Q1 2022 ANI Pharmaceuticals Inc Earnings Call
We'll be available for 30 days on our website and I pharmaceuticals dot com or.
For the benefit of those who maybe listening to the replay or archived webcast. This call was held and recorded on May 10, 2022. Since then 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 Nick <unk>.
Okay.
Thank you Lisa.
Good morning, everyone and it's great to have you all joined the Anr Pharmaceuticals call today and for your interest in our company.
We are looking forward to covering four key topics with you today.
First updating you on 2022 Q1 performance.
Sharing what we have accomplished and where we are headed on key growth initiatives.
Third providing full year 2022 guidance for the total company and finally discussing the organization evolution to capture the opportunities that lie ahead for Eni.
First on quarterly performance, we delivered net revenues of $64 5 million in the first quarter of 2022, an increase of 18% year over year.
As Steve will detail later, excluding the <unk> royalty from prior year results total net revenues would have increased nearly 49% year over year.
This growth was driven by the acquisition of new video and the new product launches both from the <unk> legacy business and the new video acquisition.
During this quarter, we launched purified control from gel.
Lead asset in our rare disease business and began offering patients suffering.
From certain autoimmune conditions of choice in ACTH therapy.
During the first quarter after quarter, often gel launch we achieved $1 3 million in net revenues.
Our adjusted non-GAAP EBITDA for the quarter was $4 $3 million and the year on year reduction in non-GAAP EBITDA was driven primarily by the approximately $11 million of core Trofim launch related SG&A.
Now, let me share with you what we have accomplished and where we are headed on key growth initiatives.
Our first initiative is to build a successful quarter often gel franchise.
Lead asset of our rare disease business unit.
On January 24, 2022, we announced the U S commercial availability and launch of purified quarter often Jeff.
For <unk> gel has the potential to help patients with certain chronic autoimmune disorders, including acute exacerbations of multiple sclerosis, and rheumatoid arthritis, and excess urinary protein due to the products and growth.
Before the reintroduction of court rofin gel and for over 20 years patients had only one available ACTH treatment option.
We are pleased with our progress since launch approximately 15 weeks ago.
Much credit must be given to our world class cross functional and commercial teams, including a dedicated and experienced rare disease sales force.
95% of our sales territories already filled and our clinical account executives I E sales force have already reached almost 50% of targeted prescribers and generated awareness of and interest in <unk> and gel.
Over 102125 unique prescribers have initiated over 250, new patient cases, forecourt rofin gel therapy since launch with approximately 25% of the unique prescribers, having enrolled more than one patient.
Initial enrollments are distributed relatively evenly across our targeted specialties of rheumatology neurology and nephrology.
Our launch trajectory has been strong with growth in the number of new patient cases per week and reduction in the average time from new case initiation to patient dispense.
Equally important our market access efforts have resulted in formulary coverage for over 100 million lives or one or more FDA approved indications and 16 million lives, where we are advantaged.
Our wholesale acquisition cost is approximately 23% lower than the wholesale acquisition cost of the only other ACTH therapy available in.
In addition, our patient services organization remains focused on establishing expanded access to court rofin gel for patients and their caregivers throughout the treatment journey.
Finally, our sales performance in April and early May reflects the strong launch trajectory. We've made very good progress in such a short time and we are pleased to issue 2022 revenue guidance for <unk> gel in the range of $35 million to $40 million.
The next key growth initiative I will speak about is driving growth of our generics business by enhancing our R&D capability towards the new video acquisition.
The combined team has continued to execute well on ensuring continuity of business operations and capturing synergies from the combination.
During the first quarter of 2022, we successfully launched several products for the total <unk> market size of $240 million and with the majority of these launches such as mutual protocol, Rifabutin and visa <unk>, having three or fewer competitors.
Successful execution of these new launches.
Tough to counter the impact of business erosion, we expect the patient value of new launches to help drive growth for our generics business in the subsequent quarters.
The R&D organization under the leadership of semi Sean Mclaughlin.
<unk> to deliver with six new Anda filings in Q1 in.
In addition, the company retained its leadership in competitive generic therapy, CGT approvals with securing the CGT approval of beating and add resolution today <unk> has over 20 Anda filings pending with the FDA in over 20 applications in multiple 505 Btu products.
Underdevelopment.
The company remains focused on strengthening the product pipeline to further increase sustainability of our generics business.
We have also made very good progress on driving efficiencies in our combined operations procurement and distribution.
We will increase our efforts in this area to further drive cost competitiveness.
Next I will turn to our established brands business, we are continuing to evaluate potential accretive asset acquisitions to capitalize on and augment our commercial and organizational capabilities and.
In parallel we are maximizing the value of the current portfolio through innovative and fit for purpose commercialization strategies.
And ni as well passed that inflection point and has invested significantly in organizational capability and leadership bandwidth to support our evolution towards becoming a leading biopharmaceutical company.
Our rare disease leadership team led by Chris months has experienced over 20 rare disease product launches and nearly 75% of the sales team is one of the President's club or equivalent top 10 sales award in recent years.
Our generic R&D team is a prolific track record of delivering limited competition new launches.
With that let me turn it over to Steve to share the financial results and the full year total company guidance.
Thank you Nicole and good morning to everyone on the call.
As I review, our first quarter financial results. Please keep in mind that this was the first full quarter of <unk> operations in our consolidated results.
In addition, it is the first quarter in which we are reflecting core trofim sales and marketing costs in our non-GAAP profitability measures now that we are right in the post launch period.
For the three months ended March 31, 2022, we posted total net revenues of $64 5 million up nearly $10 million or 18, 3% as compared to the prior year period, driven by revenues from the new video acquisition and new product launch.
Is tempered by the non recurrence of a material royalty item that occurred in the first quarter of 2021.
In total the new video acquisition benefited net revenue comparisons by approximately $19 2 million across our generic pharmaceuticals contract manufacturing royalties and product development services categories of revenue.
This significant gain was somewhat offset by the non recurrence of $11 2 million of royalty income recognized in the first quarter of 2021, resulting from the final yet Scott related royalties from kite pharma.
Excluding the yes Carter royalty from prior year results total net revenues would have increased nearly 49% year over year.
Net revenues for generic pharmaceutical products were $49 1 million during the three months ended March 31 2022.
An increase of $16 1 million or 49% from $33 million in the prior year period.
The net increase was principally driven by $15 7 million in revenues associated with the <unk> acquisition as well as sales of <unk>, which ini launched in September of 2022, I'm sorry September of 2021.
We also saw an increase in overall volumes in the generic segment as the market continued to recover from the Covid related suppression experienced in 2020 and 2021.
Net revenues for branded pharmaceutical products were $8 5 million during the three months ended March 31 2022.
An increase of 12% compared to the $7 5 million for the same period in 2021.
The net increase was driven by modest increases in sales across several portfolio products, including those acquired from Sandoz and launched in April of 2021.
And a shift in mix towards products with higher average selling prices.
Contract manufacturing revenues were $2 9 million during the three months ended March 31, 2022, an increase of 13% compared to the $2 6 million for the prior year period due.
Due to an increase in the volume of orders, including $1 1 million of <unk> contract manufacturing revenues.
Royalty and other revenues were $2 7 million during the three months ended March 31 2022.
Decrease of $8 7 million from $11 4 million for the prior year period due to the aforementioned final royalty payment under the kite pharma license agreement.
For yes, SCADA that was recognized during the three months ended March 31 2021.
Royalty and other revenues in the first quarter of 2022 consisted primarily of $1 9 million in royalty revenues related to the video <unk> arrangements.
And zero point $6 million in product development service revenues.
Okay.
Net revenues of rare disease pharmaceutical products consists entirely of sales of core troponin and totaled $1 3 million. During the three months ended March 31 2022.
These recognized sales figures reflect the natural lag between new case initiation and the dispensing of the product that is inherent in the early days of our rare disease new product launch.
Looking forward, we anticipate very strong quarter over quarter sequential growth during the remainder of the year.
There were there were no sales of rare disease pharmaceutical products during the comparable prior year period.
Operating expenses increased by 63% to $83 7 million for the three months ended March 31, 2022 up from $51 5 million in the prior year period.
Cost of sales, excluding depreciation and amortization increased by $14 3 million to $34 3 million in the first quarter of 2022 compared to $20 million in the prior year period.
Merrily as a result of increased volumes, including $9 5 million of costs related to sales of new video products.
<unk> costs included $3 $2 million charge, representing the excess of fair value over cost for inventory acquired in the business combination parse.
Partially offset by a decline in sales types of profit sharing arrangements.
Excluding the impact of acquisition accounting and stock compensation.
Cost of sales on a non-GAAP basis as a percentage of total net revenues increased 10 point.
Four points from 36, 6% in the prior year to 47% in the current year period.
This.
This increase was driven by the non recurrence of yes, Carter royalties, which had no corresponding cost of goods sold and a higher mix of generic sales.
Excluding <unk> from the prior year calculation cost of goods on a non-GAAP basis would've been approximately 46, 1% essentially flat with the current year.
Research and development expenses increased to $5 3 million in the first quarter of 2022 from $3 million, an increase of 78% primarily due to the addition of <unk> costs tempered by a decrease in expenses associated with the completion of our courtroom.
And development efforts.
During the quarter, we filed six new and as with the FDA on the strength of our R&D efforts.
Selling general and administrative expenses increased by $11 2 million in the first quarter of 2022 to $28 8 million compared to $17 $6 million in the comparable quarter in 2021.
The increase primarily reflects an $11 million increase in sales and marketing expense.
<unk> to the core Trofim launch.
And $2 7 million of expenses, primarily related to the addition of <unk> head count and activities.
Actually offset by a decrease in transaction expenses related to the <unk> acquisition.
Depreciation and amortization expense was $14 6 million for the three months ended March 31, 2022, an increase of $3 7 million compared to $10 9 million for the same period in 2021.
This decrease is primarily a result of ameren to amortization of intangible assets acquired in the <unk> transaction.
Our $1 27, and GAAP net loss per share reflects significant amortization and inventory step up charges, resulting from the <unk> acquisition, coupled with the sales and marketing expense behind our initial commercial launch of core Trofim.
As it relates to our non-GAAP profitability measures. The current period is the first quarter that we are reflecting poor trofim sales and marketing costs.
Prior to this period, 100% of such costs were added back as prelaunch related expenditures.
Adjusted non-GAAP EBITDA for the first quarter was $4 3 million as compared to $18 9 million for the first quarter of 2021.
And our adjusted non-GAAP diluted loss per share was <unk> 12 for the quarter compared to diluted earnings per share of $1 <unk> for.
For the first quarter of 2021.
As of March 31 balance sheet date, we had $76 $9 million of unrestricted cash and cash equivalents and total net debt utilizing the face value of debt net of unrestricted cash on hand as of March 31 was $222 4 million.
Compared to $199 7 million as of December 31, 2021 reflective of lower cash on hand, as we utilized cash in the quarter to support our core Trofim launch efforts.
Now turning our attention to forward looking guidance.
Due to increased core trofim launch visibility and momentum, we're providing total company guidance with today's release.
On a total company basis for the projected 12 months ended December 31, 2022, we currently anticipate.
Net revenue between $295 million and $315 million, representing approximately 36% to 46% growth as compared to the $216 1 million recognized in 2021.
Research and development expenses between 16 and $18 million.
Adjusted non-GAAP EBITDA between $54 million and $60 million.
Adjusted non-GAAP diluted earnings per share between $1 34, and $1 62.
In addition, we are providing the following purified protropin gel specific measures.
Net revenue between $35 million $40 million.
And direct selling general and administrative expenses between $42 million and $46 million.
In addition, we currently anticipate between $16 nine and 17 million shares outstanding and an effective tax rate of approximately 24% prior to any any federal tax reform.
With that we will now open up the call for questions.
Operator. Please go ahead with the instructions.
At this time I'd like to ask a question. Please press star one on your Touchtone phone you may remove itself from the queue at any time by personal power once.
Again that is star and one to ask a question we will take our first question from Elliot Wilbur with Raymond James.
Thanks. Good morning, just a couple of quick ones upfront for Steve first just looking to connect updated guidance versus the guidance you provided back in.
Early March doesn't look like there was any change with respect to.
Anticipated EBITDA generation on the.
Base business, but just wanted to confirm that and then how should we think about your outlook for operating cash flow over the balance of the year given the need to continue to support the initial <unk> launch and then I've got a couple for mckeel as well.
<unk>.
Sure Elliot good morning, and thanks for the question. So I guess Youre observations regarding guidance. This morning are spot on so the base business guidance, which as.
Youll recall.
At our last earnings call, we provided guidance export drove in so.
That portion of the guidance remains unchanged this morning.
And.
We're overlaying the core Trofim guidance.
To that previous guidance.
And then regarding the outlook regarding operating cash.
We're very confident in terms of when we look.
For the quarterly projections and the trajectory of the overall business as.
As well as how we expect the core trophy and.
Standalone product P&L to develop over the next three quarters.
We remain very confident in our cash cash position and the ability to support the business and support all of our key initiatives for the business.
The quarterly cash flow that youre seeing in the first quarter.
Is completely asics as expected.
Given the heavy lift.
In the early days of the core trophy launch rate we're selling.
Selling and marketing spend really occurs essentially on a divide by four basis, when obviously the revenue and the.
Associated gross gross profit streams right Youre, starting from zero and then and then building from there so nothing unexpected in the first quarter and we have a high degree of confidence in in the following in the.
Forthcoming.
<unk> two through four to support the business.
And I'll turn it back to you to ask your questions for predict kill them.
Yes. Thanks.
Les a couple of questions with respect to the initial core trophy launch Nicki I was just wondering if you could provide maybe a little bit more detail in terms of some of the early.
Success Youre seeing with respect to just short of the the source of patients are these patients new to therapy or they switches from <unk>.
The competitive therapy that's.
In the market or.
Are these patients that perhaps have been on <unk> therapy at some point.
During the air there the.
Time, they've been diagnosed.
As with the respective ailment, but have just been pushed out of the market due to due to access issues just trying to get a sense, maybe if fear.
<unk> seen some.
Some early indications that may be.
Launched of Copa NGL is actually leading to market expansion as opposed to just.
Switches between.
Cultural fit and the other product on the marketplace.
Yes.
Good morning Elliot. Thank you for your question I'll start and then we have our head in rare disease, Chris Martin on the call and he can chime in.
With additional commentary I think that.
Going back to your question.
I think the first thing is.
Just clarify or.
We reconfirm that what we did right out of the gate and it's early days of the launch is too.
<unk> focus on.
A few targets.
Pudic areas.
Prescribers rates were believers in the ACTH.
Our therapy right and.
So our targeted specialties of rheumatology and neurology and nephrology.
And looking at prescribers in the what we've seen to answer your question is that.
We are.
Definitely seeing in the enrollments that we have that there are new patient starts but the other.
Dynamic that is <unk>.
Listing in answer to your question is.
Prescribers that.
Had higher volumes of prescription in the prior period, it's not the current non last the last 12 months.
Periods prior to that.
Have.
I'll start giving us.
Additional prescriptions, which.
It leads us to believe that was our intent with the with the launch of purified corticotropin gel that than.
We are expanding both with towards the access as well as with the reach.
Within the Prescriber group.
The number of patients that can benefit from this therapy and I'll reiterate something that I said at the last earnings call, which as you know when you look at our claims based epidemiology analysis that shows that.
No.
Hum.
Less than 10% of patients who are steroid resistant and refractory refractory across primary indications receive ACTH therapy.
Thats.
That's how we see the market.
Ah patients.
This therapy, Chris would you like to add anything.
Yes, yes.
Sure. Thank you and thanks for the question earlier I think we are very focused.
Dedicated rare disease sales team.
Having clinical conversation with with physicians, who are who are comfortable with ACTH based therapy from the past experience, but really focusing on new patients and focusing on on the clinical discussion that will help identify patients who really could benefit from.
Courts, Rofin gel and that really has been our primary focus and so as <unk> said the.
The vast majority of these conversations are leading to new patient starts currently in there.
Going into the launch.
Okay and then just one follow up question for you Chris can you just talk about.
The.
The language in the release this morning talked about.
If I knew patient cases, and then ultimately turning those into our action and looking to shorten the period end.
Which that occurs could you just maybe give us a little bit of insight into sort of what some of the.
Hurdles are.
Incumbent to us in terms of just.
It just simply.
Capturing mind share at the physician level generating in our action and ultimately getting a patient on <unk>.
On therapy.
Yes sure.
Certainly in the first few months of any new product launches, especially in the rare disease space where.
These therapies are often quite expensive.
We run into headwinds of initial denial rate from commercial insurance plans and so that has really been.
Kind of managing initial denials and.
Using our internal team.
Field reimbursement team as well as insurance experts that we have.
Our hub.
Work with the office too.
Prepare the package and the data that's needed to overcome those analysis and then ultimately get put you've been approved has been really I think the.
The key headwind early on.
So that's that's what we're experiencing.
For sure.
We're really confident in terms of.
The.
The team that we have in place too.
Improve that orange the fulfillment.
Pathway for patients and and we have seen that improvement.
Okay.
Sure.
We don't.
So is that.
Is that just your standard payer, we don't cover products and the new first new product in the first 12 months type of.
Hurdles that you're referring to.
Yeah, I mean, I'd say that that's in this first period of of three plus months, where certainly.
And that for sure.
So Elliot will find me just build on what Chris said I think a couple of things one is.
Just to be clear.
The 250, new case initiations over to $1 50, or our patient fit.
<unk> prescribers have written prescriptions for so that's so I think that's just one thing to clarify.
The second thing is we have made good progress on the gaining formally coverage for over 100 million lives where they are.
Or at least one or more FDA approved indication. So obviously that's.
That's helping move the enrollment of fulfillment process and I think the.
The last part to say is look we're very encouraged by the progress we have made by improving the average time. It takes from new case initiation to dispense miles during the first three plus months of the launch.
The time from new case initiation to fulfillment has varied.
It has been dependent on payer coverage is as Chris said, but in some cases, we've seen port Colborne gel approved and shipped to patients in as fast as 36 hours when the coverage is in place.
No.
This is <unk>.
Chris said this is classic as you're pointing out to the classic rare diseases right out of the gate.
And we've factored the.
<unk>.
The acceleration of this time from enrollment to fulfillment as we've laid out our full year guidance.
Alright, Thank you for the question.
Okay.
As a reminder, that is star one to ask a question and we will take our next question from Brandon Folkes from Cantor Fitzgerald.
Hi, Thanks for taking my questions. Maybe just following on from that final question can you maybe talk about how many up to 250 patient cases are actually paid scripts at this stage business and our funding.
Any stocking in the first quarter and then any color on how many of those 150 patient cases, where may be initiated.
Post quarter.
Yeah. Thank you Brendan and good morning to you.
I think that.
Just to make sure I got all your three questions I think your first question is.
How many of the 250 cases are paid cases, the second is how many of the 200 posted the third one was how many of the $2 54 and initiated after.
Quarter end.
Apologize could you repeat your second question for me please.
I had just over $1 3 million revenue recognized in the quarter just any color on stocking.
Got it alright.
Alright, so <unk>, yes, yes, yes.
On the first one is on the.
What portion of the cases are paid cases versus off the $2 50.
As you would expect we're processing.
The enrollment of fulfillment for the 250 cases, clearly the $1 3 million.
Revenue was in quarter, one is not reflective of a majority of these patients moving to therapy right. So.
I can't give you a holistic answer on how many of these will be paid cases versus not right.
I will clarify that.
We obviously have a number of patients on therapy for those patients that are on therapy are what we are seeing in terms of.
Paid versus.
Non revenue generating vials I think that the mix is in line with what we had anticipated as we launch those products.
So that's that's first I think the second is.
How many of this.
Of the 250 have been initiated after the close of the quarter.
I don't have an exact split but the.
The trend the weekly number of new patient enrollments per week.
Have increased week on week for us, there's a clear upward trajectory.
Clearly.
As you remember we launched on January 24th.
<unk>.
So they're worried about let's call. It eight nine weeks of the first quarter. So there has been a significant improvement in the momentum of new cash generation.
And we're also seeing that in the revenues right.
We indicated revenues of $1 3 million for the first quarter.
I had highlighted during my prepared comments that in April and May.
We clearly have seen an increase in the sales in that trajectory and that's that's.
Part of the.
The data that we looked at as we give any of our full year guidance.
And then the.
Third question is on the $1 $3 million in first quarter.
I think.
Matured almost.
Not any large stocking in that number.
Remember, we're using a network of specialty pharmacies.
For our distribution and then as a distributor for.
For the hospitals and idms and so there is in the first quarter number there is limited stocking to the best of our understanding.
Yes, I think it would also be.
Safe to add to that Mike Hill that based upon.
The reorders that we've seen in April and May right. It would suggest that the first quarter units have.
Have largely if not entirely been been consumed so I think that's another another angle on that question as well.
Yes, thank you for that.
Alright, Thank you very much.
There are no further questions at this time.
Alright, well.
Yes, it's back to meeting thank you everyone for joining us on the call and being with US on this journey to deliver high quality medicines to underserved patients, while creating shareholder value. We're pleased with how 2022 has begun thanks again and stay well.
Okay.
Yeah.
This does conclude today's program. Thank you Hey, Chen you may disconnect.
Connect at anytime.
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