ANI Pharmaceuticals Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 6, 2024

There are 10 speakers on the call.

Operator

Good day, everyone, and welcome to today's ANI Pharmaceuticals, Inc. 2nd Quarter 2024 Earnings Results Call. Please note this call is being recorded. After the speakers' opening remarks, there will be a question and answer session. It is now my pleasure to turn the conference over to Lisa Wilson.

Operator

Please go ahead, ma'am.

Speaker 1

Thank you, Katie. Welcome to ANI Pharmaceuticals Q2 2024 Earnings Results Call. This is Lisa Wilson of Incyte Communications, Investor Relations for ANI. With me on today's call are Nikhil Lalwani, President and Chief Executive Officer Steve Carey, Chief Financial Officer and Chris Mudds, Senior Vice President and Head of ANI's Rare Disease Business. You can also access the webcast of this call through the Investors section of the ANI website at anipharmaceuticals.com.

Speaker 1

Before we get started, I would like to remind everyone that any statements made on today's conference call that express the belief, expectation, projection, forecast, anticipation or intent regarding future events and the company's future performance may be considered forward looking statements as defined by the Private Securities Litigation Reform Act. These forward looking statements are based on information available to ANI Pharmaceuticals' management as of today and involve risks and uncertainties, including those noted in our press release issued this morning and our filings with the SEC. Such forward looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward looking statements. ANI specifically disclaims any intent or obligation to update these forward looking statements except as required by law.

Speaker 1

The archived webcast will be available for 30 days on our website, anipharmaceuticals dotcom. For the benefit of those who may be listening to the replay or archived webcast, this call is held and recorded on August 6, 2024. Since then, A and I may have made announcements related to the topics discussed, so please reference the company's most recent press releases and SEC filings. And with that, I'll turn the call over to Nikhil Lalwani.

Speaker 2

Thank you, Lisa. Good morning, everyone, and thank you for joining our Q2 earnings call. We are delighted with ANI's accomplishments in the 2nd quarter. We achieved both record revenues and a major milestone in our ongoing efforts to expand the scope and scale of our rare disease business with our proposed acquisition of Alimera Sciences. The company continues to rise to each challenge and goal, and I'm proud of the team's ability to drive sustained long term growth while never losing sight of our purpose of serving patients, improving lives.

Speaker 2

During the Q2, ANI generated revenues of $138,000,000 an increase of 18% over Q2 of 2023. Adjusted non GAAP EBITDA was $33,200,000 and adjusted non GAAP EPS was $1.02 Based on our strong second quarter results and the continued momentum that we're seeing across the business, we're pleased to raise our full year 2024 guidance, which Steve will discuss later in the call. Accelerating demand for our lead rare disease asset, purified Cortrophin Gel and solid growth for generics drove our robust top line performance, which more than offset the expected Established Brands business performance. Cortrophin Gel generated $49,200,000 in revenues during the quarter, up 102% over the prior year quarter and 33% over the Q1 of 2024. The Q2 represented the highest number of both new patient starts and unique prescribers since launch that the areas of strategic investment behind Cortrophin Gel that we announced earlier this year and late last year, including expanding our pulmonology sales team, launching a targeted ophthalmology sales team, and actively promoting the acute gouty arthritis flares indication have been yielding positive results.

Speaker 2

Our ophthalmology sales team has a strong start and drove significant growth in prescriptions and new patient starts in the Q2. We also saw particularly strong year over year and quarter over quarter growth for acute gaudy arthritis flares. Corprophin Gel is the only ACTH product approved for this indication. As a reminder, we began promotional activities for the acute gouty arthritis flares indication in late 2023. More than 9,000,000 people in the U.

Speaker 2

S. Are affected by gout, and some of these experience acute gouty arthritis flares as a symptom of their underlying disease. For some of these patients, Cortrophin Gel may be an appropriate additional treatment option for their flares. We have seen increasing momentum in physicians adopting Cortrophin Gel for patients with acute gouty arthritis flares who have not responded adequately to conventional therapies. We continue our efforts to enhance the convenience and remove pain points for patients starting on ACTH and the healthcare providers who treat them.

Speaker 2

In the Q4 of 2023, we introduced the 1 ml version of Cortrophin Gel to meet the needs of physicians who desired a smaller configuration of ACTH for certain patients, such as those with acute gouty arthritis flares. Today, we are pleased to report for the first time that we are nearing the completion of development of a 1 ml prefilled syringe offering further benefits to patients and physicians. We plan to file for FDA approval of the prefilled syringe in the second half of twenty twenty four and are excited about the potential of this product. We look forward to launching this product in the first half of 2025. Turning now to our generics business, which delivered another strong quarter with revenue of $74,000,000 an increase of 17% over the Q2 of 2023 and 5% over the Q1 of 2024.

Speaker 2

The solid performance reflected strength in our base business coupled with contribution from new product launches. We launched 4 new products in the 2nd quarter, each into limited competition markets in generics. We have launched 3 new products so far in the Q3 and have a number of products pending approval that we expect to launch in the second half. We made substantial progress on bringing online the significant capacity expansion at our New Jersey site and believe all 15 new manufacturing suites and the new QC lab will be fully operational in the second half of twenty twenty four. The New Jersey site expansion will support the future growth of our genetics business.

Speaker 2

Revenue for established brands was $14,900,000 during the quarter, a decrease of 49% from the prior year period. The performance was anticipated and in line with our expectations and guidance. As a reminder, we noted on the Q1 call in May that we did not expect the tailwinds arising from competitor supply dynamics to persist beyond the Q1. In June, we delivered a major milestone in our growth strategy with announcing the proposed acquisition of Alimero Sciences. This highly synergistic transaction will add 2 commercial assets in ophthalmology to our rare disease portfolio and more than $100,000,000 in highly durable branded revenue annually.

Speaker 2

The acquisition is aligned with the M and A strategy we laid out over the past several quarters. Specifically, this transaction will expand the scope and scale of our rare disease business and strengthen one of our priority therapeutic areas of ophthalmology, which is also a key specialty for our lead rare disease asset, Cortrophin Gel, and the overall ACTH market. The deal will provide ANI's 2 durable assets with double digit growth. With Alimera, ANI's rare disease segment would account for approximately 45% of the total company revenues on a pro form a 2024 basis. And we expect rare disease to be the largest driver of the company's future growth.

Speaker 2

From a financial perspective, we expect high single digit to low double digit accretion in adjusted non GAAP EPS in 2025 with substantial accretion thereafter. Integration planning is well underway and the transaction remains on track to close later this quarter. Now I'd like to turn the call over to Chris Mutts, our Head of Rare Disease, to discuss the Alimera products and transaction in more detail. Chris?

Speaker 3

Thank you, Nikhil. We're excited about what Alimera brings to ANI starting with 2 high growth durable commercial products. Alimera's first product, Iluvien, is used to treat diabetic macular edema or DME, the leading cause of vision loss in diabetic patients. The company's second product, YUTIQ, is used to treat patients with chronic non infectious uveitis affecting the back of the eye. ILUVIEN and YUTIQ are both double digit growth assets with high barriers to genericization and significant future upside.

Speaker 3

With the acquisition of Alimera, ANI will have 3 commercial rare disease assets, Cortrophin, ILUVIEN and YUTIQ and an expanded rare disease commercial team covering the A nationwide sales force of approximately 45 sales representatives will be dedicated to ophthalmology alone, extending our reach and ability to promote all three additional key geographical regions. Earlier this morning, Alimera reported 2nd quarter results. ILUVIEN and Yitsiq generated net revenue of $27,000,000 in the 2nd quarter, which represented year over year growth of 54%. Alimera's adjusted EBITDA increased to $6,700,000 in the 2nd quarter, up from $900,000 in the prior year quarter and $1,800,000 in the Q1 of 2024. ILUVIEN and NUT are both high growth products and we are confident in our ability to unlock additional value through commercial synergies and execution.

Speaker 3

With that, I'd like to turn the call over to Steve, who will walk through our Q2 financial results and revise 2024 guidance in more detail. Steve?

Speaker 4

Thank you, Chris, and good morning to everyone on the call. ANI generated 2nd quarter revenues of $138,000,000 up 18% over the prior year period. Revenues from Cortrophin Gel reported in our rare disease segment were $49,200,000 dollars up 102% from the prior year period driven primarily by increased volume on record number of new patient starts. Based upon the continued strong execution of the rare disease team in driving growth, we are raising our full year clotrophin gel revenue guidance range by $15,000,000 to 185,000,000 dollars to $195,000,000 And similar to last year, we expect 4th quarter to be the strongest revenue quarter of the year. Revenues of our generics, Established Brands and Other segment were $88,800,000 a decrease of 4% over the prior year period.

Speaker 4

Generic revenues for the quarter were 74,000,000 dollars an increase of 17% over the prior year period driven by continued strength in the base business and the contributions of new product launches. Net revenues for Established Brands and Other were $14,900,000 in the quarter, a decrease of 49% over the prior year period. This performance was expected as Nikhil noted in his earlier remarks and second quarter performance is generally indicative of our quarterly expectation for the back half of twenty twenty four. Cost of sales excluding depreciation and amortization increased 36% to 57 point $7,000,000 in the Q2 of 2024 compared to the prior year period, primarily due to net growth in sales volumes of pharmaceutical products and significant growth of royalty bearing products, including Cortrophin Gel. Non GAAP gross margin was 58.4%, a decrease of approximately 5 70 basis points from the prior year period and 600 basis points from the Q1 of 2024, primarily due to product mix driven by the reduction in established brand revenues as well as expenses related to the capacity expansion at our New Jersey manufacturing site.

Speaker 4

We expect sequential improvement in gross margin in both the 3rd Q4 of this year. Research and development expenses decreased 1% to $7,300,000 in the Q2 of 2024 compared to the prior year period and 30% from the Q1. The sequential decline was related to expense timing and the inherent variability of R and D expenditures on a quarter to quarter basis. We expect R and D to increase in the second half of twenty twenty four relative to the first half of the year due to the timing of R and D activities. Selling, general and administrative expenses increased 36% to $52,800,000 in the Q2 of 2024 due to increased employment related costs, continued investment in rare disease sales and marketing activities, legal expenses, expenses related to the pending acquisition of Alimera and an overall increase in activities required to support the growth of our business.

Speaker 4

On a GAAP basis, net loss available to common shareholders for the Q2 of 2024 was $2,700,000 as compared to net income of $5,800,000 in the prior year period, driven by a $3,500,000 of expenses related to the pending acquisition of Alimera and a $2,700,000 unrealized mark to market loss on the value of our investment in CG Oncology. Both of these items are adjusted for in our non GAAP metrics this morning. 2nd quarter diluted GAAP earnings per share was a loss of $0.14 as compared to income of $0.29 per share in the prior year period. On an adjusted non GAAP basis, diluted earnings per share was $1.02 for the quarter compared to $1.28 per share in the prior year period. Adjusted non GAAP EBITDA for the Q2 of 2024 was $33,200,000 compared to $34,100,000 in the prior year period.

Speaker 4

We ended the quarter with 240,100,000 dollars in unrestricted cash and have $292,500,000 in face value of outstanding debt, which is due in November of 2027. At the end of the second quarter, our gross leverage ratio was 2.1 times and our net leverage ratio was well under a half a turn of our trailing 12 month adjusted non GAAP EBITDA of $137,500,000 Finally, as Mikhail mentioned and as outlined in this morning's press release, we are pleased to increase our full year 2024 guidance as follows: full year 2024 net revenues of $540,000,000 to $560,000,000 up from our prior guidance of $520,000,000 to $542,000,000 representing year over year growth of approximately 11% to 15%. Protrophin gel net revenues of $185,000,000 to $195,000,000 up from our prior guidance of $170,000,000 to 180,000,000 dollars representing year over year growth of 65% to 74%. Adjusted non GAAP EBITDA of $140,000,000 to $150,000,000 up from our prior guidance of $135,000,000 to $145,000,000 representing year over year growth of approximately 5% to 12%. And adjusted non GAAP earnings per share between $4.38 $4.82 up from our prior guidance of $4.26 $4.67 We are reducing our estimate for total company non GAAP gross margin by 1 point to be between 61% 62% from our prior assumption of between 62% 63% due to a modest change in the timing of when the new manufacturing suites at our New Jersey site become fully operational.

Speaker 4

This factor is short term in nature as we anticipate achieving the full benefit and efficiency of the new suites in the second half of this year and beyond. Consistent with prior quarters, we will continue to tax effect non GAAP adjustments for computation of adjusted non GAAP diluted earnings per share using our estimated statutory rate of 26%. The company now anticipates between 19,400,000 19 800,000 shares outstanding for the purpose of calculating diluted EPS and continues to expect its U. S. GAAP effective tax rate to be between 22% 25%.

Speaker 4

Please note that our updated 2024 full year guidance does not include contribution from the pending acquisition of Alimera. With that, I will now turn the call back to Nikhil.

Speaker 2

Thank you, Steve. We are extremely pleased Q2 and the continued momentum that has allowed us to increase our full year expectation. It's an exciting time at ANI with a strong first half and the anticipated Q3 closing of the acquisition of Alimera. By the end of this year, ANI will have 3 growing and durable commercial assets in rare disease, an expanded commercial team covering the specialties of ophthalmology, neurology, nephrology, rheumatology and pulmonology, and a highly leverageable global over 20 countries. We are thrilled to unite the 2 companies with a shared culture built around similar missions of serving patients, improving lives.

Speaker 2

Thank you for your interest in ANI, and we look forward to keeping you updated throughout the rest of the year. Operator, please open the line for questions.

Operator

Thank Our first question will come from Les Polisky with Truist Securities. Please go ahead.

Speaker 5

Hi, this is Jeremy on for Les. Thanks for taking our questions. First for me is, what other drivers do you have for the guidance range aside from Cortrophin? And then also on the pre filled syringe, can you give us any more color and explain if there's anything similar to this in the marketplace? Thank you.

Speaker 2

Yes. Good morning and thank you, Jeremy. Thank you for joining. I'll take your second question first, which is on the prefilled syringe. Look, we continue our efforts to enhance the convenience and remove pain points for patients starting on ACTH and the healthcare providers who treat them.

Speaker 2

You will remember that in Q4 of 'twenty three, we introduced the 1 ml version of Cortrophin Gel to meet the needs of physicians who desire the smaller configuration of ACTH for offering further benefits, right, specifically helping patients with the preparation and admission of the protofen gel product. And as I said before, we plan to file for approval of the prefilled syringe in the second half of twenty twenty four and launch this in the first half of twenty twenty five. Then going back to your question on guidance and what's driving the guidance increase. Look, overall, we have continued to see strong momentum across our rare disease and Genax business lines. Both were a touch better than we had expected and hence we're raising the full year guidance and established brands, royalties and others were largely in line with our expectations.

Speaker 2

Thank you, Jeremy.

Speaker 6

Thank you.

Operator

Thank you. Our next question will come from Gary Nachman with Raymond James. Your line is now open.

Speaker 7

Hi, thanks. Good morning, guys. And nice quarter. So regarding some of the key drivers of the strong cortrophin growth, just elaborate how many new prescribers are you getting? Where are you seeing that mostly in what therapeutic areas?

Speaker 7

And how much of the volume growth is share gain versus overall market growth? And you called out GADI flares and OPTA, but those are still relatively small, right? So which areas are driving most of the upside in absolute dollars? And how much upside potential is there with the Gaudi Squared indication and the 1 ml vial that you were just talking about?

Speaker 2

All right. Well, thank you for your questions, Gary. I will try and answer all of them. I think number 1 is, on the overall ACTH category and the question around, you know, share growth versus category growth, look, you know, and our competitor reported their results earlier this year, earlier today. And what you'll see is, as we've been saying even in the in the prior quarters, that overall, the number of patients that are being treated on with ACTH today are significantly lower than patients that were being treated many years ago.

Speaker 2

And with our efforts and the efforts of the competitor, you're seeing for the first time the category after many years of decline are seeing, you know, category growth. So the revised guidance that they shared earlier today and our raised guidance, so we raised guidance, our competitor raised guidance, you'll see what it implies for the ACTH category is a high teens growth. And there is a significant runway for the category. Right? So again, we believe that the efforts of ourselves and the competitor will increase the awareness of the ACTH market or ACTH category and result in overall ACTH market growth.

Speaker 2

So for us, it's not a share capture. It's not about share capture. It's about getting, a c Cortrophin to the appropriate patients in need. That was one of your questions. The next was, where did the growth come from?

Speaker 2

If we saw growth across therapeutic areas, both the ones we focused on at launch, neurology, nephrology and rheumatology and the newer areas of ophthalmology, gout and pulmonology. And I would highlight the so to your question on where does you know, the majority of the growth, on an absolute basis did come from the core indication that we launched with, which is neurology, nephrology and rheumatology. Of course, as you're aware that the number of resources that we have out there talking about or detailing these different to these different specialties is lower than what we have for the newer indications. But there is very strong growth and I highlight particularly strong growth both on a quarter on quarter and year over year basis that we've seen in gout, which is proprietary to Cortrophin Gel as the only ACTH product approved for this indication. And then in addition, our our ophthalmology sales team is off to a very strong start and drove significant growth in prescriptions and new patient starts in the Q2, right?

Speaker 2

And obviously, we will build on that as we expand the ophthalmology franchise with the integration of the Allen Neurosciences acquisition? And then your last question, I think, was around how much upside is there? I think, Gary, you're aware of how large the ACTH market was even when you add our raised guidance and the competitors raised guidance. That's still a touch over 50% of what peak sales of the category was a few years ago. So yes, hopefully I covered all your questions, Gary.

Speaker 7

Yes, most of it. Just that last question was really more on the Gaudi Flare indication in the 1 ml vial and having that presentation. And I think in the prepared remarks, you just talked about how many of these patients are out there and how many could be candidates. And I'm also curious if that 1 ml vial could be used for other indications, not just the Gauzy flares, just having a smaller vial size?

Speaker 2

Yes. Thank you for your question. Look, the addition of the 1 ml vial has been additive. It has helped us to expand usage to ACPs who are new to prescribing Cortrophin. And their first experience with Cortrophin has been with the 1 ml vial.

Speaker 2

And the volume in the 1 ml vial has grown significantly quarter over quarter. And look, it just goes back to our approach towards enhancing the convenience as well as addressing the pain points and needs of both the appropriate patients as well as the healthcare providers who treat them. So the 1 in our vial was, you know, one step in that direction. And now as we I was pleased to report earlier today that we are nearing the completion of our pre filled syringe to help, you know, appropriate patients. And that brings, you know, another option for enhancing the convenience and addressing the pain points of of the patients as well as the healthcare providers who treat them.

Speaker 7

Okay. That's helpful. And then just one more on Almir. So first, I just want to confirm that you're not factoring any benefit from the deal in the raised Cortrophin guidance for the ophthalmology segment? And then just talk about the planning for the closing integration and are there any issues or hurdles you're expecting

Speaker 8

Yes. Thank you. So

Speaker 2

Yes. Thank you. So your first question, there is no benefit from increased Cortrophin sales from an expanded ophthalmology sales force baked into the guidance. As you know, we are yet to close the deal. So this is for standalone ANI.

Speaker 2

And then your second question around integration planning, look, we're making very good progress on planning for the integration. First part of it is on working towards the close of the deal. And as I said, you know, we look forward to closing the deal later this quarter. And then from a planning perspective, I think that we're making again good progress interacting appropriately with the Alimera leadership and team to understand what the organization systems and processes will look like after deal closure? And as you would expect, thinking about at the heart of this integration is the combined ophthalmology 45 plus sales team and how they are going to carry all 3 durable commercial assets that Chris spoke about.

Speaker 2

And so thinking about how we will how we will organize with them, you know, what does the training program look like for the folks that have been selling the Lutine and YUTIQ for them to sell Cortrophin and our team has been selling Cortrophin for them to sell ILUVIEN and YUTIQ. And obviously, with the other sort of IC plan and other support that they need to be able in the hub, distribution, all of those, integrating all of those, I think those are all the steps that we're working towards and we're making good progress on that in that area.

Speaker 7

All right, great. Thanks, Nikhil.

Speaker 2

Thank you, Gary.

Operator

Thank you. Our next question will come from vamil Divan with Guggenheim Securities. Your line is now open.

Speaker 6

Great. Thanks for taking my questions. Maybe just a couple of things I just want to clarify here. 1 on the Cortrophin side, you mentioned Q4 you expect to be the largest quarter of the year. Again, just curious, I assume you're expecting still sequential growth from 2Q to 3Q and then 3Q to 4Q, but if you could just confirm that, that would be helpful.

Speaker 6

And then on the Established Brands side, you mentioned the Q2 is sort of a good base to look at for the remainder of this year. I'm just curious if you can comment any further than that in terms of 2025. Is this sort of a nice sort of steady state or do you expect any sort of meaningful changes next year? And then last question, just for the Almera, you mentioned now you have the ex U. S.

Speaker 6

Presence that they provide. I'm curious how you're thinking about that. As you think about some future business development priorities is expanding ex U. S. Maybe turning into a little bit more of a focus given what Almirall provides you?

Speaker 6

Thank you.

Speaker 2

Thank you, Vimal, and good morning. So your question on Cortrophin, yes, we expect to see sequential growth and that the Q4, as Steve mentioned in his prepared remarks, we do expect the 4th quarter to be the highest, right? So therefore, there will be sequential growth in 3Q and 4Q. The second question was around actually, your third question was around the ex U. S.

Speaker 2

Alimera business and what opportunities that gives us. But we're working through these and we will share updates as they're meaningful and as they develop. Nothing specific to report at this time. Obviously, we're currently focused on closing the deal, integrating the asset, the company and continuing the great work that Rick and team have been doing. So that's on the Alimera ex U.

Speaker 2

S. Business and what opportunities that gives us. And then the third question on Established Brands. Look, on Established Brands, we are continuing this is an important component of our portfolio of businesses in that it is low working capital, high gross margin and strong cash flow generation part of the business. So we are working on a number of different things.

Speaker 2

Historically, as you know, for established brands, we expand the portfolio by doing business development deals for established brands. But we haven't done one since 2021 as we've, you know, found different pathways to growth, whether it's the whether it's capturing the benefits of the supply tailwinds or trying innovative commercial strategies. And so we'll deploy some combination of these 3 to work through the plans for established brands, and we'll share more as we go along. But going back to your core question, the current portfolio year on year, you'll see some margin decline in the absence of one of these moves being made.

Speaker 6

Okay. Thank you. That's helpful.

Speaker 2

Yes.

Operator

Thank you. Our next question will come from Oren Livnat with H. C. Wainwright. Your line is now open.

Speaker 9

Thanks. I have a few questions. I guess, coincidentally, this morning, along with your announcement of the prefilled syringe development work, Mallinckrodt also announced the availability of their single use prefilled auto injector as that was approved months back. Can you just tell us if you think that will have any material impact on the competitive ACTH landscape? Like are there certain indications where patient self administration and auto injector would be most relevant?

Speaker 9

And do you think that will have any different market access or coverage than the current relative coverage of the year 2 products now? And I have follow ups today.

Speaker 2

Sure. Good morning, Oren, and thank you for your question. Look, the competitor's device, we can tell is in that the competitors' efforts as well as ANI's efforts are aimed at enhancing the convenience and addressing pain points that a subset of patients have. So for example, our presold syringe is used to address patients that have that can be helpful for patients in preparing and administering the Cortrophin Gel product, right, in a 1 ml pre filled syringe. And I think the way I would think about it is both the competitor and us are working or investing to increase the awareness and bring new options to patients and therefore increase awareness of the category and drive growth in the category, right?

Speaker 2

We lost a 1 ml vial, which was also appreciated by, as I mentioned earlier, by healthcare providers, some of whom initiated their who were naive to ACTH and initiated their usage of ACTH by trying with the 1 ml vial. So again, different options for patients as well as the healthcare providers who treat them. And again, you know, reiterate that overall, this is great for the category given that there is a significant runway for the ACTH category, but the number of patients being treated today being significantly lower than the number of patients being treated many years ago.

Speaker 9

And I appreciate different strokes, different folks on products and needs across the landscape. I'm just curious if you think I don't know what dose their auto injector is for, if it's adjustable. Do you think there are any particular areas where that will have any impact? Or do you think it's just that is she does with your growth trajectory?

Speaker 2

Yes. I think that there are probably a subset of indications where a 1 ml or a 0.5 ml dose may be more convenient, right, to have than taking a 5 ml vial. And then it is with this understanding itself that we invested to bring the 1 ml vial many months ago, right? And now are going to bring a pre filled syringe. And you would expect that the options from a dosing perspective that you can expect that that will not create sort of meaningful differentiation between the 2 for now.

Speaker 9

Okay. And regarding Alimera, I know it hasn't closed yet, so I guess feel free to say no comments. But since you're clearly in the planning stages, can you give us any color on potential synergies there? Maybe what sort of EBITDA margins And I guess another question I have is, you talk about these rare disease. Obviously, DME is a much larger indication, but you're targeting in Asia of it and NIU is rare disease.

Speaker 9

Is there any opportunity to revisit pricing of these products? It seems to me that the value is quite high there and particularly in an orphan indication and the differentiation of the product, it's not super expensive in my view. Do you have freedom to make changes there? Or are you limited in the sort of IRA framework that we're

Speaker 2

Yes. Thank you for your questions, Oren. I think that the sort of financial outlook for the deal remains what we shared at when we announced the deal in that from a synergies perspective, like we had announced in 2025, we expect to see about $10,000,000 worth of synergies. And as we're doing the integration plan and we're seeing a runway into that or there's I guess there's no information that suggests that we couldn't capture that. And then from an again from an EBITDA addition, we also gave guidance on how much adjusted EBITDA we expect to add.

Speaker 2

Steve, you can jump in, but I think it was in the $30,000,000 plus range that we talked about. You can help me with that, Steve. So that's in terms of EBITDA addition in pro form a a in 2025. And that obviously is net of any additional Cortrophin in sales and revenue synergies. That's just the additional EBITDA that we would get from the Alimera acquisition.

Speaker 2

And then the third part regarding pricing, again, we try to strike a balance between sharing information that is helpful as well as competitively sensitive. And we're in the integration planning stage, so allow us to come back to you with further information on that topic. But Steve, could you just answer Oren's clarification regarding what we had said about additional EBITDA in 2025?

Speaker 4

Yes. Good morning, Oren. Yes, and I think importantly, I would know in terms of our gross margin profile rate, it's going to be accretive to our gross margins. The Alimera products are in the low 80%. And in terms of EBITDA, we would expect in the end of the mid-30s as Nikhil mentioned.

Speaker 9

Okay. And just lastly, I noticed in your GAAP SG and A, you had some litigation expense in there. And I'm just wondering if you're able to give us any color. Is that just on the disclosed CG oncology dispute that we've known about? Or is there potential Paragraph IV or 505(2) IP related stuff there?

Speaker 9

And I guess should we hope to hear anything news on the 505(2) front in the foreseeable future? Thank you.

Speaker 4

Yes. I mean, in terms of the incremental litigation, as you would expect, we're vigorously pursuing the defense of our rights in CG Oncology. And so that is an element in terms of the increased spend that we have in litigation year over year on a GAAP basis. That's I think that's the only one that we would highlight today to you. And then what was the second part of your question?

Speaker 4

I'm sorry.

Speaker 2

Yes, I can take that. So Oren, on the 505(2)s, we will share more when we have meaningful updates to give. But to your there's no linkage between the litigation spend and the launch of 505(2) products, but we will share updates on that when they're material.

Speaker 9

All right. Thanks so much. Congrats on another upside quarter.

Speaker 2

Thank you, Oren.

Operator

Thank you. Our next question will come from Tim Chiang with Capital One. Your line is now open.

Speaker 8

Thanks. Nikhil, it seems like your generic segment revenues are actually exceeding your original targets. Can you just sort of comment on where you see expectations for growth from the generic segment in the back half of the year? Obviously, you've increased your guidance for rare disease in your total revenues. But so how do you sort of see your generic segment playing out in the back half?

Speaker 2

Yes. Good morning and thank you for your questions, Tim. Look, for our generics business, the performance is really coming on the back of three things, right? Number 1 is our new product the cadence of new product launches, right? We launched, as we talked about, 4 new products in the Q2, 2 new already in the Q3.

Speaker 2

So about 12 since the start of the year. That combined with our operational excellence and being a reliable supplier with strong GMP status and U. S.-based manufacturing enables us to deliver, as we had shared before, on a full year basis, high single digit to low double digit growth. And then you can expect towards the to your question, I think sequential growth as we move to the subsequent quarters in 2025.

Speaker 8

And maybe just a follow-up. I mean, you cited this new facility in New Jersey. How much capacity are you actually going to be able to increase with that new facility?

Speaker 2

Yes. We are adding about 15 new manufacturing suites and a new QC lab. So that's a substantial increase in capacity. We've also upgraded the equipment and added higher batch size equipment in there. So I don't have a specific percentage, but it's a meaningful addition, to the volume that we can service out of the New Jersey site.

Speaker 2

And it will serve the growth of the argenx business for multiple years.

Speaker 8

Okay, great. Nice quarter. Thanks.

Speaker 2

Thank you, Tim.

Operator

Thank you. It appears we have no further questions at this time. I'll now turn the program back over to Nikhil Lalwani for closing remarks.

Speaker 2

Thank you again for your interest in ANI and for joining our call this morning. We really appreciate it and we look forward to updating you on our progress as we move forward. Thank you.

Operator

Thank you. Ladies and gentlemen, this concludes today's event. You may now disconnect.

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Key Takeaways

  • Record Q2 revenues of $138 M (+18% YoY) and raised 2024 full-year net revenue guidance to $540–560 M, driven by strong momentum across the business.
  • Cortrophin Gel generated $49.2 M in Q2 (+102% YoY) with record new patient starts, expanded sales teams in pulmonology and ophthalmology, and progress on a 1 ml prefilled syringe filing in H2 2024 for a H1 2025 launch.
  • Generics segment delivered $74 M in Q2 revenue (+17% YoY) supported by four new product launches and expects all 15 new manufacturing suites in New Jersey to be operational in H2 2024 to fuel future growth.
  • Established Brands revenue declined 49% to $14.9 M in Q2 as anticipated, following the expiration of prior competitor supply tailwinds and aligning with full-year guidance for the segment.
  • Proposed acquisition of Alimera Sciences adds two high-growth ophthalmology assets (Iluvien and YUTIQ) with $100 M+ annual branded revenues, on track to close this quarter and expected to drive double-digit EPS accretion in 2025.
A.I. generated. May contain errors.
Earnings Conference Call
ANI Pharmaceuticals Q2 2024
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