ANI Pharmaceuticals Reports Second Quarter Results
BAUDETTE, Minn., Aug. 7, 2019 /PRNewswire/ --
For the second quarter 2019:
-- Net revenues of $54.4 million, an increase of 15% versus prior year
-- GAAP net income of $6.6 million and diluted GAAP earnings per share of
$0.53, increases of 137% and 130% versus prior year, respectively
-- Record adjusted non-GAAP EBITDA of $23.7 million and adjusted non-GAAP
diluted earnings per share of $1.44, increases of 24% and 27% versus
prior year, respectively
-- Reaffirms 2019 adjusted non-GAAP EBITDA and adjusted non-GAAP diluted
earnings per share guidance and updates guidance for 2019 net revenues
ANI Pharmaceuticals, Inc. ("ANI") (NASDAQ: ANIP) today reported its financial results for the three and six months ended June 30, 2019 and reaffirmed its previously issued guidance for adjusted non-GAAP EBITDA and adjusted non-GAAP earnings per share, while updating its 2019 financial guidance for net revenues. The Company will host its earnings conference call this morning, August 7, 2019, at 10:30 AM ET. Investors and other interested parties can join the call by dialing (866) 776-8875. The conference ID is 3823848.
Financial Summary
(in thousands,
except per share
data) Q2 2019 Q2 2018 YTD 2019
(a) YTD 2018
(a)
Net revenues $54,357 $47,268 $107,244 $93,751
Net income $6,585 $2,777 $7,034 $5,027
GAAP earnings per
diluted share $0.53 $0.23 $0.57 $0.42
Adjusted non-GAAP
EBITDA
(b) $23,681 $19,034 $45,980 $40,788
Adjusted non-GAAP
diluted earnings
per share
(c) $1.44 $1.13 $2.75 $2.45
(a) See ANI's Form 10-Q filed
August 7, 2019 for discussion of
year-to-date results.
(b) See Table 3 for US GAAP
reconciliation.
(c) See Table 4 for US GAAP
reconciliation.
Arthur S. Przybyl, President and CEO, stated,
"ANI had a strong second quarter, generating net revenues of $54.4 million, an increase of 15% over the prior year period, and record adjusted non-GAAP EBITDA of $23.7 million, an increase of 24% over the prior year period. More importantly, we remain on track to file our supplemental NDA for Cortrophin® Gel in the first quarter of 2020.
Generic product revenues increased 20% over the prior year period and we launched one new generic product in late June, Ranitidine capsules. We also received FDA approval for 250 mg/5 ml Vancomycin Oral Solution, which we intend to launch in the third quarter.
During the second quarter, we continued to add to our generic portfolio, through an April distribution agreement with a specialty injectable manufacturer and the June acquisition of seven development stage generic products, which expanded our pipeline of injectable drugs to six."
ANI Updates Guidance for Net Revenues for the Full Year 2019
ANI has updated its full year guidance for net revenues due to the competitive landscape of the Methylphenidate ER market. ANI's guidance for adjusted non-GAAP EBITDA and adjusted non-GAAP earnings per diluted share remains unchanged from previously issued guidance.
Revised guidance for 2019 net revenues of $220 million to $226 million reflects sales growth of between 9% and 12% over 2018 full year actual results. Previous guidance for net revenues was $231 million to $245 million.
The following table summarizes 2019 guidance:
($ in millions except per share data)
2019 Guidance
Net Revenues
$220 to $226
Adjusted non-GAAP EBITDA
$95 to $105
Adjusted non-GAAP diluted
earnings per share
$5.57 to $6.21
ANI's estimates are based upon actual results for the six months ending June 30, 2019 and projected results for the remaining six 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 revenues, adjusted non-GAAP EBITDA, and adjusted non-GAAP diluted earnings per share.
Second Quarter Results
Net Revenues Three Months Ended
June 30,
(in thousands)
2019 2018 Change % Change
Generic pharmaceutical
products $
36,255 $
30,202 $
6,053 20%
Branded pharmaceutical
products 13,996 10,530 3,466 33%
Contract manufacturing 3,687 1,679 2,008 120%
Royalty and other 419 4,857 (4,438) (91%)
Total net revenues $
54,357 $
47,268 $
7,089 15%
Generic Pharmaceutical Products
Second Quarter Net Revenues - Results and Update
Net revenues from sales of generic pharmaceuticals increased 20% to $36.3 million from $30.2 million in the prior period, primarily due to the launch of Ezetimibe-Simvastatin, Candesartan, and other products launched in 2018 and 2019, as well as increased unit sales of Vancomycin.
Key Generic Pipeline Product
Product Reference Drug Required Filing Timing Total Annual Market
(d)
---
Aspirin/Dipyridamole ER
Aggrenox(R)
None (approved) Launch no later than
Capsules October 1, 2019
$ 105M
(d) Based on data from
IQVIA
Branded Pharmaceutical Products
Second Quarter Net Revenues - Results and Update
Net revenues from sales of branded pharmaceuticals increased 33% to $14.0 million from $10.5 million in the prior period, primarily due to sales of Arimidex® and Casodex®, which were launched under ANI's label in July 2018 and sales of Atacand® and Atacand HCT®, which were launched under ANI's label in October 2018. Prior to the launch under the ANI label, net revenues generated by these products was recorded via royalties received and was reported as Royalty and Other.
Key Brand Pipeline Products
Product Required Filing Filing Date Total Annual Market
(e)
---
Vancocin(R) for
PAS Approved June 2019, launch Q3
Oral Solution 2019
$ 450M
Cortrophin(R)
Gel
sNDA
Q1 2020
$1,110M
(e) Based on data from
IQVIA
Vancocin® for Oral Solution Update
ANI is currently advancing a commercialization effort for Vancocin® for oral solution. ANI filed a prior approval supplement ("PAS") in September 2018 and it was approved in June 2019. 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
ANI continues to successfully progress our Cortrophin® re-commercialization program. Significant accomplishments since the first quarter 2019 press release (dated May 9, 2019) include:
-- The completion of a third commercial scale batch of Corticotropin API.
This batch was analytically consistent with previously manufactured
batches and met all specifications. ANI expects to complete API process
validation and registration stability batch manufacturing in the third
quarter of 2019.
-- The initiation of viral clearance studies, which are expected to be
completed in the third quarter of 2019.
-- The manufacture of two commercial scale batches of Cortrophin® Gel
using commercial scale API. ANI intends to complete the third and final
registration batch of drug product in the third quarter of 2019.
ANI remains on track to file a supplemental NDA in the first quarter of 2020.
For further details, please see ANI's Cortrophin® Gel Re-commercialization Milestone Update in Table 5.
Contract Manufacturing
Second Quarter Net Revenues - Results and Update
Contract manufacturing revenues increased 120% to $3.7 million from $1.7 million in the prior year period, primarily due to the impact of contract manufacturing revenues from ANI's Canadian subsidiary, ANI Pharmaceuticals Canada Inc. ("ANI Canada"), which was acquired in August 2018.
Royalty and Other
Second Quarter Net Revenues - Result and Update
Royalty and other decreased 91% to $0.4 million from $4.9 million, primarily due to the launches of Atacand®, Atacand HCT®, Arimidex®, and Casodex® under the ANI label in the second half of 2018. The net revenues 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 revenues from ANI Canada.
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 $45.1 million for the three months ended June 30, 2019, from $40.0 million in the prior year period. The increase was primarily due to a $4.2 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 $1.2 million, primarily due to additional amortization expense associated with a March 2019 asset acquisition and a January 2019 royalty buyout payment related to a prior period asset acquisition. These increases were partially offset by a $1.0 million decrease in cost of sales.
Cost of sales as a percentage of net revenues decreased to 29% during the three months ended June 30, 2019, from 35% during same period in 2018. The decrease was primarily due to lower royalty expense resulting from a royalty buy out and lower sales of products under profit-sharing arrangements.
Net Income and Diluted Earnings per Share
Net income was $6.6 million for the three months ended June 30, 2019, as compared to net income of $2.8 million in the prior year period. The effective consolidated tax rate excluding impacts of discrete items for the three months ended June 30, 2019 was 16.8%.
Diluted earnings per share for the three months ended June 30, 2019 was $0.53, based on 12,269 thousand diluted shares outstanding, as compared to diluted earnings per share of $0.23 in the prior year period. Adjusted non-GAAP diluted earnings per share was $1.44, as compared to adjusted non-GAAP diluted earnings per share of $1.13 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 111 products, addressing a total annual market size of $5.2 billion, based on data from IQVIA. Of these 111 products, 106 were acquired and of these acquired products, ANI expects that at least 56 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, as adjusted for the dilutive effect of the convertible debt notes, when applicable. 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 June 30, Six Months Ended June 30,
2019 2018 2019 2018
Net Revenues $54,357 $47,268 $107,244 $93,751
Operating Expenses
Cost of sales (excl.
depreciation and
amortization) 15,632 16,593 30,357 37,286
Research and development 5,773 5,137 10,146 7,239
Selling, general, and
administrative 14,188 9,962 27,472 18,918
Depreciation and
amortization 9,472 8,313 25,575 16,508
Total Operating Expenses 45,065 40,005 93,550 79,951
Operating Income 9,292 7,263 13,694 13,800
Other Expense, Net
Interest expense, net (3,406) (3,730) (6,760) (7,364)
Other income/(expense),
net 46 (30) (84) (91)
Income Before Benefit/
(Provision) for Income
Taxes 5,932 3,503 6,850 6,345
Benefit/(Provision) for
Income Taxes 653 (726) 184 (1,318)
Net Income $6,585 $2,777 $7,034 $5,027
Earnings Per Share
Basic Earnings Per Share $0.55 $0.24 $0.59 $0.43
Diluted Earnings Per Share $0.53 $0.23 $0.57 $0.42
Basic Weighted-Average
Shares Outstanding 11,851 11,679 11,799 11,634
Diluted Weighted-Average
Shares Outstanding 12,269 11,789 12,046 11,748
ANI Pharmaceuticals, Inc. and Subsidiaries
Table 2: US GAAP Balance Sheets
(unaudited, in thousands)
June 30,
December 31,
2019 2018
Current Assets
Cash and cash equivalents $40,589 $43,008
Accounts receivable, net 76,274 64,842
Inventories, net 45,296 40,503
Prepaid income taxes, net 3,442
Prepaid expenses and other
current assets 3,311 4,524
Total Current Assets 168,912 152,877
Property and equipment, net 38,953 38,090
Restricted cash 5,018 5,021
Deferred tax assets, net of
deferred tax liabilities and
valuation allowance 31,957 27,964
Intangible assets, net 196,697 201,604
Goodwill 3,580 3,580
Other non-current assets 1,789 1,468
Total Assets $446,906 $430,604
Current Liabilities
Current component of Term
Loan, net of deferred
financing costs $4,149 $3,256
Convertible notes, net of
discount and deferred
financing costs 115,858 112,463
Accounts payable 9,809 8,884
Accrued expenses and other 2,423 1,707
Accrued royalties 6,265 8,456
Accrued compensation and
related expenses 2,133 3,524
Current income taxes payable,
net 5,022
Accrued government rebates 10,943 8,974
Returned goods reserve 14,656 12,552
Deferred revenue 558 711
Total Current Liabilities 166,794 165,549
Term Loan, net of deferred
financing costs and current
component 65,688 67,296
Other non-current liabilities 6,768 496
Total Liabilities 239,250 233,341
Stockholders' Equity
Common stock 1 1
Treasury stock (723) (659)
Additional paid-in capital 194,867 186,812
Retained earnings 18,524 11,488
Accumulated other
comprehensive loss, net of
tax (5,013) (379)
Total Stockholders' Equity 207,656 197,263
Total Liabilities and
Stockholders' Equity $446,906 $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 June 30, Six Months Ended June 30,
2019 2018 2019 2018
Net Income $6,585 $2,777 $7,034 $5,027
Add back
Interest expense, net 3,406 3,730 6,760 7,364
Other (income)/expense, net (46) 30 84 91
(Benefit)/provision for income taxes (653) 726 (184) 1,318
Depreciation and amortization 9,472 8,313 25,575 16,508
Add back
Stock-based compensation 2,593 1,782 4,303 3,159
Acquired IPR&D expense 2,324 1,335 2,324 1,335
Excess of fair value over cost of
acquired inventory 5,645
Transaction and integration expenses 341 84 341
Adjusted non-GAAP EBITDA $23,681 $19,034 $45,980 $40,788
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 June Six Months Ended June
30, 30,
2019 2018 2019 2018
Net Income $6,585 $2,777 $7,034 $5,027
Add back
Non-cash interest expense 1,856 1,945 3,655 3,859
Depreciation and amortization
expense 9,472 8,313 25,575 16,508
Acquired IPR&D expense 2,324 1,335 2,324 1,335
Stock-based compensation 2,593 1,782 4,303 3,159
Excess of fair value over
cost of acquired inventory 5,645
Transaction and integration
expenses 341 84 341
Less
Tax impact of add back items (3,899) (3,155) (8,626) (7,095)
Discrete tax benefit related
to ANI Canada transfer
pricing agreement (1,653) (1,653)
Adjusted non-GAAP Net Income $17,278 $13,338 $32,696 $28,779
Diluted Weighted-Average
Shares Outstanding 12,269 11,789 12,046 11,748
Less dilutive effect of notes (306) (153)
Adjusted Diluted Weighted-
Average
Shares Outstanding 11,963 11,789 11,893 11,748
Adjusted non-GAAP
Diluted Earnings per Share $1.44 $1.13 $2.75 $2.45
ANI Pharmaceuticals, Inc. and Subsidiaries
Table 5: Cortrophin(R) Gel Re-Commercialization Milestone Update
Objective Duration
Steps / Details
Status
--- ---
Manufacture -- Scale-up manufacturing process 5x to
commercial-scale projected commercial scale
batches of
corticotropin API 2-3 months per batch
Complete
---
-- Finalize API
manufacturing process &
initiate PV /
registration batches
Complete
-- Method development for
API characterization
methods
Complete
-- Method validation for
API release /stability
methods
Complete
-- Perform viral clearance
studies and validation
In Progress
--- ---
Manufacture -- Finalize drug product manufacturing
Commercial Scale process
Cortrophin(R) Gel
Drug Product 1 month per batch
Complete
-- Initiate process
validation
Complete
-- Method validation for
API release /stability
methods
In Progress
-- Manufacture three API
and three drug product
registration batches Two Complete /Third In Progress
Registration
6 months -- Initiate registration stability First two studies initiated and in
stability for sNDA studies and demonstrate six-months of progress /Third awaiting batch
accelerated and real-time stability manufacturing
prior to sNDA submission
--- ---
sNDA submission
-- Target date: 1Q 2020
On Track
-- Filing -four month PDUFA date
---
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SOURCE ANI Pharmaceuticals, Inc.
