Ani Pharmaceuticals (ANIP) Q2 2026 earnings call transcript

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 Alwani, 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 Alwani.

Thank you, Irina. Good morning, everyone, and thank you for joining us for ANI's second quarter 2026 earnings call. Starting on slide five, 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 Cotrofen 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 genetics businesses with incremental contribution from the Harmony Intellectual Property outlicensing 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 six, 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, Cortrofen gel and Illusion. We delivered 117.1 million in protrophin, gel net revenues for the second quarter, up 43% year-over-year and 56% over quarter one, 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 specialties sales force to continue its strong trajectory in the second half of 2026. We completed our GAUT-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 gaudi 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 Cotrofen gel have only increased over time since our 2022 launch. Cortrofin 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 Cortrofin 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 Cortrofin 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 Quotrofin compared to 2025, and the addition of the GOUT expansion creates a strong new growth trajectory for Quotrofin.

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 case in July and the strong demand generation from the GOUT expansion.

For Alluvian, we delivered $18.7 million of revenue in the second quarter. We announced the top line results from the Phase 4 Open Label Synchronicity Trial in NIUPS 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 the 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 NIUPS represent at least 10X the number of patients treated with Illuvian today, a significant and durable opportunity for value creation.

Turning to slide 7, our strategic priority, 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 number two player in overall CGT filings. Driven by our superior R&D capabilities and operational execution, we delivered another strong quarter with generic 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 that have expanded our cortrophin commercial footprint in acute cardiothoritis 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 eight, 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 percent Quartrofen 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 Quartrofen 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 billion. 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 will now turn the call to Chris to discuss our rare disease business and provide color from the ongoing launch in acute cardiothoritis flares. Chris?

Thank you, Nikhil, and good morning, everyone. In the second quarter, cortrofin 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 cortrofin 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 cortropin 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 cortropin 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, ANI 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 a million addressable patients, and yet, to date, ACTH therapies are vastly underpenetrated. With ANI's demonstrated ability to educate healthcare providers to help identify new patients who are appropriate candidates for cortrophin treatment, we have confidence that there is significant runway for continued strong multiyear 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. Gaud 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 gaudy 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 guardia 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 experience multiple flares a year who have We 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 an access to scotrophin 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 Gaud 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 and demand persists with record new cases achieved by the team week over week We seen traction with both primary care and podiatry offices with initial and repeat prescribing Over a 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 Pediatric Medical Association Scientific Meeting, We are now looking at the QTROFIN team for their superior focus and execution.

Our new Gaud 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 Alluvian. We recently reported top-line results from the Synchronicity Phase IV open-label trial and noninfectious uveitis of the posterior segment and plan to present the detailed results and additional analyses at a medical meeting in fourth quarter 2026. These data will support increased engagement with retina specialists who treat NIUPS as we 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 in 2026 guidance in more detail. Starting with slide A&I total net revenues were $266 million in the second quarter, up 26% over the prior year period. Revenues from Cotrofen 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. Illuvian 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 WACIX 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, 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 Cortrofin, 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 2.4 times, and our net leverage was one time, 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 The theme 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 Cortrofin 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 Cotrofin 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 set. We are reaffirming our Illuvian net revenue guidance of $78 million to $83 million, which reflects stronger Illuvian 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 Cotrophin 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 21.5 million and 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, We are very encouraged by the initial demand that our Cotrophin sales force expansion in grout 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.

Yeah. Good morning, Vano, and thank you for your questions. I think your first question is on the gout expansion. So as we said, the leading indicators from the gout expansion are very positive, right? Overseeing is the, you know, so first of all, you know, our gout focus organization expansion was fully operational by the end of June as expected.

And then the leading indicators of demand that we've pointed out are, which we're pleased with, is the breadth and the depth of the prescribing, right? So over 95% of the reps generated multiple new patient cases. Over a third of the prescribers are initiated, have initiated two or more cases. And 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, you know, thought about the gout expansion, right? So I think all of those, you know, very pleased with the progress and the leading indicators of demand that we've pointed out for the gout expansion.

Now, when it comes to guidance, you know, Steve pointed out that our Q3 guidance for Quotrofen is 143 to 153, and then, you know, your question was around the step up from there. So when you think about the GOUT expansion, right, we've executed our largest rare-to-vee Salesforce expansion, and we've increased our reps by 50%. This expansion from 120 to 180 reps, right, so that's a meaningful expansion. 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 growth in 2Q and have continued the momentum in 3Q with the highest number of new cases initiated in July but that also has continued momentum And then you know lastly you know that Q4 also benefits from the typical channel and insurance dynamics acting as tailwinds So finally as a reference point in 2025 too where we did a Salesforce expansion revenue contribution from H2 was 61 of the total And then you know just again as the reference point the expansion in 2026 is 3x the expansion in 2025 in terms of number of reps and was completed in the second quarter Versus the first quarter in 2025.

And then 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 Cotrofen and are investing in multiple ways to capture that opportunity and to most importantly, you know, be true to our purpose of serving patients in place.

Thank you, Vano.

Thank you.

Yeah. Good morning, Glenn, and thank you for your question. So first is on the insurance re-verification, which drove impacted the performance in the first quarter. That issue is behind us, and there's no impact from insurance re-verifications in the Q2 number. And then to level set here, we did make our guidance range for the quarter, achieving the 56% and 43% year-over-year growth in Q2 and are proud of the progress we made. And there are a diverse range of inputs that drives our guidance, right, such as number of cases initiated, the indication mix, patient pull-through, payer type, and other such factors. And then, you know, in terms of momentum, right, going into Q2 and, you know, obviously we're sharing Q3 data too, the growth came in Q2 came primarily from existing specialties, and the momentum has continued into the third quarter with from existing specialties itself.

We have the highest number of months 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, you know, metrics on the indicators of demand, right, that I already laid out. And so our expectation for Q3 and Q4 hinges on both the continued momentum in the existing stuff we talked about, as well as the very positive early feedback from the grout launch, where we have over 95% of our team has generated multiple new cases, and over a third of our prescribers have initiated two or more cases.

And we continue to have success going to prescribers who are naive to ACTH, right? We have, over the history of us commercializing cotrophin, over half of our prescribers are, you know, were naive to ACTH and began using ACTH to serve patients. With the linkage to IQVIA and the question around that, while the 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 IQVIA data, but we understand that to be helpful to investors, we have been providing to investors many of our key internal metrics, such as, you know, next quarter's revenue guidance or various demand metrics from July in the first month of the current quarter.

Thank you, Glenn.

Thank you.

Good morning, and thank you for your questions, Dennis. So, you know, 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 cortrofin to $520 million to $540 million in cortrofin revenue for the full year. And importantly, cortrofin has a strong multi-year growth opportunity driven by the large, significantly underpenetrated almost 1 million patients that we estimate as our addressable market. And we continue to see momentum across both our existing specialties and from the gout expansion. You asked about Q3 metrics, right? In existing specialties, highest number of new cases initiated in July.

In the gout expansion, 95% of the reps, right, an expansion that was operational at the end of June, 95% of reps fully operational at the end of June. Ninety-five percent of reps have initiated two or more cases. A third of our prescribers have written two or more cases. So we are seeing very strong demand generation and very positive demand generation, which is on track or ahead on metrics that we have, right? Week on week, we're continuing to see that momentum. We do not see any additional headwinds in the back half of the year, And our, very importantly, our expectations for the back half of the year are largely intact with what we had originally anticipated at the start of the year, right?

And that's, so the revised guidance is simply taking into account the actual results from the first half. And then you asked about the question on the step up in Q4. I think the big difference with last year is, you know, we have an expansion that's 3X the previous year's expansion, right, that's fully operational at the end of June. So these reps will have been out, you know, three months in Q3, but then you'll have a full quarter and, you know, most reps will be out between three to five months when you get to the fourth quarter. So you will see a much bigger impact from the gout expansion in the fourth quarter.

Thank you, Dennis.

Thank you, Dennis, for your question. Look, we're trying to give as many internal metrics to be helpful to investors, but we're not, at this point, sharing flares per rep or number of cases per rep, etc. Because as I said, there are many factors that drive our guidance, and so I will keep it at that.

Thank you, Dennis. Thanks.

Good morning, and thank you, David. So when we say new cases initiated, we mean prescriptions. We mean the same thing as enrollments, enrollment forms. So when we say, you know, highest number of new cases initiated for existing specialties in the month of July, then that means highest number of enrollment forms or prescriptions that were written in July. And the same thing when we talked about, you know, from the gout expansion, the leading indicators of demand, there are a third of our prescribers have written more than two prescriptions, meaning intent to treat more than two enrollment forms and initiated new cases initiated. So new cases initiated is the terminology we use. So that's one. The second on time to, you know, from the time of the enrollment or the new case initiation to fulfillment, that time varies.

It varies on a number of different factors. It can be in a matter of a couple of days to, you know, a couple, into weeks, and it depends on the payer type, the patient, the physician's office. I think it's a number of different factors that drives it. I think importantly, you know, we're near five of our launch, right? And we have consistently across the five years kept improving this process to support prescribers and prescriber offices and patients who are appropriate for ACTH and corporeal therapy to get the medication that they need in time. So there is no lag or any new headwind that we're facing on that front. We continue to, you know, work with the prescriber's office and, you know, in the appropriate fashion to ensure that these enrollments end up with patients on therapy.

And then the last question was on, third question was on operating leverage. Absolutely, David. The investment that we've made in 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. And so you can expect higher sales in 2027 and operating leverage from the investment made this year.

Thank you, David.

Good morning, and thank you, Katrina, for your questions. First question is on, I'll take a second question first, which is on the vials or the usage per patient. The usage per patient varies across indications and prescribers. So, you know, we are not seeing any significant shift. The mix of indications, right, we have is there are some indications for which there's a higher usage per patient, And there are some indications where there's a lower usage per patient, whatever the prescriber feels is appropriate for the patient. So we're not seeing, you know, any specific change in any indication, right, of the usage per patient. And then going back to your reverification question, look, we worked through the reverification issues.

And again, just to remind investors, there was a large bolus of patients that needed to be re-verified, that patients who were on therapy on December 31, 2025, and needed to be re-verified in 2026 early as part of their insurance process. And because of the large bolus as well as weather-related issues, it took a bit more time. Now, we were able to convert many or most of those patients through the reverification process, right? And there was some shifting of that in the timing of that that it happened. Did we lose some patients? Yes, but that's also, you know, patient pulled through. This is also consistent with what has happened in the previous year. So there's not, you know, an additional impact that we're seeing from that.

Yeah. So thank you, Katrina. Thanks.

So, thank you for your – good morning, and thank you for your questions, Gary. I think your first question on what was the contribution of GOUT. So, you know, I'll speak to existing specialties where you remember that even we have spoken about gout being about 18% of our sales as we were reporting in the past, right? So that's what that gout was giving from existing specialty, rheumatology, nephrology, you know, and from the pilot territories. That's the last sort of number that we've shared. You know, in Q2 from the gout expansion where we've, you know, had this expanded sales force that goes into primary care and podiatry, we had limited impact in the second quarter in revenues, right?

And this was as expected. We obviously will expect, you know, to see 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%. But as I've said, there's 750,000 patients in the other specialties, right, which we believe is the underpenetrated and that are significantly underpenetrated, right? So this is ex-gout. So a million patients including gout, but 750,000 patients ex-gout, and there is a significant growth opportunity there. So, you know, that will keep growing, right, and will keep investing to capture that growth in the non-gout areas too. So, at this point, we're not projecting, you know, what's the gout mix of the business going to be going forward.

Your second question was on the gout number of vials per patient. Yes, the gout number of vials per patient is lower, or number of PFS per patient is, or MLs per patient is lower, but then there's a lot more gout patients. And even when you think of, you know, the prescribers that we go to, the number of patients that each prescriber are seeing, our experience has been through the 10 territories where we did the pilots, as well as in the expansion that we've in the first few weeks of the expansion, that the number of patients that are suffering from acute gaudi arthritis flares and who the prescribers believe are appropriate to consider for a new treatment option, such as cortrofen, So, we'll see more patients and there will be less usage per patient.

So, we think of it that way. And then the third question on the gross to net, there is nothing to highlight here. We obviously try to strike a balance with, as you refer to our competitor, between sharing information that is competitively sensitive with information that is helpful to investors. So, you know, nothing new to share at this time.

Yeah. So discipline capital allocation is a critical path of our success story and plans going forward. And executing M&A to expand the scope and scale of our rare disease business is a top priority from a capital allocation perspective. And where do we plan to invest or where we've been evaluating opportunities? Very much two sets of opportunities. So commercial or near commercial assets that are synergistic either with our call points, right? So we have the benefit of Croprofen having multiple call points. So synergistic with the call points from a Salesforce perspective or leveraging the rest of our infrastructure, right, which is the market access, medical affairs, patient support, you know, a lot of the, which is also a critical part in the rare disease space, you know, so those are the two sets of sort of core capabilities that we want to, you know, add assets that are synergistic with that.

Thank you, Gary. Okay.

And then we also have the learnings from the pilots that we did in the middle of last year for podiatry and PCP. So we've taken all those learnings as we have engaged with the podiatrists and PCP offices, and we have found that on both fronts, both in terms of the engagement and the discussions with the podiatrists and PCPs, as well as in the support that's needed for them, our experiences in the gout expansion to date has been pretty consistent. And so we're continuing to build on that, right? So very positive and very consistent.

I think the second question on contribution from the pilot territories, I mean, remember, there were 10 territories, roughly. And then as we've gone into the expansion, you know, we've had about 64 reps, right? And 95% of them are seeing, have initiated two or more cases. So the impact is beyond the demand generation, is beyond the 10 pilot territories. The momentum is across the entire team. So thank you for your questions, Tom.

Good morning, Brandon, and thank you for your questions. So the first question is on the existing specialties. We see strong multi-year growth potential across the existing specialties. As I mentioned, there's 750,000 addressable patient population outside of the GALT specialty, right? So across the key existing specialties, there are 750,000 patients, and we're just, you know, they're significantly underpenetrated. And there continues to be robust momentum across these existing specialties. The Q2 to Q1 growth of 56 percent quarter-on-quarter and the 43 percent year-over-year growth was, you know, essentially achieved by the existing specialties. And then the, you know, are you seeing, you asked, you know, is there a slowdown? We are not seeing a slowdown across specialties. In fact, I think one of the things we highlighted is there's a doubling of the ophthalmology volumes year over year.

To give you an example, obviously we're trying to find a balance between sharing information that is helpful with information that is competitively sensitive. So we give that as an example. And as far as 3Q goes, the momentum is strong. We gave multiple metrics for July, and especially for existing specialties, we said that there's the highest number of new patient cases initiated in July. And obviously, new patient cases initiated translates to new patient starts translates to volumes dispensed.

So thank you for your questions, Brandon.