Q2 2024 ANI Pharmaceuticals Inc Earnings Call
Operator: Please stand by; your program is about to begin. If you need assistance during the conference day, please press star zero. Good day, everyone, and welcome to today's ANI Pharmaceuticals Inc. Second Quarter 2024 Earnings Results Call.
Speaker Change: Please stand by, your program is about to begin. If you need assistance during the conference day, please press star zero.
Operator: Please stand by; your program is about to begin.
Operator: If you need assistance during the conference day, please press star zero.
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.
Speaker Change: Good day, everyone, and welcome to today's ANI Pharmaceuticals Inc. second quarter 2024 earnings results call.
Operator: Please note this call is being recorded. After the speaker's opening remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key, followed by the number one on your telephone keypad. If you would like to withdraw yourself from the questioning queue, please press star two. It is now my pleasure to turn the conference over to Lisa Wilson. Please go ahead, ma'am. Thank you, Katie. Welcome to ANI.
Operator: After the speaker's opening remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw yourself from the questioning queue, please press star two.
Speaker Change: Please note this call is being recorded. After the speaker's opening remarks, there will be a question and answer session.
Speaker Change: If you would like to ask a question during this time, simply press the star key followed by the number 1 on your telephone keypad. If you would like to withdraw yourself from the questioning queue, please press star 2.
Operator: It is now my pleasure to turn the conference over to Lisa Wilson. Please go ahead, ma'am.
Speaker Change: It is now my pleasure to turn the conference over to Lisa Wilson. Please go ahead, ma'am.
Lisa Wilson: Thank you, Katie. Welcome to ANI Pharmaceuticals Q2 2024 earnings results call. This is Lisa Wilson of Insight Communications, Investor Relations for ANI, with me on today's call, or Nikhil Lalwani, President and Chief Executive Officer, Steve Carey, Chief Financial Officer, and Chris Mutz, Senior Vice President and Head of ANI's Rare Disease Business. You can also access the webcast of this call through the investor section of the ANI website at ANIPharmaceuticals.com.
Lisa Wilson: Thank you, Katie.
Lisa Wilson: Welcome to ANI Pharmaceuticals Q2 2024 earnings results call. This is Lisa Wilson of Insight Communications Investor Relations for ANI. With me on today's call, I'm Nikhil Lalwani, President and Chief Executive Officer; Steve Kerry, Chief Financial Officer; and Chris Mutz, Senior Vice President and Head of ANI's Rare Disease Business. You can also access the webcast of this call through the Investor section of the ANI website at ANI Pharmaceuticals.com.
Lisa Wilson: Thank you, Katie. Welcome to ANI Pharmaceuticals Q2 2024 Earnings Results Call. This is Lisa Wilson of Insight Communications, Investor Relations for ANI.
Speaker Change: With me on today's call are Nikhil Lalwani, President and Chief Executive Officer, Steve Carey, Chief Financial Officer, and Chris Mutz, Senior Vice President and Head of ANI's Rare Disease Business.
Speaker Change: You can also access the webcast of this call through the investor section of the ANI website at ANIPharmaceuticals.com.
Lisa Wilson: 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 in 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.
Lisa Wilson: 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 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. However, actual results may differ materially from those projected in the forward-looking statements.
Speaker Change: 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 Act.
Lisa Wilson: ANI 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, anifarmaceuticals.com. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on August 6, 2024. Since then, ANI 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 Change: 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.
Speaker Change: Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements.
Lisa Wilson: ANI specifically disclosed any intent or obligation to update these forward-looking statements, except it's required by law.
Speaker Change: ANI 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, anipharmaceuticals.com.
Lisa Wilson: The archive webcast will be available for 30 days on our website, ANI Pharmaceuticals.com. For the benefit of those who may be listening to the replay or archive webcast, this call was held and recorded on August 6, 2024. Since then, ANI may have made announcements related to the topics discussed, but please reference the company's most recent press releases in SEC filings.
Speaker Change: For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on August 6, 2024.
Nikhil Lalwani: Since then, ANI 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.
Nikhil Lalwani: With that, I'll turn the call over to Nikhil LaWani. Thank you, Lisa. Good morning, everyone, and thank you for joining our second quarter earnings call. We are delighted with the ANI's accomplishments in the second 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 Alamera Sciences. The company continues to rise to eat 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.
Nikhil Lalwani: And thank you for joining our second quarter earnings call. We are delighted with ANI's accomplishments in the second quarter.
Nikhil Lalwani: Thank you, Lisa.
Nikhil Lalwani: Good morning, everyone, and thank you for joining our second quarter earnings call.
Nikhil Lalwani: We are delighted with A&I's accomplishments in the second quarter.
Nikhil Lalwani: We achieved both record revenues and a major milestone in our ongoing efforts to expand the scope and scale of our rare disease with our proposed acquisition of Alomera 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. Proving lies.
Nikhil Lalwani: We achieved both record revenues and a major milestone in our ongoing efforts to expand the scope and scale of our rare disease business.
Nikhil Lalwani: with our proposed acquisition of Alomera Sciences.
Nikhil Lalwani: 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 and their families.
Nikhil Lalwani: During the second quarter, ANI generated revenues of $138 million, an increase of 18% over the second quarter of 2023. Adjusted Non-GAAP EVA DA was $33.2 million, and adjusted non-GAAP EPS was $1.2 million. 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 acid, glorified Cortrofin Gel, and solid growth for generics drove our robust offline performance, which more than offset the expected established brands of business performance.
Nikhil Lalwani: During the second quarter, ANI generated revenues of $138 million, an increase of 18% over the second quarter of 2023. Adjusted non-gap EBITDA was $33.2 million and adjusted non-gap 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 acid, purified cortofan gel, and solid growth for generics drove our robust top-line performance, which more than offset the expected established brands business before.
Nikhil Lalwani: Improving lives
Nikhil Lalwani: 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.
Steve Carey: Accelerating demand for our lead rare disease acid, purified cortofan gel, and solid growth, or generics, drove our robust top-line performance, which more than offset the expected established brands business performance.
Nikhil Lalwani: Cortrofin Gel generated $49.2 million in revenues during the quarter, up 102% over the prior year of quarter, and 33% over the first quarter of 2024. The second quarter represented the highest number of both new patient starts and unique prescribers since launch in January 2022. We continue to have momentum in the addition of new prescribers and robust growth from existing prescribers, and volumes increased across all targeted specialties: neurology, rheumatology, nephrology, pulmonology, and ophthalmology. We are pleased to report that the areas of strategic investment behind Cortrofin 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 gaudy arthritis slairs indication, have been yielding positive results.
Nikhil Lalwani: Quatrofingel generated $49.2 million in revenues during the quarter, up 102% over the prior year quarter and 33% over the first quarter of 2024. The second quarter represented the highest number of both new patient starts and unique prescribers since launch in January 2022. We continue to have momentum in the addition of new prescribers and robust growth from existing prescribers, and volumes increased across all targeted specialties... Urology, Rheumatology, Nephrology, Alminology, and Ophthalmology. We are pleased to report that the areas of strategic investment behind Corcovangel that we announced earlier this year and late last year, including expanding our pulmonology sales, launching a targeted ophthalmology sales, and actively promoting the acute gouty arthritis flares indication have been yielding positive results. Our ophthalmology sales team had a strong start and drove significant growth in prescriptions and new patient starts in the second quarter.
Steve Carey: The second quarter represented the highest number of both new patient starts and unique prescribers since launch in January 2022.
Steve Carey: Urology, Rheumatology, Nephrology, Alminology, and Ophthalmology.
Steve Carey: We are pleased to report that the area of strategic investment behind Cortofan Gel that we announced earlier this year and late last year, including expanding our pulmonology sales team.
Nikhil Lalwani: Our ophthalmology sales team has a strong start and growth significant growth in prescriptions and new patient starts in the second quarter. We also saw particularly strong year-over-year and quarter-over-quarter growth for acute gaudy arthritis slairs; Cortrofin Gel is the only ACTH product approved for this indication. As a reminder, we began promotional activities for the acute Gaudy Arthritis Slairs indication in late 2023. More than 9 million people in the US are affected by gout, and some of these experience acute gaudy arthritis flairs as a symptom of their underlying disease. For some of these patients, Cortrofin Gel may be an appropriate additional treatment option for their flares.
Steve Carey: Our ophthalmology sales team has a strong start and drove significant growth in prescriptions and new patient starts in the second quarter.
Nikhil Lalwani: We also saw particularly strong year-over-year and quarter-over-quarter growth for acute gouty arthritis flares. Corprofen 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 million people in the U.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, corticofen gel may be an appropriate additional treatment option for their flare.
Steve Carey: As a reminder, we began promotional activities for the acute gouty arthritis flares indication in late 2023.
Steve Carey: More than 9 million people in the U.S. are affected by gout, and some of these experience acute gouty arthritis flares as a symptom of their underlying disease.
Steve Carey: For some of these patients, corticofen gel may be an appropriate additional treatment option for their flares.
Nikhil Lalwani: We have seen increasing momentum in physicians adopting Cortrofin Gel for patients with acute gaudy arthritis slairs 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. In the fourth quarter of 2023, we introduced the 1 mL version of Cortrofin Gel to meet the needs of physicians who desired a smaller configuration of ACTH for certain patients. such as those with acute gaudy arthritis flares.
Nikhil Lalwani: We have seen increasing momentum in physicians adopting Cortofin gel for patients with acute gouty arthritis flares who have not responded adequately to conventional therapy. We continue our efforts to enhance the convenience of the product and the healthcare providers who treat them. The acquisition is aligned with the M&A strategy we laid out over the past several quarters.
Steve Carey: In the fourth quarter of 2023, we introduced the 1-ML version of Cortofan 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.
Nikhil Lalwani: Today, we are pleased to report for the first time that we are nearing the completion of development of a 1 ml pre-fill syringe, offering further benefits to patients and physicians. We plan to file for every approval of the pre-fill syringe in the second half of 2024 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 generic business, which delivered another strong quarter with revenue of 74 million, an increase of 17% over the second quarter of 2023 and 5% over the first quarter of 2024.
Steve Carey: We plan to file for F3 approval of the pre-filled syringe in the second half of 2024 and are excited about the potential of this product.
Steve Carey: Turning now to our Genetics Business.
Speaker Change: which delivered another strong quarter with revenue of $74 million, an increase of 17% over the second quarter of 2023, and 5% over the first quarter of 2024.
Nikhil Lalwani: The solid performance reflected strength in our base business, coupled with contribution from new product launches. We launch four new products in the second quarter, each into limited competition markets in generics. We have launched three new products so far in the third quarter 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 2024. The New Jersey site expansion will support the future growth of our generics business.
Steve Carey: We have launched three new products so far in the third quarter and have a number of products pending approval that we expect to launch in the second half.
Steve Carey: 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 2024.
Steve Carey: The New Jersey site expansion will support the future growth of our genetics business.
Nikhil Lalwani: Revenue for established brands was 14.9 million 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 first quarter call in May that we did not expect the tailwinds rising from competitor supply dynamics to persist beyond the first quarter. In June, we delivered a major milestone in our growth strategy for announcing the proposed acquisition of Alimera Sciences. This highly synergistic transaction will add two commercial assets in ophthalmology to our rare disease portfolio and more than a hundred million dollars in highly durable branded revenue annually.
Steve Carey: Revenue for established brands was $14.9 million during the quarter, a decrease of 49% from the prior year period. The performance was anticipated and in line with our expectations and guidance.
Steve Carey: As a reminder, we noted on the first quarter call in May that we did not expect the tailwinds rising from competitor supply dynamics to persist beyond the first quarter.
Steve Carey: In June , we delivered a major milestone in our growth strategy with announcing the proposed acquisition of Alomero Sciences.
Steve Carey: This highly synergistic transaction will add two commercial assets in ophthalmology to our rare disease portfolio and more than $100 million in highly durable branded revenue annually.
Nikhil Lalwani: The acquisition is aligned with the M&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, Quartrofengel, and the overall ACTH market. The deal will provide the NI-2 durable assets with double-digit growth. With Alimera, NI's rare disease segment would have found for approximately 45% of the total company revenues on a pro-4 month 2024 basis. And we expect rare disease to be the largest driver of the company's future growth.
Steve Carey: The acquisition is aligned with the M&A strategy we laid out over the past several quarters.
Steve Carey: 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, corticofen gel, and the overall ACTH market.
Steve Carey: The deal will provide ANI two durable assets with double-digit growth.
Steve Carey: And we expect rare disease to be the largest driver of the company's future growth.
Nikhil Lalwani: 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. Director. Integration planning is well underway, and the transaction remains on track to close later this quarter.
Steve Carey: 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.
Steve Carey: Integration planning is well underway and the transaction remains on track to close later this quarter.
Chris Mutz: Now, I'd like to turn the call over to Chris Mutz, our Head of Rare Disease, to discuss the Alamera products and transaction in more detail. Chris?
Chris Mutz: Thank you, Nikhil.
Chris Mutz: We're excited about what Alamera brings to ANI, starting with two high-growth, durable commercial products. Alamera's first product, Illuvian, is used to treat diabetic macular edema, or DME, the leading cause of vision loss in diabetic patients. The company's second product, UTIC, is used to treat patients with chronic, non-infectious uveitis affecting the back of the eye. Illuvian and UTIC are both double-digit growth assets with high barriers to generalization and significant future upside.
Steve Carey: [inaudible]
Nikhil Lalwani: Thank you, Nikhil.
Speaker Change: We're excited about what Alomera brings to ANI, starting with two high-growth, durable commercial products.
Speaker Change: Alomera's first product, Iluvian, is used to treat diabetic macular edema, or DME, the leading cause of vision loss in diabetic patients.
Nikhil Lalwani: The company's second product, Utique, is used to treat patients with chronic non-infectious uveitis affecting the back of the eye.
Speaker Change: Eluvia and Andutik are both double-digit growth assets with high barriers to genericization and significant future upside.
Chris Mutz: With the acquisition of Alamera, ANI will have three commercial rare disease assets: Cortrofen, Illuvian, and UTIC, and an expanded rare disease commercial team covering the specialties of ophthalmology, neurology, nephrology, rheumatology, and pulmonology. A nationwide sales force of approximately 45 sales representatives will be dedicated to ophthalmology alone, extending our reach and ability to promote all three products for difficult-to-treat late-line patients with limited therapeutic options.
Speaker Change: With the acquisition of Elimera, ANI will have three commercial rare disease assets, Quartrophin, Eluvian, and Utique.
Speaker Change: and an expanded rare disease commercial team covering the specialties of ophthalmology, neurology, nephrology, rheumatology, and pulmonology.
Speaker Change: A nationwide sales force of approximately 45 sales representatives will be dedicated to ophthalmology alone. Extending our reach and ability to promote all three products for difficult-to-treat, late-line patients with limited therapeutic options.
Chris Mutz: Alamera will also increase ANI's geographic diversification with its established XUS footprint, including direct marketing operations in Europe and partnerships in additional key geographical regions.
Chris Mutz: Earlier this morning, Alamera reported second-quarter results. Illuvian and UTIC generated net revenue of $27 million in the second quarter, which represented year-over-year growth of 54%. Alamera's adjusted EBITDA increased to 6.7 million in the second quarter, up from 0.9 million in the prior year quarter, and 1.8 million in the first quarter of 2024. Illuvian and UTIC are both high-growth products, and we are confident in our ability to unlock additional value through commercial synergies and execution.
Speaker Change: Elluvian and Utique generated net revenue of $27 million in the second quarter, which represented year-over-year growth of 54%.
Speaker Change: Elluvian and UT are both high growth products and we are confident in our ability to unlock additional value through commercial synergies and execution.
Stephen Carey: With that, I'd like to turn the call over to Steve, who will walk through our second quarter financial results and revise 2024 guidance in more detail. Steve.
Speaker Change: With that, I'd like to turn the call over to Steve, who will walk through our second quarter financial results and revise 2024 guidance in more detail. Steve?
Stephen Carey: Thank you, Chris, and good morning to everyone on the call. ANI generated second quarter revenues of $138 million, up 18% over the prior year period. Revenues from Portrophin Gel reported in our rare disease segment, or 49.2 million, up 102% from the prior year period, driven primarily by increased volume on record number of patient starts.
Steve Carey: Thank you, Chris, and good morning to everyone on the call. ANI generated second quarter revenues of $138 million, up 18% over the prior year period.
Stephen Carey: Based upon the continued strong execution of the rare disease team in driving growth, we are raising our full-year Portrophin Gel revenue guidance range by $15 million to $185 million to $195 million. and similar to last year, we expect fourth quarter to be the strongest revenue quarter of the year.
Speaker Change: 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 million to $185 million to $195 million.
Speaker Change: And similar to last year, we expect fourth quarter to be the strongest revenue quarter of the year.
Stephen Carey: Revenues of our generics, establish brands, and other segments, or 88.8 million, a decrease of 4% over the prior year period. Generic revenues for the quarter were 74 million, 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 14.9 million in the quarter, a decrease of 49% over the prior year period.
Speaker Change: Revenues of our generics, established brands, and other segments were $88.8 million, a decrease of 4% over the prior year period.
Speaker Change: Generic revenues for the quarter were $74 million, an increase of 17% over the prior year period, driven by continued strength in the base business and the contributions of new product launches.
Speaker Change: Net revenues for established brands and others were $14.9 million in the quarter, a decrease of 49% over the prior year period.
Stephen Carey: 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 2024.
Speaker Change: 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 2024.
Stephen Carey: Cost of sales, excluding depreciation and amortization, increased 36% to 57.7 million in the second quarter 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 cultural and gel. Non-GAAP growth margin was 58.4%, a decrease of approximately 570 basis points from the prior year period and 600 basis points from the first quarter of 2024.
Speaker Change: Cost of sales excluding depreciation and amortization increased 36% to $57.7 million in the second quarter of 2024 compared to the prior year period.
Speaker Change: primarily due to net growth in sales volumes of pharmaceutical products and significant growth of royalty-bearing products including cortisone gel.
Speaker Change: non-GAAP gross margin was 58.4%.
Speaker Change: a decrease of approximately 570 basis points from the prior year period and 600 basis points from the first quarter of 2024.
Stephen Carey: 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. We expect sequential improvement in gross margin in both the third and fourth quarter of this year. Research and development expenses decrease 1% to 7.3 million in the second quarter of 2024, compared to the prior year period, and 30% from the first quarter. The sequential decline was related to expense timing and the inherent variability of our expenditures on a quarter-to-quarter basis.
Speaker Change: primarily due to product mix.
Nikhil Lalwani: as well as expenses related to the capacity expansion at our New Jersey manufacturing site.
Speaker Change: driven by the reduction in established brand revenues as well as expenses related to the capacity expansion at our New Jersey manufacturing site.
Speaker Change: We expect sequential improvement in gross margin in both the third and fourth quarter of this year.
Speaker Change: Research and development expenses decreased 1% to $7.3 million in the second quarter of 2024.
Speaker Change: compared to the prior year period and 30% from the first quarter.
Speaker Change: The sequential decline was related to expense timing and the inherent variability of R&D expenditures on a quarter-to-quarter basis.
Stephen Carey: We expect R&D to increase in the second half of 2024 relative to the first half of the year due to the timing of R&D activities. Selling, general, and administrative expenses increased 36% to 52.8 million in the second quarter of 2024 due to increased employment-related costs, continued investment in rare disease sales and marketing activities. Legal expenses, expenses related to the petting acquisition of Alamara, and an overall increase in activities required to support the growth of our business.
Speaker Change: We expect R&D to increase in the second half of 2024 relative to the first half of the year due to the timing of R&D activities.
Speaker Change: Selling general and administrative expenses increased 36% to $52.8 million in the second quarter of 2024.
Speaker Change: Due to increased employment-related costs, continued investment in rare disease sales and marketing activities, legal expenses,
Speaker Change: expenses related to the pending acquisition of Alomera and an overall increase in activities required to support the growth of our business.
Stephen Carey: On a gap basis, net loss available to common shareholders for the second quarter of 2024 was 2.7 million, as compared to net income of 5.8 million in the prior year period. Driven by a $3.5 million of expenses related to the pending acquisition of Alamara, and a $2.7 million non-realized mark-to-market loss on the value of our investment in CG on college.
Speaker Change: On a gap basis, net loss available to common shareholders for the second quarter of 2024
Speaker Change: was $2.7 million as compared to net income of $5.8 million in the prior year period, driven by a $3.5 million of expenses related to the pending acquisition of Alomera.
Speaker Change: and a $2.7 million unrealized mark-to-market loss on the value of our investment in CG oncology.
Stephen Carey: Energy. Both of these items are adjusted for in our non-GAAP metrics this morning.
Speaker Change: Both of these items are adjusted for in our non-GAAP metrics this morning.
Stephen Carey: Second quarter diluted GAAP earnings per share was a loss of 14 cents as compared to income of 29 cents 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 second quarter of 2024 was $33.2 million compared to $34.1 million in the prior year period.
Speaker Change: Second quarter diluted gap earnings per share was a loss of $0.14 as compared to income of $0.29 per share in the prior year period.
Speaker Change: On an adjusted non-gap basis, diluted earnings per share was $1.02 for the quarter, compared to $1.28 per share in the prior year period.
Speaker Change: Adjusted non-GAAP EBITDA for the second quarter of 2024 was $33.2 million, compared to $34.1 million in the prior year period.
Stephen Carey: We ended the quarter with $240.1 million in unrestricted cash and have $292.5 million 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 $137.5 million.
Speaker Change: We ended the quarter with $240.1 million in unrestricted cash and have $292.5 million in face value of outstanding debt, which is due in November of 2027.
Speaker Change: 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 $137.5 million.
Stephen Carey: Finally, as Nikhil 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 million to 560 million, up from our prior guidance of 520 million to 542 million, representing year-over-year gross of approximately 11 to 15 percent. For trophy and gel net revenues of $185 million to $195 million, up from our prior guidance of $170 million to $180 million, representing year-over-year gross of 65 percent to 74 percent. Adjusted non-GAAP EBITDA of $140 million to $150 million, up from our prior guidance of $135 million to $145 million, representing year-over-year gross of approximately 5 to 12 percent.
Speaker Change: Finally, as Nikhil mentioned, and as outlined in this morning's press release, we are pleased to increase our full year 2024 guidance as follows.
Nikhil Lalwani: Full year 2024 net revenues of $540 million to $560 million.
Speaker Change: up from our prior guidance of $520 million to $542 million.
Speaker Change: representing year-over-year growth of approximately 11 to 15 percent.
Speaker Change: We're trophing gel net revenues of $185 million to $195 million, up from our prior guidance of $170 million to $180 million, representing year-over-year growth of 65 percent to 74 percent.
Speaker Change: Adjusted non-GAAP EBITDA of $140 million to $150 million, up from our prior guidance of $135 million to $145 million, representing year-over-year growth of approximately 5% to 12%.
Stephen Carey: And adjusted non-GAAP earnings per share between $4.38 and $4.82, up from our prior guidance of $4.26 and $4.67.
Speaker Change: And adjusted non-GAAP earnings per share between $4.38 and $4.82, up from our prior guidance of $4.26 and $4.67.
Stephen Carey: We are reducing our estimate for total company non-GAAP gross margin by one point to be between 61 and 62 percent from our prior assumption of between 62 and 63 percent due to a modest change in the timing of when the new manufacturing suite that our New Jersey site becomes fully operational. 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 percent.
Speaker Change: We are reducing our estimate for total company non-GAAP gross margin by one point.
Speaker Change: to be between 61% and 62% from our prior assumption of between 62% and 63% due to a modest change in the timing of when the new manufacturing suites at our New Jersey site become fully operational.
Speaker Change: 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.
Speaker Change: 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%.
Stephen Carey: The company now anticipates between 19.4 million and 19.8 million shares outstanding for the purpose of calculating diluted EPS and continues to expect its U.S. gap effective tax rate to be between 22% and 25%.
Speaker Change: The company now anticipates between 19.4 million and 19.8 million shares outstanding for the purpose of calculating diluted EPS, and continues to expect its U.S. GAAP effective tax rate to be between 22% and 25%.
Stephen Carey: Please note that our updated 2024 full-year guidance does not include contribution from the pending acquisition of Alamera.
Speaker Change: Please note that our updated 2024 full-year guidance does not include contribution from the pending acquisition of Alomera.
Nikhil Lalwani: With that, I will now turn the call back to Nikhil. Thank you, Steve. We are extremely pleased with our performance in the second quarter 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 acquisition of Alamera. By the end of this year, ANI will have three 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 eligible global over 20 countries. With this, thrilled to unite the two companies with the shared culture built around similar missions of serving patients and improving lives.
Speaker Change: With that, I will now turn the call back to Nikhil.
Nikhil Lalwani: Thank you, Steve. We are extremely pleased with our performance in the second quarter and the continued momentum that has allowed us to increase our full year expectation.
Speaker Change: It's an exciting time at ANI, with a strong first half and the anticipated Q3 closing of acquisition of Alomera.
Speaker Change: By the end of this year, ANI will have three 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 network.
Nikhil Lalwani: over 20 countries.
Speaker Change: We are thrilled to unite the two companies with a shared culture built around similar missions of serving patients, improving lives.
Nikhil Lalwani: Thank you for your interest in ANI, and we look forward to keeping you updated throughout the rest of the year.
Speaker Change: Thank you for your interest in ANI, and we look forward to keeping you updated throughout the rest of the year.
Operator: Operator, please open the line for questions. Thank you. At this time, if you would like to ask a question, please press star one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. Once again, that is star one to ask a question. We will pause for a moment to allow questions to queue.
Speaker Change: Operator, please open the line for questions.
Speaker Change: Thank you. At this time, if you would like to ask a question, please press Star 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing Star 2. Once again, that is Star 1 to ask a question. We will pause for a moment to allow questions to queue.
Operator: Thank you. Our first question.
Jeremy Jacoby: We'll come from Lesb Flouwisky with truest curities. Please go ahead.
Speaker Change: Thank you. Our first question will come from Les Sulewski with Truist Securities. Please go ahead.
Jeremy Jacoby: Hi, this is Jeremy on for Lesb. Thanks for taking our questions. First for me is whether drivers do you have for the guidance range aside from Courtrofen?
Jeremy Jacoby: Hi, this is Jeremy on behalf of Les. Thanks for taking...
Speaker Change: 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 Quartrofen?
Nikhil Lalwani: And then also on the pre-filled syringe. Can you guys add any more color and explain if there's anything similar to this in the marketplace?
Speaker Change: And then also on the prefilled syringe, can you give us any more color and explain if there's anything similar to this in the marketplace? Thank you.
Nikhil Lalwani: Thank you. Good morning, and thank you, Jeremy. Thank you for joining.
Speaker Change: Good morning, and thank you, Jeremy, thank you for joining. I'll take your second question for us, which is on the pre-filled syringe. Look, we continue our efforts to enhance the convenience and remove pain points for patients.
Nikhil Lalwani: I'll take your second question for us, which is on the pre-filled syringe. But we continue our efforts to enhance the convenience and remove pain points for patients starting on ACTH, and the healthcare providers will treat them. You will remember that in the fourth quarter of '23, we introduced the 1ml version of Courtrofen gel to meet the needs of physicians who desired the smallest configuration of ACTH for certain patients. And now we've completed, or we're nearing the completion of development of a 1ml pre-filled syringe, offering further benefits, right? Specifically helping patients with the preparation and admission of the Courtrofen gel product.
Speaker Change: starting on ACTH and the healthcare providers who treat them.
Speaker Change: You will remember that in the fourth quarter of 2023, we introduced the 1-ML version of corticofen gel to meet the needs of physicians who desire the smaller configuration of ACTH for certain patients.
Speaker Change: And now we're nearing the completion of development of a 1-ml pre-fill syringe offering further benefits, right, specifically helping patients with the preparation and admission of the pre-fill syringe.
Nikhil Lalwani: And as I said before, we're planned to file for approval of the pre-filled syringe in the second half of 2024 and launch this in the first half of 2025.
Speaker Change: cordofan gel product. And as I said before, we plan to file for approval of the pre-filled syringe in the second half of 2024 and launch this in the first half of 2025.
Nikhil Lalwani: Then you're going back to your question on guidance and what's driving the guidance increase. But overall, we have continued to see strong momentum across our rare disease and genetics business lines. Both worked much better than we had expected, and hence we're raising the folio guidance. Established brands, royalties, and others were largely in line with our expectations.
Speaker Change: Then you're going back to your question on...
Speaker Change: You know, guidance and what's driving the guidance increase. But overall, we continue to see strong momentum across our rare disease and GenX business lines.
Speaker Change: Both were a touch better than we had expected and hence were raising the folio guidance and established brands, royalties, and others were largely in line with our expectations.
Jeremy Jacoby: Thank you, Jeremy. Thank you.
Jeremy: Thank you, Jeremy.
Jeremy: Thank you.
Gary Nachman: Our next question will come from Gary Nachman with Raymond James. Your line is now open.
Speaker Change: Thank you. Our next question will come from Gary Nachman with Raymond James. Your line is now open.
Gary Nachman: All right. Thanks.
Gary Nachman: Good morning, guys, and nice quarter. So regarding some of the key drivers of the strong course roof and growth, just to elaborate, how many new prescribers are you getting? Were you seeing that mostly in what therapeutic area is? And how much of the volume growth is share gained versus overall market growth? And you called out Gatti Flair as an opt-out. 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 Gatti Flair indication and the one in our vial that you were just talking about?
Gary Nachman: All right. Thanks. Good morning, guys. Have a nice quarter.
Gary Nachman: So, regarding some of the key drivers of the strong cortisofen growth, just elaborate, how many new prescribers are you getting? Were you seeing that mostly in what therapeutic areas? And how much of the volume growth is share gain versus overall market growth?
Speaker Change: and you called out Gaddy Flair as an opt-out.
Speaker Change: 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 flare indication and the 1 ml vial that you were just talking about?
Nikhil Lalwani: All right.
Nikhil Lalwani: Well, thank you for your questions, Gary. I will try and answer all of them. I think number one is on the overall ACTH category and the question around share growth versus category growth. Look, you know, in our competitor reported their results earlier this year, earlier today. And what you'll see is, as we've been saying, even in the prior quarters, that overall the number of patients that are being treated on with ACTH today is significantly lower than patients that were being treated many years ago. And, you know, with the, with our efforts and the efforts of the competitor, you were seeing, for the first time, the category after many years of decline are seeing category growth.
Speaker Change: All right.
Speaker Change: Well, thank you for your questions, Gary. I will try and answer all of them.
Speaker Change: I think number one is, you know, on the overall ACTH category and the question around, you know, share growth versus category growth.
Speaker Change: And our competitor reported their results earlier this year, earlier today.
Speaker Change: And what you'll see is, as we've been saying even in the prior quarters, that overall the number of patients that are being treated on with ACTH today are significantly lower than last year.
Speaker Change: patients that were being treated many years ago.
Speaker Change: And, you know, 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 decline slowed and now the category is seeing growth. And in fact, if you…
Nikhil Lalwani: So the decline slowed, and now the category is seeing growth. And in fact, if you, you know, add the revised guidance that they shared earlier today, and our raised guidance, so we raised guidance, our competitor raised guidance, you'll see that what it implies for the ACTH category is a high-teens growth. And there is a significant runway, you know, for the category, right? So, again, we believe that the efforts of ourselves and the competitor will increase the awareness of the ACTH market, our ACTH category, and result in overall ACTH market growth. So for us, it's not a shared capture.
Speaker Change: you know, add the revised guidance that they shared earlier today and our raised guidance, so we raised guidance, our competitor raised guidance. You'll see that the, what it implies for the ACTH category is a high teams growth.
Speaker Change: and there is a significant runway.
Speaker Change: [inaudible]
Speaker Change: for the category, right? So again, we believe that the efforts of...
Nikhil Lalwani: It's not about shared capture. It's about getting AC, a core profile, into the appropriate patients in need.
Nikhil Lalwani: So that was one of your questions. The next was, you know, where did the growth come from? Look, we saw growth across therapeutic areas, both the ones we focused on at launch, neurology, nephrology, and rheumatology, and the new areas of ophthalmology, gout, and pulmonology. And I would highlight the, so to your question on where did the, 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, 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.
Speaker Change: So, that was one of your questions. The next was, you know, where did the growth come from?
Speaker Change: Look, 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 did the –
Speaker Change: You know, the majority of the growth.
Speaker Change: on an absolute basis did come from the core indications.
Speaker Change: that we launched with, which is neurology, nephrology, and rheumatology. Of course, as you're aware, the number of resources that we have out there talking about
Speaker Change: or detailing to these different specialties.
Nikhil Lalwani: But, you know, there is very strong growth, and I would highlight the particularly strong growth, both on a quarter-on-quarter and a year-over-year basis that we've seen in GALT, which is proprietary to Cotrophin Gel as the only ACTH product approved for this indication. And in addition, you know, our ophthalmology sales team is off to a very strong start and grow significant growth in prescriptions and new patient starts in the second quarter, right? And obviously, we will build on that as we expand the ophthalmology franchise with the integration of the Alameir Sciences acquisition.
Speaker Change: is lower than what we have for the newer indications.
Nikhil Lalwani: is lower than what we have for the newer indications. But, you know, there is very strong growth, and I would highlight the particularly strong growth, both on a quarter-on-quarter and year-over-year basis that we've seen in gout, which is proprietary to clotrophin gel as the only ACTH product approved for this indication. And then, in addition, you know, our ophthalmology sales team is off to a very strong start and drove significant growth in prescriptions and new patient starts in the second quarter.
Speaker Change: But, you know, there is very strong growth, and I would highlight the particularly strong growth both on a quarter-on-quarter and year-over-year basis that we've seen in gout.
Speaker Change: which is proprietary to clotrophin gel as the only ACTH.
Speaker Change: Product approved for this indication.
Speaker Change: And in addition, you know, our ophthalmology sales team is off to a very strong start and drove significant growth in prescriptions.
Nikhil Lalwani: And, obviously, we will build on that as we expand the ophthalmology franchise with the integration of the Allomera Sciences 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...
Speaker Change: and new patient starts in the second quarter, right? And obviously, we will build on that as we expand the ophthalmology franchise with the integration of the Alameda Sciences acquisition.
Nikhil Lalwani: And then your last question, I think, was around how much upside is there? I think you're aware of how large the ACTH market was. Even when you add, you know, our raised guidance and the competitors' raised guidance, that still, you know, a touch over 50% of what peak sales of the category was a few years ago. So, yeah, hopefully I covered all your questions, Gary.
Speaker Change: you know, our raised guidance and the competitors raised guidance, that's still you know, a touch over 50% of what peak sales of the category was a few years ago. So yeah, hopefully I covered all your questions, Gary.
Gary Nachman: Yeah, most of it, just that last question was really more on the GALT flare indication and one ML file and having that presentation. I think in the prepared remarks, you know, 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 one ML file could be used for other indications, not just the GALT flare, just having, you know, a smaller file. Yeah.
Gary Nachman: Yeah, most of it, just that last question, was really more on the Gaudi flare indication and the 1ml file and having that presentation and I think in the prepared remarks you know you just talked about how many of these patients are out there and how many could be candidates and
Speaker Change: I'm also curious if that 1 mL vial could be used for other indications, not just the Gaudi flares, just having, you know, a smaller vial size.
Nikhil Lalwani: Now, thank you for your question. Look, the addition of the one ML file has been edited. It has helped us to expand usage to ACPs who are new to prescribing court, and their first experience with court has been, you know, with the one ML file. And the volume in the one ML file has grown significantly quarter over quarter.
Speaker Change: Thank you for your question.
Speaker Change: Look, the addition of the 1 mL vial has been additive.
Speaker Change: It has helped us to expand usage to ACPs who are new to prescribing cortisofen.
Speaker Change: And their first experience with clortrofen has been, you know, with the 1-ML vial. And the volume in the 1-ML vial has grown significantly quarter over quarter. And look, it just goes back to, you know, our approach towards...
Nikhil Lalwani: And look, it just goes back to, you know, 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 one ML file was, you know, one step in that direction. And now, as we, I was pleased to report earlier today that we're 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 patients, as well as the healthcare providers who treat them.
Speaker Change: enhancing the convenience as well as addressing the pain points and needs of both the appropriate patients as well as the health care providers who treat them.
Speaker Change: So, the 1-ml 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-fill syringe.
Speaker Change: to help, you know, appropriate patients. And that brings, you know, another option for enhancing the convenience and addressing the pain points of the patients as well as the healthcare providers who treat them.
Gary Nachman: Okay, that's helpful.
Gary Nachman: And then just one more in Alamera. So, first, I just want to confirm that you're not factoring any benefits from the deal in the raised court trofen guidance for the ophthalmology segment. And then just talk about the planning for the closing integration.
Speaker Change: Okay, that's helpful. And then just one more on Alamira. So first, I just want to confirm that you're not factoring any benefit from the deal
Speaker Change: in the Raised Quartrophin Guidance.
Speaker Change: for the ophthalmology segment.
Speaker Change: And then just talk about the planning for the close and integration, and are there any issues or hurdles you're expecting, and anything that you need to build out beforehand just to make sure that you have a successful transition from day one. Thanks.
Nikhil Lalwani: And are there any issues or hurdles you're expecting, and anything that you need to build out beforehand, just to make sure that you have a successful transition from day one. Thank you.
Nikhil Lalwani: So your first question, there is no benefit from increased corporal sales, from a expanded ophthalmology sales force baked into the guidance.
Speaker Change: Yeah, thank you. So your first question, there is no benefit from increased corcorafen sales.
Speaker Change: from a expanded ophthalmology sales force baked into the guidance. As you know, we are yet to close the deal, so this is for standalone ANI.
Nikhil Lalwani: As you know, we are yet to close the deal. So this is for standalone ANI.
Nikhil Lalwani: And then your second question around integration planning. Look, we are making very good progress on planning for the integration. First part of it is on, you know, working towards the, the cause 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, you know, I think that we're making again, good progress, interacting appropriately with the Alamera leadership and team to understand, you know, what the organization systems and processes will look like after, after deal closure. And as you would expect, you know, thinking about, you know, at the heart of this, of this integration, if the combined ophthalmology, you know, 45 plus sales team.
Speaker Change: And then your second question around integration planning. Look, we're making very good progress on planning for the integration.
Speaker Change: The first part of it is on working towards the close of the deal, and as I said, we look forward to closing the deal later this quarter.
Speaker Change: And then from a planning perspective.
Speaker Change: You know, I think that...
Speaker Change: We're making, again, good progress interacting appropriately with the Alomera leadership and team.
Speaker Change: to understand, you know, what the organization's systems and processes will look like after deal closure. And, as you would expect, you know, thinking about...
Speaker Change: At the heart of this of this integration is the combined ophthalmology, you know, 45 plus sales team.
Nikhil Lalwani: And how, how they are going to carry all three durable commercial assets that Chris spoke about. And so, you know, thinking about how we will, we will, how we will organize with them, you know, what does the training program look like for the folks that have been selling, you've been looking in your teeth for them to sell courtrofen. And the, the R team was selling courtrofen for them to sell. They're looking in your teeth. And obviously with, with the other sort of, you know, IC plan and, 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, you know, in that area.
Speaker Change: and how they are going to carry all 3D durable commercial assets that Chris spoke about.
Speaker Change: And so, you know, thinking about how we will organize with them, you know, what does the training program look like for the folks that have been selling Illuvian and Utique.
Speaker Change: for them to sell Quartrofen and our team has been selling Quartrofen for them to sell the Luganian boutique and obviously with the other sort of, you know, IC plan and other support that they need to be able in the hub.
Speaker Change: 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 you know in the in that area
Nikhil Lalwani: All right, great.
Nikhil Lalwani: Thanks, Nekia. Thank you, Gary.
Speaker Change: Alright, great. Thanks, Nikhil.
Oren Livnat: Thank you. Our next question will come from the mill, Devon, with Guggenheim Securities.
Gary Nachman: Thank you, Gary.
Speaker Change: Thank you. Our next question will come from Vamil Divan with Guggenheim Securities. Your line is now open.
Oren Livnat: Your line is not open. Great. Thanks for taking my question.
Oren Livnat: So, maybe just a couple of things I just want to clarify here. One on the courtrofen side, you mentioned fourth quarter, you expect to be the largest quarter of the year. Again, I'm just curious. I assume you're expecting still sequential growth from two Q to three Q. And then three Qs to four Qs. But if you could just confirm that, that'd be helpful.
Vamil Devan: Great, thanks for taking my question. So maybe just a couple of things I just want to clarify here.
Vamil Devan: One on the quartrophin side you mentioned fourth quarter you expect to be the largest quarter of the year again I'm just curious. I assume you're expecting still sequential growth
Speaker Change: from 2Q to 3Q, and then 3Q to 4Q, but if you could just...
Oren Livnat: And then on the established brand side, you mentioned the second quarter, 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 the 2025. Is this, is this sort of a nice sort of steady state, or do you expect any sort of, you know, meaningful changes next year?
Vamil Devan: And then on the established brand side, you mentioned the second quarter 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...
Speaker Change: 2025, is this sort of a nice steady state or do you expect any sort of meaningful changes?
Oren Livnat: And then last question, just with Almer, you mentioned, now you have the XUS presence that they provide. I'm curious how you're thinking about that. Anything else for future business development? You know, priorities is expanding XUS, maybe turning into a little bit more focused, given what Almer reprides you. Thank you.
Speaker Change: next year. And then last question, just with Elmeri, you mentioned now you have the ex-U.S.
Speaker Change: I'm curious how you're thinking about that as you think about sort of future business development priorities is expanding Ex-U.S. maybe turning into a little bit more of a focus given what Almera provides you. Thank you.
Nikhil Lalwani: Thank you, Valor. And good morning. So, your question on courtrofen, yes, we expect to see sequential growth, and that the fourth quarter of... As Steve mentioned in his prepared remarks, we do expect the fourth quarter to be the highest; therefore, there will be sequential growth in 3, Q and 4, Q.
Speaker Change: Thank you, Vamil, and good morning. So your question on corticofen, yes, we expect to see sequential growth, and that the fourth quarter
Nikhil Lalwani: The second question was around actually the third question was around the XUS, Alamera business and what opportunities that gives us. So 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 Alamera XUS business and what opportunities that gives us.
Speaker Change: The second question was around, actually the third question was around the ex-U.S. Alamera business and what opportunities that gives us. But we're working through these and, you know, we will share updates.
Speaker Change: As they're meaningful and, you know, as they develop, nothing specific to report at this time. Obviously, we're currently focused on...
Speaker Change: Closing the deal, integrating the asset, the company, and continuing the great work that Rick and team have been doing.
Speaker Change: So that's on the Alamera XUS business and what opportunities that gives us. And then the third question on established brands.
Nikhil Lalwani: And then the third question on established brands: you know, on established brands we are continuing. This is an important component of our portfolio of businesses in that it is low working capital, high growth margin, and strong cash flow generation part of the business. So we are working on a number of different things historically, as you know, for established brands. We expand the portfolio by doing business development deals for established brands, and we haven't done one since 2021, as we've, you know, found different pathways to grow, whether it's the, whether it's capturing the benefits of the supply tailwinds or trying innovative commercial strategies.
Speaker Change: You know, look, you know, on established brands, we are continuing, this is a, this is an important component of our, you know, of our portfolio of businesses in that it is low working capital, high gross margin and strong cash flow generation part of the business.
Speaker Change: Thank you. Bye-bye.
Speaker Change: We are working on a number of different things.
Speaker Change: Historically, as you know, for established brands, we expand the portfolio by doing business development deals for established brands.
Speaker Change: And we haven't done one since 2021, as we've...
Speaker Change: You know, found different pathways to growth, whether it's capturing the benefits of the supply tailwinds or trying innovative commercial strategies. And so we'll deploy.
Nikhil Lalwani: And so we'll deploy some combination of these three to, you know, to work through, you know, the plans for established brands, and we'll share more as we go along. But you know, going back to your core question, the current portfolio you're on, you'll see some marginal decline in them in the absence of, you know, one of these moves being made. Thank you very much.
Speaker Change: Some combination of these three to, you know, to work through, you know, the plans for established brands and we'll share more as we go along.
Speaker Change: But, you know, going back to your core question, the current portfolio, year-on-year, you'll see some marginal decline in them in the absence of, you know, one of these moves being made. Yeah?
Speaker Change: Thank you. Thank you.
Oren Livnat: Thank you. Our next question will come from Orrin Levnott with HC Winwright. Your line is that open?
Speaker Change: Yep.
Speaker Change: Thank you. Our next question will come from Oren Livnat with HC Wainwright. Your line is now open.
Oren Livnat: Oh, thanks.
Oren Livnat: I have a few questions. I guess coincidentally this morning, along with your announcement of the pre-filled syringe development work, Mellon Crott also announced the availability of their single-use pre-filled auto injector because I was approved once back. Can you just tell us if you think that'll 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? And do you think that will have any different market access or covers than the current, you know, relative coverage of your two products now and I've followed. Sure, good morning, and thank you for your question.
Oren Livnot: Oh, thanks. I have a few questions.
Speaker Change: I guess coincidentally this morning, along with your announcement of the pre-filled syringe development work, Mallinckrodt also announced the availability of their single-use syringe.
Speaker Change: prefilled auto-injector. I guess that was approved months back. Can you just tell us if you think that'll have any material impact on the competitive ACTH landscape? Like, are there certain indications where
Speaker Change: patient self-administration and auto-injector would be most relevant, and do you think that will have any different market access or coverage than the current, you know, relative coverage of your two products now? And I have follow-ups. Bye.
Nikhil Lalwani: Look the the competitors device what we can tell is in that you know the competitors efforts as well as ANI's efforts are aimed at enhancing the convenience and addressing pain points that you know a subset of patients have so for example our pre-filled syringe is is used to address you know patients that have you know that can be helpful for patients in preparing and administering the cartofan 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 you know working or investing to to increase the awareness and bring new options to patients and therefore increase awareness of the category and drive growth in the category right we lost the 1 ml vial which was also appreciated by as I mentioned earlier by healthcare providers some of whom you know initiated there who were naive to ACTH and initiated their usage of ACTH by trying with the 1 ml vial so again you know different options for patients as well as the healthcare providers who treat them and again you know a reiterate that overall this is great for the category given that there is a significant one way for the ACTH category with the number of patients being treated today being significantly lower than the number of patients being treated many years ago I appreciate different strokes and different folks on products and needs across the landscape.
Speaker Change: Sure. Good morning, Oren, and thank you for your question. Look, the competitor's device
Speaker Change: And what we can tell is in that
Speaker Change: The competitors' efforts as well as ANI's efforts are aimed at
Speaker Change: Enhancing the Convenience and Addressing Pain Points.
Speaker Change: that, you know, a subset of patients have. So, for example, our pre-fill syringe is used to address, you know, patients that have
Speaker Change: you know, that can be helpful for patients in preparing and administering the corticofen gel product, right, in a 1-ml prefilled syringe.
Speaker Change: And I think the way I would think about it is both the competitor and us are...
Speaker Change: You know, working or investing to increase the awareness and bring new options to patients.
Speaker Change: and therefore increase awareness of the category and drive growth in the category, right? We launched the 1ml vial, which was also appreciated by, as I mentioned earlier, by healthcare providers, some of whom, you know, initiated their, who were naive to ACTH.
Speaker Change: and initiated their usage of ACTH by trying with the 1-ML vial. So again...
Nikhil Lalwani: You know, different options for patients as well as the healthcare providers who treat them. And again, I reiterate that overall, this is great for the category given that there is a significant runway for the ACTH category with the number of patients being treated today being significantly lower than the number of patients being treated many years ago.
Speaker Change: You know different options for patients as well as the health care providers who treat them and
Speaker Change: Again, you know, I'll reiterate that overall this is great for the category given that there is a significant runway for the ACTH category with the number of patients being treated today being significantly lower than the number of patients being treated many years ago.
Speaker Change: Okay, and I appreciate, you know, different strokes for different folks on products and needs across the landscape. I'm just curious if, um...
Nikhil Lalwani: I'm just curious if you think I don't know what dose they're auto injectors 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 goes with your growth trajectory? Yeah, I think that there are probably a subset of indications where a 1ml or a half ml dose may be more convenient to have than taking a 5ml vial. And it is with this understanding itself that we invested to bring the 1ml vial many months ago. And now we're going to bring a pre-filter range.
Speaker Change: You'd think, I don't know what dose their autoinjector is for, if it's adjustable. You know, do you do you think there are any particular areas where that will have any impact, or do you think it's just steady as she goes with your growth trajectory?
Speaker Change: Yeah, I think that, you know, that there are probably a subset of indications where a 1 ml or a half ml, you know, dose may be.
Speaker Change: More convenient?
Speaker Change: Great to have and then taking a 5 ml vial and
Speaker Change: And it is with this understanding itself that we invested to bring the one ML vial many months ago, right? And now we're gonna bring a pre-filled syringe. And you would expect that
Nikhil Lalwani: And you would expect that the options from a dosing perspective, that will not create meaningful differentiation between the two. Okay.
Speaker Change: the options from a dosing perspective, then you can expect that that will not create sort of meaningful differentiation between the two, between the,
Nikhil Lalwani: And regarding Alamera, I know it has a closed yet, so I guess you'll free to say no comments.
Speaker Change: between the two for now. Yeah. Okay.
Speaker Change: ...and...
Speaker Change: Regarding Alomera, you know, I know it hasn't closed yet, so I guess feel free to say no comment. But since you're clearly in the planning stages, you know...
Nikhil Lalwani: But since you're clearly in the planning stage, can you give us any color on potential synergies there, maybe what sort of EBITDA margins you hope the business can contribute versus what I guess they are just reporting now? And I guess another question I have is, you know, you talk about ease of rare disease. Obviously, DME is a much larger indication, but you're targeting a niche of it. And NIU is a rare disease.
Speaker Change: Can you give us any color on potential synergies?
Speaker Change: There may be what sort of EBITDA margins you hope the business can contribute versus what I guess they are just reporting now. And...
Speaker Change: I guess another question I have is, you know, you talk about these as rare disease, obviously DME is a much larger indication, but you're targeting a niche of it, and NIU is rare disease. Is there any opportunity to revisit pricing of these?
Nikhil Lalwani: 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 IRA framework that we're looking at?
Speaker Change: products. It seems to me that, you know, the value is quite high there and
Speaker Change: Particularly in an orphan indication and the differentiation of the product. It's not super expensive in my view Do you have freedom to to make changes there or are you limited in the IRA framework that we're in?
Nikhil Lalwani: Yeah, thank you.
Stephen Carey: Thank you for your questions, Oren. I think that the sort of financial outlook for the deal remains what we shared at knowing we announced a deal in that, from a synergies perspective, but we had announced in 2025 we expect to see about $10 million worth of synergies. And as we're doing the integration plan and we're seeing a runway into that, or I guess there's no information that suggests that we couldn't capture that. And then, you know, again, from an EBITDA edition, we also gave guidance on how much adjusted EBITDA we expect to add. See, you can jump in, but I think it was in the 30 million-plus range that we talked about.
Speaker Change: Yeah, thank you. Thank you for your questions, Oren.
Speaker Change: I think that the sort of financial outlook for the deal remains what we shared at
Speaker Change: When we announced the deal, in that, from a synergies perspective, as we had announced in 2025, we expect to see about $10 million worth of synergies, and as we're doing the integration plan, we're seeing a runway into that.
Speaker Change: I guess there's no information that suggests that we couldn't capture that. And then, again, from an EBITDA edition, we also gave guidance on how much adjusted EBITDA we expect to add.
Speaker Change: Steve, you can jump in, but I think it was in the 30 million plus range that we talked about.
Stephen Carey: It can help me with that. So that's in terms of EBITDA edition in pro forma in 2025. And that obviously is net of any additional corporate sales and revenue synergies; it is just the additional EBITDA that we would get from the Alamera acquisition. 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 it allows us to come back to you with further information on that topic.
Speaker Change: You can help me with that Steve. So that's in terms of EBITDA addition in Pro Forma, you know, in 2025.
Steve Carey: And that obviously is net of any additional corporate sales and revenue synergies, it's just the additional EBITDA that we would get from the...
Speaker Change: Alamera Acquisition. And then the third part regarding, you know, pricing, again, we try to strike a balance between sharing information that is...
Speaker Change: helpful.
Speaker Change: as well as competitively sensitive. And, you know, we're in the integration planning stage, so, you know, allow us to come back to you with further information on that topic.
Stephen Carey: Stephen Carey, Vamil Divan, can you just tell us an answer, Oren's clarification regarding what we had said about additional EBITDA in 2025?
Nikhil Lalwani: Yeah, good morning, Oren. Yeah, and I think, importantly, I would note, in terms of our gross margin profile, right, it's going to be accretive to our gross margins. The Alomera products are in the low 80%, and in terms of EBITDA, you know, we would expect in the mid-30s, as Nikhil mentioned.
Stephen Carey: Yeah, good morning, Oren. 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 Alamera products are in the low 80 percent, and in terms of EBITDA, we would expect in the end of the mid 30s as Nikhil mentioned.
Speaker Change: Yeah, good morning, Oren. Yeah, and I think importantly, I would note, in terms of our
Speaker Change: Gross Margin Profile, right? It's going to be accretive to our gross margins. The Alomera products are in the low 80% and in terms of EBITDA, you know, we would expect in the end of the mid-30s as Nikhil mentioned.
Stephen Carey: Okay, and just lastly, I noticed in your GAPSGNA, you had some litigation expense in there, and I'm just wondering if you were able to give us any color. Is that just on the disclosed CD oncology dispute that we've known about, or is there a potential paragraph for, or 505B2 IP related stuff there? And I guess that should be hoped to hear anything news on the 505B2 front and the foreseeable future. Thank you. Yeah, in terms of the incremental litigation, as you would expect, we're vigorously pursuing the defense of our rights in CD oncology, and so that is an element in terms of the increased spend that we have in litigation here over a year on a GAP basis.
Oren Livnot: Okay. And just lastly, I noticed in your GAP SG&A, you had a...
Speaker Change: 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?
Speaker Change: CG oncology dispute that we've known about or their potential a paragraph four or 505 B 2 IP related stuff there And I guess that should be hope to hear any news on the 505 B 2 front in the foreseeable future
Speaker Change: Thank you.
Speaker Change: In terms of the incremental litigation, as you would expect, we're vigorously pursuing the defense of our rights in CG oncology.
Speaker Change: That is an element in terms of the increased spend that we have in litigation year-over-year on a gap basis.
Stephen Carey: I think that's the only one that we would highlight today to you. And then what was the second part of your question? I'm sorry.
Speaker Change: That's, I think, you know, that's the only one that we would, you know, highlight today to you.
Nikhil Lalwani: Yeah, I can take that.
Speaker Change: And then what was the second part of your question? I'm sorry, Oren. No, I got it. I can take that, yeah. So, Oren, on the 505B2s.
Nikhil Lalwani: So, Orrin, on the 505B2's, we will share more when we have meaningful updates to give, but you know, there's no linkage between the litigation spend and the launch of 505B2 products. But we will share updates on that when they're material. All right.
Speaker Change: We will share more when we have meaningful updates to give, but there is no linkage between the litigation span and the launch of 505B2 products, but we will share updates on that when there is material.
Oren Livnat: Thanks so much. Congrats on another upside quarter.
Speaker Change: Alright, thanks so much. Congrats on another upside quarter.
Nikhil Lalwani: Thank you, Orrin. Thank you.
Timothy Chiang: Our next question will come from Tim Chang with Capital One. Your line is now open. Hey, thanks. It seems like your generic segment revenues are actually exceeding your original targets. Could you just sort of comment on where you see expectations for growth from the generic segment and 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? Yeah.
Oren Livnot: Thank you, Oren.
Speaker Change: Thank you. Our next question will come from Tim Chiang with Capital One. Your line is now open.
Nikhil Lalwani: Hey, thanks. Nikhil, you know, it seems like your generic segment revenues are actually exceeding your original targets. Could you just sort of comment on, you know, where you see expectations for growth from the generic segment in the back half of the year?
Tim Chang: Hey, thanks. Nikhil, you know, it seems like your generic segment revenues are actually exceeding your original targets.
Tim Chang: Could you just sort of comment on, you know, 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 and your total revenues, but so how do you sort of see your generic segment playing out in the back half?
Timothy Chiang: Good morning, and thank you for your questions. Tim, for our genetics business, the performance is really coming on the back of three things. Number one is our new product, the cadence of new product launches, right? We've launched, as we talked about, four new products in the second quarter, three two new already in the third quarter, so about about 12 since the start of the year. That, combined with our operational excellence and being a reliable supplier with, you know, 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.
Speaker Change: Yeah, good morning and thank you for your questions. Tim, for our Genetics business, the performance is really coming on the back of three things, right? Number one is our new product, the cadence of new product launches, right? We've launched...
Speaker Change: As we talked about, four new products in the second quarter, two new already in the third quarter, so about 12 since the start of the year. That combined with our operational excellence and being a reliable supplier with strong GMP status.
Speaker Change: and U.S.-based manufacturing enables us to deliver, as we have shared before, on a full-year basis, high single-digit to low double-digit growth.
Nikhil Lalwani: and then you can expect towards that to your question, I think, sequential growth as we move to the second subsequent quarters in 2025.
Speaker Change: And then you can expect towards your question, I think, sequential growth as we move to the subsequent quarters in 2025.
Timothy Chiang: Maybe just a follow-up.
Nikhil Lalwani: And maybe just to follow up, I mean, you started this new facility in New Jersey. You know, how much capacity are you actually going to be able to increase with that new facility?
Nikhil Lalwani: 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? Yeah, as we are adding about 15 new manufacturing suites and in new QC labs, that's a substantial increase in capacity. We've also upgraded the equipment and added higher bat size equipment in there. So I don't have a specific percentage, but it's a meaningful addition to the volume that we can serve us out of the New Jersey site. And it will serve the growth of our genetics business for multiple years.
Speaker Change: And maybe just to follow up, I mean, you started this new facility in New Jersey, you know, how much capacity are you actually going to be able to increase with that new facility?
Speaker Change: Yeah, it's...
Speaker Change: We are adding about 15 new manufacturing suites and a new QC lab, so that's a substantial increase.
Speaker Change: We've also upgraded the equipment and added higher bat-size equipment in there. So I don't have a specific percentage, but it's a meaningful addition to...
Speaker Change: The volume that we can service out of the New Jersey site and it will serve, you know, the growth of our genetics business for multiple years.
Timothy Chiang: Okay, great. Nice quarter.
Timothy Chiang: Thanks.
Speaker Change: Okay, great.
Timothy Chiang: Thank you, Tim.
Speaker Change: Nice quarter. Thanks.
Operator: Thank you. It appears we have no further questions at this time.
Tim Chang: Thank you, Tim.
Nikhil Lalwani: I'll turn the program back over to Nikhil Lalwani for closing remarks. Thank you again for your interest in A&I and for joining us this morning. We really appreciate it, and we look forward to updating you on our progress as we move forward. Thank you.
Speaker Change: Thank you. It appears we have no further questions at this time. And I'll turn the program back over to Nikhil Lalwani for closing remarks.
Nikhil Lalwani: 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.
Operator: Thank you, ladies and gentlemen.
Operator: Thank you, ladies and gentlemen. This concludes today's event. You may now disconnect.
Operator: This concludes today's event.
Operator: You may now disconnect. Thank you.
Speaker Change: Thank you, ladies and gentlemen. This concludes today's event. You may now disconnect.