Good day everyone and welcome to today’s ANI Pharmaceuticals, Inc. Second Quarter 2022 Earnings Results Call. [Operator Instructions] Please note, this call may be recorded. It is now my pleasure to turn today’s program over to Lisa Wilson, Investor Relations for ANI Pharmaceuticals, Inc.

Thank you, Brittany. Welcome to ANI Pharmaceuticals Q2 2022 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; Steve Carey, Chief Financial Officer; and Christopher Mutz, Head of Rare Disease 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'd 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 August 8, 2022. 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.

Thank you, Lisa. Good morning, everyone and thank you for joining our call. Two years ago, we began a journey to transform ANI into a leading biopharmaceutical company serving patients in need. We continue to make strong progress in this journey and believe ANI remains well positioned to deliver sustainable long-term growth. I'm delighted to share that second quarter net revenues of $73.9 million represent a new quarterly record for ANI and an increase of 52% from a year earlier. This growth is driven both by the first full quarter sales of our lead rare disease asset, Purified Cortrophin Gel and by growth in our generics business unit. We continue to see acceleration in the number of patients treated with Cortrophin, reflecting the value seen by all stakeholders -- patients, prescribers, payers and PBMs -- that Cortrophin is a new option in a category where patients for decades have only had 1 ACTH treatment available. These benefits and the hard work and dedication of our experienced rare disease team enabled us to deliver revenues of $10.2 million in the second quarter versus $1.3 million in the first quarter. In addition, our generics business unit continues to bring new products to patients and customers. And I am proud to share that ANI is now ranked 6th among all companies in terms of number of ANDA approvals received in the past 12 months. At this time, we're raising our 2022 net revenue guidance for Cortrophin to a range of $40 million to $45 million and reiterating our total company net revenue guidance at $295 million to $315 million. Our adjusted non-GAAP EBITDA guidance remains at $54 million to $60 million. Let me now provide a few details on momentum we've built across key business lines before turning the call over to Steve…

Thank you, Nikhil and good morning to everyone on the call. For the 3 months ended June 30, 2022, we posted total net revenues of $73.9 million, up $25.2 million, or 52%, as compared to the prior year period, driven by revenues from the Novitium acquisition and the late January launch of Cortrophin. Net revenues for generic pharmaceutical products were $49.9 million during the 3 months ended June 30, 2022, an increase of 46% compared to the $34.2 million for the same period in 2021. The net increase was primarily driven by revenues from commercial generic products acquired in our acquisition of Novitium and increased revenues of Nebivolol which ANI launched in September of 2021. These items were partially tempered by a decrease in revenues from sales of several legacy ANI generic products. Net revenues for branded pharmaceutical products were $8.5 million during the 3 months ended June 30, 2022, a decrease of 23% compared to $11 million for the same period in 2021. The net decrease was principally due to a decrease in sales of InnoPran XL and Inderal XL. Contract manufacturing revenues were $4.4 million during the 3 months ended June 30, 2022, an increase of 89% compared to $2.3 million for the same period in 2021, due to an increase in the volume of orders primarily related to the addition of Novitium contract manufacturing revenues. Net revenues of our rare disease pharmaceutical products were $10.2 million for the quarter, consisting entirely of sales of Cortrophin Gel. There were no sales of rare disease pharmaceutical products during the comparable prior year period. Operating expenses increased by 35% to $86.8 million for the 3 months ended June 30, 2022 from $64.2 million in the prior year period. Cost of sales, excluding depreciation and amortization, increased by $13 million to…

[Operator Instructions] And we will take our first question from Elliot Wilbur with Raymond James.

Just wanted to ask a couple of questions on the base business and then I had a few on Cortrophin. So first, with respect to the base business, obviously the company’s had a lot of top line momentum in terms of approvals but still a relatively mixed narrative from the industry overall -- and I’m speaking specifically with respect to generics -- as to the general health of that market, direction, trends in terms of price volume. So just maybe some high-level commentary in terms of what you’re seeing with respect to erosion in the base and your ability to offset that the new product launches? And then as a follow-up question on the base, just want to get a little bit more insight into what is happening with respect to the branded business. It’s been a little bit light relative to external expectations last couple of quarters. Just sort of wondering if the run rate for the first 6 months kind of represents sort of a new normalized baseline for that business going forward.

All right. Thank you, Elliot, for your questions. I think the first question on the overall generics business, look, we've seen growth in our genetics business quarter-on-quarter and expect this trend to continue. As you mentioned, our approach here is very straightforward that we have launches that are coming from our R&D engine that we acquired last year and that will outpace the erosion that we're seeing on our base or in-line products, if you will. And that is playing out, whether you look at it year-on-year or even quarter-on-quarter. Having said that, your other question around pricing erosion that's still there on the in-line products and it is in line with what we have seen historically and being seen by our peers. We, at this point, don't see that accelerating or any trigger for accelerating that. It's in line with what's been going on. So that's the first question. And then on the established brands, yes, we have seen a decline in a couple of our larger products on the established brands business. Having said that, as I mentioned, we're doing a number of things to address that, right? We have partnered with a dermatology company to drive promotion of our dermatology products. And we're doing targeted reach outs to prescribers on the established brands to complement our -- the other elements of our commercialization strategy. To your specific question around established brands and whether the run rate now is a new normal, I think we've not given guidance at that level. So let us come back on that question.

Okay. Then just a couple of quick follow-ups on Cortrophin. Can you just talk about some or success rates that you've seen in terms of enabling patients to continue on therapy once they've received an initial prescription. Just sort of the persistence rates you've seen, kind of given maybe from some of the early initial patient starts. I know if you look back at the history of ACTH products, I think for variety of different ailments but you've seen something like 7 to 9 vials kind of on average per patient. And I'm just wondering if there's anything you could say at this point with respect to overall persistence. Then the last question here is just talk about where you guys are in terms of your ultimate physician detailing strategy, whether or not all physician targets have been reached with at least an initial detail. And sort of how you're thinking about how many details may be necessary before you can convert targeted physicians over to actual prescribers.

Got it. Thank you again, Elliot, for your questions. I think the first question on success rates and persistence, because as you know well, that the number of vials or the course of therapy varies from indication to indication. And also the coverage varies from patient to patient, like what insurance plan they're on. With these 2 factors in mind, as a broad trend, we are absolutely seeing that patients that start on therapy are getting the follow-on therapy that they need and that the -- both the coverage that is -- that they have and the prescriptions that are written are ones that are just beyond just the first vial, if you will. So we are seeing the persistence and in line with what we believe is being used -- what is the appropriate course of therapy. So I'd say that on the success rate and persistence. And then on the physician detailing, as you would imagine, at this point, we have had an initial reach out to all of our -- a majority of our physician detailing targets. And on the how much time does it take to convert them? Look, the facts are straightforward, right? Since the last earnings, we’ve doubled the number of prescribers that have written -- that have initiated new patient cases and 1/3 of them are writing multiple cases. And there are prescribers that have never -- Cortrophin -- the ACTH therapy before the ever [ph]. So, I think the physician response has been very strong.

We will take our next question from Greg Fraser with Truist Securities.

A couple on Cortrophin. Can you provide some specifics on patient numbers? Maybe the average number of patients on therapy during the quarter or how many patients are on therapy at the end of the quarter? And then if you could just comment on the percentage of scripts that are being written that are being filled. And for those that are not filled, what are the primary reasons?

Got it. So, look -- and thank you for your question, Greg. On the question on patients on therapy, look, we're very encouraged by our early physician demand that has resulted in doubling of manual case initiations to more than 500 new case initiations for Cortrophin Gel. We've also made good progress so far by gaining formulary coverage for 134 million lives. Our ambition to significantly expand access for patients that need Cortrophin Gel is obviously still something that we're working on. And in terms of specific numbers of patients on therapy, we're currently at north of 225 patients on therapy, as it currently stands.

Got it. Just a couple follow-ups. What portion of that 134 million-plus covered lives have advantaged access? And do you have a target for number of covered lives for which you’re looking to contract for favorable access? And then if you could just comment on any sort of reactionary behavior that you’ve seen so far from Mallinckrodt, that would be helpful.

Yes. Thanks, Greg. As you will expect, that commenting on this while we're in the middle of contracting, I think we've shared a great degree of information. But in terms of targeted coverage specifics and specifics on how many we want to be advantaged is something that we'd like to steer clear from, as I said, that our ambition is to significantly expand access for patients that need for Cortrophin Gel. And we've made very good progress getting to 134 million lives. And I highlighted some of our recent wins, or one of our recent wins, in the press release. And then, Greg, would you mind repeating the second question?

Yes. Just curious if you’ve seen some reactionary behavior from Mallinckrodt.

Yes. Look, we're tracking what Mallinckrodt is doing and the changes that have happened at the company and any resulting changes. But more than that, we're importantly focused on what we need to do to achieve our purpose of providing another choice in ACTH therapy to our patients. As mentioned before, a claims-based epidemiology analysis suggests less than 10% of patients who are steroid resistant and refractory across primary indications actually receive ACTH therapy. So this is the unmet need that we're focused on.

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

Congratulations on the results. Maybe just 2 on Cortrophin. Any color -- additional color on the split of ATCH-experienced prescribers versus first-time prescribers? And then the guidance raise, can you just help us think about how we should sort of think about the moving parts there? Do you expect to increase the pace of new patient starts in the back half of the year with the guidance raise driven by the better coverage that you have coming online there? And then, I’ll just ask my other one. Just in terms of business development going forward, do you look to bring in additional rare disease assets or continue to bring in generic assets? Just longer term, should we think of ANI sort of growing its generics business as the primary driver or maybe bringing in additional specialty assets?

Yes. And thank you, Brandon, for your question. In terms of the split between experienced prescribers versus new prescribers, we're not sharing those details at this time. As you can imagine, there's a competitive context here that drives what we can share or not share on these calls and I appreciate your understanding there. Regarding your second question on the guidance and the raise on the Cortrophin guidance, look, we absolutely see an increase in the number of patients that will get on therapy and acceleration there. And that does inform the guidance range of -- and the momentum that we believe drives our guidance increase. Yes, so it's both -- it's not -- it is the increase in the number of patients that will get on therapy as we go forward and that is driven by both factors, right? Increase in the number of new enrollments, new patient cases initiated. As I just said, we've doubled the number of new patient cases initiated since the last earnings. We expect that momentum to continue, as well as getting those patients on therapy. And then, your third question on business development, look, the rare disease business unit is one that we have invested in heavily and one that we will absolutely bring additional assets in to expand and use the rare disease platform that we have. Of course, at this time, we're focused on executing on the Purified Cortrophin Gel launch. There are many other elements of the Cortrophin Gel launch that will unravel as we move forward. But in terms of how you think about business development and where ANI will be focused, I think that rare disease is an areas that will absolutely get allocation of capital and bringing additional assets in to drive that platform and drive it forward. And as far as the generics business goes, look, we have a rock solid, high-performing R&D engine. And that will be the source of organic growth as we look at – potentially look at other dosage forms, that’s where the business development will be targeted there. Of course, the Oakrum Pharma-type acquisitions are opportunistic where we achieve better chance to expand our portfolio.

We do have a follow-up question from Elliot Wilbur with Raymond James.

Just real quickly on pipeline, specifically thinking about generic business. Nikhil, I don’t know if you have the numbers in front of you or not but just wondering where things stand in terms of number of ANDAs currently pending at FDA. And also, I think there’s been a settlement reached in your Paragraph IV filing on reprostinil [ph]. Just wondering if there’s anything you can say about that in terms of when you may be able to monetize that opportunity. And I think as part of the Novitium acquisition, you also picked up a couple of 505(b)(2) assets. Just wondering what developments have occurred since the acquisition. If there’s anything more you could say about the time line associated with those.

Yes. Thank you, Elliot, for your question. So on the 2 505(b)(2) assets, they're progressing well. Or I'm sorry, on the multiple 505(b)(2) assets that we had. It's not just 2. They're progressing well. We have made significant progress on the launch of one of them and we'll share more details in future calls. But I think the idea of looking at 505(b)(2)s and using the Novitium R&D engine to drive that forward is something that we are committed to and we'll take forward. So that's on the 505(b)(2)s. The reprostinil settlement is not one that we can share more on than what’s in the public domain. So I think I’ll have to steer clear of that. And then your third question which is the number of ANDAs pending at the FDA. I have the number of the total ANDAs, so allow me to come back to you in terms of the total number of ANDAs. But it’s – that are pending, it’s I think close to 30 that are pending at the FDA. But obviously, as you know well, Elliot, this is something that we keep adding to the pipeline. We have a high-performing R&D engine, ranked number 6 in terms of the number of ANDA approvals received in the past 12 months. So it’s something that we keep adding to the pipeline, as you will imagine.

It appears we have no further questions on the line at this time. I will turn the program back over to our presenters for any additional or closing remarks.

Yes. Thank you very much for turning the call back. Thank you, everyone, for joining our call this morning. We’ve made excellent progress to date and remain committed to capturing the full potential of our lead rare disease product, Cortrophin Gel, all while advancing our active R&D engine to continue delivering high-quality medicines to patients in need. As always, we appreciate the support of our shareholders and look forward to sharing our future progress. Thanks again and stay well.

This does conclude today's program. Thank you for your participation. You may disconnect at any time and have a wonderful day.