ANI Pharmaceuticals(ANIP) - 2024 Q1 - Quarterly Results

Legal & Financial Disclosures Disclaimer This section outlines forward-looking statements, emphasizing that actual results may differ materially due to various risks and uncertainties, and states the company undertakes no obligation to update these statements - Forward-looking statements are subject to risks and uncertainties, including commercialization success, regulatory approvals, supply chain disruptions, and economic conditions, which may cause actual results to differ materially[3] - The company does not undertake any obligation to update or revise forward-looking statements[3] Non-GAAP Financial Measures This section defines non-GAAP financial measures like Adjusted EBITDA and Adjusted EPS, explaining their use by management for evaluation and strategic decisions, while clarifying their limitations - Non-GAAP financial measures, including Adjusted EBITDA and Adjusted EPS, are used by management to evaluate performance and make strategic decisions, providing useful information to investors[4] - These non-GAAP measures are not substitutes for GAAP measures and have limitations due to subjective calculations and potential differences in calculation methods compared to other companies[4] - The company does not provide a reconciliation for forward-looking non-GAAP measures due to the inability to accurately estimate all variables and adjustments without unreasonable effort[4] Company Profile & Strategic Overview Business Model and Growth Pillars ANI Pharmaceuticals operates with a business model driven by Rare Disease, Generics, and Established Brands, with Purified Cortrophin® Gel as a key growth driver - ANI's business model is driven by three pillars: Rare Disease (lead asset Purified Cortrophin® Gel), Generics (enhanced R&D and operational excellence), and Established Brands (unique commercial capability, high margins, strong cash flow)[7] 2023 Financial Snapshot | Metric | Value | | :---------------------------- | :------ | | 2023 Revenue | $487 million | | Adjusted non-GAAP EBITDA Growth | 140% | Historical Performance and Growth Drivers ANI has consistently achieved high revenue growth since 2021, with the Rare Disease segment, particularly Cortrophin Gel, projected as the primary future growth driver - ANI has consistently delivered high revenue growth since 2021[8] - Rare Disease is expected to be the largest driver of growth going forward[8] - Rare Disease contributed to profitability in 2023, in its second year of launch, following 2022 investment in infrastructure[14] Q1 2024 Business Highlights In Q1 2024, ANI saw steady gains for Cortrophin Gel across core therapeutic areas and strong traction in new areas, alongside six new generic product launches - Cortrophin Gel achieved steady gains in Q1 2024 across core therapeutic areas (rheumatology, neurology, nephrology) and strong traction in new areas (pulmonology, ophthalmology)[17] - Cortrophin Gel momentum continued into Q2 2024 with record new patient starts in April and May[17] - Six new generic products were launched in Q1 2024, leveraging operational excellence and U.S.-based manufacturing[17] Financial Outlook: 2024 Guidance 2024 Guidance Overview ANI Pharmaceuticals has reiterated its 2024 guidance, projecting total net revenue between $520 million and $542 million, with strong contributions from Cortrophin Gel 2024 Full Year Guidance vs. 2023 Actuals | Metric | Full Year 2024 Guidance | 2023 Actuals | | :--------------------------- | :---------------------- | :----------- | | Net Revenue (Total Company) | $520 million - $542 million | $487 million | | Cortrophin Gel Net Revenue | $170 million - $180 million | $112 million | | Adjusted Non-GAAP EBITDA | $135 million - $145 million | $134 million | | Adjusted Non-GAAP Diluted EPS | $4.26 - $4.67 | $4.71 | - 2024 guidance for Adjusted Non-GAAP Diluted EPS reflects a full year of shares outstanding from the May 2023 secondary equity raise[23] Rare Disease Segment: Cortrophin Gel Cortrophin Gel Product & Market Overview Cortrophin Gel, a purified corticotropin (ACTH), is a treatment for chronic autoimmune disorders in a market with limited competition and significant growth potential - Cortrophin Gel is purified corticotropin (ACTH) for chronic autoimmune disorders, facing limited competition with high barriers to entry[25][28] - The ACTH market was estimated at $600 million at Cortrophin Gel's 2022 launch, with a category potential of ~$1.2 billion for significant future growth[28] - Cortrophin Gel is approved for multiple indications, initially launched in nephrology and rheumatology, and recently expanded into pulmonology and ophthalmology[28] Cortrophin Gel Performance & Market Expansion Cortrophin Gel is ANI's primary growth engine, demonstrating continued prescription growth and active expansion into new therapeutic areas with new product formulations - Cortrophin Gel shows continued prescription growth in original therapeutic areas (neurology, nephrology, rheumatology) and strong prescribing momentum[30] - The company is gaining traction in new therapeutic areas, adding a second geographical region to the pulmonology sales force in Q1 2024 and deploying a targeted ophthalmology sales force[30] - A 1-mL vial size of Cortrophin Gel was launched in Q4 2023, indicated for acute gouty arthritis flares, expanding treatment options[30] ACTH Market Dynamics The overall ACTH market is projected to return to growth in 2024, with Cortrophin Gel expected to maintain a strong multi-year growth trajectory due to significant room for market expansion - The ACTH market is expected to return to growth in 2024, projected to grow ~8-10%+[32] - Cortrophin Gel is believed to remain on a strong multi-year growth trajectory[31] - The number of patients on ACTH therapy today is substantially lower than a few years ago, indicating significant room for growth[32] ACTH Market Sales ($ millions) | Year | ACTH Market Sales ($ millions) | | :--- | :----------------------------- | | 2019 | $953 million | | 2020 | $768 million | | 2021 | $594 million | | 2022 | $558 million | | 2023 | $537 million | | 2024E | $580 million - $590 million | Strategic Expansion Initiatives ANI is actively pursuing M&A and in-licensing opportunities to expand its Rare Disease business, prioritizing existing therapeutic areas and other rare disease segments - ANI is focused on M&A and in-licensing to expand its Rare Disease business[33][34] - Priority 1 opportunities are in existing therapeutic areas: nephrology, neurology, rheumatology, pulmonology, and ophthalmology[34] - Priority 2 includes rare disease opportunities outside current priority areas where ANI can leverage its Rare Disease platform[34] Generics & Established Brands Segment R&D, New Product Launches & Operational Excellence ANI demonstrates superior R&D capabilities and operational excellence, evidenced by new product launches, high CGT approval rankings, and a strong U.S.-based manufacturing footprint - Launched six new products in Q1 2024, including a Competitive Generic Therapy (CGT) product with 180-day exclusivity[38] - Ranks number two in CGT approvals and among the top 15 manufacturers in product approvals[38] - Increased 2024 R&D spend to fuel new launches and drive high single-digit/low double-digit growth[38] - Supplied over 1.5 billion doses of therapeutics in 2023 and maintains excellent compliance with successful FDA audits across all sites, including a Q1 2024 capacity expansion at the New Jersey site[38][86][87] - Focuses on cost excellence through systematic reduction of raw materials and finished goods costs, and a lean approach to corporate spending[38] - U.S.-based manufacturing and operational nimbleness enable quick response to drug shortages and patient needs, establishing ANI as a partner of choice[40] Financial Strength Balance Sheet and Cash Flow ANI maintains a strong balance sheet to support its Rare Disease business development, reporting $221 million in cash and a significantly improved net debt to EBITDA ratio of 0.5x as of March 31, 2024 Balance Sheet Metrics | Metric | 2022 | 2023 | | :-------------------------- | :--- | :--- | | Cash & Cash Equivalents | $48 million | $221 million | | Net Debt/EBITDA | 4.4x | 0.5x | | Gross Debt | $297 million | $294 million | | Net Debt | $249 million | $73 million | | Adjusted Non-GAAP EBITDA (1) | $56 million | $134 million | - Strong balance sheet supports Rare Disease business development[37] Leadership Team Executive Management ANI Pharmaceuticals is led by an experienced and purpose-driven management team with extensive expertise in pharmaceuticals and healthcare, including key executives across various functions - Nikhil Lalwani, President & CEO, has over 20 years of leadership experience in pharmaceuticals and a proven track record of strategic growth[89] - Chris Mutz, Head of Rare Diseases, brings over 25 years of commercialization experience, including building and leading the launch of Soliris[89] - Samy Shanmugam, COO & Head of Global R&D, has extensive R&D and operations experience, having developed over 100 specialty dosage forms and ANDAs[89] - The leadership team includes experienced professionals in finance (Stephen Carey), HR (Krista Davis), legal (Meredith Cook), generics (Ori Gutwerg), corporate development (Chad Gassert), and operations (James Marken)[89][90] Key Investment Highlights Investment Summary ANI Pharmaceuticals presents a compelling investment case driven by its strong and growing Rare Disease business, robust Generics segment, solid financial strength, and an experienced management team - Strong and growing Rare Disease business, with Cortrophin Gel forecasted at $170 million - $180 million revenues in 2024 (+52% - 61%) and significant multi-year future growth opportunity[91] - Robust and nimble Generics segment with targeted growth in the high single-digit to low double-digit range, driven by R&D excellence and reliable supply from U.S. manufacturing[91] Financial Strength Highlights | Metric | Value (as of March 31, 2024) | | :-------------------------------- | :--------------------------- | | Unrestricted Cash | $229 million | | 2023 Cash Flow from Operations | $119 million | | Estimated 2024 Revenue | $520 million - $542 million (7% - 11% YoY growth) | | Estimated 2024 Adjusted non-GAAP EBITDA | $135 million - $145 million | | Estimated 2024 Adjusted non-GAAP EPS | $4.26 - $4.67 | - Experienced, purpose-driven management team with deep expertise across Rare Disease, Generics, and Established Brands, focused on serving patients[91] Appendix: Non-GAAP Reconciliations Adjusted non-GAAP EBITDA Reconciliation This section provides a detailed reconciliation of Net Income to Adjusted non-GAAP EBITDA for the three months ended March 31, 2024, and 2023, including various non-recurring and non-cash adjustments Adjusted non-GAAP EBITDA Reconciliation (Three Months Ended March 31) | Metric | 2024 ($) | 2023 ($) | | :------------------------------------------ | :--------- | :--------- | | Net Income | 18,207 | 1,439 | | Interest expense, net | 4,600 | 7,696 | | Provision for income taxes | 7,128 | 726 | | Depreciation and amortization | 14,686 | 14,700 | | Contingent consideration fair value adjustment | 90 | 961 | | Restructuring activities | - | 1,130 | | Gain on sale of building | (5,347) | - | | Unrealized gain on investment in equity securities | (9,655) | - | | Impact of Canada operations | - | 1,647 | | Stock-based compensation | 6,934 | 4,338 | | Novitium transaction expenses | 713 | 342 | | Litigation expenses | 245 | - | | Adjusted non-GAAP EBITDA | 37,633 | 33,013 | Adjusted non-GAAP EPS Reconciliation This section details the reconciliation of Net Income Available to Common Shareholders to Adjusted non-GAAP Diluted EPS for the three months ended March 31, 2024, and 2023, with adjustments for non-cash and non-recurring items Adjusted non-GAAP EPS Reconciliation (Three Months Ended March 31) | Metric | 2024 ($) | 2023 ($) | | :-------------------------------------------------- | :--------- | :--------- | | Net Income Available to Common Shareholders | 17,801 | 1,033 | | Non-cash interest (income) expense | (10) | 987 | | Depreciation and amortization | 14,686 | 14,700 | | Contingent consideration fair value adjustment | 90 | 961 | | Restructuring activities | - | 1,130 | | Gain on sale of building | (5,347) | - | | Unrealized gain on investment in equity securities | (9,655) | - | | Impact of Canada operations | - | 1,647 | | Stock-based compensation | 6,934 | 4,338 | | Novitium transaction expenses | 713 | 342 | | Litigation expenses | 245 | - | | Less: Estimated tax impact of adjustments | (1,991) | (5,785) | | Adjusted non-GAAP Net Income Available to Common Shareholders | 23,466 | 19,353 | | Diluted Weighted-Average Shares Outstanding | 19,422 | 16,531 | | Adjusted non-GAAP Diluted Earnings per Share | 1.21 | 1.17 |