ANIP - 3 Catalysts Could Drive ANI Pharmaceuticals' PPS Growth Through November 2023

2023-11-06 10:28:09 ET

Summary

• ANIP's PPS has gained 63.41% YTD and is expected to continue growing.
• ANIP should record its fifth consecutive quarter beating earnings and revenue consensus.
• ANIP's Sovuna, a unique version of Hydroxychloroquine sulfate, and a new 1-ml vial version of Purified Cortrophin Gel have significant market potential.
• 3,656 patient female testosterone trial results should become public by November 26, 2023.

Introduction

ANI Pharmaceuticals, Inc.'s (ANIP) PPS has gained 63.41% ((YTD)) and likely to continue this trend. The following are the reasons I believe ANIP's growth is sustainable, and why I consider ANIP a strong buy.

When ANIP hired Nikhil Lalwani, ANIP's CEO, he had a three-year plan to turn ANIP into a sustainable biopharmaceutical company. Under his plan, ANIP has recorded four consecutive quarterly increases in Revenue and EPS. In 2023, ANIP's has increased the rare disease sales team expanded conditions the team will be focusing on and started hiring for a small specialty pharma sales team. Indications are that will beat consensus estimates for the fifth quarter in a row on November 8th, 2023.

ANIP will likely announce the launch of Sovuna , a branded Hydroxychloroquine Sulfate Tablet on or before earnings release. According to the National Institute of Health's ((NIH)) National Library of Medicine, Sovuna is the only FDA-approved version of the drug to treat patients weighing between 50.7 lbs and 68.3 lbs. The ability to divide the 300mg tablet in half, without the tablet losing its integrity or effectiveness, allows prescribers to adjust dosage in 50 mg increments, whereas all other versions of hydroxychloroquine sulfate are only approved to be adjusted in 100 mg increments. On September 14, 2023, the FDA issued a prior approval sNDA for ANIP's Sovuna, which saw an 460% increase in trading volume following on September 15, 2023, over the trading volume on the day prior to the approval.

On October 2, 2023, ANIP announced the approval and commercialization of a new 1-ml vial size of Purified Cortrophin® Gel which is an adjunctive treatment of certain patients with Acute Gouty Arthritis Flares. Though not mentioned in the press release the smaller size and improved shelf-life stability of this drug will give it a competitive advantage over Acthar.

The deadline for submitting clinical trial results for the largest long-term female testosterone study safety titled "Safety and Efficacy of LibiGel® for Treatment of Hypoactive Sexual Desire Disorder in Postmenopausal Women (BLOOM)" was October 27, 2023. The NIH is required to post trial results within 30 days of submission, even if there are issues with the data, which need addressing. Therefore, results should be posted by November 26, 2023. The results, if consistent with mid-trial reviews and patent applications should confirm that long-term use of testosterone in women is not only safe, but that it reduces the risk of Cardiovascular events (71% at mid-trial review) and breast cancer events (undisclosed amount).

Current PPS does not appear to reflect these pending catalysts, making ANIP currently undervalued and a strong buy.

Q3 Earnings scheduled for release on November 08, 2023

The upcoming quarter has consensus on revenue at $111.92, which would be the first time in five quarters that ANIP's revenue has dropped. We will shortly see, if ANIP has kept the quarter-over-quarter growth momentum, where ANIP has managed to grow revenue quarter over quarter over quarter at ranges between 13% and 9% for the last four quarters and beat estimates in both revenue and EPS for each quarter.

The following are consensus estimates for Q3.

The following is ANIP's earning history over the last four quarters.

According to periodic reviews of ANIP career page, it appears that ANIP has been increasing their workforce, including commercial and operational support positions. This leads me to believe that ANIP's Q3 revenue and EPS will both beat current estimates, once again.

Sovuna

ANIP continues to find niche markets to address unmet needs. ANIP currently lists Sovuna (Hydroxychloroquine Sulfate) Tablet a product on their website. However, ANIP has yet to make an announcement. In previous presentations, ANI Pharmaceuticals CEO, Nikhil Lalwani has been reluctant to provide details to analysts regarding the NDA 505(2)(b) drugs under development by their subsidiary, Novitium. Sovuna is one such drug. On September 14, 2023, the FDA issued a prior approval sNDA to ANIP for Sovuna. Though a number of generic Hydroxychloroquine Sulfate tablets are available, Sovuna has two competitive advantages that should drive revenue. ANIP has started hiring a small Specialty Pharmaceutical sales team, ideally with experience in Rheumatology, no doubt to promote these advantages along with other drugs under development. These competitive advantages should add revenue, which is not currently reflected in analyst estimates.

Competitive Advantages

1. Sovuna comes in 200 mg and 300 mg oral tablet. The 300 mg oral tablet can be divided in half, which gives ANIP the only approved version of Hydroxychloroquine Sulfate approved in the 150 mg dose. When combined with ANIP's 200 mg dose, it gives prescribers the ability to adjust dosage upward or downward in increments of 50 mg intervals, whereas all other currently approved hydroxychloroquine sulfates can only adjust the dosage in 100 mg increments.
2. When compared to Plaquenil and generic hydroxychloroquine sulfate, Sovuna is the only version drug approved to treat patients between 23kg (50.7 lbs) and 31 kg (68.3 lbs). All other currently approved hydroxychloroquine sulfate tablets are for patients weighing 31kg or greater. It expands the use for pediatric patients in treatment or as a prophylaxis for malaria.

Additionally, ANIP manufacturing is based in the United States, which minimizes supply chain disruptions.

Market Potential

Since sales of Hydroxychloroquine Sulfate over the last couple of years have inflated due to Covid 19, a condition for which the FDA has not approved and determined that it did not show efficacy. Therefore, I looked at pre-covid sales to gain an understanding of its potential. According to "Meeting the potential emergency global drug supply challenge of hydroxychloroquine for COVID-19" ( Meeting the potential emergency global drug supply challenge of hydroxychloroquine for COVID-19 ) in 2018, the US accounted for over a quarter of global sales of hydroxychloroquine sulfate sales. A majority of the prescriptions in the US, were for chronic indications such as Rheumatoid Arthritis ((RA)) and Systemic Lupus Erythematosus ((SLE)). Hydroxychloroquine sulfate was the second most prescribed drug for Rheumatoid Arthritis in the US, after methotrexate. In 2019, over 5.8 million scripts were dispensed in the US. However, most were generic sales from ex-United States manufacturers. In addition to RA and SLE, Sovuna is approved to treat Malaria and Chronic Discoid Lupus Erythematosus.

According to Drug.com , Plaquenil, the only other branded Hydroxychloroquine sulfate sells for $1,347 for one hundred 200mg tablets. While the following is a list of starting prices for generic versions of the drug.

Though little information is currently available on pricing of Sovuna. ANIP will be looking for a sweet spot in pricing supported by the specialty pharmaceutical sales team. Arguably, a 5% market share with the Sovuna scripts (200 mg and 300 mg) selling for an average $600, ANIP could add over $174 million in revenue. This appears like a reasonable goal given that Sovuna is the only approved drug to treat patients between 23kg (50.7 lbs) and 31 kg (68.3 lbs), and is the only Hydroxychloroquine drug with the ability to be scaled upward or downward in 50 mg increment from a minimum dose of 150 mg, and is manufactured in the United States. The additional $174 million in revenue is a 36.23 % increase over the consensus revenue estimate for 2024 of $480.42 million.

Purified Cortrophin Gel 1-ml Vial

On October 2, 2023, ANI Pharmaceuticals announced the launch of Purified Cortrophin Gel 1-ml vial, indicating how it will assist in treating acute gouty arthritis, for which only ANIP's Purified Cortrophin gel is approved and Acthar Gel is not. What it did not elaborate on was how this gives them a competitive advantage over Mallinckrodt's (MNKTQ) Acthar Gel in general prescribing for many other indications. According to ANIP when it reintroduced Purified Cortrophin Gel it was the first newly commercialized drug indicated for appropriate patients with acute gouty arthritis flares in 12 years. This smaller 1-mL version was developed to enable rapid time to therapy, at point-of-care, for appropriate patients with acute gouty arthritis flares. They added that more than nine million people in the US are affected by gout, acute gouty arthritis flares are a symptom of their underlying disease. Purified Cortrophin Gel may be an appropriate additional treatment for flares in some patients. Lalwani added that the 1-mL vial for Purified Cortrophin Gel is another step scaling up their Rare Disease business and is ANIP's largest growth driver. A key to achieving their goal of building a high-growth biopharma company. Though ANIP did not advertise their plan to use the drug to address ophthalmological conditions.

A comparison of the prescribing labels between Purified Cortrophin Gel and Acthar Gel best describes ANIP's competitive advantage. Both Purified Cortrophin Gel and Acthar Gel's 5-ml versions have a 28-day shelf life after first use. Whereas the 1-ml vials have a 6-month shelf-life after first use. The 1-ml option can lead to reduced waste. An important consideration when looking at controlling costs. Acthar Gel's smaller doses are drawn from 5-ml vials. Armed with the more stable 1-ml vial, ANIP is hiring an Area Business Director focusing on Ophthalmology. They are responsible for hiring, leading, and retaining a team of Clinical Account Executives (CAEs) rooted in their knowledge and experience in Ophthalmology.

The 1-ml vial version, with added stability, should see ANIP expand the market for Purified Cortrophin Gel and siphon sales from Acthar Gel, which according to Mallinckrodt's Q2 earnings release generated $198.8 million in revenue for the first 6 months of 2023, who are also in the midst of their second bankruptcy. ANIP's current estimates for Purified Cortrophin Gel sales do not reflect these developments.

Female Testosterone

October 27, 2023, was the deadline for ANIP to submit results to the largest long-term safety study on the use of testosterone by post-menopausal women to treat HSDD. The trial involved 3,656 postmenopausal women who were at an elevated risk of experiencing cardiovascular events. The NIH has a responsibility to post the submitted results within 30 days of submission. Therefore, the results could be posted anytime between now and November 26, 2023. If consistent with mid-trial reviews and details with patent applications, the findings will show that restoring testosterone levels to premenopausal levels reduces the risk of cardiovascular events and breast cancer. It is unknown if ANIP is still leading the submission or a larger pharmaceutical company, such as AbbVie ( ABBV ) or Merck ( MRK ). For more details regarding the clinical trial and potential partners refer to the Seeking Alpha article titled "2023 A Big Year for Testosterone: AbbVie and ANI Pharmaceuticals Best Positioned to Benefit". Since the company has not made any mention of female testosterone for years, it is likely the partner who is taking the lead.

Though the results should be posted by November 26, 2023. An announcement might be made at the American Heart Association's Scientific Sessions which run November 11 -13, 2023.

Positive results should drive PPS higher, if accompanied by a large global partner, share price should climb much higher. Another potential catalyst is not currently reflected in ANIP's PPS.

ANIP to present at Jefferies Healthcare Conference London, UK

ANIP announced that it will present at the Jefferies Healthcare Conference in London, UK on November 15, 2023. To date ANIP has focused on the North American Market, this will be the first Conference outside the United States. Occurring two days after the American Heart Association's Scientific Sessions. It is possible that it is related the testosterone trial results. However, it could also be related to ANIP expanding their rare disease business, as they have been actively looking to leverage their rare disease infrastructure with complementary drugs.

Caveats

With respect to Sovuna, I have yet to find any documentation regarding patent coverage or exclusivity periods regarding Sovuna. Therefore, it is unknown how long ANIP's competitive advantage will last. The prescribers and insurance providers will be key to determining if the improved dosing capability justifies the increased cost, at least for patients weighing 31kg and above. ANIP could delay announcing the launch of Sovuna, as they ramp up their sales team and work to have it covered by insurance providers. Regarding Cortrophin Gel, it is unknown if Mallinckrodt will also try to get a 1-ml vial dose approved. If so, it is unknown how long an approval would take, or if they could match ANIP's ability to use Purified Cortrophin Gel for up to six months after it was first used. Finally, since ANIP has made no mention of female testosterone, this catalyst remains speculation. There is a possibility that posting testosterone trial results could be delayed, though unlikely, as it could negatively affect the certification of the results, which is important when filing a new drug application. The results could also be less impressive then those found during a mid-trial review.

Conclusion

November is shaping up to be a busy month for ANIP. On November 8, 2023, their earnings release will likely beat consensus estimates for the fifth consecutive month. The approval of Sovuna and the 1-ml vial version of Purified Cortrophin Gel are examples of how ANI Pharmaceuticals continues to find niche markets to address unmet needs. Current consensus estimates on revenue for 2023 are $452.94 million and $480.06 million for 2024 do not reflect sales from Sovuna and Purified Cortrophin Gel 1-ml vials. Once the competitive advantages for both drugs are understood, share price should increase. In addition, zero value has been given to female testosterone. How much ANIP's PPS will climb will depend on what deals, if any, are in place. The structure of a deal and an imminent NDA filling will all factor in the potential increase in PPS. Any of these catalysts, once understood, should lead to raised Revenue and EPS estimates. However, when combined, ANIP 's PPS is poised to sustain the accelerated growth it has shown this year, which makes ANIP a strong buy.

For further details see: