Replies to post #13837 on ANI Pharmaceuticals (ANIP)

[Just the facts maam]

LD, you got me thinking about the Novitium deal and based on the following, I am less skeptical . The following shows the potential earnouts, it looks their true growth value to ANIP is in the 505(b)(2) filings they bring to the table and most likely any future 505(b)(2) filings

According to their Agreement Plan of Merger,

Section 1.12 Earn-Out.
(a) Subject to the following terms and conditions, Parent shall make the following payments, if any, to the Exchange Agent (for distribution to the Company Members in accordance with their respective Pro Rata Percentages) (collectively, the “Earn-Out Payments”):

(i) An amount of up to $25 million (the “Gross Profit Earn-Out”) shall be payable as follows:

(A) An amount up to $12.5 million in the aggregate (the “GP Earn-Out”) shall be payable as follows: if during the first 24 months starting on the first day of the month following the month in which the Closing occurs (the “Gross Profit Earn-Out Period”), the Gross Profit generated by the Novitium Portfolio minus Required CapEx is greater than or equal to $95 million, Parent will pay an amount, not to exceed $12.5 million, calculated by multiplying $12.5 million by a fraction, (i) the numerator of which is the amount by which (A) the Gross Profit generated during the Gross Profit Earn-Out Period minus Required CapEx made during the Gross Profit Earn-Out Period exceeds (B) $80 million, and (ii) the denominator of which is $25 million; and

(B) An amount equal to $12.5 million (the “ANDA Filing Earn-Out”) if the Company makes all of the FDA Filings during the Gross Profit Earn-Out Period with respect to all of the Existing Pipeline ANDAs (which list shall be subject to adjustment both prior to and following the Closing upon mutual agreement of Parent and the Key Persons); provided, in the case of each of clauses (A) and (B), that the annualized R&D expenses of the Company in respect of the Novitium Portfolio and the Existing Pipeline ANDAs relevant to the calculation of the Gross Profit Earn-Out do not exceed $16 million per year for each year during the Gross Profit Earn-Out Period (“R&D Expenses”); and/or

(ii) Another amount up to $21.5 million (the “505(b)(2) Earn-Out”) shall be payable as follows: Out of the Net Profit generated by the 505(b)(2) Products, the Company Members shall receive 20%, payable on a quarterly basis until the earlier to occur of (i) the sum of all such payments being equal to $21.5 million in the aggregate and (ii) the tenth anniversary of FDA Approval of the applicable 505(b)(2) Product.

iMerger Agreement

According to the Q1 filing they project an 87.7% probability of paying out the ANDA related earnout between 2023 and 2029. This consistent with what Lalwani has stated in conference calls, where they expect slow growth due to competition on older ANDAs

As it relates to the 505(b)(2) the Q1 filing projected a 90% probability of paying out the full earnout in 2023 and 2024. Of they are rare disease drugs we are probably looking at an 80% profit margin. If so, the 505(b)(2) should at generate at least $135 million in revenue between 2023 and 2024. An average of $67.5 million a year, but obviously will produce a higher annual run rate.

Then you have Corti growing revenue and potentially (most likely for some of us) Libigel.

GLTA