ANI Pharmaceuticals, Inc. Wells Fargo 21st Annual Healthcare Conference

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 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. 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 to 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 to 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 to $300 million in adjusted non-GAAP EBITDA.