Q4 2020 ADMA Biologics Inc Earnings Call
At this time, I would like to introduce Skyler Blum director investor relations and corporate strategy at adma biologics, please go ahead.
Welcome everyone and thank you for joining us this afternoon to discuss adma biologics Financial results for the fourth quarter and full-year twenty-twenty. I'm joined today by Adam Grossman president and chief executive officer and Brian Lenz Executive Vice President and Chief Financial Officer during today's call Adam will provide some introductory comments and provide a corporate update and then Brian will provide an overview of the company's fourth-quarter in your ended December 31st, 2020 Financial results, Adam will then provide some brief summary remarks before opening the call up for your questions earlier today. We issued a press release detailing the fourth quarter and full-year 2020 Financial results. The release is available on our website at ww.w.
Before we before we begin our formal comments a remind you that we will be making forward-looking assertions during today's call that represent the company's intentions expectations or beliefs concerning future events wage, which constitute forward-looking statements for the purposes of the Safe Harbor Provisions under the private Securities litigation Reform Act of 1995. All forward-looking statements are subject to factors and uncertainties such as those details in today's press release announcing this call in in our filings with the SEC which may cause actual results to differ materially from the results expressed or implied such statements in addition any forward-looking statements represent our views only as of this date of this recording and should not be relied upon as representing our views as of any subsequent Thursday. We specifically disclaim any obligation to update any such statements except as required by the federal Securities laws.
We refer you to the disclosure notice section in our earnings release. We issued today in the risk factors section of our 2020 annual report on form 10-K, which we expect to file following this conference call for discussion of important factors that could cause actual results to differ materially from these forward-looking statements with that. I'd like to now turn the call over to Adam Grossman Adam.
Thank you Skyler. Good afternoon everyone and thank you for joining us on today's call. We hope those joining us today continue to remain healthy and safe 2020 was an unprecedented year for businesses and difficult for most of the nation due to the pandemic despite this enormous unforeseen challenge adma biologics delivered on its commitment to stockholders customers and most importantly the patients who were treated with our life-saving plasma-derived Therapeutics.
because of the focus
Dedication of admins Workforce. We are pleased to report that 2020 was a year of multiple achievements including record revenue of 42.2 million dollars, which represents a 44% increase over 2019 this top-line Revenue Milestone taken together with the rapid expansion of our plasma collection center Network as well as delivering on all production and Regulatory objectives as part of our supply chain enhancement initiatives adma ended 2020 in the strongest position. It has been in since Inception on the financial front page. We substantially strengthened our balance sheet and ended twenty-twenty with assets totaling 207.7 million dollars.
As evidenced by The increased production throughput we experienced during 20/20. We significantly grew our inventories to a year-end balance of 81.5 million dollars wage was increased our accounts receivable and recorded investments in property plant and equipment.
Although plasma collections for the industry including for Admiral remain pressured due to among other things a present combination of government stimulus packages persisting social distancing measures wage different vaccination rollout state-by-state. I am proud to report that admin continues to successfully navigate the evolving COVID-19 operating backdrop and is producing its products and according to plan.
All of our plasma collection centers remain fully operational and we continue to see stabilizing and improving collection Trends over recent periods, which we are hopeful will continue as vaccinations roll out across the country our supply chain continues to experience areas of improvement with easier access to certain raw materials, and we have built robust inventories of newly identified long lead-time items most recently for our biocenters business unit. We announced Korean Ministry of Food and Drug safety approval for the sale of source plasma into South Korea as well as announcing FDA approval to implement a hepatitis B immunization program enabling adma to collect hyper immune plasma from donors immunized with an FDA license commercially available hepatitis B vaccine.
These approvals are a testament to our company's adherence to Global regulatory standards. It should be noted that this approval to collect Hepatitis B hyperimmune plasma will allow adma the option to retain raw material for the forward fractionation and production of ma BHB or to monetize this inventory by selling it to third parties.
As many of you are aware a key corporate initiatives to expand our adma biocenters plasma collection center Network and further secure enhance and optimize our raw material supply off.
Earlier this year in February. We received approval for another plasma collection center. And in this business unit. We now have seven plasma collection facilities at various stages of operations and development including one facility presently pending FDA biologic license application or b l a approval in the second half of this year. Additionally, we expect to file a month or two new centers during 2021 due to our ahead of schedule expansion progress. We have revised guidance from building five to ten facilities by 2024 to our current expectation of having ten or more facilities FDA-approved and fully operational by 2024 in combination with our contractually committed third-party plasma Supply contracts. We believe is positioned to produce growing and continuous quantities of immune globulin Supply in the forward-looking periods. And ultimately we will emerge from the pandemic dead.
Operationally stronger than ever we remained.
On track to achieve our goal of becoming an end-to-end integrated and highly profitable manufacturer of specialty immune globulin Therapies.
Are still in execution during the First full calendar year for the commercial roll-out of our to intravenous immune globulin products, they began and a sentence together with our long-term third-party plasma Drive intermediate fractions. Supply agreement allowed us to provide first time Pete Revenue guidance of 250 million dollars or more which is which is expected to be achieved in twenty twenty, four hour, 20, 20 progress and forward-looking Outlook. Also enabled us to confidently commit to achieving profitability by no later than the first quarter of 2024.
In addition to our firm commitment to these longer-term operating targets, we confidently reiterate our expectations to generate quarter-over-quarter Revenue growth throughout 2021 and Beyond. I'm proud to say that we achieve all of these operational Milestones while acting decisively in the face of COVID-19 to enact all the medically recommended safeguards for our patients families and customers which collectively We Believe will enable us to continue to successfully navigate through the pandemic related headwinds in the periods ahead are dedicated staff in each of business segments across the country. What we do seriously patients are counting on us to provide high-quality life-sustaining products are performance during this Global pandemic is a result of a Compaq unified and focused with its mission.
I think the admin team for keeping your focus and composure in the face of true adversity.
Additionally, we are sincerely grateful to our shareholders for your continued support of our efforts to provide these life-saving products to patients in need.
With that said I now have to turn the call over to Brian for a review of the 20-25 minutes.
Thank you, Adam, since we issued a press release earlier today outlining our fourth-quarter and full-year 2020 Financial results. I'll just review some of the highlights for the 3 months ended December 31st, 2020. Total revenues were $14 compared to twelve million dollars for the fourth quarter of 2019. This represents an increase of $2 or approximately 16% off the revenue growth for the fourth quarter of 2020 compared to the fourth quarter of 2019 was favorably impacted by the continued commercial ramp-up of our IVIG product portfolio as I mentioned earlier our total inventory as of December 31st, 2020 was approximately 81.5 million dollars up approximately 54% from 53.1 million dollars at 6 and 2019.
The cemetery consists of raw materials including Source plasma and other materials expect it to be used in the production of our three commercial products as well as work and process inventories for bivigam choice of a Nabi and finished goods of intermediate fractions as well as our three commercial immune globulin products in accordance with us generally accepted accounting principles. The value of our life has stated at our cost in the periods ahead. We anticipate continuing to purchase raw materials and building work and process inventories as well as finished goods inventories, which we hope will translate to quarter-over-quarter revenue growth throughout 2021 and Beyond additionally given COVID-19 related uncertainties across the pharmaceutical supply chain. We intend to retain a portion of our growing inventories as Safety stock, which we believe will strengthen our position as a reliable supplier to customers distribution partners and prestige.
over the coming quarters
Our Consolidated net loss for the three months ended December 31st, 2020 was Nineteen point four million dollars or a $0.20 loss per basic and diluted share compared to a Consolidated net loss of 10.6 million dollars or an $0.18 loss per basic and diluted share for the quarter ended December 31st, 2019. The increase in your rear net loss was primarily attributed to increased manufacturing ramp-up activities at the Boca facility to support our commercialization efforts of bivigam and asceniv moving on now to the full year twenty-twenty Finance. Just total revenues were forty two point two million dollars compared to twenty nine point three million dollars for the full year 2019 representing an increase of 12.9 million dollars or 44%
The increase in revenues was primarily attributable to increase sales of our immune globulin products portfolio Consolidated net loss for the full year 2020 was 75.7 Million off or an $0.88 loss per basic and diluted share compared to a Consolidated net loss of 48.3 million dollars or an $0.89 loss per basic and diluted share for the full year 2019 at December 31st, 2020 add my head cash and cash equivalents of 55.9 million dollars and accounts receivable of Thirteen point two million dollars compared to suction cash equivalents of approximately 26.8 million dollars and accounts receivable of approximately 3.5 million dollars at December 31st, 2019.
Atmos net working capital as of December 31st 2020 was approximately 133.8 million dollars compared to approximately 71.8 million dollars as of December 31st 2019 accounting for our most recent ATM financing activity. We have now extended our cash Runway guidance into the fourth quarter of 2021 representing a to fiscal quarter extension from our previous guidance during the year We additionally refinanced our senior secured Term Loan, which among other things lowered our overall effect of cost of capital gains solidated are previously subordinated debt and most importantly
Bite it for a two year extension of the interest-only. Through March of 2024, which we believe will allow adma to reach profitability prior to maturity with them. I will now turn the call back over to Adam for closing remarks. Thank you, Brian.
The totality of our twenty-twenty achievements leaves us well-positioned to execute on our ongoing operating targets and advanced towards our goal of generating substantial revenues and profitability from our multi-faith product offerings across all business segments.
We anticipate twenty Twenty-One to be defined by continued commercial execution in addition to a series of value-creating FDA decisions during the year with our supply chain production and biocenters plasma collection business segments. These anticipated upcoming FDA decisions include expanded 4400 liter IVIG plasma pulled off the scale in-house a septic field finished capabilities with our installed equipment, including our van RX s a 25 and the continued expansion of our adma biocenters plasma center Network upon receipt of these FDA approvals admit expects to realize significant operating efficiency and improve gross margins beginning potentially as early as mid-2013, which we believe will ultimately support durable profitability with enhanced in-house control of our most critical manufacturing and operating functions.
well our organization
She's focused remain singularly on achieving our near-term operating targets and ultimately progressing towards profitability. I'd like to take a moment to acknowledge several of our recent scientific divorce.
Notably, we presented a poster at Ivy League twenty20 detailing the challenges in the management of respiratory viral infections and more recently. We presented a late-breaking poster at the club. I conference highlighting the potential clinical utility of a strep pneumoniae hyper immune globulin invulnerable patient populations adma continues to establish its reputation a scientific and medical community as a thought leader in the development of specialty hyper immune globulins, and when considered in combination with our expanding intellectual property of State wage leave at it could be a partner of choice for the rapid development of targeted infectious disease therapies as well as for a potential Suitor moving forward.
Management will continue to evaluate all of our business development options in order to maximize shareholder value.
We enter 2021 from a position of strength across our value chain in the immune globulin end markets and in the context of our improving financial position and asset value. We look forward to executing on all of our commitments in 2021 and in doing so we anticipate creating meaningful value for our shareholders in the near and mid-term.
On behalf of the entire adma biologics team. I thank you are stockholders for your continued support as your investment in admin helps to advance our mission to save lives and make good products that help our friends family and neighbors. Please donate plasma get your vaccine help save lives and with that. We now like to open up the call for questions.
Thank you. Today's question-and-answer session will be conducted electronically. If you'd like to ask a question, please press star then one on your touch-tone telephone, press the pound key or pause just a moment to assemble the roster.
Our first question comes from Anthony Petrone with Jeffrey.
Hi, good afternoon. Everyone. Congratulations on on a strong year through 2022 start off maybe again just to a little bit on time a couple of timing questions and I'll have some questions on supply and demand on timing maybe just an update on the FDA finish off as well as bivigam lot expansion. It sounds like that's still potentially a first-half event. So just an update there maybe a quick follow-up. There will be Brian may be to just walk us through under a scenario where both of those are secured in in the first half. What is the sort of second half gross margin ramp look like from there and I'll have a couple of follow-ups. Thank you very much. Anthony great questions. You know FDA is very engaged with Admiral right now. We're going through the review process our previous guidance. I believe we said was maybe yep.
But we are still on track.
We we we feel very confident that we're in a good place for the review and we feel very comfortable that you should see the approvals coming in sometime on Thursday around mid-year and then we've said second half to start realizing some of the accretion from the enhancements to the supply chain from Off Lease potential approvals, but everything's on track of the agencies, very engaged. I mean being in the immune globulin space during COVID-19 you get a lot of attention from FDA and these are products that without them many of the patients would not be able to survive and live normal productive lives IVIG continues to remain on the FDA drug shortage list. I had continues to be a company that's saying that we've got more IGG to bring to the market in 2021 than we had last year and customers are being very receptive to it. And the FDA is really working very closely wage.
Plus, uh to ensure that we can continue the continuity of supply and and care for the market brought you want to take Anthony's next part. Sure. Thank You Oughta month. So with regards to our second half gross margin ramp-up. We reported earlier that we have about eight million dollars of our conformance lot manufacturing taking the manufacturer bivigam from 22 to 4400 liters and in doing so we had to expense those four conformance Lots in accordance to Gap now when we receive FDA approved, hopefully in the middle of the year, we would be able to realize 100% gross margins sometime in the second second half and the sometime in the second half maybe third early part with quarter for those four conformance Lots.
We've already started to see if you back off if you back off the 8 million dollars from the sixty 1 million and the cost of product Revenue Anthony. We've already started to see gross losses narrow. I should say improved to the positive. So we expect that Trend to continue towards the second half especially as we receive the FDA approval of The 4400 liter capacity expansion pack.
That's helpful and then couple of follow-ups and I'll I'll hop back in queue. When would be when we think about the the manufacturing timeline today, whether it's for baby began more sensitive when you secure clearance for a lot expansion and fill finishing house. What do you think that does for a timing on on inventory turns from you know a source plasma to finished goods and then once you have that visibility in hand, you know, how should we think about bivigam Contracting once visibility is enhanced off? Thanks.
Thanks Anthony. So our production cycle is 7 to 12 months. I think as I've said previously, you know, we're on the longer end of that cycle time right now is we're using third parties for our a septic field finish labeled pack etcetera. And we have seen improvements in this production cycle time throughout twenty-twenty and we're actually looking at some data today things are looking really good. Obviously when we get to Greenfield finish and house and as I've said we can just take the bulk and wheel it down the hallway into the filth finish school rather than putting it on a truck shipping it up to our CMO doing the appropriate identification testing and getting into their cue. We believe that we can shave some time off of life. But no matter what Anthony it's still going to be within that 7 to 12 month window, you know, our hope is to be in that, you know, seven eight nine months range for the production cycle, but you really can log
get it any faster than
Than that but we're currently on the the outer bound of that cycle, which is where we've seen. We we are seeing improvements our hope is that we're in call at 7 to 9 months as we go forward with regard to be began Contracting and making sales. We're really seeing very very good demand q1 happens to be woke up really nicely and we feel very good about about the quarter as we wind down here.
We're really building a good following and brand loyalty. We've got great reimbursement structure for both bivigam, and it's tentative as we get more Vivid game available are feeling is patience continue to do well, our customers will continue to put more patience on our product. So we feel very good about this. We're already cultivating and speaking with our distribution partners and are both types of care home infusion specialty pharmacies that that are working very very closely with our Field Force and the prescribers and we're really able to identify gaps in the market where they're not able to have complete Supply with all the brands all the size of that. They would like, so we feel very good about bringing more product into the market. We feel that the the demand is they're based on our first quarter performance that I've seen so far. We really feel that we're on a good track to continue to deliver quarter-over-quarter Revenue growth. Thanks again. I'll hop back in.
Thanks, Anthony.
Our next question comes from Elliot Wilbur with Raymond James.
Thanks. Good afternoon. First question for yourself Adam. Just if you could certainly the build-out of the collection centres has progressed at a faster Pace. Then what we would have anticipated over the past twelve months. Can you just talk about some of the decisions internally or the factors that have enabled you or let me see you to pull forward the the build out of the the the collection centres and then just you know what the messaging or body language has been from FDA in terms of a review timelines certainly approve last facility that quicker than anticipated or on a quicker than anticipated Thailand, but just you know what you maybe
getting from the agency in terms of in terms of
Messaging that may influence your expectations around the timing of approval for the collection centers as well absolutely thinks things that we pretty much. Hope you're doing well. So, you know the the decision to build more plasma centers, you know, there's a simple answer and then it's a multi-faceted answer. I mean quite frankly, we've got a plant that has a four hundred thousand capacity today. We're talking about being able to upsize our lots for our production lot sizes for bibig am sometime in middle of this year round can reasonably assume that we may have more capacity in the future. We want to have control of our plasma Supply, you know, not not to be funny. But the reason why you're hearing from me today and why we own this end and walk, you know, essentially vertically-integrated provider of specialty mean globulin products because we used to rely on third parties and you rely on third parties. You don't have all the controls you want and dead.
You know even before COVID-19 admin management team was talking about building. Our plasma center is getting more control supply chain enhancements.
And I think what we've learned during Cove is and and and and really the way that we've been able to operate navigate during COVID-19. We want to have as much control over our destiny as a possible. I think that's what a potential acquirer would want to see in our business and I think that's really what our shareholders want to see from this business. So so first and foremost collections have been down wage reported from others in the industry as well as adma in my prepared remarks. We are being impacted. I don't believe that we're being impacted as severely as some of the other collectors that have home made statements publicly, but we are seeing quarter-over-quarter improvements week-over-week improvements with respect to collections up and down here and there the government stimulus keeping thing a little bit flat right now, but we're optimistic with the vaccination rollouts that things are going to improve but no matter what the world relies on us plasma for the Global Production.
Plasma Drive therapies across the globe so there is going to be a supply constraint of plasma. One thing that has been proven time and time again, and I've been a student of this industry for guess. This is my third decade supply and demand the plasma goes up and down but we've got a place to put that plasma other demand for IG continues to be forecasted to be favorable and we want to control our our supply I think COVID-19 has allowed us to be opportunistic with respect to finding locations as a y'all know. Unfortunately, the retail industry has taken a big hit during the COVID-19 pandemic a small businesses all across the country, you know, we we like strip malls be like a pads on a strip mall parking lots and we take you know, ten to fifteen thousand square feet of retail Frontage if you will in existing strong.
Calls or these types of locations and I don't want to speak for Brian but Brian and the and the biocenters management team are you know, they they said they'd like to pay very little for rent and we're being very opportunistic. So we know that this pandemic is going to end at some point and we're locking ourselves in with, you know, ten year plus leases for these plasma centers. And you know, you're seeing rent for Prime retail spaces that used to be in the, you know, fifteen to twenty $25 a foot. I'm seeing in the high single-digits you got to pounce on it and you gotta do it now because you lock yourself in for ten years that directly goes to the to the reduction of cogs that quite frankly when when when my team and I are modeling we haven't factored that in but it could be substantial. So we're really being opportunistic.
We see that the demand for plasma continues to grow the number of collectors out there. The other the other point Elliot is there are some recent transactions in an industry. There was a a deal for $25 centers and the value of that deal. I want to say it's north of $14 per Center. So, you know, they your these are facilities that had much and build or between, you know, 3 to 5 million dollars. We say the approval cycle as you've been asking the approval cycle typically has been from the time is filed. Typically, it's 12 months. You'll get an approval. Our last Center was approved and a little bit over six months from the time that we submitted the wrong way and that was done without an FDA inspection. Typically FDA requires an on-site inspection of a plasma center. Our last Center had its inspection waived and they accepted a dog
Audit, you know, we've been a known plasma collector.
To the FDA since 2011 we received our first license, so we're not an unknown entity. We're not a new entrant in the space. And we feel really good about approvals. I you know, I can't tell you whether they're going to approve it early or if they're going to approve it within that 12 months cycle. My my feeling is that they will approve it. I want to say our guys took some time in the fourth quarter of this year. We expect the approval. Could it come early anything's possible, but at the present time, I'm not prepared to change my diet in some of the approval wage in if the FDA wants to do it sooner. We're not going to be upset.
Brian at anything you want to add there?
I think you hit on the main points Adam the marketplace for plasma center certainly has grown almost $15 was a recent transaction of 25 centers that were a wired for about $15 per Center. So the market value is there the marketplace is there and we just think it's a great opportunity to to build more plasma centers and they become fully self-sufficient as we said, we improved our increased our guidance from 5 to 10 centers to 10 or more and we're certainly well on our way currently having seven centers under our corporate umbrella at this present time. Okay next question with respect to
The supply chain initiatives 44 hardly any capacity captive filled finish. What are the remaining gating factors in terms of obtaining FDA approval do they actually need to come on site and inspect the equipment in the facility in order to sign off. They is that something they can they can do remotely just you know curious obviously if you have to have it on-site inspection for that to for that to occur sure, you know Elliot one thing I'll say is we are in an active role. So I want to be cautious about things that I say, but what I can tell you is that for The 4400 leader plasma for expansion. No inspection is required. That long is a normal and customary prior approval supplement submission. We send in the review our data that review the specifications. Typically, that would be a month.
Make a review and there is no prior approval inspection required for that submission for the installation of the fill Finish Line and um beginning all of the operations that go along with billing labeling packaging et cetera. Typically that would require a FDA on-site inspection and I say typically because that's what's required in the code of federal regulations. Now, we've installed as van rx625 and and a couple of investors over the last I guess the year or so that we've been talking about this machine. They asked me why do you keep saying van rxs a 25 and I say well that's material. It's very important for the reader to know the investor to know because the van RX is a is a you know, I get like a keys on the message boards and my kids make fun of me but dead.
It's a state-of-the-art machine. It's a totally self-contained isolator system.
And there is no customization of this system at all. So the FDA has approved this device, you know over 30 time maybe forty times now and then that was a precedent. I want to say middle of last year late last year. There was a van RX approved and a press release went out that there was a van RX approved at another company and they may not have a PA I so I can't comment on whether or not the FDA has come in or they haven't come in or going to leave or not. Wait Vai, but what I can tell you is that there's precedent out there dead. But this machine this is a state-of-the-art machine that is a totally self-contained isolator system that we don't have it. We don't have special clean rooms. We don't have special areas. Yes. It's in a controlled environment, but pretty much this machine is what it is. So we feel very very good about where we are with the review cycle. We feel that we will receive approval wage.
Where the device this year and you know, we're also optimistic that the vaccine rollout is going to continue and we're already seeing some modifications in the behavior of our government. We're seeing the CDC revised guidelines for for school children to be less socially distant if you will and we're really hoping that you know, as we we we get to met that came with the vaccine rollout, maybe we'll see FDA start to travel around and do inspections and or continue to feel very comfortable with the van RX and actually waving inspection, but we feel real confident Elliot that the review is going well, and we're very very positive on the outlook for the business for the remainder of the year off. Okay. Thanks and then just to find out Financial questions for for Brian Brian you provided a total inventory number.
Roche little over $81 billion if you happen to have it in front of you could you tell us what the the finished-goods number was within that and then his wife think about your prior commentary that you expect the top line to continue to grow over the course of twenty. Twenty-One given where we are currently object. You have a good line of sight in two one Q. How should we be thinking about the balance of the year in terms of the the trajectory here? Would you expect growth be relatively linear life or is is it you know, should we be expecting more of a a second half acceleration? Sure. All right. Well, thank you. I do have the breakdown for the inventory the different components to Raw Whip and finished goods finished goods from for 2020 is $19 of the $81 million and that increased from $5 and 2019. So nineteen million of the eighty wage.
Is finished goods inventory for the year ended 2020?
Regarding revenues is that I mentioned we do feel really good about the first quarter Top Line revenues here with about a just less than a week left in the quarter and then I'm going about how the second half looks and just from an overall standpoint. We have publicly disclosed. We anticipate quarter-over-quarter sequential top-line Revenue growth thinking about the second half as we hopefully receive FDA approval the 44000 expansion and continue to receive Market acceptance of our products that Thursday April 1st for a sensitive and then going forward. We feel very optimistic about the second half again, thinking quarter-over-quarter sequential Revenue growth.
Ladies and gentlemen, this will conclude our question-and-answer portion of the call. I'd like to turn it back over to Adam. No additional closing comments.
If there's nothing further, thank you very much everybody. I want to thank you for dialing into to our call. Thank you for your interest and adma and plasma-derived therapies and you know gallons and again get your vaccine visit donatingplasma.org and find a plasma collection center near you. We need all donations even those from home or holder. So thank you very much. They healthy and safe and have a great afternoon.
Ladies and gentlemen, this does conclude the conference call for today. We appreciate your participation and you may now disconnect.
Ash Ash
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Jeff