ANI Pharmaceuticals, Inc. (NASDAQ:ANIP) Q4 2020 Earnings Conference Call March 9, 2021 8:30 AM ET
Lisa Wilson - In-Site Communications, Investor Relations
Nikhil Lalwani - President & Chief Executive Officer
Stephen Carey - Chief Financial Officer
Conference Call Participants
Brandon Folkes - Cantor Fitzgerald
Elliot Wilbur - Raymond James
Dana Flanders - Guggenheim
Good morning, and welcome to today's program. My name is Maria, and I'll be your conference operator. At this time, I'd like to welcome everyone to ANI Pharmaceuticals Fourth Quarter and Year End 2020 Earnings Results and Business Update Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. [Operator Instructions] As a reminder, this conference call is being recorded today, March 9, 2021.
It's now my pleasure to turn the floor over to Ms. Lisa Wilson, Investor Relations for ANI Pharmaceuticals. Please go ahead.
Thank you, Maria. Welcome to ANI Pharmaceuticals Q4 2020 Earnings Results Call. This is Lisa Wilson of In-Site Communications, Investor Relations for ANI. With me on today's call are Nikhil Lalwani, President and Chief Executive Officer and Steve Carey, Chief Financial Officer of ANI. You can also access the webcast of this call through the Investors section of the ANI website at anipharmaceuticals.com.
Before we get started, I would like to remind everyone that any statements made on today's conference call that express a belief, expectation, projection, forecast, anticipation or intent regarding future events and the Company's future performance may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act. These forward-looking statements are based on information available to ANI Pharmaceuticals' management as of today and involve risks and uncertainties, including those noted in our press release issued this morning and our filings with the SEC. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. ANI specifically disclaims any intent or obligation to update these forward-looking statements, except as required by law. The archived webcast will be available for 30 days on our website at anipharmaceuticals.com. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on March 9th, 2021. Since then, ANI may have made announcements related to the topics discussed. So please reference the Company's most recent press releases and SEC filings.
And with that, I'll turn the call over to Nikhil Lalwani.
Thank you, Lisa. Good morning, everyone, and thank you for joining our call. I'm very pleased to be here to update you on our recent progress and to set forth for you my plan to drive sustainable growth for ANI. This morning, we announced the acquisition of Novitium Pharma. I'll share the details and the value of this important transaction in a few minutes.
COVID-19 continues to impact just about every aspect of our personal and professional lives. The impact continues to be felt throughout the pharmaceutical industry and our team has been focused on managing our business through these challenges. I remain grateful and proud of the strong commitment shown by our ANI team in conjunction with our customers, suppliers and manufacturing partners to ensure that we continue to supply medicines to patients in need. Our established brands business experienced the greatest impact from the constraints imposed by the pandemic and our full year results reflect a significant dip being commencing in March of last year. Steve will provide the full details of our financials, including 2021 guidance in a few moments.
As promised, I will now take you through my strategy to deliver a sustainable future growth and create value for our shareholders, while most importantly, serving patients in need. During the past six months, I have taken time to understand the evolving biopharma market dynamics, potential market opportunities, the approaches developed by other players, and ANI's current competitive position. This has helped me crystallize how to build ANI into a successful and sustainable biopharma company and to maximize value for current shareholders.
Let me now walk you through the four key pillars of our growth strategy. Our top priority is building a successful Cortrophin franchise. Our goal is to submit as robust a package as possible, one that gives us the highest degree of confidence that it will be accepted and ultimately approved by the FDA. Over the past few months, we have actively engaged with the FDA to refine the regulatory path forward. Accordingly, we have made refinements to what we will submit. Based on the refinements, we now believe we are well positioned for resubmission in Q2 of 2021. In addition, we have increased our manufacturing batch size to match our commercial aspirations. Although this impacts our timeline by one quarter, we believe it will result in a more comprehensive and robust re-filing to ultimately support approval of Cortrophin.
In fact, as part of the Novitium acquisition, the Cortrophin re-filing approach has been diligence-ed by prominent regulatory firm outside of the one that we're currently using and other consultants and they have each given the thumbs-up to the Novitium sellers and Ampersand Capital Partners.
To strengthen our commercialization efforts around Cortrophin, we recently brought on Chris Mutz as Chief Commercial Officer and Head of Rare Diseases. He has been tasked with leading the Cortrophin commercial franchise, including our launch strategy and commercial plan. He brings deep experience in the successful commercialization of rare diseases at both Alexion and Merck and we look forward to his leadership and guidance of this important franchise.
The second pillar to our growth strategy is strengthening our generics business by enhancing development capabilities, and enhancing increased focus on niche opportunities. The acquisition of Novitium Pharma announced this morning for a $163.5 million is an important step towards achieving this goal.
Let me share some of the compelling reasons that lead us for doing this transaction. First, Novitium creates a sustainable generics growth engine with over 25 anticipated product launches in 2021 and 2022 including products with competitive generic therapy designation. Furthermore, they have 21 ANDAs on file with the FDA and more than 30 additional products under development. And their leadership team has an excellent track record of execution and efficiency from filing to launch. Importantly, they are currently advancing three 505(b)(2) candidates in oncology and hypertension. These products will enable us to build on ANI's increasing focus on niche opportunities, including a Paragraph IV filed in 2020 and the anticipated filing of injectables adders [ph] this year. The transaction will also serve to expand our manufacturing footprint and enhance the scale of our CDMO business. Novitium adds nine new customers to ANI's growing CDMO business.
Novitium has a 50,000 square foot facility for finished dose, R&D, commercial manufacturing, and packaging right here in New Jersey with a further 20,000 square feet expansion plan. Novitium's annual production capacity is approximately 2 billion units across tablets, capsules, liquid suspensions, solutions, powders for oral suspension, controlled release and potent compounds.
The third component of our growth strategy is to maximize value within our established brands portfolio. Through continued programmatic business development and use of innovative market access and go-to-market strategies. The environment continues to provide good opportunities which then leverage our existing brand infrastructure. In addition, we have been adopting innovative programs that expedite the resolution of prior auth issues and digital tools for engaging prescribers and reducing patient burden.
The fourth pillar of my growth strategy is to expand our CDMO business, leveraging our unique North America based manufacturing capabilities. I just shared how the Novitium acquisition expands our customer base and enhance the scale in manufacturing capacity. In addition, I believe we could leverage our fully contained high potency facility that can manufacture hormonal steroid and oncolytic products in Baudette. Our ambition will be delivered by our collaborative, purposeful and empowered team members with high performance orientation. Our strong internal talent pool complemented by targeted external hires will accelerate our growth. Our recent hires of Chris Mutz, Ori Gutwerg and Davinder Singh, they all hit the ground running from day one.
Finally, we are taking steps to strengthen our capital structure with new credit facilities and a PIPE. We will share the details with you shortly. This capital structure further facilitates achievements of ANI's aspirations.
In summary, we have a clear growth strategy and have already taken a major step towards that goal with the acquisition of Novitium and a clear plan laid out for refiling Cortrophin Gel in Q2 of 2021.
With that, I'll turn the call over to Steve to discuss our Q4 financials as well as provide guidance for 2021, Steve?
Thank you, Nikhil, and good morning, everyone. And thank you for joining us on this exciting day in ANI's evolving growth story.
Net revenues for the fourth quarter of 2020 were $57.3 million versus $48 million in the fourth quarter of 2019, principally due to increases in sales of our generic products. Sales of our generic products were $38.7 million during the fourth quarter, an increase of 32.7% as compared to the $29.1 million for the same period in 2019. The increase primarily reflects the January 2020 launches of Paliperidone, Miglustat, Mixed Amphetamine Salts, Tolterodine, Bexarotene and other products acquired from Amerigen; the January 2020 launch of Potassium Citrate ER; and increased revenues of Candesartan. These increases were tempered by decreases in revenues of Ezetimibe Simvastatin, EEMT and Methazolamide.
Net revenues for our branded products were $15.8 million during the fourth quarter, an increase of 0.9% compared to the $15.6 million for the same period in 2019, primarily reflecting increased revenues of Inderal LA, which were tempered by a decrease in unit sales of Innopran XL.
Our cost of sales, excluding depreciation and amortization increased by $6.7 million to $24.5 million in the fourth quarter of 2020, primarily as a result of increased volumes during the quarter including a shift in product mix towards generic products and an increase in sales of products subject to profit sharing arrangements coupled with fourth quarter 2020 inventory reserve charges. The increases were partially tempered by the non-recurrence of the fourth quarter 2019 inventory reserve charges related to our exit from the market of Methylphenidate Extended Release. Cost of sales as a percentage of net revenues increased to 42.9% during the fourth quarter of 2020 from 37.1% during the same period in 2019, primarily due to the same factors previously discussed. Research and development expenses decreased in the fourth quarter of 2020 to $3.7 million compared to $4.7 million in the fourth quarter of 2019, primarily due to a decrease in expense related to the Cortrophin re-commercialization project and the non-recurrence of 2019 milestone expenses related to Bretylium. We recognized Cortrophin prelaunch inventory charges of $3 million in the fourth quarter of 2020 compared to $6.5 million in the prior year quarter.
Adjusted non-GAAP EBITDA of $17.2 million was essentially flat as compared to last year, down $200,000. As detailed on Table 4 of this morning's press release, our adjusted non-GAAP diluted earnings per share is $0.80 for the quarter as compared to $1.08 in the prior year period. As of December 31st, we had $7.9 million of unrestricted cash and cash equivalents. Total net debt as of December 31st increased to $179.1 million as compared to $171.4 million as of the September 30th balance sheet. This figure represents 2.7 times net leverage on a trailing 12 month basis.
As highlighted in this morning's press release and in Nikhil's comments, we are very happy to announce our plans to acquire Novitium Pharma. Upon close of the transaction, we will pay day one consideration of $163.5 million comprised of $89.5 million of cash and approximately $74 million in equity to the selling shareholders. The transaction is structured to contain additional contingent consideration of up to $46.5 million or a total potential transaction value of $210 million. Of this amount, $25 million of the contingent consideration may be earned in the first 24 month period post close, based upon the achievement of certain financial and FDA filing metrics. In addition, up to $21.5 million may be earned in the form of royalties on sales of certain 505(b)(2) products anticipated to be launched in the future.
In conjunction with the transaction, we have secured committed financing in the form of a $340 million senior secured credit facility that has been committed by Truist Securities. This facility will be anchored by a $300 million syndicated term loan B and a $40 million revolver. In addition, we have secured a $25 million PIPE investment from Ampersand Capital Partners. This PIPE will be in the form of convertible preferred equity. The transaction is subject to approval by ANI's shareholders and clearance by the Federal Trade Commission. We currently expect the transaction to be completed in the second half of 2021.
In conjunction with today's announcements, we are re-instituting annual guidance. It is very important to note that the following guidance figures assume that total U.S. pharmaceutical prescription activity continues to rebound to pre-COVID-19 levels. Any further COVID related depression of physician and script activity will materially impact the Company's ability to reach the following goals. In addition, the following guidance figures assume the completion of Cortrophin related R&D activities and the initiation of Cortrophin sales and marketing related activities. These are key milestones as we progress towards our goal of bringing Cortrophin to market. With that said, we currently anticipate ANI's standalone net revenues for 2021 to be in the range of $207 million to $218 million; adjusted non-GAAP EBITDA of between $60 million to $65 million, and adjusted non-GAAP diluted earnings per share to be in a range of $3.30 to $3.59 per diluted share.
For illustrative purposes only, these figures on a non-GAAP pro forma basis, assuming a full year of forecast 2021 Novitium performance would translate to approximately net revenues of between $277 million and $294 million and adjusted non-GAAP EBITDA of between $85 million and $95 million.
With that, I'd like to turn back to the operator to now open the call for questions. Operator, please go ahead.
Thank you. [Operator Instructions] Our first question comes from the line of Brandon Folkes of Cantor Fitzgerald.
Hi, thanks for taking my questions and congratulations on the acquisition. Maybe just two from me. Any additional color you can provide on the earn-out? Is this sort of across a broad swath of products you're acquiring in this acquisition or is it more heavily tied to one or two products? And then secondly, now you're bringing an R&D engine and I think that's the right thing to do, so congratulations there. But how do we think about balancing investments in R&D going forward with the need to invest in the commercial infrastructure for Cortrophin. And I assume it's too early, but anything you can say about your assumptions around investment required for Cortrophin's commercial infrastructure would be great. Thank you.
Yes. So Steve, maybe I can start and you can jump in.
Yes. So, thank you, Brandon, for your question. First one, on the earn-out, they are not related to one product. They are in fact related to the entire portfolio and is meant to do two things. I think one is meant to recognize and reward the performance from the pipeline that is about unlock or that is unlocking as we speak for Novitium. And then second, you know a part that we're very excited about, when we talk about this R&D engine, we're really talking about the magic of Samy, Chad, Vijay and their teams. And this is a way for them to, again, be recognized and rewarded for continuing to perform as they join the management team of ANI. So that's what the earn-outs are for.
The second question regarding investment in the R&D engine versus investment in Cortrophin. Look, as you heard, we are ready to refile in Q2. We are -- we have brought Chris Mutz on board and he is refining the commercial game plan and I think we will have a little more to share about our investments for Cortrophin as we go forward. Having said that, we have factored in certain level of spend on Cortrophin in the EBITDA guidance that Steve just shared.
Yes. And I would just -- I would just add to that Nikhil, just to further unpack Brandon's question. And good morning, Brandon. Thank you for the thoughtful questions. In terms of R&D investment going forward, clearly, the acquisition of Novitium Pharma and building in a Center of Excellence to fuel further growth for ANI Pharmaceuticals has been a strategic imperative for some time. So, clearly, we are looking forward to continuing to invest in generic R&D. With that said, we think on the other side of close of Novitium that the dollars that we're spending are going to be more efficient. The founders and principals and all the employees of Novitium have an excellent track record in terms of the efficiency of their R&D spend and we think the combination of the Novitium R&D excellence coupled with ANI's longstanding track record and R&D excellence within our own four-walls is going to unlock significant forward looking value and so we look forward to that day where we can allocate R&D dollars across our two teams or I should say our combined team at that point in time. So that's one thing. We think we'll unlock efficiencies there.
Secondly, on the Cortrophin investment in SG&A, I think we certainly view internally the fact that we're starting to invest behind key hires such as Chris and start to invest behind the Cortrophin SG&A engine is clearly an important turning point. It's always been a very difficult kind of decision internally as to when to turn on the tap to spend in the SG&A for Cortrophin. It's something that the management team has thought a lot about as the Cortrophin redevelopment program has continued on. And so, we feel very good internally that we're at a point where the management team can look at one another and start to spend into SG&A with confidence around this program.
And then lastly, I would just highlight that part of the financing for the Novitium transaction, while getting the funding to do the transaction was front and center and job number one, we do anticipate that there will be some kind of side benefits from moving to the term loan B market that will allow -- it will be -- we would anticipate at this moment it will be a more covenant-light type of financing structure for us, which is important, because to your question, the management team is balancing a lot of needs at the current moment, and I think a little bit more -- the term loan B structure will give the team a little bit more room to maneuver while still continuing to be thoughtful about leverage ratios which has always been an underpinning of the approach at ANI. So hopefully that helps.
That does. Thank you to both of you. That was very helpful.
Our next question comes from the line of Elliot Wilbur of Raymond James.
Thanks, good morning and congratulations on the transaction. I know that establishment of internal product development capabilities has been a long-running goal of the Company; so congrats on finally completing that piece of the puzzle. I have a couple of questions. With respect to Novitium, but first I want to ask a question around Cortrophin and the revised timeline. I guess, there's not a lot of surprise that the company at some point chose to meet with the FDA in advance of the filing. But it seemed like that opportunity was on the table following the Refuse to File development last year. So, I'm wondering what has changed with respect to prompting the Company to sit down with the agency. And then, Nikhil, thinking about the commercialization strategy behind the asset, you recently brought in some new talent in terms of leadership with experience in the branded and the rare disease area. The strategy originally behind Cortrophin was more of a price strategy to lead with aggressive discounting and the product would sort of sell itself on that basis. And I'm wondering if that thinking maybe has changed or evolved now that you've had fresh eyes sort of take a look at the strategy?
Got it. Well, thank you for that question, Elliot. So, I guess I'll answer your questions on Cortrophin first. Regarding the meeting with the FDA, look when we got the Refusal to File, as we've explained in the past, Pat had done this when he was the Interim CEO, is that we spend a lot of time first just analyzing the file ourselves and saying what could we have done better. And what we found and you know we brought in a strong external consultant or consultants to help us do a full Gap analysis on the submission that we had done and what they found was, there was a number of things that we could have done better in the file itself. So it's not just the points that were there in the FDA Refusal to File letter, but it was also other gaps that they had identified. And so what we've -- and so at that point, we restructured our internal team and we started addressing those gaps. Now when we start addressing those gaps, we realized that there are a few questions that would be helpful to get FDA's guidance on before we refile. So rather than making assumptions, we had a Type B meeting with the FDA and we've also had engagement with the FDA since then to understand and refine our understanding of what will make a robust package to submit to the FDA and that's what's driving the slight shift in timeline for the Cortrophin refiling. That was in terms of the meeting with the FDA.
The second question on commercialization, you're absolutely correct. Our approach to commercialization of Cortrophin will be holistic. Market access and pricing will only be one component of the commercialization approach. I know that our competitors or competitor Mallinckrodt is likely trying to figure out what exactly we're doing. And therefore, I would like to not give further color on what our approach is, but you should be assured that the approach will be a more holistic approach rather than one of just price discounting.
Okay. And then I wanted to ask a couple of questions around the Novitium transaction as well. I guess just simplistically, expect that business to contribute or to generate roughly 25 new launches in 2021 and 2022, they obviously have 21 ANDAs pending. So there is some already approved products that are going to be launched, but how many of those pending 21 ANDAs are embedded within the expectations for the 25 launches? And then question on the EBITDA expectation for the second half. I'm assuming that's just a sort of base Novitium number. Obviously wouldn't have the benefit of any potential cost savings or synergies from combining the two companies. So I wanted to confirm that. And can you give us a sense of where they are currently in terms of EBITDA? What has to happen in terms of the approval cadence for that $15 million number to happen?
And then, one final question. I know you mentioned that several members of the management team of Novitium are going to be joining ANI. I know that management team is quite well regarded in the industry. So I'm wondering what type of commitments you've been able to secure from them. Given they seem to have a fairly significant residual stake in the combined company, I'm assuming they'll stay on board for some period. But if any color you could share there would be appreciated. Thanks.
Got it. So Elliott, let me start with your last question first, which is on the commitment. I think that our goal has been with Chad and Samy and Vijay and the rest of the organization is to build a combined organization that will grow and thrive together. And the leadership team of Samy, Chad Vijay and the rest of the organization, we believe that they will be with us for some years and years, right, and that's how we're thinking about the partnership. As you correctly noted, that they have significant equity in ANI going forward after of course the transaction closes as well as these earn-outs, and that is sufficient incentive to keep them recognized and rewarded. But the impact that they will have is much broader, right. Steve talked about our R&D Center of Excellence. We have strong internal R&D development capability and this is going to strengthen that further, and I think that we'll work as one development engine going forward. So I think that's to answer that question.
The second question you asked was -- actually, the first question you asked was about the launches plan. Look, we're giving you indicative range of how many launches will come, right. As you are well aware that we have -- and of course this is a, this is a team that has delivered time and time again. And so we've sat with them and tried to understand what is their expectations of launch timelines. And also figured that -- figured in there that there will be some movement, some puts and takes and that's factored in into the -- into the estimate shared of 25 plus launches. I think that at this point, we will also step back and look at the overall portfolio and say, with the best-in-class R&D engine that we have, what is the most value creating portfolio to take forward? Of course the filed ANDAs. We will make sure that those are launched and there are -- as you heard that there is also, as part of the earn-out, an earn-out related to the filing of ANDAs, and that will also -- the teams will work together to finalize that plan and so that portfolio will evolve over time.
And then -- your second question was, is their R&D synergy, right? Is that right Elliot?
Yes, it was -- trying to get a little bit more color around the second half EBITDA run rate expectation. So I'm assuming that $15 million doesn't -- wouldn't include the possibility of any synergies, whether they'd be R&D spend or elimination of some G&A. and I'm trying to figure out like what has to happen for that run rate to materialize in the sense of new launches? So I was wondering if you can give some color around kind of maybe where that business is now and what sort of has to happen for it to get to that $30 million annualized run rate, $15 million in the second half in terms of approvals?
Sure. Sure, so I'll start and then Steve can jump in. This does not count on -- and this -- the investment thesis behind this acquisition is not one or a cost synergy, as Steve had clarified. It's about building, as you pointed out, a complimentary capability and enhancing and strengthening that product development capability that ANI has had as a strategic imperative for some period of time. Now, to your question on what needs to happen. I mean things are already in motion for them to achieve that run rate. Last week, they got approval for Fluphenazine tablet, which is an attractive market opportunity. They're the fourth entrant. There is other attractive launches that they have coming and the unlocking of those launches will essentially help deliver the $15 million H2 EBITDA and the $30 million run rate.
Now, the only caveat that I would add is, we don't want to be presumptuous about the time taking the secure FTC approval. So there is -- that's why we've said H1 -- sorry H2. And also, as you are aware that this -- the equity that has been granted to the sellers, which is the Novitium shareholders as well as to Ampersand Capital Partners, the combination needs to be put to a shareholder vote and so it's subject to those approvals and the timing of those.
Yes. And Nikhil and Elliott, the one other point I think is worth mentioning, right. If you think of so many acquisitions and merger activities in the world, many times in transactions I think more often than not, right, the other party is a bit unknown, right, and a lot of times you lose -- you have a lot of value leakage post close just based on cultural issues, right. I think in this case, another strength of this deal and this combination is that both management teams of ANI and Novitium are very confident around cultural alignment and clearly we have teams that -- portions of our team that are very aware of approach in terms of both management styles. And from that perspective, I think it's going to be quite a natural fit as we bring the two entities together and I think that that will just further strength the combined team's ability to deliver in the future.
[Operator Instructions] Our next question comes from the line of Dana Flanders of Guggenheim.
Great, thank you very much for the questions. I had a couple that I'll just ask upfront. And so, my first one is just with the acquisition, Nikhil, can you talk about kind of the expectations for the number of ANDA filings that you expect to be able to file with the FDA going forward? And you talk about focusing on niche opportunities, are there particular, any dosage forms that you're seeing kind of better opportunities across the space and does that align with your capabilities? I mean, I know you mentioned filing an injectable product, some Paragraph IV opportunities. Just kind of curious how you're thinking about kind of the types of opportunities across generics with your capabilities now?
My second question was, wondering if you could provide any more color on the 505(b)(2)s that they have in the pipeline and if you expect that to be a bigger focus for your R&D engine going forward? And then my last one, was hoping you could elaborate a little bit on the CDMO strategy you're putting into place. I know with this acquisition, you're adding some new customers. It seems like they have an ongoing expansion at their facility. The CDMO space is obviously very attractive. How much capacity are you bringing on with this acquisition and talk about the strategy to continuously add new customers going forward and just what that could look like for ANIP? Thank you.
Yes, thank you. Thank you for your questions. Let me take them one at a time. So, I think the first one on ANDA filings, I think that, look, you know, we will be in the range of 15 filings. Again, we need to step back and look at the combined portfolio and say what does -- what could that look like. We have a very prolific team at Novitium that has execution and efficiency at the heart of what they do and we have a team at ANI that has had a very successful track record of bringing high value products to market. So, we will look at that combination and it's -- to me, it's less about the number of files and more about the value associated with the ANDA filings. So I think -- but indicative I think you can take in the 15-plus range for the number of filings. The second, you said about niche areas. Look, you know over the past -- before the Novitium acquisition, through the programmatic BD that we were doing, we did add some niche areas -- we started adding more niche areas and there is a basket of injectable ANDAs that we are pursuing through partners. So this is obviously not at our own facility. And then we've also ventured and done our first Paragraph IV filing in the end of 2020. So we're trying to -- obviously this is a space that I know well and we're trying to find more areas like that to invest in.
And then on the 505(b)(2)s; the 505(b)(2) pipeline that Novitium currently has is in the area of oncology and hypertension and it's really around the capability around dosage forms and unmet medical needs and finding the opportunities at the intersection of that. So there are multiple programs in progress currently. And again, part of the improvement in capital structure is to allow ourselves to invest more behind these sorts of opportunities to go ahead and to expand our 505(b)(2) business. So I think that's how we're thinking about that. And obviously, you've seen that as part of the financing we've also brought on board a financial sponsor Ampersand Capital and that was a -- there was a lot of thought put behind that choice too. So finally, on your question on CDMO, I think there is -- there is tremendous opportunity not just at Novitium, but also at our site in Baudette, our two sites in Baudette as well as the site in Canada. We have tremendous capacity that can be leveraged to grow the CDMO business. The key is to find the balance of finding the opportunities of CDMO that are attractive and sticky and that's what we will be focused on. I did highlight in my remarks, prepared remarks the unique capability that we have also at our facility in -- at our hormonal and oncolytic facility in Baudette and that's something that we will leverage more as we really put effort behind and grow our CDMO business.
Our next question comes from the line of Elliot Wilbur of Raymond James.
Cited that Steve hadn't had enough airtime as of yet. Steve, can you just -- if you've provided it in your prepared commentary, I apologize, I missed it, but just some commentary on the interest rate on the new credit facility. And then, also the second tranche of the earn-out structure tied to the 505(b)(2)s, I didn't catch timeline associated with that, I'm not sure if you provided or not. I know the first part is within 24 months. But is there a timeline with respect to the 505(b)(2)s? And then, one question for -- follow-up question for Nikhil as well. So how do we think about the integration now of Novitium and its pipeline with the 90 plus ANDAs that are in the ANI library? Just not sure what the real opportunity is there. Does the acquisition of Novitium give you capabilities to monetize those at a quicker pace than you might have otherwise? Just trying to think about sort of how the acquisition maybe added some incremental value to those legacy assets. Thanks.
Yes, sure thing. So I'll start off there. So, Elliott, in terms of shifting to a term loan B structure, I think it's important to know outright this is the first time that we'll be taking ANI through the rating agency process and through a syndicated process on the debt side. So we look forward to working with the leadership at Truist on those pathways. And -- so I would say, what I would say around this is, for our planning purposes at the moment and of course subject to change based upon future events, but for planning purposes, we anticipate being kind of in the 5.75% type area in terms of an all-in interest rate on the term loan B. In terms of the contingent consideration, you're correct, the first tranche that's tied to financial performance and FDA filing metrics will be measured in the 24-month period, post close. The second tranche of potential earn-outs around the 505(b)(2)s are structured as a traditional royalty on those products. So the concept is, when the products launch, there will be a royalty that accrues back to the selling shareholders of Novitium and they have the ability to earn upwards or up to the $21.5 million cash over time and there is a -- that timeframe can extend out to 10 years.
Nikhil, I think the last leg of the question, perhaps is for you.
Sorry. Yes. No, thank you, Steve. I think that it's interesting you brought that question up, Elliot. In the time that we have been obviously discussing the opportunities, there have already been two -- at least two products from our basket of dormant ANDAs that you know Samy and team at Novitium believe that they can get to the market much faster and that has already been put in motion as part of a -- in obviously a separate co-development deal that we would do. But, for sure, that the unlocking of the dormant ANDAs and not all 90 have -- not all 90 have the same value, but the ones that have market need and value, accelerating their time to market is, for sure, part of the plan.
And ladies and gentlemen, we've reached the allotted time for questions, I'd like to turn the floor back over to Nikhil Lalwani for any additional or closing remarks.
Thank you, Maria. So look, this is a very exciting and active time for ANI. We weathered a difficult year and believe that we are well positioned to take advantage of opportunities as the headwinds from COVID begin to dissipate. We feel confident that we have established a clear regulatory path forward for Cortrophin, our top priority. We are thrilled to acquire Novitium, a well-run company with a portfolio that immediately gives us an established R&D engine and contributes to our EBITDA.
We believe that the future is bright. As always, we appreciate your support as we accelerate our growth plans and bring high quality medications to the patients who can benefit. Thank you all for your time today.
Thank you, ladies and gentlemen. This does conclude today's conference call. You may now disconnect.