Q2 2022 ADMA Biologics Inc Earnings Call
Good afternoon and welcome to the ADMA Biologics second quarter 2022 financial results and corporate update conference call on Wednesday August 10, 2022.
At this time, all participants are in listen-only mode. There will be a question and answer session to follow.
Please be advised that this call is being recorded at the company's request and will be available on the company's website approximately 2 hours following the end of the call.
At this time, I would like to introduce Skyra Bloom, Senior Director of Business Development and Corporate Strategy at ABMA Biologics. Please go ahead. Skyra Bloom, Senior Director of Business Development and Corporate Strategy at ABMA Biologics
Welcome, everyone, and thank you for joining us this afternoon to discuss Adma Biologics Financial Results for the second quarter 2022 and recent corporate updates.
I'm joined today by Adam Grossman, President and Chief Executive Officer, and Brian Linds, Executive Vice President, Chief Financial Officer, and General Manager of Admabio Centers.
During today's call, Adam will provide some introductory comments and provide an update on corporate progress, and then Brian will provide an overview of the company's second quarter 2022 financial results.
Finally, Adam will then provide some brief summary remarks before opening up the call for questions. Earlier today, we issued a press release detailing the second quarter of 2022 financial results and summarized certain achievements in recent corporate updates.
The release is available on our website at www.admobiologics.com. Before we begin our formal comments, I'll 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 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, risks, and uncertainties such as those detailed in today's press conference.
We refer you to the disclosure notice section in our earnings release we issued today in the risk factors section of our 2021 annual report on Form 10-K for the year-ended December 31st, 2021, as well as the risk factors section of our quarterly report on Form 10-Q for the quarter-ended June 30th, 2022, for discussion of important factors that could cause actual results to differ materially from these forward-looking statements.
With that, I would now like to turn the call over to Adam Grossman. Adam.
Thank you, Skylar. Good afternoon, everyone, and thank you for joining us on today's call.
We hope you all remain healthy and safe.
The second quarter of 2022 was another banner period of execution for our company.
During the quarter, we grew total revenues by 90% year over year, generated significant improvement of gross margin and meaningfully narrowed net losses from prior periods.
The significant revenue growth coupled with our disciplined expense management.
to establish a strong foundation for the company to accelerate towards profitability.
Consistent with the robust year-to-date trends previously highlighted.
We are particularly pleased with the continued growth for our higher-margin IG product.
Okay.
Drawing from the strong underlying product demand trends, we are confident the product and margin mix will continue to favorably evolve over the coming periods.
In this context, we anticipate the company's pathway to profitability will become increasingly visible.
As the year progresses and our anticipated margin expansion unfolds.
enabled by the company's strong execution during the first half of the year.
We are well positioned to generate full year 2022 revenues exceeding $130 million.
The revenue increases will be driven by both IB-IG and market growth as well as anticipated share gains for our product portfolio.
Ascent of adoption continues to accelerate, and we are confident the product's upside will sustain over the near and longer term period.
Our commercial organization has successfully positioned the product.
constructed and conveyed appropriate commercial messaging, and mobilized targeted medical education campaign.
which are focused on expanding the brand's awareness and products utility.
Our team has identified yet to be realized growth opportunities among both new and new
Providers, as well as headroom for increased penetration within existing institutions.
Importantly,
the problematic and at risk primary immunodeficient patients being treated with a sentence.
are demonstrating real-world benefits and quality of life improvements.
Anecdotal market feedback has been resoundingly positive, and this patient's population is oftentimes poorly controlled on standard IVIG products.
We believe this validates and supports our company's mission to commercialize novel products for immunodeficient patients at risk for infection.
It is our devotion to this underserved population that fuels us.
And we are proud that the Adma Biologics name is now synonymous with trust and confidence.
with physicians, providers, and patients.
Finally, on a senate, ADMA's nimble manufacturing capabilities provide for time and cost-efficient production flexibility as our product demand grows.
Additionally, we believe we have sufficient internal and external RSV plasma supplies to support the upside revenue targets with problems.
We are well prepared from a raw material RSV and normal source plasma supply standpoint.
as well as manufacturing capacity to meet our products rapidly growing demand.
Turning to Viv again.
The product continues to penetrate and gain market share in the growing US and UNO globular markets.
We are pleased with growth and overall product specific execution.
The second quarter of 2022 represented the highest period of utilization and demand pull-through since the product's relaunch in 2019.
Our confidence in Bivigam's ongoing and teeth revenue potential is unwavering and fully intact.
As we have throughout the pandemic, ADMA remains committed to delivering the continuity of patient care.
Our strong normal source and RSC plasma supply inventories, which are included in the total inventories of 146 million dollars.
recorded at the end of the second quarter.
are anticipated to support all upwardly revised revenue forecasts on an ongoing basis across our IG product portfolio.
This robust plasma supply position is a result of the execution by our BioCentres team.
in rapidly expanding our internal plasma collection center network.
and management's assertive efforts to secure third-party plasma supply contracts.
At present in our BioCenters segment, we have 10 plasma collection centers under our corporate umbrella.
Six centers are FDA licensed.
Two additional collection centers are operational in collecting plot.
and two centers are in various stages of construction.
We remain on track to have all 10 plasma collection centers FDA licensed by the end of next year, at which point we anticipate having substantial plasma supply self-sufficiency.
At present, we are encouraged with our donor foot traffic and collection volumes, which are now considerably exceeding our organization's pre-pandemic levels.
With respect to macroeconomic conditions,
in addition to the noble altruism associated with building the plasma.
We believe the remuneration for plasma donations can help donors manage and offset increased pressures.
due to their historic consumer inflation rates.
It is in this context that ADMA is proud to be a trusted partner with the local communities we serve.
and we look forward to welcoming many more donors to our state-of-the-art BioCenters facilities.
These truly remarkable accomplishments across our business could not have been possible without the dedication and focus of admin staff, leadership, and advisors.
Our organization's collective vision and dedication to establish complete end-to-end control of operations is now our
We out.
Thank you for your dedication and hard work in achieving our corporate goals and delivering on our commitments to the patients, prescribers, and stockholders to whom we have made these promises.
We commend the entire ADMA team for your remarkable efforts focused on improving health care for patients who we know are counting on us.
Additionally, before turning the call over to Brian , I'd like to confirm our strategic alternatives process remains a top priority and a bongo.
Our objective is to maximize stockholder value and we will update the market as developments continue engineers leading KarlLikeK predatory skills marginal growth opportunities
With that said, I'd now like to turn the call over to Brian for a review of the second quarter 2022 financials.
Thank you, Adam. We issued a press release earlier today outlining our second quarter 2022 financial results, and I'll now discuss some of the key highlights.
As Adam mentioned earlier, total revenues for the 2nd quarter ended June 30th, 2022, or 33.9M dollars as compared to 17.8M dollars during the 2nd quarter of 2021. This represents an increase of 16.1M dollars, or approximately 90%.
The revenue growth for the second quarter of 2022 compared to the second quarter of 2021 was favorably impacted by the continued commercial ramp up of our IVIG product portfolio and expansion of our customer base for BIVIGAM and Ascentive.
As a result of the encouraging 1st, half of 2022, we are well positioned to generate full year 2022 revenues in excess of 130M dollars.
During the second quarter of 2022, ADMA realized a gross profit of $7.8 million compared to a gross loss of $1 million for the second quarter of 2021.
Gross profit during the second quarter was driven by a favorable contribution from our higher margin product, Ascentive.
Our consolidated net loss for the quarter ended June 30th, 2022 was 13.8M dollars or a net loss of 7 cents per basic and diluted share. Compared to a consolidated net loss of 18.9M dollars or net loss of 15 cents per basic and diluted share for the quarter ended June 30th, 2021.
Net loss decreased by approximately $5.1 million. This is primarily attributed to higher gross margins of $8.8 million, offset by $1.3 million increase in interest expense as a result of additional debt, as well as rising interest rates, along with increased plasma center operating expenses of $1.1 million, attributed to having eight plasma centers in operation compared to four centers this time last year.
as well as increased general and administrative expenses of $1.5 million, resulting in increased headcount, commercialization, and marketing expenditures.
We look forward to expanding on these trends in the quarters ahead as we expect to continue to grow revenues and grow gross profits and narrow net losses as 2022 progresses.
In doing so, we anticipate our pathway to profitability will become increasingly clear.
We have significantly strengthened our balance sheet and funding position over recent periods. On a pro forma basis, the company's total liquidity stands at greater than $96 million, and this includes current cash on hand at the end of the second quarter of $52 million, accounts receivable of $19 million, and access to an additional $25 million in non-dilutive funds from HAFEN, which is now accessible at our discretion.
In the context of expected improvements in net losses moving forward, ADMA is in the best financial position the company has been in since inception.
As of June 30, 2022, ADMA's total asset value was $297 million, notably including $146 million of total inventory recorded at the company's cost, cash and cash equivalents of $52 million, as well as accounts receivable of $19 million.
Lastly, we're very pleased with the expansion progress at our bio centers with 8 centers now in operation and collecting plasma compared to 4 this time last year. During the 1st, half of this year. We received FDA approvals for 3 of our centers, and this brings a total FDA approved centers to now 6.
We also have two additional centers presently under FDA licensing preparation and another two under construction. We are well positioned to achieve our stated goal of having all 10 centers collecting and FDA licensed by year end 2023.
With that, I will now turn the call back over to Adam for closing remarks.
Thank you Brian .
In summary, we have successfully implemented all requisite measures to enable our company's collective advancement toward profitability.
We comprehensively reiterate all previously provided longer term financial guidance.
We believe the admin is on track to generate $250 million or more in top-line revenue in 2024.
and $300 million or more annually thereafter.
At this level, we continue to anticipate generating potential annual gross profit and net income
of $100 to $150 million and $50 to $90 million, respectively.
during the 2024-2025 time period and beyond.
while guided profitability is reiterated for no later than the first quarter of 2024.
Accelerated profitability timelines are possible should the demand trends for our IG portfolio previously characterized. If you want to earn on your own you can join our Hou," or join our structured round of people fund <expletive> for free sessions Appreciate it. Paulispers There is some good money
and current Morgan dynamics sustained.
As the timing profitability becomes clearer, we will formally revisit this guidance.
In closing, I'd like to thank you, our stockholders, for your continued support as your investment in Adma helps to advance our mission to save lives and make high quality, safe, and efficacious products that help our friends, family, and neighbors.
Please donate plasma and help save lives.
And with that, we will now open up the call for your questions.
Operator.
Thank you.
Thank you.
Hello?
Operator.
Wanda, Jason?
The operators seem to have got disconnected. I'm working on getting a new one.
All right, for the technical difficulties, everyone, please stand by.
Yes. Okay. Thank you.
Michelle.
Our first question comes from Elliot Wilber with Raymond James. Your line is open.
All right.
Thanks. The operators probably misplaced their personal PIN code as well. How you doing Elliot? Good, thank you. Thank you. Good to hear your voice again. Congrats on a strong quarter. Just wanted to ask a couple of questions, maybe first for actually for Brian and just thinking about...
given expectations for sequential top line increase over the balance.
the year, how should we be thinking about gross margin both in dollar terms and percentages?
either with progressive
as well given that I think last quarter you sort of called out a couple of
Moving parts or 1 time items that could impact to Q margins specifically the effects of the shutdown. And then I think some of the longer. They did the inventory was expected to have a favorable impact. So just trying to get a sense of how this representative this quarter may be in terms of margin levels. Over the balance of the year.
Sure. Thank you for the compliments and thank you for the questions, Elliott. The way we're looking at the remaining balance of the year is continued gross profit expansion as well as narrowing that losses and continued revenue growth. Thinking about the impact of the recognition of the longer dated inventory, this was incremental in nature. What we've mentioned on previous calls and we continue to see our revenues being generated from our higher margin products incentive and a NABI.
Where historically we were looking at our forecast and thinking about a ViviGAM standard IVIg mix compared to our Higher margin mix of a 90%, 10%, maybe 80, 20%. We're seeing a 70, 30% Higher margin mix ViviGAM and Assentives. So with 4 consecutive quarters of positive gross margin, Last this current quarter being a 23%, we're hopeful that we're going to continue to see positive gross margins trend.
that direction and then eight consecutive quarters of top-line revenue growth.
And recently, certainly narrowing net losses, we feel that this was a very, very clean quarter. And we look forward to continuing to produce increased revenues and improved gross margins and narrowing that losses as the quarters progress. I think the last couple of quarters were in that 10 to 13, 15% range. This quarter we did 23%. From a quantifiable standpoint, I would say somewhere continuing to rise modestly as we progress through the rest of the year.
Divigam peak gross margins we think are going to be in that 25 to 35 percent range and then Asenup will be in that 80 to 85 percent range, Navis in the 70 to 75 percent range, so on a blended basis. As we look to exit 2022 going into 2023 and certainly by peak we'll have a blended 50 percent gross margin towards the end of 2023 and then going into 2024. So it'll be a modest continued increase in gross margins is how we're forecasting.
our continued success out of the remaining balance of the rest of this year.
And if I can, maybe I'll just add Elliot that, you know, we're really pleased with the 90% year over year growth. The business is firing on all cylinders. We've.
We've been producing a lot of drug and it's coming off the line. Inventory turns are happening a little bit faster. Things are really...
falling into favor these days. And I think it's important for me to just point out, we've always been conservative in our estimates. We've always been, I like to say we're a management team that sets achievable expectations and we certainly love beating them. So we're looking at this. We've, I guess, reiterated our guidance. We've enhanced it to the point where we're saying, what do we expect?
to exceed 130 million, but we want to be cautious that with the macroeconomic uncertainties that are plaguing pharmaceutical manufacturers with the supply chain inflationary pressures. We just want to be conservative here, but we're very pleased with the execution, very pleased with the execution during the quarter. We've been able to really manage expense as well and certainly the demand for our product continues to grow and we expect to see continued quarter over quarter growth.
all the way through profitability.
Thanks, and I'm just following up on some of your comments there. Can you just talk about the, you know, the current macro environment on on the collection side? Um, you know, what you're seeing in terms of foot traffic collection volumes. Um, you mentioned remuneration and you prepared commentary, but what you're seeing in terms of, um, you know, overall inflationary pressures there in terms of being able to get donors into.
Centers, but maybe just kind of high-level commentary on on the collection side. Sure. Absolutely. I I think that I'm I'm
One of the last people to say this publicly, but some of the other plasma companies have stated that collection volumes are increasing, centers are operating very well. It's the same for Adma. I can let Brian speak to the actual numbers here, but foot traffic is up. I'll just say, you know, for those who've been following the company for a while, I mean, we've been public since 2013, those can recall some of the headlines in the 2008 to 2012 timeline.
You know, inflation rates and pressures to the general population certainly are positives for plasma donation. It's a way for folks to sort of offset some of these increasing costs that they're experiencing at the grocery store and at the pump and in their regular daily lives. So you know, government programs are sunsetting. We keep comet
extremely high levels. We think that donor foot traffic should continue to accelerate. We work very closely and we're really a big part of the communities where our centers are located. As we said during the prepared remarks, we've got 10 centers under our corporate umbrella. We've got eight centers that are currently operating and collecting plasma and we're ramping up, we're staffing and we're seeing collection volumes month over month.
that are improving across the board in all of our geographies. So we feel very confident that
We feel very confident that we're going to be able to get to self-sufficiency sometime next year. And we're really pleased with the opportunities ahead of us from a collections standpoint.
So just just to elaborate a little bit more on that, our donor for trafficking collections are certainly much higher today than they were pre pandemic. As a result of opening up more centers running special donor programs. But I think having the centers remain open throughout the pandemic. That's one of the things that I was able to do. We didn't shut down our centers so we're able to roll out programs we're able to keep the donors still coming in even with some social distancing.
that was previously enacted, but obviously now that's gone away, we're extremely excited geographically where we're located as well. So we think that even though inflation is increasing, we think that there's an opportunity for donors to earn additional income, to augment their income based on rising prices, gas, and groceries. So we're certainly happy to add to the local economies in the 10 centers that we've located throughout the United States.
Thanks. Maybe just one final question for me and I'll get back in the queue here. Another more of a macro subject and wondering if we have any visibility into the legislation coming out of Washington with respect to drug price.
I know the original legislation had a carve out for plasma therapies such that they would not be subject to the provisions of that legislation, but a lot of kind of last moving or fast moving changes in addition to deletions to legislation as it's come through both chambers here. I'm just wondering if.
you have any perspective in terms of whether or not that exemption still exists in the latest iteration of that bill.
Sure, Elliot. I think the short answer to your question is yes, the exemption exists in the latest draft of the bill. I have to commend ADMA's policy team as well as the work that we do with the Plasma Protein Therapeutics Association and our brethren companies in the plasma-derived product space.
you know, historically under Obamacare.
plasma products were excluded. We felt confident that plasma products continued to be excluded. You know, there we I believe that there's a plasma caucus that has been formed now on Capitol Hill. That's due to the combined efforts, I think, of the industry. And I think that the folks that are really trying to get their arms around drug pricing reform understand that the world that we play in in the arena
we're in is different than that of the small molecules and some of the other generic products that are out there. You cannot grow what we make in laboratories. We need human beings to be altruistic and come in and donate plasma. And the costs continue to rise and I think things like dealing with global pandemics and infectious diseases and and all the additional testing and
good manufacturing, good laboratory practices that we have to implement. I think that some of the regulators understand that there are additional costs and that there are additional pressures and quite frankly when you look at the margin profile of plasma companies, it's different than that of pharma. So we're very very pleased. Every once in a while our government does some some good stuff and we think excluding plasma from the
Medicare, Medicaid price.
negotiations is the right thing to do and it's going to help keep product into the veins of patients where it's most needed.
Thanks for the questions Elliot.
Our next question comes from Kristin Kluska with cancer. Your line is open.
Hi, good afternoon, everyone. Thanks for taking my questions and congrats on another strong quarter. So I appreciate your conservative approach that you give as it relates to your forecasting, but could you talk about what you would need to see in these next few months or quarters to adjust some of your profitability guidance? And for example, does your current internal forecast assume the lower end of this revenue guidance that you've provided and similar growth trends on...
And even when we're faced with some of these supply chain and economic challenges.
If we continue to see the growth in BIVIGAM utilization, the growth and utilization of the Senate continues to accelerate the way that we've seen.
Are we surprised by our results? No, we're not surprised. Are we pleased? We're certainly very, very pleased. But I think that our commercial team is well oiled at this point. The medical messaging and the medical education campaigns are really doing their job. And I think word of mouth in our grassroots approach to sales and market penetration.
is proving to be successful. So I think if we could see another, you know, I've got a glimpse into the third quarter, you know, we continue to see strong demand trends into the third quarter. I think as this continues, you know, as we get closer to the end of the year, we certainly believe that there is a potential to accelerate profitability timeline. And we will formally revisit that guidance in due course as the year unfolds. You know, one of the things I...
I said in the prepared statement is that the more we operate, the more visible profitability is becoming.
We really...
We don't want to set expectations and then have something fall from the sky because of the macroeconomic pressures that we really just don't see yet. We're trying our best to see around corners. We feel very confident that we're certainly on track for profitability on or before the end of Q1-24. And I think if we continue to do our jobs well, we certainly have the inventory in the work in process channel to meet the growing demand trends. Thank you.
Even if those demand trends accelerate even faster than our internal expectations, we've substantially increased the production of a cent of this year. That's one thing I love about our plant here. It doesn't matter what plasma we bring into the plant that day. It's pretty much the same process for whatever we make. So if we want to make a batch of a cent of all we do is bring over the RSV plasma pool. We want to make the again we bring over the bivagam plasma pool. So
We've been able to swap out some Vivigam badges this year for additional incentives. And I think coupled to Brian mentioned earlier, Brian mentioned the 36-month shelf life extension, producing more drugs, having it on hand to meet the growing demand trends that we don't want to be caught short. And I can assure our investors that in that $146 million worth of inventory, there's a solid amount of extended product in there that we think will.
meet the expectations of the street. And we have inventory that will allow us to beat. So we feel very good about it. But I can't commit today, Kristen, but I certainly am committing to continued quarterly growth.
and delivering on the promises to the patients, the prescribers, and our stockholders.
And I think just a couple things to add to that as we continue to ramp up production at the plant. Presently, we're about 50, 60% at the production. Now, we've said historically, we have a 600,000 liter plan to produce close to 2M grams. And that would be in that 2024 2025 timeframe. So, as we continue to realize efficiencies at the plant. Improved inventory turns, perhaps increasing or expediting testing results.
All that will lead to improved working capital and improved gross margins. So we're going to continue to obviously monitor these things very closely and improve their returns and other things, efficiencies in the business to continue to improve margins and narrow net losses.
Thank you. Appreciate that. So now that you've had a couple of successful quarters with the incentive and you've highlighted the momentums ongoing, are you seeing that the average number of doses per year has increased or is a lot of the growth also just attributed to new patient starts or is it really just a combination of these two factors?
You know, the answer is yes. We are seeing patients.
Most patients are going on a center therapy, Kristin, because they've had complications and they have other comorbidities and their success on standard IG is less than optimized.
So clinicians are switching these primary immune deficient patients, secondary immune deficient patients off of their standard IG onto a scent of therapy which is labeled indicated use and we're seeing patients remaining on therapy for a long period of time. A couple of patients that we have on therapy are in their second year.
Typically in this patient population if you do well on a drug you tend to stay on that drug.
And we're starting to see that. And we believe that the business that we're building is certainly sticky. We're seeing very, very consistent utilization amongst existing prescribers and existing patients. And we are seeing growth again at the same institutions. And we're adding new institutions all the time. We feel very, very proud of what we're doing here. I mean, I was just traveling around a little bit now that the world is opening up. I had a couple of...
regional medical meetings and meeting with some of our KOLs. And I can tell you that the message out there is one of that we're making a product that's truly truly differentiated in the eyes of a number of prescribers and that it's making a difference in the quality of life and outcomes for patients.
So while I can't quantify that specifically today, I can tell you that
stocks that have a problem with their PI patient on another IVIG. They now have something where they can try that's not just increasing the amount of IG or increasing the frequency. They now have a product that's manufactured with a plasma pool that's derived from donors that are tested to have sufficient levels of RSV antibodies. And we've shown in the public domain in our papers and in our patents that
These donors have high titers to a panel of other respiratory viral pathogens. And we feel that we're offering a differentiated opportunity to the doctors to provide their patients. And we feel very, very good that the demand trends are going to continue to hold and that we're going to see accelerated pull through as the battery of publications on patient outcomes continue to...
enter into the scientific domain. Okay, and do you have a general sense of ballpark what percent of the IVIG market kind of fits into this bucket of either having complications with IG or they have these other comorbidities or they simply just don't respond well?
Yeah, so in the primary immune deficient, in the immunodeficient population, we figure about 30% of the market.
for immunoglobulin is in that market. So, you know, call it a hundred million grams are typically used annually. So say 30 million grams of product are used in the primary and secondary immune deficient patient population.
You know based based on our internal models, you know, there are probably about a hundred and fifty thousand primary community efficiency patients. We say roughly 10 to 20% of these patients are higher risk.
So they have comorbidities, they have underlying chronic lung conditions, they have chronic persistent infections, they're on antibiotics for long periods of time. So when we really look at that subset, and if you look at the ascendant.com website, we try to call out
the types of risk factors that this patient population would be subjected to in some of the comorbidities. It's, you know, call it it's in that 15 to 30,000 patients are really our target market.
when you look at the dosing of IG and you look at the utilization of a incentive and you
see this, a modest penetration into this.
will deliver substantial top line revenues to the company, helping to drive profitability.
Great. Thank you.
If there are no further questions, I'd like to turn the call back over to Adam Grossman for the closing remarks.
Sure.
Thank you everybody for your attention and time. Sorry for the technical difficulties, and we appreciate your continued support in allowing us to make good products to help these immunocompromised patients.
Have a great afternoon.
This concludes the program. Can you support in allowing us... Have a great day.
The conference will begin shortly. To raise your hand during Q&A, you can dial star 11.
You
you
you
you
you