Q4 2023 ADMA Biologics Inc Earnings Call
Operator: Good afternoon, and welcome to the ADMA Biologics fourth quarter and full year 2023 financial results and business update conference call on Wednesday, February 28, 2024. At this time, all participants are in a listen only mode.
Good afternoon, and welcome to the asthma biologics fourth quarter and full year 2023 financial results and business update conference call on Wednesday February 28, 2024 at this time all participants are in a listen only mode.
Operator: 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 two hours following the end of the call. At this time, I would like to introduce Skyler Bloom, Senior Director, Business Development and Corporate Strategy at ADMA Biologics. Please go ahead.
Would 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 two hours following the end of the call.
At this time I would like to introduce Skyler from senior director of business development and corporate strategy at my Biologics. Please go ahead.
Skyler Bloom: Welcome, everyone, and thank you for joining us this afternoon to discuss ADMA Biologics' financial results for the fourth quarter and full year of 2023 and recent corporate updates. I'm joined today by Adam Grossman, President and Chief Executive Officer, and Brian Lenz, Executive Vice President, Chief Financial Officer, and General Manager of ADMA Biosecurity. During today's call, Adam will provide some introductory comments and provide us an update on corporate progress, and then Brian will provide an overview of the company's fourth quarter and full year 2023 financial results. Finally, Adam will then provide some brief summary remarks before opening up the call for your questions.
Welcome everyone and thank you for joining us this afternoon to discuss asthma biologics financial results for the fourth quarter and full year of 2023 and recent corporate updates I'm joined today by Adam Grossman, President and Chief Executive Officer, and Brian Lenz Executive Vice President Chief Financial Officer.
General manager about in our bio centers.
During today's call Adam will provide some introductory comments and provide us an update on corporate progress and then Brian will provide an overview of the company's fourth quarter and full year 2023 financial results. Finally, Adam will then provide some brief summary remarks before opening up the call for your questions.
Skyler Bloom: Earlier today, we issued a press release detailing the fourth quarter and full year 2023 financial results and summarized certain achievements in recent corporate updates, is available on our website at www.admabiologics.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 fluid-looking statements are subject to factors, risks, and uncertainties such as those detailed in today's press release announcing this call and in our filings with the SEC, which may cause actual results to differ materially from the results, or implied by such statements. In addition, any forward-looking statements represent our views as of the date of this call and should not be relied upon as representing our views. We specifically disclaim any obligation to update any such statement except as required by the Federal Securities Law.
Earlier today, we issued a press release detailing the fourth quarter and full year 2023 financial results and summarize certain achievements in recent corporate updates.
Is available on our website at www dot asthma biologics dot 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 release announcing this call and in our filings with the SEC, which may cause actual results could differ materially from the results.
Or implied by such statements.
In addition, any forward looking statements represent our views as of the date of this call and should not be relied upon as representing our views.
One day.
We specifically disclaim any obligations to update any such statements except as required by the federal Securities laws.
Adam S. Grossman: We refer you to the Disclosure Notice section in our earnings release we issued today in the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2023, for a discussion of the important factors that could cause actual results to differ materially from these forward-looking states. Please note that the discussion on today's call includes certain non-GAAP financial measures, including adjusted EBITDA and adjusted net income. A reconciliation of these non-GAAP financial measures to the nearest comparable GAAP metric is available in our release. With that, I would now like to turn the call over to Adam Grossman.
We refer you to the disclosure notice section in our earnings release, we issued today and the risk factors section of our annual report on Form 10-K for the year ended December 31, 2023 for a discussion of the important factors that could cause actual results to differ materially from these forward looking statements.
Please note that the discussion on today's call include certain non-GAAP financial measures, including adjusted EBITDA and adjusted net income a reconciliation of these non-GAAP financial measures to the nearest comparable GAAP metrics is available in our release with that I would now like to turn the call over to Adam Grossman Adam.
Adam S. Grossman: Thank you, Skyler, and welcome, everyone. We are extremely pleased with our 2023 performance, which marked first time adjusted net income and positive cash flow from operation, on a full year basis. We believe these significant milestones are a testament to the, to both our unwavering commitment to the continuity of patient care. Steady financial execution for our stockholders. During 2023, ADMA strengthened its position as one of the fastest-growing providers of immunoglobulin in the U.S. market, and advanced its financial profile to become one of the fastest growing and profitable biopharma companies in the United States. We believe our significantly strengthened balance sheet following the fourth quarter debt refinance, as well as our robust forecasted earnings growth and cash generation, puts our company in a strong position as we start 2024 and look to the future, full year 2023 total revenues grew by 68%. $258.2 million, This rapid growth enabled ADMA to generate positive adjusted net income, and more than $40 million in adjusted EBITDA on a trailing 12-month basis.
Thank you Skyler and welcome everyone.
We are extremely pleased with our 2023 performance, which marked first time adjusted net income and positive cash flow from operations on a full year basis.
We believe these significant milestones are a testament to both our unwavering commitment to the continuity of patient care and steady financial execution for our stockholders.
During 2023 Atmos strengthened its position as one of the fastest growing providers of immunoglobulin and the U S market and.
In advance of its financial profile to become one of the fastest growing and profitable biopharma companies in the United States.
We believe our significantly strengthened balance sheet following the fourth quarter debt refinancing as well as our robust or forecasted earnings growth and cash generation.
Our company in a strong position as we start 2024 and look to the future.
Full year 2023, total revenues grew by 68% to $258 2 million.
This rapid growth enabled admit to generate positive adjusted net income and more than $40 million and adjusted EBITDA on a trailing 12 month basis.
Adam S. Grossman: We believe these exceptional results speak to the efficiency in our organization's operations, and our relentless focus on maintaining top-tier revenue growth while judiciously managing overhead and expenses. We fully anticipate our positive trajectory will continue to drive earnings growth for the foreseeable future. As ADMA's forward-looking business trends gain momentum. We're revising financial guidance upwards for both 2024 and 2025. Increasing Top and Bottom Line Projection, based upon current market factors.
We believe these exceptional results speak to the efficiency in our organization's operations and our relentless focus on maintaining top tier revenue growth, while judiciously managing overhead and expenses.
We fully anticipate our positive trajectory will continue to drive earnings growth for the foreseeable future.
As Atlas forward looking business trends gain momentum, we're revising financial guidance upwards for both 2024, and 2025, increasing top and bottom line projections.
Based upon current market factors, we now anticipate generating revenues during these periods of more than $330 million and $380 million respectively.
Adam S. Grossman: We now anticipate generating revenues during these periods of more than $330 million and $380 million respectively, at this level in 2024. We've increased adjusted EBITDA guidance to more than $90 million, and Adjusted Net Income to more than $65 million. Similarly, for 2025.
At this level in 2024.
We've increased adjusted EBITDA guidance to more than $90 million and adjusted net income to more than $65 million.
Similarly for 2025, we've increased adjusted EBITDA guidance to more than $140 million and net income guidance to more than $115 million.
Adam S. Grossman: We've increased adjusted EBITDA guidance to more than $140 million, and Net Income Guidance to more than $115 million. We believe our commercial success, driven in large part by the recent and continued growth of ascentive utilization, which we believe is attributable to our unwavering focus on the immune deficient patient segment, especially in those PI patients who suffer from complex comorbidities. Specialized Focus in combination with our innovative business model, diverse product portfolio, and our targeted medical education, marketing, and market access initiatives, have provided ADMA with its highly differentiated messaging and product offering. We believe we have successfully established an enduring and growing foothold within the US IG landscape, specific to a Senate. We are confident that there remains a significant growth opportunity for the product within its targeted addressable market, further penetrating the treatment setting comprised of immune deficient patients grappling with these complex comorbidities. Launch metrics for Ascent have remained broadly supportive, and again, made new record highs across leading demand indicators, including measures of both breadth and depth.
We believe our commercial success driven in large part by the recent and continued growth of our center utilization, which we believe is attributable to our unwavering focus on the immune deficient patient segment.
Especially in those patients who suffer from complex comorbidities.
Our specialized focus in combination with our innovative business model diverse product portfolio, and our targeted medical education marketing and market access initiatives.
Provided admah with its highly differentiated messaging and product offerings.
We believe we have successfully established an enduring and growing foothold within the U S landscape.
Specific to incentives we are confident that there remains a significant growth opportunity for the product within its targeted addressable market.
Further penetrating the treatment setting comprised of immune deficient patients grappling with these complex comorbidities.
Launch metrics for a Senate remained broadly supportive and again made new record highs across leading demand indicators, including measures of both breadth and depth.
Adam S. Grossman: All told, we are encouraged to see Ascentive's unique product profile continuing to resonate in clinical practice and the real world setting. Therapy's Accelerating Demand Trends and Healthy Growth Attributions, continually catalyze us to favorably rethink the ultimate size of the market opportunity. And we reiterate that we believe we are in the early innings with the product's total, Prior to providing an update on our growth initiative, I'll spend a moment reviewing the recent implementation of our innovative AI program, ADMAlytics, over the last year and a half. Our Internal Information Technology Leadership, has been working tirelessly to develop ADMALIS, which has now been successfully tailored to our organization's bespoke need, and implemented for commercial use. ADMAlytics combines AI and machine learning, and is designed to optimize and streamline certain of our intricate production processes, in the Complex Landscape of Specialty Biologics Production.
All told we are encouraged to see incentives unique product profile continuing to resonate in clinical practice and the real world setting.
The therapy is accelerating demand trends and healthy growth attribution continually catalyze us to favorably rethink the ultimate size of the market opportunity.
And we reiterate that we believe we are in the early innings with the product's total potential.
Prior to providing an update on our growth initiatives I'll spend a moment reviewing the recent implementation of our innovative AI program at <unk>.
Over the last year and a half hour internal information technology leadership team has been working tirelessly to develop analytics.
<unk> has now been successfully tailored to our organization's bespoke needs and implemented for commercial use.
<unk> combines AI and machine learning and is designed to optimize and streamline certain of our intrastate production processes.
And the complex landscape of specialty biologics production.
Adam S. Grossman: Maintaining uninterrupted operations is paramount, and we believe that ADMAlytics will further bolster our commitment to ensuring the continuity of patient care. We anticipate the program's rollout across the organization will, in due course, bring far-reaching improvement and efficient, across our operations, and further support the company's rapid earnings growth trajectory. The successful development and implementation of ADMAlytics aligns seamlessly with our overarching mission, continuously innovate production processes for specialty biologics, while also building on our reputation as a thought leader within the commercial specialty biologics markets our therapies serve. We applaud the ADMA IT team for their execution and success bringing this innovative software to real-world applications. Turning to our 2024-2025 Corporate Growth Initiative. All activities continue to progress as planned.
Maintaining uninterrupted operations is Paramount and we believe that <unk> will further bolster our commitment to ensuring the continuity of patient care.
We anticipate the programs rollout across the organization will in due course being far reaching improvements and efficiencies.
Across our operations and further support the Companys rapid earnings growth trajectory.
The successful development and implementation of <unk> aligns seamlessly with our overarching mission to continuously innovate production processes for specialty biologics.
While also building on our reputation as a thought leader within the commercial specialty biologics markets our therapy serves.
We applaud the admin team for their execution and success, bringing this innovative software to real world applications.
Turning to our 2020 for 2025 corporate growth initiatives.
All activities continue to progress as planned.
Adam S. Grossman: We've successfully expanded ascent of production to the 4,400 liter manufacturing scale. Enhancing the Product's Margin, Yield, and Capacity. We expect to realize these profitability benefits more materially as we progress into 2024. Additionally, our Ascentive Post-Marketing Clinical Study is progressing well, and may lead to label expansion with a potential pediatric age group if successful. Further strengthening our product portfolio relative to competitive IG offices. Our excitement continues to build as we see the potential impact of our manufacturing IG yield enhancement. During the fourth quarter, we made significant strides in scaling up our processes and conducting laboratory bench scale runs and analysis.
We've successfully expanded the Senate production to the 4400 leader manufacturing scale enhancing.
The product margin yield and capacity.
We expect to realize these profitability benefits more materially as we progress into 2024.
Additionally, our centre of post marketing clinical study is progressing well and.
It may lead to label expansion with the potential pediatric age group if successful.
Other strengthening our product portfolio relative to competitive offerings.
Our excitement continues to build as we see the potential impact of our manufacturing yield enhancement initiatives.
During the fourth quarter, we made significant strides in scaling up our processes and conducting laboratory bench scale runs and analysis.
Adam S. Grossman: If ultimately successful, we believe enhanced production yields will be transformative, providing increased finished goods output, which would substantially increase ADMA's peak revenue earnings potential. This exciting project remains on track, and we will provide updates as developments unfold. Finally, earlier this year, we provided an update on our patented preclinical hyperimmune globulin program targeting strep pneumonia, while still in the early stages of preclinical development.
If ultimately successful we believe enhanced production yields will be transformative and providing increased finished goods output, which would substantially increase add much peak revenue earnings potential.
This exciting project remains on track and we will provide updates as developments unfold.
Finally earlier this year, we provided an update on our patented preclinical hyper immune globulin program targeting strep pneumonia.
While still in the early stages of preclinical development. We are excited to advance this program.
Adam S. Grossman: We are excited to advance. Our interest in this potential new product opportunity stems from several key factors. Firstly, the market potential is significant and currently underserved. Streptococcus pneumonia is the primary cause of community-acquired pneumonia in the United States, ranking in the top 10 diseases for all-cause mortality.
Our interest in this potential new product opportunities stems from several key factors.
Firstly the market potential is significant and currently underserved.
Streptococcus pneumonia is the primary cause of community acquired pneumonia in the United States ranking in the top 10 diseases for all cause mortality.
Adam S. Grossman: The growing prevalence of anti-infective resistance emphasizes the urgent need for both prophylactic and therapeutic interventions. Secondly, ADMA holds a strong patent portfolio for this specific hyperimmune globulin, providing for the development of an S-Pneumo hyperimmune with IP defensible until at least 2037. Drawing from our successful development of Ascentive through clinical and regulatory pathways, as well as our demonstrated commercial launch capability. We believe we are positioned to potentially replicate this success with the Strep Pneumonia Program. It's ultimately approved, we project this hyperimmune globulin could generate additional future peak revenue in the range of 300 to $500 million annually, to reiterate, as evidenced by today's increased earnings guide, we will remain highly cost-disciplined in advancing this program through the preclinical development, on the plasma supply front. I'm pleased to highlight that all 10 of our plasma collection centers are now FDA licensed, and collection volumes are trending at the upper bound of our internal estimates. Foot traffic on a same-center basis continues to grow and reach new highs.
The growing prevalence of anti infective resistance emphasizes the urgent need for both prophylactic and therapeutic interventions.
Secondly, admah holds a strong patent portfolio for this specific hyper immune globulin, providing for the development of an ex pneumo hyper immune with IP defensible until at least 2037.
Drawing from our successful development of incentives through clinical and regulatory pathways as well as our demonstrated commercial launch capabilities. We believe we are positioned to potentially replicate the success with the strep pneumonia program.
If ultimately approved.
We project this hyper immune globulin could generate additional future peak revenue in the range of $300 million to $500 million annually.
To reiterate as evidenced by today's increased earnings guidance, we will remain highly cost discipline and advancing this program through the preclinical development program.
On the plasma supply front I am pleased to highlight that all 10 of our plasma collection centers are now FDA licensed and collection volumes are trending at the upper bound of our internal estimates.
Foot traffic on a same center basis continues to grow and reached new highs.
Adam S. Grossman: All told, we're confident in our ability to meet the increased production forecast, for our commercial IG portfolio. Reflecting on the journey of ADMA. It's clear that our achievements stem directly from the unwavering commitment, and hard work demonstrated by our outstanding and knowledgeable team members. The remarkable evolution from a young virtual biotech startup to a fully compliant end-to-end controlled supply chain and now advancing our position as one of the fastest growing and profitable biopharma companies in the U.S. It's truly rare and remarkable.
All told we're confident in our ability to meet the increased production forecast for our commercial portfolio.
Reflecting on the journey of asthma.
It is clear that our achievements stem directly from the unwavering commitment and hard work demonstrated by our outstanding and knowledgeable team members.
The remarkable evolution from a young virtual biotech startup to a fully compliant and to end controlled supply chain and now advancing our position as one of the fastest growing and profitable biopharma companies in the U S. It's truly rare and remarkable.
Adam S. Grossman: To our employees, we extend our heartfelt gratitude for your tenacity. Perseverance and Tireless Dedication, which not only fuels our progress, but also leaves a significant impact on those we serve, the collaborative ethos and collective effort that truly distinguish our work, We deeply value the dedication, enthusiasm, and diligence exhibited by each team member of our team, the steadfast devotion that drives our success, and enables us to maintain firm control over our operations, in line with our fundamental vision. We firmly believe this strong foundation paves the way for even greater accomplishments in the periods ahead. I'd now like to turn the call over to Brian for a review of the fourth quarter and full year 2023 financials. Thank you, Adam.
To our employees, we extend our heartfelt gratitude for your tenacity perseverance and tireless dedication.
Which not only fuels our progress, but also leaves a significant impact on those we serve.
The collaborative ethos and collective effort that truly distinguish our workplace.
We deeply value the dedication enthusiasm and diligence exhibited by each team member of our team.
This steadfast devotion that drives our success and enables us to maintain firm control over our operations in line with our fundamental vision.
We firmly believe the strong foundation paved the way for even greater accomplishments in the periods ahead.
I'd now like to turn the call over to Brian for a review of the fourth quarter and full year 2023 financials.
Brian Lenz: We issued a press release earlier today outlining our fourth quarter and full year 2023 financial results, and we will be also issuing our full year 2023 10-K report later this afternoon, which we would encourage you to read in conjunction with our comments and discussion points we'll make during today's call. I'll now discuss some of the key highlights from the fourth quarter and full year. As Adam mentioned earlier, total revenues were $73.9 million for the quarter-ended December 31, 2023, as compared to $50 million for the quarter-ended December 31, 2022, and this represents an increase of $23.9 million, or approximately 48%. Total revenues for the year ended December 31st, 2023 were $258.2 million.
Thank you Adam we issued a press release earlier today outlining our fourth quarter and full year 2023 financial results and we also issuing our full year 2023 10-K report later this afternoon, which we would encourage you to read in conjunction with our comments and discussion points, we'll make during today's call.
I will now discuss some of the key highlights from the fourth quarter and full year.
As I mentioned earlier total revenues were $73 $9 million for the quarter ended December 31, 2023, as compared to $50 million for the quarter ended December 31 2022.
This represents an increase of $23 9 million or approximately 48%.
Total revenues for the year ended December 31, 2023 were $258 $2 million.
Brian Lenz: This represents 68% year-over-year growth. The increase is primarily related to increased sales of our immunoglobulin products, partially offset by a planned decrease in sales of plasma to third parties due to the increasing retention of plasma for our IVIG production. The decline in external plasma sales is consistent with our expectations as we are utilizing a greater percentage of our internally sourced plasma from our 10 FDA-licensed plasma collection facilities for our BOCA facilities manufacturing of Ascentiv and Vivig. Gross profit for the three months ended December 31st, 2023, was $31.1 million, as compared to $14.2 million for the same period of a year ago.
This represents 68% year over year growth.
The increase is primarily related to increased sales of our immunoglobulin products, partially offset by a planned decrease in sales of plasma to third parties due to the increasing retention of plasma for our IV <unk> production.
The decline in external plasma sales is consistent with our expectations as we are utilizing a greater percentage of our internally sourced plasma from our 10 FDA licensed plasma collection facilities.
Our Boca facilities manufacturing of incentives and begin our.
Our gross profit for the three months ended December 31, 2023 was $31 1 million as compared to $14 2 million for the same period, a year ago and this represents an increase of $16 $9 million.
Brian Lenz: And this represents an increase of $16.9 million. Gross profit for the year ended December 31st, 2023, was $88.9 million, representing an increase of $53.7 million, compared to fiscal year 2022. The expansion of gross margins is attributed to selling more of our higher-margin product ascent during 2023 as compared to 2022. As a result, ADMA achieved a corporate gross margin of 42% in the fourth quarter of 2023, as compared to 28% in the fourth quarter of 2022.
Gross profit for the year ended December 31, 2023 was $88 9 million representing.
An increase of $53 7 million compared.
Compared to fiscal year 2022.
The expansion of gross margins is attributed to selling more of our higher margin product thats status during 2023 as compared to 2022.
As a result, admin achieved a corporate gross margin of 42% in the fourth quarter of 2023 as compared to 28% in the fourth quarter of 2022.
Brian Lenz: We believe the pathway is well paved to continue to grow gross profits over the coming period. We are very pleased to report, as Adam mentioned earlier, that for the first time in corporate history, ADMA achieved first-time positive adjusted net income and positive cash flows from operations during 2023 on a full-year basis. During the fourth quarter alone, adjusted net income reached $8.5 million, as compared to a net loss of $12.2 million for the fourth quarter of 2022. ADMA grew adjusted EBITDA to $40.3 million for the full year 2023 as compared to an adjusted EBITDA loss of $27.6 million for the full year 2022. For the three months ended, December 31st, 2023, ADMA generated $18.6 million of adjusted EBITDA as compared to an adjusted EBITDA loss of $3.5 million the same period of a year ago.
We believe the pathway as well paved to continue to grow gross profits over the coming periods.
We are very pleased to report is as Adam mentioned earlier that for the first time in corporate history.
<unk> achieved first time positive adjusted net income and positive cash flows from operations during 2023 on a full year basis.
During the fourth quarter alone adjusted net income reached $8 5 million as compared to a net loss of $12 2 million for the fourth quarter of 2022.
Admin grew adjusted EBITDA to $43 million for the full year 2023, as compared to an adjusted EBITDA loss of $27 $6 million for the full year 2022.
For the three months ended December 31, 2023, Adama generated $18 6 million of adjusted EBITDA as compared to an adjusted EBITDA loss of $3 5 million the same period a year ago.
Brian Lenz: The improvement is driven primarily by increased sales, gross profit, and fiscal operating management of our business. Based on ADMA's fourth quarter annualized adjusted EBITDA growth and cash-in-cash equivalents, the company's current net leverage ratio has organically improved to approximately 1.1X. We anticipate the balance sheet will continue to strengthen over the coming periods, enabled by forecasted operating cash flow and growing adjusted EBITDA. Lastly, it is with pleasure to note that all 10 of our plasma centers within our BioCenter network are now FDA licensed and collecting plasma. This milestone marks the successful conclusion of our multi-year investment initiative to establish plasma supply self-sufficiency, and we are now well positioned to support all of our growing internal production needs. Additionally, we remain encouraged by the real-time improvements in donor foot traffic and collection volumes, which continue to achieve record all-time highs and remain considerably above our organization's pre-pandemic levels. With that, I'll now turn the call back over to Adam for closing remarks. Thank you, Brian.
The improvement is driven primarily by increased sales gross profit and fiscal operating management of our business.
Based on Atmos fourth quarter annualized adjusted EBITDA growth and cash and cash equivalents. The company's current net leverage ratio has organically improved to approximately one onex.
We anticipate the balance sheet will continue to strengthen over the coming periods enabled by forecasted operating cash flow and growing adjusted EBITDA.
Lastly, it is with pleasure to note that all 10 of our plasma centers within our Biosensor network are now FDA licensed and collecting plasma.
This milestone marks the successful conclusion of our multiyear investment initiatives to establish plasma supply self sufficiency and we are now well positioned to support all of our growing internal production needs.
Additionally, we remain encouraged by the real time improvements and donor foot traffic and collection volumes, which continued to achieve record all time highs and remained considerably above our organizations pre pandemic levels.
With that I'll now turn the call back over to Adam for closing remarks.
Thank you Brian.
Adam S. Grossman: ADMA's business prospects and opportunities are vast, and company morale has never been higher. Our organization is energized and unified, and the performance-driven culture we have established at ADMA Biologics is bearing fruit. Our portfolio of life-changing medicines is providing significant real-world benefits, for Patients Managing Diseases of Critical Unmet Needs. In doing good for others, we've done well for our organization and our stock. Our business continues to strengthen, and we believe we are well positioned to generate significant growth in cash flow for years to come. We anticipate 2024 being defined by top tier revenue and earnings growth. Significant Cast Generation, and the Further Development of Transformative Growth Initiatives, which, if successful, have the potential, significantly impact ADMA's Peak Revenue and Earnings Targets. We believe ADMA's proven internal R&D capability.
Admin business prospects and opportunities are vast and company morale has never been higher.
Our organization is energized and unified in the performance driven culture, we have established with asthma biologics is bearing fruit.
Our portfolio of life, changing medicines is providing significant real world benefits.
To patients managing diseases, a critical unmet need.
And doing good for others, we've done well for our organization and our stockholders.
Our business continues to strengthen and we believe we are well positioned to generate significant growth in cash flow for years to come.
We anticipate 2024 being defined by top tier revenue and earnings growth significant cash generation and the further development of transformative growth initiatives, which if successful has the potential to significantly impact <unk> peak revenue and earnings targets.
We believe admins proven internal R&D capabilities broad IP estate and successful establishment of our innovative commercial business model positions the company for enduring success.
Adam S. Grossman: Broad IP Estate, Successful establishment of our innovative commercial business model positions the company for enduring success. Thank you for your continued support and trust in the company. We appreciate those of you who have supported us through this journey, and we are committed to delivering for our stockholders in the periods to come. 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, before opening the call for Q&A. We announced earlier this afternoon that Brian will be transitioning from his current role of Executive Vice President, CFO, and General Manager of ADMA Bioscience, as part of a planned executive leadership, to ensure a seamless transition. Brian will continue supporting the company in a consulting role effective April, Brian has served as CFO with distinction, and dedication over the past 11 years.
Thank you for your continued support and trust in the company.
We appreciate those of you who have supported US through this journey and we are committed to delivering for our stockholders in the periods to come.
Your investment in AD and that helps to advance our mission to save lives and make high quality safe and efficacious products that help our friends family and neighbors.
Before opening the call for Q&A.
We announced earlier this afternoon that Brian will be transitioning from his current role of executive Vice President and CFO and general manager of Adenovirus centers as part of a planned executive leadership change.
To ensure a seamless transition Brian will continue supporting the company in a consulting role effective April one.
Brian has served as CFO with distinction and dedication over the past 11 years.
Operator: During his tenure, we've achieved significant milestones and navigated through various challenges with resilience. We wish Brian all the best and look forward to continuing to work with him during this transition period. With that, We'd like to open up the call for your questions, operator. Thank you. And as a reminder, to ask a question, simply press star 11 to get in the queue and wait for your name to be announced. To remove your question, simply press star 11 again.
During his tenure, we've achieved significant milestones and navigated through various challenges with resilience.
We wish Brian all the best and look forward to continuing to work with them during this transition period.
With that we'd like to open up the call for your questions.
Operator.
And as a reminder to ask a question simply press star one to get into queue and wait for your name to be announced to remove your question simply press star one again.
Operator: One moment for our first question. Our first question comes from Anthony Petrone with Mizuho. Please proceed. Hey, Anthony.
For our first question.
Our first question comes from Anthony Petrone with Mizuho. Please proceed.
Adam S. Grossman: Hey, Adam. Thanks for getting us in here. And congratulations on another great quarter and the strong outlook. Maybe I'll have a couple on, just the moving parts on product mix and question on R&D and then one on margin. So maybe just in terms of the cadence between Vivagam and Ascentiv.
Hey, Anthony.
Hey, Adam Thanks.
Thanks for getting us in here and congratulations on another great quarter.
And the strong outlook, maybe all of the a couple on <unk>.
Just the moving parts on product mix and question on R&D and then one on margins. So so so maybe just in terms of the cadence between <unk> and incentive maybe just a little bit on the share landscape for traditional <unk>.
Adam S. Grossman: Maybe just a little bit on the shared landscape for traditional IG, first, just considering that there seems to be some moving pieces out there just on the competitive landscape. Do you think more share comes up for bid as the year progresses? And could that be a tailwind for Bivigam?
First just considering that there seems to be some.
Moving.
Moving pieces out there just on the competitive landscape.
Do you think more share comes up for bid as the year progresses.
Could that be a tailwind for bid again and then on incentive maybe just an update on active prescribers and how sticky your existing prescriber base is an odd one on margin for Brian.
Adam S. Grossman: And then on Ascentiv, maybe just an update on active prescribers and how sticky your existing prescriber base is, and I'll have one on margin for Brian. Sure, all great questions. I was just making some notes here. When you refer to share landscape, I mean, IG, in 2023, I think it was one of the largest growth years in the last five plus years. For the product, plasma supply has been good. Both IV and subq products have been good.
Sure.
Sure all great questions I was just making some notes here so.
When you refer to share landscape I mean.
<unk>.
In 2023, I think it was one of the largest growth years in the last five plus years.
The product.
On the supply has been good.
Both IV and substitute products have been good there were a couple of other approvals I think for some for some other products during the year. So the market is.
Adam S. Grossman: There were a couple of other approvals, I think, for some for some other products during the year. So the market is is is pretty flush with product right now. The landscape, you know, IV is about 80 percent, sub-Q is about 20 percent from what we see, but you know, you may mention about, you know, could there be some good tailwinds for bivigam? You know, Anthony, we're, we're, we're selling everything we make out of this plant, be it Vivagam, be it Ascentive, our products are well tolerated in the market. Patients like our products. They're good, safe products, you know, we're the only manufacturer that I'm aware of that's still using centrifugation to make these products.
Pretty flush the product right now.
The landscape IV is about 80% in subsea is about 20% from what we see but.
You made mention about.
Could there be some some some good tailwind for <unk>.
Anthony.
We're selling everything we make out of this plant.
Satish.
Our products are well tolerated and the market patients like our products.
They're good safe products were the only manufacturer that I'm aware of that's still using centrifuge Asian to make these products and there have been some articles published about.
Adam S. Grossman: And there have been some articles published about how there could be some benefits there. The mix, I mean, look, we, we raised guidance. I think it was three times last year.
How there could be some benefits there.
The mix I mean look we raised guidance I think it was three times last year, we've already raised guidance now once in 2024.
Adam S. Grossman: We've already raised guidance now once in 2024. What can I say about the mix? Ascentive is really, You know, we love the product. The patients love the product. I think the payers love the product, the physicians certainly love it. The drug is doing well in the refractive, complex, comorbid, immune deficient patient, full stop.
What can I say about the mix of <unk> is really.
We loved the product patients loved the product I think the payers loved the product the physician certainly loved the product.
The drug is doing well in the refractive.
Complex co morbid.
Immune deficient patient full stop.
Adam S. Grossman: I think the uptake is growing more rapidly than even our accelerated case expectations. And I think that that's what you're seeing in our guidance and in our financial performance. I mean, look, on an adjusted basis, being net income positive for the first time, it was definitely a very pleasant surprise. Lots of high fives around this office.
I think the uptake is.
Growing more rapidly than even our accelerated case expectations and I think that thats, what youre seeing in our in our guidance.
Our financial performance I mean, if you look on.
On an adjusted basis being being that didn't come.
Positive for the first time it was definitely a very pleasant.
Pleasant surprise lots of high fives around this office here.
Adam S. Grossman: We're really excited about it and, you know, all I can tell you Anthony is that you make good products that help people and there's good outcomes in the real world setting. That's what really drives uptake here. And I think that's what you're seeing.
We're really excited about it.
All I can tell you Anthony is that you can make good products that help people and theres good outcomes in the real world setting.
That's what really drives uptake here and I think thats, what youre seeing so I think we have a lot of tailwind and I think that people it out and we'll make a good safe efficacious product.
Adam S. Grossman: So I think we have a lot of tailwinds I think the people at ADMA make a good, safe, efficacious product All of our products and we're going to continue to to drive product penetration and uptake as fast as we can, I hope that that answers your question. Absolutely. Maybe to pivot to Brian, first, you know, congratulations on the 11 years and, you know, you'll be missed and thanks for all the help along the way here.
All of our products and we're going to continue to drive.
<unk> penetration and uptake as fast as we can.
I hope that that answers your question there absolutely.
Absolutely and maybe to pivot to Brian first congratulations on the 11 years and you'll be missed and thanks for all the help along the way here. So good luck in the next chapter.
Brian Lenz: So good luck in the next chapter. In terms of margin, maybe a little bit, Brian, on, you know, how much yield enhancement are we seeing in gross margin? And it looks like the hyperimmune R&D portfolio is going to progress here. So should we be expecting an uptick in R&D expenses in the second half of the year? Thanks again.
In terms of margin, maybe a little bit Brian on.
How much yield enhancement or are we seeing in gross margin.
And it looks like the hyper immune R&D portfolio.
It's going to progress here, so should we be expecting an uptick in R&D expenses in the second half of the year. Thanks again.
Brian Lenz: Well, thank you, Anthony. And it's certainly been a long and overall successful 11 year run. So I appreciate the compliments.
Thank you Anthony and that's certainly been a long and overall successful 11 year run. So I appreciate the compliments and I still strongly believe in the company and its products.
Brian Lenz: And I still strongly believe in the company and its products. And so we'll be continuing to root the company on. As it relates to margin, You know, we're producing both products, Ascentive and Vivagam, at the 4,400 level we have been for some time. So, we're going to be, all we're selling is at the 4,400 higher margin scale. So, Ascentive, closer to that 85%, where historically we were in that low 80%. So, you know, nice increase, about 5% for Ascentive. Vivagam, you know, we went from the, you know, high teens, low 20s.
So continuing with the company on.
As it relates to margin.
We're producing those products incentive <unk> at the <unk> 4400 level, we have been for some time. So we're going to be all we're selling is at the 4400 higher margin scale, so incentives closer to that 85%, where historically we were in that low 80%. So nice increase about 5% for incentives.
We went from the high teens low 20 percents now are in that 25 approaching 30%. So we think that there's still room. There is still upside to go and as I had mentioned about the product mix, we think that there's more opportunity for our setup and.
Brian Lenz: Now we're in that 25, approaching 30%. So, you know, we think that there's still room, there's still upside to go. And as Adam mentioned about the product mix, you know, we think that there's more opportunity for Ascentive. And, you know, going forward, that's how we've, you know, been able to revise guidance now several times over the last, you know, year and a half.
Going forward, that's how we've been able to revise guidance now several times over the last year and a half.
Brian Lenz: Regarding R&D spend, Anthony, you know, we we think it's really manageable. Yield enhancement, as we've said, it's it's a few million dollars. I mean, we we're, we're not getting over our skis in any way, shape and form.
Regarding R&D spend Anthony.
We think it's really manageable yield.
Yield enhancement as we've said it's.
It's a few million dollars I mean, we are we're not getting over our skis in any way shape and form I mean being cash flow positive the way we are.
Brian Lenz: I mean, being cash flow positive the way we are. Net Income Positive the way we are. I mean, certainly we're going to be opportunistic with that cash and use it to drive value for shareholders, but I can tell you that our R&D expense, I mean, sure, it's going to pick up slightly, but it should not be in any material way. We're going to really be, very responsible and how we're spending. The R&D for the streptomyia product is again in its early stages. And we're going to keep you apprised of both manufacturing yield enhancement R&D, which again, we think we we should have on file later this year or early next year and probably realizing those financial benefits sometime in the back half of 2025. Anthony.
Net income positive way, we are I mean, certainly we're going to be opportunistic with that cash.
And use it to drive value for shareholders, but I can tell you that our that our R&D expense I mean sure.
Picked up slightly but it should not be in any material way, we're going to really be.
Yes.
Very.
Responsible in how we're spending.
The R&D for the Strep pneumonia product is again in its early stages and we're going to keep you apprised of boats.
Manufacturing yield enhancement R&D.
Again, we think we.
Should have on file later on this year growing next year.
Probably realizing those financial benefits sometime in the back half of 'twenty five.
Anthony.
Operator: All right, I'm going to move along to the next question. One moment, please. Sure. And it comes from the line of Kristen Kluska with Cantor Fitzgerald. Please proceed. How you doing, Kristen?
Now moving onto the next question one moment please sure.
Okay.
And it comes from the line of Kristen <unk> with Cantor Fitzgerald. Please proceed.
Kristen Brianne Kluska: Hi. Congrats on a really strong 2023. I don't think I've seen a company raise guidance this many times and consistently deliver. And Brian, wishing you the very best, should feel very proud of everything that you accomplished.
How are you doing Chris.
Okay.
Congrats on a really strong 2023, I don't think I've seen a company raised guidance. This many times consistently deliver and Brian wishing you. The very best should feel very proud of everything that you accomplished.
Adam S. Grossman: So I wanted to ask, you know, once upon a time, the company was talking about $300 million being the peak sales potential. And today, you know, you talk about your enthusiasm, but you also characterize it as early innings. So I just want to get a general sense of how you're thinking about, you know, maybe you don't have to give me a specific number, but what, you know, the peak sales could ultimately be if you continue seeing the cadence and the demand that you are. Thank you, Kristen.
I wanted to ask once upon a time the company was talking about $300 million being the peak sales potential.
Today.
Talk about your enthusiasm, but you also characterize it as early innings. So I just wanted to get a general sense of how Youre thinking about maybe you don't have to give me a specific number but what the.
Peak sales could ultimately be if you continue seeing the cadence and the demand that you are.
Yes.
Adam S. Grossman: That's very kind of you to say. Your question has me smiling with all of my notes and everything that I see here. I mean, look, I think what I should say is that for those who followed our story and it's been a hell of a ride, right? Hasn't it?
Thank you Kristen that's very kind of you to say.
Your question has me smiling with all my notes.
And everything that I see here I mean look.
What I should say is that for those who followed our story.
It's been a hell of a ride.
Adam S. Grossman: You know, we've had to bob and weave, and we've had regulatory challenges, and we've had supply chain challenges, and you name it, there have been tons of challenges. But at the end of the day, we knew, based on the phase three data for our drug, that we had a product that was unique. We had a product that provided very, very good results for the primary and all the secondary end.
Sure.
<unk>.
<unk> had to Bob and weave and we've had regulatory challenges and we've had supply chain challenges and you name. It there have been tons challenges, but at the end of the day, we knew based on the phase III data for our drug that we had a product that was unique and we had a product that provided very very good results for both primary and all the secondary endpoints.
Adam S. Grossman: There was something special in what we were making. And, you know, there were things that were not published with respect to some of the patient diaries and our clinical trial team would get feedback from the coordinators at these sites about just the way patients were responding to the products. We always knew there was something special, but how do you model that? How do you forecast?
There was something special in what we were making in there were things that were not published with respect to some of the patient diaries.
In our in our clinical trial team would get feedback from the coordinators at these sites about just the way patients were responding to the product. So we always knew there was something special but how do you model that how do you forecast this there.
Adam S. Grossman: There are certain things that occur when the product gets into the real-world setting, which I know we've seen with other products, and I really do believe that, you know, at that time we were looking at our ability to get RSC plasma, our ability to produce, you know, at one point in time we were, you know, contract manufacturing, so how much capacity would our contract manufacturer give to us? So, you know, I think the $300 million was a very, very fair and, honestly, appropriate forecast back then. With where we are today, I mean, I don't want to say that we're producing as fast as we can. We can't keep up with the demand, but that's the truth. We are producing as fast as we can.
There are certain things that occur when the product gets into the real world setting, which I know we've seen with other products.
And I.
I really do believe that.
At time, we were looking at our ability to get RSV plasma our ability to produce.
At one point in time, we were contract manufacturing so how much capacity with our contract manufacturer gift to us. So I think the $300 million was a very very fair.
Honestly appropriate forecast back then.
With where we are today I mean, I don't want to say that where we are.
Producing as fast as we can we can't keep up with the demand.
But that's the truth, we are producing it as fast as we can.
Adam S. Grossman: We're working on strategies for identifying additional RSV plasma donors. We're working with other third-party collectors to augment our internal supply to collect as much plasma as we possibly can. I'm, I can tell you that, you know, the peak guidance that we're giving for next year, we raise it to 380. Am I correct? So, you know, we, we are, we're not factoring in any yield enhancements, from there. We're not factoring in any contribution for building an incentive with respect for yielding, are peak revenues. I don't factor in anything for the potential in the back half of the decade, say, for the strep pneumonia hypercommunity. Hypothetically, I mean, you could do the math.
We are working on strategies for identifying additional RSV plasma donors, we're working with other third party collectors to augment our internal supply to collect as much plasma as we possibly can.
I can tell you that.
<unk> guidance that we're giving for next year.
We raised it to three AE $3 80, my correct.
So we are.
We're not factoring in any yield enhancement from there.
We're not factoring in.
Any contribution from <unk> and incentive with respect for yield enhancement.
Our peak revenues don't factor in anything for the.
The potential in the back half a decade say for the strep pneumonia hypothermia.
Hypothetically if you could do the math would be about 400 500000 liter plant 600000 meter plan year.
Adam S. Grossman: We have a 400, 500,000 liter plant, 600,000 liter plant here. If you make it all assentive, you know, what. What does that yield you? You know, if you're, if you're fractionating half a million liters of plasma at four grams per liter, that's a lot of product. Will the payers pay for that much? Will the market absorb that much? I don't have the answers.
If you make it all.
What's.
What is that.
Youre fractionated at 1 billion liters of plasma at four grams per liter that's a lot.
Product will the payers pay for that much will the market absorb that much I don't have the answers, but what I do know is that.
Adam S. Grossman: But what I do know is that, Where we are today, we've got patients waiting for therapy. We've got patients who are waiting for us to release drugs, start. We've got patients who have approvals from their payer to switch from whatever IG they're on to Ascentive. We are making the product as fast as we can. We cannot change how fast it takes to make these products.
Where we are today, we've got patients waiting for therapy, we've got patients who are waiting for us to release drug to start therapy.
<unk> got patients who have approvals from their payer.
To switch from whatever they are on to incentives we.
We are making the product as fast as we can we cannot change how fast it takes to make these products side. It takes as we've said publicly six to $9 seven to 12 months.
Adam S. Grossman: It takes, as we've said publicly, six to nine, seven to 12 months, depending upon how good our team is. You know, we we're working as fast as we can, Kristen, and, you know, I stick to what I said on previous calls. We give conservative guidance, um you know we contemplate this range um you know if if, If everything as we're operating remains intact, obviously we're gonna continue to beat and raise and beat and raise. That's our MO.
Depending upon how good our team is.
Yes.
We where we're going as fast as we can Christian.
No.
I stick to what I said on previous calls we give conservative guidance.
We contemplate this range.
Yes.
If everything as we're operating remains intact, obviously, we're going to continue to beat and raise in deep raise that's our that's our Mo.
Adam S. Grossman: If something changes, we're gonna meet guidance and we're gonna hit it and we're gonna feel great about what we're doing. And if, you know, trends continue and we're able to accelerate certain programs here at the company, I think that there's an opportunity for us to truly smash these numbers. It's the same approach every year and, you know, I just feel really proud of our team, proud of the drug assent that we... You know, brought to market and persevered through all all these challenges, but, It's really the way the patients are responding to the drug. These are sick people.
If something changes, we're going to meet guidance and we're going to hit it and we're going to feel great about what we're doing.
<unk>.
Trends continue.
We're able to accelerate certain programs here at the company.
I think that there that.
That opportunity for us to true lease match these numbers.
The same approach every year.
And I, just feel really proud of our team proud of.
The of the drug.
That we have.
Brought to market and persevered through all these challenges but.
It's really the way the patients are responding to the drug.
Adam S. Grossman: These are people who have had DI for years, and who don't respond well on their current therapy. They have complex comorbidities that are, you know, to the point of being unmanageable in certain, and they switched to Ascentive, and the patients thrive. And that's what we're most proud of here at ADMA. When you can change an impact and improve a patient's life the way that we see that we're doing it with Ascentive, that's why we say it's in the early inning. You know, I don't know what else to say but that, Kristen.
These are sick people. These are people, who have had it for years and who don't respond well on their current therapy.
They have complex comorbidities that are.
To the point of being unmanageable in certain instances and they switch to a settings.
And the patients thrive.
And that's what we're most proud of here at <unk>.
Ed when you can change and impact and improve a patient's life the way that we see that we're doing it with incentives. That's why we say it's in the early innings.
I don't know what else to say, but that Kristen.
Adam S. Grossman: But the drug is changing lives. It's changing the treatment regimens out there in the market. And I think our medical education, marketing, market access, sales strategies, I think all of these things coming together, you know, are really measured. From my perspective, you know, there are very few companies our size that really launch products and stay independent. I think what the market is seeing is they're seeing a real success story unfold right in front of their eyes, they're seeing a company that is going at it alone. Playing in a market of very, very big players.
The drug is changing lives it is changing.
The treatment regimens out there in the market and I think our medical education marketing market access sales strategies I think all of these things coming together are really measure.
From my perspective.
There are very few companies our size that really launched products.
Stay independent I think what the market is seeing because they are seeing a real success story unfold right in front of their eyes.
They are there.
Seeing a company that is going at it alone.
Playing in a market a very very big players and we're differentiating ourselves and we've done it in a way that has documented.
Adam S. Grossman: And we're differentiating ourselves and we've done it in a way that has documented itself with 14 calendar quarterly beats. And it's because the products we make are good. It's because the people who come to work here every day really care about what they do. And, you know, I like to take a little credit. You know, I care about what we do. You know, it's not just about this is where I get in trouble and the stock quits, stuff that my son reads to me, you know.
That itself with 14 calendar.
We beat.
And it's because the products we make are good it's because the people who come to work every day really care about what they do.
And.
Take a little credit I care about what we do it's not just about this is where I get in trouble.
And the stock price.
Stuff that my son reads to me.
Adam S. Grossman: Yes, it's about the financials. But first and foremost, you got to take care of the FDA, got to take care of the SEC, you got to be able to operate, then you got to make a good safe product, you got to give the doctors what they need, you got to help the patients, and the rest falls into place. And I think that you're seeing our financials truly improve and the acceleration in the financial improvement has been dramatic. Our expenses are down, we're controlling costs in the beginning of last year with our, realignment of resources. I mean, we've continued on that track, and we're going to continue to deliver for shareholders. We're hyper-focused on shareholder return here now. And, you know, look, I think the stock is truly undervalued.
Yes, it's about the financials, but first and foremost you've got to take care of the FDA kind of take care of the SEC.
You've got to be able to operate then you got to make a good safe product you've got to get the doctors, what they need and you got to help patients and the rest falls into place and I think that youre seeing our financials truly improve and the acceleration in the financial improvement has been dramatic our expenses are down and we're controlling cost at the beginning of last year with our.
Yes.
Realignment of resources.
We've continued on that track and we're going to continue to deliver for shareholders were.
We're hyper focused on shareholder return here now.
And.
Look I think the stock is truly undervalued I think the cash generation that we're going to develop from the.
Adam S. Grossman: I think the cash generation that we're going to develop from the, I think the cash generation that we're going to see starting in Q1 of this year is going to be robust and it's going to allow us to do a lot of great things. Awesome, thanks for that response. And just the last question for me is, if you could talk about the metrics you're seeing from a prescriber basis, specifically, you know, is it more levered towards, Are there certain prescribers adding more patients versus getting new prescribers entirely on board or is it a blend of the two? The answer is, it's both, it's yes and it's yes.
I think the.
Cash generation that we're going to.
C.
Starting in Q1 of this year.
It is going to be robust and it's going to allow us to do a lot of great. Thanks.
Thank you for that response.
Question for me is maybe you could talk about the metrics youre seeing from a prescriber base.
Perfect.
Is it more levered towards Sir increased.
<unk> prescribers, adding more patients.
Getting new prescribers entirely on board.
Is it a blend of the queue.
The answer is yes.
It's both it's yes, and it's yes.
Adam S. Grossman: You know, obviously, the doctors who have seen results, they're very, very quick to be able to identify new patients and get those patients on, you know, the number of prescribers grows every month, every quarter. We. We're smashing all of our internal estimates and our numbers, Kristen.
Obviously.
The doctors, who have seen results there.
They're very very quick to be able to identify new patients and get those patients on.
The number of prescribers grows every every month every quarter.
So we.
Were smashed in all of our internal estimates in our in our numbers Kristen.
Adam S. Grossman: You know, the prescribers are pretty much strictly immunologists. You know, the majority of our sales are in the outpatient setting. I can tell you that existing prescribers, on a buy-and-bill basis, Once those physicians take title to the product and know that they're going to get reimbursed, they feel comfortable about adding patients.
The prescribers are pretty much directly immunologists. The majority of our sales are in the outpatient setting.
I can tell you that existing prescribers on a buy and bill basis.
Once those physicians take title to the product and know that theyre going to get reimbursed they feel comfortable about adding patients certainly there is a cost outlay for four.
Adam S. Grossman: Certainly, there is a cost outlay for any IG that a doctor with an infusion practice in his office, in their office, they do take some risks there, but I think that folks are truly comfortable now at this point, and we've done a lot of great education out there, both on the market access side and on the medical side. So, I think you're going to see that prescriber base continue to increase. I think you're going to see same-store sales increase, and, you know, it's... It's the drug.
I'd say that.
A doctor with an infusion.
<unk> and his office.
In their office.
They do take some risk there, but I think that folks are truly comfortable now at this point.
And we've done a lot of great education out there both on the market access side and and.
And on the medical side so.
I think youre going to see that prescriber base continued to to increase I think youre going to see same store.
The sales increase.
It's <unk>.
Adam S. Grossman: I mean, I like to think that it's our great marketing strategy, medical education stuff. It is, but the drug also does a lot of the work. Thank you so much.
It's the drug I mean, I like to think that it's our great marketing strategy and medical education stuff. It is but the drug also does a lot of the talking.
Thank you.
Operator: Thank you. One moment for our next question, please, and it comes from the line of Gary Nachman with Raymond James, please proceed. Great. Good afternoon, guys, and congrats on all the progress and good luck to you, Brian. We will definitely miss you.
Thanks Christian so much. Thank you one moment for our next question. Please.
And it comes from the line of Gary Nachman with Raymond James. Please proceed.
Great. Good afternoon, guys and congrats on all the progress and good luck to you, Brian We will definitely Miss you.
Gary Jay Nachman: So Adam, maybe just talk more about your plans to explore developing a hyperimmune product to treat pneumonia. You know, what led to that decision, and why do you think it could be a 300 to 500 million opportunity, how you get there, and just reiterating that there's no impact to profitability, so just explain how that's going to happen. And then also just, you know, what are other hyperimmune products that you could potentially pursue?
So Adam maybe just talk more about your plans to explore developing a hyper immune product to treat pneumonia.
Led to that decision and why do you think it could be a $300 million to $500 million opportunity how you get there.
And just reiterating that there is no impact to profitability. So just explain how that is going to happen.
And then also just what are other hyper immune products that you could potentially pursue.
Adam S. Grossman: When could we hear about those? So, oh, and also just getting a sense of your capacity as you potentially expand into these other products while you're still trying to, obviously, grow a center. All great questions.
When could we hear about so and also just getting a sense of your capacity as you potentially expand into these other products, while you're still trying to obviously grow our sales.
Adam S. Grossman: Thank you, Gary, very much. So strep pneumonia, you know, we've, I actually checked this before we got on the call, because I figured someone was going to ask me, but, you know, we've been publishing data about strep pneumonia since 2020, 2021. As we said, I believe, in our press release earlier this year, where we announced that we were going to embark on this program, it's in the top ten leading, causes of death. It's the leading cause of community-acquired pneumonia.
All great questions. Thank you Gary very much so.
So strep pneumonia.
I actually checked this before we got on the call because I figured someone was going to ask me, but we've been publishing data about strep pneumonia since 2000 2000 2021.
As we've said.
I believe.
In our <unk>.
Press release earlier this year.
Where we announced that we were going to embark on this program.
It's in the top 10, leading.
Causes of death.
It's the leading cause of community acquired pneumonia.
Adam S. Grossman: We look at the world very practically, Gary. We look at this as there are vaccines for people who can receive vaccines, and when you look at immune-compromised patients. They do not respond well or they do not respond at all to vaccination.
We look at the world very practically Gary.
We look at this as there are vaccines for people, who can receive vaccines or when you look at immune compromised patients.
They do not respond well or they do not respond at all to vaccination.
Adam S. Grossman: So, one of the leading issues in primary immune deficiency in, you know, cancer patients and post-surgical patients and the elderly that are hospitalized is strep pneumonia, and we feel that there's an opportunity here to sort of bridge this gap. And again, we don't know if it's going to be treatment or if it's going to be a prevention. There is still work that we have to do. Again, it's very early.
One of the leading issues in primary immune deficiency in.
Cancer patients and post surgical patients and the elderly that are hospitalized is strep pneumonia.
And we feel that there is an opportunity here to sort of bridge this gap.
And again, we don't know if it's going to be treatments or if it's going to be a prevention. There is still work that we have to deal again, it's very early I think that we've got no look.
Adam S. Grossman: I think that we've got, you know, look, we built our plasma center network, Gary, so that, and I think that this touches on your second part of the question, too. We built this plasma center network not only to secure our supply chain, but also because it allows us to evaluate novel things with plasma. That's where everything we do starts from. So we have evaluated and we've established a method to stimulate antibody using commercially available vaccine in our plasma donors and we've measured these antibody titers and and we see that they're developing protective opsonic, That's the first step to ensure the control of the raw material. And we make raw material. Once you can make raw material, then the rest, I don't want to say is the easy part, but, you know, we'll we'll put the product into animals earlier at at some point this year, and we've got IP out there and we're going to evaluate and see. Roughly based on the data that I that I recall, it takes roughly 10 days for an immune-competent person to develop seroprotection when they're vaccinated with the commercially available vaccines.
Built our plasma center network, Gary So that and I think that this touches on your second part of the question do we built this plasma center network not only to secure our supply chain, but also because it allows us to evaluate novel things with plasma donors.
Everything we do starts from so.
We have evaluated and we've established a method to stimulate antibody using commercially available vaccine and our plasma donors and we measure these antibody titers and we see that they are developing protective opsonic titers. That's the first step to ensure the control of the raw material and we make raw material. Once you can make.
Raw material then the rest I don't want to say is the easy part but.
We'll put the product into animals earlier at at some point this year.
And we've got IP out there and we're going to evaluate and see.
Lastly, based on the data that I that I recall it takes roughly 10 days for an immune competent person to develop.
Zero protection when they are vaccinated with the commercially available vaccines.
Adam S. Grossman: I think I'm right. If I'm wrong, shoot me. But I think it takes about 10 days to seroconvert. So just on a very practical basis, if you're a vaccine-naive elderly patient whose immune compromise is because they're elderly, and you're hospitalized in the cardiac unit, or you just had surgery because you fell and broke your hip, and you're hospitalized for those reasons, and many institutions, their protocol is to provide a vaccine.
I think I'm right if I'm wrong.
But I think it takes about 10 days to Cerro convert so.
On a very practical basis, if you're.
A vaccine naive elderly patients, whose immune compromised because their elderly and Europe hospitalized in the cardiac unit or you just had surgery because you own broker you're hospitalized.
For those reasons.
Many institutions their protocol is to provide a vaccine.
Adam S. Grossman: Well, you're not doing anything to protect the patient because it takes 10 days, if you're immune competent, to develop seroprotective antibodies to all the different serotonins. So if you look at the way, rabies is treated, tetanus is treated, hepatitis B is treated post-exposure. You provide a globulin and a vaccine to protect that seroconversion period. So we think that that could be an opportunity. It could be another opportunity to follow what we've done with Ascentive. You know, when you think about it, if you make a high titer IG for the primary immune deficiency population, that's easier to manufacture, let's just say, because the plasma supply is a lot easier to obtain. You're not looking for these naturally occurring high titer RSV donors, which is what we do for Ascentive. But if you're able to just stimulate your plasma donor with a vaccine against strep pneumonia, you know, it's a lot easier to control the raw material supply there. So, we think that these hyper means could have Ascentive-like penetration.
Youre not doing anything to protect patient because it takes 10 days if your immune confidence to develop sort of protective antibodies to all the different serotypes. So if you look at the way.
Rabies as treated says treated.
Hepatitis B is treated post exposure you provide a globulin and a vaccine.
To protect that zero conversion period.
So we think that that could be an opportunity it could be another opportunity to follow what we've done with incentives.
But do you think about it if you make a a tight tighter.
For the primary immune deficiency population.
That's easier to manufacture, let's just say because the plasma supply is a lot easier to obtain youre not looking for these naturally occurring high titer RSV owners, which is what we do for centers, but if youre able to just stimulate your your plasma donor with a vaccine against strep pneumonia.
A lot easier to control the raw material supply there so.
We think that these hyper means could have a sense of like penetration.
Adam S. Grossman: We think that these hyper means could have utility, even outside of the PI population. And with respect to your question about capacity, I mean, look, I love this again. I love Navi, I love Ascentive, I love every product that generates revenue and has the gross margin that we're seeing. We have the best gross margin profile of any plasma fractionator globally, to the best of my knowledge. It can only improve, Gary, and I don't want to say, you know, I want to stop making Vivigam, but look, ADMA Biologics' founding principles were to make the products that nobody else wants to make, to make hyperimmunes targeted at specific infectious diseases. So you asked, I think you asked, you know, what other pathogens? Well, what's your favorite infectious disease of the day?
We think that these hyper means could have utility even outside of the pie population.
And with respect to your to your question about capacity I think.
I Love live again.
I Love I Love It I love every product that generates revenue.
Has the gross margins that we're seeing.
We have the best gross margin profile of any plasma fractionator globally.
The best of my knowledge.
Can only improve Gary and I don't want to say.
I want to stop making began but look asthma biologics founding principles were.
To make the products that nobody else wants to make to make hyper immune targeted at specific infectious diseases. So you asked.
I think you asked what other pathogens, what's your favorite infectious disease of the day.
Adam S. Grossman: If we can generate antibody through vaccination, if we can generate antibody through, you know, we're being able to detect that naturally occurring antibody using special testing methods, we can make anything. And then if you dig deeper into our IP, we also have IP around, but we can make hyperimmunes by making a, call it a Vivigam plasma pool, a normal IG and then spiking it with monoclonal antibodies, we've got IP around that as well. So I think the sky's the limit for us. You know, our small plant here that can produce, call it, you know, 2 million grams of IG annually, if it's all hyperimmune globulin, I mean, the sky's the limit. You know, to Kristen's earlier question, you know, how much revenue can you generate? I mean, in theory, it could be billions.
If we can generate antibody through vaccination, if we can generate antibody through.
We're being able to detect that naturally occurring antibody using special testing methods, we can make anything and that if you dig deeper into our IP. We also have IP around what we can make hyper immune by making a call. It a began plasma pool a normal.
And then spiking it with monoclonal antibodies, we've got IP around that as well so I think the sky's the limit for us our our our small plants here.
That can produce call. It 2 million grams of IAG annually, if its all hyper immune globulin I mean, the sky's the limit.
The Christians earlier question, how much revenue can you generate I mean in theory could be billions.
Adam S. Grossman: Are we there yet? No. Are we ready and prepared to give guidance in that arena? No. But the reason why I think that this could be a 300 plus million dollar product is you just look at where Ascentive is today. It's easier for me to get the plasma and the market is a lot broader for a streptomonia type hyperglycemia.
Are we there yet no are we ready and prepared to give guidance in that arena.
But the reason why I think that this could be a $300 million product. If you just looked at where incentive is today.
It's easier for me to get the plasma and the market is a lot broader for a strep pneumonia type hybrid I mean, theres billions of dollars of vaccine being sold if you just take that subsegment of how much vaccine is being used for patients that are.
Adam S. Grossman: I mean there's billions of dollars of vaccine being sold. If you just take that sub-segment of how much vaccine is being used for patients that are going for surgery or entering the hospital and if you give a globulin on top of that, we're picking up the crumbs and these are 60, 70, 80 percent gross margin products, maybe even more. Okay, great. That was very helpful.
Going for surgery or entering the hospital I Wonder if you can give a blob you want on top of that we're picking up the problems and these are.
60, 70, 80% gross margin products, maybe even more.
Okay, Great that was very helpful. Thank you and then just a follow up.
Adam S. Grossman: Thank you. And then just to follow up, I don't think you mentioned this before, but could you give us a better sense of what is implied in the Revenue Guidance in terms of the mix between Ascentive and Bivigam this year and next? And how aggressive can you be at paying down the debt? I'm curious how much that's factored into the Net Income Guidance for this year and next year. These are all great questions.
I don't think you mentioned this before but.
Could you give us a better sense of what is implied in the revenue guidance in terms of the mix between incentives and Dave again.
This year and next.
How aggressive can you be a paying down the debt.
Curious how much that's factored into the net income guidance for this year and next year. These are all great questions I mean look Gary we.
Adam S. Grossman: I mean, look, Gary, we reiterate that mix. You know, I'm trying to stay away from where this is. You know, we always said in the beginning, 80-20 and then 70-30. And, you know, we do say that we're going to get to this 50-50 split. The timing of which, you know, we're doing really well, Gary. What can I tell you?
We reiterate that mix.
I'm trying to stay away from from from from where this is we always said at the beginning of 2020.
And that 70 30 in.
We do say that we're going to get to this 50 50.
Split the <unk>.
Timing of which.
We're doing really well Gary what can I tell you, where we're doing very very well.
Adam S. Grossman: We're doing very, very well. You know, because we are seeing. You know, and it's not just from the Senate.
Because we are seeing.
Adam S. Grossman: I mean, Vivagam is doing well also. The fact that plasma collections are up and the fact that that plasma supply and the supply chain has opened up post-COVID, I mean, we're just seeing, we're seeing lots of efficiencies and we're realizing lots of efficiencies within our own operating organization here. So Vivagam is contributing nicely as well. You know, we look at this as, You know, the guidance that we're giving this year I think is pretty straightforward and clear. I think it's what it's 330, 330 or more now and we're saying 70 million or so in net income. I mean, you know, that's, that's, that's nice. My task is to beat it.
And it's not just from the Senate I mean, <unk> is doing well also the fact that that that plasma collections are up and the fact that that.
Plasma supply and the supply chain has opened up post Covid I mean, we're just seeing we're seeing lots of efficiencies and we're realizing lots of efficiencies.
Within our own operating organization here so.
<unk> game is contributing nicely as well.
We we look at this.
The guidance that we're giving this year I think is pretty straightforward and clear I think it is what it is $3 30.
330, or more now and we're saying $70 million or so.
Okay.
Net income.
<unk>.
That's nice.
My task is to beat it and my request of all my employees.
Adam S. Grossman: And my request of all my ADMA employees and, and team members here listening is, we, we need to beat it. I mean, again, we're hyper focused on shareholder returns here. You saw us use cash on our balance sheet to pay down some of the debt and to reduce the interest expense and, and we were opportunistic. With respect to your question about, you know, Our guidance does not contemplate us paying down the debt. Certainly, if we hit the forecast that we are presenting today, or if we exceed it, I mean, look, we have the ability, at least with the revolver portion of the loan where there's only a 50 percent minimum draw there. So we have some optionality, as cash bills on the balance sheet that we can pay this down without any prepayment penalties, obviously producing the interest expense and improving that income. So, you know, I'm not looking to onboard assets right now.
Team members here listening as we.
We need to beat it I mean again, we're hyper focused on shareholder returns here.
You saw us used cash from our balance sheet to pay down some of the debt and to reduce the interest expense and we were opportunistic.
With respect to your question about.
Our guidance does not contemplate us paying down the debt.
If we.
Hit the forecast that we are presenting today.
If we exceed it I mean look we have the ability at least with the.
Revolver portion of the loan where theres only a 50% minimum draw there so.
Have some optionality as cash builds on the balance sheet that we can pay this down without any prepayment penalties, obviously, producing the interest expense and improving net income so.
I'm not looking to onboard assets right now, we're really confident in our ability to manage the R&D spend and we're.
Adam S. Grossman: We're really confident in our ability to manage the R&D spend and we're confident in our, you know, ability to effectively deliver on our internal R&D. But I can tell you that, you know, we're going to do the right things here. I'm a substantial stockholder. As you know, my family's substantial stockholders. We want to see this stock really achieve the value that we believe. Again, I think I said it earlier, I think the stock is truly undervalued. Based on what I've seen in the back half of 2023, and what I see in the beginning part of 24 here, we're on the right path, and we're going to continue to generate cash, and we're going to be as opportunistic as possible to maximize shareholder value.
Confident in our ability to effectively.
Deliver on our internal R&D engine.
I can tell you that.
We're going to do the right things here.
Stanfill stockholder as you know my family substantial stockholders.
We want to see the stock really achieve the value that we believe again I think I said it earlier.
I think the stock is truly undervalued.
Based on what I've seen in the back half of 2023, and what I see in the beginning part of.
2004 here.
We're on the right path and we're going to continue to.
To generate cash and we're going to be as opportunistic as possible to maximize shareholder value.
Adam S. Grossman: Great. Thanks so much. Thank you. And ladies and gentlemen, this will conclude our question and answer portion of the call. I'd like to turn it back to Adam for additional closing remarks. Thank you everybody, thank you to the analysts for the good questions, donate plasma, help save lives again, and stay safe, and thank you for your interest in ADMA Biologics and the products that we make to help save lives. Ladies and gentlemen, this concludes the conference. You may now disconnect. Thanks for watching!
Great. Thanks, so much.
Thank you and ladies and gentlemen, this will conclude our question and answer portion of the call I'd like to turn it back to Adam for additional closing remarks.
Thank you everybody and thank you to the analysts for the good question.
Donate plasma help save lives again.
Stay safe and.
Thank you for your interest in asthma biologics from the products that we make to help save lives.
Ladies and gentlemen. This concludes the conference you may now disconnect.
Okay.
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