Q2 2025 ANI Pharmaceuticals Inc Earnings Call

Speaker #3: Your program is about to begin. Good day, yone. And welcome to today's ANI Pharmaceuticals Inc. Q2 2025 earnings results call. Please note, this call is being recorded.

Speaker #3: After the speakers' opening remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star; then the number one on our telephone keypad.

Speaker #3: If you would like to withdraw your question, please press the star key, then the number two on your telephone keypad. It is now my pleasure to turn the conference over to Lisa Wilson.

Speaker #3: Please go head.

Speaker #4: Thank you, operator. Welcome to ANI Pharmaceuticals Q2 2025 earnings results call. This is Lisa Wilson investor relations for ANI. With me on today's call are Nikhil Lalwani, president and chief executive officer; Stephen Carey, chief financial officer; Chris Mutz, senior vice president and head of ANI's rare disease business; and Dr. Mary Powell, our chief medical officer.

Speaker #4: You can also access the webcast of this call through the investor section of the ANI website at anipharmaceuticals.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 act.

Speaker #4: These forward-looking statements are based on information available to ANI's 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 #4: Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. ANI specifically disclaims any intent or obligation to update these forward-looking statements except as required by law.

Speaker #4: The archived webcast will be available for 30 days on our website, anipharmaceuticals.com. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on August 8, 2025.

Speaker #4: 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 #5: Thank you, Lisa. Good morning, everyone, and thank you joining us. I'll start by discussing our second quarter performance and highlights. Along with our raised 2025 guidance, Chris Mutz will then provide additional color on our rare disease business, including our lead asset, Cotrofin Gel, and our retina assets, Illuvium and Utique.

Speaker #5: Finally, Steve, Carey, our CFO, will review our second quarter results and updated 2025 guidance in more detail. Following our remarks, our chief medical officer, Dr. Mary Powell, will join us, and we take your estions.

Speaker #5: This was a record-setting quarter for our company. With all-time overall company highs, in net revenue, adjusted non-GAAP EBITDA, and adjusted non-GAAP EPS. Reflecting very ong momentum across both our rare disease and genetics business units.

Speaker #5: Our rare disease team delivered exceptional year-over-year and sequential quarterly growth, with Cotrofin Gel demand accelerating and both new patient starts and new cases initiated reaching new highs.

Speaker #5: We continue to pursue initiatives to improve the performance of our retina franchise, yielding positive results. Our genetics business delivered another solid quarter, driven by new product launches and strong operational execution.

Speaker #5: Based on our very strong second quarter performance and broad-based momentum across rare disease and genetics, we are raising our 2025 guidance for total net revenues adjusted non-GAAP EBITDA and adjusted non-GAAP EPS.

Speaker #5: We now expect 2025 revenues of $818 million to $843 million, which represents growth of 33% to 37% over 2024, versus our prior guidance of $768 million to $793 million.

Speaker #5: We expect rare disease to account for approximately 57 percent of total company net revenues in the second half of 2025. We expect adjusted non-GAAP EBITDA of $213 million to $223 million which reflects growth of 37 percent to 43 percent over 2024, versus our prior guidance of $195 million to $205 million.

Speaker #5: Lastly, we expect adjusted non-GAAP earnings per share between $6.98 and $7.35. Up from our prior guidance of $6.27 and $6.62. Steve will provide more specifics on our increased guidance later in the call.

Speaker #5: Turning now to our second quarter results. Total net revenues were $211.4 million, representing year-over-year growth of 53 percent on an as-reported basis and 37 percent on an organic basis.

Speaker #5: Driven by strong growth for our lead rare disease asset, Cotrofin Gel, and our genetics business, adjusted non-GAAP EBITDA was $54.1 million, and adjusted non-GAAP EPS was $1.80.

Speaker #5: Cotrofin Gel had an exceptional quarter. With revenues of $81.6 million, up 66 percent year-over-year, and 54 percent from the first quarter 2025. Strong execution by our commercial teams including our newly expanded portfolio sales team, the successful launch of our prefill syringe, and continued momentum across our target therapeutic areas contributed to record demand in the second quarter.

Speaker #5: As a reminder, in the first quarter, we expanded our portfolio sales team, which promotes Cotrofin Gel in neurology, nephrology, and rheumatology from 52 to 70 members.

Speaker #5: Remapping and increasing the number of sales territories led to a meaningful increase in productivity as the smaller territories allowed all of our reps to spend more time detailing Cotrofin and less time traveling.

Speaker #5: As a result, the team was able produce a meaningful sequential quarterly growth in new cases initiated and new patient starts that exceeded our prior expectations.

Speaker #5: We also saw strong interest and demand for our new Cotrofin Gel prefill syringe presentation, which we launched in April. The prefill syringe offers advantages to both patients and physicians by reducing the number of steps required for self-administration, which is especially important for patients with impaired vision or limited hand mobility.

Speaker #5: We expect the prefill syringe to remain an important driver of prescription demand going forward. Based on continued growth in Cotrofin Gel, prescribers and patients, as well as broad adoption across therapeutic areas, we are increasingly confident that Cotrofin is on a strong multiyear growth trajectory.

Speaker #5: The ACTH market grew 27 percent to $684 million in 2024, and is expected to grow 36 percent to $933 million in 2025 based on the midpoints of our new guidance and the competitors' idance.

Speaker #5: While recent growth in the ACTH market has been strong, the current number of patients on ACTH therapy remains significantly below historical levels offering substantial room for expansion.

Speaker #5: We estimate that today's patient base is still roughly half of what it was at the market's peak in 2017. In addition, today's ACTH market covers a broader set of indications including acute gouty arthritis flares which was not there in 2017.

Speaker #5: Further, based on our epidemiological analysis, we believe that the addressable patient population for ACTH therapy could be many times larger than the previous high of eight years ago.

Speaker #5: Importantly, a large and growing group of our prescribers were previously naive to ACTH. We believe that that number now exceeds 50 percent. We remain confident in our rare disease team's ability to sustain robust multi-year growth for Cotrofin Gel.

Speaker #5: Based on our first half performance, and continued strong underlying demand trends, we are increasing our 2025 Cotrofin Gel guidance to $322 million to $329 million from our prior guidance of $265 million to $274 million.

Speaker #5: Our new guidance reflects year-over-year growth of 63 percent to 66 percent. Turning now to our retina portfolio. Our retina portfolio Illuvium Utique generated revenues of $22.3 million in the second quarter, consistent with our expectations.

Speaker #5: Our commercial team progressed several key initiatives during the second quarter. We executed on the addition of the chronic NIUPS indication to Illuvium's label and fully transitioned ur US promotional focus to Illuvium.

Speaker #5: At the same time, we remain committed to supporting physician offices in navigating ongoing Medicare market access challenges, particularly for patients who previously relied on foundational support.

Speaker #5: We also took important steps to strengthen our US ophthalmology sales team. As noted earlier, we remain on track to realize meaningful revenue synergies for Cotrofin within ophthalmology.

Speaker #5: Our international Illuvium business, accounting for over one-third of Illuvium revenues, continues to perform well across both our direct markets and those served by distribution partners.

Speaker #5: We also completed the New Day clinical trial of Illuvium in earlier stage DME and presented the results at the American Society of Retina Specialists or ASRS annual meeting.

Speaker #5: New Day was the first clinical study that tested a long-acting steroid against anti-VEGF standard of care treatment. Feedback on the New Day results from study investigators and retina physicians at ASRS was positive, and reinforced our view that the data could help support the use of Illuvium earlier in the DME patient journey.

Speaker #5: Chris will speak more on New Day and our next steps with the data. While the second quarter was productive for our ophthalmology team and we successfully executed against our objectives, externally the market access challenges that have impacted prescribing of retina drugs for Medicare patients since January have persisted.

Speaker #5: We previously assumed that some funding for Medicare patient support foundations would resume, and Medicare access would improve in the second half after a large ophthalmology company launched its matching program for donations to the Good Days Fund.

Speaker #5: Unfortunately, this has not yet happened. So, we made the decision to update our guidance to reflect this dynamic. We now expect 2025 revenues for our retina franchise of $87 million to $93 million, versus our prior guidance of $97 million to $103 million.

Speaker #5: Moving now to our genetics business which also delivers strong performance in the second quarter, with revenues of $90.3 million and increase of 22 percent over the prior year period.

Speaker #5: The quarter reflected strong execution in our base business and contribution from new product launches including procaliperides tablets with 180-day exclusivity. Based on the performance of our genetics business in the first half of the year, we continue to expect growth for the full year in the mid-teens.

Speaker #5: Our brand's full portfolio also had a strong quarter. With revenues of $13.2 million, up 32 percent year-over-year. We were able to identify and capture increased demand for certain products during the second quarter and anticipate a return to a more normalized level demand during the second half.

Speaker #5: Next, I will review a few points regarding ANI standing in the evolving tariff situation. While we await the administration's pharmaceutical industry-specific framework, it is worth reiterating ANI's long-standing commitment to the US pharmaceutical industry and our positive and unique positioning relative to our peers.

Speaker #5: We are a U.S.-domiciled pharmaceutical company with over 90 percent of total company revenues coming from finished goods manufactured in the U.S. Products representing less than 5 percent of our total company revenues rely directly on imports from China.

Speaker #5: In addition, we have a strong balance sheet that enables us to carry healthy levels of finished goods and raw material inventories we look forward to maintaining our strong commitment to the US pharmaceutical industry.

Speaker #5: Before I turn the call over to Chris, I'd like to comment on the recent trial with CG Oncology. As a reminder, under an assignment and technology transfer agreement dated November 15, 2010, ANI had sold CG0070 Critostimidine and related assets such as the investigational new drug application or IND phase one, phase two clinical data know-how and IP to CG Oncology.

Speaker #5: ANI commenced civil action against CG Oncology in the Superior Court of the State of Delaware in March 2024, alleging that CG Oncology is liable to pay a running royalty of 5 percent on the worldwide net sales of their lead product, CG0070, or Critostimidine.

Speaker #5: The case proceeded to trial on July 21, and the jury returned a verdict in favor of CG Oncology on July 29. We continue to believe in the merits of our position and intend to vigorously challenge the verdict through post-trial motions and/or an appeal.

Speaker #5: I'll now turn the call over to Chris to discuss our rare disease business in more detail. Chris?

Speaker #6: Thank you, Nikhil. And good morning, everyone. Our rare disease team was highly productive during the second quarter. We generated record demand for Cotrofin Gel with broad-based strength across specialties.

Speaker #6: And we made good progress capturing opportunities and addressing challenges for our retina franchise. First, on Cotrofin Gel, we are very pleased with continued strong demand and feedback from physicians similar to the last several quarters we saw growth across all of our targeted specialties.

Speaker #6: The number of cases initiated and new patient starts reached record highs. Our expanded portfolio sales team hit the ground running, adding new prescribers and driving meaningful increases in new patient starts across neurology, nephrology, and rheumatology.

Speaker #6: Our specialty-focused teams produce strong growth in our newer areas of pulmonology and ophthalmology and we believe we are still in the early stages of penetrating these therapeutic areas.

Speaker #6: In ophthalmology, we saw a record number of new cases initiated and a 33 percent sequential quarterly increase in Cotrofin volumes. We have already realized meaningful revenue synergies as a result of the Elimera acquisition and believe there are further opportunities as we expand awareness of Cotrofin's utility in helping patients with severe allergic and inflammatory eye conditions.

Speaker #6: We saw very strong demand for our new Cotrofin prefill syringe offering, which we launched in April. The reduced number of steps required to administer the prefill syringe has resonated with patients and physicians, and we observed prescribing of the prefill syringe ramp across indications during the quarter. We are pleased to report that the prefill syringe already accounts for approximately 70 percent of new cases initiated only three months into its launch.

Speaker #6: Cotrofin Gel prescribing for acute gouty hritis flares remained a strong driver in the second quarter as a reminder the gout indication is unique to Cotrofin Gel among ACTH therapies.

Speaker #6: Gout accounts for approximately 15 percent of Cotrofin Gel use, and it's contributed significantly to the growth of new prescribers for Cotrofin. We're continuing to invest in evidence generation for Cotrofin Gel with our previously announced phase four trial in acute gouty arthritis flares.

Speaker #6: We believe the 150-patient study will provide physicians with valuable insight on the treatment of acute gouty arthritis flares with Cotrofin Gel and could support positioning in the American College of Rheumatology treatment guidelines.

Speaker #6: We are also pleased to announce two new publications of important preclinical data that expand the body of evidence around the use of Cotrofin Gel in nephrology and ophthalmology.

Speaker #6: Firstly, our preclinical study of Cotrofin Gel and uveitis that was presented earlier this year has been published in Ocular Immunology and Inflammation. Secondly, a manuscript for a linical study of Cotrofin Gel and membranous nephropathy was accepted for publication in Molecular Therapy.

Speaker #6: A leading journal in the field of innovative therapeutics. The study speaks directly to the steroid-independent mechanism of action of Cotrofin Gel in an animal model of membranous nephropathy.

Speaker #6: Specifically, its effect on the complement system, an area of significant interest in ongoing membranous nephropathy drug development. Overall, we are delighted with the growing recognition of Cotrofin Gel as a treatment option for appropriate patients and look forward to delivering strong multi-year growth for the product.

Speaker #6: Turning to our retina franchise, as Nikhil mentioned, in the second quarter, our commercial team was focused on managing the Illuvium launch with the combined label for chronic NIUPS and DME.

Speaker #6: And transitioning promotional efforts fully to Illuvium. We have successfully hired and onboarded nearly all vacancies across our sales territories and now have a full team dedicated to educating and supporting the retina community.

Speaker #6: In mid-June, we began promoting Illuvium under the combined label for chronic NIUPS and DME. The transition is on track, with our sales teams educating customers across the country and our market access team working with payers to establish coverage for Illuvium's new NIUPS indication.

Speaker #6: We've positive feedback on the convenience of a single product covering both indications. Also in Q2, we strengthened our promotional efforts launching new peer-to-peer educational speaker programs and new refreshed marketing materials for Illuvium, which are helping our sales team increase awareness among retina physicians.

Speaker #6: Our initiatives to help physicians practice this navigate the market access challenges for Medicare patients that have impacted the retina market since early January yielded positive results in the quarter.

Speaker #6: As a reminder, patient support foundations such as Good Days did not receive sufficient funding 2025 which affected their ability assist Medicare patients with copay support.

Speaker #6: This change in access affected retina products broadly and was not unique to our portfolio. The magnitude of the disruption that this lack of funding funding has had on the treatment of retina diseases in Medicare patients was actually a topic of a paper at the recent ASRS meeting in Long Beach, California.

Speaker #6: In a survey of 455 retina specialists presented at the meeting, 94 percent of respondents reported a significant or moderate impact on their practice and 78 percent of respondents noted that at ast 25 percent of their Medicare-age patients were unable receive their preferred medications.

Speaker #6: Our commercial team has been ing closely with retina practices to help improve access for Medicare patients including accessing Illuvium through a specialty pharmacy using Medicare Part D benefits.

Speaker #6: I'm very proud of how our team executed in the quarter while facing these significant access challenges. We're hopeful that funding for patient support organizations will resume in the second half.

Speaker #6: Which should help increase access for Medicare patients to Illuvium and other retina products. As a reminder, one of the largest companies in the retina space recently initiated a matching program for donations to Good Days, through which it will match up to $200 million of donations over the balance of 2025.

Speaker #6: We recently presented the results from our New Day study of Illuvium in patients with DME at the American Society of Retina Specialists annual meeting in Long Beach, California.

Speaker #6: Feedback on the results from study investigators and retina physicians at ASRS was very positive. And although the study did not meet its primary endpoint, some physicians have indicated that the New Day data may support treating DME patients earlier with Illuvium based on its role in reducing treatment burden for these patients.

Speaker #6: Following the release of this data, several next steps are underway. We are preparing additional presentations at upcoming national and international conferences to further share and contextualize these findings in parallel we are actively exploring the potential of including New Day in promotion aimed at increasing awareness and understanding of the study results.

Speaker #6: With that, I'll turn the call over to Steve for the financial update. Steve?

Speaker #7: Thanks, Chris. And good ning to everyone on the call. I'll review our second quarter results and then discuss our updated guidance for the full year.

Speaker #7: ANI generated revenues of $211.4 million in the second quarter up 53 percent over the prior year period. Revenues from rare disease and brands were $117.2 million in the second quarter approximately double the prior year period on an as-reported basis and up 60 percent on an organic basis driven by growth in our rare disease franchise.

Speaker #7: Rare disease revenues were $104 million up $111 percent from the prior year. Revenues from Cotrofin Gel were $81.6 million up 66 percent from the prior year period driven by increased volume on a record number of new patient starts.

Speaker #7: Revenues from Illuvium and Utique were $22.3 million up from $16.1 million in the first quarter. Revenues for brands were $13.2 million in the second quarter up 32 percent versus the prior year period.

Speaker #7: We continued to capture increased demand for certain products through a portion of the second quarter and anticipate a full return to more normalized level of demand during the second half of the year.

Speaker #7: Revenues for our genetics and other segment were $94.2 million an increase of 20 percent over the prior year period. Revenues for genetics were $90.3 million an increase of 22 percent over the prior year period driven by increased volumes on contributions from new product launches in 2024 and the first half of 2025 including our launch of procaliperide with its $180-day CGT exclusivity.

Speaker #7: Now moving down the P&L. As a reminder, when I speak to our operating expenses, I will be referring to our non-GAAP expenses which are detailed on table three in our press release.

Speaker #7: Generally, our non-GAAP operating expenses exclude depreciation and amortization, stock-based compensation, and certain costs related to litigation and M&A activity. Please refer to table three for a reconciliation to our GAAP expenditures.

Speaker #7: Non-GAAP cost of sales increased 29 percent to $74.2 million in the second quarter of 2025 compared to the prior year period primarily due to net growth in sales volumes and significant growth of royalty-bearing products.

Speaker #7: Non-GAAP gross margin was $64.9 percent an increase of over six points from the prior year period principally due to favorable mix towards rare disease products and strength in genetics driven by the procaliperide $180-day exclusivity which concluded at the end of the second quarter.

Speaker #7: Non-GAAP research and development expenses were $16 million in the second quarter an increase of $130 percent from the prior year period driven by higher investment to support future growth of our rare disease and genetics businesses.

Speaker #7: Spend related to our New Day study as well as year-over-year timing of spend. Non-GAAP selling general and administrative expenses increased 66 percent to $67.1 million in the second quarter driven by spend for our new larger ophthalmology sales team promoting Cotrofin Gel and Illuvium and continued investment in rare disease sales and marketing activities including the new sales representatives that we added in the first quarter.

Speaker #7: Adjusted non-GAAP diluted earnings per share was $1.80 for the second quarter compared to $1.02 per share in the prior year period. Adjusted non-GAAP EBITDA for the second quarter was $54.1 million compared to $33.2 million in the prior year period.

Speaker #7: Turning to the balance sheet, we ended the second quarter with $217.8 million in unrestricted cash, up from $149.8 million at the end of the first quarter.

Speaker #7: Cash flow from operations was $110.8 million in the first half of the year. As of June 30th, we had $625.2 million in principal value of outstanding debt.

Speaker #7: Inclusive of our senior convertible notes and term loan, at the end of the second quarter, our gross leverage was $3.3 times and our net leverage was $2.2 times our trailing 12-month adjusted non-GAAP EBITDA of $190 million.

Speaker #7: Utilizing the midpoint of our revised 2025 adjusted non-GAAP EBITDA guidance, our net leverage is approximately $1.9 times on a forward basis. Now turning to our updated 2025 financial guidance.

Speaker #7: We are raising our guidance for total revenue and adjusted non-GAAP EBITDA primarily based on higher estimates for our rare disease business. Our updated guidance is as follows.

Speaker #7: Full year 2025 net revenue of $818 million to $843 million up from our prior guidance of $768 million to $793 million representing year-over-year growth of approximately 33 percent to 37 percent.

Speaker #7: Cotrofin Gel net revenue of $322 million to $329 million up from our prior guidance of $265 million to $274 million representing growth of 63 percent to 66 percent.

Speaker #7: We continue to expect sequential growth of Cotrofin revenues in the third and fourth quarters. Combined Illuvium and Utique net revenue million to $93 million versus our prior guidance of $97 million to $103 million are revised guidance assumes no meaningful change in the copay funding gaps facing Medicare patients in retina for the remainder of the year.

Speaker #7: Genetics revenue growth in the mid-teens driven by of $87 business and contribution from new product launches consistent with our expectations and previous guidance, we expect genetics revenue in the second half of the year to be lower than that of the first half due to competitive entrance into the procaliperide market that occurred late in the second quarter.

Speaker #7: Adjusted non-GAAP EBITDA of $213 million to $223 million up from our prior guidance of $195 million to $205 million. Representing growth of approximately 37 percent to 43 percent.

Speaker #7: Adjusted non-GAAP earnings per share between $6 and $0.98 and $7.35 up from our prior guidance of $6.27 and $6.62. We currently anticipate a full year US GAAP effective tax rate of approximately 24 percent to 25 percent.

Speaker #7: And consistent with prior quarters, we will tax effect non-GAAP adjustments for computation of adjustments of adjusted non-GAAP EBITDA diluted earnings per share using our estimated statutory rate of 26 percent.

Speaker #7: We also continue to anticipate between 20.3 million and 20.5 million shares outstanding for the purpose of calculating diluted EPS. With that, I'll call I'll turn the call back to Nikhil.

Speaker #8: Operator, please open the line for questions.

Speaker #1: Thank ou. And at this time, if you would like to ask a question, simply press star then the number one on your telephone keypad.

Speaker #1: If you would like withdraw your question, please press star two on your telephone keypad. We'll take our first question from Gary Nachman with Raymond James.

Speaker #1: Please go ahead. Your line is open.

Speaker #9: Good morning. and congrats on the great quarter. so given the strength you saw in Cotrofin in in the second quarter, first, I wanted to make sure there wasn't anything unusual in there.

Speaker #9: In terms of one-time benefits or seasonality with any of the indications, and with the great ROI you're getting with the increased sales force, it begs the question if there are other additions to the sales force you'll consider doing in any of the areas anytime soon.

Speaker #9: especially with the good market growth and the headroom there. And then you, you call that ophthalmology and gouty arthritis flares is the gest drivers of growth.

Speaker #9: Is there still a lot of upside potential in in both of those markets? Maybe you could walk through that.

Speaker #10: thank ou, Gary. And good morning and thank you. I'll e, each question. So the first question on seasonality or, one-time benefit, on Cotrofin, no.

Speaker #10: This is, driven by the underlying demand. I ink the factor to consider is new patient starts which have more than doubled in Q2 '25 versus Q2 '24.

Speaker #10: So this is the the performance is a is an outcome of the increased demand. rather than seasonality or benefit or any one-time benefit. So that's one.

Speaker #10: Second, we do not, contemplate adding at this time additional sales at, you know, sales team members. Having said that, you know, obviously, we continue to evaluate high ROI commercial initiatives to sustain the long-term growth of, of, Cotrofin.

Speaker #10: You know, we believe that there is a, you know, multi-year strong growth runway for Cotrofin. And, you know, and our investing, both in evidence generation that Chris spoke about, bringing new presentations, we brought the 1ML and the 5M, and the prefill syringe.

Speaker #10: And we're investing in other, in other ways to, to increase the physician and patient convenience. So, that's how I would think about, you know, continuing to grow the franchise, to deliver strong multi-year growth.

Speaker #10: And then the third is, look, ophthalmology revenue synergies that we saw in Q2 which led to the 33 percent increase in volume is important.

Speaker #10: the gout additional acceleration is also important. But really, we have growth across therapeutic areas and indications. and we're really nowhere close to the addressable market, right?

Speaker #10: As we've spoken about, epidemiologically, when you look at these different indications, and look at the addressable market, as a subset of the, patients that are refractory or, for whom you know steroid resistant, the addressable market is many times larger than even what was being treated at the peak.

Speaker #10: So the, you know, that provides substantial room for expansion. And the other data point that was important that we shared is, you know, almost more than 50% of our prescribers are HCPs who, you know, had not used ACTH prior to the launch of Cotrofin.

Speaker #10: So that gives us, you know, additional confidence in driving this sustainable, long-term, multi-year growth in Cotrofin. Thank you, Gary.

Speaker #9: Okay. Great. And just a couple of quick follow-ups. With the additional cash flow that you're generating, with the good performance, just what are our priorities in terms of use of capital for debt paydown or business development?

Speaker #9: And, you know, how much more active are you getting on the BD front? and then just gross margin. You know, why isn't that guidance coming up more?

Speaker #9: Just given that the mix is shifting more for rare disease. And if it continues to move in that direction, the the business mix should we expect gross margins to, you know, move upwards and maybe to what extent?

Speaker #9: Over the next, couple of years. Thanks.

Speaker #10: Great. Yeah. Thank you for your estion. I'll, answer the first in terms of BD and then turn it over to Steve to talk about cash flows.

Speaker #10: and then also your question on gross margin. So on BD, look, we have as you've seen, right, there is strong growth that we've ivered, organically.

Speaker #10: And there is, you ow, again, substantial room for growth organically both across our two rare disease assets, Cotrofin and Illuvium, as well as in our genetics business, right?

Speaker #10: So we have a strong growth outlet organically. And therefore, for BD, you know, we're continuing to focus our BD efforts on expanding the scope and scale of our rare disease business.

Speaker #10: And our, you know, are looking at assets where the one-year anniversary of the Elimera acquisition. And so we're continuing to look for assets, but we're, you know, we're not, you know, not, in a hurry.

Speaker #10: And we're, you know, carefully evaluating what are the what is the next right next, step from a BD perspective? And again, I'd just like to reiterate that we have, you know, obviously a very strong growth, organic growth outlook as ou've seen even in the the delivery in '25 versus '24.

Speaker #10: So that's on the BD. and I'll turn it over to to Steve to answer the question on cash flows. And we can come back to gross margin.

Speaker #9: Yeah. Thanks, Nikhil. and, good morning, Gary. And, on the, I guess on the, on the cash flows, yeah, we're very pleased with the cash generation in the first half of the year.

Speaker #9: and, you know, at the moment, our our near to mid-term goal for cash is to, you ow, to continue to accrue cash to the balance sheet and and build that war chest.

Speaker #9: As we think about how to reinvest into the business both organically and through future business development and potential M&A, that's our near-term goal.

Speaker #9: As we continue to generate cash, you know, we can think about, you ow, a debt debt paydowns in future. but, you know, we have the the cash in, in, accounts that generate, decent, interest income returns.

Speaker #9: that just acts as a natural hedge to, some of the debt instruments that we have out there as well. on the on the gross margin question, our our second, quarter gross margin was driven by strength in multiple lines of our business including the second full quarter of procaliperide in genetics, which had the benefit of first-to-market generic pricing.

Speaker #9: somewhat better than expected brands performance. as well as the shift in in the mix of the overall company towards rare disease. in the second half of the year, that benefit from procaliperide on total company margins will no longer be present, given, the, the amount of competitors that entered in late June.

Speaker #9: And we do continue to expect a moderation of brand performance. We're assuming fully normalized quarters of brand performance in the back half. And so those impacts are expected to drive a modest reduction in second half gross margin.

Speaker #9: and therefore, we we're very comfortable in reiterating our full year guidance of $63 to $64 percent margins, for the for the full year P&L, by the end of the year.

Speaker #9: and and under your, associated question in terms of, how we think margin evolves in the future, you know, we're we're quite pleased that at kind of approaching this mid-60s mark, in 2025.

Speaker #9: And we see that as a a very good base for, continued growth in the future. Both as we manage the mix of our business, as well as, you know, we we continually have, projects in place, to improve our procurement process.

Speaker #9: It's it's an area that we've been quite focused on over recent years. And and have strengthened quite a bit. and we continue to, to lean into procurement, as we, manage margins going forward.

Speaker #9: As well as continuing to manufact, leverage our manufacturing capability, right? We're very proud of our three US-based manufacturing plants. and the capabilities that they provide us.

Speaker #9: and and we're continually reinvesting into those facilities, to ensure that we're, optimizing margins as as we go forward. So, you ow, Gary, obviously, we don't, you know, speak to forward-looking guidance specifically at this time.

Speaker #9: But we do anticipate the evolution of positive margins as we continue to march forward. Great. Thanks for all that, and congrats again on the results.

Speaker #10: Thanks, Gary.

Speaker #8: Thank you, Gary.

Speaker #1: Thank you. Our next question comes from Faisal Kurshid with Larink Partners. Please go ahead. Your line is open.

And lastly the acceleration of New prescriber Edition, right? Especially there are those that are naive to act who now account for approximately, 50% of crop and prescriber base.

So, you know, look overall, this is it's not any 1 thing, it's multiple different, uh, drivers. And I think, most importantly we've made significant progress in building this, high growth profitable and sustainable rare disease business since the launch in 2022.

You know and our our well equipped to continue tapping into this large Tam and you know continue to convince newer, prescribers to uh to uh provide cultural Andel to the appropriate patients.

Got it, thank you. And in fact, ask a follow-up on the pre-filled syringe, uh, just to clarify, you're saying, 770% of new patient starts, uh, with the pre-filled syringe. Uh, and then, could you also comment. I know you won't give a any specifics around, like, growth to net, and things like that. Uh, but you could, you just comment broadly if the economics around the pre-filled syringe, uh, or any different, um, to you than the economics on the uh, traditional um, violence range format.

Yeah, so on your first question on, uh, the the the stat that Chris shared in this prepared remarks was that 70% of enrollments in July, uh, are for the, you know, uh, which is enrollment I as in new cases, initiated were for the prefilled were written with pre-filled syringe. So that's that's what we said about the pre-filled syringe and then the second your question on Gross Finance. I think there's a modest uh,

comment, obviously we uh, you know, strike a balance between sharing, what is

helpful to investors, as well as what is, uh,

You know, competitively sensitive. So uh that's what we'll share. Thank you, first of all.

Yep, thank you.

Thank you.

We will move next with the meal Divan with Guggenheim security. Please go ahead. Your line is open.

Hi, this is Danielle on FOMO. Thanks for taking our questions, and congrats on the quarter. Um, so a couple of questions. What—one is sort of a follow-up question on sort of the previous ones. Um,

Uh, revolving around the pre-filled syringes.

So are there any particulars Specialties that are adopting this presentation more quickly than others or maybe more quickly than you all expected? Uh, if there's any other uh, you know, additional colors, you can find there.

And then the second question is on, uh, luvian. So, uh, you you mentioned that there's, you know, they continue to Market access challenges, that sort of pushed that bully your guidance down here. Uh, but can you speak to, if the new day, trial results at any positive impact on this new guidance, or maybe at differently, like these positive results, partially offset. This negative impact in the market market access challenges, which 1 255.

Or will they expected benefit from these new day results and the resulting, you know? Uh, education. There be more of a longer term benefit. Thank you.

Sounds good. Good morning, Daniel, and thank you for your question. So, on the pre-filled syringe question, uh, the, you know, the ease of use of the pre-filled syringe has resonated, really with Physicians and patients. And uh, so the prescribing of the pre-sales syringe has ramped across indications, so it's uh, during the quarter. So it's not, you know, uh, 1 indicate the other. It's it's really across indications that's why you know, 70% uh of the new cases initiated or with the pre where with the brief of syringe. So I think that's 1 and then on your question on illusion. Um specifics to the new day. Look the overall feedback on the new day, study results have been positive from study investigators and

Physicians at asrs. We you know that was the last week or the week before so from Dr. Singer and the study investigators they appreciated you know a couple of things they appreciate it. Having the first body of data that uh studied the use of ivian as a baseline therapy in patients earlier in DME.

Uh, specific data points, they were interested in were, you know, difference in time to First supplemental injection of a flub in the ivian arm compared to the uh uh compared to the Flubber cept arm.

And that approximately 30% of patients in both arms of the study. Did not require supplemental injection, as well as the total number of injections needed in the illusion arm 2.8 versus the if liver cept arms which was uh 7 plus so you know, following the release of this data. Several next steps are underway. We're preparing additional data presentations that upcoming National and international conferences to

Uh, further share and contextualize these findings and we're in parallel. We're actively exploring the potential of including new day in promotion name that increasing awareness and understanding of the study results.

especially in uh, earlier DME patients and, you know, uh so I think that that sort of, we will continue to use new day to uh,

And share and increase awareness of the study results. Um, as we, as we move forward, uh, there isn't a specific uh, upside that has been factored in to the back half of the year, right? Uh, with keeping this in mind.

Thank you, Daniel. Okay, thank you.

Thank you. Our next question, comes from David, um, Salem with Piper Sandler, please go ahead. Your line is open

Thanks. Just a couple of quick ones for me on kortsen. Um, first, as the category grows, um,

Given that the label is quite expansive, are there other...

Clinical settings that you're going to explore or might explore um down the road um aside from the current uh therapeutic verticals. Thanks.

Good morning and thank you. Uh, David.

Look on the pair landscape. Um, remember we brought competition to this category in 2022? We launched when there had only been 1 act option, uh, and when we went to partner with them right from day 1. Uh, so they, you know, I think that that's the, you know, that's how we've engaged with them. And we will continue to engage with them as we bring the cultural and therapy to the appropriate patients.

Um, I'll keep it at that. Uh, you know, obviously trying to balance what we share. What is helpful for investors, and what is competitively sensitive.

so that's on the pair landscape and then

Look in terms of therapeutic areas and focus for control. Fun. I mean, we're currently.

have significant opportunity that has not been captured in the indications and therapeutic areas that we're in right now. Right across the core indications of, uh, room nest and neuro as well as in the, you know, newer Specialties of gout palm and opal, right? And we spoke about the Opthalmology Revenue synergies. So

You know, in the, in the near term we're focused on these and they're significant uh expansion opportunities there, right substantial.

You know, could we consider other therapeutic areas? Yeah, I think we think about it, but I think in the near term more focused on there's so much opportunity and so many patients that can benefit.

You know, appropriately from uh the the core profan therapy, that, that's what we're focused on in the near term.

Okay, thank you.

Thank you, David.

Thank you. Our next question comes from ekatarina, ncoa with JP Morgan. Please go ahead your line is open.

Uh, thank you so much, another question on crop and gel, but and I think you've touched upon this in the program, Mark, but just between the growth that you're seeing and your competitors are seeing just any thoughts on how quickly the category role could kind of get back to that, you know, 1.2 billion Peak that I think we saw in 2017 and has your thinking changed, just in terms of how big this category can kind of get over time.

and then second question is also on control from, um, but just, you know, as you look at the category, you know, more broadly, are you starting to kind of see, physician perception change just in terms of, you know, if they're reaching for the product earlier, or in different types of cases or, um,

Different use cases, I think than previously. Thank you.

Sure. So I'll take the first question on, you know, on uh, where the overall category is going and then Chris can uh, you know, jump in with the, uh, you know, physician perception and where it's being used for the category. So, look, overall, we believe that the market can go well, past the previous Peak and remain confident. In our ability to sustain robust multi-year growth. You know, our belief is driven by 3 factors, right? First that there is substantial room for expansion in the number of patients on ACT therapy, right? If I break that down into 2 parts. Firstly, the number of the current number of patients on acca's therapy are almost half of the patients on therapy at the previous peak in 2017. Second based on the epidemiology analysis, right? We believe the addressable patient population for ACT therapy, could be many times larger than the previous high. So here we looked at patient populations, by indications, such as Ms. Nephrotic syndrome, Riot arthritis that are refractory or steroid resistance, right? And this is there across indications.

So that's the first Factor, right? Substantial room for expansion in the number of patients, check in today's at Market includes acute. Guardian arthritis, flares, which accounts for approximately, 15% of core control, and use and was not there in the previous Peak. And then third is

You know, reason to believe is our ability to expand. The ACT Market is that more than 50% of for control and prescribers had never used ACT therapy before and with that, I'll ask Chris to answer your question about the the use cases and, uh, physician perceptions

Yeah, thanks. Thanks to Karina for the question. And so, you know, we think really, that's about by specialty, right? So we have really, uh, you know,

Significant impact of the acute gouty arthritis flare indication in in with, with the Rheumatology Community to drive utilization and trial, um, of um, cordial. You know we've seen that, um, we've seen that have a, a big impact on bringing in new rheumatologists, um, to to, to use cordial in their patients, with, you know, severe persistent, um, gout flares, right? That that are very tough to manage and you know, that that utilization has, has opened the door for other indications in Rheumatology that we have. So so that's 1 area, you know, and 1 Dynamic, that that where we've um, you know, that that is that is in play and that is really driving growth and kind of new physicians in Rheumatology coming to the to the class.

Thank you.

Our next question comes from Brandon Folks with HC Wayne Wright. Please go ahead. Your line is open.

Hi, thanks for taking my questions and congratulations on a really good quarter here. Um,

Maybe just following on from a number of the prior questions. But sort of, when you think about these potential patient expansions of the market that you were talking about here,

How do you view court open market share? Expanding over time as these new patients grow the market, you know, giving your success and your prescribers. Would you be willing to sort of?

Put a figure out there where whether you think Court tropen could be, you know, an equal market share. Um,

Product at Peak or even the dominant, um, product in the Market at Peak and then maybe just 1 on granularity. How do we think about the pushes and pulls in the R&D spend going forward? Compared to this quarter? Thank you.

Got it.

So thank you. Uh thank you for that question, Brandon. Um,

to look on the, you know,

on the overall Market. I think what we're as I just mentioned, right? We believe that the market can go well, past the previous Peak, uh, and that the number of, you know, it's a there's a large, uh, patient population that can benefit. So our focus is really on getting this ACT therapy and control, fun to the appropriate patients and and not focus on market share. Because, you know, as we as we spoke about, right, that the market grew 27% last year and is on, you know, if you add our guidance and their Guidance, the competitor's guidance, it's on uh track to grow even higher than that. So it's really about growing, the market getting ACT therapy to the appropriate patients in need rather than, you know, uh, anything about share and you know about

With regards to putting a share number out there.

You know, that's the balance between, you know, investor what's what's helpful for investors. And, you know, competitively sensitive. So we're really focused on, you know, on growing the act and really the core trophy use in the ACT Market.

And then your second question on R&D, um,

There is, you know, uh, some phasing of R&D that ends up happening, you know, almost as, as the year goes on. So that that's why you see, uh, a spike in the, in the second quarter. But I'll let Steve add, if any other anything else regarding, uh, phasing of R&D, spend Steve.

Yeah, uh, good morning Brandon. Um, yeah, I just just to remind everyone as we've, you know, spoke in the past. When you think about any of our Opex lines, the R&D line is the 1 that can have the most, um, variability, uh, quarter uh, quarter to quarter. Um and you know, second quarter R&D was up uh uh sequentially versus q1 consistent with our expect expectations and consistent with our comments on the first quarter earnings call. Um because the first quarter 25 uh was was a uh certainly a bit lower uh from a run rate perspective from 2025. And if you look at the Cadence in 2024, uh, kind of the opposite happened, the

Um the culmination or at least the the beginning of the culmination of the new day trial um in the second quarter. Um, you know, there will be new day spend in the third quarter um but that will start to Trail off as the as the year goes on. Um, but you know, overall we remain, uh, very committed, uh, to continuing to invest in R&D um, to to drive the mid and long-term uh, growth in the business. Uh, and we have uh, we have exciting projects going on, uh, both in support of uh rare disease and uh, and our generic business.

Great. Thank you very much. Take my questions and

thank you.

Thank you. And once again, that is star and 1 on your telephone keypad, if you would like to join the queue,

We will move on next with less Soloski with Tourist Securities. Please go ahead; your line is open.

Uh, good morning. Thank you for taking our questions. Um, I have 2 on 1 on the patrol and the second on generic, on the control side, can you help us? Uh, square up the updated Outlook, uh, what has driven the disconnect since you last issued, the guidance. Um, and and your peers saw in your 50% growth in the in the category, how are you able to outpace that, uh, what portion of of your growth can essentially be allocated to the new sales team ads, and then just to go back to

Brandon's question. Are you seeing an uptick in in switches and and market share gains? And then on the generics front, how are you thinking about new product Cadence across generics in the in the second half and and you know, perhaps into next year as a procurement product exclusively, period, comes off. And and second, are you seeing any uptick in delays on the FDA approval front? Thank you.

Good morning and thank you. Les hommes.

looks your first question on uh, on controls and um,

We?

Really we're raising controls and guidance for the second time in 2025. And, you know, obviously have raised it by over 55 million from the 2655 million, to 322 million to 329 and

You know, in terms of what's been better than what we anticipated.

Look, it's the faster time to impact of the control from sales expansion by the 18th from 52 to 70 members. We're not disaggregating, how much is the impact from that versus other, uh, factors? But that's, you know, 1 Factor. The second is the acceleration in the newer indications of gal, as well as Opthalmology, Revenue synergies, uh, wrap it up update in the pre-filled syringe presentation, which, you know, uh, you know, with the 70% of

Of new cases in uh sorry uh new cases initiated being in preference. That's definitely higher than uh what we had initially anticipated uh and the acceleration of the new prescriber edition, right? The the number that we had out originally or earlier was about 40% but we're at 50% of our prescriber base. So I think it's a number of different factors that are driving the uh the

You know, and the strong underlying demand, right? And the patient populations that can benefit from it and.

and Physicians that are that are uh, trying it, you know, for the appropriate patients.

um when you your your next question around, you know, our sub question around market share

You know, similar to what we said to brand and really we're focused on, you know, getting core profen to the appropriate patients. And not really thinking about uh market share uh and it's you know uh we're growing they're growing and we're you know, I think we increase awareness of the category probably helps both in terms of uh positions, you know, using it for the appropriate patients.

And then on genetics, thank you for asking a question on our genetics business. We continue to have strong R&D execution.

So far we've not seen any material delays in FDA approvals uh or anything like that. And you know, we find, you know, or continuing that Steve mentioned earlier, continuing to invest in R&D for generics and approve and

uh, you know, plan to see the continued Cadence of, uh, new product launches and which is really

Between that and operational excellence has been the the key drivers of our strong performance Engineers. Uh and we uh you know, we see that Outlook going forward.

Thank You, Les.

Thor. Thank You, Les. Yes. We all, uh, have a us-based supply chain entirely and uh, you know, have been planning for, you know, this uh, this volume expansion. And uh, yeah, our well positioned, with our uh, with our supply chain, to be able to, uh,

Uh, to continue to serve the the patients in need.

Thank You, Les.

Thank you.

And we show no further questions in queue. At this time, I will turn the call back to nikhil lalwani for closing or additional remarks.

Thank you everybody, for joining, our call, apologies for running over a little bit and we're really, uh, grateful for, uh, for your interest in Ai, and look forward to continue updating you on our progress. As we move forward. Thanks everybody.

Thank you. Thank you. This does conclude today's program.

Thank you for your participation. You may disconnect at any time.