ANI Pharmaceuticals, Inc. Morgan Stanley 24th Annual Global Healthcare Conference

Good morning everyone, and thanks for joining us. I'm Daniel Cohen from Morgan Stanley, and it's my pleasure to welcome you to this fireside chat with ANI Pharmaceuticals. ANI is a diversified biopharmaceutical company that has transformed itself into a rare disease growth story led by Cortrophin Gel and a growing ophthalmology portfolio, supported by strong cash generative generics and established brands for our businesses. It's been a standout year, results ahead of expectations, multiple guidance raises, and real acceleration across the rare disease franchise. I'm joined by two leaders who can take us through it. Nikhil Lalwani is ANI's President and Chief Executive Officer, a role he's held since 2020, and the architect of the company's pivot to rare disease strategy.

Stephen Carey is ANI's Chief Financial Officer and Senior Vice President of Finance, who has been with the company since 2016 and leads its financial strategy and capital allocation. Nikhil, Steve, thank you for joining us. Let's get into it. Thank you, Daniel.

Good morning, everybody, and thank you for joining us bright and early.

Nikhil, you've now been the CEO for six years. How do you feel about the progress made thus far, and what's your vision for the future of ANI?

Yeah. Thank you, Daniel. I'm really pleased with the progress made by the team across the last six years. We have made several important steps for the company and the company's trajectory. Starting with when I joined as CEO in 2020, we were largely a BD shop. We did business development in generics and in established brands or older brands. We sat together with the board and big believer in moving capability forward and building capabilities in the organization. There are two successful capabilities that we've built as a result, two successful high-performing businesses. First is our rare disease business and the commercialization that goes with that. So the capability to commercialize rare disease products. That's a key capability we've built. The second is generics. Developing, manufacturing, and commercializing generics products. I'll just talk you through those two.

On the rare disease front, our lead asset, Purified Cortrophin Gel, we got the SNDA approved in October 2021 and launched that drug in January of 2022. When we built that team, we really went out there and hired the best talent that we possibly could from leading rare disease organizations and most of those individuals are still with us. That's the anchor of the capability that we've built in rare disease. It's across the sales team, medical affairs, market access, patient support, specialty pharmacy distribution. It's across the board. It's really the platform or the infrastructure that we've built with the team as the anchor to it and obviously strengthen the systems and processes along the way.

The second is our generics business, where we were a BD shop, as I was saying, and we went and acquired Novitium, which is a leading generics R&D organization, massive R&D capability, and capability that was well ahead of what they could fund. Over the past four years, five years, we've been able to have significant success with that acquisition. Both Cortrophin and the Novitium acquisition have been runaway successes for us and then really just built that capability where we can do 10 to 15 new product launches every year on the back of that R&D capability and generate EBITDA and cash flows that, as you pointed out in your introduction, we are taking to reinvest into the rare disease business. Vision for the future is very clear. We're leading our transformation into accelerating our transformation into a leading rare disease company.

In 2026, approximately 60% of our revenues, approaching 60% of our revenues will come from rare disease. Really just overall very pleased with the progress over the last six years, taking revenues from right around $200 million to north of $1 billion this year, 5x, and similar growth in EBITDA. Building two high-performing businesses in rare disease and in generics.

Great. Thanks, Nikhil. Let's start with the rare disease product, Cortrophin Gel. Can you talk through the unmet need that it addresses and how big the addressable market is?

Sure. Purified Cortrophin Gel is a repository corticotrophin. It is derived from the pituitary glands of porcine, so it is a naturally derived product, and it is shown to bind with, in an in vitro basis, with all five melanocortin receptors, which are cell surface proteins. What Cortrophin Gel is used for is across multiple autoimmune indications to deal with inflammations or exacerbations and flares, and it is appropriate for treatment of patients who generally are not responding to other treatments such as steroids or have high side effect profile with steroids. So that is the role that Cortrophin Gel plays. We are approved in multiple indications. The six or seven specialty areas or indications we focus on are rheumatology, nephrology, neurology, ophthalmology, pulmonology, and acute gouty arthritis. When you talk about addressable market across the different specialties and indications, we believe there are approximately 1 million patients.

Now, as I walk you through that, the indication itself may not be rare, but the addressable patient population or the appropriate patient population is much smaller across the broader incidence disease. Let me just explain that. If you take acute gouty arthritis flares, there are 10 million patients in the U.S. that suffer from acute gouty arthritis flares. A number of them, those flares resolve on their own. Some get treated well by treatments such as prednisone and colchicine, et cetera. But there is a very small subset of patients, which we see is about 285,000, that their flares require IV or injectable treatment. So that is 285,000 out of 10 million, and that is what we think of as addressable market. Similarly, if you do the same analysis across multiple sclerosis, rheumatoid arthritis, nephrotic syndrome, and sarcoidosis, et cetera, you get to about 1 million patients.

We are just getting started. Between the competitor and us, because there is one other player in the ACTH category, we are currently, both a combined basis, serving a very small fraction of that 1 million addressable patient population.

Can you talk a little bit more about the expansion to primary care and podiatry for the gouty flares and how that's going?

Sure. We're in year 5 of our launch, and every year, as we're trying to reach more patients, one of the ways we do that is by reaching new prescribers. While this category has existed for a while, an important metric is that over half of our prescribers, even before this most recent expansion, comes from prescribers that were naive to ACTH, that had never tried ACTH before, the ACTH category. As we were working across the first 4 years, what we found is that approximately 18% of our usage came from acute gouty arthritis flares, that there was a real need there. However, the call points that we were going to, the specialties we were going to, which are rheumatology and nephrology, only tackle a small subset of the addressable patient population.