管理層發言
Good day, everyone, and welcome to today's ANI Pharmaceuticals, Inc. Second Quarter 2026 Earnings Results Call. Please note this call is being recorded. Operator provided instructions. It is now my pleasure to turn the conference over to Irina Koffler. Please go ahead.
Thank you, Daniel. Welcome to ANI Pharmaceuticals' Second Quarter 2026 Earnings Results Call. This is Irina Koffler, Investor Relations for ANI. With me on today's call are Nikhil Lalwani, President and Chief Executive Officer; Stephen Carey, Senior Vice President and Chief Financial Officer; and Chris Mutz, Senior Vice President and Head of ANI's Rare Disease Business. Earlier this morning on August 7, 2026, we released our results for the second quarter 2026 via a press release that is available on our website. This call is also available via webcast and is accompanied by a slide deck that can be accessed by going to the Events section of the Investors page of our website. Before we begin, I would like to remind you that we will be making forward-looking statements and discussing certain non-GAAP measures. Forward-looking statements are subject to substantial risks and uncertainties, speak only to the call's original date, and we take no obligation to update or revise any of the statements. During this call, we will also refer to certain non-GAAP financial measures to describe our performance and have provided a reconciliation to the most directly comparable GAAP financial measures within the materials that accompany this call. The archived webcast will be available for 30 days on our website, anipharmaceuticals.com. And with that, I'll turn the call over to Nikhil Lalwani.
Thank you, Irina. Good morning, everyone, and thank you for joining us for ANI's second quarter of 2026 earnings call. Starting on Slide 5, our entire organization demonstrated outstanding focus during the second quarter as we continued to transform ANI into a leading rare disease company. We reported record second quarter 2026 revenues of $266 million for the overall business, record Cortrophin revenues of $117.1 million and record adjusted EBITDA of $71.6 million. In the second quarter, we grew total net revenues 26% year-over-year, driven by persistent execution across our Rare Disease and Generics businesses with incremental contribution from the Harmony intellectual property out-licensing deal we announced last quarter. We also grew adjusted EBITDA 32% year-over-year to an all-time high and above our prior expectations. Furthermore, we achieved all of this while executing the single largest rare disease sales force expansion in our history, where we increased our sales force by 50% to approximately 180 reps. Our strategic plan is on track and we are well positioned to drive meaningful growth in 2026 and beyond. Turning to Slide 6. Our first area of focus in our transformation into a rare disease company is delivering organic growth for our two durable branded rare disease medicines, Cortrophin Gel and ILUVIEN. We delivered $117.1 million in Cortrophin Gel net revenues for the second quarter, up 43% year-over-year and 56% over quarter 1, 2026, consistent with the expectations we outlined during our last quarterly call. Second quarter revenues from our existing specialties of rheumatology, nephrology, neurology, ophthalmology and pulmonology was healthy and we are seeing significant momentum in demand in the third quarter with July representing the highest month for new cases initiated. We expect our existing specialty sales force to continue its strong trajectory in the second half of 2026. We completed our gout-focused organization expansion, and the team was fully operational at the end of June, as expected. We are pleased that we have seen strong demand driven by the high unmet need for patients who are most severely impacted by acute gouty arthritis flares and who need an additional treatment option. Our leading indicators are very positive, such as total new cases initiated, cases initiated per sales rep, and a number of prescribers with multiple new cases. We believe we are at the start of a sizable inflection for this business and look forward to updating you on our progress. Taking a step back, our conviction in the growth and durability of Cortrophin Gel have only increased over time since our 2022 launch. Cortrophin has grown at a compound annual growth rate of 103% to $348 million in sales in 2025, and we're just getting started. We believe Cortrophin will serve as the key building block catalyzing our transformation into a rare disease company. Now that we are midway through the year, we are modestly revising our Cortrophin Gel revenue guidance to $520 million to $540 million, primarily to account for results in the first half of 2026. Our expectations for the back half remain largely intact with what we had expected at the start of the year. Importantly, this still represents 50% to 55% growth for Cortrophin compared to 2025, and the addition of the gout expansion creates a strong new growth trajectory for Cortrophin. We believe we are well-positioned to achieve our revised 2026 guidance based on the continued momentum in existing specialties, as evidenced by the highest new cases in July, and the strong demand generation from the gout expansion. For ILUVIEN, we delivered $18.7 million of revenue in the second quarter. We announced the top-line results from the Phase IV open-label SYNCHRONICITY trial in NIU-PS and plan to unveil detailed results and additional analysis at a medical conference in the fourth quarter of 2026. These results are particularly relevant for retina specialists who see a large population of uveitis patients. Uveitis remains a category in which steroids are a standard of care and where we see an opportunity to build an increasing share of voice over time. Over the long term, we continue to believe the addressable patient populations in DME and NIU-PS represent at least 10x the number of patients treated with ILUVIEN today, a significant and durable opportunity for value creation. Turning to Slide 7, our second strategic priority is continued execution in Generics. To date, we have launched 12 generics in 2026 and are on track to launch at least 15 in the full year. We also continue to hold our position as the #2 player in overall CGT filings. Driven by our superior R&D capabilities and operational execution, we delivered another strong quarter with Generics revenue of $99.1 million, up 10% year-over-year. As a reminder, ANI is uniquely positioned to capitalize on opportunities in the evolving tariff landscape that may arise with approximately 95% of our revenues coming from finished goods manufactured in the U.S. Bringing high-quality Generics and Rare Disease products made in the U.S. to our patients plays an important role in our success. Third, we remain focused on executing a disciplined capital allocation strategy. We are investing in organic growth and have expanded our Cortrophin commercial footprint in acute gouty arthritis flares. We continue to deploy a high single-digit percentage of generics revenue into generics R&D programs. We are also evaluating attractive inorganic growth opportunities to expand the scope and scale of our Rare Disease business. Turning to Slide 8, our strong second quarter performance demonstrates the steadfast execution of our strategic priorities as we deploy the cash created by Generics and Brands in our virtuous cycle towards our transformation to becoming a leading rare disease company. We are confident in delivering 50% to 55% Cortrophin revenue growth in 2026 and are pleased that our gout expansion is off to a strong start. Taken together, these initiatives are expected to create operational leverage in 2027 and beyond as we maximize the Cortrophin growth opportunity. In 2026, we expect to deliver $1.1 billion in revenue, representing 26% growth over 2025 at the midpoint of our guidance range, with Rare Disease as the primary driver of that growth. We also expect to expand the bottom line with adjusted EBITDA, forecasted to grow 27% year-over-year to $285 million to $300 million. Our balance sheet is healthy with the capacity to support future potential business development opportunities to expand the scope and scale of our Rare Disease business. I'll now turn the call to Chris to discuss our Rare Disease business and provide color from the ongoing launch in acute gouty arthritis flares. Chris?
Thank you, Nikhil, and good morning, everyone. In the second quarter, Cortrophin grew 43% year-over-year to $117.1 million, in line with our expectations. This growth originated primarily from our existing specialties, such as nephrology, neurology, ophthalmology, pulmonology, and rheumatology, which represent the base Cortrophin business before the recent gout expansion. Momentum in our existing specialties has continued into the third quarter with a record number of new cases initiated in July. We also continue to realize meaningful revenue synergies in ophthalmology with second quarter Cortrophin volumes in ophthalmology again doubling over the same period a year ago. Moving now to Slide 11. The overall ACTH market is quite healthy and expected to grow nearly 30% in 2026 to reach over $1.3 billion in sales, with Cortrophin expected to grow 50% to 55% year-over-year in 2026. This market expansion is driven by growth in key underpenetrated specialties that have significant upside potential. There are a large number of prescribers and patients who are naive to the ACTH category across all therapeutic areas, and ANI is steadily reaching this segment including as part of our gout expansion now reaching podiatrists and primary care physicians. Approximately half of Cortrophin Gel prescribers in our core specialties are naive to ACTH. Here on Slide 12, we return to the size of the overall opportunity for Cortrophin Gel. Across indications, we estimate there are almost 1 million addressable patients, and yet, to date, ACTH therapies are vastly underpenetrated. With ANI's demonstrated ability to educate health care providers to help identify new patients who are appropriate candidates for Cortrophin treatment, we have confidence that there is significant runway for continued strong multi-year Cortrophin growth and market expansion. Turning to Slide 13, we have made our largest commercial expansion in the first half of 2026, increasing our sales headcount by 50% to approximately 180 sales representatives based on what we view as a transformational multi-year growth opportunity for our business in the podiatry and primary care settings. Our team was fully onboarded and trained by the end of June and have been out in the field engaging with their new prescribers. Gout is a condition with significant patient burden, and our market research, as well as our early experience, shows us that people view their disease as disruptive, anxiety-provoking, and frustrating. Pain from acute gouty arthritis flares has been described by some as unbearable and can come on quickly and unexpectedly, especially in the middle of the night or the early morning. We believe podiatrists and primary care physicians are actively managing a much larger volume of acute gouty arthritis flares than specialists, and most often earlier in the patient journey either due to referral gaps or access limitations. Our sales representatives are educating podiatrists and primary care providers about Cortrophin Gel and the identification of appropriate patients. We're focused on the most severe patients who experienced multiple flares a year who have previously been treated with injectable medicines like steroids or pain relieving medications. These patients may benefit from an additional treatment option. Our patient support team is helping patients request access to Cortrophin Gel to treat the current flare and to have drug readily available for when the next flare hits. Turning to Slide 14, we feel confident about the opportunity in the podiatry and primary care settings because of the insights and results generated by both the pilots conducted in 10 territories as well as the strong momentum we are seeing today from the gout expansion. While it is early days, we are pleased to see encouraging trends in our leading indicators. To date, we have been generating very strong demand with meaningful breadth and depth of prescribing. Over 95% of our new sales representatives have generated multiple new cases and momentum in demand persists with record new cases achieved by the team week over week. We've seen traction with both primary care and podiatry offices with initial and repeat prescribing. Over one third of our prescribers have initiated two or more patient cases. Our patient support team has been successful in helping these patients get access to therapy. ANI's entire organization is dedicated to making this new commercial expansion successful. We're excited that this weekend our marketing, medical, and sales teams will be engaging with customers at the American Podiatric Medical Association Scientific Meeting, or APMA, being held in Nashville, and we intend to be increasingly visible to this key prescriber audience going forward. I want to thank the entire Cortrophin team for their superior focus and execution. Our new gout expansion is off to a very encouraging start, and we look forward to their contribution in the second half of 2026 and beyond. On Slide 15, turning to our retina franchise, we continue to make progress to support a return to growth for ILUVIEN. We recently reported top-line results from the SYNCHRONICITY Phase IV open-label trial in non-infectious uveitis of the posterior segment and plan to present the detailed results and additional analysis at a medical meeting in fourth quarter 2026. These data will support increased engagement with retina specialists who treat NIU-PS as we continue sharing insights and new findings from the SYNCHRONICITY study. The second quarter reflects strong execution across our team as we continue to accelerate into a leading rare disease company. With that, I will now turn the call over to Steve to detail our financials.
Thanks, Chris, and good morning to everyone on the call. Now I'll review our second quarter results and 2026 guidance in more detail. Starting with Slide 17, ANI total net revenues were $266 million in the second quarter, up 26% over the prior year period. Revenues from Cortrophin Gel in the second quarter were $117.1 million, up 43% from the prior year period, driven by increased volume and performing in line with our expectations. ILUVIEN net revenues were $18.7 million in the second quarter, down 16% from the prior year primarily based on timing of international shipments. We remain on track to meet our full year guidance for this product. In January, we entered into a licensing transaction with Harmony Biosciences. We recognized $17.7 million of associated revenues in the second quarter, consisting of $9.7 million of royalty income on sales of WAKIX and $8 million of revenue based upon work completed in the quarter toward the achievement of certain development milestones. We expect to recognize the remaining $2 million from the development milestone in the third quarter of 2026. Revenues for Generics in the second quarter were $99.1 million, an increase of 10% over the prior year, driven by continued strength in the partner generic launch that commenced in the third quarter of 2025, contribution from new product launches, and commercial and operational outperformance. Turning to Slide 18, non-GAAP cost of sales increased 34% to $99.6 million in the second quarter of 2026 compared to the prior year period. Non-GAAP gross margin in the second quarter was 62.6%, a decrease of approximately 230 basis points from the prior year driven by product mix. Non-GAAP research and development expenses decreased 11% to $14.1 million in the second quarter, primarily due to phasing of generic R&D spend. Non-GAAP selling, general, and administrative expenses increased 20% to $80.7 million in the second quarter, driven by our gout expansion for Cortrophin, as well as an overall increase in activities to support the ongoing growth of our business. Adjusted non-GAAP diluted earnings per share was $2.21 for the second quarter, compared to $1.80 per share in the prior year period. Adjusted non-GAAP EBITDA for the second quarter was $71.6 million, up 32% compared to the prior year period. We ended the second quarter with $360.2 million in unrestricted cash, up $74.6 million as compared to the December 31, 2025 balance sheet. Cash flow from operations was $56.7 million in the second quarter and $115 million on a year-to-date basis. As of June 30, 2026, we had $620.9 million in principal value of outstanding debt, inclusive of our senior convertible notes and term loan. At the end of the second quarter, our gross leverage was 2.4x, and our net leverage was 1x our trailing 12-month adjusted non-GAAP EBITDA of $259.6 million. Turning to Slide 19, we are reaffirming our 2026 financial guidance for total net revenue, adjusted non-GAAP EBITDA, and adjusted non-GAAP EPS, which reflects significant top and bottom line growth, and modestly revising our guidance for Cortrophin Gel. Our guidance outlined on Slide 19 is as follows: we expect 2026 total company net revenue of $1.08 billion to $1.14 billion, representing 26% year-over-year growth. From a quarterly cadence perspective, we expect the third quarter total company revenues to be modestly higher as compared to second quarter and accelerating sequential growth in the fourth quarter. We are revising our guidance for Cortrophin Gel net revenue to $520 million to $540 million, primarily to account for results in the first half of the year. Our expectations for the back half of the year remain largely intact. From a quarterly cadence perspective, we expect third quarter Cortrophin revenues to be in the range of $143 million to $153 million, with further sequential gains in the fourth quarter driven by continued performance of our existing specialties team, in addition to the full deployment of our gout expansion sales force. We are reaffirming our ILUVIEN net revenue guidance of $78 million to $83 million, which reflects stronger ILUVIEN revenue in the back half of the year compared to the first half. This guidance assumes no meaningful contribution from third-party patient assistance foundations in line with our prior expectations. We expect adjusted non-GAAP EBITDA of $285 million to $300 million. From a quarterly cadence perspective, we expect third quarter non-GAAP EBITDA to be down sequentially, however higher than the first quarter of 2026 non-GAAP EBITDA. This will be driven by two factors. First, we expect to recognize the final $2 million Harmony development milestone in the third quarter as compared to the $8 million recognized in the second quarter. And, secondly, the third quarter will be the first fully loaded quarter of the gout expansion and associated operating expense. We continue to expect fourth quarter EBITDA to be the highest of the year as we begin to achieve leverage on the gout expansion with increasing Cortrophin Gel revenues. We continue to expect adjusted non-GAAP earnings per share between $9.19 and $9.69. We continue to expect adjusted gross margin to be between 59.9% and 60.9% in 2026. We continue to anticipate between 21.5 million and 21.8 million shares outstanding for the purpose of calculating full-year non-GAAP diluted EPS and a full-year U.S. GAAP effective tax rate of approximately 26% to 28%. With that, I'll turn the call back to Nikhil.
Thank you, Steve. Turning to Slide 21, in closing, we are making meaningful progress against our strategic priorities to accelerate our transformation into a leading rare disease company to continue executing in generics and to deploy capital in a disciplined manner. We are very encouraged by the initial demand that our Cortrophin sales force expansion in gout is driving and the momentum of our existing specialties. Overall, we expect to deliver over $1 billion in revenue in 2026, with Rare Disease approaching 60% of total revenues. We are confident in achieving our 2026 financial guidance, which reflects significant top and bottom line growth. Operator, please open the line for questions.
分析師問答
Operator opened the line for questions. Our first question comes from Vamil Divan with Guggenheim Partners.
Just focusing on Cortrophin here. Can you give a little bit more detail in terms of what you've been seeing so far in terms of the gout uptake? I appreciate the comments you made. I'm just sort of thinking about the way you structured the guidance here. You're going to get about $143 million, $153 million in the third quarter. It's a pretty meaningful step up from there into the fourth quarter. So just trying to see what you've seen so far in gout and kind of the confidence it gives you to see the further uptake through the course of the year. And then sort of tied to that also, obviously, a lot of potential patients that Cortrophin can hit across the current indications as you showed on the one slide here. Can you maybe just give us a sense of how penetrated you think some of these current indications are? Again, just trying to get a sense in terms of obviously there's a big runway ahead of you, but trying to get a sense of how far you've penetrated them to get a sense of what maybe is left to penetrate them.
Vamil, thank you for your questions. I think your first question is on the gout expansion. As we said, the leading indicators from the gout expansion are very positive. What we're seeing is the following. First, our gout-focused organization expansion was fully operational by the end of June as expected. The leading indicators of demand that we've pointed out are the breadth and the depth of the prescribing. Over 95% of the reps generated multiple new patient cases. Over one third of the prescribers have initiated two or more cases. We also saw balanced demand between primary care and podiatrists. We also see continued success and growth in the territories that were the 10 pilot territories that we had, which based on whose success we actually thought about the gout expansion. So I think all of those are very pleasing with the progress and the leading indicators of demand that we've pointed out for the gout expansion. Now, when it comes to guidance, Steve pointed out that our Q3 guidance for Cortrophin is $143 million to $153 million, and your question was around the step-up from there. When you think about the gout expansion, we've executed our largest rare disease sales force expansion and we've increased our reps by 50% from 120 to 180 reps. That expansion was operational by the end of June. I already spoke about the leading indicators of demand. So we expect Q3 to keep building on this momentum and therefore Q4 will have significantly higher impact from the gout expansion. In parallel, our existing specialties, which were the primary drivers of growth for the 56% quarter-on-quarter growth in 2Q, have continued the momentum into 3Q with the highest number of new cases initiated in July, so that also has continued momentum. And then lastly, Q4 also benefits from the typical channel and insurance dynamics acting as tailwinds. Finally, as a reference point, in 2025, where we did a sales force expansion, revenue contribution from the second half was 61% of the total. The expansion in 2026 is three times the expansion in 2025 in terms of number of reps and was completed in the second quarter versus the first quarter in 2025. Lastly, your question was on penetration across the addressable market. It's very low, very, very low, and so there is a huge opportunity, and we continue to believe in the strong multi-year growth opportunity for Cortrophin and are investing in multiple ways to capture that opportunity and to most importantly, be true to our purpose of serving patients and improving lives.
Our next question comes from Glen Santangelo with Barclays.
Nikhil, at the beginning of the year, you called out all these prior authorization reverification issues that would impact 1Q. But then on May 8, when you reported 1Q, you said that this was kind of behind the company. This quarter, you're talking about the early progress of your sales force expansion, the early success in gout, but yet you come in light and you sort of trimming the guide for the year. And so I just want to try to get your sense for how the months have progressed and how the insurance reverification issues have progressed and is that playing a role here in the second quarter because you know what we find a little perplexing is the disconnect between the IQVIA data and what you're reporting. And so I'm kind of curious if we have a situation where scripts are getting written but not approved. Any sort of details around sort of how the first half played out from 1Q to 2Q would be helpful.
Yes, thank you for your question. First, on the insurance reverification, which impacted the performance in the first quarter: that issue is behind us and there's no impact from insurance reverifications in the Q2 number. To level set, we did make our guidance range for the quarter, achieving the 56% quarter-on-quarter and 43% year-over-year growth in Q2 and are proud of the progress we made. There are a diverse range of inputs that drive our guidance, such as number of cases initiated, the indication mix, patient pull-through, payer type, and other such factors. In terms of momentum going into Q3, the growth we saw in Q2 came primarily from existing specialties and the momentum has continued into the third quarter from existing specialties itself; we had the highest month of new patient cases initiated in July. As expected and as previously discussed, given the timing of operationalizing our gout expansion, it did not have a meaningful impact on Q2 reported revenues, but we continue to expect measurable revenues in the third quarter and robust growth in the fourth quarter, and we're giving metrics on the indicators of demand that are already laid out. Our expectation for Q3 and Q4 hinges on both the continued momentum in the existing specialties I talked about as well as the very positive early feedback from the gout launch where we have over 95% of our team generating multiple new cases and over one third of our prescribers initiating two or more cases. We continue to have success reaching prescribers who are naive to ACTH; over half of our prescribers historically were naive to ACTH and began using ACTH to serve patients. Regarding the IQVIA linkage and the question around that: while IQVIA data has historically provided directional insights on revenues, we also know that there is a lot of volatility in the data, and it has over or understated quarterly revenues in the past. That's really all we have to say about the IQVIA data. To be helpful to investors, we have been providing many of our key internal metrics, such as next quarter's revenue guidance or various demand metrics from July in the first month of the current quarter.
Our next question comes from Dennis Ding with Jefferies.
We have two on the Cortrophin guidance. So number one, what factors didn't play out to your expectations that has driven the guidance revision? Because you guys landed within your Q1 and Q2 soft guidance, but then lowered 2026 by about $30 million. So I'm just curious, did early Q3 demand perhaps not meet your expectations or maybe you're seeing incremental headwinds on access as we've seen a couple of other specialty pharma companies flag additional step edits and things even though they're in other therapeutic areas. So that's question number one. And then question number two, is that, your guidance also assumes a pretty big step-up in Q4. But if I look at last year, that was actually the slowest sequential step-up that Cortrophin had. So I'm just wondering, what gives you the confidence that Q4 would play out as expected, appreciating that the gout expansion is happening and is accelerating.
Thank you for your questions. Our revised guidance principally accounts for the actual performance in the first half and largely maintains our expectations for both the existing specialties and the gout expansion in the back half. We expect to deliver 50% to 55% year-over-year growth for Cortrophin to $520 million to $540 million in Cortrophin revenue for the full year. Importantly, Cortrophin has a strong multi-year growth opportunity driven by the large significantly underpenetrated almost one million patients that we estimate as our addressable market. We continue to see momentum across both our existing specialties and from the gout expansion. On Q3 metrics: in existing specialties, we had the highest number of new cases initiated in July. In the gout expansion, 95% of the reps were fully operational at the end of June, 95% of reps have initiated multiple cases, and one third of our prescribers have written two or more cases. We are seeing very strong demand generation, and we do not see any additional headwinds in the back half of the year. Our expectations for the back half of the year are largely intact with what we had originally anticipated at the start of the year, so the revised guidance is simply taking into account the actual results from the first half. Regarding the step-up in Q4: the big difference with last year is we have an expansion that's three times the previous year's expansion that's fully operational at the end of June. These reps will have been out three months in Q3, and you'll have a full quarter and most reps will be out between three to five months when you get to the fourth quarter. So you'll see a much bigger impact from the gout expansion in the fourth quarter.
Okay, got it. And if I can have a quick follow-up. So on the dedicated gout expansion, can you comment on how many flares have been treated so far? Because based on some of your comments, I mean, you guys had 65 dedicated gout reps. You said 95% of them had multiple new cases. So if you have conservatively assumed two cases each, maybe that's 125 patients or flares from the end of June to the end of July. So that's about a month. And that's going to ramp up through the year. Do you think those are fair assumptions?
Yes. We're trying to give as many internal metrics to be helpful to investors, but we are not at this point sharing flares per rep or number of cases per rep, because there are many factors that drive our guidance. I'll keep it at that.
Our next question comes from David Amsellem with Piper Sandler.
So just a couple for me. First, just wanted to clarify, Nikhil, are cases the same as prescriptions written? And if they're not, can you talk about how many of those cases that you referred to, a percentage of those cases, are actually becoming active prescriptions? That's number one. Number two, as you think about the ramp in the back half of the year. How long does it take on average to get a script filled from when it was written? Are you seeing any significant lags there that could be or have been problematic just beyond the authorization issues that you cited earlier this year? And then lastly, operating leverage. With the expansion in place, how are you thinking about operating leverage beyond this year? Do you think you're going to need further sales force expansion to support the gout indication or other indications? Just generally speaking, if you can talk about that as well that would be helpful.
Thank you, David. When we say new cases initiated, we mean prescriptions, we mean the same thing as enrollments, enrollment forms. So when we say new cases initiated for existing specialties in the month of July, that means the number of enrollment forms or prescriptions that were written in July. The time from the enrollment or the new case initiation to fulfillment varies. It can be in a matter of a couple of days to weeks, and it depends on the payer type, the patient, and the physician's office. Importantly, we're in year five of our launch and we have consistently across the five years kept improving this process to support prescribers and patient access. So there is no lag or any new headwind that we're facing on that front. We continue to work with the prescriber's office to ensure that these enrollments end up with patients on therapy. On operating leverage: the investment that we've made this year by expanding our rare disease sales force by about 50% from 120 reps to 180 reps will see impact in the back half, but we'll see the full year impact on operating leverage in 2027. You can expect higher sales in 2027 and operating leverage from the investment made this year.
Our next question comes from Ekaterina Knyazkova with JPMorgan.
So first, I just wanted to go back to the patient reverification issue. Just what percent of the volumes that you lost in Q1 were you eventually able to recover in Q2 versus how much of those volumes were permanently lost? And similar kind of line of questioning, but should we expect a similar issue as we kind of think about 2027? And then the next topic I wanted to talk about is just also Cortrophin Gel trends that you're seeing in terms of vials per patient. Just any big shifts in terms of the number of vials you're kind of seeing each patient use.
Got it. Thank you, Ekaterina. On the vials or the usage per patient: the usage per patient varies across indications and prescribers, and we are not seeing any significant shift. The mix of indications means some indications have higher usage per patient and others lower, depending on what the prescriber feels is appropriate. Regarding the reverification question: we worked through the reverification issues. There was a large bolus of patients that needed to be reverified — patients who were on therapy on December 31, 2025 and needed to be reverified in early 2026 as part of their insurance process. Because of the large bolus as well as weather-related issues, it took more time. We were able to convert many, or most, of those patients through the reverification process and there was some timing shift. Did we lose some patients? Yes, but that's also consistent with what has happened in previous years and we are not seeing an additional impact from that going forward.
Our next question comes from Gary Nachman with Canaccord Genuity.
A few more on Cortrophin for me. So what portion of Cortrophin volume was from gouty arthritis flares in 2Q versus 1Q? If you could quantify that, it would be helpful. And maybe where do you see that going by the end of the year? And then just following up on the last usage question, within gouty flares, is the revenue per patient a bit lower? So assuming you need a lot more of those patients on a relative basis, I'm curious if that's a dynamic to consider with the revenue as the mix is going to shift going forward. And then any anticipated pressure in gross to net at all that might be impacting the revenue based on the dynamics that you're seeing in the space, including with your competitor? And then I have one follow-up.
Got it. Thank you for your questions. On the contribution of gout historically: recall that prior to the broad gout expansion, gout represented about 18% of our sales based on existing specialty rheumatology and nephrology and from the pilot territories. In Q2, from the gout expansion where we've had the expanded sales force that goes into primary care and podiatry, we had limited impact in the second quarter in revenues, and that was as expected. We expect a ramp in Q3 and then a much bigger ramp in Q4 on sales from that. So gout as a percentage of sales across existing specialty and from the gout expansion will increase from that 18% level. Regarding vials per patient in gout: yes, the gout number of vials per patient is lower compared to other indications, but there are many more gout patients. The number of patients that each prescriber sees and the number who may be appropriate for a new treatment option such as Cortrophin is larger on a per office basis. We'll see more patients and less usage per patient, and we think of it that way. On gross-to-net: nothing specific to highlight here at this time. We try to strike a balance between sharing information that is competitively sensitive and information helpful to investors. So nothing new to share on gross-to-net dynamics at this time.
Okay, great. Just a follow-up on David's operating leverage question. So, just how aggressive are you at this point, looking to expand the Rare Disease business through M&A and what kind of assets are you looking for? So, I guess, how important is it to further leverage the increased sales force, I guess, particularly in podiatry and primary care? Is that going to be a focus, or do you not want to mess with that because you need to focus on the Cortrophin growth? So just your latest thoughts on the importance of M&A at this point in Rare Disease.
Disciplined capital allocation is a critical part of our plan. Executing M&A to expand the scope and scale of our Rare Disease business is a top priority. We have been evaluating two sets of opportunities: commercial or near-commercial assets that are synergistic with our call points and sales force, and assets that leverage our infrastructure such as market access, medical affairs, and patient support. Those are the core capabilities we look to add to expand our Rare Disease portfolio.
Our next question comes from Thomas Smith with Leerink Partners.
Also two on the Cortrophin gout launch, if I may, are there any differences you're seeing in payer mix between these podiatrists and primary care settings versus the base business specialties? And can you just elaborate a little bit on how you're engaging with these new specialties to help them navigate the reimbursement process? And then separately, you also called out success and growth coming from these 10 initial pilot territories. Just wondering if you could elaborate and maybe quantify how much of the demand in the quarter came from those territories, and how broadly do you expect the experience within those pilot centers to play out now that you have the sales force expansion fully in place?
Thank you. On supporting podiatrists and primary care offices: we're in year five of Cortrophin and we've engaged with many new prescribers along the way; over half of our prescribers were naive to ACTH historically. We've taken learnings from the pilots we ran in 10 territories and applied them to the broader expansion. Our engagement with podiatrists and PCPs and the support needed for them has been consistent with those learnings and very positive to date. On contribution from the pilot territories: there were roughly 10 pilot territories, and as we've gone into the expansion we have about 64 reps focused on gout, with 95% of them initiating multiple cases. The impact is beyond the initial pilot territories; demand generation is across the entire expanded team.
Our next question comes from Brandon Folkes with H.C. Wainwright.
Staying on the Cortrophin guidance, can you just elaborate on the growth of Cortrophin outside of gout, especially those specialties which use a higher number of vials per script, is Cortrophin use declining in any of those specialties? Secondly, you reiterated Cortrophin guidance in May, but flagged in the first half of the year as the driver of the change in guidance. So can you just elaborate if those drivers of the guidance change arose in May and June of this year? And if so, are they resolved? If it is just timing on the sales force expansion, why don't we see that bump in 3Q? And then just lastly, outside of the gout sales force expansion, what are the other drivers of the 4Q's Cortrophin revenue inflection?
Thank you. On the existing specialties: we see strong multi-year growth potential across the existing specialties. There are 750,000 addressable patients outside of gout and they remain significantly underpenetrated. We continue to see robust momentum across these specialties; the 56% quarter-on-quarter growth in Q2 was essentially achieved by the existing specialties. We are not seeing a slowdown across specialties — in ophthalmology, for example, volumes doubled year-over-year. Regarding timing: the momentum is strong and we provided metrics for July, and especially for existing specialties there's the highest number of new patient cases initiated in July. You asked why you don't see a bigger bump in 3Q: the gout expansion was fully operational at the end of June, so reps will have been out for only part of Q3; the full impact will be more pronounced in Q4 as reps accumulate more time in the field and build prescribing patterns. Other drivers of the Q4 inflection include continued strength in existing specialties and typical channel and insurance dynamics that tend to act as tailwinds in the fourth quarter.
I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.