Good day, everyone, and welcome to today's ANI Pharmaceuticals, Inc. Second Quarter 2024 Earnings Results Call. [Operator Instructions]. It is now my pleasure to turn the conference over to Lisa Wilson. Please go ahead, ma'am.

Thank you, Katie. Welcome to ANI Pharmaceuticals Q2 2024 earnings results call. This is Lisa Wilson of Insight Communications, Investor Relations for ANI. With me on today's call are Nikhil Lalwani, President, and Chief Executive Officer; Steve Carey, Chief Financial Officer; and Chris Mutz, Senior Vice President and Head of ANI's rare disease business. 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. 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 is held and recorded on August 6, 2024. 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.

Thanks, to Lisa. Good morning, everyone, and thank you for joining our second quarter earnings call. We are delighted with ANI's accomplishments in the second quarter. We achieved both record revenues and a major milestone in our ongoing efforts to expand the scope and scale of our rare disease business with our proposed acquisition of Alimera Sciences. The company continues to rise to each challenge and goal, and I'm proud of the team's ability to drive sustained, long-term growth while never losing sight of our purpose of serving patients, improving lives. During the second quarter, ANI generated revenues of $138 million, an increase of 18% over the second quarter of 2023. Adjusted non-GAAP EBITDA was $33.2 million, and adjusted non-GAAP EPS was $1.02. Based on our strong second quarter results and the continued momentum that we're seeing across the business, we're pleased to raise our full year 2024 guidance, which Steve will discuss later in the call. Accelerating demand for our lead rare disease asset, purified Cortrophin gel, and solid growth for generics drove our robust top-line performance, which more than offset the expected established brand business performance. Cortrophin gel generated $49.2 million in revenues during the quarter, up 102% over the prior year quarter and 33% over the first quarter of 2024. The second quarter represented the highest number of both new patient starts and unique prescribers since launch in January 2022. We continue to have momentum in the addition of new prescribers and robust growth from existing prescribers and volumes increased across all targeted specialties, urology, rheumatology, nephrology, pulmonology, and ophthalmology. We are pleased to report that the areas of strategic investment behind Cortrophin gel that we announced earlier this year and late last year, including expanding our pulmonology sales team, launching a targeted ophthalmology sales team, and…

Thank you, Nikhil. We're excited about what Alimera brings to ANI, starting with two high-growth, durable commercial products. Alimera's first product, ILUVIEN, is used to treat diabetic macular edema, or DME, the leading cause of vision loss in diabetic patients. The company's second product, YUTIQ, is used to treat patients with chronic, non-infectious uveitis affecting the back of the eye. ILUVIEN and YUTIQ are both double-digit growth assets with high barriers to genericization and significant future upsides. With the acquisition of Alimera, ANI will have three commercial rare disease assets, Cortrophin, ILUVIEN, and YUTIQ, and an expanded rare disease commercial team covering the specialties of ophthalmology, neurology, nephrology, rheumatology, and pulmonology. A nationwide sales force of approximately 45 sales representatives will be dedicated to ophthalmology alone, extending our reach and ability to promote all three products for difficult-to-treat, late-line patients with limited therapeutic options. Alimera will also increase ANI's geographic diversification with its established ex-US footprint, including direct marketing operations in Europe and partnerships in additional key geographical regions. Earlier this morning, Alimera reported second-quarter results. ILUVIEN and YUTIQ generated net revenue of $27 million in the second quarter, which represented year-over-year growth of 54%. Alimera's adjusted EBITDA increased to $6.7 million in the second quarter, up from $0.9 million in the prior year quarter and $1.8 million in the first quarter of 2024. ILUVIEN and YUTIQ are both high-growth products, and we are confident in our ability to unlock additional values through commercial synergies and execution. With that, I'd like to turn the call over to Steve, who will walk through our second-quarter financial results and revise 2024 guidance in more detail. Steve?

Thank you, Chris, and good morning to everyone on the call. ANI generated second-quarter revenues of $138 million, up 18% over the prior year period. Revenues from Cortrophin gel reported in our rare disease segment were $49.2 million, up 102% from the prior year period, driven primarily by increased volume on record number of new patient starts. Based upon the continued strong execution of the rare disease team in driving growth, we are raising our full-year Cortrophin gel revenue guidance range by $15 million to $185 million to $195 million. And similar to last year, we expect fourth quarter to be the strongest revenue quarter of the year. Revenues of our generic, established brands, and other segments were $88.8 million, a decrease of 4% over the prior year period. Generic revenues for the quarter were $74 million, an increase of 17% over the prior year period, driven by continued strength in the base business and the contributions of new product launches. Net revenues for established brands and other were $14.9 million in the quarter, a decrease of 49% over the prior year period. This performance was expected, as Nikhil noted in his earlier remarks, and second quarter performance is generally indicative of our quarterly expectation for the back half of 2024. Cost of sales, excluding depreciation and amortization, increased 36% to $57.7 million in the second quarter of 2024, compared to the prior year period. Primarily due to net growth in sales volumes of pharmaceutical products and significant growth of royalty bearing products, including Cortrophin gel. Non-GAAP gross margin was 58.4%, a decrease of approximately 570 basis points from the prior year period and 600 basis points from the first quarter of 2024, primarily due to product mix, driven by the reduction in established brand revenues, as well as expenses…

Thank you, Steve. We are extremely pleased with our performance in the second quarter, and the continued momentum that has allowed us to increase our full-year expectations. It's an exciting time at ANI, with a strong first half and the anticipated Q3 closing of the acquisition of Alimera. By the end of this year, ANI will have three growing and durable commercial assets in rare disease, an expanded commercial team covering the specialties of ophthalmology, neurology, nephrology, rheumatology, and pulmonology, and a highly reliable global network of over 20 countries. We are thrilled to unite the two companies with a shared culture built around similar missions of serving patients, improving lives. Thank you for your interest in ANI, and we look forward to keeping you updated throughout the rest of the year. Operator, please open the line for questions.

Our first question will come from Les Sulewski with Truist Securities.

Hi, this is Jeremy on for Les. Thanks for taking our questions. First for me is, what other drivers do you have for the guidance range, aside from Cortrophin? And then also on the pre-filled syringe, can you give us any more color and explain if there's anything similar to this in the marketplace? Thank you.

Good morning, and thank you, Jeremy. Thank you for joining. I'll take your second question first, which is on the pre-filled syringe. Look, we continue our efforts to enhance the convenience and remove pain points for patients, starting on ACTH and the healthcare providers who treat them. You will remember that in the fourth quarter of '23, we introduced the 1-ml version of Cortrophin gel to meet the needs of physicians who desire the smaller configuration of ACTH for certain patients. Now, we're nearing the completion of development of a 1-ml pre-filled syringe, offering further benefits, right? Specifically, helping patients with the preparation and admission of the Cortrophin gel product. And as I said before, we plan to file for approval of the pre-filled syringe in the second half of 2024 and launch this in the first half of 2025. Then, going back to your question on guidance and what's driving the guidance increase. Look, overall, we've continued to see strong momentum across our rare disease and generics business lines. Both were a touch better than we had expected, and hence, we're raising the folio guidance. And established brands, royalties, and others were largely in line with our expectations.

Our next question will come from Gary Nachman with Raymond James & Associates.

All right. Thanks. Good morning, guys, and nice quarter. So, regarding some of the key drivers of the strong Cortrophin growth, just elaborate how many new prescribers are you getting? Were you seeing that mostly in what therapeutic areas? And how much of the volume growth is share gain versus overall market growth? And you called out gouty flares and [indiscernible] but those are still relatively small, right? So, which areas are driving most of the upside in absolute dollars? And how much upside potential is there with the gouty flares indication and the 1-ML vial that you were just talking about?

All right. Well, thank you for your questions, Gary. I will try and answer all of them. I think number one is on the overall ACTH category, and the question around, share growth versus category growth. Look and our competitor reported their results earlier this year, earlier today. And what you'll see is, as we've been saying even in the prior quarters, that overall the number of patients that are being treated on with ACTH today are significantly lower than patients that were being treated many years ago. And with our efforts and the efforts of the competitor, you're seeing for the first time the category, after many years of decline, are seeing category growth. So, the decline slowed and now the category is seeing growth. And in fact, if you add the revised guidance that they shared earlier today, and our raised guidance, we raised guidance, our competitor raised guidance, you'll see that what it implies for the ACTH category is a high teams growth. And there is a significant runway for the category, right? So, again, we believe that the efforts of ourselves and the competitor will increase the awareness of the ACTH market or ACTH category and result in overall ACTH market growth. So, for us, it's not a share capture -- it's not about share capture, it's about getting ACTH to the appropriate patients in need. So, that was one of your questions. The next was, where did the growth come from? We saw growth across therapeutic areas, both the ones we focused on at launch, neurology, nephrology, and rheumatology, and the newer areas of ophthalmology, gout, and pulmonology. And I would highlight the, so, to your question on where did the majority of the growth, you know, on an absolute basis did come from the…

Most of it, just that last question, was really more on the gouty flare indication and the 1-ml vial and having that presentation. And I think in the prepared remarks, -- you just talked about how many of these patients are out there and how many could be candidates. And I'm also curious if that 1-ml vial could be used for other indications, not just the gouty flare, just having a smaller vial size.

Yeah. Thank you for your question. Look, the addition of the 1-ml vial has been additive. It has helped us to expand usage to ACPs who are new to prescribing Cortrophin. And their first experience with Cortrophinhas been, -- with the 1-ml vial. And the volume in the 1-ml vial has grown significantly quarter-over-quarter. And look, it just goes back to, our approach towards enhancing the convenience as well as addressing the pain points and needs of both the appropriate patients as well as the healthcare providers who treat them. So, the 1-ml vial was one step in that direction. And now, as we, I was pleased to report earlier today, that we are nearing the completion of our prefilled syringe to help, appropriate patients. And that brings another option for enhancing the convenience and addressing the pain points of the patients as well as the healthcare providers who treat them.

Okay. That's helpful. And then just one more on Alimera. So, first, I just want to confirm that you're not factoring any benefit from the deal in the raised Cortrophin guidance for the ophthalmology segment. And then just talk about the planning for the close and integration. And are there any issues or hurdles you're expecting and anything that you need to build out beforehand just to make sure that you have a successful transition from day one? Thanks.

Yeah. Thank you. So, your first question, there is no benefit from increased Cortrophin sales from a expanded ophthalmology sales force baked into the guidance. As you know, we are yet to close the deal. So, this is for standalone ANI. And then your second question around integration planning, we're making very good progress on planning for the integration. First part of it is on working towards the close of the deal. And as I said, we look forward to closing the deal later this quarter. And then from a planning perspective, I think that we're making, again, good progress interacting appropriately with the Alimera leadership and team to understand what the organization systems and processes will look like after deal closure. And as you would expect, thinking about at the heart of this integration is the combined ophthalmology 45-plus sales team and how they are going to carry all 3D durable commercial assets that Chris spoke about. And so, thinking about how we will organize with them, what does the training program look like for the folks that have been selling ILUVIEN and YUTIQ, for them to sell Cortrophin and our team has been selling Cortrophin for them to sell ILUVIEN and YUTIQ. And obviously, with the other sort of IC plan and other support that they need to be able in the hub distribution, all of those, integrating all of those, I think those are all the steps that we're working towards and we're making good progress in that area.

Our next question will come from Vamil Divan with Guggenheim Securities.

Thanks for taking my question. So, maybe just a couple of things I just want to clarify here. One, on the Cortrophin side, you mentioned fourth quarter, you expect to be the largest quarter of the year. Again, I'm just curious, I assume you're expecting still sequential growth from 2Q to 3Q and then 3Q to 4Q, but if you could just confirm that, that'd be helpful. And then on the established brand side, you mentioned the second quarter is sort of a good base to look at for the remainder of this year. I'm just curious if you can comment any further than that in terms of 2025. Is this sort of a nice sort of steady state or do you expect any sort of meaningful changes next year? And then last question, just with Alimera, you mentioned now you have the Ex- US presence that they provide. I'm curious how you're thinking about that. Anything else for future business development priorities is expanding Ex-US, maybe turning into a little bit more of a focus given what Alimera provides you. Thank you.

Thank you, Vimal, and good morning. So your question on Cortrophin, yes, we expect to see sequential growth and that the fourth quarter, as Steve mentioned in his prepared remarks, we do expect the fourth quarter to be the highest. Therefore, there will be sequential growth in 3Q and 4Q. The second question was around, actually the third question was around the Ex-US Alimera business and what opportunities that gives us. But we're working through these and we will share updates as they're meaningful and as they develop. Nothing specific to report at this time. Obviously, we're currently focused on closing the deal, integrating the asset, the company, and continuing the great work that Nick and team have been doing. So that's on the Alimera Ex-US business and what opportunities that gives us. And then the third question on established brands -- On established brands, we are continuing. This is an important component of our portfolio of businesses in that it is low working capital, high gross margin, and strong cash flow generation part of the business. So we are working on a number of different things. Historically, as for established brands, we expand the portfolio by doing business development deals for established brands. We haven't done one since 2021 as we've found different pathways to growth, whether it's capturing the benefits of the supply tailwind or trying innovative commercial strategies. And so we'll deploy some combination of these three to work through the plans for established brands and we'll share more as we go along. But going back to your core question, the current portfolio, year on year, you'll see some marginal decline in them in the absence of one of these moves being made.

Our next question will come from Oren Livnat with H.C. Wainwright & Co.

Thanks. I have a few questions. I guess coincidentally this morning, along with your announcement of the prefilled syringe development work, Mallinckrodt also announced the availability of their single use prefilled auto injector. [Technical Difficulty] Can you just tell us if you think that will have any material impact on the competitive ACTH landscape? Are there certain indications where patient self-administration and auto injector would be most relevant? And do you think that will have any different market access or coverage than the current relative coverage of your two products now? And I have a follow-up to that.

Sure. Good morning, Oren, and thank you for your question. Look, the competitor's device, from what we can tell, is aimed at -- the competitor's efforts as well as ANI's efforts are aimed at enhancing the convenience and addressing pain points that a subset of patients have. So, for example, our prefilled syringe is used to address, patients that have -- that can be helpful for patients in preparing and administering the Cortrophin gel product, right -- in a one mL prefilled syringe. And I think the way I would think about it is both the competitor and us are working, are investing to increase the awareness and bring new options to patients and, therefore, increase awareness of the category and drive growth in the category, right? We lost the 1- mL vial, which was also appreciated by, as I mentioned earlier, by healthcare providers, some of whom, initiated their, who were naive to ACTH and initiated their usage of ACTH by trying with the 1-mL vial. So, again different options for patients as well as the healthcare providers who treat them. And, again, reiterate that, overall, this is great for the category given that there is a significant runway for the ACTH category with the number of patients being treated today being significantly lower than the number of patients being treated many years ago.

And I appreciate, different strokes, different folks on products and needs across the landscape. I'm just curious if you think, I don't know what dose their autoinjector is for, if it's adjustable. You know, do you think there are any particular areas where that will have any impact or do you think it's just that is, she goes with your growth trajectory?

Yeah, I think that -- that there are probably a subset of indications where a 1-mL or 0.5-mL dose may be more convenient, right, to have than taking a 5-mL vial. And it is with this understanding itself that we -- we invested to bring the 1-mL vial many months ago, right, and now are going to bring a pre-filled syringe. And, you would expect that the options from a dosing perspective that you can expect that that will not create sort of meaningful differentiation between the two -- between the two for now.

Okay. And regarding Alimera, I know it hasn't closed yet, so I guess feel free to say no comments. But since you're clearly in the planning stages -- can you give us any color on potential synergies there? Maybe what sort of EBITDA margins you hope the business can contribute versus what I guess they are just reporting now. And I guess another question I have is you talk about these as rare disease. Obviously, DME is a much larger indication, but you're targeting a niche of it, and NIU is rare disease. Is there any opportunity to revisit pricing of these products? It seems to me that, the value is quite high there, and particularly in an orphan indication and the differentiation of the product. It's not super expensive in my view. Do you have freedom to make changes there, or are you limited in the IRA framework?

Yeah, thank you for your questions, Oren. I think that the sort of financial outlook for the deal remains what we shared at when we announced the deal, in that from a synergies perspective, like we had announced in 2025, we expect to see about $10 million worth of synergies. And as we're doing the integration plan, we're seeing a runway into that. Or I guess there's no information that suggests that we couldn't capture that. And then, again, from an EBITDA addition, we also gave guidance on how much adjusted EBITDA we expect to add. Steve, you can jump in, but I think it was in the $30 million plus range that we talked about. You can help me with that, Steve. So that's in terms of EBITDA addition in pro forma in 2025. And that obviously is net of any additional corporate sales and revenue synergies. It's just the additional EBITDA that we would get from the Alimera acquisition. And then the third part regarding pricing, again, we try to strike a balance between sharing information that is helpful as well as competitively sensitive. And we're in the integration planning stage, so it allows us to come back to you with further information on that topic. Steve, could you just answer Oren's clarification regarding what we had said about additional EBITDA in 2025?

Yeah, good morning, Oren. Yeah, and I think importantly, I would note in terms of our gross margin profile, right, it's going to be accretive to our gross margin. The Alimera products are in the low 80%. And in terms of EBITDA, you know, we would expect in the mid-30s as Nickhil mentioned.

Okay. And just lastly, I noticed in your GAAP SG&A, you had some litigation expense in there. And I'm just wondering if you're able to give us any color. Is that just on the disclosed CG oncology dispute that we've known about? Or is there potential Paragraph IV or IP-related stuff there? And I guess I should be hoping to hear any news on the 505B2 front in the foreseeable future.

Thank you. Yeah. I mean, in terms of the incremental litigation, as you would expect, we're vigorously pursuing the defense of our rights in CG oncology. And so that is an element in terms of the increased spend that we have in litigation year-over-year on a GAAP basis. I think that's the only one that we would highlight today to you. And then what was the second part of your question? I'm sorry.

I can take that. Yeah. So, Oren, on the 505B2s, we will share more when we have meaningful updates to give. But there's no linkage between the litigation spend and the launch of 505B2 products. But we will share updates on that when there are material.

Our next question will come from Tim Chiang with Capital One.

Thanks. It seems like your generic segment revenues are actually exceeding your original targets. Can you just sort of comment on where you see expectations for growth from the generic segment in the back half of the year? Obviously, you've increased your guidance for rare disease and your total revenues. But so how do you sort of see your generic segment playing out in the back half?

Yeah. Good morning, and thank you for your questions, Tim. For our generic business, the performance is really coming on the back of three things, right? Number one is our new product, the cadence of new product launches, right? We launched, as we talked about, four new products in the second quarter, two new already in the third quarter, so about 12 since the start of the year. That combined with our operational excellence and being a reliable supplier with strong GMP status and US based manufacturing enables us to deliver, as we had shared before, on a full-year basis, high single-digit to low double-digit growth. And then you can expect towards your question, I think, sequential growth as we move to the subsequent quarters in 2025.

And maybe just to follow up, I mean, you started this new facility in New Jersey. How much capacity are you actually going to be able to increase with that new facility?

Yeah. We are adding about 15 new manufacturing suites and a new QC lab, so that's a substantial increase in capacity. We've also upgraded the equipment and added higher batch size equipment in there. So I don't have a specific percentage, but it's a meaningful addition to the volume that we can service out of the New Jersey site, and it will serve the growth of our genetics business for multiple years.

Thank you. It appears we have no further questions at this time. And I'll turn the program back over to Nikhil Lalwani for closing remarks.

Thank you again for your interest in ANI and for joining our call this morning. We really appreciate it, and we look forward to updating you on our progress as we move forward. Thank you.

Thank you, ladies and gentlemen. This concludes today's event. You may now disconnect.