ANI Pharmaceuticals - Earnings Call - Q2 2025

Executive Summary

• Record quarter: net revenues $211.4M (+53.1% YoY; +37.0% organic), adjusted EBITDA $54.1M (+62.8% YoY), and adjusted EPS $1.80; GAAP diluted EPS $0.36.
• Guidance raised materially: 2025 net revenues to $818–$843M, adjusted EBITDA to $213–$223M, and adjusted EPS to $6.98–$7.35; retina (ILUVIEN/YUTIQ) guidance reduced to $87–$93M due to persistent Medicare co-pay access issues; Cortrophin guidance lifted to $322–$329M (+63–66% YoY).
• Cortrophin Gel momentum: $81.6M revenue (+66% YoY), driven by more than doubling of new patient starts YoY, 33% sequential ophthalmology volume growth, and rapid adoption of the prefilled syringe (~70% of July new cases).
• Generics strong (prucalopride exclusivity) at $90.3M (+22.1% YoY), with expected H2 moderation as competitors enter; mix and exclusivity pushed non-GAAP gross margin to 64.9%.
• Catalysts: raised FY25 guide and explicit expectation for sequential Cortrophin growth in Q3/Q4; potential improvement in retina patient access if funding returns; litigation update (CG Oncology verdict—management intends to challenge).

What Went Well and What Went Wrong

What Went Well

• “Record-setting quarter” with all-time highs in net revenue, adjusted EBITDA, and adjusted EPS, reflecting strong momentum in Rare Disease and Generics.
• Cortrophin Gel drove strength: $81.6M (+66% YoY), new patient starts “more than doubled,” and 33% sequential growth in ophthalmology; prefilled syringe reduced administration steps and is driving uptake.
• Generics delivered $90.3M (+22.1% YoY) on new launches and first-to-market prucalopride with 180-day exclusivity; non-GAAP gross margin expanded to 64.9% on favorable mix.

Quotes:

• CEO: “We had another record-setting quarter… very strong momentum across our business units”.
• CEO: “We are increasing our 2025 guidance for total net revenues, adjusted EBITDA, and adjusted EPS”.
• CFO: “Non-GAAP gross margin was 64.9%,… due to favorable mix towards rare disease…and prucalopride exclusivity”.

What Went Wrong

• Retina market access remained challenged for Medicare patients due to a lack of third-party co-pay assistance funding; FY25 retina guidance reduced to $87–$93M (from $97–$103M).
• SG&A elevated (non-GAAP $67.1M, +65.8% YoY) given expanded ophthalmology team and continued investment in Rare Disease marketing; R&D increased to $16.0M (non-GAAP) to support growth and studies.
• Prucalopride exclusivity ended late Q2, with management explicitly guiding lower Generics revenue in H2 as competitors enter.

Transcript

Speaker 10

Good day, everyone, and welcome to today's ANI Pharmaceuticals, Inc. Q2 2025 earnings results call. Please note this call is being recorded. After the speakers' opening remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press the star key, then the number two on your telephone keypad. It is now my pleasure to turn the conference over to Lisa Wilson. Please go ahead.

Speaker 4

Thank you, operator. Welcome to ANI Pharmaceuticals Q2 2025 earnings results call. This is Lisa Wilson, Investor Relations for ANI. With me on today's call are Nikhil Lalwani, President and Chief Executive Officer, Steve Carey, Chief Financial Officer, Chris Mutz, Senior Vice President and Head of Rare Disease at ANI Pharmaceuticals, and Dr. Mary Pau, our Chief Medical Officer. You can also access the webcast of this call through the Investor section of the ANI Pharmaceuticals website at anipharmaceuticals.com. Before we get started, I would like to remind everyone that any statements made on today's conference call that express a belief, expectation, projection, forecast, anticipation, or intent regarding future events and the company's future performance may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act.

These forward-looking statements are based on information available to ANI Pharmaceuticals management as of today and involve risks and uncertainties, including those noted in our press release issued this morning and our filings with the SEC. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. ANI Pharmaceuticals specifically disclaims any intent or obligation to update these forward-looking statements except as required by law. The archived webcast will be available for 30 days on our website, anipharmaceuticals.com. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on August 8, 2025. Since then, ANI Pharmaceuticals may have made announcements related to the topics discussed, so please reference the company's most recent press releases and SEC filings. I'll turn the call over to Nikhil Lalwani.

Speaker 5

Thank you, Lisa. Good morning, everyone, and thank you for joining us. I'll start by discussing our second quarter performance and highlights, along with our raised 2025 guidance. Chris Mutz will then provide additional color on our rare disease business, including our lead asset, Purified Cortrophin Gel, and our retina assets, ILUVIEN, and YUTIQ. Finally, Steve Carey, our CFO, will review our second quarter results and updated 2025 guidance in more detail. Following our remarks, our Chief Medical Officer, Dr. Mary Pau, will join us, and we will take your questions. This was a record-setting quarter for our company, with all-time overall company highs in net revenue, adjusted non-GAAP EBITDA, and adjusted non-GAAP EPS, reflecting very strong momentum across both our rare disease and generics business units.

Our rare disease team delivered exceptional year-over-year and sequential quarterly growth, with Purified Cortrophin Gel demand accelerating and both new patient starts and new cases initiated reaching new highs. We continue to pursue initiatives to improve the performance of our retina franchise, yielding positive results. Our generics business delivered another solid quarter, driven by new product launches and strong operational execution. Based on our very strong second quarter performance and broad-based momentum across rare disease and generics, we are raising our 2025 guidance for total net revenues, adjusted non-GAAP EBITDA, and adjusted non-GAAP EPS. We now expect 2025 revenues of $818 million to $843 million, which represents growth of 33% to 37% over 2024, versus our prior guidance of $768 million to $793 million. We expect rare disease to account for approximately 57% of total company net revenues in the second half of 2025.

We expect adjusted non-GAAP EBITDA of $213 million to $223 million, which reflects growth of 37% to 43% over 2024, versus our prior guidance of $195 million to $205 million. Lastly, we expect adjusted non-GAAP earnings per share between $6.98 and $7.35, up from our prior guidance of $6.27 and $6.62. Steve will provide more specifics on our increased guidance later in the call. Turning now to our second quarter results. Total net revenues were $211.4 million, representing year-over-year growth of 53% on an as-reported basis and 37% on an organic basis, driven by strong growth for our lead rare disease asset, Purified Cortrophin Gel, and our generics business. Adjusted non-GAAP EBITDA was $54.1 million, and adjusted non-GAAP EPS was $1.80. Purified Cortrophin Gel had an exceptional quarter with revenues of $81.6 million, up 66% year-over-year and 54% from the first quarter of 2025.

Strong execution by our commercial teams, including our newly expanded portfolio sales team, the successful launch of our pre-filled syringe, and continued momentum across our target therapeutic areas contributed to record demand in the second quarter. As a reminder, in the first quarter, we expanded our portfolio sales team, which promotes Purified Cortrophin Gel in neurology, nephrology, and rheumatology from 52 to 70 members. Remapping and increasing the number of sales territories led to a meaningful increase in productivity as the smaller territories allowed all of our reps to spend more time detailing Cortrophin and less time traveling. As a result, the team was able to produce a meaningful sequential quarterly growth in new cases initiated and new patient starts that exceeded our prior expectations. We also saw strong interest and demand for our new Purified Cortrophin Gel pre-filled syringe presentation, which we launched in April.

The pre-filled syringe offers advantages to both patients and physicians by reducing the number of steps required for self-administration, which is especially important for patients with impaired vision or limited hand mobility. We expect the pre-filled syringe to remain an important driver of prescription demand going forward. Based on continued growth in Purified Cortrophin Gel, prescribers, and patients, as well as broad adoption across therapeutic areas, we are increasingly confident that Cortrophin is on a strong multi-year growth trajectory. The ACTH market grew 27% to $684 million in 2024 and is expected to grow 36% to $933 million in 2025 based on the midpoints of our new guidance and the competitor's guidance. While recent growth in the ACTH market has been strong, the current number of patients on ACTH therapy remains significantly below historical levels, offering substantial room for expansion.

We estimate that today's patient base is still roughly half of what it was at the market's peak in 2017. In addition, today's ACTH market covers a broader set of indications, including acute gouty arthritis flares, which was not there in 2017. Further, based on our epidemiological analysis, we believe that the addressable patient population for ACTH therapy could be many times larger than the previous high of eight years ago. Importantly, a large and growing group of our prescribers were previously naive to ACTH. We believe that that number now exceeds 50%. We remain confident in our rare disease team's ability to sustain robust multi-year growth for Purified Cortrophin Gel. Based on our first half performance and continued strong underlying demand trends, we are increasing our 2025 Purified Cortrophin Gel guidance to $322 million to $329 million from our prior guidance of $265 million to $274 million.

Our new guidance reflects year-over-year growth of 63% to 66%. Turning now to our retina portfolio. Our retina portfolio, ILUVIEN and YUTIQ, generated revenues of $22.3 million in the second quarter, consistent with our expectations. Our commercial team progressed several key initiatives during the second quarter. We executed on the addition of the chronic NIU-PS indication to ILUVIEN's label and fully transitioned our U.S. commercial focus to ILUVIEN. At the same time, we remain committed to supporting physician offices in navigating ongoing Medicare market access challenges, particularly for patients who previously relied on foundational support. We also took important steps to strengthen our U.S. ophthalmology sales team. As noted earlier, we remain on track to realize meaningful revenue synergies for Purified Cortrophin Gel within ophthalmology.

Our international ILUVIEN business, accounting for over one-third of ILUVIEN revenues, continues to perform well across both our direct markets and those served by distribution partners. We also completed the NuDay clinical trial of ILUVIEN in earlier-stage DME and presented the results at the American Society of Retina Specialists, or ASRS, annual meeting. NuDay was the first clinical study that tested a long-acting steroid against anti-VEGF standard-of-care treatment. Feedback on the NuDay results from study investigators and retina physicians at ASRS was positive and reinforced our view that the data could help support the use of ILUVIEN earlier in the DME patient journey. Chris will speak more on NuDay and our next steps with the data.

While the second quarter was productive for our ophthalmology team and we successfully executed against our objectives, externally, the market access challenges that have impacted prescribing of retina drugs for Medicare patients since January have persisted. We previously assumed that some funding for Medicare patient support foundations would resume and Medicare access would improve in the second half after a large ophthalmology company launched its matching program for donations to the Good Days Fund. Unfortunately, this has not yet happened. We made the decision to update our guidance to reflect this dynamic. We now expect 2025 revenues for our retina franchise of $87 million to $93 million versus our prior guidance of $97 million to $103 million. Moving now to our generics business, which also delivered strong performance in the second quarter with revenues of $90.3 million and an increase of 22% over the prior year period.

The quarter reflected strong execution in our base business and contribution from new product launches, including prucalopride tablets with 180-day exclusivity. Based on the performance of our generics business in the first half of the year, we continue to expect growth for the full year in the mid-teens. Our brand store portfolio also had a strong quarter with revenues of $13.2 million, up 32% year over year. We were able to identify and capture increased demand for certain products during the second quarter and anticipate a return to a more normalized level of demand during the second half. Next, I will review a few points regarding ANI's standing in the evolving tariff situation. While we await the administration's pharmaceutical industry-specific framework, it is worth reiterating ANI's longstanding commitment to the U.S. pharmaceutical industry and our positive and unique positioning relative to our peers.

We are a U.S.-domiciled pharmaceutical company with over 90% of total company revenues coming from finished goods manufactured in the United States. Products representing less than 5% of our total company revenues rely directly on imports from China. In addition, we have a strong balance sheet that enables us to carry healthy levels of finished goods and raw material inventories. We look forward to maintaining our strong commitment to the U.S. pharmaceutical industry. Before I turn the call over to Chris, I'd like to comment on the recent trial with CG Oncology. As a reminder, under an assignment and technology transfer agreement dated November 15, 2010, ANI had sold CG0070 CREDUS Temagene and related assets such as the investigational new drug application, or IND, phase one, phase two clinical data, know-how, and IP to CG Oncology.

ANI commenced a civil action against CG Oncology in the Superior Court of the State of Delaware in March 2024, alleging that CG Oncology is liable to pay a running royalty of 5% on the worldwide net sales of their lead product, CG0070 or CREDUS Temagene. The case proceeded to trial on July 21, and the jury returned the verdict in favor of CG Oncology on July 29. We continue to believe in the merits of our position and intend to vigorously challenge the verdict through post-trial motions and/or an appeal. I'll now turn the call over to Chris to discuss our rare disease business in more detail. Chris?

Speaker 9

Thank you, Nikhil, and good morning, everyone. Our rare disease team was highly productive during the second quarter. We generated record demand for Purified Cortrophin Gel with broad-based strengths across specialties. We made good progress capturing opportunities and addressing challenges for our retina franchise. First on Purified Cortrophin Gel, we are very pleased with continued strong demand and feedback from physicians. Similar to the last several quarters, we saw growth across all of our targeted specialties. The number of cases initiated and new patient starts reached record highs. Our expanded portfolio sales team hit the ground running, adding new prescribers and driving meaningful increases in new patient starts across neurology, nephrology, and rheumatology. Our specialty-focused teams produced strong growth in our newer areas of pulmonology and ophthalmology, and we believe we are still in the early stages of penetrating these therapeutic areas.

In ophthalmology, we saw a record number of new cases initiated and a 33% sequential quarterly increase in Purified Cortrophin Gel volumes. We have already realized meaningful revenue synergies as a result of the Alimera Sciences acquisition and believe there are further opportunities as we expand awareness of Purified Cortrophin Gel's utility in helping patients with severe allergic and inflammatory eye conditions. We saw very strong demand for our new Purified Cortrophin Gel pre-filled syringe offering, which we launched in April. The reduced number of steps required to administer the pre-filled syringe has resonated with patients and physicians, and we observed prescribing of the pre-filled syringe ramped across indications during the quarter.

We are pleased to report that the pre-filled syringe already accounts for approximately 70% of new cases initiated only three months into its launch. Purified Cortrophin Gel prescribing for acute gouty arthritis flares remained a strong driver in the second quarter. As a reminder, the gout indication is unique to Purified Cortrophin Gel among ACTH therapies. Gout accounts for approximately 15% of Purified Cortrophin Gel use and has contributed significantly to the growth of new prescribers for Purified Cortrophin Gel. We're continuing to invest in evidence generation for Purified Cortrophin Gel with our previously announced phase four trial in acute gouty arthritis flares. We believe the 150-patient study will provide physicians with valuable insight on the treatment of acute gouty arthritis flares with Purified Cortrophin Gel and could support positioning in the American College of Rheumatology treatment guidelines.

We are also pleased to announce two new publications of important preclinical data that expand the body of evidence around the use of Purified Cortrophin Gel in nephrology and ophthalmology. Firstly, our preclinical study of Purified Cortrophin Gel in uveitis that was presented earlier this year has been published in Ocular Immunology and Inflammation. Secondly, a manuscript for a preclinical study of Purified Cortrophin Gel in membranous nephropathy was accepted for publication in Molecular Therapy, a leading journal in the field of innovative therapeutics. The study speaks directly to the steroid-independent mechanism of action of Purified Cortrophin Gel in an animal model of membranous nephropathy, specifically its effect on the complement system, an area of significant interest in ongoing membranous nephropathy drug development.

Overall, we are delighted with the growing recognition of Purified Cortrophin Gel as a treatment option for appropriate patients and look forward to delivering strong multi-year growth for the product. Turning to our retina franchise, as Nikhil mentioned, in the second quarter, our commercial team was focused on managing the ILUVIEN launch with the combined label for chronic NIU-PS and DME and transitioning promotional efforts fully to ILUVIEN. We have successfully hired and onboarded nearly all vacancies across our sales territories and now have a full team dedicated to educating and supporting the retina community. In mid-June, we began promoting ILUVIEN under the combined label for chronic NIU-PS and DME, and the transition is on track with our sales teams educating customers across the country and our market access team working with payers to establish coverage for ILUVIEN's new NIU-PS indication.

We've received positive feedback on the convenience of a single product covering both indications. Also in Q2, we strengthened our promotional efforts, launching new peer-to-peer educational speaker programs and new refreshed marketing materials for ILUVIEN, which are helping our sales team increase awareness among retina physicians. Our initiatives to help physician practices navigate the market access challenges for Medicare patients that have impacted the retina market since early January yielded positive results in the quarter. As a reminder, patient support foundations, such as Good Days, did not receive sufficient funding for 2025, which affected their ability to assist Medicare patients with co-pay support. This change in access affected retina products broadly and was not unique to our portfolio.

The magnitude of the disruption that this lack of foundation funding has had on the treatment of retina diseases in Medicare patients was actually a topic of a paper at the recent ASRS meeting in Long Beach, California. In a survey of 455 retina specialists presented at the meeting, 94% of respondents reported a significant or moderate impact on their practice, and 78% of respondents noted that at least 25% of their Medicare-age patients were unable to receive their preferred medication. Our commercial team has been working closely with retina practices to help improve access for Medicare patients, including accessing ILUVIEN through a specialty pharmacy using Medicare Part D benefits. I'm very proud of how our team executed in the quarter while facing these significant access challenges.

We're hopeful that funding for patient support organizations will resume in the second half, which should help increase access for Medicare patients to ILUVIEN and other retina products. As a reminder, one of the largest companies in the retina space recently initiated a matching program for donations to Good Days, through which it will match up to $200 million of donations over the balance of 2025. We recently presented the results from our NuDay clinical trial of ILUVIEN in patients with DME at the American Society of Retina Specialists annual meeting in Long Beach, California. Feedback on the results from study investigators and retina physicians at ASRS was very positive. Although the study did not meet its primary endpoint, some physicians have indicated that the NuDay data may support treating DME patients earlier with ILUVIEN based on its role in reducing treatment burden for these patients.

Following the release of this data, several next steps are underway. We are preparing additional presentations at upcoming national and international conferences to further share and contextualize these findings. In parallel, we are actively exploring the potential of including NuDay in promotion aimed at increasing awareness and understanding of the study results. With that, I'll turn the call over to Steve for the financial update. Steve?

Speaker 2

Thanks, Chris, and good morning to everyone on the call. I'll review our second quarter results and then discuss our updated guidance for the full year. ANI generated revenues of $211.4 million in the second quarter, up 53% over the prior year period. Revenues from rare disease and brands were $117.2 million in the second quarter, approximately double the prior year period on an as-reported basis and up 60% on an organic basis, driven by growth in our rare disease franchise. Rare disease revenues were $104 million, up 111% from the prior year. Revenues from Purified Cortrophin Gel were $81.6 million, up 66% from the prior year period, driven by increased volume on a record number of new patient starts. Revenues from ILUVIEN and YUTIQ were $22.3 million, up from $16.1 million in the first quarter.

Revenues for brands were $13.2 million in the second quarter, up 32% versus the prior year period. We continued to capture increased demand for certain products through a portion of the second quarter and anticipate a full return to a more normalized level of demand during the second half of the year. Revenues for our generics and other segment were $94.2 million, an increase of 20% over the prior year period. Revenues for generics were $90.3 million, an increase of 22% over the prior year period, driven by increased volumes on contributions from new product launches in 2024 and the first half of 2025, including our launch of prucalopride tablets with its 180-day exclusivity. Now, moving down the P&L. As a reminder, when I speak to our operating expenses, I will be referring to our non-GAAP expenses, which are detailed on Table 3 in our press release.

Generally, our non-GAAP operating expenses exclude depreciation and amortization, stock-based compensation, and certain costs related to litigation and M&A activity. Please refer to Table 3 for a reconciliation to our GAAP expenditures. Non-GAAP cost of sales increased 29% to $74.2 million in the second quarter of 2025 compared to the prior year period, primarily due to net growth in sales volumes and significant growth of royalty-bearing products. Non-GAAP gross margin was 64.9%, an increase of over six points from the prior year period, principally due to favorable mix towards rare disease products and strength in generics driven by the prucalopride tablets 180-day exclusivity, which concluded at the end of the second quarter.

Non-GAAP research and development expenses were $16 million in the second quarter, an increase of 130% from the prior year period, driven by higher investment to support future growth of our rare disease and generics businesses, spend related to our NuDay clinical trial, as well as year-over-year timing of spend. Non-GAAP selling, general, and administrative expenses increased 66% to $67.1 million in the second quarter, driven by spend for our new larger ophthalmology sales team promoting Purified Cortrophin Gel and ILUVIEN and continued investment in rare disease sales and marketing activities, including the new sales representatives that we added in the first quarter. Adjusted non-GAAP diluted earnings per share was $1.80 for the second quarter compared to $1.02 per share in the prior year period. Adjusted non-GAAP EBITDA for the second quarter was $54.1 million compared to $33.2 million in the prior year period.

Turning to the balance sheet, we ended the second quarter with $217.8 million in unrestricted cash, up from $149.8 million at the end of the first quarter. Cash flow from operations was $110.8 million in the first half of the year. As of June 30th, we had $635.2 million in principal value of outstanding debt, inclusive of our senior convertible notes and term loan. At the end of the second quarter, our gross leverage was 3.3 times, and our net leverage was 2.2 times our trailing 12-month adjusted non-GAAP EBITDA of $198 million. Utilizing the midpoint of our revised 2025 adjusted non-GAAP EBITDA guidance, our net leverage is approximately 1.9 times on a forward basis. Now, turning to our updated 2025 financial guidance. We are raising our guidance for total revenue and adjusted non-GAAP EBITDA, primarily based on higher estimates for our rare disease business.

Our updated guidance is as follows: full-year 2025 net revenue of $818 million to $843 million, up from our prior guidance of $768 million to $793 million, representing year-over-year growth of approximately 33% to 37%. Purified Cortrophin Gel net revenue of $322 million to $329 million, up from our prior guidance of $265 million to $274 million, representing growth of 63% to 66%. We continue to expect sequential growth of Purified Cortrophin Gel revenues in the third and fourth quarters. Combined ILUVIEN and YUTIQ net revenue of $87 million to $93 million versus our prior guidance of $97 million to $103 million, our revised guidance assumes no meaningful change in the co-pay funding gaps facing Medicare patients in retina for the remainder of the year. Generics revenue growth in the mid-teens, driven by strength in our base business and contribution from new product launches.

Consistent with our expectations and previous guidance, we expect generics revenue in the second half of the year to be lower than that of the first half due to competitive entrance into the prucalopride market that occurred late in the second quarter. Adjusted non-GAAP EBITDA of $213 million to $223 million, up from our prior guidance of $195 million to $205 million, representing growth of approximately 37% to 43%. Adjusted non-GAAP EPS between $6.98 and $7.35, up from our prior guidance of $6.27 and $6.62. We currently anticipate a full-year U.S. GAAP effective tax rate of approximately 24% to 25%, and consistent with prior quarters, we will tax effect non-GAAP adjustments for computation of adjusted non-GAAP EBITDA diluted EPS using our estimated statutory rate of 26%. We also continue to anticipate between 20.3 million and 20.5 million shares outstanding for the purpose of calculating diluted EPS.

With that, I'll turn the call back to Nikhil.

Speaker 5

Operator, please open the line for questions.

Thank you. At this time, if you would like to ask a question, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star two on your telephone keypad. We'll take our first question from Gary Nutman with Raymond James. Please go ahead. Your line is open.

Good morning and congrats on the great quarter. Given the strength you saw in Purified Cortrophin Gel in the second quarter, first, I wanted to make sure there wasn't anything unusual in there in terms of one-time benefits or seasonality with any of the indications. With the great ROI you're getting with the increased sales force, it begs the question if there are other adds to the sales force you'll consider doing in any of the areas anytime soon, especially with the good market growth and the headroom there. You call out ophthalmology and acute gouty arthritis flares as the biggest drivers of growth. Is there still a lot of upside potential in both of those markets? Maybe you could walk through that.

Thank you, Gary, and good morning, and thank you. I'll take each question. The first question on seasonality or one-time benefit on Purified Cortrophin Gel, no, this is driven by the underlying demand. I think the factor to consider is new patient starts, which have more than doubled in Q2 2025 versus Q2 2024. This performance is an outcome of the increased demand rather than seasonality or benefit or any one-time benefit. That's one. Second, we do not contemplate adding at this time additional sales team members. Having said that, obviously, we continue to evaluate high ROI commercial initiatives to sustain the long-term growth of Purified Cortrophin Gel. We believe that there is a multi-year strong growth runway for Purified Cortrophin Gel and are investing both in evidence generation that Chris Mutz spoke about, bringing new presentations.

We brought the 1 mL and the 5 mL and the pre-filled syringe, and we're investing in other ways to increase the physician and patient convenience. That's how I would think about continuing to grow the franchise to deliver strong multi-year growth. The third is, ophthalmology revenue synergies that we saw in Q2, which led to the 33% increase in volume, is important. The gout additional acceleration is also important. Really, we have growth across therapeutic areas and indications, and we're really nowhere close to the addressable market. As we've spoken about epidemiologically, when you look at these different indications and look at the addressable market as a subset of the patients that are refractory or for whom steroid resistant, the addressable market is many times larger than even what was being treated at the peak. That provides substantial room for expansion.

The other data point that was important that we shared is, almost more than 50% of our prescribers are HCPs who had not used ACTH prior to the launch of Purified Cortrophin Gel. That gives us additional confidence in driving this sustainable long-term multi-year growth in Purified Cortrophin Gel. Thank you, Gary.

Speaker 9

Okay, great. Just a couple of quick follow-ups. With the additional cash flow that you're generating with the good performance, what are your priorities in terms of use of capital for debt paydown or business development? How much more active are you getting on the BD front? Just gross margin, why isn't that guidance coming up more, given that the mix is shifting more for rare disease? If it continues to move in that direction, the business mix, should we expect gross margins to move upwards and maybe to what extent over the next couple of years? Thanks.

Speaker 5

Right. Yeah, thank you for your question. I'll answer the first in terms of BD and then turn it over to Steve to talk about cash flows and then also your question on gross margin. On BD, look, as you've seen, there is strong growth that we've delivered organically. There is, you know, again, substantial room for growth organically, both across our two rare disease assets, Purified Cortrophin Gel and ILUVIEN, as well as in our generics business, right? We have, you know, a strong growth outlook organically. Therefore, for BD, we're continuing to focus our BD efforts on expanding the scope and scale of our rare disease business and are, you know, looking at assets. We're at the one-year anniversary of the Alimera Sciences acquisition.

We're continuing to look for assets, but we're not in a hurry and we're, you know, carefully evaluating what is the next, right, next step from a BD perspective. Again, I'd just like to reiterate that we have, you know, obviously a very strong organic growth outlook, as you were seeing even in the delivery in 2025 versus 2024. That's on the BD. I'll turn it over to Steve to answer the question on cash flows, and we can come back to gross margin.

Speaker 2

Yeah, thanks, Nikhil, and good morning, Gary. On the cash flows, we're very pleased with the cash generation in the first half of the year. At the moment, our near to midterm goal for cash is to continue to accrue cash to the balance sheet and build that war chest as we think about how to reinvest into the business, both organically and through future business development and potential M&A. That's our near-term goal. As we continue to generate cash, we can think about debt paydowns in the future. We have the cash in accounts that generate decent interest income returns that just acts as a natural hedge to some of the debt instruments that we have out there as well.

On the gross margin question, our second quarter gross margin was driven by strength in multiple lines of our business, including the second full quarter of prucalopride in generics, which had the benefit of first-to-market generic pricing, somewhat better than expected brands' performance, as well as the shift in the mix of the overall company towards rare disease. In the second half of the year, that benefit from prucalopride on total company margins will no longer be present, given the amount of competitors that entered in late June. We do continue to expect a moderation of brand performance. We're assuming fully normalized quarters of brand performance in the back half. Those impacts are expected to drive a modest reduction in second-half gross margin. Therefore, we're very comfortable in reiterating our full-year guidance of 63 to 64% margins for the full-year P&L by the end of the year.

On your associated question in terms of how we think margin evolves in the future, we're quite pleased at kind of approaching this mid-60s mark in 2025. We see that as a very good base for continued growth in the future, both as we manage the mix of our business as well as we continually have projects in place to improve our procurement process. It's an area that we've been quite focused on over recent years and have strengthened quite a bit. We continue to lean into procurement as we manage margins going forward, as well as continuing to leverage our manufacturing capability, right? We're very proud of our three U.S.-based manufacturing plants and the capabilities that they provide us. We're continually reinvesting into those facilities to ensure that we're optimizing margins as we go forward.

Gary, obviously, we don't speak to forward-looking guidance specifically at this time, but we do anticipate positive evolution of our margins as we continue to march forward.

Speaker 9

Great. Thanks for all that, and congrats again on the result.

Speaker 2

Thanks, Gary.

Speaker 5

Thank you, Gary.

Thank you. Our next question comes from Faisal Khurshid with Leerink Partners. Please go ahead. Your line is open.

Hey, guys. Thanks for the question. I just wanted to ask, you spoke on granularity on what exactly is driving the kind of pretty meaningful inflection to expansion of the ACTH class, like combined with the ACPA results reported earlier this week and your results today as well. Clearly, this class is experiencing a pretty big inflection. I get what you're saying is that, you know, it's just like a huge chance that even increasing penetration a little bit, you know, represents a large dollar value. If you can kind of like pinpoint, like, is it particular indications? Is it particular prescribers? Is it the launch of these easier-to-use dosage forms? What exactly is kind of like giving this like very strong growth?

Good morning and thank you, Faisal. I think in terms of what is going, and obviously we raised the guidance by $55 million for ourselves. Obviously, the competitor spoke about 20% to 30% growth. From our perspective, in terms of what is going, let's call it better than anticipated, first, the faster time to impact of the Purified Cortrophin Gel sales expansion by increasing from 52 team members to 70 team members for our core indications of nephrology, neurology, and rheumatology. That's a big, that's an important driver. Second, the acceleration in the newer indications of acute gouty arthritis flares, as well as the revenue synergies in ophthalmology, where we had a 33% increase in volume from the combined sales force that's selling both Purified Cortrophin Gel and ILUVIEN. Third, Chris Mutz talked about 70% of our new enrollments have been with the pre-filled syringe presentation.

That is a more rapid update and additional momentum than really what we had anticipated. Lastly, the acceleration of new prescriber addition, especially those that are naive to ACTH, who now account for approximately 50% of the Purified Cortrophin Gel prescriber base. Overall, this is not any one thing. It's multiple different drivers. Most importantly, we've made significant progress in building this high-growth, profitable, and sustainable rare disease business since the launch in 2022 and are well-equipped to continue tapping into this large TAM and continue to convince newer prescribers to provide Purified Cortrophin Gel to the appropriate patients.

Got it. Thank you. If I could just ask a follow-up on the pre-filled syringe, just to clarify, you're saying 70% of new patient starts with a pre-filled syringe. Could you also comment, I know you won't give any specifics around like gross to net and things like that, but could you just comment broadly if the economics around the pre-filled syringe are any different to you than the economics on the traditional vial and syringe format?

Yeah. On your first question, the stat that Chris Mutz shared in his prepared remarks was that 70% of enrollments in July, which is enrollment as in new cases initiated, were written with pre-filled syringe. That's what we said about the pre-filled syringe. On your question on gross to net, I think there's a modest upward pricing advantage in terms of the WAC of the pre-filled syringe. I think that's what we'll comment. Obviously, we strike a balance between sharing what is helpful to investors as well as what is competitively sensitive. That's what we'll share. Thank you, Faisal.

Speaker 2

Thank you.

Thank you. We will move next with Daniel Bevan with Guggenheim Securities. Please go ahead. Your line is open.

Hi. This is Daniel on Revamlo. Thanks for taking that question and congrats on the quarter. A couple of questions. One is sort of a follow-up question on the previous ones involving the pre-filled syringes. Are there any particular specialties that are adopting this presentation more quickly than others, or maybe more quickly than you all expected? If there's any other additional color you could find there. The second question is on ILUVIEN. You mentioned that there's, you know, you can be market active challenges that sort of pushed that full-year guidance down here. Can you speak to if the NuDay clinical trial results had any positive impact on this new guidance?

Or maybe ask differently, if these positive results partially offset this negative impact in the market access challenges for 2025, or will the expected benefit from these NuDay results and the resulting education there be more of a longer-term benefit? Thank you.

Speaker 5

Sounds good. Good morning, Daniel, and thank you for your question. On the pre-filled syringe question, the ease of use of the pre-filled syringe has resonated really with physicians and patients. The prescribing of the pre-filled syringe has ramped across indications during the quarter. It is not one indication or the other; it is really across indications. That is why 70% of the new cases initiated were with the pre-filled syringe. I think that is one. On your question on ILUVIEN, specifics to the NuDay, the overall feedback on the NuDay study results has been positive from study investigators and physicians at ASRS. That was the last week or the week before. From Dr. Singer and the study investigators, they appreciated a couple of things. They appreciated having the first body of data that studied the use of ILUVIEN as a baseline therapy in patients earlier in DME.

Specific data points that they were interested in were the difference in time to first supplemental injection of Aflibercept in the ILUVIEN arm compared to the Aflibercept arm, and that approximately 30% of patients in both arms of the study did not require supplemental injection, as well as the total number of injections needed in the ILUVIEN arm, 2.8, versus the Aflibercept arm, which was 7 plus. Following the release of this data, several next steps are underway. We are preparing additional data presentations at upcoming national and international conferences to further share and contextualize these findings. In parallel, we are actively exploring the potential of including NuDay in promotion aimed at increasing awareness and understanding of the study results, especially in earlier DME patients. I think that we will continue to use NuDay to share and increase awareness of the study results as we move forward.

There is not a specific upside that has been factored into the back half of the year, with keeping this in mind. Thank you, Daniel.

Okay. Yeah, thank you.

Thank you. Our next question comes from David Amsellem with Piper Sandler. Please go ahead. Your line is open.

Thanks. Just a couple of quick ones for me on Purified Cortrophin Gel. First, as the category grows, how do you envision the payer landscape evolving? It looks like it's pretty benign at present. Over time, particularly given the expensive price points here for both products in the category, do you envision potentially a more restrictive environment? Do you envision potentially some at least minor erosion in net pricing? This is more of a long-term question, not a 2025 question. Just help us understand your thought process there. Secondly, I know that you've cited growth across all the various therapeutic categories. Given that the label is quite expansive, are there other clinical settings that you're going to explore or might explore down the road, aside from the current therapeutic verticals? Thanks.

Yeah. Good morning, and thank you, David. Look, on the payer landscape, remember we brought competition to this category in 2022. We launched when there had only been one ACTH option. When we went to partner with them right from day one, they, you know, I think that that's the, you know, that's how we've engaged with them. We will continue to engage with them as we bring the Purified Cortrophin Gel therapy to the appropriate patients. I'll keep it at that. Obviously, trying to balance what we share, what is helpful for investors, and what is competitively sensitive. That's on the payer landscape.

In terms of therapeutic areas and focus for Purified Cortrophin Gel, we currently have significant opportunity that has not been captured in the indications and therapeutic areas that we're in right now, right, across the core indications of rheumatology, nephrology, and neurology, as well as in the newer specialties of acute gouty arthritis flares, pulmonology, and ophthalmology, right? We spoke about the ophthalmology revenue synergies. In the near term, we're focused on these, and there's significant expansion opportunities there, substantial. Could we consider other therapeutic areas? Yeah, I think we think about it, but I think in the near term, we're focused on there's so much opportunity and so many patients that can benefit, you know, appropriately from the Purified Cortrophin Gel therapy that that's what we're focused on in the near term.

Okay, thank you.

Thank you, David.

Thank you. Our next question comes from Ekaterina Nyasikova with J.P. Morgan. Please go ahead. Your line is open.

Oh, thank you so much. Another question on Purified Cortrophin Gel. I think you've touched upon this in the prepared remarks, but just between the growth that you're seeing and your competitors are seeing, any thoughts on how quickly the category role could kind of get back to that $1.2 billion peak that I think we saw in 2017? Has your thinking changed just in terms of how big this category can kind of get over time? The second question is also on Purified Cortrophin Gel, but just, you know, as you look at the category more broadly, are you starting to kind of see physician perception change just in terms of, you know, if they're reaching for the product earlier or in different types of cases or different use cases, I think, than previously? Thank you.

Sure. I'll take the first question on where the overall category is going. Chris can jump in with the physician perception and where it's being used for the category. Overall, we believe that the market can go well past the previous peak and remain confident in our ability to sustain robust multi-year growth. Our belief is driven by three factors, right? First, there is substantial room for expansion in the number of patients on ACTH therapy. If I break that down into two parts, firstly, the current number of patients on ACTH therapy are almost half of the patients on therapy at the previous peak in 2017. Second, based on the epidemiology analysis, we believe the addressable patient population for ACTH therapy could be many times larger than the previous high.

Here we looked at patient populations by indications such as MS, nephrotic syndrome, rheumatoid arthritis that are refractory or steroid resistant, and this is there across indications. That's the first factor, substantial room for expansion in the number of patients. Second, today's ACTH market includes acute gouty arthritis flares, which accounts for approximately 15% of Purified Cortrophin Gel use and was not there in the previous peak. Third, our reason to believe in our ability to expand the ACTH market is that more than 50% of Purified Cortrophin Gel prescribers had never used ACTH therapy before. With that, I'll ask Chris to answer your question about the use cases and physician perception.

Yeah, thanks, thanks Ekaterina, for the question. We think really this about by specialty, right? We have really, you know, five specialties that all act pretty differently. I'd say, you know, focusing on rheumatology just to give you some context, and that's an important specialty for us, for sure. I think one of the dynamics there that we've seen and we've spoken in the past about is the significant impact of the acute gouty arthritis flare indication. With the rheumatology community to drive utilization and trial of Purified Cortrophin Gel, we've seen that have a big impact on bringing in new rheumatologists to use Purified Cortrophin Gel in their patients with severe persistent gout flares that are very tough to manage. That utilization has opened the door for other indications in rheumatology that we have.

That's one area and one dynamic that is in play and is really driving growth and kind of new physicians in rheumatology coming to the class.

Thank you, Chris.

Thank you. Our next question comes from Brandon Folk with H.C. Wainwright. Please go ahead. Your line is open.

All right. Thanks for taking my questions and congratulations on a really good quarter here. Maybe just following on from a number of the prior questions, but sort of when you think about these potential patient expansion of the market that you're talking about here, how do you view Purified Cortrophin Gel's market share expanding over time as these new patients grow the market? Given your success in your prescribers, would you be willing to sort of put a figure out there whether you think Purified Cortrophin Gel could be, you know, an equal market share product at peak or even the dominant product in the market at peak? Maybe just one on granularity. How do we think about the pushes and pulls in the R&D spend going forward compared to this quarter? Thank you.

Got it. Thank you for that question, Brandon. On the overall market, as I just mentioned, we believe that the market can go well past the previous peak and that there's a large patient population that can benefit. Our focus is really on getting this ACTH therapy and Purified Cortrophin Gel to the appropriate patients and not focus on market share because, as we spoke about, the market grew 27% last year and if you add our guidance and their guidance, the competitor's guidance, it's on track to grow even higher than that. It's really about growing the market, getting ACTH therapy to the appropriate patients in need rather than anything about share. With regards to putting a share number out there, that's the balance between what's helpful for investors and what's competitively sensitive.

We're really focused on growing the ACTH and really the Purified Cortrophin Gel use in the ACTH market. Your second question on R&D, there is some phasing of R&D that ends up happening almost as the year goes on. That's why you see a spike in the second quarter. I'll let Steve add if there's anything else regarding phasing of R&D spend. Steve?

Speaker 2

Yeah. Good morning, Brandon. Just to remind everyone, as we've spoken in the past, when you think about any of our OpEx lines, the R&D line is the one that can have the most variability quarter to quarter. Second quarter R&D was up sequentially versus Q1, consistent with our expectations and consistent with our comments on the first quarter earnings call because first quarter 2025 was certainly a bit lower from a run rate perspective from 2025. If you look at the cadence in 2024, kind of the opposite happened. The second quarter of 2024, I think, was the low watermark. I think it was around $7 million or so.

The point being, the spend can be a little bit lumpy because it's highly dependent on the timing of spend both internally and with third-party partners and can be dependent highly on when we procure certain materials, etc., that get expensed for R&D purposes. When we look forward for 2025, I would also comment, we had kind of the culmination or at least the beginning of the culmination of the NuDay clinical trial in the second quarter. There will be NuDay spend in the third quarter, but that'll start to trail off as the year goes on. Overall, we remain very committed to continuing to invest in R&D to drive the mid and long-term growth in the business. We have exciting projects going on both in support of rare disease and our generics business.

Great. Thank you very much for taking my questions and congrats again on a really good quarter.

Thank you.

Thank you. Once again, that is star and one on your telephone keypad if you would like to join the queue. We will move next with Les Salewski with Tourist Securities. Please go ahead. Your line is open.

Good morning. Thank you for taking our questions. I have two, one on the Purified Cortrophin Gel and the second on generics. On the Purified Cortrophin Gel side, can you help us square up the updated outlook? Why has there been the disconnect since you last issued the guidance? Your peers saw a near 50% growth in the category. How are you able to outpace that? What portion of your growth can essentially be allocated to the new sales team ads? Just to go back to Brandon's question, are you seeing an uptick in switches in market share gains? On the generics front, how are you thinking about new product cadence across generics in the second half and, you know, perhaps into next year as a procurement product exclusivity period comes off? Are you seeing any uptick in delays on the FDA approvals front? Thank you.

Speaker 5

Good morning, and thank you, Les. Look, your first question on Purified Cortrophin Gel, we really were raising Purified Cortrophin Gel guidance for the second time in 2025. Obviously, it raised it by over $55 million from the $265 million to $322 million to $329 million. In terms of what's been better than what we anticipated, it's the faster time to impact of the Purified Cortrophin Gel sales expansion by 18 from 52 to 70 members. We're not disaggregating how much of the impact from that versus other factors, but that's one factor. The second is the acceleration in the newer indications of gout, as well as ophthalmology revenue synergies, rapid uptake in the pre-filled syringe presentation, with 70% of new cases initiated being in pre-filled syringe, that's definitely higher than what we had initially anticipated. The acceleration of the new prescriber addition, right?

The number that we had out originally or earlier was about 40%, but we're at 50% of our prescriber base. I think it's a number of different factors that are driving the strong underlying demand, and the patient populations that can benefit from it and physicians that are trying it for the appropriate patients. Your next question around, or sub-question around market share, similar to what we said to Brandon, really, we're focused on getting Purified Cortrophin Gel to the appropriate patients and not really thinking about market share. We're growing, they're growing, and I think the increased awareness of the category probably helps both in terms of physicians using it for the appropriate patients. On generics, and thank you for asking a question on our generics business.

Speaker 10

continue to have strong R&D execution. We've not seen any material delays in FDA approvals or anything like that. We plan, as Steve mentioned earlier, to continue to invest in R&D for generics and plan to see the continued cadence of new product launches, which is really between that and operational excellence, the key drivers of our strong performance in generics. We see that outlook going forward. Thank you, Lesh.

Speaker 4

If I may, just one follow-up. Can you comment a little bit more on product sourcing for Purified Cortrophin Gel, your capacity to fill the uptake and the demand? Thank you.

Speaker 10

Sure. Thank you, Les. Yes, we all have a U.S.-based supply chain entirely and have been planning for this volume expansion. We're well positioned with our supply chain to be able to continue to serve the patients in need. Thank you, Les.

Speaker 5

Thank you. We show no further questions in queue at this time. I will turn the call back to Nikhil Lalwani for closing or additional remarks.

Speaker 10

Thank you, everybody, for joining our call. Apologies for running over a little bit. We're really grateful for your interest in ANI and look forward to continue updating you on our progress as we move forward. Thanks, everybody.

Speaker 5

Thank you.

Speaker 4

Thank you.

Speaker 5

This does conclude today's program. Thank you for your participation. You may disconnect at any time.