ANI Pharmaceuticals (NASDAQ:ANIP) Q1 2026 Earnings Call

0:00 Good day, everyone, and welcome to today's ANI Pharmaceuticals, Inc. First Quarter twenty twenty six Earnings Results Call. Please note this call is being recorded. After the speakers' prepared remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, one, one on your telephone keypad It is now my pleasure to turn the conference over to Irina Koffler. Thank you, Liz. Welcome to ANI Pharmaceuticals First Quarter twenty twenty six Earnings Results Call. This is Irina Koffler, Investor Relations for ANI. With me on today's call are Nikhil Lalwani, President and Chief Executive Officer Stephen Carey, Senior Vice President and Chief Financial Officer and Chris Muth, Senior Vice President and Head of ANI's Rare Disease business.

0:58 You can also access the webcast of this call through the Investors section of the ANI website at anipharmaceuticals.com. This call is accompanied by a slide deck that can be accessed by going to the Events section of the Investors page of our website. You can turn to our forward looking statements on Slide two. Before we begin, I would like to remind everyone that some statements we make today may be considered forward looking statements as defined by the Private Securities Litigation Reform Act. ANI cautions that these forward looking statements are subject to risks and uncertainties, including those noted in our press release issued this morning and our filings with the SEC that may cause actual results to differ materially from those projected in the forward looking statements.

1:48 ANI specifically disclaims any intent or obligation to update these forward looking statements except as required by law. During this call, we will also refer to certain non GAAP financial measures. These non GAAP financial measures should not be considered as an alternative to financial measures required by GAAP. The non GAAP financial measures referenced on this call are reconciled to the most directly comparable GAAP financial measures in a table available in the slide deck accompanying this call. The archived webcast will be available thirty 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 05/08/2026.

2:35 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. Thank you, Irina, and welcome again to ANI. Good morning, everyone, and thank you for joining us for ANI's first quarter twenty twenty six earnings call. Starting on slide four, in the first quarter, we continue to deliver on our goal of accelerating our transformation into a leading rare disease company and meaningfully further our commitment to serving patients, improving lives. Specifically, in the first quarter, we grew total net revenues 20% year over year, driven by strong performance across our rare disease and generics businesses, along with contributions from an innovative intellectual property out licensing agreement that will provide us with royalty revenues for years going forward.

3:48 We also grew adjusted EBITDA 24% year over year, while making strategic investments into our rare disease business to accelerate its growth. These strong first quarter results enabled us to raise our 2026 financial guidance for total revenue to the range of $1,080,000,000 to $1,140,000,000 and adjusted EBITDA to the range of $285,000,000 to $300,000,000 I'm highly encouraged by our first quarter performance, which positions us well to drive meaningful growth in 2026 and beyond. Turning to slide five, this year, we outlined top three priorities for 2026.

4:34 And I'm proud of all of the hard work our team has put in to generate strong momentum as we execute against these priorities. The first priority is to accelerate our transformation into a leading rare disease company. Central to this effort is maximizing the multi year growth opportunity for Cortrophin Gel, our lead rare disease asset. We delivered 75,100,000 in Cortrophin Gel net revenues for the first quarter, up 42% year over year and consistent with the expectations we outlined during our last quarterly call. The fundamentals remain strong and we exited the quarter with clear traction across our target indications. We saw accelerating momentum across our new patient starts and monthly volumes dispensed in February and March.

5:25 This momentum has persisted in the second quarter with April having the highest number of new patient starts and monthly volumes dispensed since launch. We have also made significant strides this quarter in expanding our rare disease organization to capture the sizable and unique opportunity in acute gouty arthritis flares by targeting podiatry and primary care. We have recently hired and onboarded the majority of our new dedicated commercial team, who will be in the field in the second quarter. We expect to have our full organizational expansion completed and operational by the end of June. This together with the continued strong demand across other core indications provides a solid foundation to drive significant revenue growth in the back half of the year.

6:15 We believe we are well positioned to achieve our 2026 guidance of $540,000,000 to $575,000,000 in Cortrophin Gel revenues. For ILUVIEN, we delivered $19,300,000 of revenue in the first quarter, up 20% year over year as we continue to execute on the commercial and patient access initiatives we established in 2025. In particular, we made meaningful progress on generating and sharing clinical data with the retina community, including our recent publication of New Day results in DME. We're also on track to announce results from the Phase four Synchronicity clinical trial in NIUPS at a medical conference in the third quarter of twenty twenty six. Over the long term, we continue to believe the addressable patient populations in DME and NIUPS represent at least 10x the number of patients treated with ILUVIEN today, representing a significant and durable opportunity for value creation.

7:15 Turning to slide six, we entered into a transaction with Harmony Biosciences under which we exclusively licensed certain intellectual property to Harmony, which expands its intellectual property estate for pitalisand. In addition, we provided Harmony a co exclusive license with which Harmony and Nvidia, a subsidiary of ANI, intend to develop a novel formulation of pitalisant in broad CNS indications. In the first quarter, we received a $15,000,000 upfront license fee. Additionally, we have the potential to receive an additional $10,000,000 milestone payment upon achievement of certain development milestones and expect these development milestones to be achieved in the second and third quarters of twenty twenty six.

8:03 We will also receive low single digit royalties on pitolisant based products. Harmony's guidance has WCAG delivering net revenues of $1,000,000,000 to $1,040,000,000 in 2026. Turning to Slide seven, our second priority is continued execution in our generics business. By leveraging our superior R and D capabilities, operational execution and US based manufacturing footprint, as well as maintaining our current cadence of 10 to 15 launches annually. Similar to rare disease, similar to our rare disease franchise, we are able to report meaningful progress on this front. Year to date, we have already launched six new generics products and continue holding our position as the number two player in overall CGT approvals.

8:54 Our third priority is managing a disciplined capital allocation strategy. We continue to explore inorganic opportunities to expand the scope and scale of our rare disease business. We are also focused on driving organic growth by investing in our dedicated organization for Cortrophin in acute gouty arthritis flares and investing a high single digit percentage of generics revenues into generics R and D. Our confidence in the business is further evidenced by our new $100,000,000 share repurchase program authorized by our Board. Turning to Slide eight, we are encouraged by our first quarter performance and the important progress we've made against our strategic priorities. We are seeing strong momentum coming out of the quarter and are well positioned to achieve our newly raised 2026 financial guidance.

9:44 In 2026, we expect to deliver over $1,000,000,000 in revenue, representing 26% growth over 2025 at the midpoint of our guidance range, and rare disease is expected to account for approximately sixty percent of our total revenues in 2026 with Cortrophin Gel growing 60% year over year. We also expect to expand the bottom line with adjusted EBITDA forecasted to grow 27% year over year. Our balance sheet is healthy with the capacity to support future business development opportunities to expand scope and scale of our rare disease business. With all of this recent progress, we are continuing our virtuous cycle of growth with which our generics and brands businesses generate meaningful cash flows to support our rare disease business as we accelerate our transformation into a leading rare disease company.

10:35 I'll now turn the call over to Chris to discuss our rare disease business in more detail. Chris? Thank you, Nikhil, and good morning, everyone. Starting with slide nine. Cortrophin grew 42% year over year to $75,100,000 in line with our expectations in the first quarter. We drove momentum across our underpenetrated specialty indications and made significant progress on our organizational expansion to capture the unique opportunity in acute cardiac arthritis flares. As a reminder, consistent with prior years and typical industry dynamics, Cortrophin's performance in the first quarter reflected seasonality primarily related to the impact of insurance reverifications. In the first half of the quarter, insurance reverifications took slightly longer to clear as compared to the prior year due to increased Cortrophin patient volumes in the physician offices and in some parts of the country due to weather related physician office closures that temporarily delay the reverification process.

11:34 As physician offices worked through the reverification backlog, Cortrophin sales began to ramp back up. In fact, we saw an acceleration in February and March, which carried into April. April achieved the highest number of new patient starts and monthly volume dispensed since launch. We are also pleased with the underlying fundamentals. We delivered year over year growth across all of our targeted specialties of rheumatology, nephrology, neurology, pulmonology and ophthalmology. Prescribing for Cortrophin Gel and acute gouty arthritis flares remained a key driver this quarter. This indication is unique to Cortrophin Gel among ACTH therapies, represented approximately 18% of total utilization. We also continue to realize meaningful revenue synergies in ophthalmology with first quarter Cortrophin volumes in ophthalmology doubling over the same period a year ago.

12:25 I'm proud of our commercial team's execution this quarter that positions us for significant growth in 2026. To capture the multi year growth potential of Cortrophin Gel, we continue to focus on three key strategic priorities high ROI commercial initiatives, investment to generate robust clinical evidence to support physician decision making and confidence in Cortrophin Gel and enhancing patient convenience. I want to focus my comments today on our investments in high ROI commercial initiatives. Turning to Slide 10. Building on the commercial expansion we executed in 2025 and following a successful pilot program, we are taking the next step to capture the unique opportunity for Cortrophin Gel in acute gouty arthritis flares with our new 90% dedicated organization targeting primary care and podiatry.

13:16 The majority of our commercial team has been recently hired and onboarded. They will be in the field and meaningfully engaging with prescriber targets in the back half of the second quarter. Further, our sales team is equipped with new promotional materials focused on acute Guardia Arthritis flares that we believe will assist significantly with our educational efforts. Expect We to have the full team deployed by the end of the second quarter, focusing on the 7,000 HCPs to treat the most severe patients outside of our prior call points in rheumatology and nephrology. While we anticipate the expansion to begin impacting Cortrophin Gel volumes in the second half of twenty twenty six, we expect a greater impact in 2027 as the team reaches full productivity. There are several reasons why we are very confident about the opportunity in acute gouty arthritis flares.

14:03 First, it represents a significantly underpenetrated market opportunity. There are roughly ten million patients in The U. S. With gout, about thirty six percent receive treatment annually. They have one point five to two flares on average per year, and only eight percent of those patients receive an injectable flare treatment. This group of two hundred and eighty five thousand patients represents our addressable patient population, and majority of them are treated in settings called on by our new team. Second, Cortrophin is the only approved ACTH therapy for acute cardio arthritis flares. Third, we have a proven track record in this indication. Prescribing for acute cardio arthritis flares represents approximately eighteen percent of Cortrophin Gel use, to date driven primarily by use in rheumatology and nephrology. Last year, we ran successful pilots across 10 territories in primary care and podiatry, and we continue to see momentum in these territories.

14:55 This data gave us further confidence to expand our organization to capture the broader opportunity in gout. Finally, our organization build out further enables us to continue expanding the ACTH market, which is pictured on Slide 11. Already prescribers who were previously naive to ACTH represent approximately half of our total Cortrophin Gel prescriber base And this cohort will continue to grow. The ACTH market is expected to reach over $1,300,000,000 in sales in 2026 with Cortrophin expected to grow 55% to 65% year over year. On Slide 12, turning to our retina franchise, we're advancing several initiatives to support ILUVIEN sales. We're committed to generating clinical data for the overall retina community. We're pleased that last month the results of our New Day study of ILUVIEN in patients with DME were published in ophthalmology, a leading globally respected peer reviewed journal.

15:47 We also expect to share results from our synchronicity Phase IV study of YUTIQ now promoted under the ILUVIEN label in chronic NIUPS at a medical meeting in the third quarter. In addition, our commercial team is focused on educating and engaging the retina community and they're conducting peer to peer educational programs and field activities with updated marketing materials to enhance physician understanding of ILUVIEN and its two indications. We also continue to work with physician practices as they navigate ongoing Medicare market access challenges that have persisted since January 2025, including exploring alternate access pathways. I'm proud of all of the progress our team made this quarter and believe we are well positioned to accelerate our transformation into a leading rare disease company. With that, I will now turn the call over to Steve to detail our financials.

16:35 Thanks, Chris, and good morning to everyone on the call. I'll now review our first quarter results and 2026 guidance in more detail. Starting with slide 13. ANI total net revenues were $237,500,000 in the first quarter, up 20% over the prior year period. Revenues from Cortrophin Gel in the first quarter were $75,100,000 up 42% from the prior year period, performing in line with our expectations. As Chris noted, first quarter twenty twenty six results were impacted by seasonality related to the impact of insurance reverifications that took slightly longer to clear in January and February.

17:26 ILUVIEN net revenues were $19,300,000 in the first quarter, up 20% from the prior year period. As Nikhil mentioned, in January, we entered into a licensing transaction with Harmony Biosciences. We recognized $21,500,000 of associated revenues in the first quarter, consisting of the $15,000,000 upfront license fee and the initial royalty income on sales of Wakix. Revenues from generics in the first quarter were $105,400,000 an increase of 7% over the prior year, driven by the continued strength in the partner generic launch that commenced in the third quarter of twenty twenty five, contribution from new product launches and commercial and operational outperformance.

18:22 Turning to Slide 14. Non GAAP cost of sales increased 28% to $93,100,000 in the first quarter of twenty twenty six 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 in the first quarter was 60.8%, a decrease of approximately two thirty basis points from the prior year period, principally due to higher sales of royalty bearing products, including Cortrophin Gel, the partnered generic product launch that occurred in the third quarter of twenty twenty five, the non recurrence of prior year revenues from frucalypide as well as lower brand sales year over year.

19:15 These effects were somewhat tempered by the initial revenue recognition under the Harmony agreement. Non GAAP research and development expenses were $10,000,000 in the first quarter, essentially flat with the prior year period. Non GAAP selling, general and administrative expenses increased 12% to $71,400,000 in the first quarter, driven by initial marketing and recruitment expenses for our organizational expansion for Cortrophin in acute gouty arthritis flares as well as an overall increase in activities to support the ongoing significant growth of our business. Adjusted non GAAP diluted earnings per share was $2.5 for the first quarter compared to $1.70 per share in the prior year period.

20:13 Adjusted non GAAP EBITDA for the first quarter was $63,000,000 up 24% compared to the prior year period. We ended the first quarter with $311,200,000 in unrestricted cash, up $25,600,000 as compared to $285,600,000 as of the 12/31/2025 balance sheet. Cash flow from operations was $58,400,000 in the first quarter. As of 03/31/2026, we had $625,000,000 in principal value of outstanding debt, inclusive of our senior convertible notes and term loan. At the end of the first quarter, our gross leverage was 2.6 times and our net leverage was 1.3 times our trailing twelve months adjusted non GAAP EBITDA of $242,000,000 Driven by first quarter performance, we are pleased to raise our 2026 financial guidance for total net revenue, adjusted non GAAP EBITDA and adjusted non GAAP EPS, which reflects significant top and bottom line growth.

21:29 Our guidance outlined on Slide 15 is as follows. We now expect 2026 net revenue of $1,080,000,000 to 1,140,000,000 up $25,000,000 from previous guidance. We are reaffirming our guidance for Cortrophin Gel net revenue of $540,000,000 to $575,000,000 And from a quarterly cadence perspective, we expect second quarter Cortrophin Gel revenues to represent approximately 21 to 23% of total twenty twenty six Cortrophin revenues. We then expect further sequential gains in the third and fourth quarters, driven by continued performance of our portfolio, pulmonology and ophthalmology teams in addition to the full deployment of our commercial organization focused on acute gouty arthritis flares.

22:31 Revenues associated with this expansion will first occur late in the second quarter and are expected to build momentum throughout the second half of the year. We are reaffirming our ILUVIEN net revenue guidance of $78,000,000 to $83,000,000 and we now expect non GAAP adjusted EBITDA of $285,000,000 to $300,000,000 up $10,000,000 from our previous guidance. From a quarterly cadence perspective, we expect second quarter non GAAP EBITDA to be essentially in line with first quarter as the increase in Cortrophin Gel revenues will be tempered by the non recurrence of the $15,000,000 upfront license fee recognized in the first quarter.

23:23 We then expect strong sequential growth in adjusted non GAAP EBITDA in the third and first quarters driven by Cortrophin Gel revenue gains. We now expect adjusted non GAAP earnings per share between $9.19 and $9.69 We are also adjusting upward gross margin expectations and expect adjusted gross margin to be 59.9% to 60.9% in 2026, up 60 bps from our previous guidance. We continue to anticipate between 21,500,000 and 21,800,000 shares outstanding for the purpose of calculating full year non GAAP diluted EPS and a full year U. S. GAAP effective tax rate of approximately 26% to 28%.

24:21 Finally, we are pleased to announce a new three year share repurchase program to repurchase up to $100,000,000 in common stock. This reflects the strength of our balance sheet and our ongoing confidence in the business. This program provides us with another tool in our capital allocation strategy, which is centered on creating long term value for our shareholders. With that, I'll turn the call back to Nikhil. Thank you, Steve. Turning to slide 16. In closing, we are making meaningful progress against our strategic priorities to accelerate our transformation into a leading rare disease company, continuing to execute in generics and deploying capital in a disciplined manner.

25:12 Overall, we expect to deliver over $1,000,000,000 in revenue in '26 with rare disease approximate representing approximately 60% of total revenues. We are on track to achieve our raised 2026 financial guidance, which reflects significant top and bottom line growth. Operator, please open up the line for questions. Our first question comes from David Amsellem with Piper Sandler. Thanks. So just have a couple. First, on the mix for Cortrophin, can you talk to how much of your growth is coming from the non gout settings like pulmonologysarcoidosis and ophthalmology?

26:16 And how much of the mix is in those other high growth settings other than gout. So that's number one. And then also wanted to drill down on number of vials and duration of treatment in the various indications. My understanding is that with in gout, it's a pretty short course pulmonology, ophthalmology others, there's more vials, there's more duration. So help us better understand those dynamics. And then last question is on payer access as you gain more and more of a footprint overall, and particularly in gout. Can you talk about how access dynamics might evolve? Thank you.

27:05 Yes. Good morning, and thank you, David. So your first question is where is the growth coming from? Our previous year sales was $348,000,000 and our guidance for this year was is $540,000,000 to $575,000,000 So that growth of approximately 60%, majority of that growth comes from the what I would refer to as core indications are the ones that we had been focusing on since launch, which is rheumatology, nephrology, neurology, pulmonology and ophthalmology. And there is acute gouty arthritis flares as part of that, but coming from the prescribers being rheumatologists and nephrologists.

27:54 Now, when you think about the gout expansion that we've done this year, As Chris mentioned in his remarks, the team is pretty much hired and trained and is going to be in the field starting the back half of this quarter. You'll see some revenue impact in this quarter, but it'll really ramp up towards Q3, Q4. But there's a much greater impact that's gonna happen in 2027 from this expansion that we've done of a dedicated commercial organization for acute GARA arthritis flares targeting primary care and podiatry. So to summarize again, majority of that growth from three forty seven going to five forty to five seventy five will come from our core indications and with our prescribers with those core indications.

28:51 And then there's a subset of it, also growth is coming from the gout expansion that we're doing this year. We'll see the full scale impact and operating leverage in '27. So that's the answer to question one. Regarding the vials per by different therapeutic areas and indications, you're absolutely right that there is a variance. Know, chlorprofen is prescribed by across specialties, and there is specialties like pulmonology and nephrology that have higher vials or PFS per patient, and then there is multiple sclerosis, gout, have lower vials per flare.

29:39 And I would just remind that in some cases the patients do come back and they may have used colprofen a couple of years ago, but then will come back the next time an exacerbation or a flare comes up. So that's a bit of the color that we can give you on vials or duration across indications. And obviously, there's a continuum there across different specialties and different indications. And then on third is payer access. We brought competition to a category that had no competition in ACTH when we launched in 2022, and have been focused on expanding access and serving the significantly underpenetrated addressable market across indications.

30:32 And what you'll see with the 30% growth implied in our and our competitors guidance is that we're both focused on reaching the patients for who ACTH therapy is appropriate, and expanding the access as we are doing that. I'm trying to keep it a bit general because as you would expect, there's stuff that is competitively sensitive that we need to just balance while sharing information that's helpful for investors. So thank you, David. Our next question comes from Vamil Divan with Guggenheim Partners.

31:22 Great. Thanks for all the information today and thanks for taking my questions. I guess I have a couple of questions related to the guidance increase. So and I guess ties into the the Harmony deal. So just to confirm, it sounds like you already recognized 15,000,000 upfront license fee. So I'm assuming that's already I was included in your guidance expectation. And then there's this $10,000,000 in development milestones that you're expecting in 2Q and 3Q. So my question is, is that already included in your guidance as well? If it is, then that sort of accounts for the $25,000,000 guidance range, for the company as a whole. So So I'm wondering how you're thinking about the royalties that you'd get on top of that. Is that included in your guidance or not? Because if that is, then I'd almost wonder why the guidance and especially the EBITDA guidance maybe not is not going up by more given the impact of this acquisition?

32:16 And then my second question sorry, that was a long question. The second one is on Cortrophin, and I understand the reauthorization took longer than expected in the first half of the first quarter. But the prescription data that we're seeing publicly through IQVIA, those sources still looked very, very strong. So I'm just wondering if you can maybe help explain the disconnect there. But I would think that if the reauthorizations are taking longer, it would lead through to in terms of the prescription data, but maybe maybe it doesn't. Maybe maybe I'm wrong on that. So if you can just clarify how we should think about interpreting any of the publicly available prescription data. Thanks. Sure. Good morning and thank you, Vamil. So I'll take your second on Cortrophin and IQVIA first, and then I'll come back to the guidance.

33:03 So, look, in the past, IQVIA has been directionally in line with our performance. However, we can't comment on the recent disconnect as it is third party data, and we do not have insight into all their inputs. And that's why what we've tried to do is share internal metrics that are useful for investors. So we and as you would expect, operationally, we remain focused on our internal metrics and leading indicators we use to manage the business while obviously watching the external metrics too. And what we have shared, right, is that we exited the quarter and began Q2 with significant momentum across our target indications. We saw accelerating momentum across monthly volumes dispensed and new patient starts in February and March. And we've spoken to some of that when we reported it in February.

33:55 And then this momentum has persisted in the second quarter with April having the highest number of new patient starts and monthly volumes dispensed since launch. So that's the the answer on cloprofen and and related to the IQVIA clarification that you that you had sought. And then on the guidance, look. We you know, our guidance included when we had issued the guidance, it included the the the the the Harmony deal. Right? So our initial guidance, which we issued in January included Cortrophin at $5.40 to $575,000,000, Iluvien at 78 to 83, revenues from the out licensing agreement, gross margin at 59.3 to 60.3, and adjusted EBITDA at 275% to 290%.

34:47 Our newly raised 26% guidance retains Cortrophin and ILUGIN revenue guidance. And so for the guidance increase is really driven by high generics revenues on the back of first quarter and visibility into new product launches for the rest of the year. That's one. Second is clarity around the milestone achievement of the $10,000,000 the development milestones that is there in the Harmony agreement. We have more clarity around when that can be achieved. And I think Steve had spoken that that will be achieved in the second and third quarter, that $10,000,000 will be achieved across the second and third quarter of this year. And third is just refinement of the royalties revenues expected for this year based on the updated 2026 guidance issued by Harmony.

35:36 Okay. Thank you for your question, Vamil. Our Our next question comes from Dennis Ding with Jefferies. Guys. Thanks for taking my questions and congrats on a very good Q1. So, you know, on the Q2 soft guidance, it seems to imply 117,000,000 to $128,000,000 for Cortrophin at the midpoint. Maybe talk about the pushes and pulls on that number and what's driving your confidence today in achieving that and how much visibility do you have on orders over the next forty five days? That's question one. And then question number two, if I think about the Patrofam guidance for the year, I feel like what I'm really trying to get comfortable with is maybe around an incremental $15,000,000 in second half Galp revenue.

36:23 When I do the math, that implies around, let's say 1,500 to 2,000 flares that need to be treated in the second half, but you're also going after 7,000 HCPs, so maybe only a small proportion then just needs to treat a single flare in the second half to bridge the $50,000,000 in gout revenue. Do you agree with that math, or is there something that we're missing here? Thanks. Right. So and good morning, and thank you for your questions, Dennis. So the first question is on the Cortrophin guidance and the quarterly evolution that we spoke to. So look, as we said, we saw we exited the first quarter with significant momentum, right, and saw accelerating momentum across monthly volumes dispensed and new patient starts in February and March. We exited and then began in Q2 with significant momentum. We shared that you know, both in terms of volume dispensed and new patient starts, April is the highest of all time. Right? We believe that momentum will sustain. Right?

37:31 And so we are reaffirming our guidance for Cortrophin of five forty to five seventy five. And then what you have in the third and fourth quarters is, and this goes back to the question that the first question that I asked for David, is that the third and fourth quarters will have continued performance of our portfolio pulmonology and ophthalmology teams. And in addition to that is a full deployment of our commercial organization. We have completed that hiring and training for the most part. It will be fully complete by the end of June. So the revenues associated with this expansion will first occur late in the second quarter, and then are expected to build momentum through the second half of the year, which is in the third quarter and fourth quarter. I mean, for reference, we're adding 64 new sales reps.

38:28 And as you're thinking about number of patients, the number of enrollments, number of physicians, I think broader, I would just zoom out a little bit and say, there are 285,000 patients that we believe are in the addressable market, and we believe that they have an unmet need where Cortrophin Gel may be an appropriate treatment. And they are being treated by physicians that we are currently not reaching. So consistent with our mission of serving patients, improving lives, we've done investment to reach these patients, first of all. And as a consequence, expand the ACTH market because we're reaching a completely new set of prescribers that for the most part, other than those 10 pilots that we had done last year and have seen significant success in and continue to see momentum in this year, we were not really accessing.

39:29 And so really this is about reaching that much larger patient population through the expanded sales force. And again, we remain confident with the addition of 64 reps of seeing momentum build for that in the back half of the year, but also the bulk of the growth from three forty seven to five forty to five seventy five coming from the core portfolio pulmonology and ophthalmology team. When I say portfolio, I mean reps that detail into nephrology, neurology and rheumatology. Thank you, Dennis. Our next question comes from Glenn Santangelo with Barclays. Thanks for taking my question.

40:16 Mikael, I just want to follow-up on sort of your previous response regarding the guidance. I mean, you're making the case that the licensing fee was included in the original guidance, but it was unclear to me what you were saying about the milestone payments. Were they in the original guidance or is that incremental now? I just wanna make sure I'm clear on that. And then I had a follow-up. Got it. Yeah. I think that when we gave the initial guidance, we had you know, we take into account, you know, we we it took us time to figure out, you know, the the timing of for the development of these sorry, for the achievement of the milestone related to the development. So that's, you know, that we've baked that in into the revised guidance.

41:04 And look, there are multiple factors that are impacting the raised guidance as I spoke about, right, you know, earlier, So that was the higher generics revenues on the back of first quarter and visibility into new product launches for the rest of the year. The second is the clarity around the achievement of the $10,000,000 development milestones. And look, we're also retaining some flexibility to invest further across rare disease and generics as we ramp through the year, because we have tremendous growth opportunities across both, right? So we're retaining some flexibility to invest further in the latter part of the year as needed. So thank you, Glenn, and I think you have a follow-up. Please go ahead. Yes. Maybe I'll shift gears and ask you a quick question on ILUVIEN.

41:56 Based on your full year guidance and what you sort of did in 1Q, it doesn't seem to be that you're expecting any sort of sequential growth in this product throughout the year. And I was wondering if you could just update us on your sort of commercial and patient access initiatives, because it seems like you're just sort of expecting 20 mil a quarter for the balance of the year. Yeah, thank you for your question, Glenn. We've deployed these commercial and patient access initiatives starting with towards the end of 'twenty five and heading into 'twenty six. And we're seeing the impact from those as we've been in a strong Q1.

42:46 And we're just calibrating as we look ahead. The foundation related access issues have not resolved. We've obviously made some progress with alternate access pathways for patients that do have the pharmacy benefit. But we're calibrating as we give guidance on what will come towards the rest of the year. We have a lot to look forward to, right? We spoke about the release of the New Day clinical study results in publishing of that in ophthalmology, as well as, you know, in q three at a medical conference releasing data on ILUVIEN in NIUPS, the study is called synchronicity.

43:36 And so there's a number of things that we are working on, initiatives that we're working on, but we're just being calibrated on where the guidance is versus where we started. Thanks, Glenn. Okay, thank you. Our next question comes from Kanarina Niascova with JPMorgan. Thank you so much. Just wanted to talk about the data generation strategy. Do you think that it makes sense generating additional data in some of the older indications as a kind of way to increase adoption? And if so, what indications do you think would be the most interesting there? And then second question is just on BD, just latest thinking in terms of appetite or priorities for the company. Thank you. Yeah. Good morning, thank you, Katrina.

44:23 So in terms of generating scientific and clinical evidence, it's something that we've been focused on right from your one of the launch we've invested in generating preclinical evidence that shows the differentiated mechanism of action of Cortrophin Gel and supports the physician use of Cortrophin. And we're continuing to explore and work collaboratively with physicians to identify areas where we can do that. You obviously know about the phase four study that we have in acute cardiac arthritis flares. We're looking at and we've also got other publications we've done in the other indications, and we continue to sort of evaluate and make investments in generating scientific and clinical evidence, and we'll keep you updated.

45:20 Obviously, there is a competitive angle to this and balancing what we're sharing from a competitively sensitive standpoint. But it is an area generating scientific and clinical evidence is an area we're absolutely committed to for Cortrophin and supporting the growth of this franchise. And then when it comes to BD, we remain it is a critical and important part of our capital allocation strategy. We are exploring ways to expand scope and scale of our rare disease business, looking at commercial assets that can leverage either the sales team that we have that go into multiple call points or the rest of the rare disease infrastructure that we have that support market access, especially pharmacy distribution, patient support, medical affairs, marketing, all of that rare disease infrastructure that we have in place that can support us reaching patients in rare indications.

46:21 So identifying a commercial asset that can leverage these capabilities that ANI has in rare disease to expand our scope and scale, we retain our focus on that, and it's a critical priority for ANI. Thank you, Eckersley. Thank you. Our next question comes from Les Selusky with Truist. Good morning. Thank you for taking my questions. I have three. First on the reverberations, can you color if the do you expect any spillover of these lingering into 2Q or is it now mostly resolved? And are you aware of the magnitude of these issues among your competitor? And how should we expect similar reoccurrence in Q1 of next year?

47:09 And then just to clear up on the Harmony settlement, is the royalty tied to all weight kick sales or just future indications or future formulations? And do you have ability to sell this royalty stream? And would you consider going this route? And then just on the buybacks, is there an ASR component to the buybacks? And how should we think about priority of capital allocation strategy? Thank you. Yes. So thank you, Les, and good morning. I'll take the first one, and then I'll hand it over to Steve to answer the one on the share repurchase as well as the Harmony royalties. So the headwinds that we saw related to Q1 seasonality and insurance reverifications taking longer to get through impacted the first half of the quarter. Physician offices since worked through that backlog, and we saw the accelerating momentum across monthly volumes dispensed and new patient starts in February and March.

48:08 I think that as we head into your question on what will happen in twenty seven Q1, we get to towards the end of the year and into twenty seven Q1, we will work with the physician offices and we already have, as we've been working through these insurance reverifications on, you know, what can we do to collaborate to make these go, you know, go smoother and and have identified a set of initiatives that we will deploy, and we will look forward to updating you as as we get closer to that to that time frame. Obviously, there was, you know, there was some impact from the weather related issues that happened in significant number or significant weather related issues in those first, you know, half of q one.

49:02 That's something obviously that we that's mother nature and that we'll decide. But in terms of the insurance reverification process, we do have ideas that we're exploring and we'll implement as we get towards the end this of year and heading into next year to support the physician offices. And then I'll just turn it over to Steve to answer your question on Harmony royalties, as well as the buyback. Yes. So I'll pick the buy up one first and Les, good morning. Thanks for the questions. Just to position the repurchase program a little bit and then I'll get to your specific question. As we said on the call, putting this in place at this time reflects our confidence in the balance sheet, the cash generation that we've achieved today with $311,000,000 on the current balance sheet.

50:02 But our overall confidence in the future prospects of the business, which includes an expectation for significant cash flow generation in 2026. To be clear, our principal goal for the excess cash on our balance sheet remains to support future business development and M and A. And within that framework, the addition of the buyback program really just gives us another tool in our tool belt as we actively manage the capital allocation plans going forward. Our shareholders should expect us to judiciously allocate cash between investment behind the strategic growth and diversification of the business, delevering our balance sheet and return of any excess capital to shareholders.

51:03 And to your specific question, Les, at the current time, there is no plan for an ASR to be implemented within this buyback program. Thank you. And then, sorry, on your question. On Harmony. Yeah, on the Harmony royalties, the royalty is due on all Pitola san products, including Wakix and any future products that may be introduced that is Pitoleson based. And in terms of whether we would sell that royalty stream or not, we typically don't discuss any potential future BD.

51:58 We're at the moment, we're just very pleased with the collaboration with Harmony and look forward to executing our portion of that out licensing deal. Our next question comes from Brandon Folkes with H. C. Wainwright. Hi. Thanks for taking my questions and congrats on a very good quarter. I just want to follow-up on an earlier question regarding the subscription growth we are seeing where we sit versus reported revenue on Cortrophin. A few sub questions here. As the ACTH category grows, are you seeing any additional payer management across the board?

52:50 And then on Cortrophin again, any changes in rebates or contract terms for 2026 versus 2025? And then lastly, I guess, was the level of patient support you provided in 1Q twenty twenty six, was that within what you would expect for a first quarter comparable to the prior year? And are you seeing any change in usage patterns in gut? A lot in there, I appreciate it. Thank you. Yes. Yes. Good morning, Brandon, and thank you for your questions. So your first question on peer management and then your subsequent question on rebates. Look, we try to provide as much information as we can to be useful to investors, but some stuff is competitively sensitive.

53:43 What's happening on the payer landscape as well as on rebates is competitively sensitive. So we'll not be able to give you specifics there. What I can say is that our efforts to since we've launched is to bring competition to a category that has not had competition and to reach more patients. Half our prescribers ones that were naive to ACTH and had never considered ACTH before writing their first prescription of Cortrophin Gel. So we're really trying to reach that larger addressable market. And we believe that, you know, as with our efforts and also the competitors' efforts, there are more patients that are appropriate for ACTH that are getting access to this therapy, right?

54:41 So I think that's what I could say in terms of expanding access and having patients access this therapy. So that's on your first two questions. And then with regards to patient support, no, the patient support in 2026, in twenty twenty five Q4 heading into twenty twenty six Q1 was much more than the patient support that we had in twenty twenty four Q4 going into twenty twenty five Q1, because we obviously knew there were a lot more patients on therapy in twenty twenty five Q4, and that would need insurance reverifications. I believe that's where you were trying to understand. And so we made the expansion of our patient support team, But there are three different stakeholders that play a role in insurance reverifications, and one of which is the physician offices.

55:35 So I think that's across the three where we had the volumes that went to some of those physician offices, and then it was exacerbated by the weather related delays is what led to the insurance reverification issues. And then on gout, I think what I could share that would be useful is you know, gout is a acute gouty arthritis flares as a percentage of Cortrophin volumes has grown to eighteen percent, majority of which comes from rheumatology and nephrology because that's, you know, that's what we were originally focused on. So that, obviously, is seeing a lot of momentum. And then the cities in which we did the pilots, those territories are also seeing momentum, and that momentum has persisted even after the pilots have concluded. Obviously, of the pilots have just translated into this new acute GI arthritis expansion team, and we're continuing to see momentum in that team, too.

56:45 Thank you, Brandon. Great. Thank you very much and congrats. Our next question comes from Thomas Smith with Leerink Partners. Hey, guys. Good morning. Thanks for the updates and for taking our questions. On Cortrophin, could you just expand on, some of those comments, Nikhil, with respect to the 10 primary care and podiatry centers where you executed the pilot programs last year. Maybe is there a way to quantify, I guess, the potential continued growth and maybe the uptake from the centers now that you're a bit removed from the pilot and what other learnings could you apply from experience? And then on the Harmony licensing transaction, you just talk about what a potential development path looks like for the novel formulation of Pitola sent maybe a little bit of color on timelines, how you think about potential value generation from that asset? And then are there other monetizable IP assets in that portfolio that could drive maybe similar transactions here over the next couple of years? Thanks so much.

57:54 Great. And thank you, Tom, for questions and good morning. So on the pilots, we're continuing to see momentum in both the new patient starts and volumes dispense, the momentum is significant. Obviously, we keep monitoring that and that continues to give us confidence in this expansion that we've done. And lot of our expansion is architected based on what we learned from the pilots. Right? So when you think about which are the how do you identify primary care and podiatrist physicians to reach out to, to reach? So we took, we looked at the success in these pilots, and we're able to develop a set of criteria from claims data that helped us identify who are the physicians, primary care, and podiatrists, which are very large populations, and then really focusing the 7,000 HCPs that are treating the patients with the most severe acute gouty arthritis flare indications.

59:00 And so, a lot of that has been learning from there. Second is, what is the cadence? This is a different prescriber group than the ones that we've been going with initially or going to initially with our Salesforce. And so really learning like, what's the cadence that would be appropriate for them? What is the messaging that's appropriate? We have a whole slew of new marketing material that is tailored to acute cardiac arthritis flares, and what are the messages that resonate? So a whole bunch of the architecture of our gout expansion really comes from the learnings from the 10 pilots.

59:48 Your second question on the development timelines for Harmony, and that's it's confidential to the collaboration and not one that I can speak to today. And then the last one on monetizable IP, you know, we absolutely keep working on IP that we can monetize and collaborations that we can do from a development standpoint to create value for our shareholders, and Harmony is one step in that direction. And that's also part of the reason why, as Steve highlighted, we now have these captured in a separate line under Cortrophin under rare disease and brands.

1:00:40 Thank you, Thomas. Thank you. That concludes today's question and answer session. This concludes today's conference call. Thank you for participating. You may now disconnect.