Hello, everyone and thank you for your patience. The Amneal Pharmaceuticals Third Quarter 2024 Earnings Call will begin shortly. [Operator Instructions] Thank you. Good morning and welcome to the Amneal Pharmaceuticals Third Quarter 2024 Earnings Call. I'd now turn the call over to Amneal's Head of Investor Relations, Tony DiMeo. Please go ahead.

Good morning and thank you for joining Amneal Pharmaceuticals' third quarter 2024 earnings call. Today, we issued a press release reporting Q3 results. The 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 for factors that may impact future performance. We also discuss non-GAAP measures. Information on use of these measures and reconciliations to GAAP are in the earnings release and 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 Specialty; and Jason Daly, Chief Legal Officer. I will now hand the call over to Chirag.

Thank you, Tony. Good morning to everyone. We're excited to talk about our strong Q3 results. Our entry into obesity and metabolic disease space with Metsera collaboration and our recent launch of CREXONT for Parkinson's disease. Q3 was an excellent quarter as we continue to drive sustainable growth and took actions to solidify our long-term growth profile. First, I'll discuss our recently announced collaboration and entry into the global obesity space. The GLP-1 market is prime for innovation and expanding access to these novel class of therapies. And with Metsera, we are poised to deliver new, high-quality medicines at scale. Metsera is a clinical stage biotech company purpose built for advancing the next generation of weight loss medicines. They have rich proprietary library of peptides with a pipeline of innovative injectable and oral therapies. Amneal's high-quality manufacturing and operational expertise is complementary to Metsera's drug discovery capabilities. This collaboration is an important milestone for Amneal and underscores the strength of our capabilities and our reputation as an industry leader. Amneal is Metsera's preferred global supplier in the United States, Europe and other markets and has been granted a license to commercialize Metsera products in select emerging markets, including India and certain countries in Southeast Asia, Africa and the Middle East. We will leverage our existing infrastructure and build 2 new world-class manufacturing facilities in India to support the initiative. Importantly, this collaboration creates a new high-growth vector for Amneal with multiple avenues for value creation in a rapidly growing space that is estimated to reach over $100 billion by 2030. It is a logical extension of our strategy, a deep expertise in complex pharmaceutical manufacturing and our track record of delivering high-quality innovation at scale. Second, we are incredibly excited about the recent launch of CREXONT which is an important…

Good morning, everyone. Thank you, Chirag and thank you to the global Amneal family who wakes up every day with energy and passion to make healthy possible. I will discuss our core strengths in operations, innovation and pull you where Amneal continues to thrive then I will share how we will utilize our vast experience and capabilities in the GLP-1 space which is a new growth vector for Amneal. First, in operations, Quality is at the center of everything we do. Our world-class global operations have an industry-leading quality track record and we had multiple successful inspection at our sites over the last quarter. Across our organization, we are investing in automation, digitization and AI technologies to advance our global infrastructure. We are driving operational excellence, Kaizen cost improvements and skill development programs to enable our next generation of capabilities and growth. We see operational excellence, high levels of customer fulfillment and a robust supply chain as the key competitive advantages for us as the recent storms in the U.S. remind us drug shortages, particularly for injectables remains a U.S. supply challenge and we are working hard to be part of the solution. Second, in innovation, we launched CREXONT in September which is a remarkable new treatment for Parkinson's disease which will benefit many patients. We are hearing testimonies from patients that CREXONT is changing their daily lives. Its unique and novel formulation is designed to provide rapid onset of action and extended efficacy to deliver more "good on" time with less frequent dosing. As a leader in the Parkinson's space, we are working to bring this new therapy to patients quickly and are pleased with early adoption. Another specialty R&D program we have been working on but had not disclosed prior to approval is extended release Pyridostigmine Bromide. This…

Thank you, Chintu and good morning, everyone. We're very pleased to report another terrific quarter with strong revenue and adjusted EBITDA growth, robust cash generation and continued debt reduction. I'll first discuss our third quarter and year-to-date results, then move on to cars and capital allocation priorities. In the third quarter, revenues grew 13% to $702 million with continued growth across all our 3 business segments. Our generics, what we also call our affordable medicines business grew 9% to $427 million. This terrific performance was driven by the strength of new product launches which in turn help improve shortages and provide exceptional value to our customers, payers and patients. New products launched in 2023 and 2024 contributed $35 million to Q3 revenue growth and also biosimilars, generated $31 million in revenue. Amneal's continued R&D innovation, superb quality track record and consistency of supplier to competitive advantages, driving sustainable value creation and diversification. Let me now move to our Specialty segment, where revenues grew 19% to $116 million, driven by our branded products. Our Parkinson's franchise which now includes CREXONT, Rytary and ONGENTYS delivered $61 million in revenue and contributed $17 million to Q3 revenue growth. CREXONT's quarterly revenue was $3 million due to the initial stacking. One month post launch, we are pleased with the early indicators of commercial uptake, inclusive of prescription trends, physician and patient testimony as well as insurance providers interested in making this new therapy available to their patients. In the third quarter, our outcare business grew 21% to $159 million, reflecting continued growth across both the distribution and government channels. New product launches and continued strong execution by the team are key drivers of this strong performance. Amneal's overall gross margin of 44% in the third quarter was up 30 basis points compared to the…

Thank you, Tasos. Our bold strategic vision for Amneal is becoming a reality more and more each day. Over the past 5 years of the journey, we focused on transforming and diversifying the business. In retail generics, we shifted our portfolio focus to complex products starting back in 2019. In 2020, we acquired the healthcare distribution business to add new channels to drive access to our products. Then in 2021, we started expanding our injectable business by adding new products, capabilities and capacity. In 2022, we launched our first biosimilars and built our initial pipeline from there. Internationally, we have laid a strong foundation for long-term growth. The launch of CREXONT and our entry into GLP-1 space in Q3 are very significant milestones for the company, as we execute our strategy, further diversify and drive sustainable growth, we are building Amneal as a leading diversified global pharmaceutical company. Let's now open the call for Q&A, Tony?

[Operator Instructions] The first question comes from David Amsellem from Piper Sandler.

So just have a few I wanted to start with CREXONT. And I know early days regarding the rollout. But can you talk about the reimbursement landscape, particularly Part D and how we should think about access. And regarding adoption, how are you thinking about that in the context of the eventual loss of exclusivity for Rytary. So that's number one. Number 2 is on your injectable business. I know you've talked about shortage products and you've also leaned into more complex products. Trying to get a better sense of the mix the topline mix for injectables with respect to shortage products and more complex products? And how do you think that mix will evolve over time as you continue to build that part of the business? And then lastly, a product-specific question. I believe you've been developing an intranasal epinephrine product. Any updates on that would be helpful.

Good morning, David. So CREXONT, off to a great start. We are actually pleasantly surprised by ourselves how the product is doing. It's like CREXONT is marketing CREXONT and excess so far, good initial coverage, it's just been a few months and great discussion with rest of the payers. We expect to get more coverage than Rytary because what product is doing. So that's the answer to your first question. LOE of Rytary which is August 1, 2025, should not have much of an impact at all because this is -- we're expanding the market. We're going to pretty much all qualified or people who should be taking CD/LD and converting the market from IR. We have the naive patient labelling and from Rytary or other small portion of the XR all of them took CREXONT which is the most advanced product today available for Parkinson's patient. There is no excuse why they're not all should be on it. So we're going for a massive market share for this product. And this is why we're pricing affordability, we have done an extensive work to set it up properly and we are receiving the feedback we had expected for the market access. So no impact on LOE, obviously, we'll we lose LOE in August 1 but CREXONT and ONGENTYS and the other growth drivers of the company continue to drive growth for 2025 and beyond tremendous growth for me. Your second question on injectable, complex, I'll hand it to my brother but we're doing both the shortages and complex products continue to provide both and also we are converting the compounded products which always gets into the FDA's crosshairs for the GMP and other reliability. We had our first launch of potassium prospect just recently and it has been received really well in the market. It's pretty much everybody wants to use FDA-approved product rather than compounded products. And we're working on a few more but Chintu can shed a little bit more color on it. Go ahead, brother.

So on injectables, we are very excited with our pipeline and infrastructure and the time we spent over the last 4 years in creating this. So we have a very good mix of complex products and shortages are very hard to predict but we do have the capabilities and capacity and the mix of the product. And we are always working with FDA drug shortage group to proactively work as and when we get a request, we keep eye on the drug shortages. We are very purpose driven when it comes to shortages and how we can help alleviate the shortage. So our portfolio is very nicely balanced in different categories of injectable. We have LBB bags. Some of them always goes on a shortage and we have excess capacity, we have the vial capabilities, PFS, we have the immersion line like a product like Propofol. We have plan to get capacity. So we'll be able to cater to the shortage as and when it happen. We have a very good complex portfolio also in microspheres and we expect to receive our approval in next quarter or so for our first microsphere product. We have liposomal, we have the suspension-based product. So, I think it's a very mixed revenue perspective, of course, complex will drive a lot more on a revenue and a topline than the shortage and we have the right-sized infrastructure. So that's a very good mix and we have the scientific capabilities of developing even the next generation of complex injectable as we announced with GLP-1 drug device combination and auto injectors. So, very nicely balanced portfolio. We have about 30 or so pending approvals at FDA. So our injectable is a very good mix. Very hard to say each one from the percentage because shortages are not known. Regarding Neffy we are very excited about our own product, our Adrenaclick auto-injector that is doing really well. This is the emergency drug. We are not expecting any challenges to our current business. Actually, it's growing. It's a preferred route because of the emergency for the parents. Neffy also, we have the capabilities on a unique dose nasal spray. So as of today, we are not seeing any impact or we don't expect to see any impact going forward on our current product. And Neffy, so far, we have not seen any greater uptake or anything in the market. And we will provide more highlight into our plan going forward on a unit dose major of epinephrine.

The next question is from Balaji Prasad.

Firstly, congratulations on the Metsera deal. Looking at it, it seems to have the potential to redefine Amneal over the longer term. So my first question is on that. Can you provide a bit more financials around the deal? What does this mean in terms of incremental CapEx for Amneal over the coming years and the balance sheet back. And maybe also discuss the longer-term goals that you have with this deal. That's one. Two, maybe a follow-up on CREXONT. Could you describe in detail a bit more on the feedback with the product now. How has the protocol emerged for converting from existing drugs, Sinemet to CREXONT or Rytary and competition from other products too.

So you're correct, Metsera deal puts us into the next generation of growth. And it is very -- it's next level of partnership as well. And this is in peptides and biologics and expect us to do more announcement in a similar line. So first of all, we create a massive capacity and capabilities to supply peptides-based product which is starting with on obesity, metabolic disease and then continue to do more partnership beyond Metsera or even approach big players like Lilly, Novo, Roche to do CMO work for them. So that is why it's very strategically how we have set it up. And on top of it, it obviously allows us to get ready for the GX entry with power -- I mean, big capacity. So could be 10 filers but who could really supply globally at a high-quality product. And that is what we're being -- we are setting it up, both on all injectables. On the financial terms, as we disclosed, Metsera is providing $100 million towards the CapEx and our net expense over the next 4 to 5 years is about $50 million to $200 million, so well within our budgets, so not a big deal. And this is why we are putting the first phase in India. In the future, obviously, we will always like some portion to be produced in the United States, both oral and injectables which will do so going forward in the United States as well. Moving on to CREXONT, as I just explained, CREXONT is very novel. It's the best in the class right now. It doesn't too much compete with the more -- even though the results could be same as a continuous pump that every launch and that is for more advanced patient at $120,000 WACC versus CREXONT is a daily use, naive patient all the way to the advanced patient can use this. So the universe is so big just in the United States market number of patients. And our marketing strategy is we're going after all of that business from naive to Rytary to Sinemet to AbbVie doesn't matter to us. We're because what our product does and what we have seen so far and the affordability of whole product that it can have a wider market access. And this is why we set it up this way because we really wanted to reach many patients. What's the use of innovation if it cannot reach the patients. And that's the Amneal philosophy and that's how we have launched it. Joe, would you like to add?

Yes. Balaji, thanks for the question around CREXONT. I would just add to what Chirag said is that our goal has always been to demonstrate the fact that we're the number 1 company in the Parkinson's space. The addition of CREXONT absolutely allows us to do that. And there were really 3 key aspects to our strategy around your question. One was ensuring that patients saw this product as one that they had accessibility to and were excited about and we are very pleased with the response we got from the Parkinson's community. The second which is kind of goes to your question around conversion and dosage. The HCPs were a critical aspect of our second part of our strategy which was ensuring that the HCPs or health care providers saw CREXONT as differentiation, clinically different than what they saw in other products in the market. And the good news is the feedback we've heard as the health care providers absolutely see CREXONT as a clinical differentiator and their response and feedback has been that the dosing is very easy for them to convert, whether it be a Rytary patient or a patient on CD/LD or a naive patient to Chirag's point. And then last to the question, you had -- that was asked earlier by David which is the market access strategy which was our third strategy component was ensuring we got access comparable but not broader, than what we saw with Rytary which had about a 70% national average access. With CREXONT we're very pleased with the response from the payers so far. We've already tapered a few deals and we are looking to go at least 50% coverage by next year. And the trend that we're on now with some of the deals we're in conversations with looks like we'll probably be able to get that, if not more, next year. So the access response from the payers has also been very positive. So hopefully, that gets to some of the questions you had about CREXONT as well.

That's very helpful. If I could just add in a follow-up question here. Chirag, even discussed making America on multiple firesides in the past, even last year's CEO panel at AAM. So with the change in administration coming, can you talk about the implications of an America-centric manufacturing for generics and biosimilars and how that could -- would influence Amneal's growth strategy over the coming years?

Yes. Thanks, Balaji. So we have an issue as a country in case of emergencies, we need to build a resilient supply chain. And what I mean by resilient is having multiple locations, countries, supplying the friends, shoring and onshoring because sometimes it will be hard to, in the cases of hopefully never happens like wars or some kind of pandemics or national disaster, we could have issues importing antibiotics. The critical 40 or 50 products that we've been -- law being, I would -- advocating in Congress and in White House and both sides of the aisle are completely receptive. We have advanced the agenda for those products the starting material API and finished dosage for the Medicare portion which is about 45% to 50% market share, Medicare giving different reimbursement for those products. It's legislatively passed, so it's a law and it creates open market for anybody to invest in America, build these plants to supply these critical medicines. So I think we get that done this time.

The next question is from Leszek Sulewski from Truist Securities.

I just want to focus on the GLP-1 Metsera partnership. So after that announcement, has this raised awareness of your manufacturing capability. And have you been approached by other clinical-stage peptide biotechs for similar partnerships. And then remind us, what is your current capacity is sterile injectable peptides? And how much additional volume would you anticipate from the new facilities? And what percentage of that increased capacity would you anticipate to be allocated to Metsera's product versus capacity to capture other brands including Lilly or Novo as you mentioned. Also, is there a path for you to capture the generic side of some of these blockbuster GLP-1s come LOE? And then lastly, what do you expect the response will be from some of your manufacturing competitors in the space?

So let me start with our current capacity. On the PFS cartridge, we can make up to 5 million units, a very small capacity for peptides API as of today. In the next few years, 3 years or so, we would increase our capacity to make 5 to 10 turns of API drug substance and 100 million of combination of PFS and cartridges whichever our client chooses to use with full assembly. So that's the phase for the next 3 years on a capacity-wise. We would -- yes, we've been approached by big guys as well. So we will obviously work with them and see how we can help them to introduce these very important drug globally and create access to other countries as well, affordable access. So we have that opportunity as well with us. And on -- as far as GX is concerned, we would be ready whenever the LOE happens and we will have full capacity to supply GX products at that time, if we need to add another 100 million units, we can because the infrastructure will be there. And if we have to expand API, we will because we have all the capabilities -- capacity already built in and then just extending the site. So that is the strategy for us to play in GLP-1 or all peptides within the obesity and metabolic space and that could further expand to other peptides enzyme driven products as well.

And just lastly on the competitors' response, have you seen anything out there yet?

No, this is a very unique partnership. It took us a year and a very old partnership knowing it's a trusted partnership and we're doing beyond CDMO work here. We're co-developing the products, helping them on CMC, clinical and production. So both oral and injectable side, the formulation enhancement. So this is very unique and we haven't seen anybody else doing that. But I'm sure people may follow this model.

The next question is from Chris Schott from JPMorgan.

Congrats all the progress on the business. Just 3 for me. Maybe first on business development. Can you just talk about the landscape for deals here? And it just seems like the business is growing, you get more capabilities for investing behind assets. Just maybe a little bit more color on kind of the size and stage of assets you're most interested in? The second question, biosimilars. Just talk a little bit about the opportunity and competitive landscape you're thinking about in that market? And then finally, just on 2025, just any initial color you can provide in terms of just thinking about pushes and pulls as we think about the outlook for next year?

Thank you, Chris. So the business development front, as we continue to obviously -- we want to delever. So we have that in mind but we do generate $300-plus million operating cash flow. So we do have certain capabilities and we are very, very focused on getting down into 3s as far as the leverage is concerned. And the deals we're looking at and would be adding is 2 areas, specialty products and it's very smart additions because we have limited R&D budget and limited cash but there are so many opportunities that we see and using Amneal's capabilities and Amneal's 1,000 scientists and all the CMC and other capabilities clinical, we could have a unique partnership on the specialty assets. We could take some of the commercial assets. Oncology is our new focus on specialty. So far, we've been focused on CNS and we have key products in endocrinology. We're now going in Onco because of the biosimilars, we have a whole pipeline of oncology products, the same touch points so why not introduce the branded products as well within the same community, we hear them the need for it. It will be a specialty products, so we're not competing with big guys. But there are opportunities. So you will see us doing those deals and bringing those into our specialty pipeline. The second would be biosimilar. We would love to integrate completely and head-on compete with Sandoz, Celltrion, Amgen. So we'll have -- we would like to have a full capacity of development add on another 8, 10 programs which are done over 4, 5 years, manufacturing capacity, so full R&D capacity, manufacturing at scale like a 30,000, 40,000, 50,000 liter scale. We already -- so -- and keep expanding partnership within biosimilars. We want -- we see…

Chris, just wanted to add on Xolair, also our partner is uniquely positioned to have all the strength, both the even newly launched strength, 175, 150 and 300 plus the auto-injector device. So while they are growing up on the approval, Amneal would enjoy the entire range of Xolair differentiated auto-injector, PFS with different strengths. So -- and a very strong IP position, both. So that will be uniquely differentiate us than our competitors in initial time frame.

Yes. And Chris, '25 looks very strong. I'll pass it to Tasos for push and pulls but we are very excited about '25.

So I think the question was early view into 2025 increase and then it pulls, all detractors. So I'll say a couple of things. So we'll give you guidance for next year, at the end of February but we feel great about next year. Our company is built for growth and that's how the management team is thinking about the business. We have driven growth for the last 5 years throughout COVID and kind of engineering this spectacular financial turnaround and we're not going to stop after 5 years. So next year, we expect another year of growth from both the topline, bottom line and cash generation. That's kind of point number one. When we think about kind of tailwinds and headwinds is the obvious headwind is the Rytary LOE. Now the vast majority of that will be compensated by the launch of CREXONT. So that's kind of point number one. So I think that becomes more of a speed bump, the right LOE. In addition, our biosimilars will continue to grow. Our institutional business, so the injectable products we've been talking about, those will continue to grow substantially next year and beyond. In healthcare we'll just continue the growth that it has been on for the last 5, 6 years. And at the same time, when you think about cash generation, we are the clinical of interest expense. So as we think about next year, we will expect about $30 million of reduced interest expense and that's a function of 2 things. Number one is just reflective fact this year, most likely, we would have paid down about $180 million of gross debt. We have already paid $127 million and we probably will pay another $50 million, $60 million of gross debt in Q4. So we're carrying essentially a couple of hundred million dollars less of interest of gross debt. And then as you know, interest rates are beginning to slowly creep down. So a combination of all these biosimilars, health care, injectables, CREXONT and interest -- less interest expense will more than offset whatever we lose in the right of LOE and put the company in another year of growth. Does that help?

That's super helpful. I appreciate the color. Maybe just one really quick clarification. If I just look at the Parkinson's franchise as a whole, I guess when we combined the very strong launch so far with the Rytary generics, is that a franchise we should expect to grow next year? Obviously, over time, it grows. But specifically in '25, do you think you can still grow the franchise between those 2 assets?

Yes, I think that's a great question and I have a tendency of driving my friend, Joe here crazy about this. I would say it's a little bit -- It's a little bit the -- we're only a couple of months into the launch. Obviously, that will be -- obviously, that would be our objective. But frankly, even if we don't kind of completely offset the LOE loss next year, right, by a few million dollars in the grand scheme of -- almost $3 billion revenue company, we will be more than able to offset that.

And we have also added ONGENTYS Chris which is growing as part of the franchise.

We have no further questions. So, I'd like to hand back to Chirag Patel to conclude. Thank you.

Well, thank you, everybody and wish you a great weekend. Thank you.

This concludes today's call. Thank you for joining. You may now disconnect your lines.