Amneal Pharmaceuticals, Inc

Good morning and welcome to the Amniel Pharmaceuticals First Quarter 2025 Earnings Call. I'd now like to turn the call over to Amniel's Head of Investor Relations, Tony DiMaio.

Good morning, and thank you for joining Amniel Pharmaceuticals First Quarter 2025 Earnings Call. Today, we issued a press release reporting Q1 results. The earnings press release and presentation are available at amniel.com. Certain statements made on this call regarding matters that are not historical facts, including but not limited to management's outlook or predictions, are forward-looking statements that are based solely on information that is now available to us. Please see the section entitled Cautionary Statements on Forward-Looking Statements for factors that may impact future performance. We also discussed non-GAAP measures. Information on use of these measures and reconciliations to GAAP are in the earnings release and presentation. On the call today are Chirag and Shintu Patel, co-founders and co-CEOs. Tasos Konidera, CFO, our commercial leaders, Andy Boyer for affordable medicines, Joe Renda for specialty, and Jason Daly, chief legal officer. I will now hand the call over to Chirag. Thank you, Tony.

Good morning, everyone. In Q1, we delivered another quarter of strong performance and continued growth, driven by the successful execution of our strategy. Q1 revenues of $695 million grew 5% and adjusted EBITDA of $170 million grew 12%. Over the years, we have made deliberate decisions and investments across our business. and delivered on our commitments. Over time and through market cycles, we have differentiated MNIL from our peers by delivering sustainable growth, driven by our leadership and quality, innovation and execution. Today, MNIL is in as strong a position as ever. We are embarking on our next phase of growth with momentum and confidence in our ability to deliver on our goals in 2025 and beyond. Big picture, MNIL is a trusted leader in an essential industry, providing millions of Americans with access to affordable and innovative treatments each year. We fill over 162 million scripts for American patients. MNIL has one of the largest US pharmaceutical manufacturing footprints in the industry. With a broad portfolio of over 280 products, over 150 of our medicines are made in the United States, from antibiotics, antivirals, to medicines that treat Alzheimer's, cancer, Parkinson's disease. What M.Neal made in America isn't just a label. It's been a cornerstone of our strategy since our founding in 2002 in Paterson, New Jersey. Let me now walk you through the key areas of our business. First, in our specialty segment, The launch of CREXON for Parkinson's disease continues to exceed expectations in its first year of commercialization. Market uptake has been strong, with market share already surpassing 1% and on track to reach over 3% by end of this year. We have received remarkable feedback from patients and providers as one key opinion leader who is also a patient, shared the following. Crexon has made me feel and move tremendously better compared to Rytary. I have concrete examples of how Crexon has changed my life. It has made a huge difference. In addition, we are pleased with the continued progress and momentum in expanding market access. This year so far, Crexon has been added to several major insurance plans, including the Veteran Administration, United Healthcare, CVS Health, and Cigna Commercial. This doubles the total U.S. coverage from approximately 30% at the end of 2024 to approximately 60% of U.S. covered lives today. To put that in perspective, Crexon has achieved in six months that rightly took years to accomplish in market excess coverage. We are highly confident in achieving US peak sales of 300 to 500 million for Crexon. Overall, we are focused on expanding our specialty branded portfolio over time. Next, with the anticipated launch of our DHE auto injector, later this year. Second, in GLP-1s, we continue to advance our partnership with Metzera in the weight loss and obesity space, which represents a new integrated business model to drive innovation at scale in GLP-1s. Metzera is rapidly advancing its pipeline of ultra-long-acting injectable and oral candidates. As they have shared, MEDSERA's lead program, MED-097i, a monthly ultra-long-acting injectable, is expected to deliver Phase 2b trial results mid-year. MNIL is MEDSERA's preferred global supplier across the United States, Europe, and other markets. Also, MNIL will commercialize their products in 20 emerging markets, including India. To support this plan, we are leveraging our existing infrastructure while constructing a high-volume peptide manufacturing facility and an advanced sterile fill and finish production facility. Over time, we expect GLP-1s will be a long-term growth driver for MNIL with three avenues of value creation. First and foremost, our collaboration with MetSERA second potential cmo offerings for other large companies and lastly manufacturing capacity we can provide for generic weight loss therapies globally third in our affordable medicine segment which includes retail genetics injectables and biosimilars growth continues to be driven by our diversified complex portfolio and new launches In particular, our injectables portfolio is expanding. Last month, we launched Beruzu, which is our fourth 5-5-B2 injectable launch over the last year. These ready-to-use solutions improve hospital efficiency by eliminating medication preparation steps and have unique reimbursement coding for hospitals. Fourth, turning to biosimilars. This represents a next major wave of affordable medicines in the United States. According to an IQIA report, more than 100 biologics will lose exclusivity over the next decade. Yet, only 10% have biosimilars in development. Biosimilars for the remaining 90% could save approximately $189 billion over 10 years. For patients, biosimilars improve affordability and access to essential therapies. For MNIL, they represent a compelling long-term growth opportunity that we are well positioned to lead. Today, our strategic focus has been in licensing our biosimilar portfolio and establishing a commercial platform. In 2024, Our first three biosimilars generated 125 million revenue. In addition, we have expanded our pipeline with regulatory applications for five additional biosimilars being filed this year. By 2027, we expect to have six biosimilars on the market across eight product presentations. Our strategic goal is to be vertically integrated in biosimilars and leverage our proven ability and expertise to develop, manufacture, and commercialize complex biopharmaceuticals at scale. Finally, growth in our healthcare segment continues to be driven by new launches across three channels, distribution, government, and unit dose. We expect healthcare revenue to reach over $900 million by 2027. This business adds stability and diversification to MNIL's portfolio. In summary, MNIL has a diverse array of growth drivers that enhance our competitive differentiation, drive sustainable value creation, and improve access and care for patients. Our strategic focus and long-term investments have been intentional and thoughtful. We could not be more excited about what the future holds as we advance our vision to be America's number one affordable medicines company. I will now turn it over to Chintu.

Thank you, Chirag, and good morning, everyone. Let me begin by expressing my deep appreciation to our MNIL team. Their passion and commitment continue to drive M&A forward as a purpose-driven company focused on innovation, execution, and value creation. This morning, I will provide an update on our strategic priorities across operations, innovation, and our portfolio. First, on operations, our global high-quality manufacturing infrastructure remains a key differentiator. MNIL continues to be recognized for its stellar quality track record and operational excellence. We are investing in digitization, automation, and AI technologies across our network to drive operational efficiency and our trusted quality and customer service reputation. This foundation positions us well to launch new products, help address drug shortages in the market, and serve more patients. MNIL has a robust and diverse manufacturing footprint across the U.S., India, and Ireland. In the U.S., our extensive manufacturing infrastructure and capabilities are the foundation of our leadership position. We are one of the largest domestic pharmaceutical manufacturing footprints in the industry as we produce many of our genetics and specialty products, including Klaxon in the U.S. Over the years, we have built deep pharmaceutical manufacturing expertise across a wide range of dosage forms in the U.S., from oral solids to highly complex formulations. We have seven US FDA-approved manufacturing facilities across four sites capable of making oral solids, liquids, topicals, transdermal patches, and nasal spray dosage forms. with access capacity to meet market needs. MNIL is proud of its Made in America heritage, which is a competitive advantage and a core part of our strategy. Turning to innovation, we are pleased with the progress of Kraxon in the first six months of launch, with strong KPIs across the board. The product is engineered for rapid onset and extended efficacy, delivering more good on time with fewer doses for Parkinson's patients. At the American Academy of Neurology meeting last month, our team shared new data from our Phase 3 study showing significant improvements in sleep quality for patients on Paxon. In particular, sleep disturbances affect up to 80% of PD patients. Further, our open-level phase 4 study is underway to generate additional real-world evidence. With robust early adoption and strong feedback from the neurology community and patients, Crexon is poised to become the leading branded product for Parkinson's disease. Next in our specialty pipeline is the DHE auto-injector for migraine and cluster headache. Our goal date is coming up this month. This innovative presentation of a well-known molecule was developed and will be manufactured in-house. This first and only DHE auto-injector is intended to help patients avoid emergency room visits during these painful headache episodes. We look to launch this product later this year and see the DHE auto-injector as a 50 to 100 million peak sales opportunity. In addition, our strategic partnership with Medcera in the GLP-1 space is progressing as planned. As part of this collaboration, we are building two new manufacturing facilities, one for peptide drug substance production and another for advanced sterile field finish manufacturing. These facilities will enable high-volume production as MNIL serves as MaxRF's preferred global supplier and will support large-scale GLP-1 commercialization. This collaboration exemplifies how we are leveraging our strong core competencies in R&D and complex manufacturing to lead in high-growth therapeutic areas like GLP-1s. On our complex genetics portfolio, each year we expect to launch 20 to 30 new products. We have launched eight new products so far in 2025. Later this year, we have several key complex product launches, including Bradford Ophthalmic Suspension and Respiratory Injection. Overall, we have 81 ANDAs pending approval, of which 65% are non-oral solids, and 47 products in development, of which 96% are non-oral solids. We continue to prioritize within our R&D portfolio and allocate investment towards higher growth areas like specialty brands, injectables, and biosimilars over time. In injectables, we launched 12 new products in 2024 and expect to launch over 10 new injectables in 2025. In particular, we have launched four new 55B2 injectables over the last year, which is a new growth vector for our business. In April, we launched Boruzu, our fourth 55B2 injectable. In addition, we have 10 to 12 more 55B2 injectables in development. Other complex injectable R&D programs, including microspheres, liposomes, and drug-device combinations, continue to progress well. MNIL is well positioned to be a leader in the injectable space in the coming years with our robust manufacturing footprint, deep scientific capabilities, and expanding portfolio. In biosimilar, we see a significant market potential given the upcoming wave of LOEs for biologics and the clear opportunity for MNIL to establish a leadership position in the space. This year, we are filing our next five biosimilar pipeline candidates. It launches targeted for 2026 and 2027. The BLA filings for two danazumab biosimilars were submitted with goal dates in quarter four. Next, the supplemental BLA filings for PAK field grasping, OBI, and autoinjector is expected in the third quarter. followed by the BLA filing for biosimilar solar set for quarter four. We look to expand our biosimilar portfolio and be vertically integrated over time. In summary, we have continued our strong operational momentum and execution in 2025. Our strategic focus on innovation, quality, and manufacturing excellence sets us for sustainable growth and leadership across our business. Thank you, and with that, I will hand it over to Parthos.

Thank you, Chintu, and good morning, everyone. In the first quarter, we saw continued broad-based growth across our three segments, excellent uptake of Craigson, and new product launches that further enhance our growth profile and diversification. As a result, we're incredibly proud of our global teams for delivering growth of 5% in revenue, 12% in adjusted EBITDA, and 50% growth in adjusted EPS. I'll first cover our Q1 results in more detail, then touch on tariffs, and finally affirm our 2025 full-year guidance. In the first quarter of 2025, total net revenues of $695 million grew 5% in line with our expectations. Q1 affordable medicines revenue of $415 million grew by 23 million, or 6%, as new products launched in 2024 and 2025 added 41 million. Our affordable medicines portfolio includes approximately 270 products across retail, injectables, and biosimilars. As Juragen seemed to mention, MNL's R&D success, excellent supply chain, and commercial execution are key strengths driving consistent revenue growth, broadening of our product portfolio, and delivering value to our customers, providers, and patients. In our specialty segment, Q1 revenue of $108 million grew 3%, driven by Crexan, which added $9 million, and Unitroid, which added $4 million and a quarter. We're delighted by the market acceptance of Crexan and upcoming payer coverage expansion. Consequently, we're confident that Crexan will meet or exceed its 2025 revenue goal of $50 million. Q1 upcare revenues of $172 million grew 6%. A strong growth in the government channel was partially offset by softness in the lower margin distribution channel. From a gross margin perspective, we're extremely pleased to report Q1 adjusted gross margins of 43.1% up 120 basis points year over year. The strong margin expansion was driven by favorable product and channel mix, new product launches, and higher efficiencies at the plant level. Q1 adjusted EBITDA of 170 million grew 12% reflecting revenue growth, higher gross margin, and operating expense leverage. From an EPS perspective, we're pleased to report Q1 adjusted EPS of 21 cents, which represents 50% growth driven by higher adjusted EBITDA and lower interest expense. In summary, We're off to a strong start for the year, driven by strong execution across a multitude of growth drivers. In addition, we continue to strengthen our overall financial position with strong cash flow generation, no near-term debt maturities, and continue to reduce leverage. In Q1, gross leverage was further reduced to 4.0 versus 4.1x at year-end 2024, and net leverage remained at 3.9x. Let me now turn to tariffs. And even though it's difficult to quantify precise implications, our team is developing numerous mitigating actions across multiple scenarios. First, our financial forecasts already include the modest impact of our current tariff provisions. Second, we already have a large and growing manufacturing presence in the U.S. which produces two-thirds of our affordable medicines and specialty revenues. The remaining one-third mostly comes from our indie operations, and imports from rest of the world are not very meaningful. Third, our teams are taking several mitigating actions to ensure we deliver on our commitments to patients and shareholders. These include increasing our U.S.-based inventory, secure alternative sources of API, renegotiating supply agreements, driving portfolio optimization, and other productivity initiatives. Finally, from a long-term perspective, we believe our multiple growth vectors, extensive US manufacturing capabilities, and leading commercial presence position MNL well in being a top-tier growth company. Finally, We're pleased to affirm our full year 2025 expectations. And as a reminder, we expect total net revenue between 3 and 3.1 billion, which reflects 7 to 11% upline growth. Adjusted EBITDA between 650 to 675 million, reflecting 4 to 8% growth. And adjusted EPS of 65 to 70 cents Reflecting 12 to 21% growth. I will now turn the call back to Chirag.

Thank you. Our performance in Q1 reflects the strength of our diversified business, continued execution of our strategy, and the dedication of our team. We remain confident in our ability to drive sustainable value as we advance in this exciting next chapter of growth. Let's now open the call for question and answers.

Thank you. We will now begin the Q&A session. To ask a question, please press star 4x1 on your telephone keypad now. If you change your mind, please press star 4x2. When preparing to ask your question, please ensure your device is unmuted locally. Our first question today comes from David Anselm from Piper Sandler. Your line is now open.

Hey, good morning and thanks. So, I have a couple of questions on biosimilars and generic injectables. First, on biosimilars, Can you just give us a refresher on what you expect the 25 contribution, top line contribution to be, and particularly interested in how big you think a LEMSIS could be? I think you in the past have cited it as being about 100 million of contribution, but I just wanted to just level set those expectations for biosimilars for this year. And then secondly, you talk about vertical integration regarding your biosimilar business. I guess my question here is, when do you think that's going to actually come to pass? And how should we be thinking about not just the next couple of years, but sort of the next five years as we think about the cadence of new launches and just your overall thoughts on contribution for biosimilars to the top line? So that's on biosimilars. And then on injectables, I know you've cited shortages, but you've also cited more complex products. I guess as you think about, you know, the business, is there a lean into one versus the other? And just help us better understand what you think injectable top line contribution is going to be this year. Thank you.

Thank you, David, and good morning. Biosymbolism, we're in line with what we have said, around 150, 60 million in total contribution or top line, with other systems being a leading product. You're in the ballpark somewhere between 90 to 100 million. That's what we are driving towards. So that's the current existing products. And then your question on vertical integration, We are looking at options, and we expect to execute on options by probably end of this year, maybe beginning of next year, because we see time is at essence now, would like to be very, very a big player in biosimilars, having the development capabilities, having manufacturing capacity in the United States and in India or other locations in the world. And this week, as we said, there's a void in biosimilar. There's so many products we can work on. And when we do look to vertically integrate, We will hope that the partner has a big pipeline and the contribution from a biosimilar business over five years and 10 years is going to be very significant. It is the whole, as you know, the value of the biosimilars are huge. The total branded value is $250, $300 billion and about 100 losing exclusivity over the next 10 years. So it's all about execution. The market dynamics on a commercial side, we believe, will work it out over time, just like how it worked out in GX, but not exactly like GX because the competition here is very less from the supplier standpoint. Right now we see about somewhere 7 to 10 active companies in the United States that work on the pipeline, serious pipeline, So I know it's a long answer, but it's a very, very important vertical for us biosimilars to grow. And it's in our wheelhouse. This is what we do. Complex development, device combination, biosimilars, very complex manufacturing, and great commercialization in the United States and work with partners in the international market. So it's a great international opportunity. On injectable, I'll pass it over to my younger brother. Hi, David.

Good morning. On injectables, over the last few years, we have expanded our manufacturing footprints and R&D capabilities to work on complex and same times we have the capacity which we can work on certain volume product. We are very passionate about solving the truck shortage because we believe that truck shortage should not exist. And we have many products where does not affect or impact our ability on the complex development. So we are focusing on both areas. Our complex portfolio is moving very, very well. This year we'll be launching Consta. We have launched many other 505 programs. We have a 10-12 pipeline of 55B2 injectable programs along with microspheres are making good progress. Our liposome is making good progress. We have a deep expertise on drug-device combination. We have now infrastructure of about 22 injectable lines with three to four locations. And we are also looking to some manufacturing in U.S. in coming time also. So we are well positioned on injectables. It's a focused area. And we're not leaning one over another. We are prioritizing both space equally.

Thank you.

Thank you. The next question is from Les Lewicki from Truer Securities. Your line is now open.

Good morning. Thank you for taking my questions. First, I wanted to focus on AFCARE. How exposed is AFCARE to the federal government cuts, if any? How are you positioning this business in the current environment, I guess? And then second, are you seeing any sort of FDA delays, whether it's on approvals or feedbacks on the generics front, and any sort of, I guess, initial potential from facility site visits delays as well? And then second, just kind of talk to us about the ongoing partnership selection on Crexon, XUS. I know you've identified EU and South America and Canada, but perhaps maybe just give us a little bit of timeline on other parts and then specifically with your timeline to launch in India and the opportunity there. Thank you.

Thank you, Les, and good morning. So VA, these federal cuts do not apply to the former surrogates. VA is actually expanding 18 million lives, and more veterans are becoming older, so more prescription drugs. So we see volume growth actually in VA DOD, so we do not see any issue there. The question on FDA, we haven't seen any delays from FDA at this point, so no issue there. And then CREXANT-XUS, we have the partnership in place for Canada, Latin America, Europe, and now we just signed Southeast Asia. India, we're going to market by ourselves. Europe is the largest, I mean, largest Market size will be for us and partners doing a phase four additional small pay score for European requirements to get a proper reimbursement. And then India, we haven't gauged the exact market size, but it's much needed growth all over the world. Only IR is available for the last 30, 40 years. And these patients really will benefit from Texon. And looking at China and Japan, those talks are going on right now.

let's just to add one thing on fda none of our gold dates have been impacted all our products are progressing well and it's part of the guru for user fee also so site inspection plus mnils all plants are fd approved and in a very very good standing that also benefits us from any potential delays but as of today we have not seen any any delays on our application or the gold dates

Thank you. The next question is from Chris Schott from JPMorgan. Your line is now open.

Great. Thanks so much for the questions. I said maybe to start with a two-parter on tariffs. I know you have a different manufacturing footprint versus peers. So if we were to see tariffs applied to pharmaceuticals, do you see an opportunity to further leverage your U.S. manufacturing footprint? And maybe just talk a little bit about what type of capacity you'd have to utilize if in fact we did see tariffs applied. My second question on the tariff front was For some of the products that are potentially exposed to tariffs and thinking about the affordable medicines portfolio, what is the ability to increase price on some of these products to offset some of those pressures? Or is the goal of M. Neal more to pivot the manufacturing to either your own capacity or third parties to more avoid tariffs on those? And then maybe one follow-up after that.

Oh, thank you, Chris. So if tariffs were to come on genetics, pharmaceuticals leveraging over U.S. manufacturing footprint, we have additional capacity. We have one idle plant for a long time now, which we would restart if economically viable. We still have to do that. It's a long-term economically viable. About 8 to 10 billion more units of oral solids, of liquid manufacturing, topical manufacturing, transdermal manufacturing we can produce in the United States. So we are already set to go, but it has to be economically viable. And your question on increase in prices, obviously, look, if there are There are tariff-related increases. We would work with our big, big customers. You know, they have to participate in that, which is CVS and UnitedHealth and Cigna. These are large companies. And there is some positive indication from the customers that they would partner in if something has to happen because the last thing we want is any kind of a discontinuation or shortages. So that's the news so far. Thank you, Chris.

Great. And maybe this is a follow-up on Corxon. By looking at Scripps, I mean, obviously great trends so far. It seems like we're seeing very little cannibalization from Rotary as we've seen on the ramp. I know that hasn't been the focus, but as we get maybe closer to that Rotary LOE, is there an opportunity to maybe accelerate some of the conversion of those patients ahead of generic entry, or is the focus more just the broader market here? Thanks so much.

Yeah, Chris, so our focus, as we have said from the beginning, it's a broader market. It's a huge market, almost 650,000 patients we could potentially be on Crexon. Rightly reached up to 40,000. we are already at a run rate of 20,000 patients now. And by year end, we'll have 25,000. And then next year, we could reach, I would easily double that or more. So 80% of that is coming from the new patient, IR, which was our goal. And RITERI, as I pointed out, the KOL by himself took RITERI over the years, now taking Crexon, seeing a huge impact. So as Many of these MDS already have started shifting their patient to Crexon because it's just a much better drug than Rytary. So we would see both, but we're not doing anything particular. We don't need to move or convert aggressively from Rytary to Crexon at all.

Great. Thanks so much. Thank you, Chris.

thank you we have no further questions so i'd like to hand back to chirac for concluding well thank you very much uh we're so excited and i'm neil and we wish everybody a great weekend thank you thank you everyone thank you this does conclude today's call you may now disconnect your lines and enjoy the rest of your day thank you