Ani Pharmaceuticals Inc (ANIP) September 2026 Conference Transcript

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 Lalvani, President and CEO of ANI Pharmaceuticals, and Steve Carey, CFO of ANI Pharmaceuticals. Welcome. Thank you, Rahul.

Thank you for having us.

Thank you for your time. So why don't we get started. Can you start off with providing a 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. So, A&I 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, cortropin and alluvian, that are both growing and durable with significant multi-year growth opportunity. Cortropin is a drug that is a repository, corticotropin. The current year, our guidance is 520 to 540 million, so it's 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. Eluvian is an intravitreal implant used for DME and NIUPS, again, in large addressable markets. So both drugs have durability, they're tough to genericize, and significant multi-year growth potential. We're also expanding the scope and scale of our rare disease business through BD and M&A, where we're looking to add other commercial assets to the pipeline, which we can talk about a little bit further along. So that's our rare disease business. It's 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. So that's A&I for you.

Wonderful. You took over about six years ago. Since you've taken over, revenue has grown substantially. A&I 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 an eye to where it is today yes uh thank you rahul i think um yeah i've been here d and i for about six years when i uh walked in the company was it was different in that uh it was about 200 million in revenues uh right around 50-ish million of ebitda and about 7 million of cash on the balance sheet uh with a primary focus on BD. And 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. So if you talk about the top two or 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 a little hard to do BD with that kind of background. But more importantly, a big believer in internal capability building. So we acquired NVIDIA. I would say that's a big decision. And that R&D engine, or that organic R&D capability, has fueled the growth of our generics business, where we launched 10 to 15 products every year, and essentially have been able to deliver significant growth, more than doubling the business over the period since the acquisition. So I think that's been a significant decision, right, to acquire Nvidium and do our own R&D. And I think the second big decision I would say is when we got Cotrofen 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. And so 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. And the one thing that has stayed throughout is really something that we I walked into at A&I is a culture of collaboration and of working together as one A&I united team and that's persisted as we've expanded the organization from about 200 people to to 1,300 and you know ultimately the success is really the the issue 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.

So, you know, we were 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. And 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. But the next few assets will likely be ones that are commercial or near commercial. And so, ANI at that point, three to five years from now, will look like from a rare disease standpoint, you know, multiple assets, largely leveraging the existing call points or the back-end infrastructure that we have today, and with new capabilities in development, 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 a portion to rare disease to acquire rare disease assets but operating for the genetics business which is a high performing business will take a high single digit percentage of generic sales and invested in R&D to keep that cadence of 10 to 15 new product launches and so 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 are the results and if you can just touch on the key highlights sure so we had a record core second quarter we delivered 266 million in total company revenues our Our lead asset, Cotrofen, grew 43%, and then our 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 billion 80 million in top line, and 285 million to 300 million in adjusted non-GAAP EBITDA.

Switching gears to your products, Cotrofen Gel, this is your lead asset. you talk a bit about the market opportunity for the product and how have you grown the brand? And then also if you can touch upon the addressable patient population and how penetrated that population is today.

Sure. So, cortropin gel is a repository corticotropin. It is used for multiple autoimmune indications. When we launched this drug, there's another player in the ACTH category that it that is the incumbent that had been there for multiple years so when we launched the drug we focus first on the higher highest utilization indication so the indications where or specialties that were utilizing cortropin and we reached out to physicians that continued to believe in the drug in the category but also physicians that had used the category in the past but had moved away from it for multiple sets of reasons and and what we found what we found so the key specialties were rheumatology nephrology neurology right those were the three that we started with and what we found is that we had a lot of success with the the prescribers that had continued using cultural ACTH the competitors product but even more importantly that 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 for, you know, use Cortrofen for that. And so when you think about where we are today, a lot of our growth that we've achieved, you know, taking the sales from 42 million in the first year to, you know, 347 million last year or this year's guidance of 520 to 540, a lot of that growth has come from prescribers that were naive to ACTH. Almost half of our prescribers are folks that had never tried, never used ACTH before. Along the way, we have to reach more patients, and this goes back to the point on addressable When we look at our addressable market across our priority indications, and there are six or seven of them and there's a slide in our deck that talks to it there's about a million patients right and even between the competitor and us we are scratching the surface in terms of number of patients served out of those million so it's a very small number and our efforts has been to continue growing the market the market the acth market after our launch in 2022 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. And that's really coming from expanding the patients that we go after. So when we look at the market, we think about driving market growth. And so part of that market growth is reaching the addressable patient population so we talked about starting with nephrology rheumatology neurology we then expanded into ophthalmology and then we did the acquisition of Alamera so we have this combined team that now goes into ophthalmologists and retina specialists for ophthalmology for cortrophin with cortrophin and alluvian but that's that expansion and then we also are now this largest expansion today for gal we're going to primary care and podiatry looking at acute gauri arthritis flares so that's how by indication we've expanded the sales force but again to the main thing is to get to more portions of the addressable of a large addressable market that we have wonderful you you just touched upon this you recently completed the expansion for the cotrophin gel into the podiatry and the and the primary care space to go after the gauri opportunity that you mentioned you talk about the rationale for the expansion and the progress that you made so far in that space sure so number one rationale for the expansion for acute gaudi 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 so that's the number one thing with going after you know an indication that we have in the competitor doesn't second is we had a proven track record of success so approximately 18% of our volumes were coming from gout but from the prescribers being rheumatologists and nephrologists and 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 gaudi arthritis flare patients, we needed to reach out to primary care physicians and podiatrists. So which is, and then I come to the third reason, which is we then did pilots that were successful. So 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, you know, if they're, are they seeing acute gaudi arthritis flares patients who are not well controlled on other therapies and can benefit from considering cortropin as an alternate treatment option and, and they were able to see that and do that successfully. So seeing that success in those 10 territories, we said, okay, let's see if we can do this at scale. So we came up with an algorithm of, you know, here's the types of primary, 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 gaudi arthritis for various patients than not. That's about 7,000 of them. And 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. And that expansion was completed by the end of the second quarter in about June. and 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. So we've seen very good success with that, promising leading indicators of demand. And 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 you know 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 on on the for patients and essentially we're seeing the successes that we saw in the pilot sort of get replicated at scale and the leading indicators of demand suggests that you know that this is that the results are very promising and will continue to drive momentum into q3 q4 and also into 2027 where you will really see the full impact of this sales expansion right because it so with the same expansion that we've done this year we'll get operating leverage and growth in the increased revenues from the same Salesforce next is that what gives you confidence in the back half ramp for cotrophin gel in 26 yeah i think the back half ramp uh in cotrophin is anchored on two things one is continued growth in the existing specialties remember we grew 56 percent from q 75 million in first quarter to 117.1 in the second quarter so 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, and again, to just dimensionalize it, we've expanded our sales reps by 50%, going from about 120 reps to 180 by adding 60 plus reps. You'll see the impact of that in the back half, along with the growth in the existing specialty. So it's both of those things that will drive that's driving the growth in the back half 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 the ramp that you're seeing in the acute gaudi flares yeah I think that most importantly is the patient need, that there are really a number of patients that are appropriate for acute gaudi arthritis flares that are not being well-treated with the existing therapeutics that are out there. And 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 off that 285,000, we're, you know, reaching a very small subset. But so the most important thing that we're seeing as we're reaching out to, you know, these primary care physicians and podiatrists is that we're seeing that, yes, there are patients that can benefit from an alternate treatment option like cutrophin gel. You talked about the competitor in the category, and it's a longstanding incumbent. how do you characterize your competitive position for cutrofen gel and what's 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 capturing addressing the needs of the patients that are that the unmet needs of the patients and there's a large number of patients that have these unmet needs and between the competitor and us we are barely scratching the surface of the addressable patient population so our collective efforts are trying to reach take ACTH therapy to these patients in need so it's the internal discussions are never about share capture it's all about market growth and then to give sort of further you know 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 where we expand, last year we expanded the room Neff and Neuro sales force by adding 20 reps around there. And then 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. So really this is about market growth and not about share capture.

Understood. Switching gears a little bit, let's talk about Alluvium, 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, and there's a detailed results analysis that is supposed to come out at a meeting later this year.

Yeah, so we're on track to deliver the more comprehensive set of results at a retina conference in Q4, and details for that will be coming up. And we believe that this shows the use of alluvian. It's a study called synchronicity. It studies the use of alluvian for chronic non-infectious uveitis affecting posterior segment of the eye. and there is the data will have analysis that will be we believe will be very relevant to retina specialists and uveitis a specialist for the treatment and we'll give additional data this is a phase 4 study we'll give additional data clinical data to support the use of alluvian for the treatment of chronic NIUPS where steroids are the standard of care right so this is a drug it's an intravitreal implant that has a three-year time frame of action, and so 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 genetics business. Your genetics business is uniquely positioned in today's market with onshore manufacturing. You've got sites in New Jersey and Minnesota, and you've got a strong track record of launching CGTs. How have you kept your genetics business structurally advantaged?

Well, first of all, this goes back to one of the... Onshore manufacturing and genetics don't really go hand-in-hand based on the pricing environment we've seen. So I think this goes back to one of the top decisions, you know, as we think about the company's growth of the acquisition of NVIDIA 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 Procalo Pride 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, you know, having an R&D engine that executes and gets products to market sooner than others. The U.S. manufacturing, you know, we're proud that over 95% of our sales comes from products that are manufactured in the U.S. for all of A&I, and we have three facilities in two in Baudette, Minnesota, and one in East Windsor, New Jersey. All three are with strong GMP status, recently inspected, and I think so this combination of R&D excellence with the investment of, you know, about high single-digit percentage of generic sales into R&D combined with the operational excellence is what fuels the growth and execution of our generic performance.

Wonderful. Let's talk a little bit about the capital allocation. You have $360 million of cash and your net leverage is around one times? Around one. Next. How do you think about capital allocation priorities for A&I?

Yeah. Yeah, no, 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. And as you cite, Raul, 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. And 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 and when we think about capital allocation i would you know we 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 and so you know 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 and finally you may recall that in in May of this year we put in place the board approved a hundred million dollar 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 slash bd filters through which look at you would look at things is there anything on top of that that you would expand you would expand upon you have rare you have genetics anything else yeah sure look our from 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 is it leverages the capabilities that we have in place both on Salesforce as well as the backend infrastructure. And then to double click on the where we would look at, it's one that's leveraging our existing call point. So the advantage of Cortrofin and the infrastructure we have in place is we have Salesforce that goes into nephrologists, rheumatologists, neurologists, pulmonologists, and ophthalmologists, and now primary care and podiatry too. So there's multiple, the ad approach is pretty wide. in terms of you know adding assets that can leverage the existing sales force and then 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 back-end 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 back end infrastructure that's something that we would consider too historically we've uh in terms of firepower we have not exceeded you know more than four or if it's exceeded but then if it's for a short period of time and then with a clear pack to deal leveraging so that's sort of a constraining factor or something we keep in mind as we think about deal size and again something that adds meaningfully to the you roughly 600 million plus size of our rare disease business and obviously with durability meaning you know multiple years of of IP or other exclusivity yeah can you summarize your 26 2026 financial guidance for us and the main drivers on that and anything you can share about how you're thinking about of 2027 yeah I can definitely not share much about 27 at this point other than you know look the organic growth drivers of this company are very strong both we have two high-performing businesses both the rare disease and generics in terms of our 26 guidance our guidance for revenues was 1 billion 80 million is 1 billion 80 million to 1 billion 140 million and for adjusted non gap EBITDA is 285 million to 300 million. Within that, Cotrofin guidance is 520 to 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 here from 24 to 25 will be flattish for this year, but then we'll get back to the high single digit load, double digit growth orientation that we've had for our genetics business historically right uh and then you know for uh for eluvian our guidance for the year is 78 to 84 million uh so that's that's the the total company guidance for 26. and again as we talk about 27 you know there's maybe there's continued there will be continued momentum in cortrophin and eluvian so in rare disease organically and genetics will sort of get back to the 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 is street what are your street street and investors not fully appreciating or understanding about A&I today sure so 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 that's, we're not getting enough credit for that, I believe, given the near term, you know, where we took a step down in our cotrophin guidance from 540 to 575 to 520 to 540. Nothing has changed in terms of, you know, the opportunity, you know, with the large addressable patient population for quatrophin. We're seeing very strong, you know, bleeding indicators of demand from the gout expansion, which is the large 60% 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. So 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 sort of driver for growth or the multi-year growth opportunity for our lead acid control fund and there's durability with that there are high barriers to generalization with that drug and so you know and we have IP that goes into 2043 so I think that you know 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 it will be from rare disease I think that's something that that is a bit of a mismatch in terms of where our valuation is today and and what you know where the business is going wonderful though those are all the questions I had I'll just open it up to the audience and see if there's any questions in the audience okay thank you Steve thank you very much for your time and thanks for coming yeah thank you Rahul and thank you investors for your time thank you thank you all