ANI Pharmaceuticals, Inc. (ANIP) Q2 2018 Earnings Report, Transcript and Summary

Good morning, everyone, and welcome to ANI Second Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note, this call may be recorded. It is now my pleasure to turn today’s program over to Mr. Arthur Przybyl. Please go ahead.

Good morning, everyone. Welcome to ANI’s earnings conference call for the second quarter 2018. My name is Art Przybyl, I am the CEO; with me today is Stephen Carey, our Chief Financial Officer. Before we begin, I want to refer everyone to the forward-looking statements language in this morning’s press release and ask each of you to review it carefully as important context for this conference call. Discussions will also include certain financial measures that were not prepared in accordance with generally accepted accounting principles. Reconciliation of those non-GAAP financial measures can be found in our earnings release dated today. Today, we reported our second quarter results. Net revenues of $47.3 million, adjusted non-GAAP EBITDA of $19 million and adjusted non-GAAP diluted earnings per share of $1.13; increases of 6%, 0% and 15%, respectively as compared to the prior year quarter. Our six months results generated revenues of $93.8 million, adjusted non-GAAP EBITDA of $40.8 million and adjusted non-GAAP diluted earnings per share of $ 2.45; increases of 15%, 21% and 42%, respectively as compared to the prior year six month period. We updated our guidance for the second half of the year, in order to better reflect our revolving business model. The midpoint of our guidance forecast annual revenues of $200 million, adjusted non-GAAP EBITDA of $85 million and adjusted non-GAAP earnings per share of $5.04. These numbers represent increases of 13%, 15% and 29% over the prior year. Steve will provide you with our detailed financial highlights during his presentation. In the second quarter, we continued to successfully execute on our strategy to grow our generic and brand business platforms and to advance our key pipeline assets. In generics, we completed two transactions. We acquired a basket of 23 generic products from IDT and we acquired a portfolio of six generic products, as result of the Impax/Amneal business combination. Year-to-date, we have launched five new generic products, increasing our generic product portfolio to a total of 29 products and we recently entered into an agreement with ClarusOne, a largest buying consortium, that will provide us an opportunity to further increase our generic product revenues. To date, we have launched 10 products from our pipeline of acquired ANDAs that require a tech transfer. Today, we announced the estimated launch date for methylphenidate extended-release tablets by the first quarter of 2019, combined with our previously announced launch date of October 1, 2019 for aspirin/dipyridamole extended-release capsules. These two generic products represent a combined market size of over $1.4 billion. Lastly, we announced the GDUFA date of April 2019 for an undisclosed ANDA product, those granted priority review and its current market size of $47 million. These three generic products are compelling near term opportunities for us. We recently increased our brand portfolio in the ANI label to a total of nine products, with the launch of Arimidex and Casodex. We expect the launch two additional branded products in the ANI label, Atacand and Atacand HCT in October 2018. In today’s press release, we announced our filing date for the supplemental NDA for Cortrophin gel by the first quarter of 2020. After discussions with FDA and combined with the results of our development work, we advanced – we have advanced development activities to begin manufacturing commercial scale batches of Corticotropin raw material, with the plan to begin manufacturing of finished dosage form registration batches of Cortrophin Gel in the first half of 2019. We remain on track to file our prior approval supplement for Vancocin oral solution in September 2018. When launched these two branded products represent a combined addressable market of over $1.6 billion. These two branded products are compelling longer term opportunities for us. Today, we announced the acquisition of WellSpring Pharma Services, a contract development and manufacturing organization located near Toronto, Canada for $18 million. The transaction provides us with substantial synergy, as we anticipate expanding our contract manufacturing revenues, combined with providing us additional manufacturing capabilities to expand and accelerate the recommercialization effort associated with our pipeline of already approved ANDAs that require a tech transfer. WellSpring currently generates approximately $15 million in annual revenues and we expect the acquisition to be accretive to our adjusted non-GAAP EBITDA in 2019. WellSpring has already diverse customer base and currently manufactures 17 commercial products for 11 different customers and assisting customers on 13 additional products that are in development or awaiting FDA approval. The 100,000 square foot site manufactures drug product for both the U.S. and Canadian drug markets and has substantial capacity. We are excited to welcome the WellSpring customers and WellSpring employees to the ANI family. Today we announced our first recorded royalties from commercial sales of Yescarta. We are entitled to a percentage of global Yescarta net sales as well as a portion of certain product milestones. These royalties streams originate from assets acquired in the BioSante transaction and subsequent licensing arrangements between ANI and various parties including Kite Pharma. We recognized $900,000 worth of royalties related to Yescarta in the second quarter. I will now turn the conference call over to our Chief Financial Officer, Stephen Carey, who will provide you with more details on our financial results.

Thank you, Art. Good morning to everyone on the line, and thank you for joining the call to discuss ANI’s second quarter of 2018. For the three months ended June 30, 2018, ANI posted net revenues of $47.3 million, non-GAAP adjusted EBITDA of $19 million and non-GAAP EPS of $1.13 per diluted share. These results are below our expectations principally due to a shift in customer mix of our Inderal LA franchise towards 340B customers, leading to a lower average selling price. In addition, we are revising our guidance this morning as a direct result of this shift in mix. Net revenue for the three months ended June 30, 2018, was $47.3 million, up $2.5 million or 6% versus prior year, as modest declines in our generic and branded products were more than offset by revenue from royalties. Revenues of our generic pharmaceutical products declined 4% from prior year to $30.2 million, driven by declines in lower margin products such as fenofibrate and propranolol ER. These declines were tempered by the impact of our four product launches during the quarter, including solid contributions from Ezetimibe-Simvastatin, which was acquired in May, as well as a full quarter of sales of our Diphenoxylate-Atropine product, which launched late in the second quarter of 2017. Branded pharmaceutical revenues were $10.5 million in the quarter, a decrease of 10%. Prior year comparisons are primarily due to a decrease in unit sales of Inderal LA tempered by the impact of the February 2018 relaunch of InnoPran XL and Inderal XL in the ANI label. Royalty income was $4.9 million for the quarter, driven by $4 million related to our profit from the sale of our four brand products, they were purchased in December 2017 from AstraZeneca of Arimidex, Atacand, Atacand HCT and Casodex. As highlighted on our first quarter 2018 earnings call, these revenues will be reported as royalty income during the initial phase of the transition of the products from AstraZeneca to ANI. In addition, we recognized approximately $900,000 of royalties relating to certain milestones and the initial period of sales of Gilead’s Yescarta, as highlighted in Art’s comments. In addition, revenues of our contract manufacturing services were $1.7 million, representing an increase of approximately $150,000 principally due to the timing of the fulfillment of customer orders. Cost of sales in the period was $16.6 million, or 35% of net revenues. Prior year cost of sales included $3.2 million of costs recorded due to the step-up of basis for finished goods inventory purchased in conjunction with certain acquisitions. Excluding this amount, prior year cost of sales were $17.9 million or 40% of net revenues. This five point improvement is directly attributable to the impact of royalty income, which has no corresponding cost of sales and decreased sales of products subject to profit sharing arrangements. Selling, general and administrative expenses were $10 million as compared to $7.4 million in the prior year, driven by employment and related costs to support the growth of our business, cost to comply with new FDA guideline, which governing the testing of API and finished goods increased legal expenses and $341,000 expenses recorded in the quarter related to the WellSpring transaction. Research and development costs totaled $5.1 million in the quarter, and include $1.3 million of in-process research and development charges recognized under GAAP in conjunction with our second quarter asset acquisition of generic products from Impax/Amneal. Excluding this amount organic R&D was $3.8 million in the quarter, an increase of 75% versus prior year, driven by accelerating investment behind our Cortrophin recommercialization program and work related to our underlying generic pipeline. Our effective tax rate for the quarter was 20.7% of pretax income, as compared to 32.1% in the prior year period, primarily due to the favorable impact of the new federal corporate statutory income tax rate of 21%, as established in the Tax Cuts and Jobs Act of 2017. This rate benefited both our GAAP and adjusted non-GAAP diluted earnings per share metrics in the quarter. From a balance sheet perspective, we had unrestricted cash and cash equivalents of nearly $55 million as of June 30, 2018. This balance is net $5.2 million that we invested in the quarter behind the acquisition of commercialized generic and pipeline opportunities from Impax/Amneal and IDT. We generated $8.6 million of cash flow from operations during the quarter, and $31.5 million on a year-to-date basis. Total net debt as of the balance sheet date approximated $163 million, representing two times net leverage on a trailing 12-month basis and 1.9 times utilizing the midpoint of our revised forward-looking 2018 guidance. The $50 million revolver portion of our senior secured credit facility remains undrawn and continues to provide us with flexibility in pursuing further business development transactions. In addition, in the beginning of April, we initiated an interest rate swaps for the total amount due for the remaining tenor of our term loans. This instrument synthetically fixes the interest rate we pay on this portion of our debt structure to approximately 4.1% at our current leverage ratios. On a year-to-date basis, we have generated $93.8 million of net revenues, $40.8 million of adjusted non-GAAP EBITDA and $2.45 of adjusted non-GAAP diluted earnings per share, representing year-over-year gains of 15%, 21% and 42% respectively. While, we’re proud of these results, they do trail original expectations for the first half of the year, driven by the aforementioned declines in Inderal LA average selling price. Despite the underlying health of our business and continued enthusiasm for second half revenue and profit drivers, we have reset our expectations for Inderal LA price and revised our full year guidance. We currently project full year net revenues to reach between $195 million and $205 million, representing a 10% to 16% increase over 2017. This would place our second half of 2018 net revenues at between $101 million to a $111 million. At these revenue levels, coupled with increased second half R&D spend, we anticipate full year EBITDA to be between $82 million and $88 million, representing an 11% to 19% increase over prior year and corresponding gains in adjusted non-GAAP diluted earnings per share of 23% to 35%. We anticipate that our second half performance will be driven by the July launch of Arimidex and Casodex in the ANI label and the currently planned October launch of Atacand and Atacand HCT in the ANI label continued execution in maximizing the potential of our recently acquired generic products, leveraging our recently executed contract with ClarusOne and successful integration of WellSpring with the corresponding near term expansion of contract manufacturing revenues. Finally, we are very excited to be speaking to you today from our newly acquired business, WellSpring Pharma Services just outside of Toronto, Canada. Our acquisition of WellSpring is an important building block towards the continued maturation of ANI. In the near term, we plan to immediately expand our footprint of stable contract manufacturing revenue and plan on leveraging WellSpring’s expertise in the CDMO market to expand our offerings across the entire ANI manufacturing platform. In the midterm, we expect to leverage additional tech transfer resources to augment our existing technical capabilities, which will allow us to monetize our existing generic pipeline in a more timely manner. The WellSpring transaction closed yesterday and we gave $18 million for the business from cash on our balance sheet. In conclusion, we are increasingly optimistic about the future of ANI. From exciting generic pipeline opportunities to expanding our capabilities with the addition of WellSpring to driving the development of Corticotropin, we’re focused on both near term execution and driving long term shareholder value. With this, I will turn the call back to our President and CEO, Art Przybyl.

Thank you, Steve. Moderator, we will now open the conference call to questions.

Thank you. [Operator Instructions] Your first question comes from the line of Dewey Steadman of Canaccord Genuity.

Hi, guys. Thanks for taking the question. I guess, on WellSpring, it seems like pretty interesting acquisition. Can you just elaborate a bit on the capabilities that WellSpring has that Baudette currently does not? And then any impact to the – to see the contract manufacturing margin from this WellSpring business and then also longer term is it possible to leverage those development teams at WellSpring into build out a – I guess it’s self-funded pipeline of future ANDA product. Thanks.

Good morning, Dewey. Let me take the latter part of your question first. And that is can we leverage from the WellSpring transaction, the ability to – begin to develop more of an internally developed ANDA pipeline at the company. My reaction to that is no. The company still does not have an adequate amount of formulation capabilities in order to advance its own internally developed ANDA pipeline. So that is a remaining piece of the puzzle lead ANI that we are very well aware of. And we continue to explore and investigate opportunities to add that piece to our puzzle. Now doing that could be us hiring an individual and starting out something from scratch in terms of more of a product development formulation house, the center for excellence, if you will or that could be acquiring one. And we’re looking at both possibilities in order to advance, what we believe it will be important to the business model for the future, which would be to create greater formulation capabilities internally for the company and certainly to establish the center for excellence for an ANDA pipeline. In regards to WellSpring, beginning of your question – in regards to WellSpring and its capabilities versus Baudette, they’re actually very synonymous. The capabilities here at WellSpring resemble the capabilities of Baudette and vice versa. And so one of the synergies that we recognize here besides expanding our CDMO business is to allow us to take products from Baudette and move them into a tech transfer opportunity here at the WellSpring site. That’s important to us. We have significant capacity at Baudette, but Baudette tends to be remote. And so it’s somewhat more of a human resource issue, hiring people, and they are technically capable that can work for us in really remote Northern Minnesota. And so instead of choosing, what product we want to advance next, if we have an open slot in Baudette, this gives us the opportunity to advance several at one-time with the addition of WellSpring’s tech transfer, CDMO capability. That’s very, very important to us. Ultimately, I think you know in generics, time is money. We want to get these product out as quickly as possible and we don’t want to be held up, because we can advance as many projects at one-time as we’d like to add at Baudette. Secondarily, this is a more established CDMO business that we really have is more of an afterthought out of our Baudette manufacturing capabilities. This is now going to be a business platform like branded and generic products for us that we see the potential to double over a period of time, from where we’re at. So you could say that today, we – with the acquisition today, and really we probably drive about $20 million in revenues. But we believe that there are greater opportunities to expand the business and also we have underutilized manufacturing site at Baudette that we call the IDC Road facility, which is really capable of oral solids, but oral solids that require containment, glove box work, et cetera. And so we would like – through the combination of WellSpring and that facility, we believe we have an opportunity to significantly expand the CDMO revenue capability, revenue stream for ANI, okay? Lastly, you talked about the – how does contract manufacturing affect our overall gross margins. I’m going to let Steve speak to that a little bit. I would say, obviously, contract manufacturing, though, has inherently lower margins than the, let’s say, 65% margin run rate than we have on our core businesses, brand and generics.

Right. So while the margins are lower, net-net, Dewey, we think it’s a trade-off that we’re willing to make in terms of the stability of the dollarized margins that a CDMO business generates. And so I think about it very much in terms of balanced and continued diversification of the ANI revenue base. You’ve seen us over the past two years start to diversify our business, both through the expansion of generics towards tail brand products. And this is just a continued journey on that quest for balance and diversification in terms of our overall revenue and gross margin base. And so the CDMO business is quite sticky in terms of sale and margin generation, and so that’s a trade-off that we’ll take and welcome into our overall spending portfolio.

Great. Thanks. And then just quickly on Vanco. For the oral solution, what’s the ideal patient? And if approved, how will the product be promoted? And how should we think about margins for that product? Thanks.

That product will be promoted as a brand. So my reaction to that is branded margins associated with that product. The ideal patient would be both one that’s potentially in an institution, in a hospital environment, as well as outpatient that would benefit from, obviously, a liquid version and absorption of such. How we market that, I’m going to defer that until we get further down the road. It’s premature for me to speak to that. And whether we treat this as more of a specialty product than have a tiny branded sales force, I’m going to defer that until after we get closer to launch of that product.

Thanks for taking the question.

Your next question comes from the line of Elliot Wilbur of Raymond James.

Thanks, good morning. Just wanted to touch base on the methylphenidate opportunity maybe outside of your timing expectations here. Obviously, the markets come under a little bit of pressure. Teva talked about it on their call. It looks like Trigen’s been pretty aggressive in terms of price to grab share. But even after all of that, it still looks to me like this is going to be at least kind of a $500 million generic market opportunity at the time of entry based on the update provided today. I’m just wondering if that set of assumptions is consistent with what you’re seeing.

I think so, Elliot. I mean, for us, we didn’t announce this date until after we signed our agreement with Halo, who is the company that is validating the approved ANDA for us that we acquired in the Amneal/Impax transaction. And we look at this product – yes, it’s a large market. It’s potentially smaller margins. But for us, we look at this as a significant return considering we paid, in aggregate, for those six products from Amneal/Impax, $2.3 million, it’s obviously costing us, sake of argument, a little over $1 million to advance this to launch. But we have nowhere to go but up in terms of revenue and margin generation on this product. And so we think this is a very important product in our portfolio, or I can assure you, we would not call out a product like this in the body of our press release. We have many generic products that we’re advancing to the finish line, but we call out these three because we think these three have – or are potential significant catalysts for earnings and revenue growth. So we still see the opportunity as one that can provide us with significant return to our stakeholders and the company.

Okay, thanks Art. And a question for yourself and for Steve as well. A lot of inquiries this morning just kind of on trends in the brand business. And that revenue line, I guess, has been kind of in the $15 million to $16 million range the last three to four quarters. And just sort of looking into the results this morning and looking at some of your commentary, I’m not sure I have a full understanding of kind of what happened there. So maybe you guys could just talk about that in a little bit more detail in terms of the sequential trends there, pricing, customer mix, whether this is a new base level that we should kind of think about numbers moving up off of. Just not sure I really have a good handle on the progression of the business there.

Yes, sure, Elliot. It’s Steve. Really, the most dramatic impact sequentially in our brands business was, as stated, a very dramatic shift in the customer utilization for our Inderal LA franchise. So as you can imagine, as we’re accounting for the business, we are looking at recent trends in terms of customer mix that can be very dramatic for these admittedly low volume tail brand products. And throughout the course of 2017 and certainly, through the first quarter of 2018, the 340B mix for the Inderal LA franchise was trending downward. And so we were getting, I would say, very favorable pricing in terms of our average selling price for the franchise. That trend changed quite dramatically in the second quarter of 2018. And so it was really just purely a mix change on utilization. And so in the second quarter, honestly, it’s a little bit of a double whammy because we had to account for both the impact of second quarter utilization and also the impact which we assumed that, that new mix will remain for the remainder of 2018 and beyond. And so we’re kind of resetting our balance sheet a little bit for that product in the second quarter. So a little bit of a double whammy in the second quarter, for sure. And quite honestly, we will have to see how that trend plays out moving forward. In terms of the guidance reset that we took this morning, that is fully reflective of the second quarter reality of Inderal LA mix, and so we fully have recognized that pricing change and pricing differential in our revised guidance this morning.

Okay. Steve, I just want to follow up with you there because I think it’s important to understand. So I guess if I think about the potential impact of a mix change there, if it’s a new 340B customer, it should still be incremental revenue, although, perhaps, the margin would be lower. If it’s a change in the status of existing customers, then I guess that would sort of make sense in terms of some of the commentary. And I don’t know if you can provide any specific color on sort of those two observations there, but…

Yes, sure. Sure, I’ll try. So in terms of our direct customers, there’s been no change in terms of our direct customers for the brand business. It’s all an impact of what happens downstream from our big three wholesalers on the brand side. And so that’s why, quite honestly, just in the reality of accounting for the franchise, you get a little bit of a delay in terms of that feedback loops because it’s really impacts that come through indirect sales and then indirect utilization of the product downstream. And so it’s not really a new customer, but it’s a shift in mix. And your point to would there be incremental revenues associated, albeit at a lower gross margin, the reality is for mature brands that have been marketed for many, many years, the pricing on 340B and on a lot of government utilization is extremely low. And so that’s why it can have such a dramatic impact as we experienced in the second quarter of this year.

Okay. Thank you. I appreciate the clarification. Could you just talk a little bit as well about expense trends in the quarter? Obviously, the incremental investment R&D makes, hence, SG&A maybe a little bit ahead of expectations. But how should we think about those line items kind of trending out from current run rate?

Sure. So on the R&D side, as we’ve discussed, this year is our – what we perceive to be our bulk year in terms of the Cortrophin investment. And so you see that start to kick in here in the second quarter, and that’s a trend we’ll anticipate to continue in the third and fourth quarter. The second quarter number does have a GAAP accounting item in it since we accounted for asset acquisition of the Impax/Amneal products that I called out in the script at $1.3 million. If we just think about – if you strip that item out, I think when we initially went out with guidance this year back in February, while we didn’t put it in our guidance chart, we did talk to, we think, organic R&D will be between $14 million and $16 million this year. We continue to believe that’s the right range, although I would say we’re on track to go towards the high end of that range. So I would expect the number somewhere around $16 million excluding that GAAP accounting item that was recorded this year. And on SG&A, I would tell you that ex-integration costs for WellSpring, the number that was posted in the second quarter is representative of what we anticipate in the third and fourth quarter. And again, it’s really two-pronged. One is just increased costs as we continue to grow out our business and the support that’s needed to support a growing business and needs and then, quite honestly, coupled with increasing regulatory costs in our business, and we called that out for the first time here as it relates to the second quarter. And so the fact of the matter is that our already-complex regulatory environment continues to get more complex, and it does have an impact on our cost structure.

Okay. Thanks. Just one last question for Art. Can you just talk a little bit about the relationship with ClarusOne or the new relationship? I’m assuming it’s new and not just an enhanced one, obviously, a big name with lots of market power. And maybe just give a little bit of color in terms of what you think the opportunities will be there, whether it’s just kind of one product at a time and sort of modest incremental or if you think that there’s potential for sort of an immediate kind of across-the-board increase in the current generic run rate. Thanks.

Sure. Sure, Elliot. So if you recall, I think it was about a year ago last June, the last of the three consortiums came into play with the formation of ClarusOne. ClarusOne is combination of McKesson’s OneStop program, sake of argument, half of Rite Aid stores and Walmart and some other assorted groups. At the time that they came into the fore, we recognized that to enter that agreement and that program, to be frank, like many of these consortiums that came together, they were actually looking to extract a fair amount of dollars to enter into that agreement. And we decided, at the time, to take a couple of different steps. One, we said no to the consortium and the dollars that they wanted, and two, we shifted a significant portion of our business to other – the two other consortiums in Red Oak and WBAD. And so you never really saw a blip or downward trend in our generic revenues because of the fact that we were not doing business with ClarusOne. We lost our business with ClarusOne. So that could be perceived as a negative. Now – but that’s behind us. So we have an agreement with ClarusOne, and this gives us, obviously, the runway to potentially add a generic portfolio of products to ClarusOne, compete effectively for that business without this large upfront payment that they were looking to extract from us. And so we view this as upside. And so our national account folks, who have always maintained, obviously, a relationship with ClarusOne, at least from a communications standpoint, will be looking to add products to that newly formed agreement and, hopefully, advancing and increasing our generic product revenues. And so that’s really the effect of the agreement that we signed, I believe, in July with ClarusOne.

Your next question comes from the line of Brandon Folkes of Cantor Fitzgerald.

Hi, thanks for taking my question. I just want to go back to the guidance. I know we talked in depth on Inderal LA. But what are the dynamics you’re seeing in the market that may drive you to lower guidance? And what may be some of the pushes and pulls in achieving guidance, reset guidance in the second half of the year? And following on from that, what level of new launches are in that guidance? Thank you.

Sure. Yes, Brandon, it’s Steve. In terms of the other pieces of our business, as mentioned in our prepared comments, the other components of our business are strong. They’re largely operating as expected. There’s always pushes and pulls on various different products as the year goes on in terms of product mix and composition, particularly in the – on the generics side of the business. But net-net, our business is largely performing as anticipated. We’re very happy with the health of the underlying business. As we talked about a moment ago, the Inderal LA pricing was absolutely a curveball to the second quarter, and again, it’s one that we’ve embedded now into our second half guidance. And it has very significant ramifications for our overall numbers. The revenues and gross margins generated from that franchise are significant for us. So we’ve reset that. And quite honestly, in terms of making the second half, I think there’s a few key catalysts, and they’re principally related around the relaunch of the – for AstraZeneca products in the ANI label. We’ve already accomplished the relaunch of two of those products in July. As of July 1, we relaunched Arimidex and Casodex in the ANI label, and we’re currently on track to operationalizing the relaunch of Atacand and Atacand HCT in October of this year. So that, coupled with execution on the generic side of our recently acquired products, particularly from Impax/Amneal, is – will be key to the second quarter. And then less so in terms of the number generation or the financial results, but obviously, the team will be very focused on integrating WellSpring. As of this morning, we have roughly 100 new employees, new capabilities to integrate into the ANI family. In terms of WellSpring, you got to realize that this transaction closed yesterday. And so from a guidance perspective, we are including a very modest amount of five months of WellSpring revenues in our top line, but it’s a very small amount for the back half of this year. And as Art had mentioned in his prepared comments, we would expect WellSpring to be accretive or become accretive to our overall results in 2019. So those are some of the main factors that we’re dealing with in the second half.

Okay, great. And then, perhaps, on Corticotropin – thanks very much for providing the additional color today. So do you expect a normal review time line for this product? I mean, second, could you just discuss any rate-limiting steps between now and that filing?

Sure. So the normal review time line upon filing is a PDUFA date of four months. I can’t handicap FDA’s response to our filing and whether we’re going to receive an approval in four months time. I think that certainly, they would want to inspect the contract facilities that we use for both the raw material manufacturing and finished dosage form manufacturing of the product. But I certainly can envision an expedited process. I think that after discussions with the agency, after discussions with some of our lawmakers in Washington, D.C., I think everybody understands the importance of a drug that can break a monopoly of $1.2 billion that is costing the U.S. taxpayer significant amounts of money associated with Medicaid reimbursement on the product. But it’s not for me to handicap FDA’s course of action on an approval date after filing. So what has to happen between now and then? We basically – we need to successfully scale up amounts of raw material manufacturing, which will go into the registration batches of Cortrophin gel that we put on 180 days stability. And so you could see from the timetable in the chart at the back of our press release some of those activities that still has to occur. But from the development work that we’ve done surrounding the modernization of the chemistry as well as the bridge or comparators to the analytics of the old product, we feel pretty good about where we’re at or we would not announce this filing date in today’s press release if we’ve held off announcing this until our initial development work and our conversations with the FDA had been completed and so that – we feel confident in meeting this target date. So I hope that answers your question.

Thanks very much.

And there are no other audio questions at this time. I would like to turn the floor back over to management for any closing or additional comments.

We just like to thank everybody for attending ANI’s earnings conference call, and have a nice afternoon. Thank you, everybody. Bye-bye.

Thank you.

Thank you. This concludes ANI’s second quarter 2018 earnings Call. You may now disconnect your lines at this time, and have a wonderful day.