator value for us.

[Unidentified Analyst]

[00:35:11] So speaking of line, along the lines of long term value generation, with Teva leaving the market, any chance that this product starts behaving more like the biosimilars it is rather than a commodity generic in terms of pricing?

[Dan Dischner]

[00:35:26] That's our that's our hope. But, you know, we haven't necessarily seen that yet.

[Unidentified Analyst]

[00:35:32] Ok, fair enough, just real quickly on Prime. Haven't seen the updated slide deck yet to get the latest data in terms of sort of the the uptake here. But any other metrics you could share with us in terms of how many stores the product is on the shelf, Don. And I guess in terms of some of the early launch sites, kind of what you're seeing in terms of in terms of pull through per week, I guess, is sort of how we look at them.

[Dan Dischner]

[00:36:03] Yeah, I think I think we're you know, it's been everywhere. We launched the product. It's been well received. And so we feel like, you know, we've recently launched in Kroger. That was towards the end of the quarter. We expect that to do well. We're we're really close to being able to add another large retailer to our distribution points. And so we believe that that'll also be a big thing. And and we continue to invest in the advertising because we do see a very positive trend when we when we with our advertising, both television and digital media and I think with our digital media, we're really going to target kind of the 18 to 34 demographic and expand and expand that market. So we're excited to see how that how it's received in that group. And just, you know, the chart that that'll be in on the investor side just does show continued upward upward growth in the weekly sales. So we'll say that.

[Unidentified Analyst]

[00:37:09] Ok, and just last question, you are a and a filer on the Depression and a lot of discussion about that product in financial markets as of late, given that we're approaching a trial date for a group of filers, as well as the possibility that ego may, in fact, not have a blocking and exclusivity position. And it's also suggested it may be positioned to launch at risk. Just any updated developments or thoughts on your filing with respect to some of these recent emerging facts would be helpful. Thanks.

[Dan Dischner]

[00:37:46] Sure. So we'll be it'll be in our TENGKU, which we hope to get filed by the end of the day today. But we did settle during the quarter and that settlement is confidential. And it would be typical to other settlements that you've seen in these cases where there's multiple filers. So that's all we can really say at this point.

[Unidentified Analyst]

[00:38:09] Ok, good. Thank you.

[Operator]

[00:38:12] Our next question comes from the L.A. As you down, your line is open.

[Unidentified Analyst]

[00:38:21] Hey, good afternoon. A couple of questions on the epinephrine opportunity here. I guess the first one is once you're 180 days to severe expires, how many generics do expect to enter the market? And then just more broadly, how big is this market? And, you know, as you think of your new epinephrine product and developments, what kind of role do you think it could play in this epinephrine market?

[Dan Dischner]

[00:38:59] Yeah, OK, so you know, the size of the market, I do know it's currently over one hundred million dollars and size, and so we we expect to get a fair share of the market. And we we are not probably there yet, but we're happy with the gains that we've gotten over the course of of this time. So far, as far as competitors go, you know, this is a product that, you know, was a grandfathered product for a long time. Yet there was really only two competitors in it for a very long period of time. So we're not we don't know of any other competitors. And so I would our our best guess is that even though we have a six month exclusivity, that that goes into the well into the fourth quarter here, we're not expecting any significant number of competitors in the near future. So we think this is going to be remain a strong product with relatively high margins. And we think that we will get our reasonable share, you know, in the not too distant future. And that's on our multi dose vial. Yeah, I think the other question or second part of your question was about the intranasal epinephrine. Is that correct?

[Unidentified Analyst]

[00:40:18] Yeah, that's correct.

[Dan Dischner]

[00:40:21] And how now can you revisit that question? Because I think it's yeah. Yeah.

[Unidentified Analyst]

[00:40:28] Just the overall thoughts on what kind of opportunity you see with this intranasal products competing against these various injectables.

[Dan Dischner]

[00:40:45] Well, I think, as we said, we do believe that it presents a new way of life and a safer way maybe of of having epinephrine, and we're excited by it because the technology that's behind it is what we've seen has been very, very, very positive. So, you know, the market opportunity, I think we said, was I think the equivalent data for Twenty twenty for the auto injector epinephrine market is four billion. So that's the addressable market that we're targeting. Does that help?

[Unidentified Analyst]

[00:41:23] Yeah, absolutely. And then can we revisit the IMS UK products because we recorded quite a while back is can we just get an idea of how many products and the opportunity they represent?

[Dan Dischner]

[00:41:40] Yeah, there's about eight products, and I think we've said this is an annualized mid to high single digit million dollar opportunity for us. We've you know, we waited until we had the new capacity online earlier this year to really focus on those because we really didn't have enough capacity to satisfy the domestic market. But now that we have that capacity, you know, we had we had hoped to have that online earlier. But now that we have that capacity, we are we have turned our focus back to the U.K. market. And Tony can give you a little bit of an update on where we are with some of that and getting those products relaunched. Yeah, we have a number of products on file with the MHRA. They're going through a little bit of a shuffle between Brexit as well as covid. They're essentially on lockdown and most of the MHRA are working remotely. But nonetheless, we're we're working with them on that. We're addressing any issues that come up. But the applications are on file with them and we just continue to work through questions that they may have on that.

[Unidentified Analyst]

[00:42:51] Thank you. Thank you.

[Operator]

[00:42:56] Our next question comes from David Steinberg of Jefferies. Your line is open.

[Ted Chen, Jefferies]

[00:43:03] Hi, guys. It's actually a chance for on four days, a couple of questions you haven't talked about your I think you had talked about your first recitative installation and the filing is an update on that. And then also just a quick question on on your question. Spend, you know, on kind of sequentially kind of what we should expect going into fourth quarter and and then kind of in twenty one, you know, the investment that you're looking to to add on to this year.

[Tony Marrs]

[00:43:49] Yeah. Hi, this is Tony. I can address the inhalation filing of the trials are wrapped up. All of the trials that we needed to do for that product, they're completed and we're just compiling information as we prepare for the filing that we anticipate to do later this quarter. And the as far as the and spend a lot of that in the quarter is related to legal expenses specifically. We were getting closer. We had a lot of expenses along for the press in case. And also the Lexus Skåne case out of the vasopressin cases settled. Those go away. So that should flatten out somewhat. But in the selling expense line, we are targeting an increase in spending in the fourth quarter for advertising on Primanti Missed. And we're also looking to increase that spending next year as well. But in both those cases, our our belief is that sales is going to sales are going to increase faster than our spend. So that will have increasing operating margins from that product.

[Ted Chen, Jefferies]

[00:45:12] Thank you so much. No problem.

[Dan Dischner]

[00:45:23] Operator, that's it.

[Operator]

[00:45:27] This time, I would like to come back to this and further comments.

[Dan Dischner]

[00:45:35] I want to thank everybody for joining us today to share in our exciting news on our pipeline, specifically with our intranasal epinephrine product. We look forward to continuing to update you as these programs progress. And we look forward to a good night in Q4 and meeting with everybody. Then everybody, please stay safe and have have a good weekend.

[Operator]

[00:46:04] Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and have a wonderful day. You may all disconnect.