Good morning, everyone, and welcome to ANI's Fourth Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. Later, we 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 and welcome to ANI's earnings conference call for the full-year and fourth quarter 2018. Joining me today is Steve 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 to 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 full-year and fourth quarter results. For the fourth quarter ANI reported record net revenues $57.1 million and record adjusted non-GAAP EBITDA of $22.2 million. These numbers represent increases of 21% and 13% respectively over the prior year period. Fourth quarter generic product revenues increased by 13% and our branded product revenues increased by 21% over the prior year period. These increases were the direct results of new product launches to help drive our robust quarterly results. Full-year 2018 results generated records net revenues of $201.6 million and record adjusted non-GAAP EBITDA $84.4 million increases of 14%, as compared to 2017. For the year, adjusted non-GAAP EBITDA was 42% of net revenue. We generated $67.1 million of cash from operations. In 2018, research and development expenses increased by $6.3 million and increase of 70% primarily attributed to our Cortrophin re-commercialization efforts. During the year, we launched a total of 11 drug products, seven generic and four branded products, increasing our commercial drug portfolio to 42 products and increase of 35%. Annualizing revenues from our 2018 product launches combined with anticipated 2019 new product launches and 2019 forecasted contract manufacturing revenues. We have estimated 2019 revenues in the range of $231 million to $245…

Thank you Art, good morning to everyone on the line and thank you for joining the call to discuss ANI’s fourth quarter and full-year 2018 financial results. We are pleased to report this morning that ANI reported a strong fourth quarter to close out 2018 and by extension posted our fifth consecutive year of records net revenue, adjusted non-GAAP EBITDA and adjusted non-GAAP diluted earnings per share. Full-year net revenue reached $201.6 million representing a 14% increase versus 2017, from gross profit pull through on these sales gains drove full-year adjusted non-GAAP EBITDA to $84.4 million and adjusted non-GAAP diluted earnings per share to $5.07, representing an increase of 14% and 30% as compared to 2017, respectively. Turning our attention to the highlights of the fourth quarter. For the three months ended December 31, 2018 ANI posted net revenues of $57.1 million and adjusted non-GAAP EBITDA of $22.2 million representing new quarterly records for the Company. Corresponding adjusted non-GAAP EPS was $1.32 per diluted share. At $57.1 million net revenue for the three months ended December 31, 2018 was up $9.8 million or 21% versus prior year on gains in all four of our product categories. Revenues of our generic pharmaceutical products increased 13% from prior year to $33.7 million driven by Ezetimibe-Simvastatin, Diphenoxylate Atropine and other products launched in 2018 tempered by declines in lower margin products, such as Fenofibrate and lower sales of Nilutamide. Branded pharmaceutical revenues were $18.8 million in the quarter and increase of 21%, primarily due to sales of Atacand and Atacand HCT which were launched in the ANI label in October of 2018. And sales of Casodex and Arimidex which were launched in the ANI label in July of 2018. Gains in these products were tempered by lower sales of Inderal LA and Vancocin.…

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

[Operator Instructions] Our first question comes from the line of Elliot Wilbur with Raymond James.

Thanks. Good morning. I'm not allowed to say congratulations on a good quarter during conference call. So I will just say that it's very encouraging to see the Company continue to book record results in what has been a very challenging macro environment. So based on that comment, if I were to simply look at your second half 2018 top-line results and analyze those, I would come up with a number that is about $250 million given what is expected to be a record year in terms of new launches in 2019 combined with base portfolio trend that seem to be pretty stable from what we can tell, seems like there is quite a bit of conservatism embedded in the forecast. So maybe I'm missing something in terms of some of expected product movements in 2019 versus 2018 and some of the base products that we just haven't picked up yet, but just sort of want to kind of bounce that idea off you in terms of thinking about the robustness of the potential new product story in 2019?

Great. Good morning Elliot, it's a very good point. I think from our perspective, I think you know us to be an aggressive management team, but at the same time it conservative one when it comes to things like balance sheet leverage, debt and building a Company on what we internally describe as a wall of worry associated with the environment that we are in. Unfortunately, when we start out looking at the next year's guidance, we always start out with a negative, which is we anticipate competition on exiting generic products, potential new competition coming to market, potential erosion in some of our branded sales. So we start out from a glory outlook of all the negatives. And then we add positives to it, which are the new product launches. We have stated some of them in the press release, some we haven’t, we do not count obviously on things we don't have such as putting some of our dollars or cash flow back to work in terms of asset acquisitions, that we have described here and we come out with a number. And, we have admittedly in the past missed guidance either because of being too aggressive or not anticipating something that we didn't forecast. And so we think this number is a good number, if you take our fourth quarter results and you annualize them, you get a good feel for maybe where the guidance came from, where the year will turn out for us. But again, we feel comfortable with this and these numbers represent from us continued robust growth even greater than what we saw 2018 verses 2017 which was 14% on the revenue and adjusted EBITDA line. This year we are guiding to 19% increases on the revenue and adjusted EBITDA line from what is admittedly the law of larger numbers. And so, we are obviously comfortable in these numbers out as being representative of our business model for 2019. And so I hope that answers your comments.

Good color, I appreciate it. And if I could just ask the second question here, much of the growth and of course, sort of the focus and attention in the story in the past couple years has been on incremental ads via transactions and some of the diversification into the branded side. But you still have this large portfolio of ANDAs, I think it's something north of 70, most of them already approved. And there hasn't been a lot of movement, there hasn't been a lot of talk about it. But if I look at some of these assets, and kind of what has happened in the U.S. generic space with Mylan really pulling back from solid oral dose markets to the other players. I mean just seems like you are starting to see some of those products move in terms of price. And obviously, I'm suggesting it's getting more favorable. So I'm just kind of wondering how you may be thinking about potentially monetizing those assets in the next 12 to 18 months versus maybe what you thought about over the past 12 to 18 months.

Well we view that was - we view or and the pipeline that can be re-commercialized through CBE-30s or PASs as a library for us. And those product launches sometimes fluctuate based on opportunities that arise in the marketplace from exactly what you described as other companies potentially discontinuing products. And supply disruptions in our marketplace play a large part today. We have excellent service levels, you know we carry $40 million worth of inventory on the books, for $20 million revenue based business. In order to avoid those failure to supply penalties, which potentially can drive you into bankruptcy, as you have seen from recent filings that have occurred. And so I think you are going to see - remember that we first also attacked from that portfolio that we acquired. The faster route and obviously the larger opportunities, but many of those entail products that did not require a change in raw material supplier. And so they could be launched as changes being effective in 30-day type products. So many of the products now our prior approval supplements and some obviously are filed. You will certainly see a significant a product launch in the second quarter that comes out of that library of ANDAs. And we continue to evaluate those products based on market conditions and obviously time it takes to bring those products to market.

Okay. great. Those are my two questions. Thank you.

Alright. Thank you Elliot.

Our next question comes from the line of Dewey Steadman with Canaccord.

Hi guys, thanks for taking my question. I guess to build on the prior question. How should we think about phasing for revenue in 2018. Obviously, Concerta and Aggrenox are coming. You mentioned a library product and then there is also the unknown, undisclosed, I guess rare generic that is coming as well. So how should we think about how rather new progresses throughout the year?

Yes. I think you see a climb throughout the year really from the second quarter going forward. I know you will have a your separate call with Steve to discuss the cadence later on that you can - hopefully will help guide you a little bit more in terms of research reports that you write in regards to that revenue cadence. And that is because, methylphenidate is a - two of the SKUs are launching in late March. Two additional SKUs are anticipate to launch in this quarter. And then aspirin/dipyridamole is a October 1st date certain. I just mentioned to you that one of those products that we thought is important it's coming out of call it library is ANDAs will launch in the second quarter. And, we are forecasting for and anticipating the launch of Vancomycin oral solution in the fourth quarter. And so I hope that gives you some feel for you know how we see this new cadence of revenues going forward throughout the year.

Excellent. And then to build on Vanco oral solution, how do you plan to approach the marketing for that product? Obviously, this is a new dosage form and how do you get the word out that an oral solution is available?

We will probably utilize many of the same tools that we use for some of our, we will call it off patent brands today, which is a virtual marketing program. I don't think folks realize that we invest in the neighborhood of $2 million to $3 million on virtual marketing programs to those brands. And so we see that potentially as playing well into our launching Vanco oral solution. There is another also Vanco oral solution on the market today, and will certainly be playing of off the success of that product. But, I think primarily the strategy will be to launch it as a generic and to make sure that we get the word out that this product is available to obviously, the consortiums, the hospital GPOs, your typical traditional channels that we use a product like this. We have seen admittedly some of our Vancomycin oral or capsule sales increase in light of the fact that we have seen compounders continually buying more product, more Vancomycin product to what we believe that to put that product into an oral solution. So part of our challenge and launching a FDA approved Vancomycin oral solution will be also to make an attempt to remove those compounders from the marketplace as well, which will only increase our overall market. But we feel that this is a dosage form that has some pent up demand associated with it and obviously we have the gold standard if you will the brand as well as the generic and so we feel pretty good about the prospects for that product once we launch it.

Thanks and then just on business development with, in Rob's world, is there an increase or decrease in potential opportunities out there. I know that you were able to capitalize on some mergers within the group, but are there still portfolios out there of interesting products that can be acquired either on the generics even on the branded side.

So that is a three word answer, target-rich environment. I can't actually quite remember as much upheaval going on the generic marketplace as it is today. And from that upheaval for a company like us that is not over levered and debt is a four letter word to a generic business when you come right down to it, you just can't be levered up in our business. And so you know from all of that cash flow as we described, et cetera, we think there are compelling opportunities for us to continue that transaction train that we started really when we went public. It's not to put pressure on Rob. He does a tremendous job of finding us some of our deals. I really believe the street quite frankly completely in this the FTC divestiture process and the amount we pay for those assets and the contribution to our business model in 2018 and 2019 and maybe even beyond that. So, those are the type of compelling opportunities that we look for, those are hard to come by. But at the same time, there are more and more assets for sale in the marketplace today. And so, as long as we have the cash flow, and we keep our watchful eye on our leverage. I think we have continued compelling opportunities for us in terms of transactions in the marketplace.

Excellent. Thanks for the color.

Thank you Dewey.

And our final question comes from the line of Brandon Folkes with Cantor Fitzgerald.

Hi, thanks for taking my questions and congratulations on the quarter. Firstly, can you talk about the competitive dynamics you are seeing from your side in the methylphenidate ER market given that you are all going to launch into that market this year and that is a meaningful product for you and how much of that product may be just - just quantitatively how you thought about including the product in guidance on what's in there? And then secondly, maybe just a bigger picture question. I think the value drivers within your business model are very clear and I think the guidance related onto 2019 will be another good year and we have got Cortrophin coming in 2020 as well. But as we think your base business in 2020 and beyond, can you help us just think of some of the value drivers that we may see there? Thank you.

Alright. Well you know back in several years ago, when oral solid generics. Really came under tremendous competitive pressure for two reasons, it was the formation of three consortiums and the price reductions associated with the competing for their market share in business. And then there was the fact that OGD, or the industry in Infinite Wisdom decided to pay OGD money to approve products on a faster basis and remove the backlog. That also led to significantly increased competition. Now, if you remember, I don't know if you were covering us back then, but we have always looked at - at one time, I think we were - one product was driving a significant amount of our EBITDA run rate and we always have plan to diversify ourselves away from the concentration of risk associated with being a one or two product type EBITDA driven Company. And certainly away from the competitive pressures of consortiums in oral solid generics and obviously the additional faster approvals, we will say from OGD from Office of Generic Drugs. And we did so saw by, as you know initially started out by pivoting to brands a little bit. Now if you take a look at our fourth quarter numbers for brands versus our generic business. Our brands are now greater than 50% of our overall generic revenues, at very nice margins. So we have sake of argument found a way to insulate ourselves from some of the goings on in terms of the destruction of pricing or price erosion associated with some of those oral solid generic business. Okay. We certainly have in mind the continued object to continue to de-concentrate risk associated with any one specific business platform. So you seen as pivot to - you know I will buy - we…

Thanks guys and thank you very much and congratulations again.

Thank you Brandon.

And if there is no further questions. I would just like to thank everybody for attending our conference call today and look forward presenting to all of you our business in the future as well. Thank you very much. Bye-bye.

Thank you. This concludes ANI's fourth quarter 2018 earnings call. You may now disconnect your lines at this time and have a wonderful day.