Q2 2023 ANI Pharmaceuticals Inc Earnings Call
Yeah.
[music].
Okay.
Good morning, everyone. My name is Chelsea and I will be your conference operator.
At this time I'd like to welcome everyone to Eni Pharmaceuticals second quarter 2023 financial results.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer period.
At that time, if you have a question. Please press star and one on your telephone keypad.
As a reminder, this conference call is being recorded today August nine 2023.
It is now my pleasure to turn the floor over to MS. Judy Diclemente Investor Relations for Eni Pharmaceuticals.
Ma'am. Please go ahead.
Thank you Chelsey welcome to Ani's Pharmaceuticals, Q2, 2023 earnings results call. This is Judy diclemente of insight Communications Investor Relations for Eni.
With me on todays call are Nick kill all Wanni, President and Chief Executive Officer, and Stephen Curry Chief Financial Officer.
You can also access the webcast of this call through the investors section of the a and I website at Www Dot Eni 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 may be considered forward looking statements as defined by the private Securities Litigation reform.
Warm Act.
These forward looking statements are based on information available to <unk> 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.
<unk>, 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 and I pharmaceuticals Dot com for the benefit of those who may be listening to the replay or archived webcast. This call was held and recorded on August 9th 2023.
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 well wanting nikhil.
Okay.
Thank you Judy.
Good morning, everyone.
Thank you for joining our call.
And for your interest in Eni Pharmaceuticals.
I would like to start this morning's call by thanking the Eni family and all.
Our suppliers customers partners and shareholders for all their efforts and enabling us to serve patients in need.
I am very pleased to share.
Strong.
Over the past several quarters continued into the second quarter of 2023 and across all business segments.
This morning, we reported net.
Net quarterly revenues of $116.5 million, an increase of nearly 58% over last year and approximately 9% growth over the first quarter of 2023, which was also a record quarter.
Our adjusted non-GAAP EBITDA of $34 1 million.
<unk> represents a company record and a nearly 246% year over year increase.
Our adjusted non-GAAP diluted EPS of $1 28 per rep.
That's almost a 10 fold growth over the second quarter of 2022.
And the company generated cash of $42 million from operations. During this during the first half of the year.
These results and the outlook for all segments of our business have allowed us to once again raise our full year 2023 guidance.
Now expect net revenues to be in the range of $425 million to $445 million.
Adjusted non-GAAP EBITDA to be between.
$15 million and $125 million.
Adjusted non-GAAP earnings per share to be between $3 62 to.
$4 11.
Let's now take a closer look at the performance and progress made on our strategic imperatives in each segment.
Starting with our rare disease business.
Our goal is to scale up our rare disease business was the successful launch of our lead asset purified pork rofin gel and to add assets that leverage the rare disease infrastructure, we have built.
Revenues for <unk> gel totaled $24 3 million in the fourth quarter, an increase an increase of 138% over the prior year.
49% compared to the first quarter.
During the quarter, we saw record numbers across several areas, including new patient starts new cases initiated a new unique prescribers.
We also have continued growth in repeat prescribers.
Growth was achieved across all targeted specialties, including neurology nephrology and rheumatology.
Also during the second quarter, our modest sales team expansion into Pulmonology already began gaining momentum.
The outlook for the overall ACTH category is also robust with 12 consecutive months of year over year growth.
From June 2022 to May 2023, and double digit growth through all of 2023.
We remain focused on continuing to improve how we service patients.
<unk> and Payors to increase access to ACTH therapy for patients in need.
We are raising our full year revenue guidance for core <unk> gel to $90 million and $100 million.
Up from 80 million to $90 million, the new range represents year over year revenue growth of between 116% at 140%.
Rare disease remains a critical focus area for Anr and we expect it will be the largest driver of growth.
Increasing the scope and scale of our rare disease portfolio is a key priority.
Following our recent successful equity raise resulting in $86 million of net proceeds and our strong cash flow generation. We believe we are well positioned to build upon the strength of our rare disease platform and we are actively pursuing M&A and in licensing.
Licensing opportunities.
Turning now to our generics established brands and other segment.
Also delivered strong results during the quarter growing by 45% year over year to $92 2 million in the second quarter.
We have continued to build our reputation as a very reliable supplier by leveraging our U S manufacturing footprint, maintaining a strong GNP track record across sites and maintaining healthy inventory levels for finished goods and raw materials.
Enables us to capture opportunities arising from numerous supply disruptions continue to impact patient access to much needed medicines across both generics and establish spreads.
For our generics business, we remain focused on driving growth through superior new product launch execution operational excellence cost competitiveness and supply reliability with our patient first orientation always.
During the quarter, our strong R&D organization received four abbreviated new drug application or NDA approvals, including Colestipol hydrochloride and Nitro foreign Duane oral suspension.
In addition, we filed multiple new Anda and we will continue investing in R&D with a focus on niche opportunities to fuel the growth of our generics business.
The company also continued to be active on the business development front acquiring three products from the Acorn pharma auction.
During the quarter. We also expanded commercialization efforts into new sales channels, and we will continue striving to take our more than hundred product families to patients in need.
As previously announced manufacturing operations ceased the Oakville, Ontario site in January of 2023.
Is the successful relocation of the <unk> products to our U S facilities.
And discussions with potential buyers for the for the Oakville site remain ongoing.
For our established brands business, we continue to innovate our commercialization efforts across products.
These efforts coupled with the supply reliability. So we've spoken about earlier have driven our success.
As you've heard today it was an impressive second quarter across multiple fronts.
We're excited to continue the momentum into the second half of the year.
I'll now turn the call over to Steve.
Who will walk through our second quarter financial results and revised guidance in more detail.
Please.
Thank you Nicole and good morning to everyone on the call.
They kill indicated we posted very strong results in the second quarter of 2023 capitalizing on the groundwork we have laid over the past three years to build sustainable growth platforms and strengthen the capabilities of Eni.
We saw growth across our core businesses generating record second quarter revenues of $116 5 million.
This represents $42 $7 million or 58% growth over the $73 9 million reported in the second quarter of 2022.
And is up 9% sequentially from the $106 8 million of revenues reported in our previous record first quarter of 2023.
Revenues from core Trophy reported in a rare disease segment were $24 3 million in the quarter.
$14 1 million from the prior year.
We believe our first half of 2023 performance creates a strong foundation for achieving our full year core trophy and revenue goals.
We revised upwards this morning.
Revenues of our generic established brands in the other segment rose $28 6 million.
$92.2 million.
An increase of 45% over the prior year.
Net revenue gains across this segment reflect the increased volumes driven by annual accretion of 2022 launches current year launches.
Our ability to quickly and effectively respond to evolving market needs.
Our strong commitment to U S based manufacturing excellence in generic R&D and inform the nimble procurement and sales marketing teams have enabled <unk> to meet market demand for key products in the face of competitive supply chain issues.
Operating expenses increased by 20% to $104 1 million for the three months ended June 30th 2023.
Compared to $86 8 million in the prior year period.
Cost of sales, excluding depreciation and amortization increased by 7 million to $42 3 million in the second quarter of 2023 compared to $35 3 million in the prior year period, primarily due to a significant increase in sales volumes.
Of generic and rare disease pharmaceutical products.
Research and development expenses were $7 4 million in the second quarter of 2023, an increase of $3 2 million from the prior year period, primarily due to a higher level of activity associated with generic projects.
With an increase associated with projects related to court trofim gel in the current year period.
Okay.
Selling general and administrative expenses increased by 21% to $38 8 million in the second quarter of 2023 compared to 32 million in the prior year period, primarily due to increased employment related costs and increased legal expenditures during the quarter.
Okay.
Depreciation and amortization expense was $14 7 million for the three months ended June 32023, an increase of approximately $900000 from the prior year period.
We recognized a contingent consideration fair value adjustment related to our 2021 acquisition of the video.
$1 million of expense in the current year period.
As compared to $1 1 million of income in the prior year period.
Okay.
Regarding the closure of our Oakville, Ontario opinion, Canada manufacturing plant.
There was a de Minimis P&L impact in the current year period as our restructuring activities are essentially wound down.
This is compared to $2 6 million of restructuring expense recorded in the prior year period.
The land and building remain for sale at this time.
Net income available to common shareholders for the second quarter of 2023 was five 8 million as compared to a net loss of $15 3 million in the prior year period.
Diluted GAAP earnings per share was 29 cents as compared to a 94% loss in the prior year period.
On an adjusted non-GAAP basis, we had diluted earnings per share of $1 28 for the quarter compared to <unk> 13 cents per share for the prior year period.
Adjusted non-GAAP EBITDA for the second quarter of 2023 reached a new company record of $34 1 million and reflects gross profit pull through from the strong revenue performance.
This is an increase of $24 2 million compared to the $9 9 million posted in the prior year period.
Adjusted non-GAAP EBITDA also rose $1 1 million on a sequential basis.
From our previous record 33 billion recognized in the first quarter of 2023.
From a balance sheet perspective, we ended the quarter with $161 7 million in unrestricted cash driven in part by cash flow from operations of $20 6 million during the quarter ended June 32023.
On a six month year to date basis, we have generated $42 million of cash flow from operations.
The ending cash balance also reflects net proceeds of $80 6 million raised in our secondary equity offering completed in may.
This balance along with expected second half cash flows and $40 million of untapped capacity in our revolving credit facility placed us in a healthy position to pursue our strategic business development initiatives.
We have $295 5 million in face value of outstanding debt, which is due in November of 2027.
As of the balance sheet date, our gross leverage is two seven times and our net leverage is 1.2 times trailing 12 month adjusted non-GAAP EBITDA of $108 9 million.
Finally as outlined in this morning's press release, we are pleased to raise full year 2023 guidance as follows.
We are raising total company expected net revenues to be between $425 million and $445 million up from previously issued guidance of 385 million to $410 million.
Representing approximately 34% to 41% growth as compared to the $316 4 million recognized in 2022.
We are raising total company adjusted non-GAAP EBITDA to be between $115 million and $125 million up from previously issued guidance of $97 million to $107 million.
Presenting approximately 106% to 124% growth.
Compared to the $55 9 million recognized in 2022.
We are raising total company adjusted non-GAAP earnings per share to $3.62 to $4.11 up from previously issued guidance of $2.99 to $3 45.
Representing approximately 166% to 202% growth as compared to the $1 36 reported in 2022.
Yes.
Okay.
We are raising core trofim specific revenue guidance in the range of 90 billion to $100 million up from previously issued guidance of 80 million to $90 million, representing 116% to 140% growth as compared to the 41 7 million recognized.
In 2022.
And we now project total company non-GAAP gross margin of.
Of between 63, and 64, 8% as compared to previously issued guidance of 60 and 60 to 62, 5%.
In addition, we currently anticipate between $19 1 million and $19 3 million of shares outstanding for second half EPS.
And a U S GAAP effective tax rate of between 6% and 10%.
The company will continue to tax effect adjustments for computation of adjusted non-GAAP diluted earnings per share at our blended statutory rate of 24%.
With that we will now open the call up for questions operator.
Operator, please announce the instruction.
Yes, Sir.
At this time, if you would like to ask a question. Please press star one on your telephone keypad.
Remove yourself from the queue at any time by pressing star Q.
Once again that is star one to ask a question.
And our first question will come from the mill, Gabon with Guggenheim Securities.
Great. Thanks for taking my questions.
A couple if I could one just on established brands segment, obviously very strong results again, there I'm just trying to get a better sense of what you see is the sustainability of this level of performance in the next couple of quarters. He even into next year. Just because you have to have models that'd be very helpful. A little bit tougher for us to see that you extend.
And how that's performing.
The details and then the second one just around.
Your comments around rare diseases, and picking up additional rare disease assets to build on your or what you've done with Kirk Wilson I'm wondering if you can just give a little bit more detail there in terms of.
What should we should expect in terms of the pace.
Of doing deals or what kind of assets Youre looking for and also your willingness to use equity to do it an acquisition as opposed to something more cash based.
Thank you.
Good morning, <unk> and thank you for your question.
So I'll take the rare disease question first.
Well look our corporate development team led by Chad Gasser, and the executive team have been very active in evaluating that.
A range of opportunities available to us.
We remain focused on finding assets or companies that could provide.
Thank you for a second synergy in terms of leveraging the infrastructure that we've built around <unk>.
<unk> petroleum gel and Thats.
Both around the the target specialties that we.
Currently call on as well as the infrastructure <unk> infrastructure around specialty pharmacy distribution and market access.
And then the patient support hub all of it right. So basically assets that can leverage.
The sales force and the the.
Our remaining rare disease infrastructure that we have in place.
We are encouraged by the potential path forward for <unk>.
However, we remain steadfast in ensuring that we are diligent and highly selective as we seek to deploy the capital towards this strategic imperative.
And that also drives our sort of choice in.
Yeah.
Well Howard how to fund Gregg, obviously, we did the equity raise.
Earlier this year.
With the intent of.
Fueling this.
This expansion and expanding the scope scale and scope of our rare disease business.
And.
And that's that's what that was about right.
No.
Pat.
The second is look.
First question on established brands.
Our robust results and generic established brands and other segments, just showcases our ability to leverage our U S manufacturing footprint and our agility and operations to deliver timely solutions to our customers. It's enabled us to capture market demand arising from supply disruptions impacting patient access.
Too much needed medicines.
See this as a positive trends impacting our business.
And we expect this trend will continue.
Degrees.
What we factored into the guidance that we've given and then as I said earlier on the established brands. In addition to the.
Whats driving sort of success as we continue to innovate our commercialization efforts across products and <unk>, coupled that with supply reliability and thats whats driven our success.
Thank you Rommel.
Okay. Thank you.
Thank you.
Our next question will come from Les Sulewski with Truth Securities.
Yeah.
Hi, Good morning, Thank you for taking my questions and congrats on the progress.
Whats, particularly areas of the market are driving the ACTH growth and how does the early uptake in consulting ban on Pulmonology.
If any comments you can give around new patient starts repeats or dosing.
Averages and I guess, what have been the some of the internal levers that you've been able to pull to drive the growth and I have a follow up thank you.
Yes, good morning, and thank you Les and welcome to the Eni.
A call I believe this is your first time here so welcome.
In terms of what drove the the PCE growth purified cocoa from job growth. It was driven by record number of new cases initiated.
This growth came from.
Record number of new unique prescribers and continued growth in repeat prescribers.
And to your question regarding with specialty book, we would highlight that the growth was across all targeted specialties of rheumatology nephrology and neurology.
And also early traction seen by our Pulmonology sales team right. So we've done a modest expansion of our pulmonology sales team than we've seen.
Ali the strong traction for that team.
In that in that indication.
And then in addition, we have spoken last quarter about the increased investment in patient support in our hub infrastructure and we weren't able to translate the new case momentum to record number of new patient starts so thats whats driven the.
The growth in.
And cultural fit.
I believe you had a follow up right.
Yeah very helpful. Thank you for that.
And then.
To sum of the R&D pipeline I mean, what if.
Within generics, which therapeutic areas or product types specifically.
Are of interest to you at this stage. Thank you.
Yes.
In generics, we are continuing to invest in R&D with a focus on niche opportunities.
Vessel competition areas.
Haven't defined.
Dosage forms, but we keep looking for niche opportunities and we have some.
Accessible track record and there's.
Really the track record of the company, we acquired <unk> two years ago.
The growth of our generics business and you've seen that in the launches will be bringing to be brought to the market in <unk>.
<unk> growth that we've had in our in our generics business. We also continue to be active on the business development front opportunistically.
For smaller smaller asset level deals and Thats, what will the combination of the strong R&D organization.
With an established track record along with the.
<unk>.
Smaller business develop an asset type deals will drive the pipeline of the generics business and fuel the growth of our generics business.
Alright, thank you.
There are no further questions in the queue at this time I would like to turn the call back over to Mikael <unk> for any additional or closing remarks.
Thank you Chelsea and thank you everyone for joining our call. This morning.
<unk> is well positioned to continue delivering sustainable growth and serving patients in need.
We look forward to updating you on our progress and we appreciate your time and interest in Eni.
Yes.
Thank you ladies and gentlemen, this does conclude today's call and we appreciate your participation you.
You may disconnect at any time.
Yeah.
[music].
Mhm.
Okay.
[music].
Hello, Matt.
Oh.
[music].