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

Good morning, everyone, and thanks for joining us. I'm Daniel Cohen from Morgan Stanley, and it's my pleasure to welcome you to this fireside chat with ANI Pharmaceuticals. ANI is a diversified biopharmaceutical company that has transformed itself into a rare disease growth story led by Cortrophin Gel and a growing ophthalmology portfolio, supported by strong cash generative generics and established brands for businesses. It's been a standout year: results ahead of expectations, multiple guidance raises, and real acceleration across the rare disease franchise. I'm joined by two leaders who can take us through it. Nikhil Lalwani is ANI's President and Chief Executive, a role he's held since 2020, and the architect of the company's pivot to rare disease strategy. And Steve Carey is ANI's Chief Financial Officer and Senior Vice President of Finance, who has been with the company since 2016 and leads its financial strategy and capital allocation. Nikhil, Steve, thank you for joining us. Let's get into it.

Daniel, good morning, everybody, and thank you for joining us bright and early. Nikhil, you've now been the CEO for six years. How do you feel about the progress made thus far, and what's your vision for the future of ANI? Thank you, Daniel. I'm really pleased with the progress made by the team across the last six years. We have made several important steps for the company and the company's trajectory, starting with when I joined as CEO in 2020, we were largely a BD shop. We did business development in generics and in established brands or older brands. And we sat together with the board and, you know, a big believer in moving capability forward and building capabilities in the organization. And there are two successful capabilities that we've built as a result, two successful high-performing businesses. First is our rare disease business, right? And the commercialization that goes with that. So the capability to commercialize rare disease products, that's a key capability we've built. And then the second is generics, right? Developing, manufacturing, and commercializing generics products. So I'll just talk you through those two. On the rare disease front, our lead asset, purified Cortrophin Gel, we got that SNDA approved in October 2021 and launched that drug in January of 2022. When we built that team, we really went out there and hired the best talent that we possibly could from leading rare disease organizations, and most of those individuals are still with us. And really, that's the anchor of the capability that we've built in rare disease, and it's across the sales team, medical affairs, market access, patient support, specialty pharmacy distribution. It's across the board. It's really the platform or the infrastructure that we built with the team as the anchor to it, and obviously, strengthen the systems and processes along the way. And then second is our generics business, where we were a BD shop, as I was saying, and we went and acquired Novitium, which is a leading generics R&D organization, with massive R&D capability, a capability that was well ahead of what they could fund. And over the past four years, five years, we've been able to have significant success with that acquisition. So, both Cortrophin and the Novitium acquisition have been runaway successes for us. And then, really, we just built that capability where we can do 10 to 15 new product launches every year on the back of that R&D capability and generate EBITDA and cash flows that, as you pointed out in your introduction, we are taking to reinvest into the rare disease business. Our vision for the future is very clear: we are leading our transformation into, accelerating our transformation into a leading rare disease company. In 2026, approximately 60% of our revenues, approaching 60% of our revenues, will come from rare disease. We are really just overall very pleased with the progress over the last six years, taking revenues from right around $200 million to north of $1 billion this year, a 5x increase, and similar growth in EBITDA, and building two high-performing businesses in rare disease and in generics.

Great, thanks, Nikhil. Let's start with the rare disease product, Cortrophin Gel. Can you talk through the unmet need that it addresses and how big the addressable market is?

Sure. So, purified Cortrophin Gel is a repository corticotropin. It's derived from the pituitary glands of porcine, so it's a naturally derived product. And it is shown to bind with, in an in-vitro, with all five melanocortin receptors, which are cell-to-surface proteins. What Cortrophin Gel is used for is across multiple autoimmune indications to deal with inflammation or exacerbations and flares. And it is appropriate for treatment of patients who generally are not responding to other treatments such as steroids or have high side effect profiles with steroids. So, that's the role that Cortrophin Gel plays. We are approved in multiple indications. The six or seven specialty areas or indications we focus on are rheum hematology, nephrology, neurology, ophthalmology, pulmonology, and acute gouty arthritis. When you talk about addressable market, across the different specialties and indications, we believe there are approximately 1 million patients, right? As I walk you through that, the indication itself may not be rare, but the addressable patient population or the appropriate patient population is much smaller across the broader incidence disease. Let me just explain that. So if you take acute gouty arthritis flares, there are 10 million patients in the U.S. that suffer from acute gouty arthritis flares. A number of those flares resolve on their own. Some get treated well by treatments such as prednisone and colchicine, et cetera. But there's a very small subset of patients, which we see is about 285,000, whose flares require IV or injectable treatment. So that's 285,000 out of 10 million. And that's what we think of as addressable market. So similarly, if you do the same analysis across multiple sclerosis, rheumatoid arthritis, nephrotic syndrome, and sarcoidosis, etc., you get to about 1 million patients. And we're just getting started. Between the competitor and us, right, because there's one other player in the ACTH category, we are currently, on a combined basis, serving a fraction of that 1 million patients, a very small fraction of that 1 million addressable patient population.

Can you talk a little bit more about the expansion to primary care and podiatry for the gouty?

Flares and how that's going. Sure. So, we're in year five of our launch, and every year, as we're trying to reach more patients, one of the ways we do that is by reaching new prescribers. And while this category has existed for a while, an important metric is that over half of our prescribers, even before this most recent expansion, comes from prescribers that were naive to ACTH, that had never tried the ACTH category before. So, as we were working across the first four years, what we found is that approximately 18% of our usage came from acute gouty arthritis patients, that there was a real need there. However, the call points that we were going to, the specialties we were going to, which are rheumatology and nephrology, only tackle a small subset of the addressable patient population. And, you know, there's an increasing, we learned that there's an increasing number of patients that are seen by primary care and podiatrists, right? It's just early, it's easier to get appointments with them, et cetera. So there are a lot of patients that suffer from acute gouty arthritis flares that are being seen at primary care and podiatry. So last year, in mid-2025, we launched pilots in 10 territories, existing territories we had, where we asked a number of our reps in those territories to go out there and, obviously, with a coordinated effort with corporate, figure out what are these prescribers that actually write prescriptions, primary care and podiatrists, that actually write for acute gouty arthritis. We saw huge success there and believe that this is something that could be scaled. So in May of this year, we launched a 60-person sales force, which is about a 50% expansion in our sales force. We had about 120 reps before, and then we added 60 reps. 120 went into other specialties, which I can cover later. But the 60, the expansion we did, went to primary care and podiatrists. And by the end of June, all of them had been trained and in the field, and we've had very strong indicators of leading indicators of demand from what we've seen so far. All the reps that were hired in May and June have had two or more cases. In fact, we've actually started seeing refills already from a number of the patients. We see over a third of our prescribers, actually that number is probably higher by now, that have written two or more cases. We're seeing both width and depth of prescribing, and we're seeing demand generation, in fact, across regions. So it's not one or two regions that are seeing that. So what we saw in those 10 pilots has been scaled up to across 60 territories. And we're very pleased with the success that we've had to date. And we believe that this acute gouty arthritis flares expansion or just gout expansion will help us with the investment we've made this year to get operating leverage next year. So next year, going into 2027, we'll see a lot more sales in 2027 from the investment we made. It takes three to six months for the reps to ramp up, right? And basically, in 2027, we'll see a lot more sales. Of course, there's a significant impact that they will also have in the back half of 2027. And then last important fact to share with you regarding this gout expansion is that acute gouty arthritis flares is an indication that we have, that the competitor does not have, the other player in the ACTH category. So when you think about why did we select investment, it was because we saw proof of concept in the 18% volume we saw in nephrology and rheumatology for gout. It's an indication that we have that the competitor doesn't have, and then we also saw success in the 10 pilots. So we're very pleased with that progress. Okay. And.

And then just closing out on Cortrophin Gel, in Q2 you raised guidance to $520 million to $540 million for sales for the year. Is that dependent on the existing specialties or is that more driven by the new expansion that you just discussed?

Sure. So, when you think about our sales last year, it was $348 million, and our initial guide is $520 million to $540 million, which is an adjustment that we made in the guidance in the second quarter. The majority of the growth from $348 million to $520 million to $540 million will come from the existing specialties, which are Rheum, Neph, Neuro, and Ophthalmology and Pulmonology. That's the existing specialties. Then the gout expansion will contribute significantly in the back half. But if you think of the $348 million going to $520 million to $540 million, the majority of that growth will come from the existing specialties. Where we've continued to have strong impact, I mean if you take the first half of the year, right, we've had 45% growth in the first half of the year where we've done $192 million across Q1 and Q2. And all of that, the Gout expansion team only came in midway through May and then was really operational. So their impact on Q2 was minimal. So all the growth that you see in the 46% year-over-year growth in H1 2025 versus H1 2026 came from the existing specialties, and that momentum we expect to continue into the back half, compounded by the impact from the gout expansion. Yes.

Impressive growth on Cortrophin Gel. Maybe just turning to the ophthalmology franchise and Iluvien, you're planning to present additional data, synchronicity data, at a conference in the fall. Can you speak to what's new with Iluvien and that data and how that could drive growth in the future?

Sure. So, synchronicity was an open-label study that we completed. It shows the use of Iluvien in chronic non-infectious uveitis for the treatment in the posterior segment of the eye. We believe that this, we released the six-month data earlier this year, and we'll be releasing the more comprehensive analysis as we go along at an upcoming conference in Q4. I would believe that this data will provide additional insights and real data to clinicians, both retina specialists and uveitis specialists, to show the use of Iluvien, which is a durable, reduced treatment burden option for the treatment of chronic non-infectious uveitis in the posterior segment of the eye. So we're sharing additional analysis both on efficacy as well as safety and use cases that we believe will be very helpful for clinicians as they evaluate alternate treatment options for the treatment of these patients.

Okay, thanks, Nikhil. We talked a bunch about the rare disease franchise, but as you mentioned in the intro, your generics business has been a strong performer. Can you just talk a little bit more, expand upon more how that fits in with your business and how it contributes to the overall goals for the company?