ANI Pharmaceuticals, Inc. (ANIP) Earnings Call Transcript & Summary

Okay. Good Afternoon, everybody. My name is Daniel Cohen. I'm a Managing Director in Morgan Stanley. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative.

With that, we can begin. We are pleased to host Nikhil Lalwani, CEO of ANI Pharmaceuticals with us today. Nikhil, why don't we start out by -- maybe if you can just give us a high-level overview of each of your businesses. You have multiple businesses under the ANI Pharmaceuticals umbrella. Talk about the different drivers in each segment and how investors should think about growth in those segments.

Thank you, Daniel, and good afternoon, everybody. Thank you for joining us here at the Morgan Stanley conference. Much like Daniel, let me clarify that any disclaimer -- any information I speak to is per the disclaimers on forward-looking statements in the corporate deck that we 8-K yesterday as well as references to non-GAAP information -- non-GAAP financial information. And then the guidance that I speak to is the guidance that we gave on August 8, 2025. So with that, yes, really pleased to be here to share with you the ANI journey towards building a high-growth and profitable rare disease therapeutics business. We have 3 business segments. Rare disease is the key focus area and largest driver of growth. We have 2 assets, Cortrophin and ILUVIEN in the rare disease business. Rare disease will account for approximately 50% of 2025 revenues as per our guidance on August 8 and is our key focus area going forward, also the top priority for capital allocation. We also have a generics business that has driven strong growth on the basis of superior new product launches by our strong R&D capability in generics, operational excellence and a U.S.-based manufacturing footprint that enables us to compete and do well in the U.S. generics market. And then we have a brands business, which plays a role of providing high margins, strong cash flow generation and we think of a virtuous cycle of growth where we're using EBITDA and cash flows from the generics and margin -- in the brands business to drive growth and increase in scope and scale of the rare disease business. When you think about the total company in terms of guidance for the year, total revenues is $818 million to $843 million, adjusted non-GAAP EBITDA of $213 million to $223 million. The revenue that I just stated represents 33% to 37% estimated growth over last year, and the adjusted EBITDA is a 34% to 41% growth over last year. So that's an overview of ANI.

Are you able to talk a little bit about the differences in growth and margins between -- for each of those 3 segments?

Sure. So Cortrophin will be -- sorry, our rare disease business with Cortrophin and ILUVIEN will be the largest driver of growth and the key focus area. It's grown from -- when we launched Cortrophin, our lead asset in 2022 being 0 to half the company's revenues in 2025, where it will be -- rare disease will be $409 million to $422 million in terms of guidance. And then the generics, typically, we've guided to high single-digit, low double-digit type growth. And what we've actually delivered over the last 3 to 4 years is much higher than that. The guidance for 2025 is mid-teens growth versus the 2024 number of $301 million in revenues.

Yes. Pretty strong performance growth and margin-wise this year in particular. We note that you've raised guidance 3x this year. Can you talk a little bit about what has done better than anticipated this year?

Sure. Yes, really pleased with the performance this year and the ability to raise guidance 3x. In this year, some of the drivers that went better than anticipated was, number one, Cortrophin. And specifically Cortrophin Gel, we expanded our sales force in the first quarter of 2025 and the impact of that expanded sales force came sooner than anticipated or at a much more impact than earlier anticipated. Second is we launched a new presentation of Cortrophin, the prefilled syringe to enhance or enhance convenience for patients and HCPs. And there's a very strong demand that we've seen for the prefilled syringe. Originally, we anticipated that the prefilled syringe would be used for patients that had dexterity issues or visual impairment. We're seeing a more widespread adoption of the prefilled syringe. We spoke about 70% of enrollments in July being for the prefilled syringe. So that's the second thing that went better than anticipated. And then the third is on acute gouty arthritis flares. We're continuing to see a strong ramp there amongst indications. That's an indication that only we have and the competitor, which is the only other ACTH drug in the category does not have, acute gouty arthritis flares. So that's on the rare disease and Cortrophin side. On generics, we launched per our cadence of new product launches, we launched a generic to Mortegrity, prucalopride, in the first -- towards the end of last year in late December, early first quarter. And what we saw is full value of 6 months without the launch of an AG or any other competition entering the market. So we saw the full value of the first 6 months of prucalopride. So these are the really Cortrophin and the upside from generics driving the 3 raises that we've done in the year.

Okay. Great. Maybe just another high-level question before diving a little bit deeper into each of the segments. Some of the themes that are in investors' minds in terms of -- from a global perspective, how -- you mentioned the generics business as U.S. manufacturing capacity. You've also got a portfolio of rare disease drugs. How does the evolving tariff MFN situation, how does that impact each of your businesses?

Yes. ANI is very well positioned versus our peers with regards to both tariffs and MFN. ANI has been focused on the U.S. pharmaceutical industry and 95% of our revenues comes from products sold in the U.S. So that speaks to the MFN exposure. Only one product is sold outside the U.S., our retina product, ILUVIEN. And then we have a small number of one main product and then a couple of small generic products that are sold internationally, but less than 5% of revenues coming from outside the U.S. When it comes to tariffs, over 90% of our products -- of our revenues comes from products that are manufactured in the U.S., right? We have 3 manufacturing facilities, 2 in Baudette, Minnesota and 1 in East Windsor, New Jersey. So a huge U.S. manufacturing footprint and a commitment to U.S. manufacturing and being part of the solution when there are disruptions in the supply chain and supporting American patients with U.S. manufactured products. And so from a tariff perspective, we are very well positioned because over -- again, over 90% of our revenues comes from products that are -- finished goods that are manufactured in the U.S.

Got it. Okay. Makes sense. Maybe just diving deeper on Cortrophin. Can you talk a little bit about that market and the competitive field in that market and some of the dynamics that you're experiencing right now?

Sure. So I think that the -- especially for investors that are new to ANI Pharmaceuticals, Cortrophin Gel, our lead product, is a repository corticotropin that is used to treat certain chronic autoimmune disorders and has multiple indications, almost over 20. We focus on 6 indications. And this ACTH market has only had one competitor for an extended period of time until we entered in 2022. And what we've seen is that since we entered, the market has most recently started growing again. It went through a period of deceleration, but has started growing again. The growth in 2024 was 27% and the growth in 2025, if you add our guidance and the competitors' guidance is 39%. Most importantly, and the key driver of this growth is the underlying patient demand. So there are -- even today, the number of patients being treated are almost half the number of patients that were being treated when the market was at its peak in the past. And so what is most heartening to see is between our efforts and the competitors' efforts, we are able to get ACTH therapy to patients in need across indications. Going beyond that, and we believe strongly that Cortrophin has a strong multiyear growth trajectory. And the reason we believe that is when you look across indications, even the 6 indications that we focus on, the addressable patient populations in each of those different therapeutic area -- in each of those different indications is much larger than anything than the patients that are being addressed by the combined efforts of the competitor and ourselves. So the growth opportunity is significant. Reasons to believe that we will be able to capture more of that addressable patient population are as follows: Firstly, over the past 4 years, 50% of our prescribers are prescribers that were naive to ACTH. That is their first ACTH prescription was Cortrophin Gel. So we are able to reach more prescribers, talk to them about the appropriate patients and the benefits of ACTH therapy and have them use Cortrophin. Second is that we see growth across specialties. It's not -- the growth is not coming from any one specialty. We have, as I said, 6 different indications, multiple sclerosis, rheumatoid arthritis, nephrotic syndrome, sarcoidosis and then a couple of ophthalmology indications and acute gouty arthritis flares. And so we see growth across indications. That's another reason to believe. And then third is we see growth from both new prescribers and existing prescribers. So all of these different factors enable us to see that the ACTH market, while it's returned back to growth, the addressable patient populations are much larger and that between our efforts and the efforts of the competitor, we're able to go out and get this therapeutic or this class of therapeutic to patients in need.

Can you talk a little bit about what happened in that market and before you kind of made a dip and now it's returning to growth. How should we think about that and the possibility for that happening in the future?

Sure. Look, I think this was obviously before we entered the market. So I have to be thoughtful about what I share here. What I can say comfortably is that the reasons for the decline were largely external to the product itself. The competitor had to deal with other issues when they were the sole -- had the sole product in the category. Other company-related issues that were not specific to the ACTH category. They had to deal with bankruptcy too that they've successfully worked through and congratulations to them on that. And so the decline was driven by factors that had nothing to do with the efficacy of ACTH therapy. And that's what we've seen is when we've come back or when we've launched Cortrophin Gel, not only have we been able to convince ACTH believers to write Cortrophin, but also -- use Cortrophin for their appropriate patients, but also have new prescribers, right? Over 50% of our -- almost 50% of our prescribers are prescribers that had never used ACTH before.

You mentioned a new prefilled syringe and expanded sales force and that you have 6 indications out of 20 or more theoretical indications. Are there any other initiatives that one should be thinking about as we look out into the future around Cortrophin Gel?

Sure. So we believe in the strong multiyear growth trajectory for Cortrophin. Our guidance for this year is $322 million to $329 million. We think that there's -- we believe that there's strong multiyear growth potential beyond driven largely by the addressable patient population that we can capture. We're investing in 3 types of initiatives to strengthen the Cortrophin franchise and capture this multiyear growth. First is evidence generation and research. The evidence generation and research falls into 2 buckets. First would be there's a bunch of work we're doing on preclinical to establish the mechanism of action or not establish, but share more information on the mechanism of action. We're fortunate to be able to do this with industry-leading KOLs that adds more credibility to the category and are able to show the nonsteroidal mechanism of action, which is a key part of growth in the ACTH category. In addition, we launched a Phase IV clinical study for acute gouty arthritis flares. And our hope is that with a successful outcome there, we will be able to get Cortrophin added to the ASN guidelines. So that's number one, which is evidence generation and research. Second is from a product presentation standpoint. So we've launched initially with a 5 ml vial, which was our original presentation, and then we launched a 1 ml vial. Cortrophin is self-administered. So the 5 ml vial was being used for self-administration. But for gout, the right dosing, acute gouty arthritis flares, the right dosing is a 1 ml vial. So we launched a 1 ml vial. And then most recently, in April of this year, as you referred to, Daniel, we launched a prefilled syringe, and this is really for patients that have dexterity issues or visual impairment. Now we've seen broad adoption of this. And we're continuing to work on other steps in the second group of presentations to improve patient and HCP convenience. And then third is high ROI commercial initiatives, as you would expect, to continue expanding the Cortrophin market and capturing this addressable patient population that we have.

And is the prefilled syringe is that unique to Cortrophin Gel? Or is the competitor product have a similar prefilled syringe?

The competitor does have a self-check, what they call a self-check and we have the prefilled syringe.

Got it. Okay. Final question on Cortrophin for me. Can you talk about LOE risk of how you think about end of protection, if you will, for the product?

Sure. Yes, this is both the competitor, and we have a complex formulation of peptides that are derived from the -- that are porcine derived from the pituitary glands. And these mix of peptides are then dispersed in a gel. And therefore, this is a complex formulation that is hard to copy and show equivalence. And therefore, it is a tough drug to genericize. There are other analogs of animal-derived products that have been hard to genericize. So that's one level of protection. And then the second level of protection is the -- both the competitor and us have added IP that goes into the 2040s into 2040 to 2043 that, again, provides additional protection against generics. So we are strong believers in the durability of the ACTH category and see this as a multiyear growth opportunity. And I would be remiss before we move on, on Cortrophin to again point out that even with all the growth that we've seen and that the competitor has seen, remember, the competitor is seeing 20% to 30% growth this year. Even with both of us, we're still treating a very insignificant part of the addressable patient population. And just as an example, if I may, right, if you take multiple sclerosis, there's 750,000 patients that get -- that have -- they're diagnosed with multiple sclerosis, only a small subset of that are patients that are -- that get exacerbations and do not respond to a steroid. So there's about 300,000 flares for MS that we think is an addressable patient population -- addressable population for ACTH and what we're treating is an insignificant. And in our deck, in the new corporate deck on Slide 16, you'll see we lay that out across 5 indications, and that's a tremendous opportunity for getting patients in need the appropriate therapeutic that can be helpful as a late-line therapeutic through the efforts of both us and the competitor.

Okay. Anything else you want to cover?

No, I'm good on Cortrophin.

Happy to [indiscernible].

Thank you.

Okay. Good. Maybe let's shift to the ophthalmology portfolio. I think certainly, earlier in the year, in particular, there were some headwinds that impacted Medicare patients. Can you talk about -- a little bit about what changed this year? What are the headwinds? And where do we sit today?

Sure. So really 2025, we think of it as a bit of a reset year for our ophthalmology and retina franchise that we acquired from Alimera. And there's been a number of different factors. Obviously, the one that's most prominent and the biggest one is the nonavailability of co-pay support for Medicare patients that do not have any supplementary insurance. That funding went away in the early part of this year and has not returned. And at this point, I think we're all -- every all organizations, ANI and other organizations in ophthalmology and retina are focused on finding solutions for the patients, assuming that this co-pay support doesn't come back. Now having said that, there are a number of organizations that have spoken about efforts to bring that co-pay support funding back. But at this point, our assumption in the guidance given on August 8 was that the co-pay support would not come back. In addition, we had churn in our sales force as we combined the original Alimera sales force with the ANI ophthalmology team to create a combined sales force to sell both Cortrophin and ILUVIEN. We have all those replacements in place and we have a full team that's out there detailing both Cortrophin and ILUVIEN. In addition to strengthen that team, we have new marketing materials, a newly launched peer-to-peer marketing and speaker program. And then very importantly, we had NEW DAY, a Phase IV clinical study for ILUVIEN that was done, and we announced the results in July. And again, in this new corporate deck, we've detailed the publication and presentation plan that -- where we're presenting the results of NEW DAY. We presented at ASRS. We presented it at EURETINA and when we say we -- leading KOLs, right, Dr. Singer, Dr. Wykoff, Dr. Gonzalez. And we'll now present it at American Academy of Ophthalmology in a podium presentation and then at Hawaiian Eye. So this is rich new set of data across 300-plus patients for the use of ILUVIEN early in the treatment of DME in conjunction with anti-VEGFs. So when you think of the ophthalmology and retina franchise as a whole, while we're working through challenges in 2025, and it's a bit of a reset year for the franchise, there's -- the underlying patient demand is very strong, both in DME and NIUPS. We're treating less than 5,000 patients out of more than 50,000 patients addressable in DME and more than 75,000 patients in NIUPS. And then equally important, we have a slew of these initiatives that I talked about, right? The NEW DAY clinical study results, the new peer-to-peer speaker program, a stronger sales organization, all of these that will enable driving stronger performance as we move forward.

Okay. Anything else you want to cover on the ophthalmology franchise?

Yes. I would say the one other piece that we -- that I forgot to mention, thank you for that, Daniel, is that for ILUVIEN, we now -- for simplicity of supply chain and securing the supply chain, we added the NIUPS, non-infectious uveitis of posterior segment of the eye label -- indication to the ILUVIEN label that are now marketing just ILUVIEN, and that simplified the supply chain, and we're working through that transition in the third quarter.

Okay. So I wanted to shift to your generic business, which has been -- it's been a double-digit growth business for the past 2 years, which a little bit contrary to what others have seen perhaps in the U.S. generics market. And you've talked about mid-teens growth for this year. Can you talk a little bit about what differentiates your business relative to the broader U.S. generics sector?

Sure. So yes, we have been able to deliver almost 2.3 billion doses to American patients in the last 12 months of generic products. We do that on the back of a strong operational excellence and 3 U.S.-based manufacturing facilities, 2 in Baudette, Minnesota and 1 in East Windsor, New Jersey. So the U.S.-based manufacturing footprint is unique to ANI. All these 3 sites are in strong GMP status, strong GMP track record with either VAI or NAI status across these 3 sites. And really, the crux of generic success is new product launches, right? Our pipeline, right, the product selection and then the execution of the pipeline and being able to consistently bring lower -- lesser competition products to the market quicker. We launched between 10 to 15 products every year. That's been our cadence across the last 4 to 5 years. And we've actually -- while we speak about high single-digit, low double-digit growth, in reality, we deliver even higher than that and have done consistently over the past 4 years. This year, we talk about mid-teen growth. I think -- and as an example of the strength of our R&D, we'll talk about prucalopride, which is a 180-day exclusivity and sole generic approval that we got earlier this year or late last year, earlier this year, where there were 12-plus competitors pursuing this product, and we were able to get the approval first and consequently get 180-day exclusivity. So really strong pipeline selection, superior R&D execution and then an operational backbone that is strong and U.S.-based to support the generics business. That's the driver of success in our generics business.

Is the strategy in the generics business driven by 180-day exclusivities? Or is it broader than that?

No, no, it is broader than that. We -- I think we always try to find an angle on the pipeline selection. So whether it's the API, whether it's lesser competition, lesser focus areas. One of the things we benefit from is the scale as we were growing, we're now a $300 million business that's growing mid-teens. So the value of launches that is meaningful for us is different from what is meaningful to a much larger player. But so being able to identify those opportunities and then execute and capture those opportunities has been important.

Okay. How do you think about just shifting a little bit to close out? How do you think about capital allocation for the company?

Yes. Thank you. So we are focused on expanding the scope and scale of our rare disease business. We have a strong balance sheet with about $218 million of cash as of June 30, 2025, and 1.9 turns of net leverage, assuming the guidance that we gave on August 8. So that gives us a strong balance sheet and the ability to use that balance sheet to expand scope and scale of our rare disease business. And that is our focus area, identifying products that are synergistic with 1 of 2 things, right, either call point synergy with Cortrophin, like the Alimera acquisition where ophthalmology was a key focus area for Cortrophin. And so we found another product, ILUVIEN, that is synergistic from a call point standpoint. And so we have that opportunity now in the other therapeutic areas, rheumatology, nephrology, neurology, pulmonology. What we also have is a capability in rare disease of using the back infrastructure, which is basically medical affairs, patient support, market access, especialty pharmacy distribution. And so finding rare disease assets that may not be synergistic from a call point perspective, but are -- can have small patient populations, small sales forces, maybe in a newer therapeutic area, but leverage the rest of the rare disease infrastructure that we have and the core capability we have. That's how we're looking for assets like that, too. Two other things to add. We are in no hurry to do an acquisition next. We're obviously -- we have strong organic growth drivers and are exploring that. Having said that, we're continuing to explore, but there's no immediate need to do an acquisition. So that's one. And I think the second thing is in the terms of the type of acquisition we would look to in rare disease, we would look at commercial assets as a next step. And then as we continue to expand the scope and scale, taking appropriate sized clinical bets at some point in the future and building the development capability to as we build an integrated rare disease company in the future.

And how would you -- how do you see the market for whether it's product or company acquisitions right now? Is it particularly competitive? Or over the last few years, do you see it as being more or less competitive than it has been?

Yes. I think we're not the only people looking for rare disease assets. And the advantage we have is that we have beachheads in multiple therapeutic areas. So that's an advantage for us as we scan and look for assets. And then also, we have a strong performance and a strong balance sheet to support as we pursue our growth -- pursue our M&A strategy. And again, to recap, we're not under pressure from a time standpoint to do because we have organic growth opportunities to pursue an acquisition. So we can do it in the right time and take our time to do the right deal.

Thank you. Well, Nikhil, a lot of success from your leadership at ANI, proven ability to get products approved, make acquisitions and commercial success. So congratulations to you on all your success. Happy to open the floor to any questions if anybody has any. Feel free to raise your hand. If not, we can close there.

Thank you, Daniel, and thank you, everybody, for joining us, and we look forward to updating you on our progress in the future. Thank you.

Thank you.

Thank you.