Good day everyone, and welcome to today’s ANI Pharmaceuticals Third Quarter 2021 Earnings Results Call. At this time all participants are in a listen-only mode. [Operator Instructions] Please note, this call is being recorded. It’s now my pleasure to turn the program over to Lisa Wilson.

Thank you, Emma. Welcome to ANI Pharmaceuticals’ Q3 2021 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; and Steve Carey, Chief Financial Officer of ANI. You can also access the webcast of this call through the Investors 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. These forward-looking statements are based on information available to ANI Pharmaceuticals management as of today and involve risks and uncertainties, including those noted in our press release issued this morning and our filings with the SEC. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. ANI specifically disclaims any intent or obligation to update these forward-looking statements except as required by law. The archived webcast will be available for 30 days on our website anipharmaceuticals.com. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on November 1, 2021. Since then ANI may have made announcements related to 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.

Thank you, Lisa. Good morning, everyone and thank you for joining our call. I’m thrilled to share with you that the significant progress ANI has made on our key strategic pillars puts us truly at an inflection point, transforming ANI into a leading biopharmaceutical company serving patients in need and poised for the next period of significant growth. First, as we mentioned this morning, we are delighted that the FDA has approved our supplemental new drug application for our purified Cortrophin Gel. This is a very important milestone for ANI and a testament to the hard work and dedication over five plus years of our internal team along with our suppliers and external consultants always operating under the guidance of the FDA. Most importantly, it’s a victory for the patients with certain chronic autoimmune disorders who cope with the devasting disease on a daily basis. This approval introduces a much-needed choice into the U.S. repository Cortrophin market which for the last 30 years has had only one marketed treatment. Since acquiring the product from Merck back in2016, we have made significant investments in establishing and updating our manufacturing processes and ensuring a sustainable U.S. based supply chain all with the goal of providing access for patients, physicians and the overall healthcare system. The reason this is so important is that there are patients who are refractory or intolerant to corticosteroids. These patients have an especially urgent need for effective alternatives as they are at risk of ongoing organ damage with long-term disease. Specifically, the FDA has approved our Cortrophin Gel for the treatment of multiple chronic autoimmune disorders including acute exacerbations of multiple sclerosis and rheumatoid arthritis in addition to excess urinary protein due to nephrotic syndrome. Cortrophin Gel is approved for all current ACTH indications with the exception of…

Thank you, Nikhil. And thank you to everyone on the line that has joined us on this exciting day in ANI’s history. Net revenues for the third quarter of 2021 were $52.1 million as compared to 53 million posted in the third quarter of 2020. Sales of our generic products were $35.1 million during the third quarter of 2021 a decrease of 6.8% compared to the 37.7 million for the same period in 2020. The net decrease was due to declines in sales of EES, Methazolamide, Penicillamine and vancomycin. These decreases were partially offset by the second quarter 2021 launch of Nicardipine, and the third quarter 2021 launch of nebivolol. The decrease in net generic revenues was due in part to a decrease in average selling prices, tempered by increased volumes among our generic products. Net revenues for our branded products were $14.3 million during the third quarter of 2021 an increase of 15.3%, compared to the $12.4 million for the same period in 2020. The primary reason for the increase was the April 2021 launch of the products acquired in the Sandoz Inc., acquisition. These increases were tempered by decreased unit sales of InnoPran XL. The increase in net brand revenues was due in part to higher volumes, tempered by a shift in mix towards brand products with lower average selling prices. Contract manufacturing revenues were $2.4 million during the third quarter of 2021 compared to $2.2 million from the same period in 2020 due to a current year shift in mix towards customers with average higher average selling prices, mostly offset by a decrease in the volume of orders. Our cost of sale, excluding depreciation and amortization, increased by $4.3 million, or 21.3% to 24.4 million in the third quarter of 2021 mainly as a result of 2.2…

[Operator Instructions] We take our first question from Elliot Wilbur with Raymond James.

Thanks, good morning, and just want to extend my congratulations to Michelle and the extended team on the approval of Cortrophin. I know it's been a long journey, more of a quest than a journey but congratulations and obviously, looking forward to the launch. Nikhil, just a couple of questions for you specifically around the launch and I understand that probably a lot more to say about this in the near future. But anything you can say at this point in terms of steps or initiatives that have to take place prior to the actual launch and specifically thinking about, what we may see in terms of market preparation strategies, any additional team member additions, payer engagement initiatives? And where are you in terms of existing inventory levels, necessary to support the launch relative to the initial uptake that the company sees at this point?

Yes. Thank you, Elliot, for your question. Look, to answer the second part of your question first, which is, that we do have sufficient finished product inventory levels. You've seen that in the prior quarters as we've been building these inventory levels up to support the time we launched. So we do have sufficient finished product inventory levels, of course, with the labeling that has just been finalized and approved by the FDA that needs to be reflected on the finished dose vials. So I think that's the answer to your question on inventory. As far as our launch plans and commercial plans, I think -- thank you for coming to allow me to give you more information on this in the future. As I said earlier, we have significant on ongoing investment in people and commercial infrastructure for our launch and the key elements of our plan include a strong sales force, optimal market access and reimbursement, bespoke distribution, salient hub and patient support services, medical affairs, and marketing and advocacy. And look, we have on board a very experienced and successful rare disease leadership team that have done multiple launches across organizations and have come together very well in a focused manner been preparing for a launch. So, I feel very confident that the same prioritization focus and efforts that we brought to make -- to get this product approved, under the guidance of the FDA, we will bring that same level of commercial acumen and relentless efforts to ensure that we serve patients in need, which is ultimately the goal of our company.

Okay. If I can ask you a follow up question with respect to the label itself? How does the label actually compared to your expectations prior to the approval? And are there any indications on the current label that you think present an incremental opportunity, areas where maybe the legacy product has not been able to penetrate or be successful in just because of its price point, or focus? Just whether or not you think there's opportunities for incremental growth, maybe outside the three main indications that you highlighted in the release?

Yes. You're absolutely right, Elliot. Cortrophin Gel is approved for all the current ACTH indications with the exception of infantile spasms, which is from our understanding is less than 10% of the market. Specifically, the FDA has approved Cortrophin Gel for the treatment of multiple chronic autoimmune disorders, including, as you said, the three main indications, which are acute exacerbations of multiple sclerosis and rheumatoid arthritis. And in addition to excess urinary protein due to nephrotic syndrome. There are several other indications. And then, to your point on, our label does have -- our product does have -- is the only ACTH based therapy that is approved for the treatment of gouty arthritis. Hopefully that answers your questions.

Okay. If I can just switch gears real quickly, just maybe a bit of an update on the Novitium acquisition, just an update in terms of how the business has performed over the course of the year relative to the financial projections that you put out there when you first announced the deal? Is there any update you can provide in terms of where the pipeline stands? I know, there's been quite a few approvals over the course of the year, not sure how that compared to expectations, but haven't heard as much in terms of filings? Just kind of curious where that stands?

Yes. So, overall, Elliott, Novitium has had 10 approvals since we signed the deal in March. And in terms of commercial performances on the best of our understanding is on track, almost actually a shade better than what we had expected. And that's obviously driven by the success of the new launches, many of which you've taken note of several that have had CGT designation. And so, they are -- the investment pieces is on track. As far as the new filings, it is not typical in the generics business to announce filings unless it's a Para IV filing and you get sued, it's more typical to keep that confidential, so that you are drawing less attention to it. And so Novitium's world-class R&D engine led by Samy and Chad continues to add exciting products to their pipeline that will continue to deliver and unlock new launches in the future. So that is absolutely on track and, in fact, ahead of our investment case.

Okay, thanks. And just last question, just a couple of quick ones for Steve, specifically, Steve, can you just talk a little bit more about what you're seeing in the base generics business? I guess my takeaway is that maybe price deflation is a little bit higher than what has been anticipated, but you've been able to offset that with volumes, not sure if that's accurate or not, but that seems to be kind of what's going on in the marketplace as a whole? And then just more specifically just a comment on accounts receivable trends over the last couple of quarters? Thanks.

Yes, sure, Elliot, good morning. Yes, in terms of the chord generics business, as you know very well that pricing trends right in the aggregate for portfolio tend to follow the aggregate age of that portfolio. And so I would say in total for ANI generics, price deflation has accelerated as the quarters have gone by. And your premise is exactly right, the team has very well come together to kind of really laser focus in on opportunities and where we could kind of do more with our existing commercialized portfolio as the pipeline comes along. And you started seeing that in the third quarter, right, with the Nebivolol launch. The ANI generic launches were always back-end loaded for 2021 and Nebivolol was a nice late third quarter shot in the arm to the -- to our aggregate generics’ portfolio. And we look forward to continued strength there, as well as other launches as the fourth quarter kicks by. And it really circles around right, to the investment thesis behind the Novitium deal and bringing in that internal R&D, where we can accelerate the cadence of our generic launches to kind of prop up that pricing component of the overall generic portfolio. In terms of AR, the trend kind of goes along with that decrease in average selling prices just because the way that the receivables work and track for the generic portfolio, right, the reduction in average selling prices largely manifests itself in higher chargeback rates. And as those chargeback rates increase, it allows our big three wholesale customers to kind of stretch out their net payables to us. And so that -- that's why you see the three AR kind of creeping up and the DSO creeping up. And we expect that to kind of come back into more normalized levels, as again we get the generic launch cadence up post Novitium deal close. Hopefully that helps.

Yes, thank you. Thanks for taking the questions.

Sure, thanks.

Yes. Before we move to the next question, just two things to add, Elliot, for your -- for you and the others is one is, we have seen some pickup in the volumes also from just post COVID pickup and that's helped on parts of our base business. And then the second thing is that, look we are confident and we're seeing it play out as Steve was talking about regarding the investment thesis that the pace of new launches between Novitium and their launches as well as the ANI base launches will outpace the erosion that we're seeing in our base business, and that's the whole basis for the investment and acquisition of Novitium. So I just wanted to reiterate that.

[Operator Instructions] We'll take our next question from Brandon Folkes with Cantor Fitzgerald.

Hi, thanks for taking my questions and congratulations on the approval. Granted, you don't want to give away me much of your competitors' strategy, but can you just talk about maybe how physicians will make prescribing decisions between your product and XR? What may make a prescriber of XR switch to your product or what do you believe it would take for a non-writer to now write Cortrophin Gel? And then secondly maybe are you open to a partnership on Cortrophin in some specialties now that you have an approved product in hand? Do you think that's something we could see in terms of maybe your non-core focus, or should we think of you keeping everything in-house? Thank you.

Yes, no, thank you, Brandon and good morning. Two -- I'll take your second question first, which is, are we open to partnership, at this point we are contemplating launching across indications ourselves, but as wise mentors have told me over the years, never say never. So, yes, that's something that we -- as we're required to, we will evaluate as those, potentially those partnerships come up. And then with regards to why would a prescriber write Purified Cortrophin Gel versus the competing product, I'm not going to address -- I'm not going to share that secret sauce with you. But I will say that you should be assured that we have spoken to many, many prescribers and have a clear understanding of a willingness and eagerness really to bring another option, treat the second treatment option for patients that need this. And I'll leave it at that.

Okay, thank you.

There are no further questions at this time.

Nikhil, are you on -- you might be on mute for your parting comments.

Yes. Thank you, Steve. And thank you for your time to everyone this morning. We really appreciate it. And thank you for your support of ANI. ANI truly is at an inflection point to transforming into a leading biopharmaceutical company serving patients in need and well poised for the next period of significant growth. And thank you again for your time this morning. Thank you.

Thanks, everyone.

This does conclude today's program. Thank you for your participation. You may disconnect at any time.