ANIP - NASDAQ

Good day, everyone, and welcome to today's ANI Pharmaceuticals, Inc. Fourth Quarter and Full Year 2025 Earnings Results Call. Please note, this call is being recorded. [Operator Instructions] It is now my pleasure to turn the conference over to Courtney Moverly. Please go ahead.

Thank you, Erica. Welcome to ANI Pharmaceuticals' Fourth Quarter and Full Year 2025 Earnings Results Call. This is Courtney Moberly, 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 Mutz, Senior Vice President and Head of ANI's Rare Disease business. 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 2. Before we begin, I would like to remind everyone that any statements made on today's conference call that express a belief, expectation, projection, forecast, anticipation or intent regarding future events and the company's future performance may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act. These forward-looking statements are based on information available to ANI's Pharmaceuticals management as of today and involve risks and uncertainties, and including those noted in our press release issued this morning and our filings with the SEC. Going such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. ANI specifically disclaims any intent or obligation to update these forward-looking statements, except as required by law. 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 on the slide deck accompanying this call. The archived webcast will be available for 30 days on our website, anipharmaceuticals.com. For the benefit of those who may be listening to the replay or archived webcast, this call was held and reported on February 27, 2026. 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, Courtney. Good morning, everyone, and thank you for joining us. 2025 was another year of outstanding execution and growth by the ANI team, highlighted by our remarkable results in the fourth quarter. At the core of everything we do is our purpose of serving patients improving lives. With our progress in the last year, we are well positioned to continue delivering on that purpose in 2026 and beyond. Starting with Slide 4. In 2025, the company delivered record revenue adjusted non-GAAP EBITDA and adjusted non-GAAP diluted EPS, driven by strong performance across our rare disease and generics business unit. For the full year, we grew total company revenues by 44% year-over-year and adjusted non-GAAP EBITDA by 47% year-over-year. In addition, we delivered exceptional growth for our lead rare disease asset, Cortrophin, with full year revenues up 76% year-over-year as we meaningfully expanded our reach in underpenetrated specialty indications and serve more patients. With our strong R&D and operational capabilities, our generics business continued to outperform, growing 28% year-over-year in 2025. Turning to Slide 5. We believe the momentum we generated in 2025 positions us for continued growth in 2026. Our priorities for this year are threefold. First and foremost, ANI's transformation into a leading rare disease company. For our lead asset, Cortrophin Gel, we plan to maximize its multiyear growth opportunity by addressing the significant unmet need across indications. We will continue to build on our momentum in the key underpenetrated specialty indications in nephrology, neurology, rheumatology, ophthalmology and pulmonology. In addition, for building and deploying a 90-person organization dedicated to acute gardioarthritis fares. For this expansion, we plan to capture sizable and unique additional opportunity in gout to expanding awareness and adoption of Cortrophin for appropriate patients by newly identified physicians in polity and primary care. For ILUVIEN we are focused on returning the product to growth by leveraging the commercial and patient access initiatives established in 2025. Importantly, we continue to believe in the long-term potential of ILUVIEN as we believe the addressable patient populations across DME and NI UPS are at least 10x the current number of patients treated with ILUVIEN today. Our second priority is continued execution in our generics business by leveraging our superior R&D capabilities, operational execution, U.S.-based manufacturing and business development expertise as well as maintaining our current cadence of 10 to 15 launches annually. We continue to make progress on this priority and anticipate another year of strong performance and cash generation from our generics business that will enable us to further invest in our rare disease business. Our third priority is executing a disciplined capital allocation strategy. We are focused on driving organic growth by investing in our dedicated organization for Cortrophin in acute gartiarthritis flares and investing a high single-digit percentage of generics revenue into generics R&D and to drive inorganic growth by exploring opportunities to expand the scope and scale of our rare disease business. . Turning to Slide 6. We believe the 3 2026 strategic priorities will drive long-term growth and value creation for the company. In 2026, we expect to deliver over $1 billion in revenue, representing 23% growth over 2025 at the midpoint of our guidance range. Rare disease is expected to account for approximately 60% of our total revenues in 2026 with Cortrophin growing 60% year-over-year. We also expect to expand the bottom line with adjusted EBITDA forecasted to grow 23% year-over-year at the midpoint of our guidance range. Later in the call, Steve will provide more detail on our 2026 guidance. In summary, 2025 was a pivotal year for ANI as we delivered record performance and drove significant growth across the business lines. We are entering the year from a position of strength and are focused on executing on our 3 strategic priorities. We anticipate that our virtuous cycle of growth in which our generics and brands businesses generate meaningful cash flows to support our rare disease business will drive our transformation into a leading rare disease company. I'll now turn the call to Chris to discuss our rare disease business in more detail. Chris?

Thank you, Nikhil, and good morning, everyone. Starting with Slide 7. Looking at 2025, I'm proud of our team as we closed out the year strong, delivering another excellent quarter, marked by significant growth for Cortrophin Gel as we expanded our reach in underpenetrated specialty indication. During the fourth quarter, the number of cases initiated and new patient starts reached another record high, and we saw broad growth across all of our targeted specialties, rheumatology, nephrology, neurology, pulmonology and ophthalmology. Prescribing for Cortrophin gel and acute gouty arthritis flares remained a key growth driver this quarter. This indication is unique to Cortrophin gel among ACTH therapies and represented approximately 15% of total utilization. Notably, gardiaarthritis has also been a strong catalyst for new prescriber additions, including many providers who are previously unfamiliar with ACTH. We also continue to realize meaningful revenue synergies and ophthalmology with fourth quarter Cortrophin gel volumes in ophthalmology over 2x that of the same period a year ago. Ophthalmology remains a fast-growing targeted specialty for Cortrophin gel and we believe there is further upside as we expand awareness of Cortrophin gel for patients with severe allergic and inflammatory eye conditions. Turning to Slide 8. Looking at the market more broadly, the ACTH space has returned to growth following the launch of Cortrophin Gel in 2022 and approached $1 billion in sales in 2025. We expect it to increase significantly in 2026 with Cortrophin gel growing by 55% to 65%. Turning to Slide 9. We continue to believe that the addressable patient populations across our key indications remain significantly underpenetrated. For example, there are roughly 10 million patients in the U.S. with [indiscernible] about 36% received treatment annually, and they have 1.5 to 2 flares on average per year and about 8% of those patients with severe gadiarthritis and injectable treatment for their flares. This group of 285,000 patients represent our addressable patient population. Importantly, prescribers who were previously naive to ACTH represent approximately half of our total Cortrophin gel prescriber base, and this cohort continues to expand. We believe the most significant opportunity for growth is through overall expansion of the ACTH market by addressing unmet needs of appropriate patients. To capture the multiyear growth potential of Cortrophin gel, we continue to focus on 3 key strategic priorities outlined on Slide 10. We are investing in high ROI commercial initiatives. Building on the commercial expansion we executed in 2025, we are now taking the next step to capture the unique opportunity for Cortrophin Gel and acute [indiscernible] flares with our new 90-person dedicated organization. There are several reasons why we are confident about the opportunity in acute gadiarthritis flares. As I highlighted earlier, there is a large addressable patient population of 285,000 patients. Second, Cortrophin gel is the only approved ACTH therapy for acute cardio arthritis flares. And third, we have a proven track record in this indication. Prescribing for acute gadioarthritis laris represented approximately 15% of Cortrophin gel use in 2025. In addition, we ran successful pilots across 10 territories in primary care and podiatry. This gave us further confidence to expand our organization to capture the opportunity in acute [indiscernible] The hiring process is underway, and we expect to deploy this team by midyear. While we anticipate the expansion to the impact in Cortrophin gel volumes in the second half was 2026, we expect a greater impact in 2027 as the team reaches full productivity. Additionally, we continue to focus on enhancing patient convenience. Our Cortrophin gel prefilled syringe offering, which we launched in April of last year, simplifies administration and provides a more convenient option for patients. The launch of the prefilled syringe has been well received by both patients and prescribers and continue to support broader adoption and serve as an important growth driver for Cortrophin Gel. Finally, we continue to invest in generating robust clinical evidence to support physician decision-making and confidence in Cortrophin Gel. As part of this effort, we are advancing a 150-patient Phase IV study in acute [indiscernible] flares. This trial, along with ongoing collection of preclinical and real-world data across core indications is designed to reinforce Cortrophin Gel differentiated nonsteroidal mechanism of action and provide insights that may support adoption and treatment guidelines. We also continue to generate robust preclinical data for our key stakeholders on Cortrophin Gel differentiated mechanism of action across multiple disease states. This remains a critical growth initiative. As expanding the body of evidence supporting Cortrophin gel use across indications help physicians make more informed treatment decisions. On Slide 11, turning to our retina franchise. We are continuing to advance several initiatives to support ILUVIEN sales. Our fully onboarded commercial team is focused on educating and engaging the retina community, and we are ramping up peer-to-peer educational programs and field activities with updated marketing materials to enhance physician understanding of ILUVIEN and its 2 indications. In June of last year, we began promoting ILUVIEN under the combined label for chronic NI UPS and DME. Our sales teams have been educating customers nationwide, while our market access team worked with payers to establish coverage for the new chronic NIPS indication, all 7 Medicare Administrative Contractors or MAX have now updated their policies to cover ILUVIEN for NI UPS. Among the top 20 commercial payers, all those with ILUVIEN specific policies have updated them to reflect both DME and NI UPS indications. We also implemented initiatives to help physician practices navigate ongoing Medicare market access challenges that have persisted since January 2025. As a reminder, patient support foundations, such as good days had limited funding in 2025, affecting their ability to assist Medicare patients with co-pay support across retina products. Our team has gained traction with leading retina practices, helping them explore pathways secure ILUVIEN for eligible patients under the Medicare Part D benefit using a specialty pharmacy, the same approach used for Cortrophin gel access. In addition, we continue to share results from our NewDay study of ILUVIEN in patients with DME and which were presented at prominent medical meetings, including most recently at the Flow Retina International Congress in December and the Hawaiian and Retina Conference in January. With that, I'll turn the call over to Steve for the financial update. Steve?

Thanks, Chris, and good morning to everyone on the call. I'll review our fourth quarter and full year 2025 results and 2026 guidance in more detail. In 2025, we delivered on our financial commitments, generating robust top and bottom line growth and significant cash flows. Starting on Slide 12. The ANI recorded revenues of $247.1 million in the fourth quarter, up 30% over the prior year period. For the full year 2025 ANI generated record revenues of $883.4 million, up 44% versus 2024. Revenues from Cortrophin Gel in the fourth quarter were a record $111.4 million, up 88% from the prior year period. In 2025, Cortrophin gel delivered $347.8 million of net revenue, up 76% year-over-year driven by strong adoption across neurology, nephrology, rheumatology, pulmonology and ophthalmology. ILUVIEN net revenues were $19.8 million in the fourth quarter and $74.9 million for the full year 2025. Revenues for generics in the fourth quarter were $100.8 million, an increase of 28% over the prior year. The outperformance for the quarter was driven by continued strength in the partner generic launch that occurred in the third quarter of 2025. Full year revenues in 2025 for generics were $384.1 million, an increase of 28% over the prior year, reflecting our strong R&D capabilities, execution and steady cadence of new product launches. Now moving down the P&L on Slide 13. As a reminder, when I speak to our operating expenses, I will be referring to our non-GAAP expenses which are detailed in Table 3 in our press release. Generally, our non-GAAP operating expenses exclude depreciation and amortization, stock-based compensation and certain costs related to litigation and M&A activity. Please refer to Table 3 for a full reconciliation to our GAAP expenditures. Non-GAAP cost of sales increased 43% to $99.8 million in the fourth quarter of 2025 compared to the prior year period primarily due to net growth in sales volumes and significant growth of royalty-bearing products. Non-GAAP gross margin in the fourth quarter was 59.6% and a decrease of approximately 400 basis points from the prior year period, principally due to product mix, including significant growth of royalty-bearing products, including Cortrophin and a partner generic product that was launched in the third quarter as well as lower brand revenues. For the full year of 2025, non-GAAP cost of sales increased 44% to $339.5 million compared to the year before and non-GAAP gross margin was 61.6%, down approximately 10 basis points from the prior year. Non-GAAP research and development expenses were $11.7 million in the fourth quarter, a decrease of 27% from the prior year period, driven by timing of rare disease and generic programs. For the full year of 2025, non-GAAP research and development expenses increased 18% to $49.5 million compared to the year before due to higher investment to support future growth of our rare disease and generics businesses. Non-GAAP selling, general and administrative expenses increased 28% and to $70.2 million in the fourth quarter, driven by spend for our new larger ophthalmology sales team, promoting Cortrophin Gel and ILUVIEN and continued investment in rare disease sales and marketing activities including the expansion of the rare disease team in the first quarter of 2025. For the full year of 2025, non-GAAP selling, general and administrative expenses increased 46% to $264.6 million. Adjusted non-GAAP diluted earnings per share was $2.33 for the fourth quarter compared to $1.63 per share in the prior year period. For the full year of 2025, non-GAAP diluted earnings per share was $7.89 compared to $5.20 the year before. Adjusted non-GAAP EBITDA for the fourth quarter was $65.4 million, up 31% compared to the prior year period and was $229.8 million for the full year, up 47% compared to the prior year. We ended the fourth quarter with $285.6 million in unrestricted cash up $140.7 million as compared to the $144.9 million as of December 31 of the prior year. Cash flow from operations was $30.4 million in the fourth quarter of this year and $185.2 million on a full year basis. As of December 31, 2025, we had $629.1 million in principal value of outstanding debt, inclusive of our senior convertible notes and term loan. At the end of the fourth quarter, our gross leverage was 2.7x and our net leverage was 1.5x our full year adjusted non-GAAP EBITDA of $229.8 million. This morning, we are pleased to reaffirm our 2026 financial guidance, which reflects significant top and bottom line growth. Our guidance outlined on Slide 14 is as follows: 2 sorry, 2026 net revenue of $1.055 billion to $1.115 billion representing year-over-year growth of approximately 19% to 26%. Cortrophin Gel net revenue of $540 million to $575 million representing year-over-year growth of 55% to 65%, driven by continued volume gains. Consistent with prior years and typical industry dynamics, we expect first quarter Cortrophin general revenues to be down sequentially from the fourth quarter and to represent approximately 13% to 14% of total 2026 revenues slightly lower than in 2025, when the first quarter accounted for approximately 15% of full year revenues. This effect is driven by 2 factors: first, we are experiencing typical seasonality related to the impact of insurance reverifications, which appear to be taking slightly longer as compared to the prior year. Due to increased Cortrophin patient volume in the physician's offices and in some parts of the country due to weather-related physician office closures that temporarily delayed the reverification process. While these factors impacted January, we have since seen a 25% jump in volumes dispensed and acceleration in new patient starts in February, and are confident that the momentum will persist in March as physician offices complete work through the reverifications backlog. Second, our full year Cortrophin guidance is inclusive of initial script volume expected to result from our 90% organizational expansion to support our gaudy authorities flares indication. Revenues associated with this expansion will first occur in the third quarter and are expected to build momentum throughout the fourth quarter. As we look further out into the year, we remain confident in our full year guidance and the significant multiyear growth opportunity for Cortrophin Gel. We expect very significant sequential growth in the second quarter as typical first quarter dynamic subside. 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 by the end of the second quarter, of our new 90-person organization focused on acute cadiarthritis flares. We expect ILUVIEN net revenue of $78 million to $83 million, representing year-over-year growth of approximately 4% to 11%. We expect adjusted non-GAAP EBITDA and of $275 million to $290 million, representing year-over-year growth of approximately 20% to 26%. And from a quarterly cadence perspective, we expect adjusted non-GAAP EBITDA to be down sequentially in the first quarter and modestly down as compared to the first quarter of prior year driven by quarterly revenue dynamics. We then expect sequential growth in the remaining quarters of the year, with the fourth quarter representing the highest quarter by a significant amount driven by incremental contribution from our gout focused team expansion. We expect adjusted non-GAAP earnings per share between $8.83 and $9.34, representing year-over-year growth of approximately 12% to 18%. We expect adjusted gross margin to be 59.3% to 60.3% in 2026, which is down from 2025, driven by significantly higher forecast sales of royalty-bearing products the non recurrence of revenues from our first half 2025, 180-day exclusive launch of [indiscernible] and the expectation of lower brand sales. We currently anticipate a full year U.S. GAAP effective tax rate of approximately 26% to 28%. And consistent with prior quarters, we will tax affect our non-GAAP adjustments for computation of adjusted non-GAAP diluted earnings per share, utilizing our estimated statutory rate of 26%. We anticipate between $21.5 million and 21.8 million shares outstanding for the purpose of calculating full year non-GAAP diluted EPS and finally, please note that we will continue to exclude from our adjusted non-GAAP diluted EPS calculation, the dilutive shares included in GAAP diluted EPS, which are expected to be offset in full by the cap call transaction. With that, I'll turn the call back to Nikhil.

Thank you, Steve. Turning to Slide 15. In closing, we delivered a remarkable 2025 characterized by significant growth across Cortrophin Gel and outperformance in our generics business. We've entered 2026 in a position of strength and remain focused on achieving our strategic priorities, including accelerating our transformation into rare disease, continuing to execute in generics and deploying capital in a disciplined manner. . Overall, we expect to deliver over $1 billion in revenue in 2026 with rare disease representing approximately 60% of total revenues. With that, operator, please open the line for questions.

[Operator Instructions] And we'll take our first question from the line of Glen Santangelo from Barclays.

Nikhil, obviously, Cortrophin continues to surprise on the upside, and you sort of make the case that you believe there's a multiyear opportunity here as you expand into these under-penetrated indications. And you're obviously investing in the sales force to try to take advantage of that. Without giving us guidance beyond 2026, I don't know if there's any high-level commentary you can sort of give us -- can you help us think about how meaningful this multiyear opportunity could be. And I am guessing you're starting to think about a peak sales number, maybe it's a little bit premature, but how do you think about that? And then my follow-up to Stephen's going to be -- the royalty steps up this year. Can you help us think about how that royalty is going to step up so we can sort of better model gross margins going forward?

Yes. Thank you for your question, Glen. Look, I think we believe in the significant multiyear growth opportunity for Cortrophin but I think the key really is Slide 9 in our deck from this morning, where we highlight the addressable patient populations across indications. . And these are significantly underpenetrated, not just by us but across the ACTH category. So we believe that there is a much larger number of patients that are yet to -- that are appropriate for ACT therapy that are yet to benefit from this therapy. So we see a significant multiyear growth run rate for the category and also for Cortrophin. And we're investing to build momentum in 2016 and beyond, right? So high ROI commercial initiatives like the 90% organizational expansion for gout, but we did an expansion last year. We're enhancing convenience, we launched a prefilled syringe last year. We're continuing to evaluate opportunities to further enhance patient convenience. And importantly, we're generating both scientific and clinical evidence we advanced Phase I clinical trial. We're advancing a Phase I clinical trial for Cortrophin in gout as well as a robust pipeline of investigator-initiated trials across disease trades. So we believe in the strong multiyear growth opportunity and are investing to ensure that we can capture that opportunity? And again, we believe in the opportunity for the category as a whole to keep growing for several years. And then your second question on the Merck royalty in 2025, annual revenues of Cortrophin Gel reached a level by which we surpassed the highest royalty tier for incremental net sales, the way in 2025 itself, we were in the highest royalty tier for the royalty. And then we currently anticipate the blended royalty rate to be in the high 20s in 2026.

And we'll take our next question from David Amsellem with Piper Sandler.

So I had 2 on Cortrophin. So one, I'm trying to get a better sense of how you're thinking about operating leverage going forward. So you're adding the 90 reps, you're calling on primary care, you're calling on podiatrist. I'm just wondering how promotion intensive you perceive the gout indication to be and what that means for potentially further expansion. So just help us understand that and how you're thinking about operating leverage. That's number one. And then number two, are you thinking about indications like sarcoidosis and ophthalmic indications -- can you talk about the number of vials used or duration of treatment in those kind of indications versus gout? And what I'm trying to get at is the value of a given patient across the different opportunities within the Cortrophin franchise. So if you could help us provide color there, that would also be helpful.

Great. Thank you for your question, Dave. So the first question on operating leverage. Look, we're still in high-growth mode, and we continue to balance growth and profitability as we drive that growth, right? So when you look at 2025, our guidance implies EBITDA growth of 20% to 26%, and the EBITDA margin as a percentage of growth -- sorry, as a percentage has stayed in the same in our 2026 versus 2025 despite a our very significant investment in this 90% organization for a graft and then also related OpEx, right? So the total implied OpEx increase at the midpoint of our guidance is about $50 million, majority of which is for the gal expansion. And despite that, we're keeping the EBITDA margin percentage the same in '26 versus '25. We strongly believe that as we had seen even with the expansion last year of the sales force that we will see partial impact from the organization expansion for gout in 2026, and we'll see full impact in 2027, right? So the full year impact and -- because it takes the sales force, we'll have them in place by mid-year they'll have impact in Q3 and Q4. And then you'll see full impact in 2027, obviously driving operating leverage. So that's the question on operating leverage. And look, I think the key is in terms of further expansions, the key is the addressable patient population, right? As you know, we currently have a combined team that details into nephrology, neurology and rheumatology. That's called our portfolio team. We expanded that team in 2025, right? We still have a much larger addressable patient population that we can address, not just in these 3 beauty areas but across areas. So with an ability to reach physicians and reach patients there would be benefit from further expansions. Obviously, but that's down the field as we capture this multiple multiyear growth opportunity. I mean the key in terms of the current year investment we're seeing impact on this year retaining the EBITDA margin percentage and then going in 2027, we'll see a much bigger impact with the same level of SG&A this year. Your second question was on the duration of treatment across indications. The duration of treatment does indeed vary sarcoidosis has a much longer in use and more miles per patient, whereas acute [indiscernible] flares has a lower number of vials per patient that is appropriate, right, at the time of the exacerbation or flare. So there is a variance across the nation that we serve with Cortrophin Gel. Thank you, David.

And we'll go next to Vamil Divan from Guggenheim Securities.

Great. Maybe one more on Cortrophin. I could sort of building on the earlier question. So this additional 90% organization using is dedicated to the county opportunity in targeting primary campaign. I'm just trying to get a sense of again sort of the leverage of the opportunity for them to do other things beyond just gouty arthritis will they be going to any other specialties? Or are there other indications they'll be focusing on? Or is it strictly just for a arthritis. Just trying to get something in the ability to leverage that additional investment. And then second question, I guess, more for Steve on the business development side. And you've talked about investing and kind of expanding the rarer disease opportunity here. I'm just trying to get a sense of given where your leverage is now. So what you're willing to do in terms of leverage versus using equity or as you think about the size of potential deals what you beat in terms of options for financing those sorts of opportunities.

Thank you, Vamil. So on the 90% organization, that's for gout. And as a clarification, not all 90 are in sales. So majority of that any person grew its sales expansion, but there are obviously patient support operations and marketing and other support areas, too. . But yes, that organization and the sales organization and the rest of the organization can be leveraged both for other indications that they treat or primary care and purity do treat other indications that Cortrophin is indicated for, our focus is primarily on gout, but there are other indications potentially that they can treat, which [indiscernible] for the appropriate patients. but can be leveraged for that. But in addition, that sales force can also be leveraged by adding another product in the basket just like we did for ophthalmology. So that option is available. Obviously, our -- the opportunity in acute garden arthritis flares is very significant. We've identified 7,000 HCPs, that treat the most severe acute cardio arthritis flares patients, and that is our -- that is the primary focus of this expansion, and that is what we will be -- we focused on as we put this team in place by midyear. And look, we've made very good progress on the recruitment. We have our sales leadership and the area business directors in place and we're now moving to recruitment of the sales team members, and we will launch by midyear. So on the acute a few [indiscernible] players expansion. And then I'll turn it to Steve to answer your question on BD. Steve?

Yes, thanks for the question. We're incredibly pleased with the cash flow dynamics of the company in 2025. We're ending the year with $285 million on the balance sheet and the business generated $185 million from operations in 2025. And as you see in our full year guidance, right, we're projecting continued both revenue and profitability measures growth and so we expect very healthy cash flows in 2026 as well. . And so at this point in time, right, given the strategic imperatives of the company to expand rare disease we anticipate accruing that cash to the balance sheet to build that war chest for future business development and M&A activities. I think what you've seen us do consistently, you can look back to when we purchase Novidium in 2021, when we purchased Alimera in 2024, right? We take a balanced approach to how we finance these types of activities. And in terms of leverage ratio, right, we like to take a reasonably conservative approach there. I think what we've done in the past is we'll take leverage up to the 3-ish range, maybe a touch above 3% on net leverage but always with a clear line of sight in terms of organic delevering. And if you look back, right, to the close of Alimera, we were just right around 3x net levered and here, just 5 quarters downstream, we've cut that leverage in half really driving with organic growth in the business. So I think you should expect similar moves in the future. Okay.

And we'll take our next question from Dennis Ding with Jefferies.

We have 2. So on Cortrophin, thanks for the color on Q1, it seems like the winter storms were an unexpected impact, but bad things are recovering. So I'm wondering when you take a step back and think about the first versus second half split, it seems like it will be meaningfully second half weighted, and that does put pressure on the gout expansion going as planned. So how do you give investors confidence that will go as planned and the PCPs will be okay with prescribing a very expensive product. And then question number 2 is specifically on gross margins. So the royalty to work, I believe, is capped around 30% so we shouldn't really get any more incremental headwinds moving forward. But how are you thinking about buying that royalty down given how much cash flows you guys are generating? And is that a priority for you? And how do you also convince Merck to come to the table?

On thank you for your questions. Dennis, look are new dedicated field force for acute [indiscernible] arthritis flares will be deployed by midyear. And are reasons to believe are, number one, the large underpenetrated market opportunity and Cortrophin is the only approved ACTH product with this indication? Second is we have a successful track record in got plus of our volumes in 2025, coming from gout in rheumatology and nephrology. . And number three, our successful pilot programs across 10-plus territories in primary care and parity offices, which we ran in 2025, right? Would see the most severe acute [indiscernible] arthritis flares patients. And so we saw success with those pilot programs, and that gave us the confidence to deploy this larger sales force and the large organization in an indication where we have the indication, and we are the only ACTH product available, right? So with the field force deploying the midyear, we expect to see in Q3 and Q4, like we saw in 2025 when we did the expansion for our portfolio sales force. And we'll see the full realization in 2027, right? As we're expanding our field force, we're also investing in clinical evidence generation through a Phase IV trial to expand usage over time. That's on the gout expansion. And then your second question on the Merck royalty, look, I think we've -- in we are always evaluating potential opportunities, but we do not comment on active or nonactive business development initiatives, especially with our partners. And thank you for your question, Dennis.

And we'll move next to Ekaterina Knyazkova.

Just 1 from me. So just on Cortrophin gel, have you seen any recent changes on the patient access front, just are you seeing any payers or plans getting more triple or coverage or reimbursement? Or are you seeing kind of trends that are similar as you were seeing last year?

And thank you for your question, Ekaterina. Look, we try to find a balance between sharing information that is helpful to investors and that is competitively sensitive. . Having said that, at an overall level, we have not seen material changes from an access perspective. again, we're targeting or we're reaching -- trying to reach the appropriate patients as a late-line therapy with Cortrophin gel but thank you for your question.

And we'll go next to Thomas Smith with Leerink Partners.

Two on Cortrophin, if I could. You mentioned about 15% of utilization came from acute gave arthritis in 25. Could you just give us a sense of what your expectations are for where that number goes in '26 and '27 given the sales force expansion efforts? . And then could you give a little bit more color on the Cortrophin pilot programs executed in primary care and pathology. Any details I guess, on specific feedback from those prescribers versus your other specialty types and any specific learnings you're implementing to help better target those offices.

Yes. Good morning, and welcome to your first ANI conference call. Tom, great to have you. So the first question is on our current business. in gout, about 15% of our volume comes from gout. As we deploy this targeted sales force and broader organization, we do expect it to increase significantly. We're not putting a number to it at this time, but we'll keep you updated, obviously, on our progress. I think the important thing to highlight here is that if you look at the ANI Cortrophin story, a big part of that success has been being able to reach new physicians. Almost half of our physicians that have prescribed Cortrophin were naive to the category, [indiscernible] prior to the entry of Cortrophin gel. And if you think about -- and this dovetails into your second question around the pilot programs. If you think about the HCPs that we're reaching through this expansion, we're targeting -- we're trying to reach about 7,000 ETPs that we've identified across territories, right? Majority of these right? Obviously, some were part of the pilot programs that we had across 10 territories, but most of these have not been. And so that will further expand, right? And the success we've had in being able to reach new physicians right will continue. It has given us that for them, and we'll continue as we reach these new primary care and podiatry care physicians, right? So what will also expand is not just the gout volumes as a percentage of Cortrophin volumes, but also the number of physicians and a number of new physicians that were naive to ACTH. And then going back to your second question regarding -- or I guess, second part of your second question on the pilot programs. I think that we've had a lot of learnings in terms of the discussion to be had with the primary care and proprietary physicians in terms of identifying the appropriate patients, how to work with their offices right to work through the enrollment of fulfillment process? And then also, learnings on primary care and podiatrist are very large sort of number of HCPs that are there in the country but really figuring out the 7,000 that treat the most severe acute guard arthritis flares, how do you identify them with the claims and other data that is available so that you're reaching the appropriate patients? That's been part of our learnings through the pilot programs through 2025. And thank you for your question, Tom. .

And we'll take our next question from Les Sulewski from Truist Securities.

Congrats on the progress. Three for me, Cortrophin first, you noted that 15% of utilization is coming from gout. How would you expect that trend to uptick once the new team is in place? And is this a good representation of the percentage of the total consultant revenues? And then will you have some of the results from Phase IV trial in time for the sales force expansion? And the second, on ILUVIEN, can you provide an update on the specialty pharmacy progress and perhaps just kind of your thoughts on the patient access? And then lastly, on generics, how are you thinking about product cadence and erosion as we move through the year.

For questions. I'll take them one by one. So the first question on the gout -- we do believe that the 15% of volume of current volumes will expand, right, as a percentage of total volumes with this investment. So we will see a significant uptake we will update you as we move along. On the trial, we are -- the trial -- the Phase I trial is progressing, and we will provide meaningful updates as that trial progresses. If the organization expansion, right? We've already hired, as I said, the sales leadership and the ABD, they're your business directors. The organization will launch in full by midyear. The results of the trial will not be in place by then. So that's on the come later on, and we'll obviously provide updates on the trial. The second question was on ILUVIEN. So on ILUVIEN, we continue to make progress in the growing use of the alternative access channels to navigate the market access challenges for Medicare patients. We are seeing prominent practices adopting this alternate workflow and use of alternate channels. And it's basically patients that have access to the drug benefit. And that's the same procedure that or process that we use and workflow that we use for Cortrophin. And so we've seen prominent retina practices use it. Now what we -- what has happened with the foundation funding is we had seen some early contributions to the funding earlier this year. And though this hasn't had a meaningful impact on patient access to ILUVIEN it was open for a few days and then it was closed back. So our guidance for 2026 does not assume that the funding will return in any meaningful way. and we will continue to closely monitor the situation and of course, stay focused on growing the use of the alternative access channels to navigate the market access challenges in addition to the strategic investments in marketing and medical affairs to support the increased awareness of the new day clinical data for DME, establishing the coverage for both DME and NI UPS and then obviously the strength in the commercial team and further enhanced promotional efforts. So that's on ILUVIEN. And then finally, your question on the genetics cadence. We are continuing to have a strong cadence from our -- driven by our R&D capabilities of 10 to 15 launches. That will help support growth of the generics business and cash flow generation that we are reinvesting into rare disease to accelerate the transformation of ANI into a leading rare disease company. And thank you for your questions, Les.

And we'll take our next question from Brandon Folkes with H.C. Wainright.

Congrats on the progress. Maybe just sort of following on from the line of question on Cortrophin. Outside of gout, is it any way you can just give us some color in terms of how you're seeing the ACTH market shape up? Are prescribers choosing one product over the other or prescribers using both where they can. You talked about adding new prescribers. Can you just help us think through when you convert these new prescribers, are you generally converting them to sort of be a Cortrophin prescriber or a ACTH believer in prescriber? And what I'm trying to get to is how competitive is the next script for a potential patient right now versus a continued market expansion. How long do you see sort of the market expansion playing out versus market expansion as well as share capture between the 2 and within the category driving growth.

Yes, thank you for your question, Brandon. So I think your first question was on the ACTH market beyond and I think that we'll just point to a couple of points. Number one is that we see growth across indications across the core indications that we launched with, which is in rheumatology, nephrology and neurology in addition to in the pub and ophthalmology. . If you think about the ANI's growth in Cortrophin in 2025 in Cortrophin, a significant portion of that came from just growth across all these specialties outside of gout. Now gout also was a driver but there was significant growth across these other specialties too. And then really, the thing that's underpinning and that really goes to your second question around the competitive situation. And this is, to us, not about share capture at all. This is about market expansion, reaching the appropriate patients and the addressable patient population is very significant. And highly underpenetrated, right? So it's significantly underpenetrated across indications. And so the fact that 2 players are out there trying to address the appropriate patients ultimately supports the overall market growth and ensures that the appropriate patients get the benefit of ACTH treatment for their indications. And then maybe the last part of your question, which was -- we are -- our team is out there trying to convince and this is a little bit on a lighter note. But our team is out there trying to convince patients -- I'm sorry, current confused physicians of the appropriate patients for Cortrophin, right, and not the broader ACTH category. So thank you for your questions, Brandon.

And I would like to now turn the call back over to Nikhil Lalwani for closing remarks.

Thank you, everybody, for taking time to join the ANI discussion. We look forward to updating you on our progress and are looking forward to a strong 2026. Thank you so much, and we will remain focused on our purpose of serving patients, improving lives.