Good morning, everyone, and welcome to ANI's Fourth Quarter 2017 Earnings Call. At this time, all participants are in a listen-only mode. And later, you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions]. Please note this call may be recorded. It is now my pleasure to turn today's program over to Mr. Arthur Przybyl. Please go ahead.

Good morning, everyone, and welcome to ANI's Earnings Conference Call for the full year and fourth quarter 2017. My name is Art Przybyl. I am the CEO. And joining me today is Stephen Carey, our Chief Financial Officer. Before we begin, I want to refer everyone to the forward-looking statements language in this morning's press release and ask each of you to review it carefully as important context for this conference call. Discussions will also include certain financial measures that were not prepared in accordance with generally accepted accounting principles. Reconciliation of those non-GAAP financial measures can be found in our earnings release dated today. Today, we reported our full year results, record net revenues of $176.8 million, record adjusted non-GAAP EBITDA of $74.2 million and record adjusted non-GAAP net income per diluted share of $3.91, increases of 37%, 21% and 32%, respectively, as compared to the prior year. Fourth quarter results include net revenues of $47.3, adjusted non-GAAP EBITDA of $19.7 million and adjusted non-GAAP diluted earnings per share of $1.08, increase of 24%, 10% and 20% respectively as compared to the prior year period. In 2017, our two primary business platforms generic pharmaceutical and branded pharmaceutical products generated $118.4 million and $50.9 million in net revenues, increases of 24% and 93% respectively as compared to 2016. Last year, we launched six products, four generic and two brands that help generated these year-over-year revenue increases. For perspective, as compared to 2015, our generic pharmaceutical product revenue has more than doubled increasing by 115% from $55.2 million. Our branded pharmaceutical revenue has increased fourfold increasing by 363% from $11 million. It's significant to note that our commercial product portfolio increased by 16 to 31 products, an increase of 94% over that two year time period. During this time, we have…

Thank you, Art. Good morning to everyone on the line, and thank you for joining the call to discuss the ANI's full-year and fourth quarter 2017 financial results. ANI recorded another strong quarter to close out 2017 and by extension post our fourth consecutive year of record net revenue, adjusted non-GAAP EBITDA and adjusted non-GAAP diluted earnings per share. Full-year net revenue reached $176.8 million, representing a 37% increase versus 2016 and was driven by 93% growth in our brand product portfolio and 24% growth in our generic product portfolio. Gross profit of these sales gains drove full-year adjusted non-GAAP EBITDA to $74.2 million and adjusted non-GAAP diluted earnings per share to $3.91, representing an increase of 21% and 32% as compared to 2016 respectively. These figures place us well within our 2017 adjusted EPS guidance as a result of favorable mix as net revenue was short of full-year expectations by a modest 2%. Turning our attention to the highlights of the fourth quarter. Net revenue for the three months ended December 31, 2017 was $47.3 million, up 24% versus prior year, driven by growth in our branded product portfolio. Fourth quarter adjusted non-GAAP EBITDA was $19.7 million representing a $1.8 million or 10% increase from the year ago period. This result was achieved while increasing our year-over-year investment in research and development by $2.5 million as we continue to advance our Cortrophin re-commercialization program and invest behind our Vancocin oral solution pipeline opportunity. GAAP EPS reflects a loss of $0.83 per diluted share entirely driven by onetime $13.4 million charge recognized in conjunction with devaluing our net deferred tax assets, due to the change in the federal statutory income tax rate from 35% to 21% under the Tax Cuts and Jobs Act of 2017. In addition, during the fourth…

Thank you, Steve. Moderator, we will now open the conference call to any questions.

[Operator Instructions]. And our first question comes from the line of Elliot Wilbur with Raymond James.

Thanks. Good morning. First question for yourself Art, and just want to get a little bit of additional color commentary or insight into current trend to the generic business, look back over the last couple quarters, the business is kind of been sort of cap roughly at the $30 million per quarter level. So just sort of curious what we should expect in 2018 in terms of number of potential approvals and maybe just provide us a metric with respect to how many products are actually filed at FDA? And as a corollary to that, want to see if I mean there seems to be have been a fairly significant slowdown in terms of the number of ANDA approvals. And I'm wondering if some of the same issues that may be impacting the overall rate of ANDA approvals might or might not have an impact on your pipeline sort of given that the unique nature that many of these are of course are reductions of products or prior approval supplements?

Yeah. Thank you, Elliot. I've read your report on the FDA slowdown may be due to the government slowdown. I think there are other issues alongside debt that are potentially slowing down approvals. You've seen a new effort on the part of the agency to include a subject matter called elemental impurities. And I think you've seen some of the Comprehensive Review Letters occasionally pop-up with requesting that information. Any time there's a new effort on the part of the agency to perhaps include something like elemental impurities more formally as compared to just putting it in an annual report, it has a tendency to slow down approvals. Now, in our particular case and I would have to get to the exact number of approvals that we have filed at the agency. I don't have that off the top, in our particular case, we are still picking and choosing from previously approved ANDA products that we are re-commercializing through tech transfer efforts in our facilities in Baudette, Minnesota. And so we are affected somewhat by a slowdown in approvals as it only relates to prior approval supplements that we would submit against previously approved products or perhaps had a change in raw material supplier that would necessitate a new a prior approval supplement. We certainly are not affected when the product is, a change is being affected in 30 days type product and submitting for that. So there is no slowdown associated with that scenario. It remains to be seen how potentially the industry is impacted by any slowdown on FDA's part, I think that's still an open question. We don't see ourselves as necessarily slowed in any shape or form only because we haven't been - we haven't seen it Elliot. So we have a number of generic product launches that are certainly teed up for this year. I don't want to - I have not, as you can tell, I have not stated the amount in a press release, so I going to be a bit cautious. But the ones that are included in our guidance from our perspective are launches that we feel obviously extremely confident about, okay. So part of the answer to your question is I don't know the answer, I don't know whether the slowdown is for real or not. They approved - the agency approved I believe a record number of in this last year that's good for the industry from my perspective. And I certainly support their efforts and hope that they continue that going forward into 2018.

Okay. Thanks. And if I can just want to follow-up for you as well maybe just sort of get your current perspective on the acquisition landscape you guys obviously have had a good amount of success acquiring these more durable branded assets and provided a nice kind of buffer to some of the generic pricing headwinds that have been out there. But just sort of wondering given what seems to be more, more generic assets coming to market more, more depressed levels if that maybe the return characteristics that shift a little bit maybe those are potentially more attractive asset at this point and maybe what you are seeing on the branded side, just try to get a little bit more perspective in terms of deployment?

Well, I mean first and foremost, Elliott, it's an excellent point. I mean first and foremost, we have I think I'll say it upfront, we probably have the best business development individual rapture up that's working for us. And I would say generating a significant amount of value opportunities in the transactions that we have acquired. Even at the height of the asset fever in terms of multiples, we have always kept a - he's always kept us in a very disciplined fashion to not overpay. Now certainly we believe that this is today a target rich environment for asset opportunities coming to the market both in brands and generics. In brands, you have somewhat of a more stable environment and understanding how those brands will react and the value you can extract from the transaction over time. Generics are very different you have to be - it's a crystal ball approach associated with it you have to be very careful because we have seen company's EBITDA and we have seen specific product EBITDA on generics literally get cut in half overnight. So you don't want to catch a falling knife in regards to asset transaction for generics. So do I believe that there will be a significant amount of both generic and branded opportunities coming to market in 2018? I think we've already seen that. And obviously for us we're not speaking towards $1 billion transactions, we're more of the string of pearls type of transactions that you've seen us execute over the last several quarters and years. But I think this sets up very well for us because we are clearly a strategic buyer because of our strong capital position. And so the message to the marketplace is if you're selling assets, please include ANI as a potential buyer of those assets.

Our next question comes from the line of Dewey Steadman with Canaccord Genuity.

Hi, guys. Good morning and thanks for taking the question. I guess can you comment a little as much as you can without disclosing any competitor, putting yourself at a competitive disadvantage, can you disclose through the phasing revenue and EPS throughout the year or is it more back half weighted as those 2018 mantras really take hold or is it something we'll see some early year launches to propel earnings growth?

Steve?

Sure. Good morning Dewey. Yeah, I think that it is kind of a moderate season as the year goes on. So I think that obviously as the 2018, generic launch cadence kicks in that comes in over the course of the year. I think the launch cadence there really starts to kick in around say the back half in the second quarter and then flow out from there. So you would expect some acceleration to the quarters as the year goes on. And so I would say it's a moderate build of the base that we entered 2018 on.

Alright, great. And I guess the second year, your support of Rob and I tend to agree with that too. But has Rob seen or have you see a substantial revaluation of assets both in the generics and brands base, I know valuations begun pretty pricey and some private sellers are still appear unwilling to sell it reasonable valuation?

So, yes and no. I mean you obviously know in the macro environment for public companies multiples are different than they were in 2015 that's for sure, lower. And I think it really is dependent upon the specific situation. So that's a tough question to answer because again it really depends on the transaction. And I mean yes, we have certainly seeing - there is three ways to answer this. Number one, they don't seem to be a largest - a large amount of strategic buyers in the United States. My perspective is that many companies are somewhat tapped out associated with capital positions and their balance sheets. And I think many company's focus has turned to reducing debt on your balance sheets in our space. So that precludes some of those folks from larger transactions. We've seen the FTC approach to somebody's transactions and we still don't know how that entirely plays out. So it really depends on, I think it really depends on that transaction, the company you're dealing with see, is it a distressed transaction, is it one from a position of strength. But I wouldn't put any overall color on what's happening out there yet. I mean again our focus is specific to us the assets we're going after. And I think as we have a combination of assets that we've brought that fit into our product launch pipeline and cadence for future periods of launches and at the same time, we always are looking at instantaneously accretive asset transactions that makes sense for us obviously some time to manufacturing our lower cost et cetera. And I think that you should just expect that from us going forward that's how we're going to approach - that's how we're going to approach the opportunities in the marketplace.

All right. Great. And my final question just on further on business development. Obviously you guys have benefited from acquiring sets of assets that you can plug it eventually into by debt. Are there opportunities out there that may be outside of your normal do such forms that could be plugged in about that that are interesting at this point?

Outside of our normal dosage forum that could be plugged into debt, we wouldn't be able to…

I know, I mean that can't be plugged in by debt.

Can't be plugged in. Yes, so well, our largest one is an obvious one and that's Cortrophin gel which is obviously an injectable product. So if you're asking me, if the company in vision is moving into different platforms like injectable drugs or thermic drugs, drugs that require aseptic sterile manufacturing, we're always looking at those opportunities. We have always felt that we can successfully market any AA or AB rated generic drug and whether it's in the institution marketplace that's my background in injectable in hospitals or certainly with the consortiums and the consolidation of scripts in all solid markets. So we would not be - we will not shy away from an acquisition or merger if it made sense that would increase our portfolio without any overlap. And that would include injectable, so we will what the future brings us.

All right. Thanks so much.

You're welcome, Dewey. I'd like to just thank everybody for attending our year-end earnings conference call today. I wish you a nice afternoon and signing off. Thank you very much everybody. Bye-bye.

Thank you. This concludes ANI's fourth quarter 2017 earnings call. You may now disconnect your lines and have a wonderful day.