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What changed in ANI PHARMACEUTICALS INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ANI PHARMACEUTICALS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+838 added−468 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-29)

Top changes in ANI PHARMACEUTICALS INC's 2024 10-K

838 paragraphs added · 468 removed · 341 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

86 edited+145 added−17 removed60 unchanged
Biggest changeWe have acquired the NDAs for and market Atacand, Atacand HCT, Arimidex, Casodex, Lithobid, Vancocin, Inderal LA, Inderal XL, InnoPran XL, Oxistat, Veregen, and Pandel. We are innovating in our go-to-market strategy through creative partnerships. Generic Product Development Considerations We consider a variety of criteria in determining which products to develop. These criteria include: • Formulation Complexity.
Biggest changeWe expect to share the preliminary topline results of the SYNCHRONICITY clinical trial data in the first half of 2025. Brands We have grown our brands portfolio of product offerings through acquisition. We have acquired the NDAs for and market Atacand, Atacand HCT, Arimidex, Casodex, Lithobid, Vancocin, Inderal LA, Inderal XL, InnoPran XL, Oxistat, and Veregen.
While we continue to execute against our strategic initiatives that we believe will result in long-term, sustainable growth and value to our stockholders, we continue to evaluate potential acquisitions and other strategic transactions of businesses that we believe complement our existing portfolio, infrastructure and capabilities or provide us with the opportunity to expand our existing capabilities.
While we execute against our strategic initiatives that we believe will result in the long-term, sustainable growth and value to our stockholders, we continue to evaluate potential acquisitions and other strategic transactions of businesses that we believe complement our existing portfolio, infrastructure and capabilities or provide us with the opportunity to expand our existing capabilities.
Our Novitium subsidiary has developed a strong track record of obtaining CGT approvals and we expect to continue to develop generic drugs under the CGT pathway. Products Products A complete list of our generic and branded pharmaceutical products and descriptions is posted on our website, www.anipharmaceuticals.com.
Our Novitium subsidiary has developed a strong track record of obtaining CGT approvals and we expect to continue to develop generic drugs under the CGT pathway. Products A complete list of our generic and branded pharmaceutical products and descriptions is posted on our website, www.anipharmaceuticals.com.
Also, if the NDA is a new chemical entity (“NCE”), the FDA may not approve an ANDA for a generic product for up to five years following approval of the NDA for the NCE.
Also, if the NDA drug is a new chemical entity (“NCE”), the FDA may not approve an ANDA for a generic product for up to five years following approval of the NDA for the NCE.
Our development and manufacturing capabilities enable us to manufacture pharmaceuticals that are differentiated and include high potency, modified release, combination, and hormonal products. This ability to manufacture a variety of differentiated products is a competitive strength that we intend to leverage in selecting products to develop and commercialize. • Market Size.
Our development and manufacturing capabilities enable us to manufacture pharmaceuticals that are differentiated and include high potency, modified release, combination, and hormonal products. This ability to manufacture a variety of differentiated products is a competitive strength that we intend to leverage in selecting products to develop and commercialize. • Market Size and Patient Need .
Manufacturers must adhere to strict guidelines when promoting their products; all statements regarding a product must be consistent with its approved labeling and truthful in nature. Additionally, manufacturers may only promote their product for approved indications outlined by the FDA.
Manufacturers must adhere to strict guidelines when promoting their products; all statements regarding a product must be consistent with its approved labeling and truthful and non-misleading in nature. Additionally, manufacturers may only promote their product for approved indications outlined by the FDA.
As a result, we are dependent upon the DEA to approve quotas large enough to support our continued manufacture of our controlled substances at commercial level. See “Risk Factors ― We are entirely dependent on periodic approval by the DEA for the supply of the API needed to manufacture our controlled substances.
As a result, we are dependent upon the DEA to approve quotas large enough to support our continued manufacture of our controlled substances at commercial levels. See “Risk Factors ― We are entirely dependent on periodic approval by the DEA for the supply of the API needed to manufacture our controlled substances.
Manufacturing, Suppliers, and Raw Materials We require a supply of quality raw materials, including API, and components to manufacture and package our pharmaceutical products. In order to manufacture certain of our products deemed controlled substances, we must submit a request to the DEA for a quota to purchase the amount of API needed for manufacture.
We require a supply of quality raw materials, including API, and components to manufacture and package our pharmaceutical products. In order to manufacture certain of our products deemed controlled substances, we must submit a request to the DEA for a quota to purchase the amount of API needed for manufacture.
Under the new program, manufacturers will provide a 10 percent discount off the negotiated price for applicable drugs (branded drugs and biologics manufactured by companies that have Part D discount agreements) after the deductible is satisfied through the catastrophic phase of the benefit. In the catastrophic phase, manufacturers will provide a 20 percent discount off negotiated price.
Under the new program, manufacturers will provide a 10% discount off the negotiated price for applicable drugs (branded drugs and biologics manufactured by companies that have Part D discount agreements) after the deductible is satisfied through the initial coverage phase of the benefit. In the catastrophic phase, manufacturers will provide a 20% discount off negotiated price.
In addition, we are subject to strict regulation by the DEA and are subject to sanctions if we are unable to comply with related regulatory requirements.” Unapproved Products Three of our products, EEMT, Opium Tincture, and Thyroid Tablets, are marketed without approved NDAs or ANDAs.
In addition, we are subject to strict regulation by the DEA and are subject to sanctions if we are unable to comply with related regulatory requirements.” Unapproved Products Four of our products, EEMT, Opium Tincture, Thyroid Tablets, and Hyoscyamine, are marketed without approved NDAs or ANDAs.
See “Risk Factors – Three products, which together comprised less than 10% of our total revenue in 2023, are marketed without approved NDAs or ANDAs and we can offer no assurances that the FDA will not require us to either seek approval for these products or withdraw them from the market.
See “Risk Factors – Four products, which together comprised less than 10% of our total revenue in 2024, are marketed without approved NDAs or ANDAs and we can offer no assurances that the FDA will not require us to either seek approval for these products or withdraw them from the market.
These include registering the manufacturing establishment and listing the product with the FDA, reporting and keeping records of any adverse reactions or production problems, providing updated safety and efficacy information to the agency, and complying with advertising and promotional labeling regulations.
These include registering the manufacturing establishment and listing the product with the FDA, reporting and keeping records of any adverse reactions or production problems, providing updated safety and efficacy information to the agency, drug shortage and manufacturing volume reporting, and complying with advertising and promotional labeling regulations.
In the rare disease business there is a limited distribution network and a select group of specialty pharmacies which can dispense product to appropriate patients. We contract and engage with the largest health insurance payers across the appropriate channels and classes of trade.
In the Rare Disease business, specifically for Cortrophin Gel, there is a limited distribution network and a select group of specialty pharmacies which can dispense product to appropriate patients. We contract and engage with the largest health insurance payers across the appropriate channels and classes of trade.
In May 2023, through a public offering, the Company completed the issuance and sale of 2,183,545 shares of ANI common stock, resul ting in net proceeds after issuance costs of $80.6 million. We have a commercial portfo lio of 116 pro ducts with a wide variety of indications and a robust portfolio of pipeline products as of December 31, 2023.
In May 2023, through a public offering, the Company completed the issuance and sale of 2,183,545 shares of ANI common stock, resulting in net proceeds after issuance costs of $80.6 million. We have a commercial portfo lio of 125 pro ducts with a wide variety of indications and a robust portfolio of pipeline products as of December 31, 2024.
Branded and Generic Pharmaceutical Products All prescription pharmaceutical products distributed in the U.S., whether branded or generic, must be approved by the FDA. All applications for FDA approval must contain information relating to product formulation, raw material suppliers, stability, manufacturing processes, packaging, labeling, and quality control.
Branded and Generic Pharmaceutical Products The Drug Approval Process Generally, prescription pharmaceutical products distributed in the U.S., whether branded or generic, must be approved by the FDA. All applications for FDA approval must contain information relating to product formulation, raw material suppliers, analytical testing, stability, manufacturing processes, packaging, labeling, and quality control.
Generally, we qualify only a single source of API for use in each product due to the cost and time required to validate and qualify a second source of supply. Any change in one of our API suppliers must usually be approved through a Prior Approval Supplement (“PAS”) by the FDA.
Generally, we qualify only a single source of API for use in each product due to the cost and time required to validate and qualify a second source of supply. Any change in one of our API suppliers must usually be approved through a PAS by the FDA.
The Company has ceased operations at our subsidiary in Oakville, Ontario, Canada as of March 31, 2023. This action was part of ongoing initiatives to capture operational synergies following our acquisition of Novitium Pharma LLC (“Novitium”) in November 2021.
The Company has ceased operations at our subsidiary in Oakville, Ontario, Canada as of March 31, 2023, and the building was ultimately sold in March 2024. This action was part of ongoing initiatives to capture operational synergies following our acquisition of Novitium Pharma LLC (“Novitium”) in November 2021.
We have begun to increase our focus on niche lower competition opportunities such as injectables, Paragraph IV, and competitive generic therapy ("CGT") designation filings. Additionally, we will continue to seek opportunities to enhance our capabilities through strategic partnerships and acquisitions of assets and businesses.
We have begun to increase our focus on niche lower competition opportunities such as injectables, Paragraph IV, and competitive generic therapy (“CGT”) designation filings. Additionally, we will continue to seek opportunities to enhance our capab ilities through strategic partnerships and acquisitions of assets and businesses.
We support flexible and remote working arrangements throughout the business. 12 Table of Contents Health and Safety Management and Training We are committed to the safety and health of our employees, patient-customers, and the public. It is critical within our mission to ensure we keep our employees and customers safe while accomplishing our business goals.
We support flexible and remote working arrangements throughout the business, as we are able. Health and Safety Management and Training We are committed to the safety and health of our employees, patient-customers, and the public. It is critical within our mission to ensure we keep our employees and customers safe while accomplishing our business goals.
Our manufacturing facilities provide a means of entering niche markets, such as hormone therapies, in which fewer generic companies typically compete. 4 Table of Contents Competitive Generic Therapy The FDA Reauthorization Act of 2017 (“FDARA”) created a new pathway by which FDA may, at the request of the applicant, designate a drug with “inadequate generic competition” as a competitive generic therapy (“CGT”).
Our manufacturing facilities provide a means of entering niche markets, such as hormone therapies, in which fewer generic companies typically compete. 7 Ta b l e of Contents Competitive Generic Therapy The FDA Reauthorization Act of 2017 (“FDARA”) created a new pathway by which the FDA may, at the request of the applicant, designate a drug with “inadequate generic competition” as a competitive generic therapy (“CGT”).
Physicians may prescribe drugs or biologics off-label but manufacturers cannot promote such uses unless they have been previously authorized by the FDA. All claims made about a product should also be adequately substantiated with evidence of both benefits and risks associated with use in order to ensure fair balance between them.
All claims made about a product should also be adequately substantiated with evidence of both benefits and risks associated with use in order to ensure fair balance between them. 11 Ta b l e of Contents Physicians may prescribe drugs off-label but manufacturers cannot promote such uses unless they have been previously authorized by the FDA.
In addition, the number of retail market chains and, in particular, the number of independent drug stores and small chains, has decreased as retail consolidation has occurred, also increasing the concentration of our retail custom ers. As a result of this trend toward consolidation, a smaller number of companies each control a larger share of pharmaceutical distribution channels.
In addition, the number of retail market chains and, in particular, the number of independent drug stores and small chains, has decreased as retail consolidation has occurred, also increasing the conce ntration of our retail customers. As a result of this trend toward consolidation, a smaller number of companies each control a larger share of pharmaceutical distribution channels.
However, our business is not dependent upon any single trademark. Trademark protection continues in some countries as long as used, and in other countries, as long as registered. Registration is for fixed terms and may be renewed indefinitely. We believe that sales of our branded products have benefited and will continue to benefit from the value of the product name.
Trademark protection continues in some countries as long as used, and in other countries, as long as registered. Registration is for fixed terms and may be renewed indefinitely. We believe that sales of our branded products have benefited and will continue to benefit from the value of the product name.
We plan to continue to expand our rare disease business through a combination of organic growth, as described above, and through acquisition.
We plan to continue to expand our Rare Disease business, through a combination of organic growth and acquisition.
Copies of our SEC filings or corporate governance materials are available without charge upon written request to Investor Relations, c/o ANI Pharmaceuticals, Inc., 210 Main Street West, Baudette, Minnesota, 56623.
Copies of our SEC filings or corporate governance materials are available without charge upon written request to Investor Relations, c/o ANI Pharmaceuticals, Inc., 210 Main Street West, Baudette, Minnesota, 56623. 21 Ta b l e of Contents
We also establish active working relationships with each of our customers, continually gather important market information in order to respond successfully to requests for proposals, maintain sufficient inventories to assure high service levels, and work to reduce product costs by sourcing and qualifying alternative suppliers whenever possible.
To compete effectively, we seek to consistently produce high-quality, reliable, and effective products. We also establish active working relationships with each of our customers, continually gather important market information in order to respond successfully to requests for proposals, maintain sufficient inventories to assure high service levels, and work to reduce product costs by sourcing and qualifying alternative suppliers whenever possible.
We acquired the NDAs for Cortrophin Gel and Cortrophin-Zinc in January 2016 and executed long-term supply agreements with a supplier of our primary raw material for corticotrophin API, a supplier of corticotrophin API with whom we have advanced the manufacture of commercial scale batches of API, and a Cortrophin Gel fill/finish contract manufacturer.
Purified Cortrophin ® Gel We acquired the NDAs for Purified Cortrophin® Gel (Repository Corticotropin Injection USP) (“Cortrophin Gel”) and Cortrophin-Zinc TM in January 2016 and executed long-term supply agreements with a supplier of our primary raw material for corticotrophin API, a supplier of corticotrophin API with whom we have advanced the manufacture of commercial scale batches of API, and a Cortrophin Gel fill/finish contract manufacturer.
If an NDA is not an NCE, but the holder of the NDA conducted clinical trials essential to approval of the NDA or a supplement thereto, the FDA may not approve a generic equivalent to the NDA for three years.
If an NDA drug is not an NCE, but the holder of the NDA conducted or sponsored clinical trials (that are not bioequivalence studies) essential to approval of the NDA or a supplement thereto, the FDA may not approve a generic equivalent to the NDA drug for three years.
We occasionally use a small number of part-time and consultant resources to meet our operational needs a nd our turnover is in line with similar businesses in our industry and locations. Our Purpose and Core Values Our human capital management strategy is guided by our purpose and core values. Our purpose is Serving Patients, Improving Lives.
We also utilize agency resources as well as a small number of part-time and consultant resources to meet our operational needs and our turnover is in line with similar businesses in our industry and locations. Our Purpose and Core Values Our human capital management strategy is guided by our purpose and core values. Our purpose is Serving Patients, Improving Lives.
The Drug Supply Chain Security Act (“DSCSA”) requires manufacturers and their trading partners, such as repackagers, wholesale distributors, dispensers, and third-party logistics providers, to implement product tracking and tracing technology at the package level to identify and trace certain prescription drugs as they are distributed in the United States. ANI started manufacturing serialization-compliant products in November 2018.
The Drug Supply Chain Security Act (“DSCSA”) requires manufacturers and their trading partners, such as repackagers, wholesale distributors, dispensers, and third-party logistics providers, to implement interoperable electronic product tracking and tracing technology at the package level to identify and trace certain prescription drugs as they are distributed in the United States.
For the year ended December 31, 2023, approximately 70% of our net revenues were attributable to four customers. For the years ended December 31, 2022 and 2021, three customers, togeth er accounted for approximately 59% and 68% of our ne t revenues, respectively. In addition, as noted below, our customers also distribute our products.
For the years ended December 31, 2024 and 2023, approximately 64% and 70% of our net revenues were attributable to four customers, respectively. For the year ended December 31, 2022, three customers accounted for approximately 59% of our net revenues. In addition, as noted below, our customers also distribute our products.
Product Liability Product liability litigation represents an inherent risk to all firms in the pharmaceutical industry. We utilize traditional third-party insu rance policies with regard to our product liability claims. Such insurance coverage at any given time reflects current market conditions, including cost and availability, when the policy is written.
We utilize traditional third-party insu rance policies with regard to our product liability claims. Such insurance coverage at any given time reflects current market conditions, including cost and availability, when the policy is written.
Medicare is run by the federal government and is largely focused on the elderly and disabled. The Medicare Modernization Act of 2003 (“MMA”) created Medicare Part D to provide voluntary prescription drug coverage for Medicare beneficiaries. The MMA has increased coverage of pharmaceuticals, which has benefited the pharmaceutical industry for both brands and generic drugs.
The Medicare Modernization Act of 2003 (“MMA”) created Medicare Part D to provide voluntary prescription drug coverage for Medicare beneficiaries. The MMA has increased coverage of pharmaceuticals, which has benefited the pharmaceutical industry for both brands and generic drugs.
On October 29, 2021, the FDA approved the Company’s sNDA for Purified Cortrophin Gel (Repository Corticotropin Injection USP) for the treatment of certain chronic autoimmune disorders, including acute exacerbations of multiple sclerosis (“MS”) and rheumatoid arthritis (“RA”), in addition to excess urinary protein due to nephrotic syndrome.
On October 29, 2021, the FDA approved the Company’s Supplemental New Drug Application ("sNDA") for Cortrophin Gel for the treatment of certain chronic autoimmune disorders, including acute exacerbations of multiple sclerosis (“MS”) and rheumatoid arthritis (“RA”), in addition to excess urinary protein due to nephrotic syndrome. Cortrophin Gel is an adrenocorticotropic hormone (“ACTH”), also known as purified corticotropin.
See “Management’s Discussion and Analysis of Results of Operations and Financial Condition—Critical Accounting Estimates” for a discussion of our accruals for chargebacks, rebates, returns, and other allowances. 10 Table of Contents Sales, Marketing, and Distribution We market, sell, and distribute our products in the United States. Our products are distributed through the following channels: • Wholesalers .
See “Management’s Discussion and Analysis of Results of Operations and Financial Condition—Critical Accounting Estimates” for a discussion of our accruals for chargebacks, rebates, returns, and other allowances. 18 Ta b l e of Contents Sales, Marketing, and Distribution We market, sell, and distribute our products in the United States and internationally.
If a manufacturer of a selected drug does not negotiate a Maximum Fair Price ("MFP")v with the CMS, the manufacturer must pay an excise tax of 65 to 95 percent of Medicare utilization based on the prior year.
If a manufacturer of a selected drug does not negotiate a Maximum Fair Price (“MFP”) with the CMS, the manufacturer must pay an excise tax of 65 to 95% of Medicare utilization based on the prior year or withdraw all manufacturer drug products from coverage under Medicare and Medicaid.
The Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”) provides that generic drugs may enter the market after the approval of an ANDA, which requires (1) that bioequivalence to the branded product be demonstrated through clinical studies, and (2) either the expiration, invalidation or circumvention of any patents or the end of any other relevant market exclusivity periods related to the branded drug.
The ANDA process, however, typically requires one or more bioequivalence studies to show that the ANDA drug is bioequivalent to the previously approved reference listed drug (“RLD”). 9 Ta b l e of Contents The Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”) provides that generic drugs may enter the market after the approval of an ANDA, which requires (1) that bioequivalence to the branded product be demonstrated through clinical studies or in vitro studies, or be self-evident, and (2) either the expiration, invalidation or circumvention of any patents or the end of any other relevant market exclusivity periods related to the branded drug.
Its focus is on low-income populations. State drug coverage policies under Medicaid may vary significantly state by state.
Medicaid is administered by the states and jointly funded by the federal and state governments. Its focus is on low-income populations. State drug coverage policies under Medicaid may vary significantly state by state.
Information to support the bioequivalence of generic drug products or the safety and effectiveness of new drug products for their intended use is also required to be submitted.
Information and data to support the bioequivalence of generic drug products or the safety and effectiveness of new drug products for their intended use is also required to be submitted. There are generally two types of applications used for obtaining FDA approval of new products.
Inflation rebates are accruing on Medicare Part D utilization from October 1, 2022 and on Medicare Part B utilization of drugs from January 1, 2023 forward though the CMS has deferred collection of such rebates until 2025. Most of our products are covered by Medicaid and Medicare.
Inflation rebates are accruing on Medicare Part D utilization from October 1, 2022 and on Medicare Part B utilization of drugs from January 1, 2023 forward though the CMS has deferred collection of such rebates until 2025. Payment or reimbursement of prescription therapeutics by Medicaid or Medicare requires manufacturers to submit certified pricing information to CMS.
Of note, beginning January 1, 2025 the IRA alters the current structure of the Medicare Part D standard benefit by eliminating the coverage gap. The IRA reduces a beneficiary’s out-of-pocket maximum to $2,000 beginning in 2025. The existing coverage gap discount program for pharmaceutical manufacturers will be replaced by a new manufacturer discount program effective in 2025.
The IRA reduces a beneficiary’s out-of-pocket maximum to $2,000 beginning in 2025. The existing coverage gap discount program for pharmaceutical manufacturers has been replaced by a new manufacturer discount program effective in January 2025.
In addition, the FDA conducts pre-approval and post-approval reviews and plant inspections to determine whether our systems and processes are in compliance with cGMP and other FDA regulations. Our suppliers are subject to similar regulations and periodic inspections. Post-approval Requirements After FDA approval of an NDA or ANDA product is obtained, there are many post-approval requirements that must be met.
In addition, the FDA conducts drug pre-approval and post-approval reviews and plant inspections to determine whether our systems and processes are in compliance with NDA and ANDA specifications, cGMP and other FDA regulations. Our suppliers are subject to similar regulations and periodic inspections.
We recognize and reward employee performance, productivity, and alignment with ANI’s Core Values. We believe that a holistic rewards strategy should also go beyond compensation and benefits to consider elements such as wellness and recognition.
We pay fair and competitive salaries, short-term incentives, and long-term incentives that are informed by external market rates and internal equity. We recognize and reward employee performance, productivity, and alignment with ANI’s Core Values. We believe that a holistic rewards strategy should also go beyond compensation and benefits to consider elements such as wellness, recognition, and purpose.
As a result, we must consistently monitor and comply with these changes. Our facilities, procedures, operations, and testing of products are subject to periodic inspection by the FDA, the DEA, and other authorities.
The requirements for FDA approval encompass all aspects of the production process, including validation and recordkeeping, the standards around which are continuously changing and evolving. As a result, we must consistently monitor and comply with these changes. Our facilities, procedures, operations, and testing of products are subject to periodic inspection by the FDA, the DEA, and other authorities.
At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
Any determination that we have failed to comply with those obligations could subject us to penalties and sanctions, and we could be subject to federal or state false claims litigation. 16 Ta b l e of Contents At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
Strengthening our Generics, Established Brands, and Other segment through continued investment in our generic research and development capability and increased focus on niche opportunities We have grown our generics business through a combination of market share gains on existing products and new product launches. We have also successfully acquired numerous ANDAs through business and asset acquisitions.
We are innovating in our go-to-market strategy through creative partnerships and a sales force for these products. Strengthening our Generics and Other segment through continued investment in our generic research and development capability and increased focus on niche opportunities We have grown our generics business through a combination of market share gains on existing products and new product launches.
We expect that additional state and federal health care reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments and/or third party payors or purchasing customers in certain states pay for health care products and services, which could result in reduced demand for our product candidates or additional pricing pressures. 9 Table of Contents Patents, Trademarks, and Licenses We own the trademark names for most of our branded products, including Apexicon, Cortenema, Purified Cortrophin Gel, Cortrophin-Zinc, Inderal LA, Inderal XL, InnoPran XL, Lithobid, Reglan, Vancocin, and Veregen.
We expect that additional state and federal health care reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments and/or third party payors or purchasing customers in certain states pay for health care products and services, which could result in reduced demand for our product candidates or additional pricing pressures.
However, beginning January 1, 2024 pursuant to the American Rescue Plan of 2021 Medicaid rebates will no longer be capped at average manufacturer price. As a result we could end up paying substantially higher Medicaid rebates on certain products. Furthermore, in a Proposed Rule released in May 2023 CMS proposed changing how “best price” is determined.
However, beginning January 1, 2024 pursuant to the American Rescue Plan of 2021, Medicaid rebates will no longer be capped at average manufacturer price. As a result we could end up paying substantially higher Medicaid rebates on certain products. Medicare is run by the federal government and is largely focused on the elderly and disabled.
The Inflation Reduction Act of 2022 ("IRA"), was signed into law by President Biden on August 16, 2022. The IRA brings sweeping changes to Medicare coverage and reimbursement for prescription drugs that could negatively impact us and other pharmaceutical manufacturers.
The IRA was signed into law on August 16, 2022. The IRA brings sweeping changes to Medicare coverage and reimbursement for prescription drugs that could negatively impact us and other pharmaceutical manufacturers. Of note, beginning January 1, 2025, the IRA alters the current structure of the Medicare Part D standard benefit by eliminating the coverage gap.
Nevertheless, we compete with numerous other pharmaceutical companies, including large, global pharmaceutical manufacturers capable of addressing these complexities and hurdles with respect to products that we currently produce and products that are in our pipeline. In addition, our products are subject to competition from other generic products and non-prescription alternative therapies.
Competition Certain of our products face limited competition due to complexities in formulation, active pharmaceutical ingredient sourcing, materials handling and manufacturing, and regulatory hurdles. Nevertheless, we compete with numerous other pharmaceutical companies, including large, global pharmaceutical manufacturers capable of addressing these complexities and hurdles with respect to products that we currently produce and products that are in our pipeline.
See "Risk Factors ― We are subject to federal, state, and local laws and regulations, and complying with these may cause us to incur significant additional costs." Controlled Substances The DEA regulates certain drug products containing controlled substances, pursuant to the U.S. Controlled Substances Act (“CSA”). Certain of our products contain significant components that are classified as controlled substances.
See “Risk Factors ― We may become subject to federal and state false claims litigation brought by private individuals and the government.” Controlled Substances The DEA regulates certain drug products containing controlled substances, pursuant to the U.S. Controlled Substances Act (“CSA”). Certain of our products contain significant components that are classified as controlled substances.
On October 2, 2023, we announced FDA approval and commercial availability of a 1-mLvial of Cortrophin Gel, appropriate for adjunctive treatment of certain patients with acute gouty arthritis flares. We continued to invest in our Rare Disease team and support investments in Cortrophin Gel during 2023.
On October 2, 2023, we announced FDA approval and commercial availability of a 1-mLvial of Cortrophin Gel, appropriate for adjunctive treatment of certain patients with acute gouty arthritis flares. During the first quarter of 2024, ANI launched a targeted ophthalmology-focused sales force for Cortrophin Gel.
Item 1. Business ANI Pharmaceuticals, Inc. and its consolidated subsidiaries (together, “ANI,” the “Company,” “we,” “us,” or “our”) is a diversified bio-pharmaceutical company serving patients in need by developing, manufacturing, and marketing high quality branded and generic prescription pharmaceuticals, including for diseases with high unmet medical need.
Item 1. Business ANI Pharmaceuticals, Inc. and its consolidated subsidiaries (together, “ANI,” the “Company,” “we,” “us,” or “our”) is a diversified bio-pharmaceutical company committed to its mission of “Serving Patients, Improving Lives” by developing, manufacturing, and commercializing innovative and high-quality therapeutics.
If competitors introduce new products with therapeutic or cost advantages, our products can be subject to progressive price reductions and/or decreased volume of sales. 11 Table of Contents Principal competitors for the pharmaceutical market in which we do business include, but are not limited to, Amneal Pharmaceuticals, Inc., Apotex Inc., Aurobindo Pharma, Camber Pharmaceuticals Inc., Hikma Pharmaceuticals plc, Lupin Pharmaceuticals, Inc., Mallinckrodt Pharmaceuticals, Rising Pharmaceuticals, Inc., Strides Pharma Inc., Sun Pharmaceutical Industries Ltd., Teva Pharmaceuticals USA, Inc., Viatris Inc., and Zydus Pharmaceuticals USA.
Principal competitors for the Generic pharmaceutical markets in which we do business include, but are not limited to: • Amneal Pharmaceuticals, Inc., Apotex Inc., Aurobindo Pharma, Camber Pharmaceuticals Inc., Hikma Pharmaceuticals plc, Lupin Pharmaceuticals, Inc., Rising Pharmaceuticals, Inc., Strides Pharma Inc., Sun Pharmaceutical Industries Ltd., Teva Pharmaceuticals USA, Inc., Viatris Inc., and Zydus Pharmaceuticals USA.
In December 2022, we formed the ANI Rare Disease Patient Assistance Program, Inc. (“ANI PAP”) for the purpose of providing certain medicine for free to patients in the United States who do not have prescription drug or health insurance coverage and who, without assistance, cannot afford their medicine.
(“ANI PAP”) for the purpose of providing certain medicine for free to patients in the United States who do not have prescription drug or health insurance coverage and who, without assistance, cannot afford their medicine. In addition, ANI has provided patient-related financial support to nonprofit organizations that are aligned with ANI’s mission to address unmet needs.
When determining whether to develop or acquire an individual product, we review the current and expected market size for that product. and competitive environment. We endeavor to pursue products with sufficient market size to enable us to enter the market with a strong likelihood of being able to price our products both competitively and at a profit. • Profit Potential.
We endeavor to pursue products with sufficient market size to enable us to enter the market with a strong likelihood of serving patients in need and thus being able to price our products both competitively and at a profit. • Profit Potential.
There are generally two types of applications used for obtaining FDA approval of new products: New Drug Application (“NDA”) —An NDA is filed when approval is sought to market a newly developed branded product and, in certain instances, for a new dosage form, a new delivery system, or a new indication for an approved drug. 5 Table of Contents Abbreviated New Drug Application (“ANDA”) —An ANDA is filed when approval is sought to market a generic equivalent of a drug approved under an NDA.
An NDA is filed with the FDA when approval is sought to market a newly developed branded product and, in certain instances, for a new dosage form, a new delivery system, or a new indication for an approved drug.
Further, patent protection and market exclusivity for these branded products have expired, with the exception of the Veregen product, which has three patents. One patent expired in 2022 and the remaining two patents expire in 2025 and 2026. T herefore, we consider the trademark names to be of material value and we act to protect these rights from infringement.
One patent expired in 2022 and the remaining two patents expire in 2025 and 2026. T herefore, we consider the trademark names to be of material value and we act to protect these rights from infringement. However, our business is not dependent upon any single trademark.
Consistent with industry practice, we maintain a return policy that allows customers to return product within a specified period prior to and subsequent to the expiration date. Generally, product may be returned for a period beginning six months prior to its expiration date to up to one year after its expiration date.
Generally, product may be returned for a period beginning six months prior to its expiration date to up to one year after its expiration date.
We currently participate in the Opioid Analgesic REMS for our Oxycodone Hydrochloride Oral Solution, Oxycodone Capsules and Levorphanol Tartrate Tablets commercial products. 6 Table of Contents The FDA regulates the marketing, labeling, advertising, and promotion of products that are placed on the market.
We currently participate in the Opioid Analgesic REMS for our Oxycodone Hydrochloride Oral Solution, Oxycodone Capsules and Levorphanol Tartrate Tablets commercial products, among others.
Any pharmaceutical product marketed under an NDA, regardless of whether the product is marketed as a “generic,” is subject to the manufacturer discount requirement.
Any pharmaceutical product marketed under an NDA, regardless of whether the product is marketed as a “generic,” is subject to the manufacturer discount requirement. We currently expect that this will increase discounts due on Medicare Part D utilization of our drug products.
This portfolio is the result of internal research and development, acquisitions of businesses, acquisitions of Abbreviated New Drug Applications (“ANDAs”), New Drug Applications (“NDAs”), product rights, and entry into agreements to obtain the distribution rights for various products..
This portfolio is the result of internal research and development, acquisitions of businesses, acquisitions of Abbreviated New Drug Applications (“ANDAs”), New Drug Applications (“NDAs”), product rights, and entry into agreements to obtain the distribution rights for various products. 4 Ta b l e of Contents Strategy Our objective is to build a sustainable and growing biopharmaceutical company serving patients in need and creating long-term value for our investors.
We also recently acquired certain patents and patent applications relating to baclofen and a patent was granted on our hydrochlorothiazide product. Distribution Agreements In addition to selling products under our own NDAs and ANDAs, we enter into marketing and distribution agreements with third parties in which we sell products under ANDAs or NDAs owned or licensed by these third parties.
Distribution Agreements In addition to selling products under our own NDAs and ANDAs, we enter into marketing and distribution agreements with third parties in which we sell products under ANDAs or NDAs owned or licensed by these third parties. These products are sold under our own label. Customers O ur customers purchase and distribute our products.
In recent years, the wholesale distributor network for pharmaceutical products has been subject to increasing consolidation, which has increased the concentration of our wholesale customers.
Our customers include major national wholesalers. Our products are sold by major retail pharmacy chains, distributors, national mail order houses, as well as group purchasing organizations. In recent years, the wholesale distributor network for pharmaceutical products has been subject to increasing consolidation, which has increased the concentration of our wholesale customers.
Total Rewards ANI’s Total Rewards Philosophy is grounded in pay for performance and seeks to provide compensation and benefits that are competitive within the pharmaceuticals industry, as well as competitive with local employers for jobs of a cross-industry nature. We pay fair and competitive salaries, short-term incentives, and long-term incentives that are informed by external market rates and internal equity.
Our charitable contributions support initiatives and programs that advance medical care or patient care within the Company's therapeutic areas of focus. Total Rewards ANI’s Total Rewards Philosophy is grounded in pay for performance and seeks to provide compensation and benefits that are competitive within the pharmaceuticals industry, as well as competitive with local employers for jobs of a cross-industry nature.
Our most recent business acquisition was Novitium, including its portfolio of commercial and pipeline generic products, manufacturing and development facilities and expert workforce. The Novitium acquisition significantly increased our generic pharmaceutical research and development and manufacturing capabilities.
We have also successfully acquired numerous ANDAs through business and asset acquisitions. Our acquisition of Novitium in 2021 included its portfolio of commercial and pipeline generic products, manufacturing and development facilities and expert workforce. The Novitium acquisition significantly increased our generic pharmaceutical research and development and manufacturing capabiliti es.
We license the trademark names for Atacand, Atacand HCT, Arimidex, Casodex, Oxistat, and Pandel. With the exception of a license for patent technology for Inderal XL, InnoPran XL, and Veregen, we do not license any patents associated with these products.
With the exception of a license for patent technology for Inderal XL, InnoPran XL, and Veregen, we do not license any patents associated with these products. Further, patent protection and market exclusivity for some of these branded products have expired, with the exception of the Veregen product, which has three patents.
Certain other periods of exclusivity may be available if the branded drug is indicated for treatment of a rare disease or is studied for pediatric indications.
Certain other periods of exclusivity may be available if the branded drug is indicated for treatment of a rare disease, is an antibiotic, or is studied for pediatric indications. In order to obtain FDA approval of NDAs and ANDAs, our manufacturing procedures and operations must conform to FDA requirements and guidelines, generally referred to as cGMP.
We conduct business with the three major wholesalers in the United States: Cencora, Inc., Cardinal Health, and McKesson. • Retail Market Chains . We conduct business with all the major retail chains in the United States which includes CVS, Rite Aid, Kroger, Walmart, and Walgreens. • Distributors and Mail Order Pharmacies .
Our products are distributed through the following channels: • Wholesalers . We conduct business with the three major wholesalers in the United States: Cencora, Inc., Cardinal Health, and McKesson. • Retail Market Chains .
We offer ongoing training and career development to all employees, both through curriculum developed internally, and through external resources (e.g. LinkedIn Learning). Together, we own our culture and participate in ongoing open dialogue as we strive for continued growth. At ANI, we believe that no one should go without medicines that they need.
Together, we own our culture and participate in ongoing open dialogue as we strive for continued growth. At ANI, we believe that no one should go without medicines that they need. In December 2022, we formed the ANI Rare Disease Patient Assistance Program, Inc.
In either case, our business, financial position, and operating results could be materially adversely affected.” 7 Table of Contents Medicaid/Medicare Medicaid and Medicare, both of which are U.S. federal health care programs administered by CMS, are major payors of pharmaceutical products, including those we produce. Medicaid is administered by the states and jointly funded by the federal and state governments.
In addition, it is possible that there will be further legislation or regulation that could harm the business, financial condition and results of operations. 14 Ta b l e of Contents Medicaid/Medicare Medicaid and Medicare, both of which are U.S. federal health care programs administered by CMS, are major payors of pharmaceutical products, including those we produce.
We have contracts with several major distributors and mail order pharmacies in the United States, including Anda, Smith Drug Company, Morris Dickson, CVS Caremark, Centerwell, and ExpressScripts. • Group Purchasing Organizations .
We conduct business with all the major retail chains in the United States which includes CVS, Rite Aid, Kroger, Walmart, and Walgreens. • Distributors and Specialty Pharmacies . We have contracts with several major distributors and specialty pharmacies in the United States, including Anda, Smith Drug Company, Morris Dickson, CVS Caremark, Accredo, OptumRx, and CuraScript.
Human Capital As of January 2024, we have 642 employees, of which 569 are located in the United States, including Puerto Rico, 1 is located in Canada, and 72 are located in India.
Human Capital As of January 2025, we have 897 employees, of which 720 are located in the United States, 112 in India, 28 in the United Kingdom, 18 in Germany, 11 in Portugal, 8 in Ireland, and 1 in Canada.
However, as competitors grow larger through consolidation, so do their resources. Larger competitors may be able to aggressively decrease prices in order to gain market share on certain products and may have resources that would allow them to market their products more effectively to potential customers.
Larger competitors may be able to aggressively decrease prices in order to gain market share on certain products and may have resources that would allow them to market their products more effectively to potential customers. 19 Ta b l e of Contents Our sales can also be impacted by new studies that indicate that a competitor’s product has greater efficacy than one of our products.
This could increase discounts due on Medicare Part D utilization of our drug products. 8 Table of Contents In addition to restructuring the Medicare Part D benefit, under the IRA the CMS will negotiate directly with manufacturers the price that Medicare will pay for certain high-cost drugs via establishment of the Drug Price Negotiation Program (or the "Program").
ANI has qualified as a Specified Manufacturer, and is therefore eligible for the specified manufacturer discount phase in for patients covered under the Low Income Subsidy program for applicable drugs marketed as of August 16, 2022. 15 Ta b l e of Contents In addition to restructuring the Medicare Part D benefit, under the IRA, CMS will negotiate directly with manufacturers the price that Medicare will pay for certain high-cost drugs via establishment of the Drug Price Negotiation Program (or the “Program”).
During this timeframe, we hired a significant number of new employees and assembled and trained our Rare Disease field force. On January 24, 2022, we announced the commercial launch of Cortrophin Gel in the U.S as our foundational Rare Disease asset.
On January 24, 2022, we announced the commercial launch of Cortrophin Gel in the U.S. as our foundational Rare Disease asset. Throughout 2023 and 2024, we continued to build and invest in our Rare Disease infrastructure to support growth in new areas of opportunity, such as pulmonology, ophthalmology, and gout in the ACTH market.
Our established brand pharmaceutical products currently face competition from generic products and we expect them to continue to face competition from generic products in the future. In order to launch a generic product, a manufacturer must apply to the FDA for an ANDA showing that the generic product is therapeutically equivalent to the RLD.
In order to launch a generic product, a manufacturer must apply to the FDA for an ANDA showing that the generic product is therapeutically equivalent to the RLD. (See “Government Regulation.”) The primary means of competition among generic drug manufacturers are pricing, contract terms, service levels, and reliability.
Our growth strategy is driven by the following key growth drivers: Building a successful Rare Disease platform We have spent significant time, effort and resources in establishing our Rare Disease platform.
Our overall strategy is enabled by an empowered, collaborative, and purposeful team with high performance-orienta tion that seeks to deliver on our purpose of “Servin g Patients, Improving Lives.” Our strategy is driven by the following key growth drivers: Building a successful Rare Disease and Brands Segment We have spent significant time, effort and resources in establishing and expanding our Rare Disease and Brands segment which consists of Rare Disease and Brands portfolio of products.
During 2022, we completed an asset acquisition of four ANDAs from Oakrum Pharma, including two that were commercial at the time of acquisition. During the second quarter of 2023, we acquired two ANDAs and one pipeline product from the Cha pter 7 Trustee for the estates of Akorn Holding Company and certain of its affiliates.
D uring 2023, we acquired two ANDAs and one pipeline product from the Chapter 7 Trustee for the estates of Akorn Holding Company and certain of its affiliates, acquired an ANDA and registered patents and pending patent applications from Slayback Pharma Limited Liability Company, and acquired additional ANDAs and product rights for two products in the second half of 2023.
As a result, we are subject to extensive and complex rules and regulations, which are subject to revision from time to time. While we have experience with these regulations, there can be no assurance that we will be able to fully comply with all applicable regulations.
While we have experience with these regulations and changes, there can be no assurance that we will be able to fully comply with all applicable regulations or that our past compliance activities will be upheld by government agencies or U.S. Courts in the future.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeNoncompliance by these contract manufacturers or our inability to find qualified contract manufacturers could result in us being unable to commercialize these products; Several of our products are manufactured and/or packaged by third parties, which we cannot control and could result in us being unable to market and distribute products; 13 Table of Contents • We are subject to United States federal and state laws related to healthcare fraud and abuse and health information privacy and security, and the failure to comply with such laws may adversely affect our business; • The continuing trend toward consolidation of customer groups that could result in declines in the sales volume and prices of our products, and increased fees charged by customers; • Pharmaceutical product quality standards are steadily increasing on all products, and if we cannot meet these standards, we may be required to discontinue marketing and/or recall products from the market; • Federal and state false claims litigation brought against us by private individuals and the government could result in civil and criminal penalties, damages, fines and other related actions; • The use of legal, regulatory, and legislative strategies by competitors could result in increased costs to develop and market our products, delay new product introductions and reduce profit potential; • Third-party payer actions may prevent us from effectively marketing our products or cause us to decrease pricing; • Continuing studies of our products could produce results that could have a negative impact on our business; • Healthcare reform legislation could have a material adverse effect on our business, financial position, and operating results; • Barriers in achieving anticipated revenue growth and profitability could have a material adverse effect on our business, financial position, and operating results; • We may not achieve the anticipated benefits from our acquisition of Novitium Pharma LLC (“Novitium”); • The obligations and liabilities of Novitium, some of which may be unanticipated or unknown, may be greater than we have anticipated, which may diminish the value of Novitium to us; • Public health outbreaks, epidemics, or pandemics (such as COVID-19) have adversely affected and may in the future adversely affect our business; • The Food and Drug Administration (“FDA”) does not provide guidance on safety labeling for products that are marketed without approved New Drug Applications (“NDAs”) or Abbreviated New Drug Applications (“ANDAs”), which could increase our potential liability with respect to failure-to-warn claims for these products; • Four of our products are marketed without approved NDAs or ANDAs and we can offer no assurances that the FDA will not require us to either seek approval for these products or withdraw them from the market.
Biggest changeIf these parties do not perform or are non-compliant, it could negatively impact the clinical trial and potential of regulatory approval; further, we may be required to audit or redo previously completed trials or recall already-approved commercial products; • Clinical trials for our products may not generate the outcomes we expect, may take longer or be more costly to complete than we anticipate; • We may be adversely affected by the expiration of patents that protect key aspects of our products in the near- to medium-term; • Inability to protect our intellectual property in the U.S. and foreign countries could negatively affect sales of our branded products; • If we fail to comply with our obligations in the agreements under which we license development or commercialization rights to products or technology from third parties, we could lose license rights that are material to our business; • Our success is largely dependent upon certain key employees, including members of our senior management, the loss of whom could adversely affect our operations; • We rely significantly on information technology and any failure, inadequacy, interruption, or security lapse of that technology could harm our ability to operate the business effectively; • We are involved in and may become involved in legal proceedings from time to time, which may result in substantial losses, government enforcement actions, damage to our business and reputation, and place a strain on our internal resources; • We are susceptible to product liability claims that may not be covered by insurance, which, if successful, could require us to pay substantial sums; • The obligations and liabilities of Alimera, some of which may be unanticipated or unknown, may be greater than we have anticipated, which may diminish the value of Alimera to us; • Our operations in an international market subject us to additional regulatory oversight both in the international market and in the U.S., as well as, social, and political uncertainties, which could cause a material adverse effect on our business, financial position, and operating results; • Our operations, including those resulting from our acquisition of Alimera, and its international operations, will subject us to political and economic risks, increase our exposure to potential liability under anti-corruption, trade protection, tax, and other laws and regulations; 22 Ta b l e of Contents • Future acquisitions and investments could disrupt our business and harm our financial position and operating results; • Pharmaceutical product quality standards are steadily increasing on all products, and if we cannot meet these standards, we may be required to discontinue marketing and/or recall products from the market; • Federal and state false claims litigation brought against us by private individuals and the government could result in civil and criminal penalties, damages, fines and other related actions; • The use of legal, regulatory, and legislative strategies by competitors could result in increased costs to develop and market our products, delay new product introductions and reduce profit potential; • Third-party payer actions may prevent us from effectively marketing our products or cause us to decrease pricing; • Healthcare reform legislation could have a material adverse effect on our business, financial position, and operating results; • Public health outbreaks, epidemics, or pandemics (such as COVID-19) have adversely affected and may in the future adversely affect our business; • The continuing trend toward consolidation of customer groups could result in declines in the sales volume and prices of our products, and increased fees charged by customers; • The Food and Drug Administration (“FDA”) does not provide guidance on safety labeling for products that are marketed without approved New Drug Applications (“NDAs”) or Abbreviated New Drug Applications (“ANDAs”), which could increase our potential liability with respect to failure-to-warn claims for these products; • Four of our products are marketed without approved NDAs or ANDAs and we can offer no assurances that the FDA will not require us to either seek approval for these products or withdraw them from the market.
In some cases, studies and safety surveillance programs have resulted, and in the future may result, in the one or more of the following: • product label changes including FDA-mandated Black Box warnings; • risk management programs such as patient registries; • reduced product sales due to concerns among patients and physicians; and • discontinuance of product marketing.
In some cases, studies and safety surveillance programs have resulted, and in the future may result, in one or more of the following: • product label changes including FDA-mandated Black Box warnings; • risk management programs such as patient registries; • reduced product sales due to concerns among patients and physicians; and • discontinuance of product marketing.
To the extent that such disruptions result in (i) delays or cancellations of customer orders, (ii) a general decrease in consumer spending on healthcare technology, (iii) our inability to effectively market and distribute our products internationally (iv) our inability to timely engage with and collect payment from our customers or (v) our inability to access capital markets, our business and results of operations could be materially and adversely affected.
To the extent that such disruptions result in (i) delays or cancellations of customer orders, (ii) a general decrease in consumer spending on healthcare technology, (iii) our inability to effectively market and distribute our products internationally (iv) our inability to timely engage with and collect payment from our customers or (v) our inability to access capital markets, our business and results of operations could be materially and adversely affected.
For example, in response to the continued conflict between Russia and Ukraine, the United States has imposed and may further impose, and other countries may additionally impose, broad sanctions or other restrictive actions against governmental and other entities in Russia.
For example, in response to the continued conflict between Russia and Ukraine, the United States has imposed and may further impose, and other countries may additionally impose, broad sanctions or other restrictive actions against governmental and other entities in Russia.
We are unable to predict whether acts of international terrorism or the involvement in a war or other military actions by the United States and/or the countries in which we sell or distribute our products will result in any long-term commercial disruptions or if such involvement or responses will have any long-term material adverse effect on our business, results of operations, or financial condition.
We are unable to predict whether acts of international terrorism or the involvement in a war or other military actions by the United States and/or the countries in which we sell or distribute our products will result in any long-term commercial disruptions or if such involvement or responses will have any long-term material adverse effect on our business, results of operations, or financial condition.
The Credit Agreement contains customary covenants that require maintenance of a leverage ratio at or below specified thresholds and restricts our ability to make certain distributions with respect to our capital stock, prepay other debt, make certain investments, encumber our assets, incur additional indebtedness, make capital expenditures, engage in certain business combinations, transfer, lease or dispose of our assets, alter the character of our business in any material respect or undertake various other corporate activities.
The New Credit Agreement contains customary covenants that require maintenance of a leverage ratio at or below specified thresholds and restricts our ability to make certain distributions with respect to our capital stock, prepay other debt, make certain investments, encumber our assets, incur additional indebtedness, make capital expenditures, engage in certain business combinations, transfer, lease or dispose of our assets, alter the character of our business in any material respect or undertake various other corporate activities.
Our ability to refinance any such debt will depend on the capital markets and our financial condition at that time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default under our current or future indebtedness.
Our ability to refinance any such indebtedness will depend on the capital markets and our financial condition at that time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default under our current or future indebtedness.
While these three remaining facilities are sufficient for our current needs, the facilities are highly specialized and any damage to or need for replacement of all or any significant function of our facilities could be very costly and time-consuming and could impair or prohibit production and shipping.
While these three facilities are sufficient for our current needs, the facilities are highly specialized and any damage to or need for replacement of all or any significant function of our facilities could be very costly and time-consuming and could impair or prohibit production and shipping.
Further, we may be required to audit or redo previously completed trials or recall already-approved commercial products. We rely on third parties, such as medical institutions, clinical investigators, and contract laboratories, to assist with our clinical studies.
Further, we may be required to audit or redo previously completed trials or recall already-approved commercial products. We rely on third parties, such as medical institutions, clinical investigators, and contract laboratories, to assist with our clinical trials.
If a manufacturer’s drug is selected for negotiation, the manufacturer must negotiate a Maximum Fair Price with CMS or be liable for an excise tax of 65 to 95 percent of Medicare utilization based on the prior year.
If a manufacturer’s drug is selected for negotiation, the manufacturer must negotiate a Maximum Fair Price with CMS or be liable for an excise tax of 65% to 95% of Medicare utilization based on the prior year.
These strategies include, but are not limited to: • entering into agreements whereby other generic companies will begin to market an authorized generic, a generic equivalent of a branded product, at the same time generic competition initially enters the market; • launching a generic version of their own branded product at the same time generic competition initially enters the market; • filing citizen petitions with the FDA or other regulatory bodies, including timing the filings so as to thwart generic competition by causing delays of generic product approvals; • seeking to establish regulatory and legal obstacles that would make it more difficult to demonstrate bioequivalence or meet other approval requirements; • initiating legislative and regulatory efforts to limit the substitution of generic versions of branded pharmaceuticals; • filing suits for patent infringement that may delay regulatory approval of generic products; • introducing "next-generation" products prior to the expiration of market exclusivity for the reference product, which often materially reduces the demand for the first generic product; • obtaining extensions of market exclusivity by conducting clinical trials of branded drugs in pediatric populations or by other potential methods; • persuading regulatory bodies to withdraw the approval of branded name drugs for which the patents are about to expire, thus allowing the branded company to obtain new patented products serving as substitutes for the products withdrawn; and • seeking to obtain new patents on drugs for which patent protection is about to expire.
These strategies include, but are not limited to: • entering into agreements whereby other generic companies will begin to market an authorized generic, a generic equivalent of a branded product, at the same time generic competition initially enters the market; • launching a generic version of their own branded product at the same time generic competition initially enters the market; • filing citizen petitions with the FDA or other regulatory bodies, including timing the filings so as to thwart generic competition by causing delays of generic product approvals; • seeking to establish regulatory and legal obstacles that would make it more difficult to demonstrate bioequivalence or meet other approval requirements; • initiating legislative and regulatory efforts to limit the substitution of generic versions of branded pharmaceuticals; • filing suits for patent infringement that may delay regulatory approval of generic products; • introducing “next-generation” products prior to the expiration of market exclusivity for the reference product, which often materially reduces the demand for the first generic product; • obtaining extensions of market exclusivity by conducting clinical trials of branded drugs in pediatric populations or by other potential methods; • persuading regulatory bodies to withdraw the approval of branded name drugs for which the patents are about to expire, thus allowing the branded company to obtain new patented products serving as substitutes for the products withdrawn; and • seeking to obtain new patents on drugs for which patent protection is about to expire.
If the third parties assisting us with our clinical studies do not perform their contractual duties or obligations, do not meet expected deadlines, fail to comply with the FDA’s good clinical practice regulations, do not adhere to our protocols or otherwise fail to generate reliable clinical data, we may need to enter into new arrangements with alternative third parties and our clinical studies may be extended, delayed or terminated or may need to be repeated, and we may not be able to obtain regulatory approval for or commercialize the products being tested in such studies.
If the third parties assisting us with our clinical trials do not perform their contractual duties or obligations, do not meet expected deadlines, fail to comply with the FDA’s good clinical practice regulations, do not adhere to our protocols or otherwise fail to generate reliable clinical data, we may need to enter into new arrangements with alternative third parties and our clinical trials may be extended, delayed or terminated or may need to be repeated, and we may not be able to obtain regulatory approval for or commercialize the products being tested in such trials.
Our Credit Agreement contains restrictive and financial covenants and if we are not in compliance with these covenants, our outstanding indebtedness under this facility could be accelerated and the lenders could terminate their commitments under the facility.
Our New Credit Agreement contains restrictive and financial covenants and if we are not in compliance with these covenants, our outstanding indebtedness under this facility could be accelerated and the lenders could terminate their commitments under the facility.
The U.S. government has enacted the Federal Drug Supply Chain Security Act ("DSCSA") that requires development of an electronic pedigree to track and trace each prescription drug at the salable unit level through the distribution system, which will be effective incrementally over a 10-year period. All prescription pharmaceutical products distributed in the U.S. must be serialized with unique product identifiers.
The U.S. government has enacted the Federal Drug Supply Chain Security Act (“DSCSA”) that requires development of an electronic pedigree to track and trace each prescription drug at the salable unit level through the distribution system, which will be effective incrementally over a 10-year period. All prescription pharmaceutical products distributed in the U.S. must be serialized with unique product identifiers.
If we are unable to find qualified contract manufacturers or if a contract manufacturer fails to comply with federal, state, and local laws and regulations, we may be unable to commercialize these products, which could have a material adverse effect on our business, financial position, and operating results, including an impairment of the acquired product.
If we are unable to find qualified contract manufacturers or distributors or if a contract manufacturer or distributor fails to comply with federal, state, and local laws and regulations, we may be unable to commercialize these products, which could have a material adverse effect on our business, financial position, and operating results, including an impairment of the acquired product.
Changes in judgments and estimates may result in the recognition of an impairment loss, which could have a material negative impact on our business, financial position, and operating results. While our testing in fiscal 2023 did not result in an impairment charge related to goodwill, there can be no assurances that our goodwill will not be impaired in the future.
Changes in judgments and estimates may result in the recognition of an impairment loss, which could have a material negative impact on our business, financial position, and operating results. While our testing in fiscal 2024 did not result in an impairment charge related to goodwill, there can be no assurances that our goodwill will not be impaired in the future.
If these third parties do not perform as required or expected, or if they are not in compliance with FDA rules and regulations, our clinical studies may be extended, delayed or terminated, or may need to be repeated, and we may not be able to obtain regulatory approval for or commercialize the products being tested in such studies.
If these third parties do not perform as required or expected, or if they are not in compliance with FDA rules and regulations, our clinical trials may be extended, delayed or terminated, or may need to be repeated, and we may not be able to obtain regulatory approval for or commercialize the products being tested in such trials.
While we devote substantial resources to our compliance programs and have implemented policies, training, and internal controls designed to reduce the risk of corrupt payments, our employees, vendors or agents may violate our policies and with the acquisition of Novitium, our expanded international operations would significantly increase our exposure to potential liability.
While we devote substantial resources to our compliance programs and have implemented policies, training, and internal controls designed to reduce the risk of corrupt payments, our employees, vendors or agents may violate our policies and with the acquisition of Alimera, our expanded international operations would significantly increase our exposure to potential liability.
Our material definite-lived intangible assets consist of ANDAs for previously marketed generic products, NDAs and product rights for our branded products, product rights related to certain generic products, and a non-compete agreement. These assets are being amortized over their useful lives of seven to 10 years.
Our material definite-lived intangible assets consist of ANDAs for previously marketed generic products, NDAs and product rights for our branded products, product rights related to certain generic products, and a non-compete agreement. These assets are being amortized over their useful lives of seven to twelve years.
If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtaining additional debt or equity financing on terms that may not be favorable to us or available to us at all.
If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring indebtedness, or obtaining additional indebtedness or equity financing on terms that may not be favorable to us or available to us at all.
Drug wholesalers and retail pharmacy chains, which represent an essential part of the distribution chain for generic pharmaceutical products, have undergone, and are continuing to undergo, significant consolidation. This consolidation may result in declines in our sales volumes if a customer is consolidated into another company that purchases products from a competitor.
Drug wholesalers and retail pharmacy chains, which represent an essential par t of the distribution chain for generic pharmaceutical products, have undergone, and are continuing to undergo, significant consolidation. This consolidation may result in declines in our sales volumes if a customer is consolidated into another company that purchases products from a competitor.
Furthermore, if we are unable to address all regulatory requirements applicable to the development and commercialization of new products in a timely manner, our product introduction plans, business, financial position, and operating results could be materially adversely affected. 20 Table of Contents The FDA regulates and monitors all promotion and advertising of prescription drugs after approval.
Furthermore, if we are unable to address all regulatory requirements applicable to the development and commercialization of new products in a timely manner, our product introduction plans, business, financial position, and operating results could be materially adversely affected. The FDA regulates and monitors all promotion and advertising of prescription drugs after approval.
As a result, these stockholders, if acting together, would be able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions, or other extraordinary transactions.
As a result, these stockholders, if acting to gether, would be able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions, or other extraordinary transactions.
Virtually all our contracts for the supply o f generic products to our customers contain "failure to supply" clauses which require us to reimburse the customer for the difference between our contract price and the price the customer was forced to pay to procure the substitute product in the event we failed to deliver the requested quantity within a specified period of time.
Virtually all of our contracts for the supply o f generic products to our customers contain “failure to supply” clauses which require us to reimburse the customer for the difference between our contract price and the price the customer was forced to pay to procure the substitute product in the event we failed to deliver the requested quantity within a specified period of time.
The result of these developments or the loss of our relationship with one or more of these wholesalers, may have a material adverse effect on our business, financial position, and operating results. 27 Table of Contents Our reporting and payment obligations under the Medicaid rebate program and other governmental purchasing and rebate programs are complex and may involve subjective decisions.
The result of these developments or the loss of our relationship with one or more of these wholesalers, may have a material adverse effect on our business, financial position, and operating results. Our reporting and payment obligations under the Medicaid rebate program and other governmental purchasing and rebate programs are complex and may involve subjective decisions.
Novitium’s obligations and liabilities, some of which may not have been disclosed to us or may not be reflected or reserved for in Novitium’s historical financial statements, may be greater than we have anticipated.
Alimera’s obligations and liabilities, some of which may not have been disclosed to us or may not be reflected or reserved for in Alimera’s historical financial statements, may be greater than we have anticipated.
Levels of market acceptance for our products could be impacted by several factors, including but not limited to: • availability of alternative products from our competitors; • our products’ pricing relative to that of our competitors; • our marketing effectiveness relative to that of our competitors; • timing of our market entry; • our ability to market our products effectively to the retail level; and • acceptance of our products by government and private formularies.
Levels of market acceptance for our products could be impacted by several factors, including but not limited to: • our products’ pricing relative to that of our competitors; • our marketing effectiveness relative to that of our competitors; • timing of our market entry; • our ability to market our products effectively to the retail level; and • acceptance of our products by government and private formularies.
Noncompliance with applicable legal and regulatory requirements can have a broad range of consequences, including warning letters, fines, seizure of products, product recalls, total or partial suspension of production and distribution, refusal to approve NDAs or other applications or revocation of approvals previously granted, withdrawal of product from marketing, injunctions, withdrawal of licenses or registrations necessary to conduct business, disqualification from supply contracts with the government, civil penalties, debarment, and criminal prosecution. 31 Table of Contents All U.S. facilities where prescription drugs are manufactured, tested, packaged, stored, or distributed must comply with FDA current good manufacturing practices (“cGMPs”).
Noncompliance with applicable legal and regulatory requirements can have a broad range of consequences, including warning letters, fines, seizure of products, product recalls, total or partial suspension of production and distribution, refusal to approve NDAs or other applications or revocation of approvals previously granted, withdrawal of product from marketing, injunctions, withdrawal of licenses or registrations necessary to conduct business, disqualification from supply contracts with the government, civil penalties, debarment, and criminal prosecution. 46 Ta b l e of Contents All U.S. facilities where prescription drugs are manufactured, tested, packaged, stored, or distributed must comply with FDA current good manufacturing practices (“cGMPs”).
We are responsible for confirming that our studies are conducted in accordance with applicable regulations and that each of our clinical studies is conducted in accordance with our general investigational plan and protocol.
We are responsible for confirming that our trials are conducted in accordance with applicable regulations and that each of our clinical trials is conducted in accordance with our general investigational plan and protocol.
The rate of inflation may significantly increase input costs for our products and, given the competitive nature of the generic and rare disease markets in which we compete, we may not be able to pass those costs on to our customers.
The rate of inflation may significantly increase input costs for our products and, given the competitive nature of the markets in which we compete, including branded, generic, and rare disease pharmaceutical, and may not be able to pass those costs on to our customers.
The FDA requires us to comply with regulations and standards, commonly referred to as good clinical practices for conducting, monitoring, recording, and reporting the results of clinical studies, to assure that data and reported results are accurate and that the clinical study participants are adequately protected. Our reliance on these third parties does not relieve us of these responsibilities.
The FDA requires us to comply with regulations and standards, commonly referred to as good clinical practices for conducting, monitoring, recording, and reporting the results of clinical trials, to assure that data and reported results are accurate and that the clinical trial participants are adequately protected. Our reliance on these third parties does not relieve us of these responsibilities.
Consolidation and the formation of strategic partnerships among and between wholesale distributors, chain drug stores, and group purchasing organizations has resulted in a smaller number of companies, each controlling a larger share of pharmaceutical distribution channels.
Consolidation and the formation of strategic partnerships among and between wholesale distributors, chain drug stores, and group purchasing organizations has re sulted in a smaller number of companies, each controlling a larger share of pharmaceutical distribution channels.
Additionally, further escalation of geopolitical tensions, such as the conflict in Israel and Gaza and the surrounding areas, and conflicts related to the attacks on cargo ships in the Red Sea, could have a broader impact that extends into other markets where we do business.
Additionally, further escalation of geopolitical tensions, such as the conflict in the middle east and the surrounding areas, and conflicts related to the attacks on cargo ships in the Red Sea, could have a broader impact that extends into other markets where we do business.
Additionally, further escalation of geopolitical tensions, such as the conflict in Israel and Gaza and the surrounding areas, and conflicts related to the attacks on cargo ships in the Red Sea, could have a broader impact that extends into other markets where we do business.
Additionally, further escalation of geopolitical tensions, such as the conflict in the middle east and the surrounding areas, and conflicts related to the attacks on cargo ships in the Red Sea, could have a broader impact that extends into other markets where we do business.
Any prolonged disruption in the supply of imported API could materially affect our ability to manufacture and distribute our products, reduce or eliminate our revenues, and have a material adverse effect on our business, financial position, and operating results.
Any prolonged disruption in the supply of imported API or increased costs due to tariffs could materially affect our ability to manufacture and distribute our products, reduce or eliminate our revenues, and have a material adverse effect on our business, financial position, and operating results.
Our expanded international operations from the Novitium acquisition increased our exposure to potential liability under anti-corruption, trade protection, tax, and other laws and regulations. The Foreign Corrupt Practices Act and other anti-corruption laws and regulations (“Anti-Corruption Laws”) prohibit corrupt payments by our employees, vendors, or agents.
Our expanded international operations from the Alimera Merger increased our exposure to potential liability under anti-corruption, trade protection, tax, and other laws and regulations. The Foreign Corrupt Practices Act and other anti-corruption laws and regulations (“Anti-Corruption Laws”) prohibit corrupt payments by our employees, vendors, or agents.
We own the trademark names for most of our branded pro ducts, including, Apexicon, Cortenema, Purified Cortrophin Gel, Cortrophin-Zinc, Inderal LA, Inderal XL, InnoPran XL, Lithobid, Reglan, Vancocin, and Veregen. We license the trademark names for Atacand, Atacand HCT, Arimidex, Casodex, Oxistat, and Pandel.
We own the trademark names for most of our branded pro ducts, including, Cortenema, Purified Cortrophin Gel, Cortrophin-Zinc, ILUVIEN, Inderal LA, Inderal XL, InnoPran XL, Lithobid, Reglan, Vancocin, Veregen, and YUTIQ. We license the trademark names for Atacand, Atacand HCT, Arimidex, Casodex, and Oxistat.
We are subject to federal, state, and local laws and regulations, and complying with these may cause us to incur significant additional costs. The pharmaceutical industry is subject to regulation by various federal authorities, including the FDA, the DEA, and state governmental authorities.
We are subject to federal, state, and local laws and regulations, and complying with these may cause us to incur significant additional costs. The pharmaceutical industry is subject to regulation by various federal authorities, including the FDA, the DEA, and state governmental authorities and their respective foreign equivalents.
Three products, which tog ether comprised less than 10% of ou r total revenue in 2023, are marketed without approved NDAs or Abbreviated New Drug Applications (“ANDAs”) and we can offer no assurances that the U.S. Food and Drug Administration (“FDA”) will not require us to either seek approval for these products or withdraw them from the market.
Four products, which tog ether comprised less than 10% of our total revenue in 2024, are marketed without approved NDAs or Abbreviated New Drug Applications (“ANDAs”) and we can offer no assurances that the U.S. Food and Drug Administration (“FDA”) will not require us to either seek approval for these products or withdraw them from the market.
Any delays or difficulties with third-party manufacturers could adversely affect the marketing and distribution of these products, or future products, which could have a material adverse effect on our business, financial position, and operating results. 18 Table of Contents We are subject to United States federal and state laws related to healthcare fraud and abuse and health information privacy and security, and the failure to comply with such laws may adversely affect our business.
Any delays or difficulties with third-party manufacturers and/or distributors could adversely affect the marketing and distribution of these products, or future products, which could have a material adverse effect on our business, financial position, and operating results. 26 Ta b l e of Contents We are subject to United States federal and state laws related to healthcare fraud and abuse and health information privacy and security, and the failure to comply with such laws may adversely affect our business.
Actions brought against ANI for violations of these laws, even if successfully defended, could also have a material adverse effect on our business, financial position, and operating results. 30 Table of Contents The use of legal, regulatory, and legislative strategies by competitors, both branded and generic, including "authorized generics," citizen’s petitions, and legislative proposals, may increase the costs to develop and market our generic products, could delay or prevent new product introductions, and could significantly reduce our profit potential.
Actions brought against ANI for violations of these laws, even if successfully defended, could also have a material adverse effect on our business, financial position, and operating results. 45 Ta b l e of Contents The use of legal, regulatory, and legislative strategies by competitors, both branded and generic, including “authorized generics,” citizen’s petitions, and legislative proposals, may increase the costs to develop and market our generic products, could delay or prevent new product introductions, and could significantly reduce our profit potential.
If we spend significant resources on research and development efforts and are not able to introduce new products, our business, financial position, and operating results may be materially adversely affected. We produce the majority of our products in three manufacturing facilities.
If we spend significant resources on research and development efforts and are not able to introduce new products, our business, financial position, and operating results may be materially adversely affected. 30 Ta b l e of Contents We produce the majority of our products in three manufacturing facilities.
We are also subject to Indian foreign tax regulations. Such regulations may not be clear, not consistently applied and subject to sudden change, particularly with regard to international transfer pricing. Our earnings could be reduced by changes to such tax regulations or changing interpretation of such tax regulations.
Such regulations may not be clear, not consistently applied and subject to sudden change, particularly with regard to international transfer pricing. Our earnings could be reduced by changes to such tax regulations or changing interpretation of such tax regulations.
Our operations in India may be adversely affected by general economic conditions and economic and fiscal policy, including changes in exchange rates and controls, interest rates and taxation policies, and increased government regulation, which could have a material adverse effect on our business, financial position, and operating results. 32 Table of Contents Additionally, involvement in a war or other military action or international acts of terrorism may cause significant disruption to commerce throughout the world.
Our operations in foreign jurisdictions may be adversely affected by general economic conditions and economic and fiscal policy, including changes in exchange rates and controls, interest rates and taxation policies, and increased government regulation, which could have a material adverse effect on our business, financial position, and operating results. 47 Ta b l e of Contents Additionally, involvement in a war or other military action or international acts of terrorism may cause significant disruption to commerce throughout the world.
The obligations and liabilities of Novitium could have a material adverse effect on Novitium’s business or Novitium’s value to us or on our business, financial condition, or results of operations. Under the Merger Agreement relating to the Novitium acquisition, we have only limited indemnification with respect to obligations or liabilities of Novitium, whether known or unknown.
The obligations and liabilities of Alimera could have a material adverse effect on Alimera’s business or Alimera’s value to us or on our business, financial condition, or results of operations. Under the Merger Agreement, we have only limited indemnification with respect to obligations or liabilities of Alimera, whether known or unknown.
Therefore, our ability to source sufficient quantities of API for manufacturing is critical. We source the raw materials for our products from both domestic and international suppliers. Generally, we qualify only a single source of API for use in each product due to the cost and time required to validate and qualify a second source of supply.
We source the raw materials for our products from both domestic and international suppliers. Generally, we qualify only a single source of API for use in each product due to the cost and time required to validate and qualify a second source of supply.
In 2018, the DEA decreased quotas approved for Schedule II opioid painkillers. The DEA continues to closely monitor quotas of certain opioids and as a result there may be a reduction from what was requested; however, firms may file an application for a quota adjustment at any time during the calendar year.
The DEA continues to closely monitor quotas of certain opioids and as a result there may be a reduction from what was requested; however, firms may file an application for a quota adjustment at any time during the calendar year.
The COVID-19 pandemic previously adversely affected us in the years ended December 31, 2021 and 2020, and the COVID-19 pandemic or other actual or threatened public health outbreaks, epidemics, or pandemics may in the future adversely affect, among other things, the economic and financial markets and labor resources of the countries in which we operate; our manufacturing and supply chain operations, research and development efforts, commercial operations and sales force, administrative personnel, third-party service providers, and business partners and customers; and the demand for our products.
The COVID-19 pandemic previously adversely affected us in the years ended December 31, 2021 and 2020, and the COVID-19 pandemic or other actual or threatened public health outbreaks, epidemics, or pandemics may in the future adversely affect, among other things, the economic and financial markets and labor resources of the countries in which we operate; our manufacturing and supply chain operations, research and development efforts, commercial operations and sales force, administrative personnel, third-party service providers, and business partners and customers; and the demand for our products. 42 Ta b l e of Contents Such disruptions in our operations could materially adversely impact our business, prospects, operating results, and financial condition.
We have invested and continue to invest significantly in the commercialization of this product in the U.S, including building out a sales force and developing a patient support program, with a full-scale launch in January 2022.
We have devoted significant time and money to the development of this product since we acquired the rights to the product in 2016. We have invested and continue to invest significantly in the commercialization of this product in the U.S, including building out a sales force and developing a patient support program, with a full-scale launch in January 2022.
For example, our net revenues are concentrated among four customers representing 31%, 13%, 13%, and 12% of net revenues, respectively, during the year ended December 31, 2023. As of December 31, 2023, accounts receivable from these four customers was approximately 81% of our accounts receivable, net.
For example, our net revenues are concentrated among four customers representing 25%, 16%, 12%, and 11% of net revenues, respectively, during the year ended December 31, 2024. As of December 31, 2024, accounts receivable from these four customers was approximately 70% of our accounts receivable, net.
Any event of default or inability to otherwise satisfy our obligations could have a material adverse effect on our future operating results and financial condition.
Our indebtedness could have significant negative consequences for our stockholders and our business and any event of default or inability to otherwise satisfy our obligations could have a material adverse effect on our future operating results and financial condition.
In any acquisition that we may undertake, our failure to address these risks or other problems encountered in connection with any acquisitions and investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, and harm our business generally. 17 Table of Contents We depend on a limited number of suppliers for API.
In any acquisition that we may undertake, our failure to address these risks or other problems encountered in connection with any acquisitions and investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, and harm our business generally.
The risks presented by international operations include: • limitations on ownership or participation in local enterprises; • price controls, exchange controls, and limitations on repatriation of earnings; • transportation delays and interruptions; • the application of additional legal, regulatory and taxation regimes to our operations; • political, social, and economic instability and disruptions in applicable regions, including as a result of war, such as the conflict between Russia and the Ukraine, the conflict between Israel and Gaza, and conflicts related to the attacks on cargo ships in the Red Sea; • acts of terrorism; • government embargoes or foreign trade restrictions; • imposition of duties and tariffs and other trade barriers; • import and export controls; • labor unrest and current and changing regulatory environments; • fluctuations in foreign current exchange and interest rates; • difficulties in staffing and managing multi-national operations; • limitations on our ability to enforce legal rights and remedies. 35 Table of Contents If we are unable to successfully manage these and other risks associated with managing the expansion of our business to the jurisdictions in which Novitium operates, including India, the risks could have a material adverse effect on our business, results of operations, or financial condition.
The risks presented by international operations include: • limitations on ownership or participation in local enterprises; • price controls, exchange controls, and limitations on repatriation of earnings; • transportation delays and interruptions; • the application of additional legal, regulatory and taxation regimes to our operations; • political, social, and economic instability and disruptions in applicable regions, including as a result of war, such as the conflict between Russia and the Ukraine, the conflict between Israel and Gaza, and conflicts related to the attacks on cargo ships in the Red Sea; • acts of terrorism; • government embargoes or foreign trade restrictions; • imposition of duties and tariffs and other trade barriers; • import and export controls; • labor unrest and current and changing regulatory environments; • fluctuations in foreign current exchange and interest rates; • difficulties in staffing and managing multi-national operations; • limitations on our ability to enforce legal rights and remedies.
Our operations in an international market subject us to additional regulatory oversight both in the international market and in the U.S., as well as, social, and political uncertainties, which could cause a material adverse effect on our business, financial position, and operating results.
Our operations in an international market subject us to additional regulatory oversight both in the international market and in the U.S., as well as, social, and political uncertainties, which could cause a material adverse effect on our business, financial position, and operating results. We are subject to certain risks associated with having assets and operations located in foreign jurisdictions.
Our operations in an international market subject us to additional regulatory oversight both in the international market and in the U.S., as well as, social, and political uncertainties, which could cause a material adverse effect on our business, financial position, and operating results.
Our operations in an international market subject us to additional regulatory oversight both in the international market and in the U.S., as well as, social, and political uncertainties, which could cause a material adverse effect on our business, financial position, and operating results. We are subject to certain risks associated with having assets and operations located in foreign jurisdictions.
Such disruptions in our operations could materially adversely impact our business, prospects, operating results, and financial condition. To the extent a public health outbreak, epidemic, or pandemic adversely affects our business, prospects, operating results, or financial condition, it may also have the effect of heightening many of the other risks described in this "Risk Factors" section.
To the extent a public health outbreak, epidemic, or pandemic adversely affects our business, prospects, operating results, or financial condition, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section.
We are dependent on imported API to make certain of our products. If the FDA detained or refused to allow the importation of such API, our revenues from certain of our products would be reduced or eliminated and our business, financial position, and operating results could be materially adversely affected.
If the FDA detained or refused to allow the importation of such API of if tariffs or other governmental action make the import of such API costly, our revenues from certain of our products would be reduced or eliminated and our business, financial position, and operating results could be materially adversely affected.
Securities litigation, whether with or without merit, could result in substantial costs and divert management’s attention and resources, which could harm our business, financial position, and operating results, as well as the market price of our common stock. Item 1B. Unresolved Staff Comments None.
Securities litigation, whether with or without merit, could result in substantial costs and divert management’s attention and resources, which could harm our business, financial position, and operating results, as well as the market price of our common stock. 57 Ta b l e of Contents
Actual results could differ from those estimates. Estimates, judgments, and assumptions are inherently subject to change in the future, and any such changes could result in corresponding changes to the amounts of assets, liabilities, revenues, expenses, and income. Any such changes could have a material adverse effect on our business, financial position, and operating results.
Actual results could differ from those estimates. Estimates, judgments, and assumptions are inherently subject to change in the future, and any such changes could result in corresponding changes to the amounts of assets, liabilities, revenues, expenses, and income.
If we are unable to secure third-party manufacturers for these products on commercially acceptable terms, we may not be able to market and distribute such products at a profit.
If we are unable to secure third-party manufacturers for these products on commercially acceptable terms, we may not be able to market and distribute such products at a profit. In addition, manufacturers and distributors of our products may sometimes encounter difficulties in production and distribution.
The FDA expects trading partners to use this stabilization period, which expires on November 27, 2024, to build and validate interoperable systems and processes, manage products and data, and ensure continuity of the supply chain and product availability to patients.
The FDA expects trading partners to use this stabilization period, which expired on November 27, 2024, to build and validate interoperable systems and processes, manage products and data, and ensure continuity of the supply chain and product availability to patients. The Company continues to provide serialized commercial products as required to comply with the DSCSA.
Any provision of our certificate of incorporation and bylaws or Delaware law that has the effect of delaying, preventing, or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock. 39 Table of Contents General Risk Factors We use a variety of estimates, judgments, and assumptions in preparing our consolidated financial statements.
Any provision of our certificate of incorporation and bylaws or Delaware law that has the effect of delaying, preventing, or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.
If we choose to lower our prices, we generally give the customer a credit on the products that the customer is holding in inventory, which could reduce sales revenue for the period the credit is provided.
Under many of these arrangements, we may match lower prices offered to customers by competitors. If we choose to lower our prices, we generally give the customer a credit on the products that the customer is holding in inventory, which could reduce sales revenue for the period the credit is provided.
Additionally, further generic approvals often continue to be granted for a given product subsequent to the initial launch of the generic product. These circumstances generally result in significantly lower prices, as well as reduced margins, for generic products compared to branded products. New generic market entrants generally cause continued price and margin erosion over the generic product life cycle.
These circumstances generally result in significantly lower prices, as well as reduced margins, for generic products compared to branded products. New generic market entrants generally cause continued price and margin erosion over the generic product life cycle.
If the DEA does not approve our requested procurement quotas, we may be unable to obtain sufficient API to manufacture these products at levels required by our customers, which could have an adverse impact on our business, financial position, and operating results. 29 Table of Contents Our products are subject to regulatory and quality standards and guidelines set forth by FDA and other governmental agencies.
If the DEA does not approve our requested procurement quotas, we may be unable to obtain sufficient API to manufacture these products at levels required by our customers, which could have an adverse impact on our business, financial position, and operating results.
In either case, our business, financial position, and operating results could be materially adversely affected. Three products, Esterified Estrogen with Methyltestosterone (“EEMT”), Opium Tincture, and Thyroid Tablets are marketed without approved NDAs or ANDAs. The Company obtained the rights to Hyoscyamine, a product without approved NDAs or ANDAs, on of December 27, 2023.
In either case, our business, financial position, and operating results could be materially adversely affected. Four products, Esterified Estrogen with Methyltestosterone (“EEMT”), Opium Tincture, Thyroid Tablets, and Hyoscyamine are marketed without approved NDAs or ANDAs.
To the extent the Centers for Medicare & Medicaid Services entertains waivers to federal requirements under the Medicaid program to allow states Medicaid programs such flexibility, coverage of and payment for our drugs utilized by Medicaid beneficiaries could be negatively impacted. 33 Table of Contents Passage of the Inflation Reduction Act ("IRA") has brought sweeping change to Medicare coverage of and reimbursement for prescription drugs.
To the extent the Centers for Medicare & Medicaid Services entertains waivers to federal requirements under the Medicaid program to allow states Medicaid programs such flexibility, coverage of and payment for our drugs utilized by Medicaid beneficiaries could be negatively impacted.
The international nature of Novitium’s operations (including those of its Indian subsidiary Novitium Labs Private Limited) will subject us to political and economic risks that could adversely affect our business, results of operations, or financial condition.
The international nature of our operations (including the acquisition of Alimera) will subject us to political and economic risks that could adversely affect our business, results of operations, or financial condition.
Most notably, CMS is able to directly negotiate the reimbursement for certain prescription drugs reimbursed under Medicare Part D or B to be effective for the 2026 plan year.
Passage of the Inflation Reduction Act (“IRA”) has brought sweeping change to Medicare coverage of and reimbursement for prescription drugs. Most notably, CMS is able to directly negotiate the reimbursement for certain prescription drugs reimbursed under Medicare Part D or B to be effective for the 2026 plan year.
Therefore, as a practical matter, these covenants restrict our ability to engage in or benefit from such activities. In addition, we pledged our assets in order to secure our repayment obligations under the Credit Agreement.
Therefore, as a practical matter, these covenants, and any other additional restrictive covenants that may be included in the terms of any future indebtedness, restrict our ability to engage in or benefit from such activities. In addition, we pledged our assets in order to secure our repayment obligations under the New Credit Agreement.
We have transitioned the products manufactured or packaged in Oakville to one of our three U.S.-based manufacturing sites, and we are seeking to find potential buyers for the Oakville site.
We have transitioned products manufactured or packaged in Oakville to one of our three U.S.-based manufacturing sites.
Commitments and Contingencies, in the notes to the consolidated financial statements in Part II, Item 8 of this Annual Re port on Form 10-K. 25 Table of Contents We are susceptible to product liability claims that may not be covered by insurance, which, if successful, could require us to pay substantial sums.
For a description of legal proceedings which are currently pending, see Note 17 “Commitments and Contingencies” in the notes to the consolidated financial statements in Part II, Item 8 of this Annual Re port on Form 10-K. 37 Ta b l e of Contents We are susceptible to product liability claims that may not be covered by insurance, which, if successful, could require us to pay substantial sums.
Risks Related to Accounting, Tax, and SEC Rules and Regulations We have increased exposure to tax liabilities, including foreign tax liabilities. We are subject to, or potentially subject to, income taxes as well as non-income based taxes in various U.S. jurisdictions, Canada, and India. Significant judgment is required in determining our international provision for income taxes and other tax liabilities.
Risks Related to Accounting, Tax, and SEC Rules and Regulations We have increased exposure to tax liabilities, including foreign tax liabilities. We are subject to, or potentially subject to, income taxes as well as non-income based taxes in various U.S. jurisdictions, Canada, India, the United Kingdom, Ireland, Portugal, and Germany.
If we are unable to secure or maintain qualified contract manufacturers for those products or if a contract manufacturer fails to comply with federal, state, and local laws and regulations, our business, financial position, and operating results could be materially, adversely affected. We have acquired, and may continue to acquire, a variety of products that we seek to commercialize.
If we are unable to secure or maintain qualified contract manufacturers for those products, a contract manufacturer or distributor fails to comply with federal, state, and local laws and regulations, or third-party manufacturers or distributors sustain delays in production and distribution of our products, our business, financial position, and operating results could be materially, adversely affected.
To the extent we are not able to continue to achieve commercial success with this product, including expanding the market and gaining market share, our business, financial condition, and results of operations will be negatively impacted; • Our approved products, including Cortrophin Gel, may not achieve commercialization at levels of market acceptance that will continue to allow us to achieve profitability; • Acquisitions and investments could disrupt our business and harm our financial position and operating results; • The limited number of suppliers for our API could result in lengthy delays in production if we need to change suppliers; • Several of the products we have acquired cannot be manufactured in our facilities and we must secure and maintain qualified and compliant contract manufacturers.
To the extent we are not able to continue to achieve commercial success with this product, including expanding the market and gaining market share, our business, financial condition, and results of operations will be negatively impacted; • We may fail to realize the benefits expected from our acquisition of Alimera and the combined company may not perform as we or the market expects; • The limited number of suppliers for our API could result in lengthy delays in production if we need to change suppliers; • Several of the products we have acquired cannot be manufactured in our facilities and we must secure and maintain qualified and compliant contract manufacturers.
Our ability to manufacture and distribute products is dependent, in part, upon ingredients and components supplied by others, including entities based outside the U.S. During the year ended December 31, 2023, no single vendor represented at least 10% of inventory purchases. During the year ended December 31, 2022, we purchased approximately 19% of our inventory from one supplier.
Our ability to manufacture and distribute products is dependent, in part, upon ingredients and components supplied by others, including entities based outside the U.S. During the year ended December 31, 2024, approximately 12%, of our raw material inventory purchases were from one domestic supplier.
If we decide to withdraw the products from the market, our net revenues for generic pharmaceutical products would decline materially, and if we decide to seek FDA approval, we would face increased expenses and might need to suspend sales of the products until such approval was obtained, and there are no assurances that we would receive such approval. 28 Table of Contents Imported API are subject to inspection by the FDA and the FDA can refuse to permit the importation of API for use in products that are marketed without approved NDAs or ANDAs.
If we decide to withdraw the products from the market, our net revenues for generic pharmaceutical products would decline materially, and if we decide to seek FDA approval, we would face increased expenses and might need to suspend sales of the products until such approval was obtained, and there are no assurances that we would receive such approval.
Appco Pharma, LLC, with whom we had partnered to develop and market the product, initiated a voluntary recall, and we elected to exit the market for Ranitidine in 2019. For a description of legal proceedings which are currently pending relating to ranitidine, see Note 15.
Appco Pharma, LLC, with whom we had partnered to develop and market the product, initiated a voluntary recall, and we elected to exit the market for Ranitidine in 2019.
In the consolidated financial statements included in the periodic reports filed with the SEC, estimates, judgments, and assumptions are used for, but not limited to, revenue recognition, allowance for credit losses, accruals for chargebacks, rebates, returns and other allowances, allowance for inventory obsolescence, stock-based compensation, valuation of financial instruments and intangible assets, allowances for contingencies and litigation, deferred tax assets and liabilities, deferred tax valuation allowance, contingent consideration, and the depreciable lives of fixed and intangible assets.
In the consolidated financial statements included in the periodic reports filed with the SEC, estimates, judgments, and assumptions are used for, but not limited to, variable consideration determined based on accruals for chargebacks, administrative fees and rebates, government rebates, returns and other allowances, income tax provision or benefit, deferred taxes and valuation allowance, stock-based compensation, revenue recognition, allowance for inventory obsolescence, valuation of financial instruments and intangible assets, accruals for contingent liabilities, including contingent consideration and contingent value rights in acquisitions, fair value of long-lived assets, determination of right-of-use assets and lease liabilities, allowance for credit losses, and the depreciable lives of long-lived assets.
Changes or developments in such standards and guidelines may affect the ability of our products to meet such standards, including with respect to already approved products. If our products are not able to meet these standards, we may be required to discontinue marketing and/or recall such products from the market.
If our products are not able to meet these standards, we may be required to discontinue marketing and/or recall such products from the market.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur senior leadership team, along with representatives from our information technology, legal, human resources and finance departments, are responsible for developing the Company’s overall risk management program and are also responsible for executing our cybersecurity policies. 40 Table of Contents We are establishing a formal written information security policy and incident response policy which outlines the methods for assessing, identifying, and managing risks related to the Company.
Biggest changeOur Security Operations Team and Security Audit/Advisory Team play a key role in this strategy. Our senior leadership team, in collaboration with representatives from the Security Operations Team, as well as the legal, human resources, and finance departments, are responsible for developing and executing the company's overall risk management program, including cybersecurity policies.
These communications include potential risks facing the Company, assessments and evaluations of our cybersecurity environment, results of internal controls testing, and reports on our on-going initiatives to strengthen our cybersecurity framework.
These communications include potential risks facing the Company, assessments and evaluations of our cybersecurity environment, results of internal controls testing, and reports on our on-going initiatives to strengthen our cybersecurity framework. 59 Ta b l e of Contents
The senior leadership team provides periodic reports to our board of directors, as well as the Chief Executive Officer and audit committee as necessary. In addition, we have contracted with certified security experts that act as an extension of the internal information technology team for all security related items.
In addition, we have contracted with certified security experts that act as an extension of the internal information technology team for all security related items.
Item 1C. Cybersecurity Risk management and strategy We maintain a comprehensive process for identifying, assessing and managing material risks arising from cybersecurity threats, and have integrated these into our overall risk management processes.
Item 1C. Cybersecurity Risk management and strategy We rely on information technology systems and various software applications to operate our business. To address cybersecurity risks, we have implemented a comprehensive process for identifying, assessing, and managing material threats, and integrating these measures into our overall risk management framework.
We also ensure that third-party service providers have the ability to implement and maintain appropriate security measures in connection with their work with us, and to promptly report any suspected breach of its security measures that may affect our company. In addition, we maintain a cybersecurity insurance policy.
Additionally, we require third-party service providers to implement and maintain appropriate security measures and promptly report any suspected breaches that may impact the Company. We also maintain a cybersecurity insurance policy. We have invested in relevant tools and technologies to protect our data and business partners. Our Security Operations Team continuously monitors risks specific to our industry.
Our business strategy, results of operations and financial condition have not been materially affected by risks from cybersecurity threats. Governance Our board of directors, with delegation to the audit committee, as appropriate, retains oversight of the Company’s cybersecurity risks.
Governance Our board of directors, with delegation to the audit committee, as appropriate, retains oversight of the Company’s cybersecurity risks. The senior leadership team provides periodic reports to our board of directors, as well as the Chief Executive Officer and audit committee as necessary.
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We’ve developed a robust cybersecurity program which includes multiple security layers. We understand the importance of a strong cybersecurity framework and have hired external security consultants to assess, audit, and monitor its security controls and events.
Added
To enhance security, we have established an Information Security Program with a formal written security and incident response policy. This policy outlines methods for assessing, identifying, and mitigating risks. Our cybersecurity program incorporates multiple security layers, and we engage external security consultants to assess, audit, and monitor our security controls and events.
Added
We also leverage third-party assessors, consultants, and advisors to enhance our cybersecurity risk assessment and mitigation efforts. To foster a security-conscious culture, we have implemented a cybersecurity awareness program that educates employees on identifying and reporting threats. We conduct periodic phishing campaigns and training sessions to equip employees with the necessary skills to manage and defend against prevalent cybersecurity risks.
Added
Additionally, employees in specialized IT roles receive targeted training, including tabletop exercises, among other training. We continuously update and improve our cybersecurity program through independent assessments, penetration testing, and system vulnerability scanning.
Added
Our security framework follows a hybrid approach, incorporating best practices from the Center for Internet Security framework and incorporating relevant standards from the National Institute of Standards and Technology Cybersecurity framework. We also undergo an annual third-party assessment to evaluate the maturity of our cybersecurity program.
Added
Additionally, we periodically engage external advisors to assess our program's effectiveness, strengthen policies, and identify potential vulnerabilities. Our Security Operations Team led by VP of Technology, collaborates regularly with IT network teams and other management stakeholders to review and address cybersecurity risks and opportunities.
Added
We have a global incident response plan with defined incident management protocols, escalation timelines, and responsibilities among other policies to manage data and its risks. As of the date of this Annual Report on Form 10-K, we are not aware of any previous cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeSubsequent Events, in the notes to the consolidated financial statements in Part II, Item 8 of this Annual Re port on Form 10-K). We lease spaces for warehouse and packaging activities in East Windsor, New Jersey, and for research and development activities in Chennai, India.
Biggest changeOn March 28, 2024 the Company completed the sale of the Property ( see Note 4 "Restructuring Canada Operations" in the notes to the consolidated financial statements in Part II, Item 8 of this Annual Re port on Form 10-K).
In February 2024, the Company entered into an agreement for the purchase and sale of the Oakville site, for a purchase price of 19.2 million Canadian Dollars, or approximately $14.2 million US Dollars, based on the current exchange rate. The sale is expected to close in March 2024 ( see Note 19.
In February 2024, the Company entered into an agreement for the purchase and sale of the Oakville site, for a purchase price of $19.2 million Canadian Dollars, or approximately $14.2 million, based on the current exchange rate.
In September 2022, we entered into a lease for office space in Princeton, New Jersey, which includes certain employees in our corporate, legal, human resources, business functions, and rare disease operations. The leases will expire between 2025 and 2028. During 2023, we have expanded our East Windsor, New Jersey facility to accommodate additional laboratory, product development, and employee office space.
We currently lease office space in Princeton, New Jersey, which is our commercial headquarters, which includes certain employees in our corporate, legal, human resources, business functions, and rare disease operations. The leases will expire between 2025 and 2028.
We consider our leased and owned properties suitable and adequate for our current and foreseeable needs. Item 3. Legal Proceedings Our legal proceedings are dis cussed in Note 15. Com mitments and Contingencies, in the notes to the consolidated financial statements in Part II, Item 8. of this Annual Report on Form 10-K. Item 4.
Com mitments and Contingencies, in the notes to the consolidated financial statements in Part II, Item 8. of this Annual Report on Form 10-K.
Removed
Mine Safety Disclosures Not applicable. 41 Table of Contents PART II
Added
We also entered into a new lease agreement for office space in Princeton, New Jersey, which is expected to have a commencement date during 2025. The Princeton, New Jersey lease will have a remaining term of approximately 10 years.
Added
We lease spaces for warehouse and packaging activities in East Windsor, New Jersey, and for research and development activities in Chennai, India. During 2023, we have expanded our East Windsor, New Jersey facility to accommodate additional laboratory, product development, and employee office space. In connection with the acquisition of Alimera, we also acquired office space in Alpharetta, Georgia.
Added
Our lease for this facility expires in December 2032 with an early termination option in December 2029 and an option to extend five years beyond December 2032. Internationally, we lease office space in Dublin, Ireland, office space in Berlin, Germany, and office space in Hook, U.K.
Added
Our leases for the facilities in Ireland and Germany expire in August 2024 and June 2024, respectively. We entered into the Hook, UK lease in December 2024 and it expires in December 2034. We anticipate that following the expiration of these leases, we will be able to lease additional or alternative space at commercially reasonable terms.
Added
Additionally, we have an agreement to use approximately 400 square feet of office space in Lisbon, Portugal, which can be terminated with 90 days’ notice. We consider our leased and owned properties suitable and adequate for our current and foreseeable needs. Item 3. Legal Proceedings Our legal proceedings are dis cussed in Note 17.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed3 unchanged
Biggest changeIssuer Purchases of Equity Securities Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or approximate dollar value) of Shares that may yet be Purchased Under the Plans or Programs October 1 - October 31, 2023 — $ — — $ — November 1 - November 30, 2023 2,528 $ 52.30 — $ — December 1 - December 31, 2023 1,865 $ 52.91 — $ — Total 4,393 $ 52.56 — (1) Shares purchased during the period were transferred to the Company from employees in satisfaction of minimum tax withholding obligations associated with the vesting of restricted stock awards during the period. 42 Table of Contents Performance Graph The graph below compares the five-year cumulative total stockholder return on our common stock, the Nasdaq Stock Market (US) Index, and the S&P 600 Pharmaceuticals, Biotechnology & Life Sciences Index, assuming the investment of $100.00 on December 31, 2018, with dividends being reinvested.
Biggest changeIssuer Purchases of Equity Securities Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or approximate dollar value) of Shares that may yet be Purchased Under the Plans or Programs October 1 - October 31, 2024 — $ — — $ — November 1 - November 30, 2024 3,984 $ 56.58 — $ — December 1 - December 31, 2024 1,635 $ 56.59 — $ — Total 5,619 $ 56.58 — (1) Shares purchased during the period were transferred to the Company from employees in satisfaction of minimum tax withholding obligations associated with the vesting of restricted stock awards during the period. 61 Ta b l e of Contents Performance Graph The graph below compares the five-year cumulative total stockholder return on our common stock, the Nasdaq Stock Market (US) Index, and the S&P 600 Pharmaceuticals, Biotechnology & Life Sciences Index, assuming the investment of $100.00 on December 31, 2019, with dividends being reinvested.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the Nasdaq Global Market under the symbol “ANIP.” Stockholder Information As of February 22, 2024, there were approximatel y 264 shar eholders of record of our common stock, which does not include stockholders that beneficially own shares held in a “nominee” or in “street” name, and six holders of record of Class C stock.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the Nasdaq Global Market under the symbol “ANIP.” Stockholder Information As of February 21, 2025, there were approximatel y 358 shar eholders of record of our common stock, which does not include stockholders that beneficially own shares held in a “nominee” or in “street” name, and six holders of record of Class C stock.
The stock price performance in the graph below is not necessarily indicative of future price performance. 43 Table of Contents Item 6. Reserved 44 Table of Contents
The stock price performance in the graph below is not necessarily indicative of future price performance. 62 Ta b l e of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDuring the year ended December 31, 2022, we purc hased 19% of our inventory from one supplier. 50 Table of Contents Other Operating Expenses Year Ended December 31, (in thousands) 2023 2022 Change % Change Research and development $ 34,286 $ 22,318 $ 11,968 53.6 % Selling, general, and administrative 161,697 124,044 37,653 30.4 % Depreciation and amortization 59,791 56,972 2,819 4.9 % Contingent consideration fair value adjustment 1,426 3,758 (2,332) (62.1) % Restructuring activities 1,132 5,679 (4,547) (80.1) % Intangible asset impairment charge — 112 (112) (100.0) % Total other operating expenses $ 258,332 $ 212,883 $ 45,449 21.3 % For the year ended December 31, 2023, other operating expenses increased to $258.3 million from $212.9 million for the same period in 2022, an increase of $45.4 million, or 21.3%, primarily as a result of the following factors: • Research and development expenses increased from $22.3 million to $34.3 million, an increase of 53.6%, primarily due to expenses related to a 505(b)(2) filing for one product of approximately $1.6 million, expenses related to ANDA filings, and a higher level of activity associated with ongoing and new projects in the year ended December 31, 2023. • Selling, general, and administrative expenses increased from $124.0 million to $161.7 million, an increase of 30.4%, due to increased employment related costs, Rare Disease sales and marketing costs, legal expenses, as well as an overall increase in activities required to support the growth of our business. • Depreciation and amortization expense was $59.8 million for the year ended December 31, 2023, compared to $57.0 million for the same period in 2022, an increase of $2.8 million.
Biggest changeDuring the year ended December 31, 2022 approximately 19% , of our raw material inventory purchases were from one domestic supplier. 71 Ta b l e of Contents Other Operating Expenses, net Year Ended December 31, (in thousands) 2024 2023 Change % Change Research and development $ 44,581 $ 34,286 $ 10,295 30.0 % Selling, general, and administrative 249,636 161,697 87,939 54.4 % Depreciation and amortization 67,731 59,791 7,940 13.3 % Contingent consideration fair value adjustment (619) 1,426 (2,045) (143.4) % Restructuring activities — 1,132 (1,132) (100.0) % Gain on sale of building (5,347) — (5,347) (100.0) % Intangible asset impairment charge 7,600 — 7,600 100.0 % Total other operating expenses $ 363,582 $ 258,332 $ 105,250 40.7 % For the year ended December 31, 2024, other operating expenses increased to $363.6 million from $258.3 million for the same period in 2023, an increase of $105.3 million, or 40.7%, primarily as a result of the following factors: • R esearch and development expenses increased from $34.3 million to $44.6 million, an increase of 30.0%, primarily due to a higher level of activity associated with ongoing and new projects, including expenses related to the New Day and Synchronicity clinical trials during the year ended December 31, 2024. • Selling, general, and administrative expenses increased from $161.7 million to $249.6 million, an increase of 54.4%, due to increased employment related costs, including incentive based compensation tied to record 2024 financial performance, investment in Rare Disease sales and marketing infrastructure and activities, legal expenses, transaction and integration expenses related to the acquisition of Alimera of approximately $18.2 million, severance expense of approximately $5.3 million and the settlement of all outstanding equity awards held by Alimera employees of approximately $9.2 million, and an overall increase in activities to support revenue growth in our Rare Disease and Brands segment. • Depreciation and amortization expense was $67.7 million f or the year ended December 31, 2024, compared to $59.8 million for the same period in 2023, an increase of approximately $7.9 million, primarily related to th e amortization expense of the acquired intangible assets of ILUVIEN and YUTIQ of approximately $9.6 million.
While we continue to execute against our strategic initiatives that we believe will result in the long-term, sustainable growth and value to our stockholders, we continue to evaluate potential acquisitions and other strategic transactions of businesses that we believe complement our existing portfolio, infrastructure and capabilities or provide us with the opportunity to expand our existing capabilities.
While we execute against our strategic initiatives that we believe will result in the long-term, sustainable growth and value to our stockholders, we continue to evaluate potential acquisitions and other strategic transactions of businesses that we believe complement our existing portfolio, infrastructure and capabilities or provide us with the opportunity to expand our existing capabilities.
Pursuant to the terms of the Agreement and Plan of Merger, dated as of March 8, 2021, on December 12, 2023, the Company paid $12.5 million of cash consideration to the Company Members, defined as the holders of Novitium ownership interests in the Agreement and Plan of Merger, of Novitium for the achievement of the "ANDA Filing Earn-Out," as defined in the Agreement.
Pursuant to the terms of the Novitium Agreement and Plan of Merger, dated as of March 8, 2021, on December 12, 2023, the Company paid $12.5 million of cash consideration to the Company Members, defined as the holders of Novitium ownership interests in the Agreement and Plan of Merger, of Novitium for the achievement of the "ANDA Filing Earn-Out," as defined in the Agreement .
Net Cash Provided by (Used in) Financing Activities Net cash provided by financing activities was $67.4 million for the year ended December 31, 2023, principally due to $80.6 million in net proceeds from the May 2023 public offering and $9.0 million from proceeds from stock option exercises and ESPP purchases.
Net cash provided by financing activities for the year ended December 31, 2023 was $67.4 million, principally due to the $80.6 million in net proceeds from the May 2023 public offering and $9.0 million from proceeds from stock option exercises and ESPP purchases.
Our gross product revenue is subject to a variety of deductions, which are estimated and recorded in the same period that the revenue is recognized, and primarily represent chargebacks, rebates, prompt payment (cash) discounts, Medicaid and other government pricing programs, price protection and shelf stock adjustments, sales returns, and other potential adjustments.
The Company's gross product revenue is subject to a variety of deductions, which are estimated and recorded in the same period that the revenue is recognized, and primarily represent chargebacks, rebates, prompt payment (cash) discounts, Medicaid and other government pricing programs, price protection and shelf stock adjustments, sales returns, and other potential adjustments.
If our assumptions are not correct, there could be an impairment loss in subsequent periods or, in the case of a change in the estimated useful life of the asset, a change in amortization expense. Intangible assets with indefinite lives, including IPR&D, are tested for impairment if impairment indicators arise and, at a minimum, annually.
If the Company's assumptions are not correct, there could be an impairment loss in subsequent periods or, in the case of a change in the estimated useful life of the asset, a change in amortization expense. Intangible assets with indefinite lives, including IPR&D, are tested for impairment if impairment indicators arise and, at a minimum, annually.
Strengthening our Generics, Established Brands, and Other segment through continued investment in our generic research and development capability and increased focus on niche opportunities We have grown our generics business through a combination of market share gains on existing products and new product launches. We have also successfully acquired numerous ANDAs through business and asset acquisitions.
Strengthening our Generics and Other segment through continued investment in our generic research and development capability and increased focus on niche opportunities We have grown our generics business through a combination of market share gains on existing products and new product launches. We have also successfully acquired numerous ANDAs through business and asset acquisitions.
Administrative Fees and Other Rebates If actual results were not consistent with our estimates, we could be exposed to losses or gains that could be material, as changes to these estimates could cause an increase or decrease in revenue recognized during the year and increase or decrease accounts receivable.
Administrative Fees and Other Rebates If actual results were not consistent with our estimates, the Company could be exposed to losses or gains that could be material, as changes to these estimates could cause an increase or decrease in revenue recognized during the year and increase or decrease accounts receivable.
Government Rebates If actual results were not consistent with our estimates as related to government rebates, we could be exposed to losses or gains that could be material, as changes to government rebate estimates could cause an increase or decrease in revenue recognized during the year and decrease or increase the government rebate reserve.
Government Rebates If actual results were not consistent with our estimates as related to government rebates, the Company could be exposed to losses or gains that could be material, as changes to government rebate estimates could cause an increase or decrease in revenue recognized during the year and decrease or increase the government rebate reserve.
Chargebacks If actual results were not consistent with our estimates, we could be exposed to losses or gains that could be material, as changes to chargeback estimates could cause an increase or decrease in revenue recognized during the year and increase or decrease accounts receivable.
Chargebacks If actual results were not consistent with our estimates, the Company could be exposed to losses or gains that could be material, as changes to chargeback estimates could cause an increase or decrease in revenue recognized during the year and increase or decrease accounts receivable.
Returns If actual results were not consistent with our estimates, we could be exposed to losses or gains that could be material, as changes to returns estimates could cause an increase or decrease in revenue recognized during the year and decrease or increase the returned goods reserve.
Returns If actual results were not consistent with our estimates, the Company could be exposed to losses or gains that could be material, as changes to returns estimates could cause an increase or decrease in revenue recognized during the year and decrease or increase the returned goods reserve.
Our policy in determining whether an impairment indicator exists comprises measurable operating performance criteria as well as other qualitative measures. Events giving rise to impairment are an inherent risk in the pharmaceutical industry and cannot be predicted.
The Company's policy in determining whether an impairment indicator exists comprises measurable operating performance criteria as well as other qualitative measures. Events giving rise to impairment are an inherent risk in the pharmaceutical industry and cannot be predicted.
See the discussion about forward-looking statements on page 1 of this Annual Report on Form 10-K. This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
See the discussion about forward-looking statements on page 1 of this Annual Report on Form 10-K. This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Although we believe that the judgments and estimates discussed herein are reasonable, actual results could differ, and we may be exposed to losses or gains that could be material. Legal and Other Contingencies The outcomes of legal proceedings and claims brought against us are subject to significant uncertainty.
Although the Company believes that the judgments and estimates discussed herein are reasonable, actual results could differ, and we may be exposed to losses or gains that could be material. Legal and Other Contingencies The outcomes of legal proceedings and claims brought against us are subject to significant uncertainty.
Our convertible preferred stock (“PIPE Shares”) accrue dividends at 6.50% per year on a cumulative basis, payable in cash or in-kind.
PIPE Shares Our convertible preferred stock (“PIPE Shares”) accrue dividends at 6.50% per year on a cumulative basis, payable in cash or in-kind.
Dividends are payable until the preferred stock is converted, either at the option of the PIPE investor, at any time, or the option of ANI, beginning two years after the November 19, 2021 issuance provided ANI’s stock price reaches a certain lev el.
Dividends are payable until the preferred stock is converted, either at the option of the PIPE investor, at any time, or the option of ANI, beginning two years after the November 19, 2021 issuance provided ANI’s stock price reaches a certain level.
We own and operate three pharmaceutical manufacturing facilities, of which two are located in Baudette, Minnesota, and one is located in East Windsor, New Jersey, are together capable of producing oral solid dose products, as well as semi-solids, liquids and topicals, controlled substances, and potent products that must be manufactured in a fully-contained environment.
Our three pharmaceutical manufacturing facilities, of which two are located in Baudette, Minnesota, and one is located in East Windsor, New Jersey, are together capable of producing oral solid dose products, as well as semi-solids, liquids and topicals, controlled substances, and potent products that must be manufactured in a fully-contained environment.
Changes in these assumptions can affect the fair value estimate. Changes in estimates could affect compensation expense within individual periods. If there were to be a 10% change in our stock-based compensation expense for the year, our Income (Loss) Before Expense (Benefit) for Income Taxes would be affected by $2.1 million for the year ended December 31, 2023.
Changes in these assumptions can affect the fair value estimate. Changes in estimates could affect compensation expense within individual periods. If there were to be a 10% change in our stock-based compensation expense for the year, our (Loss) Income Before (Benefit) Expense for Income Taxes would be affected by $2.9 million for the year ended December 31, 2024.
Due to the estimation processes involved, the following summarized accounting policies and their application are considered to be critical to understanding our business operations, financial condition, and operating results. Revenue Recognition Revenues are primarily derived from sales of generic, rare disease, and established brand pharmaceutical products, royalties, and other pharmaceutical services.
Due to the estimation processes involved, the following summarized accounting policies and their application are considered to be critical to understanding our business operations, financial condition, and operating results. Revenue Recognition Revenues are primarily derived from sales of generic, rare disease, and brands portfolio of pharmaceutical products, royalties, and other pharmaceutical services.
We consider potential tax effects resulting from discontinued operations and gains and losses included in other comprehensive income (loss) and record intra-period tax allocations, when those effects are deemed material. Our effective income tax rate is also affected by changes in tax law, our level of earnings, and the results of tax audits.
The Company considers potential tax effects resulting from discontinued operations and gains and losses included in other comprehensive (loss) income and record intra-period tax allocations, when those effects are deemed material. Our effective income tax rate is also affected by changes in tax law, our level of earnings, and the results of tax audits.
These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily 56 Table of Contents apparent from other sources. Actual results could differ from those estimates.
These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.
To the extent we are required to pay amounts in excess of our established liability, our effective income tax rate in a given financial statement period could be materially affected. An unfavorable tax settlement generally would require use of our cash and may result in an increase in our effective income tax rate in the period of resolution.
To the extent the Company is required to pay amounts in excess of our established liability, our effective income tax rate in a given financial statement period could be materially affected. An unfavorable tax settlement generally would require use of our cash and may result in an increase in our effective income tax rate in the period of resolution.
Income Taxes We use the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.
Income Taxes The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.
For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. We have not identified any uncertain income tax positions that could have a material impact to the consolidated financial statements.
For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company has not identified any uncertain income tax positions that could have a material impact on the consolidated financial statements.
On February 22, 2024, the Company paid $12.5 million to Novitium related to the achievement of the milestone, see Note 2 and Note 10, Business Combination and Fair Value, respectively, in the notes to the consolidated financial statements in Part II, Item 8. of this Annual Report on Form 10-K for additional information on our contingent consideration.
On February 22, 2024, the Company paid $12.5 million to Novitium related to the achievement of the milestone. See Note 12 "Fair Value" in the notes to the consolidated financial statements in Part II, Item 8. of this Annual Report on Form 10-K for additional information on our contingent consideration.
If there were a 10% change in the administrative fees estimates throughout the year, our net revenues would be affected by $5.6 million for the year ended December 31, 2023. 57 Table of Contents Prompt Payment Discounts If customers do not take 100% of available discounts as we estimate, we could need to re-adjust our methodology for calculating the prompt payment discount reserve.
If there were a 10% change in the administrative fees estimates throughout the year, our net revenues would be affected by $6.6 million for the year ended December 31, 2024. Prompt Payment Discounts If customers do not take 100% of available discounts as we estimate, the Company could need to re-adjust our methodology for calculating the prompt payment discount reserve.
Consolidation among wholesale distributors, chain drug stores, and group purchasing organizations has resulted in a smaller number of companies each controlling a larger share of pharmaceutical distribution channels. Our net revenues were concentrated among four customers representing 31%, 13%, 13%, and 12% of net revenues during the year ended December 31, 2023.
Consolidation among wholesale distributors, chain drug stores, and group purchasing organizations has resulted in a smaller number of companies each controlling a larger share of pharmaceutical distribution channels. Our net revenues were concentrated among four customers representing 25%, 16%, 12%, and 11% of net revenues during the year ended December 31, 2024.
If there were a 10% change in the government rebate estimates throughout the year, our net revenues would be affected by $2.4 million for the year ended December 31, 2023.
If there were a 10% change in the government rebate estimates throughout the year, our net revenues would be affected by $3.2 million for the year ended December 31, 2024.
The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions, and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. The carrying value of goodwill at December 31, 2023 was $28.2 million.
The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions, and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. The carrying value of goodwill at December 31, 2024 was approximately $60.0 million.
We seek to develop products for which we can obtain sufficient market share and may decline to develop a product if we anticipate significant competition. Our manufacturing facilities provide a means of entering niche markets, such as hormone therapies, in which fewer generic companies typically compete.
We seek to develop products for which we can obtain sufficient market share and may decline to develop a product if we anticipate significant competition. Our manufacturing facilities provide a means of entering niche markets, such as hormone therapies, in which fewer generic companies typically compete. Fiscal 2024 Developments Acquisition of Alimera Sciences, Inc.
We plan to continue to expand our rare disease business, through a combination of organic growth, as described above, and acquisition.
We plan to continue to expand our Rare Disease business, through a combination of organic growth and acquisition.
Revenue is recognized when our obligations under the terms of our contracts with customers are satisfied, which generally occurs when control of the products we sell is transferred to the customer. Variable consideration is estimated after the consideration of applicable information that is reasonably available.
Revenue is recognized when our obligations under the terms of our contracts with customers are satisfied, which generally occurs when control of the products we sell is transferred to the customer. 81 Ta b l e of Contents Variable consideration is estimated after the consideration of applicable information that is reasonably available.
There were no material discrete items occurring during the year ended December 31, 2022. 52 Table of Contents Liquidity and Capital Resources The following table highlights selected liquidity and working capital information from our consolidated balance sheets.
There were no material discrete items occurring during the year ended December 31, 2023. Liquidity and Capital Resources The following table highlights selected liquidity and working capital information from our consolidated balance sheets.
As a result, negotiated payment terms with these customers have a material impact on our liquidity and working capital. 53 Table of Contents Our Cortrophin Gel product accounted for approximately 23% and 13% of our net revenues in 2023 and 2022, respectively. We pay to Merck Sharpe & Dohme B.V.
As a result, negotiated payment terms with these customers have a material impact on our liquidity and working capital. Our Cortrophin Gel product accounted for approximately 32% and 23% of our net revenues in 2024 and 2023, respectively. We pay to Merck Sharpe & Dohme B.V.
Recent Accounting Standards For information on recent accounti ng standards, see Note 1, "Description of Business and Summary of Significant Accounting Policies" of the Notes to the consolidated financial statements in Part II, Item 8. of this Form 10-K.
Recent Accounting Standards For information on recent accounti ng standards, see Note 1 "Description of Business and Summary of Significant Accounting Policies" of the Notes to the consolidated financial statements in Part II, Item 8. of this Form 10-K. 85 Ta b l e of Contents
Our contractual obligations and commitments as of December 31, 2023 are comprised of principal payments on debt, interest payments on debt, operating leases, purchase obligations, dividends, and contingent consideration. Our largest contractual obligation relates to our principal payments on our interest payments on our debt.
Our contractual obligations and commitments as of December 31, 2024 are comprised of principal payments on debt, interest payments on debt, operating leases, purchase obligations, dividends, and contingent consideration. New Credit Agreement Our largest contractual obligation relates to our principal payments on our interest payments on our debt.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. 59 Table of Contents We use a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The Company uses a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31 , 2022 , filed with the SEC on March 9 , 2023 .
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 202 3 , filed with the SEC on F ebruary 29, 2024 .
We have acquired the NDAs for and market Atacand, Atacand HCT, Arimidex, Casodex, Lithobid, Vancocin, Inderal LA, Inderal XL, InnoPran XL, Oxistat, Veregen, and Pandel. We are innovating in our go-to-market strategy through creative partnerships.
We have acquired the NDAs for and market Atacand, Atacand HCT, Arimidex, Casodex, Lithobid, Vancocin, Inderal LA, Inderal XL, InnoPran XL, Oxistat, and Veregen. We are innovating in our go-to-market strategy through creative partnerships and a sales force for these products.
Cost of sales does not include depreciation and amortization expense, which is reported as a separate component of operating expenses on our consolidated statements of operations. For the year ended December 31, 2023, cost of sales increased to $181.5 million from $138.8 million for the same period in 2022, an increase of $42.7 million or 30.8%.
Cost of sales does not include depreciation and amortization expense, which is reported as a separate component of operating expenses on our consolidated statements of operations. For the year ended December 31, 2024, cost of sales increased to $250.2 million from $181.5 million for the same period in 2023, an increase of $68.7 million or 37.8%.
We acquired the NDAs for Cortrophin Gel and Cortrophin-Zinc in January 2016 and executed long-term supply agreements with a supplier of our primary raw material for corticotrophin API, a supplier of corticotrophin API with whom we have advanced the manufacture of commercial scale batches of API, and a Cortrophin Gel fill/finish contract manufacturer.
Purified Cortrophin ® Gel We acquired the NDAs for Purified Cortrophin® Gel (Repository Corticotropin Injection USP) (“Cortrophin Gel”) and Cortrophin-Zinc TM in January 2016 and executed long-term supply agreements with a supplier of our primary raw material for corticotrophin API, a supplier of corticotrophin API with whom we have advanced the manufacture of commercial scale batches of API, and a Cortrophin Gel fill/finish contract manufacturer.
However, estimates associated with governmental allowances, Medicaid and other performance-based contract rebates are most at risk for material adjustment because of the extensive time delay between the recording of the accrual and its ultimate settlement, an interval that can generally range up to one year.
The sensitivity of our estimates can vary by program, type of customer and geographic location. However, estimates associated with governmental allowances, Medicaid and other performance-based contract rebates are most at risk for material adjustment because of the extensive time delay between the recording of the accrual and its ultimate settlement, an interval that can generally range up to one year.
We have begun to increase our focus on niche lower competition opportunities such as injectables, Paragraph IV, and competitive generic therapy ("CGT") designation filings. Additionally, we will continue to seek opportunities to enhance our capab ilities through strategic partnerships and acquisitions of assets and businesses.
We have begun to increase our focus on niche lower competition opportunities such as injectables, Paragraph IV, and competitive generic therapy (“CGT”) designation filings. 66 Ta b l e of Contents Additionally, we will continue to seek opportunities to enhance our capab ilities through strategic partnerships and acquisitions of assets and businesses.
If there were a 10% change in the returns estimates throughout the year, our net revenues would be affected by $1.8 million for the year ended December 31, 2023.
If there were a 10% change in the returns estimates throughout the year, our net revenues would be affected by $3.9 million for the year ended December 31, 2024.
Many of our established brand products as well as our generic products face competition from generic products and we expect them to continue to face competition from generic products in the future. The primary means of competition among generic manufacturers are pricing, contract terms, service levels, and reliability.
Essentially all of our generic products face competition from other generic products, as do many of our brands products, and we expect them to continue to face competition from generic products in the future. The primary means of competition among generic manufacturers are pricing, contract terms, service levels, and reliability.
Net Cash Used in Investing Activities Net cash used in investing activities for the year ended December 31, 2023 was $18.5 million, principally due to $8.9 million of capital expenditures and consideration paid for asset acquisitions of ANDAs and other product rights from Akorn Holding Company, Slayback Pharma Limited Liability Company, and Alvogen, Inc. totaling $9.6 million.
Net cash used in investing activities for the year ended December 31, 2023 was $18.5 million, principally due to $8.9 million of capital expenditures and the consideration paid for asset acquisitions of ANDAs and other product rights totaling $9.6 million.
If there were a 1% change in the chargeback estimates throughout the year, our net revenues would be affected by $5.9 million for the year ended December 31, 2023.
If there were a 1% change in the chargeback estimates throughout the year, our net revenues would be affecte d by $5.8 million for the year ended December 31, 2024.
Our most recent business acquisition was Novitium, including its portfolio of commercial and pipeline generic products, manufacturing and development facilities and expert workforce. The Novitium acquisition significantly increased our generic pharmaceutical research and development and manufacturing capabiliti es.
Our most recent business acquisition in the Generics and Other segment was the acquisition of Novitium in 2021, which included its portfolio of commercial and pipeline generic products, manufacturing and development facilities and expert workforce. The Novitium acquisition significantly increased our generic pharmaceutical research and development and manufacturing capabiliti es.
Historically, our changes of estimates reflecting actual results or updated expectations have not been material to our overall business. If any of our ratios, factors, assessments, experiences or judgments are not indicative or accurate predictors of our future experience, our results could be materially affected. The sensitivity of our estimates can vary by program, type of customer and geographic location.
Historically, the Company's changes of estimates reflecting actual results or updated expectations have not been material to our overall business. If any of our ratios, factors, assessments, experiences or judgments are not indicative or accurate predictors of our future experience, our results could be materially affected.
If there were a 10% decrease in the prompt payment discounts estimates throughout the year, our net revenues would increase by $2.3 million for the year ended December 31, 2023. Impairment of Goodwill and Intangible Assets Goodwill We allocate goodwill to reporting units based on the reporting unit expected to benefit from the business combination.
If there were a 10% decrease in the prompt payment discounts estimates throughout the year, our net revenues would increase by $2.6 million for the year ended December 31, 2024. 82 Ta b l e of Contents Impairment of Goodwill and Intangible Assets Goodwill The Company allocates goodwill to reporting units based on the reporting unit expected to benefit from the business combination.
("Merck") quarterly contingent consideration in the form of a perpetual, tiered royalty expressed as a percentage of Cortrophin Gel net sales. During the initial two years of commercialization (2022 and 2023) this royalty approximated 10% of net sales. We currently anticipate the blended Merck royalty rate to be in the upper teens in 2024.
("Merck") quarterly contingent consideration in the form of a perpetual, tiered royalty expressed as a percentage of Cortrophin Gel net sales. During the initial two years of commercialization (2022 and 2023) this royalty approximated 10% of net sales.
The following table summarizes stock-based compensation and ESPP expense included in our consolidated statements of operations: Years Ended December 31, (in thousands) 2023 2022 2021 Selling, general, and administrative $ 19,036 $ 13,316 $ 9,905 Research and development 910 751 564 Cost of sales 706 532 20 $ 20,652 $ 14,599 $ 10,489 Stock-based compensation cost for stock options is determined at the grant date using an option pricing model and stock-based compensation cost for restricted stock is based on the closing market price of the stock at the grant date.
The following table summarizes stock-based compensation and ESPP expense included in our consolidated statements of operations: (in thousands) Years Ended December 31, 2024 2023 2022 Selling, general, and administrative $ 26,534 $ 19,036 $ 13,316 Research and development 1,533 910 751 Cost of sales 1,277 706 532 $ 29,344 $ 20,652 $ 14,599 84 Ta b l e of Contents Stock-based compensation cost for stock options is determined at the grant date using an option pricing model and stock-based compensation cost for restricted stock is based on the closing market price of the stock at the grant date.
Uses of Cash Our primary cash requirements are to fund operations, including Purified Cortrophin Gel commercialization efforts, research and development programs and collaborations, to support general and administrative activities, to purchase equipment and machinery to expand our manufacturing capabilities as our product lines grow, and to expand our business and product pipeline through acquisitions of products and companies.
Uses of Cash Our primary cash requirements are to fund operations of the rare disease portion of our Rare Disease and Brands segment, research and development programs and collaborations, to support general and administrative activities, to purchase equipment and machinery to expand our manufacturing capabilities as our product lines grow, and to expand our business and product pipeline through acquisitions of products and companies.
As of December 31, 2023 accounts receivable from these four customers totaled approximately 81% of accounts receivable, net. Our net revenues were concentrated among three customers representing 26%, 18%, and 15% of net revenues during the year ended December 31, 2022.
As of December 31, 2024 accounts receivable from these four customers totaled approximately 70% of accounts receivable, net. Our net revenues were concentrated among four customers representing 31%, 13%, 13%, and 12% of net revenues during the year ended December 31, 2023. As of December 31, 2023, accounts receivable from these four customers totaled approximately 81% of accounts receivable, net.
See Note 11, Mezz anine and Stockholders’ Equity, in the notes to the consolidated financial statements in Part II, Item 8. of this Annual Report on Form 10-K for additional discussion of dividends. Consideration of the Novitium acquisition included $46.5 million in contingent future earn-out payments.
See Note 13 "Mezzanine and Stockholders’ Equity" in the notes to the con solidated financial statements in Part II, Item 8. of this Annual Report on Form 10-K for additional discussion of dividends. 80 Ta b l e of Contents Novitium Contingent Consideration Consideration of the Novitium acquisition included $46.5 million in contingent future earn-out payments.
We believe that our financial resources, consisting of net current working capital of approximately $374.3 million, anticipated future operating revenue and corresponding collections from customers, and our Credit Facility, under which $40.0 million remains available for borrowing as of December 31, 2023, will be sufficient to enable us to meet our working capital requirements and debt obligations for at least the next 12 months.
We believe that our financial resources, consisting of net current working capital of approximately $334.0 million, anticipated future operating revenue and corresponding collections from customers, and our New Credit Agreement, under which $75.0 million remains available for borrowing as of December 31, 2024, will be sufficient to enable us to meet our working capital requirements, debt obligations, and other liability obligations for at least the next 12 months from the date of filing of this report, and for the foreseeable future thereafter.
For the year ended December 31, 2022, we recognized an income tax benefit of $(14.8) million, an effective benefit rate of 23.6% of consolidated pre-tax losses reported in the period, as well as the net effects of certain discrete items occurring in 2022 which impact our income tax provision in the period in which they occur.
For the year ended December 31, 2023, we recognized an income tax expense of $1.1 million, an effective rate of 5.5% of pre-tax income reported in the period, as well as the net effects of certain discrete items occurring in 2023 which impact our income tax benefit in the period in which they occur.
In February 2024, the Company entered into an agreement for the purchase and sale of the Oakville site, for a purchase price of 19.2 million Canadian Dollars, or approximately $14.2 million US Dollars, based on the current exchange rate. The sale is expected to close in March 2024 ( see Note 19.
In February 2024, our Canadian subsidiary entered into an agreement for the purchase and sale of the Oakville site, for a purchase price of $19.2 million Canadian Dollars, or approximately $14.2 million, based on the current exchange rate.
On October 29, 2021, the FDA approved the Company’s sNDA for Purified Cortrophin Gel (Repository Corticotropin Injection USP) for the treatment of certain chronic autoimmune disorders, including acute exacerbations of multiple sclerosis (“MS”) and rheumatoid arthritis (“RA”), in addition to excess urinary protein due to nephrotic syndrome.
On October 29, 2021, the FDA approved the Company’s Supplemental New Drug Application ("sNDA") for Cortrophin Gel for the treatment of certain chronic autoimmune disorders, including acute exacerbations of multiple sclerosis (“MS”) and rheumatoid arthritis (“RA”), in addition to excess urinary protein due to nephrotic syndrome. Cortrophin Gel is an adrenocorticotropic hormone (“ACTH”), also known as purified corticotropin.
We evaluate our reporting units on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach.
The Company evaluates its reporting units on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach.
On October 2, 2023, we announced FDA approval and commercial availability of a 1-mLvial of Cortrophin Gel, appropriate for adjunctive treatment of certain patients with acute gouty arthritis flares.
On October 2, 2023, we announced FDA approval and commercial availability of a 1-mLvial of Cortrophin Gel, appropriate for adjunctive treatment of certain patients with acute gouty arthritis flares. During the first quarter of 2024, ANI launched a targeted ophthalmology-focused sales force for Cortrophin Gel.
We consider many factors in evaluating whether the value of its intangible assets with indefinite lives may not be recoverable, including, but not limited to the discount rate, terminal growth rates, general economic conditions, our outlook and market performance of our industry and recent and forecasted financial performance. 58 Table of Contents Contingent Consideration The fair value of our contingent consideration was $24.0 million and $35.1 million at December 31, 2023 and 2022, respectively.
We consider many factors in evaluating whether the value of its intangible assets with indefinite lives may not be recoverable, including, but not limited to the discount rate, terminal growth rates, general economic conditions, our outlook and market performance of our industry and recent and forecasted financial performance.
Changes in fair value can result from changes in assumptions such as discount rates, probabilities or estimates of revenue and profits, and probability of achieving regulatory milestones, as well as the passage of time. These changes resulted in charges of $1.4 million and $3.8 million during the years ended December 31, 2023 and 2022, respectively.
Changes in fair value can result from changes in assumptions such as discount rates, probabilities or estimates of future revenue and profits, as well as the passage of time. These changes resulted in charges of $0.3 million during the year ended December 31, 2024.
The interest rate under the Term Facility as of December 31, 2023 is 11.46% . See Note 5, Indebtedness, in the notes to the consolidated financial statements in Part II, Item 8. of this Annual Report on Form 10-K for additional information and timing on our principal payments on debt.
The cash interest rate under the Term Loan A was approximately 6.98% at December 31, 2024. See Note 6 "New Credit A greement" in the notes to the consolidated financial statements in Part II, Item 8. of this Annual Report on Form 10-K for additional information and timing on our principal payments on debt.
During the year ended December 31, 2023, no single vendor represented at least 10% of inventory purchases.
During the year ended December 31, 2024, 12% of our raw material inventory purchases were from one domestic supplier. During the year ended December 31, 2023, no single vendor represented at least 10% of our raw material inventory purchases.
Cost of Sales (Excluding Depreciation and Amortization) Year Ended December 31, (in thousands) 2023 2022 Change % Change Cost of sales (excluding depreciation and amortization) 181,513 138,785 $ 42,728 30.8 % Cost of sales consists of direct labor, including manufacturing and packaging, active and inactive pharmaceutical ingredients, freight costs, packaging components, and royalties payable related to profit-sharing arrangements.
Cost of Sales (Excluding Depreciation and Amortization) Year Ended December 31, (in thousands) 2024 2023 Change % Change Cost of sales (excluding depreciation and amortization) $ 250,210 $ 181,513 $ 68,697 37.8 % Cost of sales consists of direct labor, including manufacturing and packaging, active and inactive pharmaceutical ingredients, freight costs, packaging components, royalties payable related to profit-sharing arrangements, and amortization of the inventory fair value step-up recognized in connection with the acquisition of Alimera.
(in thousands) December 31, 2023 December 31, 2022 Cash and cash equivalents $ 221,121 $ 48,228 Current restricted cash — 5,006 Accounts receivable, net 162,079 165,438 Inventories 111,196 105,355 Prepaid income taxes — 3,827 Assets held for sale 8,020 8,020 Prepaid expenses and other current assets 17,400 8,387 Total current assets $ 519,816 $ 344,261 Current debt, net of deferred financing costs $ 850 $ 850 Accounts payable 36,683 29,305 Accrued royalties 16,276 9,307 Accrued compensation and related expenses 23,786 10,312 Accrued government rebates 12,168 10,872 Income taxes payable 8,164 — Returned goods reserve 29,678 33,399 Current contingent consideration 12,266 — Accrued expenses and other 5,606 5,394 Total current liabilities $ 145,477 $ 99,439 As of December 31, 2023, we had $221.1 million in unrestricted cash and cash equivalents.
(in thousands) December 31, 2024 December 31, 2023 Cash and cash equivalents $ 144,861 $ 221,121 Restricted cash 33 — Accounts receivable, net 221,726 162,079 Inventories 136,782 111,196 Assets held for sale — 8,020 Prepaid expenses and other current assets 17,975 17,400 Investment in equity securities 6,307 — Total current assets $ 527,684 $ 519,816 Current debt, net of deferred financing costs $ 9,172 $ 850 Accounts payable 45,656 36,683 Accrued royalties 22,626 16,276 Accrued compensation and related expenses 37,725 23,786 Accrued government rebates 18,714 12,168 Income taxes payable 6,749 8,164 Returned goods reserve 39,274 29,678 Current contingent consideration 29 12,266 Accrued expenses and other 13,735 5,606 Total current liabilities $ 193,680 $ 145,477 As of December 31, 2024, we had $144.9 million in unr estricted cash and cash equivalents.
See Note 15, Co mmitments and Contingencies, in the notes to the consolidated financial statements in Part II, Item 8. of this Annual Report on Form 10-K for additional discussion and timing of payments related to these operating lease obligations.
As leases expire, we do not anticipate difficulty in negotiating renewals or finding other satisfactory space if the premise becomes unavailable. See Note 17 "Commitments and Contingencies" in the notes to the consolidated financial statements in Part II, Item 8. of this Annual Report on Form 10-K for additional discussion and timing of payments related to these operating lease obligations.
Sources and Uses of Cash Debt Financing On November 19, 2021, the Company, as borrower, entered into a credit agreement (the “Credit Agreement”) with Truist Bank and other lenders, which provides for credit facilities consisting of (i) a senior secured term loan facility in an aggregate principal amount of $300.0 million (the “Term Facility”) and (ii) a senior secured revolving credit facility in an aggregate commitment amount of $40.0 million, which may be used for revolving credit loans, swingline loans and letters of credit (the “Revolving Facility,” and together with the Term Facility, the “Credit Facility”).
Sources and Uses of Cash Term Loan A On August 13, 2024, the Company, as lead borrower, entered into a delayed-draw credit agreement (the “New Credit Agreement”) with JPMorgan Chase Bank, N.A., and other financial institutions (together, the “Lenders”), which provides for aggregate principal commitments consisting of (i) a senior secured term loan facility in an aggregate principal amount of $325.0 million (the “Term Loan A” or “TLA”), and (ii) a senior secured revolving credit facility in an aggregate commitment amount of $75.0 million, which may be used for revolving credit loans, swingline loans and letters of credit (the “TLA Revolver” and together with the TLA, the “New Credit Facility”).
Executive Overview ANI Pharmaceuticals, Inc. and its consolidated subsidiaries (together, “ANI,” the “Company,” “we,” “us,” or “our”) is a diversified bio-pharmaceutical company serving patients in need by developing, manufacturing, and marketing high quality branded and generic prescription pharmaceuticals, including for diseases with high unmet medical need.
Executive Overview ANI Pharmaceuticals, Inc. and its consolidated subsidiaries (together, “ANI,” the “Company,” “we,” “us,” or “our”) is a diversified bio-pharmaceutical company committed to its mission of “Serving Patients, Improving Lives” by developing, manufacturing, and commercializing innovative and high quality therapeutics.
Equity Financing In May 2023, through a public offering, we completed the issuance and sale of 2,183,545 shares of ANI common stock, resulting in net proceeds after issuance costs of $80.6 million.
In May 2023, through a public offering, the Company completed the issuance and sale of 2,183,545 shares of ANI common stock, resulting in net proceeds after issuance costs of $80.6 million. Strategy Our objective is to build a sustainable and growing biopharmaceutical company serving patients in need and creating long-term value for our investors.
The following table summarizes our results of operations for the periods indicated: Year Ended December 31, (in thousands) 2023 2022 Net Revenues $ 486,816 $ 316,385 Operating Expenses Cost of sales (excluding depreciation and amortization) 181,513 138,785 Research and development 34,286 22,318 Selling, general, and administrative 161,697 124,044 Depreciation and amortization 59,791 56,972 Contingent consideration fair value adjustment 1,426 3,758 Restructuring activities 1,132 5,679 Intangible asset impairment charge — 112 Operating Income (Loss) 46,971 (35,283) Interest expense, net (26,940) (28,052) Other (expense) income, net (159) 670 Income (Loss) Before Expense (Benefit) for Income Taxes 19,872 (62,665) Income tax expense (benefit) 1,093 (14,769) Net Income (Loss) $ 18,779 $ (47,896) 48 Table of Contents The following table sets forth, for the periods indicated, items in our consolidated statements of operations as a percentage of net revenues.
General Impacts to our 2024 and 2023 results of operations, including to net revenues, operating expenses, interest and other expense, net, and income taxes are described below. 68 Ta b l e of Contents The following table summarizes our results of operations for the periods indicated: Year Ended December 31, (in thousands) 2024 2023 Net Revenues $ 614,376 $ 486,816 Operating Expenses Cost of sales (excluding depreciation and amortization) 250,210 181,513 Research and development 44,581 34,286 Selling, general, and administrative 249,636 161,697 Depreciation and amortization 67,731 59,791 Contingent consideration fair value adjustment (619) 1,426 Gain on sale of building (5,347) — Restructuring activities — 1,132 Intangible asset impairment charge 7,600 — Operating Income 584 46,971 Unrealized gain on investment in equity securities 6,307 — Interest expense, net (17,602) (26,940) Other expense, net (4,033) (159) Loss on extinguishment of debt (7,468) — (Loss) Income Before (Benefit) Expense for Income Taxes (22,212) 19,872 Income tax (benefit) expense (3,690) 1,093 Net (Loss) Income $ (18,522) $ 18,779 The following table sets forth, for the periods indicated, items in our consolidated statements of operations as a percentage of net revenues.
This is offset by cash used in financing activities related to $12.5 million to Company Members of Novitium, $3.0 million maturity payments on the Term Facility, $5.0 million of treasury stock purchased in 55 Table of Contents relation to restricted stock vests, and $1.6 million convertible preferred stock dividends paid.
This was offset by cash used in financing activities related to $12.5 million to Company Members of Novitium, $3.0 million maturity payments on the Term Facility, $5.0 million of treasury stock purchased in relation to restricted stock vests, and $1.6 million convertible preferred stock dividends paid. 79 Ta b l e of Contents Contractual Obligations We believe our available cash and cash equivalents along with our ability to generate operating cash flow and continued access to debt markets are sufficient to fund existing and planned cash requirements.
We are subject to taxation in various U.S. jurisdictions, Canada, and India and remain subject to examination by taxing jurisdictions for the years 1998 and all subsequent periods due to the availability of net operating loss carryforwards.
The Company is subject to taxation in various U.S. jurisdictions, Canada, India, the United Kingdom, Ireland, Portugal, and Germany and all of its income tax returns remain subject to examination by tax authorities due to the availability of net operating loss carryforwards.
Cost of sales, as a percentage of net revenues, decreased from 42.2% to 37.3% for the year ended December 31, 2023 , compared to the same period in 2022 .
Cost of sales, as a percentage of net revenues, increased from 37.3% to 40.7% for the year ended December 31, 2024, compared to the same period in 2023, primarily due to a shift in product mix year over year, and increase in sales of products that bear a royalty payable.
Income Tax Expense (Benefit) Year Ended December 31, (in thousands) 2023 2022 Change % Change Income tax expense (benefit) $ 1,093 $ (14,769) $ 15,862 (107.4) % Incom e tax expense (benef it) consists of current and deferred components, which include changes in our deferred tax assets, our deferred tax liabilities, and our valuation allowance. See Note 14.
There was no comparable transaction in the year ended December 31, 2023 . 73 Ta b l e of Contents Income Tax (Benefit) Expense Year Ended December 31, (in thousands) 2024 2023 Change % Change Income tax (benefit) expense $ (3,690) $ 1,093 $ (4,783) (437.6) % Income tax (benefit) expen se consists of current and deferred components, which include changes in our deferred tax assets, our deferred tax liabilities, and our valuation allowance.
Income Taxes, in the notes to the consolidated financial statements in Part II, Item 8. of this Annual Report on Form 10-K for further information. For the year ended December 31, 2023, we recognized an income tax expense of approximately $1.1 million. The Company's effective tax rate was 5.5% after discrete items for the year ended December 31, 2023.
See Note 16 "Income Taxes" in the notes to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for further information.
However, if actual results are not consistent with our estimates or assumptions, we could be exposed to an impairment charge that could be material. Impairments of Long-Lived Assets We review our long-lived assets, including intangible assets with finite lives, for recoverability whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable.
Impairments of Long-Lived Assets The Company reviews its long-lived assets, including intangible assets with finite lives, for recoverability whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company evaluates assets for potential impairment by comparing estimated future undiscounted net cash flows to the carrying amount of the asset.
As of December 31, 2023 , the notional value of the interest rate swap was $139.4 million . See Note 6, Derivative Financial Instruments and Hedging Activity, in the notes to the consolidated financial statements in Part II, Item 8. of this Annual Report on Form 10-K for additional information. Our operating leases are for facilities and office equipment.
See Note 7 "2.25% Convertible Senior Notes Due 2029" in the notes to the consolidated financial statements in Part II, Item 8. of this Annual Report on Form 10-K for additional information and timing on our principal payments on debt. Leases Our operating leases are primarily for warehouse, office space, and office equipment.
Year Ended December 31, 2023 2022 Net Revenues 100.0 % 100.0 % Operating Expenses Cost of sales (excluding depreciation and amortization) 37.3 % 43.9 % Research and development 7.0 % 7.1 % Selling, general, and administrative 33.2 % 39.2 % Depreciation and amortization 12.3 % 18.0 % Contingent consideration fair value adjustment 0.3 % 1.2 % Restructuring activities 0.2 % 1.8 % Intangible asset impairment charge — % 0.0% Operating Income (Loss) 9.6 % (11.2) % Interest expense, net (5.5) % (8.9) % Other (expense) income, net 0.0% 0.2 % Income (Loss) Before Expense (Benefit) for Income Taxes 4.1 % (19.9) % Income tax expense (benefit) 0.2 % (4.7) % Net Income (Loss) 3.9 % (15.2) % Results of Operations for the Years Ended December 31, 2023 and 2022 Net Revenues Year Ended December 31, (in thousands) 2023 2022 Change % Change Generics, Established Brands, and Other Segment Generic pharmaceutical products $ 269,449 $ 210,121 $ 59,328 28.2 % Established brand pharmaceutical products, royalties, and other pharmaceutical services 105,250 64,578 40,672 63.0 % Generics, established brands, and other segment total net revenues $ 374,699 $ 274,699 $ 100,000 36.4 % Rare Disease Segment Rare disease pharmaceutical products 112,117 41,686 $ 70,431 169.0 % Total net revenues $ 486,816 $ 316,385 $ 170,431 53.9 % We derive substantially all of our revenues from sales of generic, rare disease, and established brand pharmaceutical products, royalties on net sales of certain products, and other pharmaceutical services.
Year Ended December 31, 2024 2023 Net Revenues 100.0 % 100.0 % Operating Expenses Cost of sales (excluding depreciation and amortization) 40.7 % 37.3 % Research and development 7.3 % 7.0 % Selling, general, and administrative 40.6 % 33.2 % Depreciation and amortization 11.0 % 12.3 % Contingent consideration fair value adjustment (0.1) % 0.3 % Gain on sale of building (0.9) % — % Restructuring activities — % 0.2 % Intangible asset impairment charge 1.2 % — % Operating Income 0.2 % 9.7 % Unrealized gain on investment in equity securities 1.0 % — % Interest expense, net (2.9) % (5.5) % Other expense, net (0.7) % — % Loss on extinguishment of debt (1.2) % — % (Loss) Income Before (Benefit) Expense for Income Taxes (3.6) % 4.2 % Income tax (benefit) expense (0.6) % 0.2 % Net (Loss) Income (3.0) % 4.0 % 69 Ta b l e of Contents Results of Operations for the Years Ended December 31, 2024 and 2023 Net Revenue Year Ended December 31, (in thousands) 2024 2023 Change % Change Rare Disease and Brands Cortrophin Gel $ 198,085 $ 112,117 $ 85,968 76.7 % ILUVIEN and YUTIQ 31,514 — 31,514 100.0 % Rare Disease total net revenues $ 229,599 $ 112,117 $ 117,482 104.8 % Brands 64,743 85,384 (20,641) (24.2) % Rare Disease and Brands total net revenues $ 294,342 $ 197,501 $ 96,841 49.0 % Generics and Other Generic pharmaceutical products 301,004 269,449 31,555 11.7 % Royalties and other pharmaceutical services 19,030 19,866 (836) (4.2) % Generics and Other total net revenues $ 320,034 $ 289,315 $ 30,719 10.6 % Total net revenues $ 614,376 $ 486,816 $ 127,560 26.2 % We derive substantially all of our revenues from sales of rare disease, brands portfolio of pharmaceutical products, generics, and other sources of revenue such as royalties on net sales of certain products, and other pharmaceutical services.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+7 added−11 removed1 unchanged
Biggest changeWe are exposed to risks associated with foreign currency exchange rate risks as we remeasure certain Indian rupee-denominated transactions from our Indian subsidiary from the Indian-rupee to the U.S. dollar. Changes in exchange rates can positively or negatively impact our revenue, income, assets, liabilities, and equity.
Biggest changeChanges in exchange rates can positively or negatively impact our revenue, income, assets, liabilities, and equity. We do not use foreign exchange contracts for speculative trading purposes, nor do we hedge our foreign currency exposure in a manner that entirely offsets the effects of changes in foreign exchange rates.
On November 19, 2021, we entered into the Credit Agreement, which is secured by substantially all of the personal property and certain material real property owned by ANI and our wholly-owned domestic subsidiaries, and obligations under the Credit Agreement are guaranteed by certain of our wholly-owned domestic subsidiaries.
Interest Rate Risk On August 13, 2024, the Company entered into a New Credit Agreement, which is secured by substantially all of the personal property and certain material real property owned by ANI and our wholly-owned domestic subsidiaries, and obligations under the New Credit Agreement are guaranteed by certain of our wholly-owned domestic subsidiaries.
The Term Facility proceeds were used to finance a portion of the consideration for the Novitium acquisition, repay our existing credit facility, and pay fees, costs and expenses incurred in connection with the acquisition. Proceeds from the Revolving Facility are expected to be used, subject to certain limitations, for working capital and other general corporate purposes.
The Term Loan A proceeds were used to finance the acquisition of Alimera, including fees, costs, and expenses incurred in connection with the acquisition. Proceeds from the TLA Revolver are expected to be used, subject to certain limitations, for working capital and other general corporate purposes.
A 100 basis-point adverse movement (decrease) in short-term interest rates would decrease the interest income earned on our cash balance in the year ended December 31, 2023 by approximately $2.2 million.
The returns from certain of our cash and cash equivalents will vary as short-term interest rates change. A 100 basis-point adverse movement (decrease) in short-term interest rates would decrease the interest income earned on our cash balance in the year ended December 31, 2024 by approximately $1.4 million.
Currency exchange rates did not have a material impact on our revenue, income, assets, liabilities, or equity during the year ended December 31, 2023 . 61 Table of Contents
We regularly review our hedging program and assess the need to utilize financial instruments to hedge currency exposures on an ongoing basis. Currency exchange rates did not have a material impact on our revenue, income, assets, liabilities, or equity during the year ended December 31, 2024.
Removed
The Term Facility matures on the six-year anniversary of November 19, 2021 (the “Closing Date”) and the Revolving Facility matures on the five-year anniversary of the Closing Date. The Credit Agreement contains usual and customary representations and warranties of the parties for credit facilities of this type, subject to customary exceptions and materiality standards.
Added
As of December 31, 2024, the Company had approximately $323.0 million of debt outstanding under our New Credit Agreement, bearing interest at variable rates, tied to the Secured Overnight Financing Rate. Accordingly, our earnings and cash flows will be affected by changes in interest rates to the extent the principal balance is unhedged.
Removed
In addition, we are required to maintain, a total net leverage ratio not to exceed 4.75:1.00 and, solely with respect to the Revolving Facility, (a) during the period beginning on October 1, 2022 and ended on September 30, 2023, a total net leverage ratio not to exceed 4.50:1.00 and (b) for all periods thereafter, a total net leverage ratio not to exceed 4.25:1.00.
Added
Assuming no change in the amount of debt outstanding, a 100 basis point increase in the average interest rate under these borrowings would have increased the interest expense related to our variable rate debt by approximately $1.8 million based upon our unhedged portion of principal debt outstanding as of December 31, 2024.
Removed
The Credit Agreement also contains certain customary covenants and events of default, as well as, in the event of an occurrence of an event of default under the Credit Agreement, customary remedies for the lenders, including the acceleration of any amounts outstanding under the Credit Agreement. 60 Table of Contents Amendment No. 1 In July 2023, the Company amended its Credit Agreement to transition from LIBOR to SOFR due to the cessation of LIBOR pursuant to the terms of Amendment No.1 to the Credit Agreement (“Amendment No. 1”).
Added
Actual results may vary due to changes in the amount of variable rate debt outstanding.
Removed
SOFR will be applied to the Credit Facility for the interest period (as defined in the Credit Agreement) beginning on August 1, 2023 and will replace all LIBOR terms.
Added
A commitment fee accrues on the unutilized commitments under the TLA Revolver and, from and after the date that is two months after the closing date of the New Credit Agreement, the TLA at a per annum rate equal between 0.25% and 0.40% depending on the Company’s first lien net leverage ratio.
Removed
Amendment No. 1 also includes the addition of a credit spread adjustment of 0.11448% for an interest period of one-month duration, 0.26161% for a three-month duration, and 0.42826% for a six-month duration, in addition to SOFR and the applicable margin, as noted above. There were no other changes or modifications to the Credit Agreement.
Added
Foreign Currency Risk In connection with our recent acquisition of Alimera, we have increased our international operations, exposing us to increased risk of foreign currency exchange fluctuations as compared to prior periods. In particular, we are now exposed to foreign currency fluctuations in British Pounds and Euros in addition to the Indian rupee.
Removed
The Company has applied the optional expedients in ASC 848, Reference Rate Reform, and elected to treat the change in the benchmark interest rate to SOFR as a continuation of the existing Credit Agreement and account for the change prospectively.
Added
Equity Investment Risk Our equity investment is held in the marketable equity security of one publicly traded company (CG Oncology, Inc.). As of December 31, 2024, the carrying value of our marketable equity security was approximately $6.3 million.
Removed
In April 2020, we entered into an interest rate swap with Citizens Bank, N.A. to manage our exposure to changes in LIBOR-based interest rates underlying total borrowings under term facilities related to our Prior Credit Agreement. The interest rate swap matures in December 2026.
Added
This security is subject to a wide variety of market-related risks that could substantially reduce or increase the fair value of our holding. A decline in financial condition or operating results of this investment could result in a loss of all or a substantial part of our carrying value in this company. 86 Ta b l e of Contents
Removed
Concurrent with the termination of the Prior Credit Agreement and entry into the Credit Facility with Truist Bank, the interest rate swap with a notional value of $168.6 million at origin on November 19, 2021 was novated and is now with Truist Bank and is used to manage changes in LIBOR-based interest rates underlying a portion of the borrowing under the Term Facility.
Removed
The notional value of the swap was $139.4 million and $151.5 million at December 31, 2023 and 2022, respectively. We are exposed to interest rate risk on the unhedged portion of our Term Facility and if interest rates increased or decreased by 1%, interest expense would have increased or decreased by approximately $1.6 million.
Removed
If our Revolving Facility were fully drawn and interest rates increased or decreased by 1%, interest expense would have increased or decreased by approximately $0.4 million. The interest rate swap provides an effective fixed interest rate of 2.26% and has been designated as an effective cash flow hedge and therefore qualifies for hedge accounting.
Removed
As a result of the interest rate swap, our exposure to interest rate volatility is minimized. We are exposed to risks associated with changes in interest rates. The returns from certain of our cash and cash equivalents will vary as short-term interest rates change.

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