Good day, everyone, and welcome to today's ANI Pharmaceuticals, Inc. Second Quarter 2024 Earnings Results Call. 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, 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, including 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 actively promoting the acute gouty arthritis flares indication, have been yielding positive results. Our ophthalmology sales team has had a strong start and drove significant growth in prescriptions and new patient starts in the second quarter. We also saw particularly strong year-over-year and quarter-over-quarter growth for acute gouty arthritis flares. Cortrophin gel is the only ACTH product approved for this indication. As a reminder, we began promotional activities for the acute gouty arthritis flares indication in late 2023. More than 9 million people in the US are affected by gout, and some of these experience acute gouty arthritis flares as a symptom of their underlying disease. For some of these patients, Cortrophin gel may be an appropriate additional treatment option for their flares. We have seen increasing momentum in physicians adopting Cortrophin gel for patients with acute gouty arthritis flares who have not responded adequately to conventional therapies. We continue our efforts to enhance convenience and remove pain points for patients starting on ACTH and the healthcare providers who treat them. In the fourth quarter of 2023, we introduced the 1-ML version of Cortrophin gel to meet the needs of physicians who desired a smaller configuration of ACTH for certain patients, such as those with acute gouty arthritis flares. Today, we are pleased to report for the first time that we are nearing the completion of development of a 1-ML prefilled syringe, offering further benefits to patients and physicians. We plan to file for FDA approval of the prefilled syringe in the second half of 2024 and are excited about the potential of this product. We look forward to launching this product in the first half of 2025. Turning now to our generics business, which delivered another strong quarter with revenue of $74 million, an increase of 17% over the second quarter of 2023, and 5% over the first quarter of 2024. The solid performance reflected strength in our base business, coupled with contributions from new product launches. We launched four new products in the second quarter, and have launched three new products so far in the third quarter. We have a number of products pending approval that we expect to launch in the second half. We made substantial progress on bringing online the significant capacity expansion at our New Jersey site and believe all 15 new manufacturing suites and the new QC lab will be fully operational in the second half of 2024. The New Jersey site expansion will support the future growth of our generics business. Revenue for established brands was $14.9 million during the quarter, a decrease of 49% from the prior year period. The performance was anticipated and in line with our expectations and guidance. As a reminder, we noted on the first quarter call in May that we did not expect the tailwinds arising from competitor supply dynamics to persist beyond the first quarter. In June, we delivered a major milestone in our growth strategy with the announcement of the proposed acquisition of Alimera Sciences. This highly synergistic transaction will add two commercial assets in ophthalmology to our rare disease portfolio and more than $100 million in highly durable branded revenue annually. The acquisition is aligned with the M&A strategy we laid out over the past several quarters. Specifically, this transaction will expand the scope and scale of our rare disease business and strengthen one of our priority therapeutic areas of ophthalmology, which is also a key specialty for our lead rare disease asset, Cortrophin gel, and the overall ACTH market. The deal will provide ANI two durable assets with double-digit growth. With Alimera, ANI's rare disease segment would account for approximately 45% of the total company revenues on a pro forma 2024 basis. And we expect rare disease to be the largest driver of the company's future growth. From a financial perspective, we expect high single-digit to low double-digit accretion in adjusted non-GAAP EPS in 2025, with substantial accretion thereafter. Integration planning is well underway, and the transaction remains on track to close later this quarter. Now, I'd like to turn the call over to Chris Mutz, our head of rare disease, to discuss the Alimera products and transaction in more detail.

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 value 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 our 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 numbers 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 the 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 contribution 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 the second quarter performance is generally reflective 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 related to the capacity expansion at our New Jersey manufacturing site. We expect sequential improvement in gross margin in both the third and fourth quarters of this year. Research and development expenses decreased 1% to $7.3 million in the second quarter of 2024, compared to the prior year period, and 30% from the first quarter. The sequential decline was related to expense timing and the inherent variability of R&D expenditures on a quarter-to-quarter basis. We expect R&D to increase in the second half of 2024 relative to the first half of the year, due to the timing of R&D activities. Selling, general, and administrative expenses increased 36% to $52.8 million in the second quarter of 2024, due to increased employment-related costs, continued investment in rare disease sales and marketing activities, legal expenses, expenses related to the pending acquisition of Alimera, and an overall increase in activities required to support the growth of our business. On a GAAP basis, net loss available to common shareholders for the second quarter of 2024 was $2.7 million, as compared to net income of $5.8 million in the prior year period, driven by a $3.5 million of expenses related to the pending acquisition of Alimera, and a $2.7 million unrealized mark-to-market loss on the value of our investment in CG oncology. Both of these items are adjusted for in our non-GAAP metrics this morning. Second quarter diluted GAAP earnings per share was a loss of $0.14, as compared to income of $0.29 per share in the prior year period. On an adjusted non-GAAP basis, diluted earnings per share was $1.02 for the quarter, compared to $1.28 per share in the prior year period. Adjusted non-GAAP EBITDA for the second quarter of 2024 was $33.2 million, compared to $34.1 million in the prior year period. We ended the quarter with $240.1 million in unrestricted cash and have $292.5 million in face value of outstanding debt, which is due in November of 2027. At the end of the second quarter, our gross leverage ratio was 2.1 times, and our net leverage ratio was well under half a turn of our trailing 12-month adjusted non-GAAP EBITDA of $137.5 million. Finally, as Nikhil mentioned, and as outlined in this morning's press release, we are pleased to increase our full-year 2024 guidance as follows: full-year 2024 net revenues of $540 million to $560 million, up from our prior guidance of $520 million to $542 million, representing year-over-year growth of approximately 11% to 15%. For Cortrophin Gel net revenues of $185 million to $195 million, up from our prior guidance of $170 million to $180 million, representing year-over-year growth of 65% to 74%. Adjusted non-GAAP EBITDA of $140 million to $150 million, up from our prior guidance of $135 million to $145 million, representing year-over-year growth of approximately 5% to 12%. And adjusted non-GAAP earnings per share between $4.38 and $4.82, up from our prior guidance of $4.26 and $4.67. We are reducing our estimate for total company non-GAAP gross margins by one point, to be between 61% and 62%, from our prior assumption of between 62% and 63%, due to a modest change in the timing of when the new manufacturing suites at our New Jersey site become fully operational. This factor is short-term in nature, as we anticipate achieving the full benefit and efficiency of the new suites in the second half of this year and beyond. Consistent with prior quarters, we will continue to tax-effect non-GAAP adjustments for computation of adjusted non-GAAP diluted earnings per share, using our estimated statutory rate of 26%. The company now anticipates between 19.4 million and 19.8 million shares outstanding for the purpose of calculating diluted EPS, and continues to expect its US GAAP effective tax rate to be between 22% and 25%. Please note that our updated 2024 full-year guidance does not include contributions from the pending acquisition of Alimera.

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 and 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 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, specifically helping patients with the preparation and administration 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. Going back to your question on guidance and what's driving the guidance increase, 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 full-year guidance. 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 other areas, 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 to answer all of them. First, is the overall ACTH category and the question around share growth versus category growth. Look, our competitor reported their results earlier today. As we've been saying even in the prior quarters, the number of patients being treated with ACTH today is significantly lower than patients treated many years ago. With our efforts and the efforts of our competitor, you're seeing, for the first time in many years, the ACTH category experiencing growth. If you add the revised guidance shared earlier today by our competitor and our raised guidance, it implies high teens growth for the ACTH category, and there is a significant runway for growth in the category. For us, it's not about share capture; it's about getting ACTH to the appropriate patients in need. Regarding where growth came from, we saw growth across therapeutic areas, both the ones we focused on at launch—neurology, nephrology, and rheumatology—as well as newer areas like ophthalmology, gout, and pulmonology. The majority of the absolute growth came from the core indications at launch: neurology, nephrology, and rheumatology, although we are seeing particularly strong growth on a quarter-over-quarter and year-over-year basis for gout, which is proprietary to Cortrophin gel as it is the only ACTH product approved for this indication. Our ophthalmology sales team has also experienced significant growth in prescriptions and new patient starts in the second quarter. In terms of the upside potential, the ACTH market was substantially larger in the past, and even with our revised guidance and our competitor's guidance, it still reflects just over 50% of the peak sales of the category from a few years ago. So, we have ample room for growth.

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

Thank you for your question. The addition of the 1-ml vial has been additive. It has helped us to expand usage to healthcare providers who are new to prescribing Cortrophin, and their first experience with Cortrophin has been with the 1-ml vial. The volume in the 1-ml vial has grown significantly quarter-over-quarter. It goes back to our approach to enhancing convenience as well as addressing the pain points and needs of both the appropriate patients and the healthcare providers who treat them. The 1-ml vial was a step in that direction, and as we noted earlier, we are nearing the completion of our prefilled syringe to further assist appropriate patients. That brings another option for enhancing convenience and addressing the pain points for both patients and healthcare providers.

Okay. That's helpful. And then just one more on Alimera. 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. Then just talk about the planning for the close and integration. Are there any issues or hurdles you're expecting and anything that you need to build out beforehand to ensure a successful transition from day one? Thanks.

Thank you. So, to your first question, there is no benefit from increased Cortrophin sales from an expanded ophthalmology sales force included in the guidance. We are yet to close the deal, so this is for standalone ANI. Regarding integration planning, we're making very good progress on this front. We are working towards closing the deal later this quarter, and from a planning perspective, we're understanding what the organization systems and processes will look like after the deal closure. A priority in our integration planning is the combined ophthalmology sales team and how they are going to carry all three durable commercial assets. We're considering training programs for the sales representatives and how to support the integration effectively.

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

Thanks for taking my question. I have a couple of things I want to clarify. One, on the Cortrophin side, you mentioned fourth quarter, you expect to be the largest quarter of the year. I assume you're expecting sequential growth from Q2 to Q3 and then Q3 to Q4, but if you could just confirm that, that'd be helpful. On established brands, you mentioned the second quarter is a good base to look at for the remainder of this year. I'm curious if you can comment any further on 2025. Is this a nice steady state or do you expect any meaningful changes next year? Lastly, with Alimera, I'm curious how you're thinking about potential synergies. Anything else for future business development priorities expanding Ex-US, considering what Alimera provides you? Thank you.

Thank you, Vamil, and good morning. On the Cortrophin, yes, we expect sequential growth and that the fourth quarter will be the strongest, as Steve mentioned. Therefore, there will be sequential growth in Q3 and Q4. Regarding established brands, we appreciate your interest. We are focused on various strategies to enhance our business, with established brands serving as an important component of our operations due to their low working capital, high gross margin, and strong cash flow generation. Regarding Alimera, we're currently in the integration planning phase and will provide updates as we progress. We are focusing on the immediate objectives of closing the deal and integrating the assets and systems.

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

Thanks. I have a few questions. This morning, along with your announcement of the prefilled syringe development work, Mallinckrodt also announced the availability of their single-use prefilled auto-injector. 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? Do you think that will have any different market access or coverage than the current relative coverage of your two products now? I have a follow-up to that.

Good morning, Oren, and thank you for your question. The competitor's device, from what we can tell, is aimed at enhancing convenience and addressing pain points that a subset of patients have. Our prefilled syringe also addresses preparation and administration of Cortrophin gel. Both our efforts and those of our competitor are focused on increasing awareness and bringing new options to patients, thus enhancing growth in the category. The 1-ml vial we launched was appreciated by healthcare providers, some of whom initiated their use of ACTH with the 1-ml vial. Overall, this is favorable for the category given the substantial runway for the ACTH market.

I'm curious if you think there are any particular areas where that will have any impact or will it simply follow your growth trajectory?

I think there are probably a subset of indications where a 1-ml or 0.5-ml dose may be more convenient, and it is with this understanding that we invested in bringing the 1-ml vial and a pre-filled syringe. I would not expect significant differentiation between the two products at this time.

Can you give us any color on potential synergies from Alimera, and what sort of EBITDA margins you hope the business can contribute? Also, is there an opportunity to revisit pricing of these products?

Regarding the financial outlook for the deal, we expect about $10 million in synergies by 2025, and we are making good progress in capturing that. We previously mentioned that we expect the addition of over $30 million in adjusted EBITDA. In terms of pricing, we aim to strike a balance between sharing useful information and maintaining competitiveness. We're in the integration planning phase and will update you as we gather more information.

In terms of our gross margin profile, the Alimera products are expected to be in the low 80% range, which would be accretive to our gross margin.

I noticed in your GAAP SG&A, you had some litigation expense in there. Can you give us any color on that?

In terms of the increased spend that we have in litigation year-over-year on a GAAP basis, we are vigorously pursuing the defense of our rights in CG oncology, which is the primary element contributing to increased costs.

Oren, on the 505B2s, we will share more updates when we have meaningful information available.

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

Thanks. It seems like your generic segment revenues are exceeding your original targets. Can you comment on expectations for growth from the generic segment in the back half of the year?

For our generic business, performance is coming from three things: the cadence of new product launches, operational excellence, and being a reliable supplier with strong GMP status and US-based manufacturing. We expect high single-digit to low double-digit growth for the full year and expect sequential growth in subsequent quarters.

How much capacity are you increasing with the new facility in New Jersey?

We are adding about 15 new manufacturing suites and a new QC lab. This is a substantial increase in capacity that will service the growth of our generics business for multiple years.

Thank you. It appears we have no further questions at this time. 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 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.