Q2 2022 ANI Pharmaceuticals Inc Earnings Call
Good day, everyone and welcome to today's Eni Pharmaceuticals, Inc. Second quarter 2022 earnings results call.
At this time all participants are in a listen only mode. Later, you will have an opportunity to ask questions. During the question and answer session. You May Register to ask a question at any time by pressing the star and one on you touched on phone. Please note. This call maybe recorded and I will be standing by should you need any assistance.
It is now my pleasure to turn today's program over to Lisa Wilson Investor Relations for Eni Pharmaceuticals, Inc.
Thank you Britney welcome to Eni Pharmaceuticals, Q2, 2022 earnings results call.
Lisa Wilson Investor Relations for Eni.
With me on today's call are in the queue I want a president.
President and Chief Executive Officer.
Dave Kelly Chief Financial Officer.
And Christopher Mudd head of rare disease of Eni.
You can also access the webcast of this call through the investors section of the a N a website and I pharmaceuticals Dot com.
Before we get started I would like to remind everyone that any statements made on today's conference call that express a belief expectation projection forecast anticipation or intent.
Regarding future events and the company's future performance, maybe considered forward looking statements as defined by the private Securities Litigation Reform Act.
These forward looking statements are based on information available to Eni Pharmaceuticals management as of today.
And involve risks and uncertainties.
Clothing, 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.
And I, specifically disclaims any intent or obligation to update these forward looking statements, except as required by law.
The archived webcast will be available for 30 days on our website Eni pharmaceuticals Dot com.
For the benefit of those who maybe listening to the replay or archived webcast. This call was held and recorded on August eight 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.
With that I'll turn the call over to Nick Hilton La want it.
Thank you Lisa.
Good morning, everyone and thank you for joining our call.
Two years ago, we began a journey to transform <unk> into a leading biopharmaceutical company serving patients in need.
We continue to make strong progress in this journey and believe Eni remains well positioned to deliver sustainable long term growth.
I'm delighted to share our second quarter net revenues of $73 9 million, representing a new quarterly record for Eni and an increase of 52% from year earlier.
This growth is driven both by the first fourth quarter sales of our lead rare disease asset purified portrayal from gel and by growth in our generics business unit.
We continue to see acceleration in the number of patients treated with portrayal.
Reflecting the value seen by all stakeholders patients prescribers payers and Pbms that port <unk> as a new option.
Category, where patients for decades have only had one ACTH treatment available.
These benefits and the hard work and dedication of our experienced rare disease team enabled us to deliver revenues of $10 2 million in the second quarter versus $1 3 million in the first quarter.
In addition, our generics business unit continues to bring new products to patients and customers.
I am proud to share that Eni is now ranked sixth among all companies in terms of number of Anda approvals received in the past 12 months.
At this time, we are raising our 2022 net revenue guidance for cultural fit to.
To a range of $40 million to.
$245 million.
Reiterating our total company net revenue guidance at $295 million to $315 million.
Our adjusted non-GAAP EBITDA guidance remains at $54 million to $60 million.
Let me now provide a few details on momentum.
We've built across key business lines before turning the call over to Steve to share our financial results.
As most of you know building a successful quarter Wilson gel franchise is our top priority.
We are therefore very pleased to share that second quarter product sales came in at $10 2 million up from $1 3 million in the first quarter for.
For those who may be new to the Eni story core Crimson 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 Q2 nephrotic syndrome.
Our efforts to expand access and the number of patients benefiting from this therapeutic option are paying off.
Now I will share more about important elements of the <unk> launch, which our launch trajectory physician interest and patient access.
We are making good progress across each of these elements and I will tell you more about each.
Since our last earnings report new patient cases initiated have doubled as of August 5th approximately 500, new cases have been initiated since launch.
We are also seeing meaningful improvement across conversion rates and tightened taken from enrollment to fulfillment.
We have continued to strengthen our organizational infrastructure, including expansion of our hub patient support services and distribution network.
Having said that we retain our core growth and SG&A guidance for the year in a range of $42 million to $46 million.
Our commercial execution has increased prescriber awareness.
In fact, the prescriber base has doubled.
More than 250 unique prescribers as of August six.
And what is really exciting about this number is that it includes both physicians who are experienced with ACTH therapy as well as many first time prescribers.
Another positive sign is that approximately one third of the prescribers have written multiple prescriptions, which continue to be distributed across our targeted specialties.
Our efforts to bring savings to the healthcare system have resulted in expanded market access with over 144 million lives with at least one indication on formulary.
Notably on July one.
Core profit was added to the formulary for Unitedhealthcare commercial plans.
Today patients.
Patients across commercial Medicare and Medicaid.
Here's have access to <unk> profile.
The most heartening impact of our launch are the stories, we hear of patients who have benefited from access to <unk> therapy.
Overall, we are confident of our launch momentum and are raising the guidance for 2022 core pro forma revenues to $48 million to $45 million.
I'll turn next to our generics business sale.
Sales of generic pharmaceutical products rose by 46% year over year in the second quarter.
We remain focused on growing our new product pipeline and ensuring that we're driving cost competitiveness.
During the first six months of 2022, Eni filed Andas and successfully launched multiple multiple limited competition products for.
For example, we launched the second the second BB.
Rated generic for Isobutanol visa for install and review.
I am delighted to share that Eni is now ranked sixth in terms of and approvals received in the past 12 months.
That is quite an accomplishment.
We will continue to invest R&D dollars in this critical organizational area of strength.
During the second quarter, we also announced our intention to consolidate manufacturing operations and to seize operations at the Oakville, Ontario, Canada manufacturing plant.
When we assess the manufacturing footprint, we determined that our manufacturing sites across the border in New Jersey, we're well placed to support our future growth and continuing to serve patients and customers who need.
The consolidation efforts are progressing well due to the thoughtful planning and relentless efforts of our teams across <unk> for.
And New Jersey.
Several products have already been transferred to our site in <unk> and other product transfers are on track for craft for two product in New Jersey.
We're also making progress on finding a new bar for the <unk> facility.
Once fully executed this operational efficiency is expected to improve both profitability and cash flow by 7 million to $8 million on an annualized basis.
In parallel we continue to invest to expand our capacity at our New Jersey manufacturing plant.
Beyond manufacturing network consolidation, we are also driving and making progress on other operational efficiencies, including consolidation of our distribution operations.
Business development has been a strength of our company and we continue to be active on that front.
In July we acquired four limited competition Andas from <unk> pharma.
This transaction complements efforts, so far internal R&D team to expand our generic product portfolio and we expect to launch these products and see the value unlocked next year.
In the established brands business unit, we are focused on increasingly Fisher.
Efficiently increasing promotion to select high value targets for key brands.
The dermatology products, we are partnering with an established dermatology company to grow these products.
Our other key brands, we are utilizing a focused tele sales team to support promotional efforts as well as ongoing patient support through co pay assistance in patient starter samples.
In parallel we continue to actively evaluate business development deals to expand the portfolio of established brands and we commercialized.
Over the past two years, we have focused our efforts on strengthening our organization to transform eni into a leading biopharmaceutical company serving patients in need.
I am pleased to augment our leadership team and welcome Meredith Cook as senior Vice President General Counsel and corporate Secretary to Eni.
<unk> brings over 20 years of legal and leadership experience in specialty and generics pharmaceuticals, including in corporate governance, mergers and acquisitions strategic transactions and intellectual property.
Welcome again Meredith.
Steve will now walk through our detailed second quarter results.
Steve.
Thank you.
Thank you Nicole and good morning to everyone on the call.
For the three months ended June 30th 2022, we posted total net revenues of $73 9 million up $25 2 million or 52% as compared to the prior year period, driven by revenues from the new video acquisition and the <unk>.
Late January launch of Court Rofin.
Net revenues for generic pharmaceutical products were $49 9 million during the three months ended June 32022.
An increase of 46% compared to the $34 2 million for the same period in 2021.
The net increase was primarily driven by revenues from commercial generic products acquired in our acquisition of the video.
And increased revenues of medieval law, which launched in September of 2021.
These items were partially tempered by a decrease in revenues from sales of several legacy Ani's generic products.
Net revenues for branded pharmaceutical products were $8 5 million during the three months ended June 32022 of.
A decrease of 23% compared to $11 million for the same period in 2021.
The net decrease was principally due to an increase in sales of <unk> XL and inderal XL.
Contract manufacturing revenues were $4 4 million during the three months ended June 32022.
An increase of 89% compared to $2 3 million for the same period in 2021.
Due to an increase in the volume of orders primarily related to the addition of the medium contract manufacturing revenues.
Net revenues of our rare disease pharmaceutical products were $10 2 million for the quarter consisted entirely of sales of core Trofim gel.
There were no sales of rare disease pharmaceutical products during the comparable prior year period.
Operating expenses increased by 35% to $86 8 million for the three months ended June 32022 from.
From $64 2 million in the prior year period.
Cost of sales, excluding depreciation and amortization increased by $13 billion to $35 3 million in the second quarter of 2022 compared to $22 3 million in the prior year period.
Driven primarily by $7 9 million in costs related to medium product sales.
And $2 million related to an increase in the sales of products subject to profit sharing arrangements.
Excluding the impact of acquisition accounting stock compensation and the impact of our Canada operations.
Cost of sales on a non-GAAP basis as a percentage of total adjusted net revenues increased two four points from 42, 8% in the first quarter of 2021 to 45, 2% in the current year period, primarily as a result of increased generic volumes.
In a period of declining average.
Excuse me in a period of declining average selling prices.
Lower sales mix of established brand products and increased sales of products with profit sharing arrangements.
These factors were partially offset by sales of rare disease pharmaceutical products, which favorably impact our overall gross margin profile.
Research and development expenses were $4 2 million in the second quarter of 2022.
An increase of one 4 million from the prior year period, due primarily to <unk> related activities, partially offset by a decrease in expense associated with the completion of our core Trofim gel development efforts.
Selling general and administrative expenses increased to $32 million in the second quarter of 2022.
70% compared to $18 8 million in the prior year quarter.
Selecting a $12 $5 million increase in sales and marketing expenses related to our launch of core Trophy <unk> gel.
As well as the increased expenses related to the addition of the <unk> head count and activities.
Partially tempered by a one 6 million decrease in transaction expenses related to the <unk> acquisition.
Depreciation and amortization increased by 22% in the second quarter of 2022 to $13 8 million from $11 $3 million in the comparable quarter in 2021, primarily due to the amortization of intangible assets acquired in.
The <unk> acquisition.
We recognized restructuring activities of $2 6 million of expense in the three months ended June 32022.
In relation to the previously announced closure of our Oakville, Ontario, Canada facility.
Cash charges were $1 7 million driven by one $4 million in termination benefits.
While noncash charges totaled 0.9 million consisting of fixed asset impairment and accelerated depreciation.
We currently anticipate that we will incur another one 4 million of severance related cash charges and another three 1% to $3 6 million of accelerated depreciation over the course of the next three quarters.
We have excluded both the one time charges, resulting from this action as well as the residual Canada results from our non-GAAP financial measures as detailed in table three of this morning's press release.
Our 94, GAAP net loss per share for the quarter reflect 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 course rofin.
On an adjusted non-GAAP basis, we had diluted earnings per share of <unk> 13 for the quarter compared to 67 per share for the prior year period.
Adjusted non-GAAP EBITDA for the second quarter was $9 9 million as compared to $13 1 million for the second quarter of 2021.
During the quarter, we utilized approximately $11 5 million of cash and as of June 30 balance sheet date.
The company had $63 4 million in unrestricted cash and cash equivalents.
The net use of cash in the first half of the year is in line with our expectations as we invest behind the core Trofim launch.
We anticipate a return to positive cash flows from operations during the second half of the year as core trophy revenues continue to increase.
The company had $298 5 million of face value of outstanding debt as of June 32022.
Now I will comment on forward looking guidance for the projected 12 months ending December 31 2022.
Given the positive momentum behind the core drove <unk> launch we are raising our core <unk> specific net revenue guidance to $40 million to $45 million from the previously announced range of $35 million to $40 million.
We continue to forecast core trofim direct selling general and administrative expenses of between $40 million to $46 million.
On a total company basis, we are reiterating our previously issued guidance of net revenue between $295 million and $315 million, representing approximately 36% to 46% growth as compared to $216 1 million recognized.
In 2021.
Total company research and development expense of between 16 and $18 million.
Adjusted non-GAAP EBITDA of between $54 million and $60 million.
And adjusted non-GAAP diluted earnings per share of between $1 34.
And $1 62.
In addition, we currently anticipate between $16 9 million 17 million shares outstanding and an effective tax rate of approximately 24% prior to any federal tax reform.
We will now open up the call for questions. Operator. Please go ahead with instructions.
At this time, if you would like to ask a question. Please press star one on your Touchtone phone.
You may remove yourself from the queue at any time by pressing star to once again that is star one if he would like to ask a question.
We will take our first question from Elliot Wilbur with Raymond James Your line is now open.
Thanks. Good morning, just wanted to ask a couple of questions on the base business and then I had a few on core Trofim. So first with respect to the base business. Obviously the company has had a lot of top line momentum in terms of approvals, but still a relatively mixed narrative from the industry overall and I'm speaking specifically with respect to generics.
<unk>.
As to the general health of that market direction trends in terms of price volume. So just maybe some high level commentary in terms of what youre seeing with respect to erosion in the base and your ability to offset that.
New product launches.
A follow up question on the base just wanted to get a little bit more insight into what is happening with respect to the branded business.
It's Ben.
A little bit light relative to external expectations last couple of quarters, just sort of wondering if the run rate for the first six months kind of represents sort of a new normalized baseline for that business going forward.
Alright, Thank you Elliot to your questions.
And thank you for joining our call I think the first question on the overall generics business look we've seen growth in our international business quarter on quarter.
And expect this trend to continue.
As you mentioned.
The our approach here is.
Straightforward that we.
Have launches that are coming from our R&D engine that we acquired last year and that will outpace the erosion that we're seeing.
On our base more inline products. If you will and that is that is playing out whether you looked at it year on year or even quarter on quarter. So you said that your other question around pricing erosion archstone there on the in line products and it is in line with what we have seen historically.
And being seen by our peers.
We at this point.
Don't see that accelerating or any trigger for accelerating that it's in line with what's been going on now so that's the first question.
And then on the established brands.
Yes, we have seen.
A decline in a couple of our.
I mean, our large our products on the established brands business, having said that as I had mentioned that we are.
We're doing a number of things to address that right.
We have partnered with <unk>.
Dermatology company to drive promotion of our dermatology products and we're doing targeted reach out to the hype.
To prescribers on the on the established brands to complement our.
The other elements of our commercialization strategy.
To your specific question around.
Established brands and whether it's the run rate now is a.
As a new normal I think we have not given guidance at that level.
No.
Let us come back on that question.
Okay, and then just a couple of quick follow ups on your core Trophy.
You just talk about some.
Our success rates that you've seen in terms of.
Enabling.
Patients to continue on therapy once they've received an initial prescriptions just sort of the persistence rates you're seeing.
Kind of given maybe from some of the.
Some of the early initial patient starts I mean, I know if you look back at the history of ACTH products.
I think for.
Yes, there's a variety of different ailments, but you're seeing something like seven to nine files kind of on average per patient and I'm. Just wondering if theres anything you can say at this point with respect to overall persistence than last question. Here is just talk about where you guys are in terms of.
Your ultimate physician detailing strategy, whether or not all.
All physician targets have been reached with it.
At least.
And initial detail and sort of how youre thinking about how many details may be necessary before you can convert.
Targeted physicians over to actual prescribers.
<unk>.
Got it.
Thank you again for your questions I think the first question on successfully.
Yes.
And persistence.
As you know well that the number of miles over the course of therapy.
<unk> from indication to indication.
And.
And also the coverage.
Varies from patient to patient, but what what the tranche one they're wrong.
With these two factors in mind as a broad trend.
Absolutely seen that patients that start on therapy.
Our getting the.
Our fall one therapy that they need.
That.
Both the coverage that is.
The half the prescriptions that are written are ones that are just beyond just the first mile. If you will so we are seeing the persistence on in line with what we believe is.
Being used.
What is the appropriate course of therapy. So.
Would you say that on the success rates and persistence and then.
On the physician detailing as you would imagine at this point we have.
<unk> had an initial reach out to all of our.
Majority of our physician detailing targets.
And on the.
Yeah.
How much time does it take to convert them look.
Okay.
The facts are our straightforward right since the last earnings we've doubled the number of prescribers that are written.
<unk> initiated new patient cases and.
A third of them are.
Writing multiple cases.
There are prescribers that us whenever in court.
<unk> therapy before then.
<unk>.
Physician.
Our response has been very strong.
We will take our next question from Greg Fraser with true Securities. Your line is now open.
Good morning folks thanks for taking the questions.
Couple of core Trophy and can you provide some specifics on patient numbers, maybe the average number of patients on therapy during the quarter or how many patients on therapy at the end of the quarter.
And then if you could just comment on the percentage of scripts that are being written there that are being scaled and for those that are not so what are the primary reasons.
Got it.
Look.
Thank you for your question, Greg and thank you for joining us this morning.
On the on the question on patients on therapy look we're very encouraged by the early physician demand has resulted in doubling of <unk> initiations to more than 500, New case initiations for control from Joe.
We've also made good progress so far by gaining formulary coverage for 134 million lives our ambition to significantly expand access for patients that need cocoa from Joe gel is obviously still something that we're working on.
And in terms of specific numbers of patients on therapy. We are currently at north of 225 patients on therapy as it currently stands.
Got it just a couple of follow ups, but what portion of that $134 million plus covered lives have advantaged access and do you have a target.
For a number of covered lives for which you are looking to contract with favorable access.
And then if you could just comment on any sort of reactionary behavior that you've seen so far from now that would be helpful. Thank you.
Thanks, Greg as you.
As you will expect that commenting on this well when the middle of contracting I think we showed a great degree of inflammation, but in terms of targeted coverage.
Specifics on specifics of how many we want to be advantaged is something that we'd like to steer clear from.
As I said that our ambition is to significantly expand access for patients that need for quote from gel and we've made very good progress getting to 134 million lives and I highlighted some of our recent wins of one of our recent wins.
In the in the press release, and then Greg would you mind repeating the second question.
Yes, just curious if you've seen some reactionary behavior Oh, yes.
Alan.
Yes look we're tracking with mallinckrodt is doing.
And the changes that have happened at the company.
Any resulting changes, but more than that more importantly focused on what we need to do to achieve our purpose of providing another choice and ACTH therapy to our patients.
As mentioned before a claim space epidemiology analysis suggest less than 10% of patients who are steroid resistant and refractory across primary indications actually receive ACTH therapy. So this is the unmet need that we're focused on.
Got it thanks, so much.
Thank you Brad.
Once again that is star one if you would like to ask a question. We will take our next question from Brandon Folkes with Cantor Fitzgerald. Your line is open.
Alright, Thanks for taking my questions and congratulations on the results.
Maybe just two on <unk> any color additional color on the split of ACTH experienced prescribers.
First time prescribers.
The guidance raise can you just help us think about how we should sort of think about the moving parts do you expect to increase the pace of new patient starts in the back half of the year with the guidance range driven by the big coverage that you have coming on line there.
And then I'll just also add the one and just in terms of business development going forward.
Do you look to bring in additional rare disease assets will continue to bring generic assets and just longer term should we think of eni sort of growing its generics business as the primary driver or maybe bringing in additional specialty assets. Thank you.
Yes.
And thank you Brian for joining the call and thank you for your question.
In terms of the split between.
Experienced prescribers versus new prescribed versus.
New prescribers.
Sharing those details at this time as you can imagine there is a competitive context here that.
That drives what we can what we can share or not share on these calls and.
I appreciate your understanding there.
Regarding your second question on the on the guidance and the raise on the core profit guidance.
We absolutely see an increase in the number of patients that we will get on therapy and acceleration there.
That does inform the guidance range of.
And the momentum that we believe drives our guidance.
Increase yes, so it's both.
It is not it is the increase in the number of patients that will get on therapy. As we go forward and Thats that is driven by both factors rate increase in the number of new enrollments new patient cases initiated as I just said.
Double the number of new patient cases initiated since the last earnings we expect that momentum to continue as well as getting those patients on therapy.
And then your third question on business development.
Look the rare disease business unit is one that we have invested in heavily and one that we will absolutely bring additional assets in two to expand and use the rare disease platform that we have of course at this time we are focused.
On executing on the purified cocoa from gel launch there are many other elements of the Cork orphan drug launch that will unravel as we move forward.
But in terms of how you think about business development, and where Eni will be focused I think.
Rare diseases in areas that will absolutely get allocation of capital and bringing.
Additional assets in two.
To drive that platform and drive it forward and as far as the generic business goes look we have a rock solid high performing R&D engine.
That will be the source of organic growth as we look at.
Potentially look at other dosage forms.
That's where the business development will be targeted of course, the <unk> pharma type acquisitions are.
Opportunistic.
Where are we actually had a chance to expand our portfolio.
Great. Thanks for taking my questions.
Thank you Brian .
We do have a follow up question from Elliot Wilbur with Raymond James Your line is now open.
Thanks, just real quickly on.
Pipeline.
Specifically thinking about.
Generic business. Thank you I don't know if you have the numbers in front of you or not.
Just wondering where things stand in terms of number of Andas currently pending at FDA.
And also I think theres been a settlement reached in your paragraph four filing on proposed did I don't know if <unk>.
I'm just wondering if there's anything you can say about that in terms of when you may be able to monetize that opportunity.
And I think as part of the <unk> acquisition. You also picked up a couple of 505 two.
Assets I'm just wondering what.
Developments have occurred since the acquisition if there's anything more you can say about the timeline associated with those.
Yes. Thank you.
You alluded to your question.
So on the two 505 <unk> assets are progressing well.
I'm sorry on the multiple Viva <unk> assets that we.
But we had it's not just two there.
Progressing well we have.
Made a significant progress on the launch of one of them.
And we'll share more details in future calls, but I think the the.
Idea of looking at <unk> and using the medium R&D engine to drive that forward is something we look forward. We are committed to and we will take forward so that startup <unk>.
The possible settlement is not one that we can share more on than what's in the public domain. So I think all of us to steer clear of that and then your third question, which is.
The number of tenders pending at the FDA I have a number of the total lenders allow me to come back to you in terms of the.
Total number of AD does but it's.
That are pending.
I think close to 30 that are pending.
At the FDA.
But obviously as you will as you know well Elliot this is something that we keep adding to the pipeline we have a.
High performing R&D engine ranked number six in terms of the number of Anda approvals received in the past 12 months. So.
It's something that we keep adding to the pipeline as you would imagine.
And it appears we have no further questions on the line at this time I will turn the program back over to our presenters for any additional or closing remarks.
Yes, thank you very much for turning the.
Recall back. Thank you everyone for joining our call. This morning, we've made excellent progress to date and remain committed to capturing the full potential of our lead rare disease product quarter, often Joe all while advancing our active R&D engine to continue delivering high quality medicines to patients in need as always we appreciate the support of <unk>.
Our shareholders and look forward to sharing our future progress, thanks, again and stay well.
This does conclude today's program. Thank you for your participation you may disconnect at any time.
A wonderful day.
Okay.
[music] platform.
Okay.
Thank you.
Okay.
[music] facility.
Sure.
Okay.
[music].
Okay.
[music].
Understood.
Thanks.
Thank you.
[music].