ANI Pharmaceuticals, Inc. Q3 FY2025 earnings call

• Rare Disease Focus: Focused on clinical evidence generation, commercial investments, and prefilled syringe launch for Cortrophin Gel. Expanded sales force in Q1 2025, seeing positive results in new prescribers and patient starts. Conducting Phase IV clinical trial in acute gouty arthritis flares and generating preclinical data. - Generics Performance: Strong Q3 due to an opportunistic partner generic launch, expecting low 20% growth for the full year. - ILUVIEN Initiatives: Progress on market access, promotional efforts, and peer-to-peer education, but 2025 seen as a reset year with plans to grow in 2026 and beyond.

Rare Disease: In Q3 2025, Rare Disease revenues were $118.5 million, up 109.9% year-over-year. Cortrophin Gel net revenue was $101.9 million, up 93.8% year-over-year. Rare Disease is expected to become approximately half of total revenues for 2025. Generics: Generics revenues in Q3 2025 were $94.4 million, up 19.3% year-over-year. Full-year Generics growth is expected in the low 20% range. Retina (ILUVIEN): ILUVIEN net revenues in Q3 2025 were $16.6 million, lower due to reduced Medicare access and utilization of remaining YUTIQ units.

Full year 2025 net revenue guidance raised to $854 million to $873 million (39%-42% year-over-year growth). Cortrophin Gel net revenue guidance raised to $347 million to $352 million (75%-78% year-over-year growth). Combined ILUVIEN and YUTIQ net revenue guidance tempered to $73 million to $77 million. Adjusted non-GAAP EBITDA guidance raised to $221 million to $228 million, adjusted non-GAAP EPS guidance to $7.37 to $7.64.

• Market access challenges for Medicare patients impacting ILUVIEN sales. - Potential generic competition for Cortrophin Gel, though IP and formulation complexity pose barriers. - Impact of the partner generic product on gross margins due to profit share elements with the partner.

Q: One on Cortrophin. So Medicare Part D redesign lowered the catastrophic coverage limit this year, and that's been a big tailwind. But that also makes for a really tough comp next year where growth should be driven more organically and through expanding the breadth of prescribers. Do you agree with that take? And I guess, how much confidence do you have that you're able to do that with the sales force you have currently?

A: Thank you, Dennis. So I think I'll take your questions in 2 parts. First is what's the impact of IRA on 2025 and then how do we see this going forward? So I think, as you pointed out, IRA improves affordability and access for appropriate patients to needed medicines by capping the co-pays at $2,000 as well as introducing the ability to evenly spread the payments throughout the year. Now we did see a modest tailwind from that. This is consistent with what we've said in the prior quarter. And the reason it's modest is while this did get additional patients on therapy, it was tempered by the mandatory Medicare manufacturer payments that we need to make. And so overall, Cortrophin saw a modest net positive impact from the Part D redesign through IRA. And then as far as your second question on next year and going forward, look, it's we believe that there is significant multiyear growth opportunity for Cortrophin in 2026 and beyond. And that's driven by the -- really the strong underlying demand and the demand sort of is centered in the addressable populations, right? Addressable patient populations across key indications are significantly underpenetrated. For acute gaty arthritis alone, it's about 285,000 patients. And our ability to expand the market is highlighted by the fact that approximately half of our prescriber base had never used ACTH therapy before. And as Chris had mentioned in his remarks, we continue to see growth from both the existing prescribers as well as new prescribers. So we remain confident of being able to reach the appropriate patients in need by working with the HCPs.

Q: Could you speak a little bit more to what this kind of new partner generic product is? And then also what you expect for that in the fourth quarter and kind of going into 2026 as well?

A: Thank you, Faisal. So for competitive reasons, we're not specifying the name of the partner generic. It's a product that we launched, obviously, as it's intended with another manufacturer. And we're able to capture -- be the sole generic for a period of time, a majority of which was in Q3. In Q4, we have seen some competition enter on that product. So that's why our guidance for Q4 for Generics is showing a sequential drop versus the much higher Q3 that we had. And because it's a partnered generic, it also has profit share in it, and therefore, the gross margins on that product are lower. Going into 2026, we will see at least the existing competition continue, and we look forward to updating you more on the guidance for 2026 in early next year.

Q: So just a couple of quick ones for me. And I'm sorry if I missed this earlier in the prepared remarks. Can you talk about regarding Cortrophin, the growth trajectory in pulmonology and what portion of the mix that is? I think you talked about the other therapeutic areas. And then secondly, just given just the wide label and all the different indications, where do you envision untapped opportunities that aren't really a big part of the current mix for the product? And then lastly, I know this is a priority, but just wanted to get your latest thoughts on business development and M&A and how large of a transaction you'd contemplate given the current capital structure?

A: Yes. Thank you, David. So pulmonology and sarcoidosis is an important therapeutic area for us. We have a dedicated -- a smaller team but dedicated for pulmonology, and we are seeing growth in that area, too. Again, it's a smaller part of the overall Cortrophin picture at this time, but there is a significant growth opportunity there. And in pulmonology, we see a larger number of vials per patient. So I think that's another factor that makes pulmonology an important area for us. So that's on pulmonology. Regarding the wide label, look, I think currently, as you have seen the addressable patient populations in the indications that we're addressing today is much larger than anything that we're penetrating today. And so our immediate focus is -- our near-term focus is on tapping these different opportunities. And it's across the board, right? It's in neurology, nephrology, rheumatology, we talked about gout, we talked about ophthalmology, the quarter-on-quarter growth. So there's multiple areas. And part of -- as we think, as Chris thinks about where to drive the growth is where to make the high ROI commercial investments to achieve that growth because there's really -- we're fortunate that there's opportunities across specialties and that we're able to drive growth through existing prescribers as well as have new prescribers who've never -- some that are naive to ACTH and some that were never not even familiar with ACTH adopt Cortrophin or use them in their treatment paradigm for appropriate patients. And then lastly, to your question on BD, we continue to explore opportunities to expand scope and scale our Rare Disease business. I think that our filters are similar to what they were last time, which is at this time, which is late stage or close to commercial or commercial. and synergistic with either our sales force, right? So call point synergy as was in the case of Alimera or leveraging the rest of our Rare Disease infrastructure, right, which is the market access, patient support, specialty pharmacy distribution and across the board there. So that's how we think about BD efforts, and we're continuing to explore opportunities. But as I said, as I highlighted, if you look at even the growth this year, we had 34% to 37% growth based on our guidance organically, right? So -- and there's significant growth opportunity, both in Cortrophin and ILUVIEN. So we're not in a hurry to do a deal. We're wanting to make sure that we do the right deal as we expand the scope and scale of our Rare Disease business.

Q: This is Daniel on for Vamil. Congrats on the quarter. So maybe just one question on Cortrophin. Maybe if you could expand a little bit on like what exactly currently is driving doctors to use this drug across these various indications. I know you mentioned that you're focused on generating more evidence around this mechanism now. But maybe currently with what you have, like who are the patients that doctors think are the right ones for Cortrophin versus other alternatives that are available for each of these different conditions?

A: Sure. And thank you, Daniel. So I'll start and then Chris can jump in. So Cortrophin is a late-line treatment for appropriate patients for which other therapies have been sort of less effective and the real sort of the standard of care and the treatment options that are varying by I guess, by specialty and by indication. So when it fits into the treatment algorithm, it sort of varies. But essentially, it's a late-line treatment option. It's used for -- also for patients that have with this nonsteroidal mechanism of action used for patients that are refractory to steroids or have a high side effect profile. Chris, would you like to add anything?

A: Yes. No, I'd just say taking care of patients with autoimmune disorders is challenging. And thank goodness, there are a lot of great options across -- for physicians to use, right, disease-modifying therapies, new innovations across the spectrum and the patients we serve. But there are still patients -- select patients that are really tough to take care of. And physicians are coming to the kind of end of the road in terms of good options for those patients that they can rely on. And there's a significant number of those patients, as we've outlined, who need something different and a new choice of treatment. And I think that's where we focus on those we think there's -- that's a large patient population. It's a difficult-to-treat patient population, and we are just getting started.

Q: Congrats on another strong quarter. So back on Cortrophin, you just added reps and saw a good ROI on that immediately. Is this market really that promotion sensitive? Maybe just characterize that a bit more? And are there still some pockets where you could add more reps? And would you do that in the near term given the great returns there? And then the prefilled syringe seems to be having a big impact on the acceleration. Was administration really that much of a factor that previously held back use? So just explain more why you're seeing such a benefit from the prefilled syringe helping growth.

A: Yes. I think, Gary, thank you for your questions. That first question on the impact of and impact of sales reps, I would say that the way we think about it is we expanded our -- the underlying patient demand is very high, right, versus anything that we're capturing. So there are opportunities to reach prescribers, right, that with our sales force, there's opportunities to get in front of more prescribers and spend more time with them that we can keep building on where we are. So if you look at -- if you think about where we expanded the sales force, we had a combined sales force detailing into neurology, nephrology and rheumatology. And as you can imagine that even within a territory, it's tough to cover all 3 indications. So we expanded the number of sales reps in that area. And what that did is it reduced what's called windshield time and allowing the reps to spend more time speaking with docs about Cortrophin. And yes, there is opportunity to -- across specialties, across indications as we think about increasing awareness for the appropriate patients of Cortrophin, there's certainly opportunity to do that across multiple areas, right, across the portfolio area, across gout, across ophthalmology. So ophthalmology, I think we're set with the combined sales force we have right now. But there's opportunities sort of across multiple specialties and something that we'll continue evaluating high ROI commercial efforts there. And then your second question on prefilled syringe. Look, when we launched the prefilled syringe, we had expected that the prefilled syringe would be used for patients that had dexterity issues or issues with their eyesight. But as we're seeing this much greater adoption and it's across specialties, I think when given an option, I think prescribers are just prescribers and patients are choosing the reduced administration step because in the original or in the 5 ml vial, there are 2 steps to the administration. You have to obviously draw the drug from the vial and then administer it and have to use 2 different needles for doing so. So a prefilled syringe is -- it reduces that step in administration and has therefore driven more widespread adoption. What it has done is there are prescribers that are sort of willing to try a prefilled syringe, probably a bit more than going to a 5 ml vial that requires -- which is a larger use. But I mean, essentially, the growth is coming from the strong underlying demand which would have been there also with the 5 ml vial and the 1 ml vial, the other presentations that are there, the adoption of the prefilled syringe has driven -- has been driven by just the reduced steps of administration.

Q: Congrats on another good quarter. Nikhil, just following on from the prior question. Can you just remind us of the challenges of label expansion in the ACTH category for these products? Just sort of in the past, is this label expansion been a cost-benefit decision or practicality decision? And then just sort of any color in terms of if this market does double, the confidence around maintaining exclusivity on gout as a label claim? And then does that Phase IV data give you any potential additional IP around that?

A: Thank you, Brandon. I think that the -- our interaction -- on your question on label expansion, our interaction with the FDA suggests that any label expansion will need to follow the current rules of the FDA, which requires a Phase IV -- sorry, Phase III clinical trial and all the associated rules that are in place today. So that's what we'll need to do, and that's what our competitor will need to do, whether that's us trying to -- that's our understanding, whether that's us exploring infantile spasms or which is an indication they have that we don't or us exploring or them exploring acute gouty arthritis flares. And then on the Phase IV data, look, that study was designed and is being executed more to inform and assist physicians in their treatment and hopefully, in their treatment decisions and hopefully could be included in the treatment guidelines, which can drive sort of further adoption.

Q: Three for me. So just to touch on the sales force again. What are some of the KPIs that you're tracking to back the rightsizing of this team? And what trends have you seen in the sales per rep from the sales force expansion? And any of these metrics would drive your reasoning to potentially increase the sales force? And then second, can you provide any more color around that partner generic program? Are there additional opportunities in similar scope? Or is this a one-off situation? And then third, maybe for Steve. As you close out the year, could we potentially anticipate an intangible asset impairment charge tied to the revaluation of the Alimera acquisition?

A: All right. Thank you for your questions, Les. So I think first is on the sales force. As we believe -- well, on the KPIs, we're going to -- we try to share information that's helpful to investors and competitively sensitive. So I'll steer away from the KPIs. But on the trends, I mean, there's clearly expansion of the sales force in the appropriate areas is a high ROI commercial effort as evidenced by the expansion that we did earlier this year for our portfolio sales team. So that's something that we will continue to evaluate and explore as we move forward. On the partner generic -- yes, on the partner generic, there are definitely opportunities like that, ones that have been in the hopper that ones that we continue to work on. And it really just highlights our end-to-end capability, right, in BD, in R&D, in commercialization and obviously, in operational excellence. So across the board, I think we're uniquely positioned with our U.S. manufacturing footprint, right, with more than 90% of our revenues coming from products that are made in the U.S. with our 3 manufacturing facilities that are in the U.S. So we're uniquely positioned from that standpoint. And we absolutely plan to and are already working on such opportunities to capture and to bring to market. And then on the -- I think the ILUVIEN long-term question, I think that there is -- so beyond Q4 and 2026, we believe the addressable patient populations for ILUVIEN in both DME and NIU-PS are at least 10x the current number of patients currently being treated with ILUVIEN. We expect to see the results of our strengthened ophthalmology organization deploying the expanded peer-to-peer speaker education program and new marketing initiatives. And then in addition, we continue to disseminate and contextualize the findings of the NEW DAY clinical study and create greater awareness on the potential use of ILUVIEN. So while we see 2025 as a reset year, we are confident in being able to drive growth in 2026 and beyond for ILUVIEN. And Steve, I don't know if you want to add anything to Les' question with that backdrop.

A: Yes, I would only add that we evaluate all of our intangible assets on a quarterly basis. And the third quarter for ILUVIEN was no different and obviously, passed that testing in the third quarter. And as Nikhil just outlined, right, when we think about the mid- to long-term forecast for the product, we remain confident in the mid- to long-term opportunities as Nikhil just laid out.