Amneal Pharmaceuticals, Inc

Good morning, and welcome to the MNU Pharmaceuticals Third Quarter 2025 Earnings Call. I will now turn the call over to MNU's Head of Investor Relations, Tony Damio. Please go ahead.

Good morning, and thank you for joining MNU Pharmaceuticals Third Quarter 2025 Earnings Call. Today, we issued a press release reporting Q3 results. The earnings press release and presentation are available at anneal.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 in reconciliation to GAAP are in the earnings release and presentation. On the call today are Chirag and Shintzu Patel, co-founders and co-CEOs, Tasos Konideras, CFO, our commercial leaders, Andy Boyer for affordable medicines, and Joe Renda for specialty. I will now hand the call over to Chirag.

Thank you, Tony. Good morning, everyone. We're pleased with our strong third quarter performance. which represents another consecutive quarter of growth with revenues of $785 million and adjusted EBITDA of $160 million. At MNIL, we focus on delivering innovative and affordable medicines that make a difference for patients and providers. Since our founding in 2002, we have strategically expanded from generics into specialty injectables, biosimilars, GLP-1, and complex medicines. This portfolio diversification has driven significant and sustainable top and bottom line growth. From 2019 through now, MNIL revenues have grown 11% and adjusted EBITDA has grown 13% on a CAGR basis. with growth in each of the last six consecutive years. We're very confident our momentum will continue in the years ahead. Today, there are multiple growth drivers that are shaping the future of Amnio. First, in specialty segment, Prexon for Parkinson's disease continue to outperform expectations. One year post-launch, Prexon is delivering strong results all key indicators. Notably, about 80% of prescriptions are coming from IR patients, underscoring the success of our strategy to expand into the broader patient population. We are confident in peaks US cells of 300 million to 500 million for Trexant. Next, our Brachia auto-injector for migraine and cluster headache has now launched. This is the first and only product allowing patients to self-administer with the same medication used in hospitals. It addresses an unmet need for patients who have historically had to go to the hospital ER for relief. Second, in GLP-1, our strategic collaboration with Medcera positions us very well to play a meaningful role in this very large therapeutic category over the time. Medcera's broad portfolio of injectable and oral weight loss programs continue to quickly advance through the clinical phase. Third, in biosimilars, we are on track to have six marketed biosimilar products by 2027. Led by our biosimilars to Zoled, the U.S. market over $4 billion for this key allergy and asthma product. This represents our largest current biosimilar opportunity. Last month, we submitted our BLA for Zola biosimilar, and we are well positioned to be among the first two entrants in this growing market. Both in complex genetics and injectables, In our affordable medicine segment, we continue to receive approval for meaningful new products, including Respiradone injectable, sodium oxalate, and Bimartoprost ophthalmic QR, among others. We expect this segment will continue to grow driven by our diversified portfolio of complex products and steady cadence of impactful new launches. Finally, our healthcare segment continues to provide diversification, stability, and growth with a broad portfolio for government distribution and unit dose channels. In summary, our growing portfolio is creating meaningful value for patients by expanding access and advancing standards of care, and for providers by delivering a broader and more differentiated portfolio, and for investors by driving consistent growth and margin expansion. Over time, we have strategically evolved from genetics to innovative and complex medicines, and our current chapter of growth is the most exciting one yet. As we grow and expand our portfolio, we are advancing towards our strategic goal of becoming America's number one affordable medicines company. I'll turn the call over to Chintu now.

Thank you, Chirag, and good morning. As always, I will begin by thanking the global MNIL family. Your unwavering dedication and commitment continue to drive our success. The recipe for continued strong performance is clear, operational excellence, robust innovation, and strategic portfolio expansion. First, in operations, our global manufacturing network and leading capabilities remain a core strategic advantage. We continuously strengthen our operational efficiency through digitalization, automation, and cost discipline, while at the same time innovating in new complex dosage forms to expand our reach. Furthermore, with one of the largest US pharmaceutical manufacturing footprints, made in America, remains a key differentiator for MNIL in the industry. In GLP-1s, our collaboration with Medcera is progressing very well. Leveraging our expertise in R&D and manufacturing, we are building two state-of-the-art facilities, one for large-scale peptide production and another for advanced sterile-filled finish designed to produce pre-filled syringes, cartridges, or wires. At the same time, Medcera's injectable and oral clinical programs continue to show strong efficacy and product profiles, with timelines bringing us closer to entering this fast-growing market. In Affordable Medicine's portfolio, we look to launch 20 to 30 new products each year. So far in 2025, we have launched 17 new products with approvals for 13 more to launch in the future. Importantly, it is not just the number of new launches, but the value of these recent launches and approvals, and how they position MNIL for future growth. For years, our focus has been on complex generic innovation, including injectables, ophthalmic inhalation, and other advanced dosage forms. essentially the most complex drug-device combinations in pharmaceutical. And as a result of years of hard work and strategic focus, we are in the midst of a concentrated wave of affordable medicines product launches coming to market in the near term. To highlight all of these, we have a new slide in the earnings presentation with a list of some of the key launches ongoing now and coming up next. In the third quarter, we expanded our portfolio with several important approvals across key therapeutic areas, including our first long-acting injectable respiradone extended release in the mental health space, sodium oxibate for narcolepsy, and bimatoprose for glaucoma, as well as new OTIC and injectable products like multi-dose epinephrine for hospitals. Just yesterday, we are pleased to receive tentative approval for our first metered dose inhalation product, Baclomethazone Dipropionate, generic for QR. This is the first of several new inhalation products expected in the coming years, as inhalation is a new growth factor starting in 2026. For years, we have been discussing the strategic portfolio shift towards the complex products, And with so many meaningful launches, we are at an inflection point. Looking ahead, we have 69 ANDA spending, of which 64% are complex products, and 44 additional products in development, of which 95% are complex products. We continue to focus our R&D on high growth, high-impact products across dosage forms, such as inhalation, microspheres, liposomals and 505B2 specialty injectables. With this strategic portfolio expansion and robust pipeline, we are reshaping our affordable medicine business and expect our strong momentum to drive meaningful growth and value creation for years to come. In biosimilars, we remain focused on building our leadership position over time. Our most exciting near-term opportunity is our biosimilar to Zolaire, where we submitted our BLA in September ahead of schedule. Alongside Zolaire, we are advancing other key programs, including Dunazumab, with multiple new biosimilar launches expected in 2026 and 2027. In specialty, our cracks on open-label Phase IV study is progressing very well. We are very pleased with early results and look forward to sharing additional data later this year on real-world good on time, performance that further supports Crexon's clinical value and differentiation for Parkinson's patients. We continue to work on several specialty R&D initiatives in the focus area of CNS and endocrinology, and we look forward to sharing more as this program advances. In summary, we are driving operational excellence, advancing our innovation agenda, and expanding our portfolio to deliver robust growth and leadership across our business areas. I will hand it over to Tasos.

Thank you, Shintu, and good morning, everyone. Q3 was another terrific quarter with continued and sustainable strong growth across our three business segments. resilient and consistent growth is a testament to our strategic choices, diversified portfolio, and robust execution. In addition, we've further strengthened our balance sheet with strong cash flow generation, reduced net leverage ratio, and increased our expected full-year bottom line guidance. So all in all, an excellent quarter. As I usually do, I'll start with our Q3 and year-to-date results. Move on to our balance sheet and our updated 2025 guidance. Starting with the third quarter, total company revenues grew 12% to $785 million. Our affordable medicines revenue grew 8% year over year to $461 million, reflecting strong performance across our broad portfolio of more than 280 products. Key contributors to our growth this quarter were products launched in 2024 and 2025, which added $24 million in revenue and included a number of 505 B2s that meet real customer needs. Specialty revenue was again very strong in Q3, up 8% year-over-year to $125 million, driven by Craxon and Unitroid. In the third quarter, as expected, after revenues grew 24% to 199 million, fueled by strong growth in the government. After growth continues to be driven by strong underlying demographics, as well as providing substantial savings to the government with timely access to innovative and very often newly available affordable medicines products. Moving down the P&L, Q3 adjusted gross margins were 42.7%, down 150 basis points year over year. However, margins on a year-to-date basis are up 130 basis points. We view our year-to-date gross margins growth as indicative of our underlying performance, and we're confident of growing our full-year gross margin compared to 2024. The expansion of gross margin is primarily driven by the innovation and strength of new product launches, as well as our relentless focus on driving operating expense efficiencies. Third quarter adjusted EBITDA of 160 million grew 1% driven by top line growth, higher gross profit, and higher commercial costs in support of correction It is worth noting that our third quarter adjusted EBITDA includes 22.5 million of R&D milestone payment related to the Zoller BLA filing. Lastly, Q3 earnings per share of 17 cents grew 6% versus prior year on the back of lower interest expense. Let me now shift to our year-to-date performance for total revenue increased 7%, driven by growth of 5% in affordable medicines, 11% growth in specialty, and 8% growth in out-care. Adjusted EBITDA grew 9%, and adjusted EPS grew 35% year-to-year, year-to-date. The drivers of our year-to-date growth are very similar to those of the third quarter. Turning to the balance sheet, As a reminder, we're very pleased to complete our full debt refinancing in July, which reduces interest costs substantially and extends debt maturities from 2028 to 2032. Also, net leverage at the end of Q3 was 3.7 times, down from 3.9 times at the end of last year. Overall, our capital allocation priorities remain consistent. That is, invest in high-return organic revenue growth. Number two, reducing net leverage below three times over the course of time. And finally, remain strategic with business development opportunities that enhance our growth profile and value creation. Moving on to our financial guidance, we're pleased that for the second consecutive quarter to update our guidance for revenues, We continue to expect a range of 3 to 3.1 billion. We have raised the low end of our adjusted EBITDA by 10 million to a new range between 675 and 685 million. And we have raised the full range of adjusted EPS by 5 cents to a new range between 75 cents and 80 cents. We expect continued strong operating cash flow between 300 to 330 million this year, and further year-over-year debt and net leverage reduction. Looking to 2026 and beyond, we continue to expect top- and bottom-line growth supported by our diversified portfolio and multiple growth drivers, including Crexham, Prekia, new biosimilars such as Oler, and a very strong wave of new affordable medicines and continued growth in healthcare. Furthermore, our focus on profitable growth, operating expense synergies, and lower interest costs are strong catalysts for strong shareholder value creation. With that, I'll turn the call back to Shirak.

Thank you, Tassos. Our strong Q3 results and updated 2025 guidance underscore the continued diversified business. We remain confident as we advance this chapter toward becoming America's number one affordable medicines company. Let's now open the call for Q&A.

Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove your question, Press star followed by two. Again, to ask a question, press star one. We will pause here briefly as questions are registered.

Les, if you're ready, first question.

Thank you. All right, we'll go to the next one. Matt. Thank you. We will now take our first question from Matt from Goldman Sachs. Please go ahead.

Hey, great. Thanks and congrats on the quarter. Maybe on the Med-Sara partnership, Could you give us your latest thinking on how the acquisition by Pfizer may impact the agreement? I know you said prior you don't expect this to change anything, given there's a change in control clause and that you all collaborated with Pfizer in the past. So just curious on your latest thinking there. And then we obviously saw this morning there's another bid for Mithra by Nova at a higher price. So maybe your thoughts on that dynamic as well. And if there's any kind of meaningful difference from an annual perspective in terms of who ultimately acquires the company. And then maybe secondly, FDA came out with new draft guidance yesterday that essentially removes the need for comparative phase three efficacy studies for biosimilars. Just curious on your thoughts in terms of how this impacts annual and the broader industry and market dynamics going forward. Thanks a lot.

Good morning, Mike. I guess we chose the right partner. Medcera is doing well, I guess, and obviously there are two bidders now. And for us, it's really, really great. We've been working with Medcera for the last couple of years and have devoted lots of resources from science, engineering, operations, manufacturing. Very close partner, great relationship. a great company, and their programs are advancing well. As you know, Matt, I cannot comment on the current events. Between twice, I know, and either one of them, MNU stands to win because of the higher name recognition on both brands with our partnership with MNU has rights to 18 countries to market the products. and agreement for supply, which is very meaningful as well. So stay tuned, and as it progresses, we'll keep you updated. Your second question, it's awesome. We've been experiencing that. We know from our partners what FDA is willing to do now since they have lots of data over the last, almost more than 12, 13 years, they've seen the biosimilars, the safety data, the biosimilarity data from the clinics as well. So finally, they are in agreement to push for more biosimilar approval, cut down the cost and time by half, And this is where MNIL's vertical integration would play a key role because it still will take three to five years for competitors to catch up. So it's great for the industry. Most importantly, it's great for the patients. It's going to create great access and FTA and HHS is behind us and entire CMS to call out all the games that are being played by the brand companies and really promote and create a market for biosimilars. And then making those biosimilars in the United States will even further give the advantages for the companies that invest in America. So we're very excited. There are 117 molecules. Only 30 are being worked on. The 90 are not being worked on. And biologics, as you know, represents half of the value for the entire pharmaceutical spend. And most of those drugs are very expensive. bringing affordable access. This is our mission, allows MNIL to take the leadership position. And what we've been saying is become America's number one affordable medicines company, allows us to, in the future, if we get the vertical integration done, as soon as possible to have bigger, broader portfolio of 20 to 30 biosimilars and keep adding five to seven every year. I hope that answers your question on where the biosimilars are headed. Very exciting.

Great. Thank you.

Thank you. Next, we will have our next question from Lezek Zuleski from Choice Securities. Please go ahead.

Great. Yeah, thank you for taking my questions. Just to follow up for each question, actually, on the biosimilars front, you know, how does that change your kind of overall strategy, given this kind of draft guidance potentially finalized as it stands? And then on the opposing side to that, you know, do you see potentially for the increased competition where the, you know, the price erosion curves ultimately resemble the traditional generics? And I met Sarah. You know, I understand there are clauses in place with the current contract that you have. You're building out the facilities in India. You know, how is your kind of thinking about that sway in a new change of control of the company and then potentially, you know, your commercialization rights in the emerging markets? Are there any kind of safeguards in place for you to retain those? And I do have a follow-up. Thank you.

Thank you, Les. So let's expand more on overall strategy for biosimilars. So it would expedite the development timing. It would cut down the cost by almost half. And both are very encouraging, but you still need big biologics manufacturing sites You need the leaders of capacity. You need the teams of hundreds of analytical people, manufacturing engineering to get all these done and with the US standards. So with FDA and then obviously EMA follows European standards are similar. So the companies, for example, Indian companies who are focused on emerging markets in biologics for years, for 20 years, they would have to build a brand new infrastructure that is for the United States and develop the products from the beginning for the United States. So if Amnio increases its footprint through the vertical integration, it will give us the advantage over next five years. Then your question on the pricing and as competitors will enter, but it's still expensive we're not talking about two million dollar development of complex genetics or five million right we're talking still about 40 million 50 million 60 million based on a molecule and still it takes a lot of capex to have the infrastructure to produce those and science science capabilities and engineering so it is you know it's complicated manufacturing The pricing of biosimilars are way higher than the small molecule. So even when you hear the tagline of 80% reduction, if your investment is 40 to 60 million, you're still doing great. As long as you can execute, be there, and select the molecules which are two competitors, three competitors, enter first, so you have advantage of insurance coverage working with private labels, doing buy and build model. All these three, you have to have marketing set up as well, which MNIL does have. So that is how I see the biosimilar industry blossoming over next one, two, three, four, five, I see it up to 10 years. Even with the competition, it's a great marketplace. As dollars are large, complications are huge. very much there, and there are many molecules to go after. Now you can select $500 million molecule, you can select $1 billion molecule, then no need to just keep going after the 10 billions and 20 billions that would face 10 competitors. So it is a competitive industry. It was supposed to be competitive, and it will create huge value. for the patient and providers. And complete backing of US government, which is fantastic to push this, rightfully so. And that was the main intent when the law was passed. So we remain very, very big player and will be to win biosimilars for the United States market particularly. And it also allows us to go global as well. Matt Serra, your second question, Mike, it's the same answer. Les, that we cannot discuss much at this point. As you know, we have a solid partnership with Metzera, and we look forward to work with whoever the new partner is. And we're very excited, actually. So stay tuned, and we'll update you at the right time.

And, Les, on a biosimilar, I'd like to add... Les, just on a biosimilar, I'd like to add... was Chirag was saying, first of all, this draft guidance is very encouraging for the entire industry. But unlike small molecules, still in the large molecules, there are multiple barriers of entry. So the speed to market still is a lot longer, plus the capacity, unlike small molecule where there was a floodgate of people filing 20, 30, 40 ANDAs, it's not possible. You know, there are 100, 12, 115 biologics products where, you know, only 20 or 30s are being worked on. So still there are, you know, manufacturing, science, you know, analytical is a very strong aspect of development, and the R&D does not allow you to take 5, 10 biosimilars a year. So still the next 10 years, if you have a head start and have a vertical integration, there's so many opportunities you can do. And with this new draft guidance, Still, you know, three to four filing is kind of max for most of the companies.

That was very insightful and extensive color on that. I appreciate it. Thank you. Maybe just one more if I could squeeze it in for Tassos. SG&A 3Q run rate, a little bit of a pickup. Is this kind of a good proxy as we move forward? And then second, you know, maybe high level. As you think about capital allocation, you're kind of getting into that 3X leverage range over the next couple of years. You know, what do you think of in terms of kind of BD? Is it more transformative or kind of continuation of Tuckins or even on the biosimilars front, but just in general capital allocation priorities over the next couple of years? Thank you.

Yeah, good morning, Liz. the answer to your first questions about the the run rate of the sales and marketing expense i think q3 is pretty indicative i think you can uh where we are because it includes kind of full commercialization expense for crack sun right which was an additive this year compared to last year It includes a little bit of a kind of getting the market set up for the exciting new launch of Rakia. So I think that's a good run rate. Around the... It's our priorities here have not changed. And that is how do we balance kind of building capabilities and products and diversification in the thoughtful, doing the right deals and at the same time structuring the deals in a way that is affordable, right? So that was the case, for example, you're going to go back to Abacare. Many years ago, right, we acquired 65% of that business, did not acquire the whole thing. It was the right smart thing from a balancing perspective. It also kept the management team engaged with the substantial skill in the game, right? And that allowed us to deliver that business quickly. Then we saw the Mechera deal last year. Again, thoughtful deal where the partner contributed a substantial amount of cash. There are substantial grants that we are expecting to receive from the India government, and the capex is over the course of time. And that's the way we're thinking about this. The rental comes up. We've been very vocal for months. for probably the last couple of years about our desire to vertically integrate in the biosimilar space. So we continue to look at that and we'll update folks, you know, whether there's something to update them about. But you can continue to expect discipline and doing the right deal at the right time.

Thank you.

Thank you. We will now take our next question from Chris Schatz from J.T. Morgan. Please go ahead.

Hey, thank you so much. This is Katerina on for Chris. So first, just on right, Tari, any line of sight of when we could see generic entry? Just wondering if you heard anything from the channel and when TEVA could potentially launch. And can you just remind us what you're embedding in guidance for the year? And then on 26, Outlook, it's obviously, you know, early, but any initial thoughts on pushes and pulls investors should keep in mind for next year? Thank you.

Yeah, hey, Katerina. I'll take the first Raitari question, and then if you don't mind repeating your second question on Craigson. So, a couple things. So, on Raitari, we have no new indication of, you know, whatever may or may not happen there. Earlier on this month, we launched our own authorized generics with a partner. So this was part of a well-documented settlement years ago, and we are receiving the majority of potential profits that may come up on that authorized generic. So overall, the delay of TEVA has overshadowed

next year. I think the second one, Katrina, is the 2026, as we mentioned in our script. Momentum is already here. The approvals, we listed it on page 11 of the company presentation. It tells you that the excitement over the new product launches, current businesses performing really well, so we expect continued growth in 2026 and beyond.

Thank you.

Thank you, Katarina.

Thank you. We will now take our next question from David Amthelam from Piper Sandler. Please go ahead.

Hey, Dane. So just a couple for me. I wanted to pick your brain on the Zolaire biosimilar. It doesn't look like a particularly crowded market potentially. So how are you thinking about that opportunity? So that's number one. Number two, can you just give us a better sense of how many biosimilars you're looking to file annually and specifically in how you're thinking about Part B versus, say, Part D products and where your priorities lie in terms of whether it's a retail pharmacy setting or institutional setting. So just philosophically wanted to get your thoughts on that. And then lastly, on the DHE autoinjector, how are you thinking about that opportunity and what that market looks like given that particularly crowded acute migraine space?

Thank you. Great. David, good morning. Zola Air Biosimilars, we are pleased that we have filed the product. Our partner has manufacturing capabilities right here in the United States, and it will have additional capacity outside of the United States as well. So we obviously would maximize the assets. We use our relationship that we have built over 20 plus years to the same groups of buyers and with 300 products. So we have a deep relationship with whether it's CVS, Caremark, Optum, United, Express Script, Cigna. We enjoy a very deep relationship as well as Kaiser's and Prime's and other smaller private labels. One market we would be exploring is the private label, which could be very significant two-player market, as the product by itself is growing 32 percent for the brand. We're excited about that. Then also there is when you're first two, coverage from the PBM. So your other potential customers tend to use your products as well. So we'll maximize the market opportunity for Zola for sure in advance of the offer for the world, which is expected in the next fourth quarter next year. On your question on, I'll continue on the market first, the part B, part D. So as you know, we've been vocal about the vertical integration is must. The licensing deals are pretty much dead. That business model will not work. And I've said that five years ago. And it's not like I'm a very genius guy. It's just like what happened in genetics. As you know, the complex genetics or genetics, they're The room for two margins in the United States market makes it harder, harder to have a real play in biosimilars. So whoever is vertically integrated is going to benefit big time, especially companies having biosimilars. working on five, seven biosimilars per year and filing those. Those will be the winner. And those are obviously filed globally. So I don't see any difference whether it's Part B, Part D. We're going to play in a broader biosimilars. And obviously, once the vertical integrations done, we would obviously expand the capabilities into a B-specific, an ADC. If you're in biologics, then you can do more biologics, right? So that's where we will look forward to. And also, FDA is considering a 505B2 kind of pathway for branded biologics. So that could be exciting as well, to bring early access to some of these some of these life-saving drugs or critical drugs, critical medicines. So we're excited on that. We'll play on Part B, Part D, private label, the smaller customers, the insurance coverage. We will be everywhere. I don't see any difference for us and any of our major competitors to not be pretty much in all segments of the market. DHE, it is very exciting. You know the market, right? The CGRP, the triptans. But there are almost, our internal analysis, we have put it out there, 132,000 patients fail those first and second line therapies. So they're being administered with well-proven DHE auto-injection in the hospital. so they can do it administered at home, avoiding going to emergency rooms, wait time, travel time, So it's a very useful innovation for patients. And so far, we're getting, it's very early in the evening, but getting great feedback. We got the team all engaged with the key edX centers and key KOLs. So remain, you will see our progress. I don't have any prediction. We've been saying it's 5,200 million pixels. So we'll update as we go.

Okay, thank you. Thanks, David.

Thank you. There are no questions waiting at this time. I will pass the conference back over to Shirag Patel for any additional remarks.

Well, thank you very much, everyone. Have a great day. Thanks. Thank you.

That concludes the MNEO Pharmaceuticals Third Quarter 2025 earnings call. Thank you for your participation. You may now disconnect from your line.