Good afternoon, everyone. I'm Rahul Sood, managing director in the healthcare investment banking group at Wells Fargo. I have the pleasure of having Nikhil Lalwani, President and CEO of ANI Pharmaceuticals, and Steve Carey, CFO of ANI Pharmaceuticals. Welcome.
Thank you.
Thank you, Rahul. Thank you for having us.
Thank you for your time. Why don't we get started? Can you start off with providing high-level overview of ANI? What are you focused on today, and how would you characterize your business and the strategy?
Sure. Thank you, Rahul, and thank you investors for joining us this afternoon. ANI is a rapidly growing, profitable biopharmaceutical company focused on rare disease. Our primary focus and strategy is to accelerate our transformation into a leading rare disease company. We have two assets currently, Cortrophin and ILUVIEN, that are both growing and durable with significant multi-year growth opportunity. Cortrophin is a drug that is a repository corticotropin. The current year, our guidance is $520 million to $540 million, so it is our largest product, and it is indicated in multiple autoimmune indications and is a significant growth driver because it operates with a large addressable patient population where ACTH, which is the drug category it operates in, is only capturing a small amount so far. ILUVIEN is an intravitreal implant used for DME and NIU-PS, again, in large addressable markets.
Both drugs have durability, they are tough to genericize, and significant multi-year growth potential. We are also expanding the scope and scale of our rare disease business through BD and M&A, where we are looking to add other commercial assets to the pipeline, which we can talk about a little bit further along. That is our rare disease business. It is a primary focus for us. Historically, ANI has had a strong generics business, and that generics business is also a high-performing business. We invest from a capital allocation perspective, about high single digits to low double digits in R&D for a percentage of generic sales in R&D to drive growth there, and have delivered successful growth in that part of our business. It provides cash flows that we then use to continue expanding the scope and scale of our rare disease business. That is ANI for you.
Wonderful. You took over about six years ago. Since you have taken over, revenue has grown substantially. ANI looks a lot different today than it did when you first came to the company. What are two or three decisions that you would point us to that were probably the most consequential in getting ANI to where it is today?
Yes. Thank you, Rahul. I have been here at ANI for about six years. When I walked in, the company was different in that it was about $200 million in revenues, right around $50 million of EBITDA, and about $7 million of cash on the balance sheet with a primary focus on BD. We sat together as a team and with the board and understood that as we grew the company, it was really important to build capabilities. If you talk about the top two, three decisions, I would say number one was, at that time, a lot of our generics portfolio came from BD, and we only had $7 million of cash on the balance sheet, so a little hard to do BD with that kind of background.
But more importantly, big believer in internal capability building, so we acquired Novitium Pharma. I would say that is a big decision. That R&D engine or that organic R&D capability has fueled the growth of our generics business, where we launch 10- 15 products every year, and essentially have been able to deliver significant growth, more than doubling the business over the period since the acquisition. I think that's been a significant decision, right? To acquire Novitium Pharma and do our own R&D.
I think the second big decision, I would say, is when we got Cortrophin approved in October 2021, is to say that we'll go out and build the best team that we possibly can with the top talent from leading rare disease organizations to really build with our aspiration to build a great rare disease company, that we really go out and hire the best talent. If you look at the folks that are in the ANI team right now, they're really talent that built their skills over the years at leading rare disease companies and have brought their expertise and insights to bear.
The one thing that has stayed throughout is really something that I walked into at ANI, is a culture of collaboration and of working together as one ANI united team. That's persisted as we've expanded the organization from about 200 people to 1,300. Ultimately, the success is really the efforts of the team coming together.
If you fast-forward the clock by another few years from where ANI is today to where it would go, help us think about the different parts of the business and how do they change over the next few years?
Sure. We are focused on transforming ANI into a leading rare disease company. As a part of that, we would add commercial assets, more commercial assets through BD and M&A. As a natural part of that evolution, we will, at some point in the future, start building development capabilities, probably through acquisition and bring on assets where we're taking clinical risk. The next few assets will likely be ones that are commercial or near commercial. ANI at that point, three- five years from now, will look like from a rare disease standpoint, multiple assets largely leveraging the existing call points or the back-end infrastructure that we have today, and with new capabilities in research and development.
From the generic standpoint, again, we have a very strong business, but from a capital allocation perspective, what we've said is capital allocation, balance sheet capital will be apportioned to rare disease to acquire rare disease assets. Operating for the generics business, which is a high-performing business, will take a high single-digit percentage of generic sales and invest it in R&D to keep that cadence of 10- 15 new product launches. We will keep that cadence going, and again, just have this virtuous cycle of growth where we're having the cash flows from generics, which is growing, continue to contribute to expanding scope of our rare disease business.
Wonderful. Before we get to the products, can you briefly summarize how the second quarter went? How were the results? If you can just touch upon the key highlights.
Sure. We had a record second quarter. We delivered $266 million in total company revenues. Our lead asset, Cortrophin, grew 43%, and our non-GAAP EBITDA grew to $71.6 million, which is also a record number. On the back of this performance, we reiterated our total year guidance of $1.08 billion in top line and $285 million- $300 million in adjusted non-GAAP EBITDA.
Wonderful. Switching gears to your products, Cortrophin Gel. This is your lead asset. Can you talk a bit about the market opportunity for the product and how have you grown the brand? Also if you can touch upon the addressable patient population and how penetrated that population is today.
Sure. Cortrophin Gel is a repository corticotropin. It is used for multiple autoimmune indications. When we launched this drug, there is another player in the ACTH category that is the incumbent that had been there for multiple years. When we launched the drug, we focused first on the highest utilization indications, so the indications where, or specialties that were utilizing Cortrophin. We reached out to physicians that continued to believe in the category, but also physicians that had used the category in the past but had moved away from it for a multiple of sets of reasons. The key specialties were rheumatology, nephrology, and neurology, right? Those were the three that we started with. What we found is that we had a lot of success with the prescribers that had continued using ACTH, the competitor's product.
Even more importantly, the team was successful in identifying new physicians that were naive to ACTH and to get them to trial it and then use it for the appropriate patients, use Cortrophin for that. When you think about where we are today, a lot of our growth that we have achieved, taking the sales from $42 million in the first year to $347 million last year or this year's guidance of $520 million- $540 million, a lot of that growth has come from prescribers that were naive to ACTH. Almost half of our prescribers are folks that had never used ACTH before. Along the way, we have to reach more patients, and this goes back to the point on addressable market.
When we look at our addressable market across our priority indications, and there are six or seven of them, and there is a slide in our deck that talks to it, there is about 1 million patients, right? Even between the competitor and us, we are scratching the surface in terms of number of patients served out of those 1 million. It is a very small number, and our efforts has been to continue growing the market. The ACTH market, after our launch in 2022, has returned back to growth. The total market will grow this year about, I think, north of 30% and to in excess of $1.3 billion, which is higher than the prior peak. That is really coming from expanding the patients that we go after. When we look at the market, we think about driving market growth.
Part of that market growth is reaching the addressable patient population. We talked about starting with nephrology, rheumatology, and neurology. We then expanded into ophthalmology, and then we did the acquisition of Alimera. We have this combined team that now goes into ophthalmologists and retina specialists for ophthalmology, for Cortrophin, with Cortrophin and ILUVIEN, but that is that expansion. We also are now this largest expansion to date for gout, where we are going to primary care and podiatry, looking at acute gouty arthritis flares. That is how, by indication, we have expanded the sales force. Again, the main thing is to get to more portions of the large addressable market that we have.
Wonderful. You just touched upon this. You recently completed the expansion for the Cortrophin Gel into the podiatry and the primary care space to go after the gout opportunity that you mentioned. Can you talk about the rationale for the expansion and the progress that you've made so far in that space?
Sure. Number one rationale for the expansion for acute gouty arthritis flares was it's an indication that we have and the competitor does not have, and we keep talking about growing the ACTH category, and that's being our focus. That's the number one thing, right? Going after an indication that we have, and the competitor doesn't. Second is we had a proven track record of success. Approximately 18% of our volumes were coming from gout, but from the prescribers being rheumatologists and nephrologists. What we found is they were only seeing a subset of the addressable patient population. What we learned is that if we wanted to reach more acute gouty arthritis flare patients, we needed to reach out to primary care physicians and podiatrists.
Then I come to the third reason, which is we then did pilots that were successful. We took about 10 territories, and we asked our team there to go out and reach out to primary care physicians and podiatrists, and see are they seeing acute gouty arthritis flares patients who are not well controlled on other therapies, and can benefit from considering Cortrophin as an alternative treatment option. They were able to see that and do that successfully. Seeing that success in those 10 territories, we said, "Okay, let's see if we can do this at scale." We came up with an algorithm of, because there's a lot of primary care physicians and podiatrists, here's a way to identify the primary care physicians and podiatrists that actually treat more acute gouty arthritis flares patients than not.
That's about 7,000 of them. To reach those 7,000, we've expanded the team by adding about 64 reps and obviously managers and other support staff. That gets us to about 90 people. That expansion was completed by the end of the second quarter in about June. The leading indicators of demand have been very positive, which I can speak to if you'd like.
Sure. Why don't we touch base on that?
Sure. We've seen very good success with that, promising leading indicators of demand. What we're really seeing is what we saw in the 10 pilot territories now being able to be done at scale. What do I mean by that? Almost all our reps have more than two cases initiated. We have more than a third of our prescribers who have written more than two cases. We're starting to have refills for patients, and essentially, we're seeing the successes that we saw in the pilot sort of get replicated at scale. The leading indicators of demand suggest that the results are very promising, and we'll continue to drive momentum into Q3, Q4, and also into 2027, where you will really see the full impact of this sales expansion, right?
With the same expansion that we've done this year, we'll get operating leverage and growth, and increased revenues from the same sales force next year.
Is that what gives you confidence in the back half ramp for Cortrophin Gel in 2026?
Yeah. I think the back half ramp in Cortrophin is anchored on two things. One is continued growth in the existing specialties. Remember, we grew 56% from $75 million in the first quarter to $117.1 million in the second quarter, which is largely from the existing specialties. And so continued momentum in that, where we've seen, again, momentum going into Q3, and we spoke a little bit about that earlier. But also the impact from the gout expansion, where there was minimal contribution in the first half. Again, to just dimensionalize it, we've expanded our sales reps by 50%, going from about 120 reps to 180 by adding 60+ reps. You'll see the impact of that in the back half, along with the growth in the existing specialties. So it's both of those things that's driving the growth in the back half.
Understood. You cited over 95% of the reps generating multiple new patient cases and over a third of the prescribers initiating two or more. You talked a little bit about the leading indicators. What does that tell you about the durability of the ramp that you're seeing in the acute gouty flares?
Yeah, I think that most importantly is the patient need. That there are really a number of patients that are appropriate for acute gouty arthritis flares that are not being well treated with the existing therapeutics that are out there. Again, just to dimensionalize, there's 10 million patients that have gout. We believe that the addressable patient population for Cortrophin Gel is 285,000. So it's a very small number out of the 10 million patients that have gout. And of that 285,000, we're reaching a very small subset. So the most important thing that we're seeing as we're reaching out to these primary care physicians and podiatrists is that we're seeing that, yes, there are patients that can benefit from an alternative treatment option like Cortrophin Gel.
Wonderful. You talked about the competitor in the category. So it's a longstanding incumbent. How do you characterize your competitive position for Cortrophin Gel, and is there a share shift happening, and how would you characterize that?
Yeah. We think that the focus of both the competitor and ourselves is on capturing, or not capture, addressing the needs of the patients, the unmet needs of the patients, and there's a large number of patients that have these unmet needs. Between the competitor and us, we are barely scratching the surface of the addressable patient population. Our collective efforts are trying to take ACTH therapy to these patients in need. The internal discussions are never about share capture. It's all about market growth. To give you further information on that, if you think about the areas where we're investing, it's not just in the existing specialties. Last year, we expanded the rheum, nephro, neuro sales force by adding 20 reps around there.
This year, we're doing a 60% expansion, but for an indication which they don't have, and reaching physicians who are naive to ACTH. Really this is about market growth and not about share capture.
Understood. Switching gears a little bit, let's talk about ILUVIEN.
Yeah.
The other asset. Can you talk about the recent data and how that could help drive the growth of the product? I believe there's only six-month top-line data that has been released to date. There's a detailed results analysis that is supposed to come out at a meeting later this year.
Yeah. We are on track to deliver the more comprehensive set of results at a retina conference in Q4, and details for that will be coming up. We believe that this shows the use of ILUVIEN. It is a study called SYNCHRONICITY. It studies the use of ILUVIEN for chronic non-infectious uveitis affecting posterior segment of the eye. The data will have analysis that we believe will be very relevant to retina specialists and uveitis specialists for the treatment and will give additional data. This is a phase IV study. We will give additional data, clinical data, to support the use of ILUVIEN for the treatment of chronic NIU-PS, where steroids are the standard of care. This is a drug, it is an intravitreal implant that has a three-year timeframe of action.
This data will further give more information on that, the SYNCHRONICITY data, both on efficacy as well as on safety.
Okay. Switching gears again and talking about your generics business. Your generics business is uniquely positioned in today's market with onshore manufacturing. You have got sites in New Jersey and Minnesota, and you have got a strong track record of launching CGTs. How have you kept your generics business structurally advantaged?
Well, first of all, this goes back to one of the--
Onshore manufacturing and generics don't really go hand in hand based on the pricing environment we've seen.
I think this goes back to one of the top decisions, as we think about the company's growth, of the acquisition of Novitium Pharma and the capability that we got with that. And that's really anchored the R&D capability and the new product launches, 10 to 15 new product launches, including some big wins like prucalopride that we had last year, which is 100-day exclusivity, and the CGT success that we've had. And this is really about just selecting the right products and then executing, having an R&D engine that executes and gets products to market sooner than others. The U.S. manufacturing, we're proud that over 95% of our sales comes from products that are manufactured in the U.S. for all of ANI. And we have three facilities, two in Baudette, Minnesota, and one in East Windsor, New Jersey.
All three are with strong GMP status, recently inspected. I think this combination of R&D excellence with the investment of about high single-digit percentage in sales into R&D, combined with the operational excellence, is what fuels the growth and execution of our generics performance.
Wonderful. Let's talk a little bit about the capital allocation. You have $360 million of cash, and your net leverage is around 1x ?
Around one.
How do you think about capital allocation priorities for ANI?
Yeah. We've been very pleased as the business has developed. Obviously, the balance sheet has developed. I think when Nikhil first started at the company, we had roughly $7 million of cash left. As you cite, Rahul, as of June of this year, we've grown that to $360 million as we've built the company out. We have extremely robust and growing cash flows. Through the first six months of this year, we generated $100 million of free cash flow as compared to $150 million for the full year of 2025. We expect that robust cash generation to continue. Adding it all up, it puts us in a very good position to support both the organic and potentially inorganic growth of the business.
When we think about capital allocation, I would put number one, continuing to support organic growth opportunities, such as the ability to put the investment behind the gout indication, and to continue to find patients in need of ACTH therapies and fill in that gap between the total addressable market that Nikhil talked about and the number of patients that are being touched today. Second, we have a very clear and stated goal to build a great rare disease company. In the next steps of our evolution, that will continue to come through M&A and BD, and all of the attributes that we're discussing of the balance sheet will help support those aspirations.
Finally, you may recall that in May of this year, we put in place, the board approved a $100 million share repurchase plan, which just gives us another tool in our tool belt as we manage capital allocation, and the growing cash balances on the balance sheet.
Wonderful. You earlier touched upon the inorganic/BD filters through which you would look at things. Is there anything on top of that that you would expand upon? You have rare, you have generics. Anything else?
Yeah, sure. Look, from a BD M&A perspective, we're focused squarely on rare disease. Within rare disease, we're focused on two types of opportunities. First filter is it should be commercial or near commercial, because it leverages the capabilities that we have in place, both on sales force as well as the backend infrastructure. To double-click on the where we would look at, it's one that's leveraging our existing call points. So the advantage of Cortrophin and the infrastructure we have in place is we have sales force that goes into nephrologists, rheumatologists, neurologists, pulmonologists, and ophthalmologists, and now primary care and podiatry too. So there's multiple. The aperture is pretty wide in terms of adding assets that can leverage the existing sales force.
The second is we're also, and this is an area of strength for us, is a team that knows how to take that prescription and then work through the prior authorization, patient support, medical affairs, market access, all that stuff, backend infrastructure to get the patient on therapy. So even if it requires looking at a rare indication that requires a small sales force expansion but leverages the backend infrastructure, that's something that we would consider too. Historically, in terms of firepower, we have not exceeded more than four, or if it's exceeded, but then if it's for a short period of time and then with a clear path to deleveraging, so that's sort of a constraining factor or something we keep in mind as we think about deal size.
Again, something that adds meaningfully to the roughly $600 million+ size of our rare disease business. Obviously with durability, meaning multiple years of IP or other exclusivity. Yeah.
Understood. Can you summarize your 2026 financial guidance for us and the main drivers in that, and anything you can share about how you're thinking about 2027?
Yeah. I can definitely not share much about 2027 at this point other than, look, the organic growth drivers of this company are very strong. We have two high-performing businesses, both the rare disease and generics. In terms of our 2026 guidance, our guidance for revenues is $1.08 billion-$1.14 billion, and for adjusted non-GAAP EBITDA is $285 million- $300 million. Within that, Cortrophin guidance is $520 million- $540 million, which is about 50% growth at the midpoint. For generics, we've said that the business will be on the back of a very strong 28% growth year from 2024 to 2025, will be flattish for this year, but then we'll get back to the high single digit, low double-digit growth orientation that we've had for our generics business historically. Right?
And for ILUVIEN, our guidance for the year is $78 million- $84 million. That's the total company guidance for 2026. And again, as we talk about 2027, there will be continued momentum in Cortrophin and ILUVIEN, so in rare disease organically, and generics will sort of get back to the type of growth. I think that's what we can say.
Wonderful. In the last five minutes that we have, can you talk a bit about what are your street and investors not fully appreciating or understanding about ANI today?
Sure. I think that the growth and durability of both of our rare disease assets and the significant multi-year growth opportunity that we have, I think we're not getting enough credit for that, I believe, given the near term, where we took a step down in our Cortrophin guidance from $540 million- $575 million to $520 million- $540 million. Nothing has changed in terms of the opportunity with the large addressable patient population for Cortrophin. We're seeing very strong leading indicators of demand from the gout expansion, which is a large 60-person expansion that we just did, where we expanded our sales force by 50% and are being able to reach more patients. And we're seeing the momentum in the existing specialty.
Our ability to serve more patients from the roughly 1 million patients in our addressable patient population across the multiple indications, that is the underlying driver for growth or the multi-year growth opportunity for our lead asset, Cortrophin. There is durability with that. There are high barriers to genericization with that drug, and we have IP that goes into 2043. From our perspective, I think that that growth and durability of our rare disease business and the fact that approximately 60% of our total company sales will be from rare disease, I think that is something that is a bit of a mismatch in terms of where our valuation is today and where the business is going.
Wonderful. Those are all the questions I had. I will just open it up to the audience and see if there are any questions in the audience. Okay. Nikhil, Steve, thank you very much for your time, and thanks for coming.
Thank you, Rahul.
Thank you.
And thank you investors for your time. Thank you.
Yeah. Thank you all.
Thanks.