ANI Pharmaceuticals, Inc. (NASDAQ:ANIP) Q2 2025 Earnings Call Transcript

ANI Pharmaceuticals, Inc. (NASDAQ:ANIP) Q2 2025 Earnings Call Transcript August 8, 2025

ANI Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $1.8, expectations were $1.38.

Operator: Good day, everyone, and welcome to today’s ANI Pharmaceuticals, Inc. 2Q 2025 Earnings Results Call. Please note, this call is being recorded. [Operator Instructions] It is now my pleasure to turn the conference over to Lisa Wilson. Please go ahead. Lisa Wilson 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 ANI’s Rare Disease Business; and Dr. Mary Pao, our Chief Medical Officer. You can also access the webcast of this call through the Investors section of the ANI 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’s 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 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 may have made announcements related to the topics discussed, so please reference the company’s most recent press releases and SEC filings. And with that, I’ll turn the call over to Nikhil Lalwani.

Nikhil Lalwani: 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 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 Pao, 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 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. And 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, Cortrophin Gel and our Generics business.

Adjusted non-GAAP EBITDA was $54.1 million and adjusted non-GAAP EPS was $1.80. 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 prefilled 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 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 Cortrophin Gel prefilled syringe presentation, which we launched in April. The prefilled 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 prefilled syringe to remain an important driver of prescription demand going forward. Based on continued growth in Cortrophin Gel, prescribers and patients as well as broad adoption across therapeutic areas, we are increasingly confident that Cortrophin is on a strong multiyear 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 midpoint of our new guidance and the competitors’ 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 8 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 multiyear growth for Cortrophin Gel. Based on our first half performance and continued strong underlying demand trends, we are increasing our 2025 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. promotional 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 Cortrophin within ophthalmology. Our international ILUVIEN business, accounting for over 1/3 of ILUVIEN revenues, continues to perform well across both our direct markets and those served by distribution partners. We also completed the NEW DAY clinical trial of ILUVIEN in earlier-stage DME and presented the results at the American Society of Retina Specialists, or ASRS, Annual Meeting.

NEW DAY was the first clinical study that tested a long-acting steroid against anti- VEGF standard of care treatment. Feedback on the NEW DAY 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 NEW DAY 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. So 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, 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 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 standing in the evolving tariff situation. While we await the administration’s pharmaceutical industry-specific framework, it is worth reiterating ANI’s long-standing 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 U.S. 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, cretostimogene and related assets such as the Investigational New Drug Application, or IND, Phase I, Phase II 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 cretostimogene.

The [ Court ] proceeded to trial on July 21, and the jury returned a verdict in favor of CG Oncology on July 29. We continue to believe in the merits of our position and intend to vigorously challenge to 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?

Christopher K. Mutz: Thank you, Nikhil, and good morning, everyone. Our Rare Disease team was highly productive during the second quarter. We generated record demand for Cortrophin Gel with broad-based strength across specialties. And we made good progress capturing opportunities and addressing challenges for our retina franchise. First, on 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 Cortrophin volumes. We have already realized meaningful revenue synergies as a result of the Alimera acquisition and believe there are further opportunities as we expand awareness of Cortrophin’s utility in helping patients with severe allergic and inflammatory eye conditions. We saw very strong demand for our new Cortrophin prefilled syringe offering, which we launched in April. The reduced number of steps required to administer the prefilled syringe has resonated with patients and physicians, and we observed prescribing of the prefilled syringe ramp across indications during the quarter.

We are pleased to report that the prefilled syringe already accounts for approximately 70% of new cases initiated only 3 months into its launch. 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 Cortrophin Gel among ACTH therapies. Gout accounts for approximately 15% of Cortrophin Gel use and has contributed significantly to the growth of new prescribers for Cortrophin. We’re continuing to invest in evidence generation for Cortrophin Gel with our previously announced Phase IV 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 Cortrophin Gel and could support positioning in the American College of Rheumatology treatment guidelines.

We are also pleased to announce 2 new publications of important preclinical data that expand the body of evidence around the use of Cortrophin Gel in nephrology and ophthalmology. Firstly, our preclinical study of 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 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 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 Cortrophin Gel as a treatment option for appropriate patients and look forward to delivering strong multiyear 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 accepting 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 NEW DAY study 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. And although the study did not meet its primary endpoint, some physicians have indicated that the NEW DAY 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 NEW DAY 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?

Stephen P. Carey: 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 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 continue to capture increased demand for certain products through a portion of the second quarter and anticipate a full return to 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 with its 180-day CGT 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 6 points from the prior year period, principally due to favorable mix towards Rare Disease products and strength in Generics driven by the prucalopride 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 NEW DAY study 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 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 30, 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 3.3x, and our net leverage was 2.2x our trailing 12-month adjusted non-GAAP EBITDA of $190 million. Utilizing the midpoint of our revised 2025 adjusted non-GAAP EBITDA guidance, our net leverage is approximately 1.9x 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%.

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 Cortrophin 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 entrants 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 earnings per share 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 adjustments — of adjusted non-GAAP EBITDA diluted earnings per share 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.

Nikhil Lalwani: Operator, please open the line for questions.

Operator: [Operator Instructions] We’ll take our first question from Gary Nachman with Raymond James.

Q&A Session

Gary Jay Nachman: Congrats on the great quarter. So given the strength you saw in Cortrophin in the second quarter, first, I wanted to make sure there wasn’t anything unusual in there in terms of onetime benefits or seasonality with any of the indications. And 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. And then you called out ophthalmology and 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.

Nikhil Lalwani: Thank you, Gary, thank you. I’ll take each question. So the first question on seasonality or onetime benefit on Cortrophin, 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 ’25 versus Q2 ’24. So this is — the performance is an outcome of the increased demand rather than seasonality or benefit — any onetime benefit. So 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 Cortrophin. We believe that there is a multiyear strong growth runway for Cortrophin and are investing both in evidence generation that Chris spoke about, bringing new presentations.

We brought the 1 ml and the 5 — and the prefilled syringe, and we’re investing in other ways to increase the physician and patient convenience. So that’s how I would think about continuing to grow the franchise to deliver strong multiyear growth. And then the third is, look, 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. But really, we have growth across therapeutic areas and indications. And we’re really nowhere close to the addressable market, right? 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.

So the — that provides substantial room for expansion. And 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 Cortrophin. So that gives us additional confidence in driving this sustainable long-term multiyear growth in Cortrophin. Thank you, Gary.

Gary Jay Nachman: Okay. Great. And just a couple of quick follow-ups. With the additional cash flow that you’re generating with the good performance, just what are your priorities in terms of use of capital, debt paydown or business development? And how much more active are you getting on the BD front? And then just gross margin, why isn’t that guidance coming up more just given that the mix is shifting more to Rare Disease? And 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?

Nikhil Lalwani: Right. Yes. 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. So on BD, look, we have — as you’ve seen, right, there is strong growth that we’ve delivered organically. And there is, again, substantial room for growth organically, both across our 2 Rare Disease assets, Cortrophin and ILUVIEN as well as in our Generics business, right? So we have a strong growth outlook organically. And therefore, for BD, we’re continuing to focus our BD efforts on expanding the scope and scale of our Rare Disease business and are looking at assets. We’re at the 1-year anniversary of the Alimera acquisition. And so we’re continuing to look for assets, but we’re not in a hurry, and we’re carefully evaluating what is the next — right next step from a BD perspective.

And again, I’d just like to reiterate that we have obviously a very strong growth — organic growth outlook, as you’ve seen even on the delivery in ’25 versus ’24. So that’s on the BD. And I’ll turn it over to Steve to answer the question on cash flows, and we can come back to gross margin.

Stephen P. Carey: Yes. Thanks, Nikhil. And on the — I guess, on the cash flows, yes, we’re very pleased with the cash generation in the first half of the year. And 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. And so that’s our near-term goal. As we continue to generate cash, we can think about debt paydowns in the future. But 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. And we do continue to expect a moderation of brand performance. We’re assuming normalized — fully normalized quarters of brand performance in the back half. And so those impacts are expected to drive a modest reduction in second half gross margin. And 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. And 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, and 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, and 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 3 U.S.-based manufacturing plants and the capabilities that they provide us. And we’re continually reinvesting into those facilities to ensure that we’re optimizing margins as we go forward. So Gary, obviously, we don’t speak to forward-looking guidance specifically at this time, but we do anticipate evolution of — positive evolution of our margins as we continue to march forward.

Operator: Our next question comes from Faisal Khurshid with Leerink Partners.

Faisal Ali Khurshid: Just wanted to ask for a little more granularity on what exactly is driving the kind of pretty meaningful inflection to expansion of the ACTH class like combined with the Acthar results reported earlier this week and your results today as well. Clearly, this class is experiencing a pretty big inflection. And I get what you’re saying is that it’s just like a huge TAM, even increasing penetration a little bit represents a large dollar value. But if you could kind of like pinpoint like is it particular indication? Is it particular prescribers? Is it the launch of these easier-to-use dosage forms? Like what exactly is kind of like giving this like very strong growth?

Nikhil Lalwani: So look, I think in terms of what is going — and obviously, we’ve raised the guidance by $55 million for ourselves. And obviously, the competitor spoke about 20% to 30% growth. I mean, from our perspective, in terms of what is going, let’s call it, better than anticipated, first, the faster time to impact of the Cortrophin sales expansion by 18, 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 gout as well as the revenue synergies in ophthalmology, where we had a 33% increase in volume from the combined sales force, right, that’s selling both Cortrophin and ILUVIEN.

Third, Chris talked about 70% of our new enrollments have been with the prefilled syringe presentation, and that is a more rapid uptake and additional momentum than really what we had anticipated. And lastly, the acceleration of new prescriber addition, right, especially those that are naive to ACTH who now account for approximately 50% of Cortrophin prescriber base. So look, overall, this is — it’s not any one thing. It’s multiple different drivers. And I think 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 Cortrophin Gel to the appropriate patients.

Faisal Ali Khurshid: Got it. And then if I could just ask a follow-up on the prefilled syringe. Just to clarify, you’re saying 70%, 7-0 percent, of new patient starts were the prefilled syringe. And then 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 prefilled syringe are any different to you than the economics on the traditional vial and syringe format?

Nikhil Lalwani: Yes. So on your first question on the stat that Chris shared in his prepared remarks was that 70% of enrollments in July are for the — which is enrollment as in new cases initiated were for the — were written with prefilled syringe. So that’s what we said about the prefilled syringe. And then the second, your question on gross to net, I think there’s a modest upward pricing advantage on — in terms of the WACC of the prefilled 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. So that’s what we’ll share.

Operator: We will move next with Vamil Divan with Guggenheim Securities.

Daniel Kyle Krizay: This is Daniel on for Vamil. Congrats on the quarter. So a couple of questions. One is sort of a follow-up question on some of the previous ones revolving around the prefilled syringes. So are there any particular specialties that are adopting this presentation more quickly than others or maybe more quickly than you all expected? If any other additional color you can provide there? And then the second question is on ILUVIEN. So you mentioned that there’s continued market access challenges that sort of pushed the full year guidance down here. But can you speak to if the NEW DAY trial results had any positive impact on this new guidance? Or maybe asked differently, like these positive results partially offset this negative impact from the market access challenges for 2025, will the expected benefit from these NEW DAY results and the resulting education there be more of a longer-term benefit?

Nikhil Lalwani: Thank for your question. So on the prefilled syringe question, the ease of use of the prefilled syringe has resonated really with physicians and patients. And so the prescribing of the prefilled syringe has ramped across indications. So it’s during the quarter. So it’s not one indication or the other. It’s really across indications. That’s why 70% of the new cases initiated were with the prefilled syringe. So I think that’s one. And then on your question on ILUVIEN, specifics to the NEW DAY, look, the overall feedback on the NEW DAY study results have been positive from study investigators and physicians at ASRS. We — that was the last week or the week before. So 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 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. So following the release of this data, several next steps are underway. We’re preparing additional data presentations at upcoming national and international conferences to further share and contextualize these findings. And in parallel, we’re actively exploring the potential of including NEW DAY in promotion aimed at increasing awareness and understanding of the study results, especially in earlier DME patients.

And so I think that, that sort of — we will continue to use NEW DAY to — and share and increase awareness of the study results as we move forward. There isn’t a specific upside that has been factored in to the back half of the year, right, with keeping this in mind.

Operator: Our next question comes from David Amsellem with Piper Sandler.

David A. Amsellem: Just a couple of quick ones for me on Cortrophin. First, as the category grows, how do you envision the payer landscape evolving? It looks like it’s pretty benign at present. But 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 ’25 question. So just help us understand your thought process there. And then secondly, I know that you’ve cited growth across all the various therapeutic categories. But 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?

Nikhil Lalwani: Yes. Thank you, David. Look, on the payer landscape, remember, we brought competition to this category in 2022 when we launched and there had only been one ACTH option. And when we went to partner with them right from day 1, so they — I think that that’s the — that’s how we’ve engaged with them, and we will continue to engage with them as we bring the Cortrophin 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. So that’s on the payer landscape. And then, look, in terms of therapeutic areas and focus for Cortrophin, I mean, 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 rheum, neph and neuro as well as in the newer specialties of gout, pulm and ophthalmology, right?

And we spoke about the ophthalmology revenue synergies. So in the near term, we’re focused on these, and there are significant expansion opportunities there, right, substantial. Could we consider other therapeutic areas? Yes, 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 appropriately from the Cortrophin therapy and that’s what we’re focused on in the near term.

Operator: Our next question comes from Ekaterina Knyazkova with JPMorgan.

Ekaterina V. Knyazkova: Another question on Cortrophin Gel. And I think you touched upon this in the prepared remarks. But just between the growth that you’re seeing and your competitors are seeing, just any thoughts on how quickly the category overall could kind of get back to that $1.2 billion peak that I think we saw in 2017? And has your thinking changed just in terms of how big this category can kind of get over time? And then second question is also on Cortrophin. But just as you look at the category more broadly, are you starting to kind of see physician perception change just in terms of if they’re reaching for the product earlier or different types of cases or different use cases, I think, than previously?

Nikhil Lalwani: Sure. So I’ll take the first question on where the overall category is going, and then Chris can jump in with the physician perception and where it’s being used for the category. So look, overall, we believe that the market can go well past the previous peak and remain confident in our ability to sustain robust multiyear growth. Our belief is driven by 3 factors, right? First, that there is substantial room for expansion in the number of patients on ACTH therapy, right? If I break that down into 2 parts. Firstly, the number of — 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, right, we believe the addressable patient population for ACTH therapy could be many times larger than the previous high.

So here, we looked at patient populations by indications such as MS, nephrotic syndrome, rheumatoid arthritis that are refractory or steroid resistance, right? And this is there across indications. So that’s the first factor, right, 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 Cortrophin use and was not there in the previous peak. And then third is reason to believe is our ability to expand the ACTH market is that more than 50% of Cortrophin prescribers had never used ACTH therapy before. And with that, I’ll ask Chris to answer your question about the use cases and physician perception.

Christopher K. Mutz: Yes. Thanks, Ekaterina, for the question. And so we think really this about by specialty, right? So we have really 5 specialties that all act pretty differently. I’d say 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 Cortrophin Gel. We’ve seen that have a big impact on bringing in new rheumatologists to use Cortrophin Gel in their patients with severe persistent gout flares, right, that are very tough to manage. And that utilization has opened the door for other indications in rheumatology that we have. So that’s one area and one dynamic that where we’ve — that is in play and is really driving growth and kind of new physicians in rheumatology coming to the class.

Operator: Our next question comes from Brandon Folkes with H.C. Wainwright.

Brandon Richard Folkes: 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 were talking about here, how do you view Cortrophin’s market share expanding over time as these new patients grow the market? Given your success in new prescribers, would you be willing to sort of put a figure out there whether you think Cortrophin could be an equal market share product at peak or even the dominant product in the market at peak? And then 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?

Nikhil Lalwani: Got it. So thank you for that question, Brandon. So look, on the overall market, I think what we’re — as I just mentioned, right, we believe that the market can go well past the previous peak and that the number of — there’s a large patient population that can benefit. So our focus is really on getting this ACTH therapy on Cortrophin to the appropriate patients and not focus on market share because as we spoke about, right, the market grew 27% last year and is on — if you add our guidance and their guidance — competitors’ guidance, it’s on track to grow even higher than that. So it’s really about growing the market, getting ACTH therapy to the appropriate patients in need rather than anything about share.

And about — with regards to putting a share number out there, that’s the balance between investor — what’s helpful for investors and competitively sensitive. So we’re really focused on growing the ACTH and really the Cortrophin use in the ACTH market. And then your second question on R&D, there is some phasing of R&D that ends up happening almost as the year goes on. So that’s why you see a spike in the second quarter. But I’ll let Steve add if any other — anything else regarding phasing of R&D spend. Steve?

Stephen P. Carey: Yes. Brandon, yes, just to remind everyone, as we’ve spoke 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. And 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 ’25 was certainly a bit lower from a run rate perspective from 2025. And 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. And so 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, et cetera, that get expensed for R&D purposes.

When we look forward for 2025, I would also comment, right, we had kind of the culmination or at least the beginning of the culmination of the NEW DAY trial in the second quarter. There will be NEW DAY spend in the third quarter, but that will start to trail off as the year goes on. But overall, we remain very committed to continuing to invest in R&D to drive the mid- and long-term growth in the business. And we have exciting projects going on, both in support of rare disease and our generics business.

Brandon Richard Folkes: Congrats again on a really good quarter.

Operator: [Operator Instructions] We will move next with Les Sulewski with Truist Securities.

Leszek Sulewski: I have 2, one on the Cortrophin and the second on Generics. On the Cortrophin side, can you help us square up the updated outlook? What has driven the disconnect since you last issued the guidance? And your peers saw 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 adds? And then just to go back to Brandon’s question, are you seeing an uptick in switches and market share gains? And then on the Generics front, how are you thinking about new product cadence across Generics in the second half and perhaps into next year as prucalopride exclusivity period comes off? And second, are you seeing any uptick in delays on the FDA approvals front?

Nikhil Lalwani: Thank you, Les. Look, your first question on Cortrophin, we really — we’re raising Cortrophin guidance for the second time in 2025. And obviously, have raised it by over $55 million from the $265 million to $322 million to $329 million. And in terms of what’s been better than what we anticipated, look, it’s the faster time to impact of the Cortrophin sales expansion by 18, from 52 to 70 members. We’re not disaggregating how much is 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 prefilled syringe presentation, which with the 70% of new cases — sorry, new cases initiated being in prefilled syringe, that’s definitely higher than what we had initially anticipated.

And the acceleration of the new prescriber addition, right? The number that we had out originally earlier was about 40%, but we’re at 50% of our prescriber base. So I think it’s a number of different factors that is driving the — and a strong underlying demand, right, and the patient populations that can benefit from it and physicians that are trying it for the appropriate patients. When you — your next question around — or sub-question around market share, similar to what we said to Brandon and really, we’re focused on getting Cortrophin to the appropriate patients and not really thinking about market share and it’s — 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.

And then on Generics, and thank you for asking a question on our Generics business. We continue to have strong R&D execution. So far, we’ve not seen any material delays in FDA approvals or anything like that. And we we’re continuing, as Steve mentioned earlier, continuing to invest in R&D for Generics and plan to see the continued cadence of new product launches and which is really between that and operational excellence has been the key drivers of our strong performance in Generics, and we see that outlook going forward. Thank you, Les.

Leszek Sulewski: If I may, just one follow-up. Can you comment a little bit more on product sourcing for Cortrophin, your capacity to fill the uptick in demand?

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

Operator: And we show no further questions in queue at this time. I will turn the call back to Nikhil Lalwani for closing or additional remarks.

Nikhil Lalwani: Thank you, everybody, for joining our call. Apologies for running over a little bit, and 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.

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