SEC Filing - ANI Pharmaceuticals, Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


(Mark one)
☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 001-31812

ANI PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)


Delaware	58-2301143
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

210 Main Street West

Baudette, Minnesota 56623

(Address of principal executive offices)

(218) 634-3500

(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbol(s)	Name of each exchange on which registered:
Common Stock	ANIP	Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒

Non-accelerated filer ☐	Smaller reporting company ☐

	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 1, 2022 there were 17,426,034 shares of common stock and 10,864 shares of class C special stock of the registrant outstanding.

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ANI PHARMACEUTICALS, INC.

FORM 10-Q — Quarterly Report

For the Quarterly Period Ended June 30, 2022

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		Page
PART I —FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (unaudited)	5

	Condensed Consolidated Balance Sheets — As of June 30, 2022 and December 31, 2021	5

	Condensed Consolidated Statements of Operations — For the Three and Six Months Ended June 30, 2022 and 2021	6

	Condensed Consolidated Statements of Comprehensive Income — For the Three and Six Months Ended June 30, 2022 and 2021	7

	Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity — For the Three and Six Months Ended June 30, 2022 and 2021	8

	Condensed Consolidated Statements of Cash Flows — For the Six Months Ended June 30, 2022 and 2021	10

	Notes to Condensed Consolidated Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51

Item 4.	Controls and Procedures	53

PART II —OTHER INFORMATION

Item 1.	Legal Proceedings	53

Item 1A.	Risk Factors	53

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54

Item 3.	Defaults upon Senior Securities	54

Item 4.	Mine Safety Disclosures	54

Item 5.	Other Information	54

Item 6.	Exhibits	55

Signatures		56

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and certain information incorporated herein by reference contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements include, but are not limited to, statements about future operations, strategies and growth potential, the revenue potential (licensing, royalty and sales) of products we sell, development timelines, expected timeframe for submission of new drug applications or supplemental new drug applications to the U.S. Food and Drug Administration (the “FDA”), pipeline or potential markets for our products, selling and marketing strategies and associated costs to support the sales of Purified Cortrophin® Gel (Repository Corticotropin Injection USP) (“Cortrophin Gel”), impact of accounting principles, litigation expenses, liquidity and capital resources, the impact of the novel coronavirus (“COVID-19”) global pandemic on our business, and other statements that are not historical in nature, particularly those that utilize terminology such as “anticipates,” “will,” “expects,” “plans,” “potential,” “future,” “believes,” “intends,” “continue,” other words of similar meaning, derivations of such words, and the use of future dates. Such forward-looking statements are based on the reasonable beliefs of our management as well as assumptions made by and information currently available to our management. Readers should not put undue reliance on these forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified; therefore, our actual results may differ materially from those described in any forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in our periodic reports filed with the U.S. Securities and Exchange Commission (the “SEC”), including those discussed in the “Risk Factors” section in Part I, Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and the following factors:

•

risks that we may face with respect to importing raw materials;

•

delays or failure in obtaining and maintaining approvals by the FDA of the products we sell;

•

changes in policy or actions that may be taken by the FDA and other regulatory agencies, including drug recalls;

•

the ability of our manufacturing partners to meet our product demands and timelines;

•

our dependence on single source suppliers of ingredients due to the time and cost to validate a second source of supply;

•

acceptance of our products at levels that will allow us to achieve profitability;

•

our ability to develop, license or acquire, and commercialize new products;

•

the level of competition we face and the legal, regulatory and/or legislative strategies employed by our competitors to prevent or delay competition from generic alternatives to branded products;

•

our ability to protect our intellectual property rights;

•

the impact of legislative or regulatory reform on the pricing for pharmaceutical products;

•

the impact of any litigation to which we are, or may become, a party;

•

our ability, and that of our suppliers, development partners, and manufacturing partners, to comply with laws, regulations and standards that govern or affect the pharmaceutical and biotechnology industries;

•

our ability to maintain the services of our key executives and other personnel;

•

whether we experience disruptions to our operations resulting from the anticipated closure of our Oakville, Ontario manufacturing plant; and

•

general business and economic conditions, such as inflationary pressures, and the effects and duration of outbreaks of public health emergencies, such as COVID-19.

These factors should not be construed as exhaustive and should be read in conjunction with our other disclosures, including but not limited to our Annual Report on Form 10-K for the year ended December 31, 2021, including the factors described in “Item 1A. Risk Factors.” Other risks may be described from time to time in our filings made under

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the securities laws, including our quarterly reports on Form 10-Q and our current reports on Form 8-K. New risks emerge from time to time. It is not possible for our management to predict all risks. The forward-looking statements contained in this document are made only as of the date of this document. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

The Company may use its investor relations website as a distribution channel of material company information. Financial and other important information regarding the Company is routinely posted on and accessible through the Company’s investor relations website. We encourage investors and others interested in our Company to review the information we post on our investor relations website in addition to filings with the SEC, press releases, public conference calls and webcasts. Information contained on the Company’s website is not included as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

NOTE REGARDING TRADEMARKS

Apexicon®, Cortenema®, Purified Cortrophin® Gel, Cortrophin-Zinc®, Inderal® LA, Inderal® XL, InnoPran XL®, Lithobid®, Reglan®, Vancocin®, and Veregen®are registered trademarks subject to trademark protection and are owned by ANI Pharmaceuticals, Inc. and its consolidated subsidiaries. Atacand® and Atacand HCT® are the property of AstraZeneca AB and are licensed to ANI Pharmaceuticals, Inc. for U.S. sales of those products. Arimidex® and Casodex® are the property of AstraZeneca UK Limited and are licensed to ANI Pharmaceuticals, Inc. for U.S. sales of those products. Oxistat® is the property of Fougera Pharmaceuticals Inc. and licensed to ANI Pharmaceuticals, Inc. for U.S. sales of Oxistat® Lotion. Pandel® is property of Taisho Pharmaceutical Co, Ltd. and licensed to ANI Pharmaceuticals for U.S. sales of Pandel® creme.

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Part I — FINANCIAL INFORMATION

Item 1. Financial Statements

ANI PHARMACEUTICALS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(unaudited)


	June 30,		December 31,
	2022		2021
Assets

Current Assets
Cash and cash equivalents	$	63,385	$	100,300
Accounts receivable, net of $150,428 and $105,260 of adjustments for chargebacks and other allowances at June 30, 2022 and December 31, 2021, respectively		150,410		128,526
Inventories, net		92,545		81,693
Prepaid income taxes		2,013		3,667
Assets held for sale		8,020		—
Prepaid expenses and other current assets		6,026		7,589
Total Current Assets		322,399		321,775
Non-current Assets
Property and equipment		71,042		75,627
Accumulated depreciation		(27,271)		(22,956)
Property and equipment, net		43,771		52,671
Restricted cash		5,001		5,001
Deferred tax assets, net of deferred tax liabilities and valuation allowance		76,587		67,936
Intangible assets, net		269,593		294,122
Goodwill		28,221		27,888
Derivatives and other non-current assets		5,762		2,205
Total Assets	$	751,334	$	771,598

Liabilities, Mezzanine Equity, and Stockholders’ Equity
Current Liabilities
Current debt, net of deferred financing costs	$	850	$	850
Accounts payable		27,641		22,967
Accrued royalties		6,295		6,225
Accrued compensation and related expenses		5,682		8,522
Accrued government rebates		9,440		5,492
Returned goods reserve		34,899		35,831
Accrued expenses and other		11,505		7,650
Total Current Liabilities		96,312		87,537

Non-current Liabilities
Non-current debt, net of deferred financing costs and current component		286,095		286,520
Non-current contingent consideration		30,958		31,000
Derivatives and other non-current liabilities		1,011		7,801
Total Liabilities	$	414,376	$	412,858

Commitments and Contingencies (Note 13)

Mezzanine Equity
Convertible Preferred Stock, Series A, $0.0001 par value, 1,666,667 shares authorized; 25,000 shares issued and outstanding at June 30, 2022 and December 31, 2021		24,850		24,850

Stockholders’ Equity
Common Stock, $0.0001 par value, 33,333,334 shares authorized; 17,566,363 shares issued and 17,427,252 outstanding at June 30, 2022; 16,912,401 shares issued and 16,829,739 shares outstanding at December 31, 2021		1		1
Class C Special Stock, $0.0001 par value, 781,281 shares authorized; 10,864 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		—		—
Preferred Stock, $0.0001 par value, 1,666,667 shares authorized; 0 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		—		—
Treasury stock, 139,112 shares of common stock, at cost, at June 30, 2022 and 82,662 shares of common stock, at cost, at December 31, 2021		(4,736)		(3,135)
Additional paid-in capital		395,043		387,844
Accumulated deficit		(83,630)		(47,765)
Accumulated other comprehensive income/(loss), net of tax		5,430		(3,055)
Total Stockholders’ Equity		312,108		333,890

Total Liabilities, Mezzanine Equity, and Stockholders’ Equity	$	751,334	$	771,598

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ANI PHARMACEUTICALS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net Revenues	$	73,855	$	48,625	$	138,332	$	103,146

Operating Expenses
Cost of sales (excluding depreciation and amortization)		35,294		22,314		69,565		42,299
Research and development		4,165		2,805		9,439		5,773
Selling, general, and administrative		31,958		18,820		60,775		36,407
Depreciation and amortization		13,764		11,324		28,321		22,222
Contingent consideration fair value adjustment		(1,095)		—		(342)		—
Legal settlement expense		—		8,400		—		8,400
Purified Cortrophin Gel pre-launch charges		—		515		—		553
Restructuring activities		2,570		—		2,570		—
Intangible asset impairment charge		112		—		112		—

Total Operating Expenses		86,768		64,178		170,440		115,654

Operating Loss		(12,913)		(15,553)		(32,108)		(12,508)

Other Expense, net
Interest expense, net		(6,669)		(2,531)		(13,282)		(4,985)
Other income/(expense), net		764		(67)		675		(582)

Loss Before Benefit for Income Taxes		(18,818)		(18,151)		(44,715)		(18,075)

Benefit for income taxes		3,895		4,045		9,662		4,055

Net Loss	$	(14,923)	$	(14,106)	$	(35,053)	$	(14,020)

Dividends on Series A Convertible Preferred Stock		(407)		—		(812)		—

Net Loss Available to Common Shareholders	$	(15,330)	$	(14,106)	$	(35,865)	$	(14,020)

Basic and Diluted Loss Per Share:
Basic Loss Per Share	$	(0.94)	$	(1.17)	$	(2.21)	$	(1.16)
Diluted Loss Per Share	$	(0.94)	$	(1.17)	$	(2.21)	$	(1.16)

Basic Weighted-Average Shares Outstanding		16,272		12,085		16,205		12,045
Diluted Weighted-Average Shares Outstanding		16,272		12,085		16,205		12,045

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ANI PHARMACEUTICALS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income/(Loss)

(in thousands)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net loss	$	(14,923)	$	(14,106)	$	(35,053)	$	(14,020)

Other comprehensive income/(loss), net of tax:
Gains/(losses) on interest rate swap, net of tax		2,718		(401)		8,485		6,004
Total other comprehensive income/(loss), net of tax		2,718		(401)		8,485		6,004
Total comprehensive loss, net of tax	$	(12,205)	$	(14,507)	$	(26,568)	$	(8,016)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ANI PHARMACEUTICALS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity

For the Three Months Ended June 30, 2022 and 2021

(in thousands)

(unaudited)


		Mezzanine Equity	Mezzanine Equity															Total Mezzanine
		Series A Convertible	Series A Convertible	Common		Common	Class C		Additional		Treasury			Accumulated				Equity and
		Preferred	Preferred Stock	Stock		Stock	Special		Paid-in		Stock	Treasury		Other Comprehensive				Stockholders'
		Stock	Shares	Par Value		Shares	Stock		Capital		Shares	Stock		Gain/(Loss), Net of Tax		Accumulated Deficit		Equity
Balance, March 31, 2021	$	—	—	$	1	12,830	$	—	$	216,223	86	$	(2,594)	$	(5,032)	$	(4,886)	$	203,712
Stock-based Compensation Expense		—	—		—	—		—		2,844	—		—		—		—		2,844
Treasury Stock Purchases for Restricted Stock Vests		—	—		—	—		—		—	15		(468)		—		—		(468)
Issuance of Common Shares upon Stock Option and ESPP Exercise		—	—		—	12		—		337	—		—		—		—		337
Issuance of Restricted Stock Awards		—	—		—	19		—		—	—		—		—		—		—
Restricted Stock Awards Forfeitures		—	—		—	(35)		—		(1)	(21)		—		—		—		(1)
Other Comprehensive Income		—	—		—	—		—		—	—		—		(401)		—		(401)
Net Loss		—	—		—	—		—		—	—		—		—		(14,106)		(14,106)
Balance, June 30, 2021	$	—	—	$	1	12,826	$	—	$	219,403	80	$	(3,062)	$	(5,433)	$	(18,992)	$	191,917
Balance, March 31, 2022	$	24,850	25	$	1	17,374	$	—	$	391,084	123	$	(4,253)	$	2,712	$	(68,300)	$	346,094
Stock-based Compensation Expense		—	—		—	—		—		3,756	—		—		—		—		3,756
Treasury Stock Purchases for Restricted Stock Vests		—	—		—	—		—		—	16		(483)		—		—		(483)
Issuance of Common Shares upon Stock Option and ESPP Exercise		—	—		—	8		—		203	—		—		—		—		203
Issuance of Restricted Stock Awards		—	—		—	208		—		—	—		—		—		—		—
Dividends on Series A Convertible Preferred Stock		—	—		—	—		—		—	—		—		—		(407)		(407)
Restricted Stock Awards Forfeitures		—	—		—	(24)		—		—	—		—		—		—		—
Other Comprehensive Income		—	—		—	—		—		—	—		—		2,718		—		2,718
Net Loss		—	—		—	—		—		—	—		—		—		(14,923)		(14,923)
Balance, June 30, 2022	$	24,850	25	$	1	17,566	$	—	$	395,043	139	$	(4,736)	$	5,430	$	(83,630)	$	336,958

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ANI PHARMACEUTICALS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity

For the Six Months Ended June 30, 2022 and 2021

(in thousands)

(unaudited)


		Mezzanine Equity	Mezzanine Equity															Total
		Series A Convertible	Series A Convertible	Common		Common	Class C		Additional		Treasury			Accumulated				Mezzanine Equity
		Preferred	Preferred Stock	Stock		Stock	Special		Paid-in		Stock	Treasury		Other Comprehensive				and Stockholders'
		Stock	Shares	Par Value		Shares	Stock		Capital		Shares	Stock		(Loss)/Gain, Net of Tax		Accumulated Deficit		Equity
Balance, December 31, 2020	$	—	—	$	1	12,430	$	—	$	214,354	76	$	(2,246)	$	(11,437)	$	(4,972)	$	195,700
Stock-based Compensation Expense		—	—		—	—		—		4,713	—		—		—		—		4,713
Treasury Stock Purchases for Restricted Stock Vests		—	—		—	—		—		—	25		(816)		—		—		(816)
Issuance of Common Shares upon Stock Option and ESPP Exercise		—	—		—	12		—		337	—		—		—		—		337
Issuance of Restricted Stock Awards		—	—		—	457		—		—	—		—		—		—		—
Restricted Stock Awards Forfeitures		—	—		—	(73)		—		(1)	(21)		—		—		—		(1)
Other comprehensive income		—	—		—	—		—		—	—		—		6,004		—		6,004
Net Loss		—	—		—	—		—		—	—		—		—		(14,020)		(14,020)
Balance, June 30, 2021	$	—	—	$	1	12,826	$	—	$	219,403	80	$	(3,062)	$	(5,433)	$	(18,992)	$	191,917

Balance, December 31, 2021	$	24,850	25	$	1	16,913	$	—	$	387,844	83	$	(3,135)	$	(3,055)	$	(47,765)	$	358,740
Stock-based Compensation Expense		—	—		—	—		—		6,993	—		—		—		—		6,993
Treasury Stock Purchases for Restricted Stock Vests		—	—		—	—		—		—	56		(1,601)		—		—		(1,601)
Issuance of Common Shares upon Stock Option and ESPP Exercise		—	—		—	8		—		206	—		—		—		—		206
Issuance of Restricted Stock Awards		—	—		—	669		—		—	—		—		—		—		—
Restricted Stock Awards Forfeitures		—	—		—	(24)		—		—	—		—		—		—		—
Dividends on Convertible Preferred Stock		—	—		—	—		—		—	—		—		—		(812)		(812)
Other comprehensive income		—	—