Market Overview

ANI Pharmaceuticals Reports First Quarter 2019 Results and Reaffirms Guidance

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BAUDETTE, Minn., May 9, 2019 /PRNewswire/ --

For the first quarter 2019:

  • Net revenues of $52.9 million, an increase of 14% versus 2018
  • GAAP net income of $0.4 million and diluted GAAP earnings per share of $0.04
  • Record adjusted non-GAAP EBITDA of $22.3 million
  • Adjusted non-GAAP diluted earnings per share of $1.30

ANI Pharmaceuticals, Inc. ("ANI") (NASDAQ:ANIP) today reported its financial results for the three months ended March 31, 2019 and reaffirmed its 2019 financial guidance. The Company will host its earnings conference call this morning, May 9, 2019, at 10:30 AM ET. Investors and other interested parties can join the call by dialing (866) 776-8875. The conference ID is 5649987.

Financial Summary

(in thousands, except per share data)


Q1 2019


Q1 2018

Net revenues


$ 52,887


$ 46,483

Net income


$      449


$   2,250

GAAP earnings per diluted share


$     0.04


$     0.19

Adjusted non-GAAP EBITDA(a)


$ 22,299


$ 21,754

Adjusted non-GAAP diluted earnings per share(b)


$     1.30


$     1.32


(a) See Table 3 for US GAAP reconciliation.

(b) See Table 4 for US GAAP reconciliation.

Arthur S. Przybyl, President and CEO, stated,

"ANI had a strong start to the year, generating record adjusted non-GAAP EBITDA of $22.3 million in the first quarter. Our first quarter results also generated net revenues of $52.9 million, an increase of 14% over the prior year period. In addition, product development expense increased by $2.3 million, or 108%, over the prior year period as we continue to advance the re-commercialization of Cortrophin® gel.

Generic product revenue increased 36% over the prior year period and we launched two generic products in late March: 400 mg/5mL Erythromycin Ethylsuccinate for oral suspension and 18 mg and 27 mg Methylphenidate Hydrochloride extended-release tablets. The full effect of these launches will be realized throughout the remainder of the year. The Methylphenidate Hydrochloride launch included two of the strengths recently acquired, and we intend to launch the remaining strengths later in the year."

ANI Reaffirms Guidance for the Full Year 2019

ANI's estimates are based upon actual results for the three months ending March 31, 2019 and projected results for the remaining nine months of the year. ANI's full year 2019 financial guidance reflects management's current assumptions regarding customer relationships, product pricing, prescription trends, competition, inventory levels, cost of sales, operating costs, timing of research and development spend, taxes, and the anticipated timing of future product launches and other key events. For the twelve months ending December 31, 2019, ANI is providing guidance on net revenue, adjusted non-GAAP EBITDA, and adjusted non-GAAP diluted earnings per share.

The following table summarizes 2019 guidance:

 ($ in millions except per share data)


2019 Guidance

Net Revenues

$231 to $245

Adjusted non-GAAP EBITDA

$95 to $105

Adjusted non-GAAP diluted earnings per share

$5.57 to $6.21

First Quarter Results

Net Revenues

(in thousands)


Three Months Ended 
March 31,







2019


2018


Change


% Change

Generic pharmaceutical products


$

31,599


$

23,227


$

8,372


36%

Branded pharmaceutical products



17,543



16,595



948


6%

Contract manufacturing



2,437



945



1,492


158%

Royalty and other income



1,308



5,716



(4,408)


(77%)

Total net revenues


$

52,887


$

46,483


$

6,404


14%

Generic Pharmaceutical Products

First Quarter Revenue Results and Update

Revenues from sales of generic pharmaceuticals increased 36% to $31.6 million from $23.2 million in the prior period, primarily due to the launch of Ezetimibe-Simvastatin, Candesartan, and other products launched in 2018, as well as increased unit sales of Vancomycin. 

Key Generic Pipeline Products 

Product

Reference Drug

Required Filing

Timing

Total Annual Market(c)

Methylphenidate ER Tablets

Concerta®

None (approved)

36 mg and 
54 mg launch
Q2-Q3 2019

   $   563M

Aspirin/Dipyridamole ER Capsules

Aggrenox®

None (approved)

Launch no later
than October 1,
2019

   $  117M

Undisclosed

Undisclosed

ANDA approved April 2019

Launch in 
Q2 2019

   $    45M


(c) Based on data from IQVIA

Branded Pharmaceutical Products

First Quarter Revenue Results and Update

Revenues from sales of branded pharmaceuticals increased 6%, to $17.5 million from $16.6 million in the prior period, primarily due to sales of Atacand® and Atacand HCT®, which were launched under the ANI label in October 2018 and sales of Casodex® and Arimidex®, which were launched under the ANI label in July 2018, tempered by lower unit sales of Inderal® LA and InnoPran XL®.  

Key Brand Pipeline Products 

Product

Required Filing

Filing Date

Total Annual Market(d)

Vancocin® Oral Solution

PAS

Filed September 2018

   $   450M

Cortrophin® Gel

sNDA

By Q1 2020

   $1,110M


(d) Based on data from IQVIA

Vancocin® Oral Solution Update

ANI is currently advancing a commercialization effort for Vancocin® oral solution. ANI filed a prior approval supplement ("PAS") in September 2018. This product will be manufactured at ANI's site in Baudette, Minnesota and will compete in a market that currently exceeds $450 million annually.

Cortrophin® Gel Re-commercialization Update

In the first quarter of 2019, ANI completed its second commercial scale batch of Corticotropin API, which was analytically consistent with previously-manufactured development batches as well as the first commercial scale API batch. ANI has also initiated API manufacturing process validation and has started to manufacture the first of three registration stability batches to support the sNDA filing. Qualification will be completed for all raw materials and manufacturing equipment prior to manufacturing process validation batches. ANI has completed method validation for all of the analytical methods to be used for API batch release and stability testing, which will be used to support analysis of all three registration batches. In the second quarter of 2019, ANI plans to complete the first and initiate the second API registration batch, and also initiate viral clearance studies. ANI also plans to manufacture Cortrophin Gel batches in the second quarter of 2019 using commercial scale API.  

ANI is on track to file a supplemental NDA by the first quarter of 2020.

For further details, please see ANI's Cortrophin® Gel Re-commercialization Milestone Update in Table 5.

Contract Manufacturing 

First Quarter Revenue Results and Update

Contract manufacturing revenue increased 158% to $2.4 million from $0.9 million in the prior year period, primarily due to the impact of contract manufacturing revenue from ANI's Canadian subsidiary, ANI Pharmaceuticals Canada Inc. ("ANI Canada"), which was acquired in August 2018. ANI has continued the integration of the ANI Canada operations in the first quarter.

Royalty and Other Income

First Quarter Revenue Result and Update

Royalty and other income decreased 77% to $1.3 million from $5.7 million, primarily due to the launches of Atacand®, Atacand HCT®, Arimidex®, and Casodex® under the ANI label in the second half of 2018. The revenue from those products are now included in the net sales of branded pharmaceutical products. This decline was tempered by product development and lab services net revenue from our ANI Canada subsidiary, as well as royalties related to a true-up from our former partner for the authorized generic for Vancocin® and royalties on sales of Yescarta®.

Key Royalty Product: Yescarta®

ANI is entitled to a percentage of global Yescarta® net sales as well as a portion of certain product milestones, such as the recent positive opinion issued by the European Medicines Agency ("EMA") Committee for Medicinal Products for Human Use ("CHMP"). 

Operating Expenses

Operating expenses increased to $48.5 million for the three months ended March 31, 2019, from $39.9 million in the prior year period. The increase was due to a $4.3 million increase in selling, general, and administrative expense as compared with the prior period, as a result of costs related to the new ANI Canada subsidiary, increased U.S.-based headcount and  pharmacovigilance compliance costs in continued support of the expansion of our commercial portfolio, higher GDUFA and PDUFA user fees paid to the U.S. FDA, higher legal fees, and increased sales and marketing-related costs. In addition, depreciation and amortization increased by $7.9 million, primarily due to the $6.8 million cumulative amortization expense recorded in relation to a royalty buy out. These increases were partially offset by a $6.0 million decrease in cost of sales.

Cost of sales as a percentage of net revenues decreased to 28% during the three months ended March 31, 2019, from 32% during same period in 2018, excluding $5.6 million of net inventory step-up costs related to sales of Inderal® XL and InnoPran XL® in the first quarter of 2018. The decrease was primarily due to lower royalty expense resulting from a royalty buy out.

Net Income and Diluted Earnings per Share

Net income was $0.4 million for the three months ended March 31, 2019, as compared to net income of $2.3 million in the prior year period. The effective consolidated tax rate (US GAAP) for the three months ended March 31, 2019 was 51%.

Diluted earnings per share for the three months ended March 31, 2019 was $0.04, based on 11,823 thousand diluted shares outstanding, as compared to diluted earnings per share of $0.19 in the prior year period. Adjusted non-GAAP diluted earnings per share was $1.30, as compared to adjusted non-GAAP diluted earnings per share of $1.32 in the prior year period. For a reconciliation of adjusted non-GAAP diluted earnings per share to the most directly comparable GAAP financial measure, please see Table 4.

ANI Product Development Pipeline

ANI's pipeline consists of 103 products, addressing a total annual market size of $4.3 billion, based on data from IQVIA. Of these 103 products, 99 were acquired and of these acquired products, ANI expects that at least 55 can be commercialized based on either CBE-30s or prior approval supplements filed with the FDA.

Non-GAAP Financial Measures

The Company's fiscal 2019 guidance for adjusted non-GAAP EBITDA and adjusted non-GAAP diluted earnings per share is not reconciled to the most comparable GAAP measure. This is due to the inherent difficulty of forecasting the timing or amount of items that would be included in a reconciliation to the most directly comparable forward-looking GAAP financial measures. Because a reconciliation is not available without unreasonable effort, it is not included in this release.

Adjusted non-GAAP EBITDA

ANI's management considers adjusted non-GAAP EBITDA to be an important financial indicator of ANI's operating performance, providing investors and analysts with a useful measure of operating results unaffected by non-cash stock-based compensation and differences in capital structures, tax structures, capital investment cycles, ages of related assets, and compensation structures among otherwise comparable companies. Management uses adjusted non-GAAP EBITDA when analyzing Company performance.

Adjusted non-GAAP EBITDA is defined as net income/(loss), excluding tax expense, interest expense, depreciation, amortization, the excess of fair value over cost of acquired inventory, stock-based compensation expense, expense from acquired in-process research and development, gains, losses, and expenses related to the repurchase of convertible debt, expenses related to debt financing, transaction and integration expenses, and other income / expense. Adjusted non-GAAP EBITDA should be considered in addition to, but not in lieu of, net income or loss reported under GAAP. A reconciliation of adjusted non-GAAP EBITDA to the most directly comparable GAAP financial measure is provided in Table 3.

Adjusted non-GAAP Net Income

ANI's management considers adjusted non-GAAP net income to be an important financial indicator of ANI's operating performance, providing investors and analysts with a useful measure of operating results unaffected by purchase accounting adjustments, non-cash stock-based compensation, non-cash interest expense, depreciation and amortization, and non-cash impairment charges. Management uses adjusted non-GAAP net income when analyzing Company performance.

Adjusted non-GAAP net income is defined as net income/(loss), plus the excess of fair value over cost of acquired inventory, stock-based compensation expense, transaction and integration expenses, gains, losses, and expenses related to the repurchase of convertible debt, expenses related to debt financing, non-cash interest expense, depreciation and amortization expense, expense from acquired in-process research and development, and non-cash impairment charges, less the tax impact of these adjustments calculated using an estimated statutory tax rate. Management will continually analyze this metric and may include additional adjustments in the calculation in order to provide further understanding of ANI's results. Adjusted non-GAAP net income should be considered in addition to, but not in lieu of, net income reported under GAAP. A reconciliation of adjusted non-GAAP net income to the most directly comparable GAAP financial measure is provided in Table 4.

Adjusted non-GAAP Diluted Earnings per Share

ANI's management considers adjusted non-GAAP diluted earnings per share to be an important financial indicator of ANI's operating performance, providing investors and analysts with a useful measure of operating results unaffected by purchase accounting adjustments, non-cash stock-based compensation, non-cash interest expense, depreciation and amortization, and non-cash impairment charges.

Management uses adjusted non-GAAP diluted earnings per share when analyzing Company performance.

Adjusted non-GAAP diluted earnings per share is defined as adjusted non-GAAP net income, as defined above, divided by the diluted weighted average shares outstanding during the period. Management will continually analyze this metric and may include additional adjustments in the calculation in order to provide further understanding of ANI's results. Adjusted non-GAAP diluted earnings per share should be considered in addition to, but not in lieu of, diluted earnings or loss per share reported under GAAP. A reconciliation of adjusted non-GAAP diluted earnings per share to the most directly comparable GAAP financial measure is provided in Table 4.

About ANI

ANI Pharmaceuticals, Inc. (the "Company" or "ANI") is an integrated specialty pharmaceutical company developing, manufacturing, and marketing high quality branded and generic prescription pharmaceuticals. The Company's targeted areas of product development currently include controlled substances, oncolytics (anti-cancers), hormones and steroids, and complex formulations involving extended release and combination products. For more information, please visit the Company's website www.anipharmaceuticals.com.

Forward-Looking Statements

To the extent any statements made in this release deal with information that is not historical, these are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about price increases, the Company's future operations, products financial position, operating results and prospects, the Company's pipeline or potential markets therefor, and other statements that are not historical in nature, particularly those that utilize terminology such as "anticipates," "will," "expects," "plans," "potential," "future," "believes," "intends," "continue," other words of similar meaning, derivations of such words and the use of future dates.

Uncertainties and risks may cause the Company's actual results to be materially different than those expressed in or implied by such forward-looking statements. Uncertainties and risks include, but are not limited to, the risk that the Company may face with respect to importing raw materials; increased competition; acquisitions; contract manufacturing arrangements; delays or failure in obtaining product approvals from the U.S. Food and Drug Administration; general business and economic conditions; market trends; regulatory environment; products development; regulatory and other approvals; and marketing.

More detailed information on these and additional factors that could affect the Company's actual results are described in the Company's filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q, as well as its proxy statement. All forward-looking statements in this news release speak only as of the date of this news release and are based on the Company's current beliefs, assumptions, and expectations. The Company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

For more information about ANI, please contact:
Investor Relations
IR@anipharmaceuticals.com

ANI Pharmaceuticals, Inc. and Subsidiaries

Table 1: US GAAP Income Statement

(unaudited, in thousands, except per share amounts)















Three Months Ended March 31,




2019


2018








Net Revenues


$  52,887


$  46,483








Operating Expenses






   Cost of sales (excl. depreciation and amortization)


14,725


20,693


Research and development


4,373


2,102


Selling, general, and administrative


13,284


8,956


Depreciation and amortization


16,103


8,195








        Total Operating Expenses


48,485


39,946








     Operating Income


4,402


6,537








Other Expense, Net






   Interest expense, net


(3,354)


(3,634)


   Other expense, net


(130)


(61)








Income Before Provision for Income Taxes


918


2,842








Provision for Income Taxes


(469)


(592)








Net Income


$       449


$    2,250








Earnings Per Share






Basic Earnings Per Share


$      0.04


$      0.19


Diluted Earnings Per Share


$      0.04


$      0.19








Basic Weighted-Average Shares Outstanding


11,747


11,589


Diluted Weighted-Average Shares Outstanding


11,823


11,706








 

ANI Pharmaceuticals, Inc. and Subsidiaries

Table 2: US GAAP Balance Sheets

(unaudited, in thousands)













March 31, 
2019


December 31,
2018

Current Assets





    Cash and cash equivalents


$               38,233


$         43,008

    Accounts receivable, net


67,410


64,842

    Inventories, net


42,032


40,503

    Prepaid expenses and other current assets


4,157


4,524






        Total Current Assets


151,832


152,877






Property and equipment, net


38,425


38,090

Restricted cash


5,008


5,021

Deferred tax assets, net of deferred tax liabilities and valuation allowance


28,542


27,964

Intangible assets, net


205,100


201,604

Goodwill


3,580


3,580

Other non-current assets


1,903


1,468






       Total Assets


$              434,390


$       430,604






Current Liabilities





    Current component of non-current borrowing, net of deferred financing costs


$                  3,243


$           3,256

    Convertible notes, net of discount and deferred financing costs


114,150


112,463

    Accounts payable 


10,519


8,884

    Accrued expenses and other


3,074


1,707

    Accrued royalties 


5,440


8,456

    Accrued compensation and related expenses


2,454


3,524

    Current income taxes payable, net


3,453


5,022

    Accrued government rebates


8,552


8,974

    Returned goods reserve


13,559


12,552

    Deferred revenue


624


711






        Total Current Liabilities 


165,068


165,549






    Non-current borrowing, net of deferred financing costs and current borrowing component


66,501


67,296

    Other non-current liabilities


3,109


496






       Total Liabilities


234,678


233,341






Stockholders' Equity





Common stock


1


1

Treasury stock


-


(659)

Additional paid-in capital


189,971


186,812

Retained earnings


11,939


11,488

Accumulated other comprehensive loss, net of tax


(2,199)


(379)






       Total Stockholders' Equity


199,712


197,263






       Total Liabilities and Stockholders' Equity


$              434,390


$       430,604

 

ANI Pharmaceuticals, Inc. and Subsidiaries

Table 3: Adjusted non-GAAP EBITDA Calculation and US GAAP to Non-GAAP Reconciliation

(unaudited, in thousands)















Three Months Ended March 31,




2019


2018








   Net Income


$       449


$    2,250








Add back






   Interest expense, net


3,354


3,634


   Other expense, net


130


61


   Provision for income taxes


469


592


   Depreciation and amortization


16,103


8,195








Add back






   Stock-based compensation


1,710


1,377


   Excess of fair value over cost of acquired inventory


-


5,645


   Transaction and integration expenses


84


-


         Adjusted non-GAAP EBITDA


$    22,299


$   21,754


 

ANI Pharmaceuticals, Inc. and Subsidiaries

Table 4: Adjusted non-GAAP Net Income and Adjusted non-GAAP Diluted Earnings per Share Reconciliation 

(unaudited, in thousands, except per share amounts)









Three Months Ended March 31,




2019


2018








   Net Income


$     449


$  2,250








Add back






    Non-cash interest expense


1,799


1,914


    Depreciation and amortization expense


16,103


8,195


    Stock-based compensation


1,710


1,377


    Excess of fair value over cost of acquired inventory


-


5,645


   Transaction and integration expenses


84


-


Less






   Tax impact of adjustments


(4,727)


(3,940)








Adjusted non-GAAP Net Income


$15,418


$15,441








Diluted Weighted-Average






     Shares Outstanding


11,823


11,706








Adjusted non-GAAP 






    Diluted Earnings per Share


$    1.30


$    1.32


 

ANI Pharmaceuticals, Inc. and Subsidiaries

Table 5: Cortrophin® Gel Re-Commercialization Milestone Update


Step 

Duration

Status

Additional Details 

Manufacture small-scale batch of corticotropin API 

4 mos. 

Complete

• Initial batch yields similar to historical yields 

• Analytical method development and testing ongoing

Select drug product CMO 

6 mos. 

Complete

• Drug product CMO has been selected

Manufacture intermediate-scale batches of corticotropin API 

4-6 mos.

Complete

• Four intermediate-scale batches successfully completed

• Further refined/modernized analytical methods and process

• Demonstrated lot-to-lot consistency

Type C meeting with FDA 


Complete

• Meeting Request submitted 4Q17; FDA granted as Type C Meeting

• Information provided on ANI's regulatory plan for re-commercialization

• Initial FDA response received March 2018 with additional communications in 2nd Quarter 2018

Manufacture demo batch of Cortrophin® Gel 

1 mo.

Ongoing

• Initiate non-GMP formulation/fill/finish of drug product at commercial scale

Manufacture commercial-scale batches of corticotropin API

2-3 mos. per batch

Ongoing

• Analytical method validation for API release/stability

• Scale-up manufacturing process 5x to projected commercial scale

• Manufacture API under cGMPs

• Finalize API manufacturing process and initiate process validation/registration batches

• Initiate viral clearance studies

Initiate manufacture of registration batches of Cortrophin® Gel 

1 mo. per batch

Q2 2019

• Analytical method validation for drug product release/stability

• Process validation

• Registration/Commercial batches

• Initiate registration-enabling ICH stability studies 

Initiate registration stability for sNDA  

6 mos. 

1H 2019

• Six months of accelerated stability from drug substance and drug product batches at time of submission 

sNDA submission


Q1 2020

• Filing - four month PDUFA date



 

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SOURCE ANI Pharmaceuticals, Inc.

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