Executive Summary / Key Takeaways

• Amphastar Pharmaceuticals is strategically evolving from a generic-centric model to an innovation-led biopharmaceutical company, emphasizing proprietary and interchangeable biosimilar products, underpinned by its robust U.S.-based manufacturing capabilities.
• The company delivered strong Q3 2025 results, with net revenues of $191.8 million and adjusted net income of $44.7 million, driven by significant growth in its proprietary products, BAQSIMI and Primatene MIST.
• A major pipeline expansion in Q3 2025 includes an exclusive licensing agreement for three novel peptide candidates in oncology and ophthalmology, unlocking a combined market opportunity exceeding $60 billion and aiming for proprietary products to constitute 50% of the pipeline by 2026.
• Despite competitive pressures on legacy generic products like glucagon and epinephrine, Amphastar projects flat revenue for 2025, anticipating a return to high single-digit to low double-digit growth in 2026, supported by new product launches and BAQSIMI's continued momentum.
• Key risks include intense generic competition, potential regulatory delays for pipeline assets, and litigation, as evidenced by a $23.1 million litigation provision in Q3 2025.

The Foundation of Innovation: Amphastar's Strategic Evolution

Amphastar Pharmaceuticals, Inc., founded in 1996 and headquartered in Rancho Cucamonga, California, has built its business on developing, manufacturing, marketing, and selling technically challenging generic and proprietary injectable, inhalation, and intranasal products. The company's offerings, including insulin active pharmaceutical ingredients (APIs), primarily serve hospital and urgent care settings, distributed through group purchasing organizations and drug wholesalers, while its over-the-counter product, Primatene MIST, reaches consumers through drug retailers. Amphastar's history is marked by strategic acquisitions that have bolstered its manufacturing, marketing, and research and development capabilities, including in-house production of raw materials and APIs. This vertical integration is a cornerstone of its operational excellence, enhancing supply chain resilience and quality control.

The biopharmaceutical industry is characterized by intense competition, stringent regulatory pathways, and a constant drive for innovation. Amphastar operates within this dynamic landscape, facing competitive pressures across its generic portfolio while simultaneously investing in a strategic shift towards higher-value proprietary and biosimilar products. This evolution is critical for sustainable long-term growth, as the company leverages its deep expertise in complex injectables and immunogenicity to carve out differentiated market positions. The company's commitment to addressing critical healthcare needs was recognized in Q1 2025 with the Drug Shortage Assistance Award from the USFDA, highlighting its role in ensuring patient access to essential medications.

Technological Edge and Pipeline Expansion

Amphastar's core technological differentiation lies in its ability to develop and manufacture complex injectable, inhalation, and intranasal products, often with high technical barriers to market entry. This expertise extends to the in-house production of APIs, which provides significant tangible benefits. For instance, manufacturing its own insulin API for its insulin aspart Biologics License Application (BLA) (AMP-004) is expected to significantly improve its cost structure in a large-volume market. The company's U.S.-based finished product manufacturing further strengthens its supply chain resilience, a critical advantage in an increasingly volatile global environment.

The company is making substantial investments in its research and development (R&D) initiatives, which are central to its strategic pivot. In Q3 2025, Amphastar made a significant move by entering an exclusive licensing agreement with Nanjing Anji Biotechnology Co., Ltd., securing U.S. and Canadian rights to three early-stage novel peptide candidates. These include AMP-105, a first-in-class oncology peptide targeting tumor proliferation and metastasis with a novel mechanism of action, showing anti-tumor activity across multiple cancer types in early studies. AMP-109 is a peptide-coupled docetaxel designed for improved selectivity and bioavailability, targeting various cancers and aiming to reduce docetaxel-induced toxicity. Perhaps most notably, AMP-107 is a noninvasive eye-drop therapy for wet age-related macular degeneration and diabetic macular edema, with the potential to be the first non-injectable anti-VEGFR eye drop in a substantial $9.4 billion market. These new assets broaden Amphastar's pipeline beyond diabetes and complex generics, unlocking a combined market opportunity estimated to exceed $60 billion. The company aims for proprietary products to comprise 50% of its pipeline by 2026, demonstrating a clear technological roadmap and strategic intent to drive future value.

Competitive Dynamics and Strategic Positioning

Amphastar operates in a highly competitive pharmaceutical landscape, facing both larger, diversified players and niche specialists. Direct competitors like Teva Pharmaceutical Industries (TEVA), Viatris (VTRS), Perrigo Company (PRGO), and Baxter International (BAX) often have broader portfolios and greater scale. Amphastar differentiates itself through its focus on technically challenging products, vertical integration, and U.S.-based manufacturing. While it may lag in overall market scale compared to giants like Teva, Amphastar's agility and specialized expertise allow it to lead in targeted segments. For instance, in the epinephrine pre-filled syringe market, Amphastar is currently the sole U.S. player.

The company's strategy for its insulin aspart BLA (AMP-004) is to achieve interchangeable biosimilar status. This is a significant differentiator, as interchangeability allows for immediate pharmacy-level substitution without a new prescription, offering a substantial competitive advantage over non-interchangeable biosimilars and potentially simplifying market access. While the GLP-1 ANDA (AMP-018) is expected to enter a crowded generic market, limiting its commercial opportunity, Amphastar's focus on cost and quality leadership in this space reflects its disciplined approach.

Amphastar's vertically integrated business model and 100% U.S.-based finished product manufacturing provide a hedge against international trade policies and tariffs on finished pharmaceutical goods. While the company imports some APIs and components, the estimated impact of current tariffs is a manageable increase of approximately $500,000 per quarter. This domestic production capacity enhances supply chain resilience, a critical competitive factor in today's global economy.

Financial Performance and Operational Highlights

Amphastar delivered a robust financial performance in the third quarter of 2025, with net revenues reaching $191.8 million, a slight increase from $191.2 million in the prior-year period. For the nine months ended September 30, 2025, total net revenues were $536.78 million, compared to $545.44 million in the same period of 2024. GAAP net income for Q3 2025 was $17.4 million, or $0.37 per diluted share, while adjusted non-GAAP net income stood at $44.7 million, or $0.93 per diluted share.

Proprietary products were key growth drivers. BAQSIMI recorded its highest quarterly sales ever in Q3 2025, reaching $53.61 million, a 33% increase year-over-year. For the nine months, BAQSIMI sales were $138.65 million, up 63% from the prior year. This growth was fueled by expanded marketing efforts, the strategic partnership with MannKind (MNKD)'s sales force, and Amphastar's assumption of full global distribution responsibilities at the start of 2025. Management anticipates BAQSIMI's peak sales to reach $250 million to $275 million, noting that the overall glucagon market is expanding, with only 12% of insulin users currently filling a glucagon prescription, indicating significant untapped potential.

Primatene MIST also demonstrated strong momentum, with Q3 2025 sales of $28.81 million, an 11% increase year-over-year, and nine-month sales of $80.74 million, up 10%. This consistent growth is attributed to increased unit volumes and sustained marketing efforts, including an expanded physician sampling program. While the product's Orange Book patent expires in 2026, management believes significant generic competition is unlikely due to its OTC nature and plans for a follow-on product with a lower global warming propellant.

Conversely, several legacy generic products faced headwinds. Glucagon sales declined 49% in Q3 2025 to $13.56 million and 33% for the nine months to $55.00 million, primarily due to increased competition and a market shift towards ready-to-use products like BAQSIMI. Epinephrine sales decreased 12% in Q3 2025 to $18.79 million, impacted by lower average selling prices for the multi-dose vial due to increased competition, though partially offset by demand for the pre-filled syringe due to competitor shortages. Lidocaine sales also saw a 19% decrease in Q3 2025 as other suppliers returned to historical distribution levels. The "Other Products" category saw a 10% increase in Q3 2025, driven by a $4.7 million rise in albuterol sales and $2.4 million from the newly launched Iron Sucrose Injection (AMP-002) in August 2025. The company projects Iron Sucrose Injection to maintain a run rate of approximately $4.8 million per full quarter.

Gross margins for Q3 2025 were 51.4%, down from 53.3% in the prior-year period, and 50% for the nine months, down from 53%. This decline was primarily due to the transition of BAQSIMI distribution (which previously had a 100% gross margin when handled by Lilly (LLY)) and pricing pressures on higher-margin legacy products like glucagon and epinephrine. However, management's cost control efforts and the strong performance of higher-margin Primatene MIST partially mitigated these impacts.

Operating expenses saw notable changes. Selling, distribution, and marketing expenses increased 28% in Q3 2025 to $11.51 million, reflecting expanded marketing for BAQSIMI and Primatene MIST. General and administrative expenses surged 166% to $39.47 million, primarily due to a $23.10 million litigation provision related to a jury verdict. Research and development expenses increased 6% to $22.35 million, driven by the $5.30 million upfront payment for the Anji licensing agreement and higher clinical trial costs. Non-operating expenses decreased due to foreign currency fluctuations and interest rate swap adjustments.

From a liquidity perspective, Amphastar reported cash and cash equivalents of $216.27 million as of September 30, 2025. Net cash provided by operating activities for the nine months was $123.30 million. The company's capital structure includes $345 million in 2029 Convertible Notes and a $250 million Wells Fargo (WFC) Term Loan. In August 2025, the Board authorized a $50 million increase to its share buyback program, bringing the total authorized to $435 million, primarily to offset equity compensation dilution. Amphastar plans a significant increase in capital expenditures for its Rancho Cucamonga facility expansion, aiming to quadruple production capacity, funded by operating cash flows. The company believes its cash reserves and operating cash flows are sufficient to fund operations for at least the next 12 months.

Outlook and Risks

Amphastar projects flat top-line revenue for 2025, a forecast that balances anticipated growth from BAQSIMI and Primatene MIST with declines in legacy generic products. This guidance incorporates risk-adjusted contributions from two expected product launches later in the year, specifically Iron Sucrose Injection (AMP-002) and teriparatide (AMP-015). Looking ahead, the company anticipates a return to high single-digit to low double-digit revenue growth in 2026, a projection that does not yet include potential launches of its insulin aspart BLA (AMP-004) or GLP-1 ANDA (AMP-018), both slated for 2027.

Key pipeline catalysts include AMP-007, an inhalation product on track for a mid-2026 launch, with the potential to be a first-to-market generic in a $1.5 billion addressable market. Teriparatide (AMP-015) is expected to launch in the first half of 2026. R&D spending is set to increase as the company ramps up investment in its insulin portfolio, two inhalation candidates, and the newly in-licensed proprietary peptide products. Capital expenditures will also see a significant increase in 2025 to support the U.S. manufacturing expansion.

Despite this optimistic outlook, several risks warrant investor attention. Intense generic competition continues to pressure pricing and unit volumes for products like glucagon, epinephrine, enoxaparin, and dextrose. Regulatory delays, as experienced with AMP-002 and AMP-007, can impact launch timelines and revenue contributions. Litigation risks, highlighted by the $23.1 million provision in Q3 2025, can significantly impact financial results. Furthermore, supply chain disruptions, particularly from the company's China facility, and cybersecurity threats remain ongoing concerns. The pledging of company shares by executives, while subject to an internal policy, introduces a potential risk of forced sales if the stock price declines significantly.

Conclusion

Amphastar Pharmaceuticals stands at a pivotal juncture, strategically shifting its focus towards a more diversified, innovation-led future. The company's robust Q3 2025 performance, driven by the strong commercial execution of BAQSIMI and Primatene MIST, underscores the efficacy of its proprietary product strategy. With a significant expansion into novel peptide candidates in oncology and ophthalmology, coupled with a commitment to U.S.-based manufacturing and a pipeline of high-potential biosimilars and complex generics, Amphastar is building a compelling long-term growth narrative.

While competitive pressures in its legacy generic portfolio and the inherent risks of pharmaceutical development present challenges, Amphastar's technological expertise, vertical integration, and disciplined capital allocation position it to capitalize on emerging opportunities. The anticipated return to double-digit revenue growth in 2026, fueled by new product launches and the continued strength of its branded portfolio, reflects management's confidence in its strategic direction. Investors should closely monitor the progress of its proprietary pipeline, the successful integration of new launches, and the company's ability to maintain its competitive edge through innovation and operational efficiency.