Q3 2024 ADMA Biologics Inc Earnings Call

November 7, 2024

Celine: Thank you for standing by. My name is Celine and I will be your conference operator today. At this time, I would like to welcome everyone to the ADMA Biologics Financial Results 3rd Quarter 2024.

Celine: All lines have been placed on mute to prevent any background noise.

Celine: After the speaker remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press start followed by the number 1 on your telephone keypad. If you would like to withdraw your question,

Celine: Please press star 1 again. Thank you. I would now like to turn the call over to Skyler Bloom. Please go ahead.

Skyler Bloom: Welcome everyone and thank you for joining us this afternoon to discuss AdminBiologics financial results for the third quarter of 2024 and recent corporate updates. I'm joined today by Adam Grossman, President and Chief Executive Officer and Brad Tate, Chief Financial Officer and Treasurer.

Skyler Bloom: During today's call, Adam will provide some introductory comments and provide an update on corporate progress, and then Brad will provide an overview of the company's third quarter 2024 financial results. Finally, Adam will then provide some brief summary remarks before opening the call up for questions.

Skyler Bloom: Before we begin our formal comments, I'll remind you that we will be making forward-looking assertions

Skyler Bloom: During today's call that represent the company's intentions expectations or beliefs concerning future events

Skyler Bloom: which constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995.

Skyler Bloom: 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 SEC filings, which may cause actual results to differ materially from the results expressed or implied by such statements.

Skyler Bloom: In addition, any forward-looking statements represent our views only as of the date of this call and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update any such statement except as required by the federal securities laws.

Skyler Bloom: We refer you to the Disclosure Notice section in our earnings release we issued today and the Risk Factors section of our quarterly report on Form 10-Q for the quarter ended September 30, 2024, for a discussion of important factors that could cause actual results to differ materially from these forward-looking statements.

Skyler Bloom: Please note that the discussion on today's call includes certain non-GAAP financial measures, including adjusted EBITDA. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP metric is available in our earnings release.

Speaker Change: With that, I would now like to turn the call over to Adam Grossman. Adam, go ahead.

Thank you, Skyler, and welcome everyone to today's call.

Adam Grossman: The third quarter has been another period of exceptional performance for ADMA.

Adam Grossman: Total revenues reached $119.8 million, reflecting an increase of 78% year-over-year.

Adjusted EBITDA rose to $45.4 million.

Adam Grossman: Representing a growth rate of 256% from the previous year, while net income increased by 1,300% year-over-year to $35.9 million.

Adam Grossman: We successfully achieved sequential growth from our second quarter financial baseline.

Adam Grossman: Both in revenue and earnings, further solidifying our position as one of the fastest growing and profitable companies in the biotech sector.

Adam Grossman: These achievements are a testament to the dedication and hard work of our teams.

Adam Grossman: as well as the real-world benefits that immunocompromised patients are experiencing on our therapies.

Adam Grossman: We believe the future of ADMA has never been brighter and we are exceedingly optimistic about the opportunities that lie ahead.

Adam Grossman: We believe our commitment to financial and operational excellence is reflected in these results.

Adam Grossman: In turn, we are yet again revising our financial guidance upward for both 2024 and 2025.

Based on current market trends.

Adam Grossman: We now expect total revenues to exceed $415 million in 2024 and $465 million in 2025.

Adam Grossman: with adjusted EBITDA projected to surpass $160 million and $215 million respectively in 2024 and 2025.

Adam Grossman: We are also raising GAAP Net Income Guidance for 2024 and 2025 to more than $120 million and $165 million, respectively.

Adam Grossman: We see Ascentive emerging as a potential billion-dollar revenue opportunity, with substantial growth headroom and branded durability, potentially extending thereafter through the 2030s and beyond.

Demand for incentive is strengthening.

with Forward-Looking Metrics Broadly Supporting Sustained Growth Momentum.

Adam Grossman: In response, we have strategically adjusted our production schedule, providing for greater incentive production throughput, and as a result, we anticipate an accelerating pace of earnings growth.

Adam Grossman: To further bolster our supply availability, we've implemented plasma donor retention programs aimed at increasing high-titer plasma collections within our network, which are already showing positive results.

Adam Grossman: Additionally, we are actively partnering with third-party plasma collectors to secure even more high-titer plasma.

Speaker Change: These combined efforts reinforce our confidence in advancing Accenture's rapid growth trajectory.

Speaker Change: We believe we are well prepared to meet the growing end-user demand and deliver increasing units of Ascentive to immunocompromised patients in need.

Speaker Change: We are pleased to announce that we successfully completed production of a pilot-scale BAS of SG001.

Additionally, we've identified a prospective laboratory partner.

Speaker Change: and we are engaged in discussions for their services in order to initiate animal model studies.

Speaker Change: Like with Ascentive's preclinical development, we believe the data obtained from animal model studies will provide an understanding of the potential for SG001 and aid in identifying the appropriate development pathway for potential future human clinical evaluations.

Speaker Change: And if approved, SG001 could potentially generate $300 million to $500 million or more in high-margin annual revenue.

Also on the R&D front.

Speaker Change: I'm pleased to announce that all patients in Ascentive's post-marketing pediatric study have now successfully completed their treatment schedule and that the clinical trial database is on track to be locked during the fourth quarter of 2024.

Speaker Change: The successful enrollment and execution by our team further illustrates the strength of ADMA's internal R&D engine and speaks to our highly capital-efficient and nimble approach to the development of specialty biologics for patients in need.

Speaker Change: Admin now anticipates filing its efficacy supplement to Ascentive's biologic license application over the coming quarters with potential label expanding approval during the first half of 2026.

Speaker Change: Ascentive's pediatric label expansion, if approved, may further strengthen the product's positioning and utilization in the immune-compromised patient setting.

Speaker Change: Our Immunoglobulin Production Yield Enhancement Initiative is also progressing as planned.

Speaker Change: We anticipate regulatory approval and the commencement of commercial sales of immunoglobulin produced from our innovative process during the second half of 2025.

Speaker Change: which could lead to a substantial increase in revenue and earnings growth beginning in the second half of 2025 with further acceleration projected into 2026 and beyond.

Speaker Change: In the third quarter, we continued the implementation of AdMilitics, our artificial intelligence and machine learning platform, across the commercial operations of the business.

Since its staggered rollout began in February of 2024.

Admolytics has delivered impressive outcomes.

Speaker Change: including increased production efficiency, enhanced manufacturing visibility, optimized commercial planning, streamlined plasma pooling, and reduced variability in FTE hours.

Speaker Change: We expect further optimization of our commercial growth strategy as Admolytics reaches full deployment, strengthening our rapidly growing earnings projections and aiding with the identification of organizational efficiencies.

Speaker Change: Our balance sheet continues to strengthen and we are confident in achieving net leverage neutrality during the fourth quarter, driven by increasing organic cash flows and growing adjusted EBITDA.

Speaker Change: Our commercial portfolio of life-changing medicines continues to provide significant benefits to patients, addressing unmet medical needs for the immunocompromised.

Speaker Change: We take immense pride in the impact we make on patients, donors, and public health.

Speaker Change: These accomplishments are a direct result of our team's unwavering dedication, and we extend our sincere appreciation for their goal-oriented hard work.

is this collaborative spirit that sets our workplace apart.

Speaker Change: Finally, prior to turning the call over to Brad who will speak to this matter in additional detail.

I would like to address the recent auditor transition.

Speaker Change: We are pleased to announce that we have now engaged KPMG as our new independent audit firm.

Speaker Change: We thank Cone Resnick for the 17 years of being our audit partner.

Speaker Change: during which we had no disagreements at any point during our working tenure or any manner of accounting principles or practices, financial statement disclosure or auditing scope or procedure.

Speaker Change: We appreciate Cone Resnick's continued support and commitment to ADMA in ensuring a smooth transition to KPMG.

Speaker Change: With this said, I'd now like to turn the call over to Brad for a review of the third quarter 2024 financials.

Brad Tate: Thank you, Adam. We issued a press release earlier today outlining our third quarter 2024 financial results.

Brad Tate: We'll also be issuing our third quarter 10-Q 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 financial highlights from the third quarter.

Brad Tate: As Adam mentioned, total revenues were $119.8 million for the quarter ended September 30, 2024.

Brad Tate: As compared to $67.3 million for the quarter ended September 30, 2023, an increase of $52.6 million, or approximately 78%.

Brad Tate: Gross profits were $59.7 million for the quarter ended September 30, 2024, as compared to $24.7 million for the quarter ended September 30, 2023, an increase of $35 million.

Brad Tate: Third quarter 2024 corporate gross margins were adversely impacted due to an outsized spot sale of low-margin, normal-source plasma.

Brad Tate: This normal source plasma available for sale is due to our designed shift of production throughput toward Ascentis.

for the third quarter.

Brad Tate: During the third quarter, adjusted EBITDA was $45.4 million as compared to adjusted EBITDA of $12.7 million for the quarter ended September 30, 2023.

An increase of $32.6 million, or approximately 256%.

Brad Tate: Gap net income was $35.9 million for the quarter ended September 30, 2024, compared to a gap net income of $2.6 million for the quarter ended September 30, 2023, an increase of 1,300%.

Brad Tate: As we expect to finish 2024 from a position of strength, we believe we are just beginning to generate financial results that demonstrate the distinct operating leverage that our business can realize if our revenue continues to grow as planned and fixed expenses are tightly managed.

Brad Tate: Based on the robust $25 million of operating cash flow generated during the third quarter and the significant adjusted EBITDA growth, the company's current net leverage ratio has organically improved to approximately 0.1x annualizing the third quarter results.

Brad Tate: We anticipate the balance sheet will continue to strengthen over the coming periods, augmented by forecasted free cash flow and growing adjusted EBITDA.

Brad Tate: We are pleased to have engaged and onboarded a new Big Four Independent Auditor, KPMG.

Brad Tate: This transition to a Big Four accounting firm is an important milestone as our organization matures.

Speaker Change: and if earnings continue to rapidly expand as expected. We look forward to the next chapter with KPMG and we thank them for the timely and efficient completion of their new client onboarding process. With that, I'll now turn the call back over to Adam for closing remarks.

Thank you, Brad.

Adam Grossman: Our commitment to innovation and performance continues to drive substantial growth and value creation.

Speaker Change: which we believe positions ADMA for both near-term and long-term success.

Speaker Change: In the periods ahead, we anticipate delivering sustained revenue growth and continuing to drive a favorable shift in our revenue mix and production schedule towards ascentive.

Speaker Change: We believe this would result in significant margin expansion and earnings growth.

Speaker Change: We are confident our strong balance sheet allows us to be capable stewards of stockholder capital and maximize equity value while supporting our rapid growth trajectory.

Speaker Change: The collective impact of our internal donor retention programs and third-party high titer plasma supply initiatives

Speaker Change: positions us to potentially reach a $1 billion annual revenue milestone as rapidly as possible with further growth opportunities extending thereafter.

Speaker Change: We are confident that these strategies will enable us to meet the rapidly growing demand for Ascentive across both short-term and peak periods.

Thank you all for your continued support and dedication.

Together we will continue to build on ADMA's successes.

Speaker Change: And with that, we'd now like to open up the call for questions. Operator?

Thank you. We will now open the line for questions.

Speaker Change: As a reminder, please press star 1 to join the queue. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Speaker Change: Your first question comes from the line of Kristen Kalska with Kantar Fibskirchen. Please go ahead.

Speaker Change: Hi everyone, thanks for taking the questions and congrats again on a great quarter. I'm not sure if I'm familiar with any company raising guidance five times in a year, so you may have the record on that one. So I saw in the press release, this might be one of the first times I think you've put it in writing about the potential for this to be a billion dollar revenue opportunity. So I was hoping you can maybe give us a little bit more color around some of the work that you've been doing to get more hyperimmune plasma as that's likely going to be the driver to get you to those numbers.

Hello? Oh, sorry.

Can you hear us?

Speaker Change: At the CARES conference, we were talking about the potential opportunity.

Speaker Change: You know, we just have a lot of great visibility into what we think is

A very compelling operating leverage trajectory and

Speaker Change: As we look at the demand indicators, they continue to remain strong. So I don't have to reiterate the same thing I've been saying for the last couple of quarters. I mean, the patient surveyor and...

We've defined appropriate use, all that stuff still holds true.

Speaker Change: But we've been implementing a VIP donor program. We've been implementing...

Speaker Change: methods with AdMalytics to identify where we can optimize plasma collections and how we can build our pools. And when we just look at all of the factors that are going into this, we're able to accelerate the identification of these donors and collect more plasma.

The real...

the real, you know,

Speaker Change: hampering to Ascentive's growth is really around the raw material supply. We've got production capacity. We've got the ability to switch from Bivigam to Ascentive. Again, the plant doesn't care what we make.

Speaker Change: It's the same process for Ascentive and Vivagam. We've invested in some additional

Speaker Change: testing machines and equipment. Even more were delivered in the last couple of weeks that have been

Speaker Change: validated and turned on. And we're working with our third party collectors, and we're currently negotiating with them on ways to potentially add some more centers, and we'll provide updates to that in the future. But as we look at this right now, we believe that we're going to identify

High titer RSP plasma donors faster.

We believe that we're implementing strategies to retain these donors.

Speaker Change: for longer periods of time, maximize the number of collections that we can get out of these donors. As I'm sure you recall, I said it a bunch of times, plasma donors can donate twice a week up to eight times per month.

Speaker Change: and we are implementing strategies to attract these donors and retain them for longer. So, when you put all of this together, you know, we believe that the demand is there and if we...

Speaker Change: If we find the plasma, we're going to make more incentive. And you heard in the prepared remarks that I said that we've

We've strategically shifted.

Speaker Change: More production from Vivagam to Ascentive all throughout this year, and we're going to continue to do that. So, as we look forward, you know, I don't know when it's going to happen, Kristen, but I know that we're all working very, very rapidly here.

Speaker Change: Is it 25? No. Is it 26? No. Could it be, you know, 27, 28, 29? Sure. You know, we really are very optimistic about the forward-looking outlook. And I think when you couple this with yield enhancements...

which also in the prepared remarks we

Speaker Change: put some brackets around timelines here. Certainly in the back half of 25 we expect to see accelerating revenue and certainly margin accretion but you know it's going to expand rapidly in 2026.

Speaker Change: when you really look at the opportunity that we have with the ability to gain 20% more finished goods from the same starting material, 100% of what we're going to sell in 2026.

Speaker Change: will be made from what we believe will be the then-approved yield-enhanced process.

You're going to see margins expand substantially.

Speaker Change: 2026 forward. So we will give additional guidance like we always do in the beginning of the year.

around the J.P. Morgan conference, but

You know, working to identify donors faster.

Retain these donors, keep them engaged at our plasma centers.

Incentivize our third-party collectors. You put all those things together.

Speaker Change: and we're really encouraged by the durability of what we're building here and we think it's truly unique.

And just to add to Adam's point.

Speaker Change: I was just going to say, just to add to Adam's point, you know, we're going to accelerate towards that $1 billion threshold as soon as possible, to Adam's earlier comments. But the key point is, it's not over there. There's growth headroom thereafter, and we're going to continue to chase it.

Speaker Change: It's a program that we've kicked off earlier this year. I believe at this stage it is.

in all of our centers, all of our tent centers.

Speaker Change: I mean, it's a pretty simple formula, Kristen, but I'm not gonna give all the details so my competitors know, but I can tell you that we treat our donors well. We've always believed that the donors are the best.

Speaker Change: You know, it's a pun, but the lifeblood of our ability to impact and improve the lives of patients in need. We build nice centers, we keep clean centers, we are working on donor retention strategies and programs that certainly include compensation.

Speaker Change: I think that from the data that I've seen and we had one of our RSV plasma meetings today, the trend is we are collecting more plasma than we ever have before.

Speaker Change: Not only from our internal centers, but also from our third party collectors. So, you're going to see, you know, look, maybe I'll just touch on this. We had a one-off in the quarter where we sold some normal source plasma.

Speaker Change: We don't really want to be in the very, very low margin, negative margin, source plasma selling business anymore. But what we're doing is we're looking at our inventory, we're taking a very, very hard look at all of this, and we only want to keep inventory.

Speaker Change: and plasma that we can use to make the products that we want to make, and that's mainly.

a fan. So

Speaker Change: You know, these are all things that I think that investors and our analysts can look at to understand that, you know, we're positioning this business appropriately.

Speaker Change: To Brad's point, not only to do a billion, but we do believe that there is room and like I've said before, that if we could fill the whole plant, which again, I'm not guiding to, I don't, I don't know if it can happen, but we certainly want to try, but.

Speaker Change: you could be generating, you know, somewhere in the range of $2 billion annually.

Speaker Change: Pushing hard. We're going to keep treating our donors kindly. We're going to keep paying them to come back We're going to keep explaining to them why the plasma that's inside them is so powerful and so beneficial to immunocompromised patients that are at high risk of infectious diseases

Thanks again and congrats again.

Thank you for your support, Kristen. Thank you, Kristen.

Speaker Change: And your next question comes from the line of Anthony Petro with Mizuho Group. Please go ahead.

Oh, thanks and congratulations.

Speaker Change: Doing very well, Adam. Thanks again and congratulations on another strong quarter year. Maybe I'll stick on the supply end of the equation.

There's a couple high-level ones.

Speaker Change: You know, when you think of just churn, is churn a big issue? Adam, are you actually losing any of these donors? It sounds like retention is actually quite high. So just a little bit on the churn. And then when you think of just how you're managing that inventory, you know, are you fully at a level where you have enough safety stock?

Speaker Change: that you're able to sort of supply these longer term contracts. So that would be the first high level one and then I'll have a follow up. Thanks.

Speaker Change: Some donors it does, but the majority of donors stay on the program for a period of time, as I've always said, and then they fall off. We're constantly testing these donors. We're constantly adding new donors.

Speaker Change: Donors, you know, move, they have lives just like everybody else, but we're doing absolutely everything that we possibly can to ensure that the donors

Speaker Change: Unknown Speaker Because we don't. If we did, then I'd be making much more incentive. And I think you'd see revenues growing even faster.

Speaker Change: But we've got plenty of work in process material. We've got plenty of plasma in inventory to continue to producing a drug to

Speaker Change: Work in process material, we've got plenty of inventory to continue to producing.

Speaker Change: Drive up to <unk>.

Speaker Change: Continue to drive that revenue mix shift towards a set of which we're seeing every single quarter every single period.

Speaker Change: continue to drive that revenue makeshift towards a Senate which we're seeing every single quarter, every single period for the last couple of

Speaker Change: For the last couple of.

Speaker Change: Quarters here <unk> is the majority of our revenue.

Speaker Change: It continues to grow.

Speaker Change: <unk>.

Speaker Change: We're doing everything we can anthony to build that safety stock.

Speaker Change: I think if some of our negotiations proved successful and as some of our activities with some of our third party suppliers proved to be successful.

Speaker Change: Hopefully, we'll have something to announce.

Speaker Change: Around J P Morgan, but our goal is to find.

Speaker Change: <unk> as many centers around the country, who are willing to sell at plasma and collect that plasma. So we'll keep you posted there but.

Speaker Change: We certainly feel very very optimistic.

Speaker Change: We're also our attorneys wouldn't let me say some of the things that I've said today.

Speaker Change: Fair enough and then maybe if any.

Speaker Change: Ill just go.

Speaker Change: Just real quick just going back to the spot sale I mean, you know Adam.

Speaker Change: We're opportunistic if we need to do a spot buy we will do a spot buy if we need to do a spot sale, we're going to do a spot sale and of course, we do that to align our plasma inventory with our production needs and in this case, we made a spot sale.

Speaker Change: We continue our designated are designed to shift of production to <unk> and we will continue to be optimistic opportunistic when it comes to plasma whether it's doing spot sales are spot buys.

Speaker Change: Okay very helpful. And then a quick follow up just again high level more of a macro question. There obviously big events. This week.

Speaker Change: Change in administration coming change at the Senate level there'll be new personnel, let FDA here.

Speaker Change: So maybe just your thoughts on how administration influences FDA.

Speaker Change: And what that potentially means just for the plasma space in general and general and admin specifically thanks again.

Okay.

Speaker Change: Thank you Anthony I mean, it's.

Speaker Change: That's quite a question you could see the smile on my face here I mean, I don't know how to answer that because I really don't really have visibility yet into who is going to be where and I know that theres a lot of conjecture out there, but what I think I can speak to are the facts and the facts are that.

Speaker Change: Since Obama.

Speaker Change: Trump.

Speaker Change: Biden now going back to Trump.

Speaker Change: <unk> been bipartisan agreement across the board that plasma derived therapies are being excluded from price negotiations they recovered under Obamacare.

Speaker Change: I anticipate that.

Speaker Change: With another Trump administration.

Speaker Change: I Wouldnt anticipate that there would be a lot of changes there.

Speaker Change: What I can speak to is.

Speaker Change: You know this for those who don't.

Speaker Change: And the current chairman of the.

Speaker Change: Plasma protein Therapeutics Association North American Board.

Speaker Change: The plasma protein Therapeutics Association as the industry Association Matt.

Speaker Change: The gates for.

Speaker Change: Access and availability of plasma derived therapies for.

Speaker Change: All patients that receive these therapies as well as for industry and.

Speaker Change: The association working with Representatives from all of the member companies, we formed a plasma caucus so I believe.

Speaker Change: I think I'm right there are about 38 sitting Congress.

Speaker Change: Congress people, who are on the plasma caucus I think capital Hill is pretty well versed in the scarcity of plasma that you can only use plasma collected from U S citizens in the United States.

Speaker Change: In order to make these products for the U S population.

Speaker Change: And I really feel that we.

Speaker Change: All of us in the in the plasma derivatives industry.

Speaker Change: Are in a good position here with the change of administration.

Speaker Change: Specifically regarding Admah, I mean, something that ive been championing about our company for a long long time.

Speaker Change: And I was shouting from the rooftops a little bit during the last Trump administration is.

We are the last of the Mohicans, we are the last 100% U S domiciled.

Speaker Change: Plasma derived therapeutics.

Speaker Change: Producing company.

Speaker Change: 100% of our manner, 100% of our manufacturing supply chain is in the United States. So we make our drug here in Boca Raton, Florida, we fill a Senate bill the game here in Boca Raton. We also have a third party fill finish facility in Virginia all of our.

Speaker Change: Finished goods distribution is out of.

Speaker Change: Tennessee I believe.

Speaker Change: We only sell our products in the United States.

Speaker Change: So we feel really good about some of the some.

Speaker Change: Some of the noise out there, but I think it would be premature Anthony to really comment specifically, but I can tell you that if there is legislation passed that hey, if you make your goods.

Speaker Change: In the good old U S. Today.

Speaker Change: We would meet that criteria so.

Speaker Change: It's been a mission of ours with one of our founding principles I always felt that very very important that the United States also controls some of their manufacturing capabilities and that is a U S company.

Some of this control and here we are we're making good products, we're putting more product into the market every single quarter and we feel real good about it but.

Speaker Change: I don't think the change in administration will will provide any negative impacts whatsoever to to add Bob or other plasma derived drugs on the market.

Speaker Change: I know that you cover some other companies there but.

Speaker Change: Sure.

Speaker Change: From a business perspective, we feel very good about.

Speaker Change: The opportunities that lie ahead.

Speaker Change: Very good. Thank you so much congrats I'll hop back in.

Speaker Change: Thank you thanks Anthony.

Speaker Change: And your next question comes from the line of.

Speaker Change: Gary Nachman.

Speaker Change: Adrian when teams. Please go ahead.

Speaker Change: Good afternoon, guys my congrats as well on the strong quarter. So just thank you for your incentive supply availability, obviously the topic Du jour.

Adam Grossman: Adam do you think you need any more plasma donor facilities of your own to have more plasma supply can those 10 facilities and then the third parties get you.

Adam Grossman: The $1 billion target.

Adam Grossman: And is there any risk to you sharing the methods of screening for high RSV titers with third parties.

Speaker Change: Great questions. Thank you Anthony.

Adam Grossman: Yes.

Adam Grossman: So your question do we need to.

Adam Grossman: Do we need more centers no do we want more centers no 10 centers gives us a great base for which we can collect and have control over some of our internal collection for the high titer plasma.

Adam Grossman: As I've said to you in the past.

Adam Grossman: Our private conversations and also as I say publicly.

Adam Grossman: We certainly care very much about what we do and our staff is certainly trained.

Adam Grossman: Two two.

Adam Grossman: Maximize the number of collections that were getting from any specific donor.

Adam Grossman: We identify as being high titer or 10 centers collect more on average than any of our third party collectors and I really think thats because there are and we control who is donating in the chair and we control what we compensate those donors with so our 10 centers from my perspective.

Adam Grossman: They've collect more than say one of our third party centers can collect and we're going to continue to do that so no. We were not investing in any more centers, we're not going to build centers at this time, we're not buying any additional centers and is enough.

Adam Grossman: That's where it's going to stay with respect to the methods of screening I think thats, a great question and I want to make sure that you and others understand this.

Adam Grossman: We don't give away our secret sauce to anybody first of all its patented second of all all of the testing all of the science is done by asthma.

Adam Grossman: So what one of our third party collectors will do is we get a sample tube.

Adam Grossman: Every new donor that walked into their center in any given week. So.

Adam Grossman: So typically do centers have between 25 to $100 depending upon the size of the center per week. Some centers have more so right now we're collecting from I want to say about 70 80 centers.

Adam Grossman: Maybe a few more but.

Adam Grossman: We're getting call it hundreds of thousands of samples every week that we do testing on in either our laboratory here in Boca Raton, or we have a laboratory, who we partnered with for many many years.

Adam Grossman: That does screening and tighter testing for us as well so all of the science is controlled by us.

Adam Grossman: All of the third party collector will know is that we say we want donor number.

Adam Grossman: One four 603, we want donor one for 600 <unk>, that's all they know.

Adam Grossman: They don't know what the donors titers are they don't know whether theyre titers are super high or in the middle range or in the lower high range. All they know is that we're going to pay them more money for that leader of plaza that they collect from that donor. So all of the science is kept in house again, all of our testing methodologies are Pat.

And protected as well as we have certain knowhow and other trade secrets that we employ around the testing and the screening but.

Adam Grossman: Our third party collectors love us because essentially theyre collecting the same thing that they are always collecting which is just regular plasma, but we're going to pay them more money for it so.

Adam Grossman: The only thing that one of our third party collectors differently as they collect an extra sample tube and they send us I think it's five ml plasma for donor.

Adam Grossman: We test it in our screening assay.

Speaker Change: Alright, great that color is very helpful and comforting.

Speaker Change: So I mean, you had a really strong quarter, but.

Speaker Change: I am curious.

Speaker Change: Why didn't you take full year guidance more than you did just when you look at what <unk> might be could it be a sequentially down quarter.

Speaker Change: In the fourth quarter.

Speaker Change: Cause that and I also wanted to confirm that the yield enhancement.

Speaker Change: In the second half of next year is not in the car in 2025 guidance.

Speaker Change: So let me take the second part of your question first the yield enhancement benefit.

Speaker Change: It is not yet contemplated in our guidance number again, we don't have FDA approval, yet and we do take a conservative approach to guidance.

Speaker Change: Going to continue to take the same conservative approach that.

Speaker Change: We've employed.

Brad Tate: Since the beginning and maybe I'll just start off and Brad certainly.

Brad Tate: Add some more color but.

Yes, Gary we're talking already about that there was a one time opportunistic plasma sale in the corner I think it was about $67 million.

Brad Tate: So we're not going to have that next quarter.

Brad Tate: We are seeing growth of attentive, we are seeing growth again, but again being conservative we are not going to have $6 million worth of revenue.

Brad Tate: Revenue generation from.

Brad Tate:

Brad Tate: Plasma sales in the quarter. Additionally.

Brad Tate: Additionally, and maybe I'll make mention of this year.

Brad Tate: We've also voluntarily stopped producing one ml nabi HB from the market.

Brad Tate: We only now produce the five ml product.

Brad Tate: The margins were not great on the one ml and candidly with the Paducah fees, where they where it just didn't make sense.

So we're not going to be selling any.

Brad Tate: One ml nabil in the fourth quarter, we do hope that we pick up that business.

Brad Tate: Five ml revenue, but thats yet to be determined but.

Brad Tate: It would be a down corner on the topline, but I think that when you look at guidance we've increased.

Brad Tate: EBITDA and net income guidance for the quarter, because we do believe that the revenue mix is going to continue to shift.

Brad Tate: Towards a senate and higher margin.

Brad Tate: Products. So we feel very good about where we are ending the year, we feel really good about where next year is going to be and again.

Brad Tate: To your to your question about yield enhancement.

Brad Tate: 2026 is going to be gangbusters I mean, we're just so excited about what what the future holds for us there, but Brad it's.

Speaker Change: Gary we're focusing on <unk> and the incentive mixed shift were focusing on yield enhancement, we're focusing on our high margin products and when you think about it Adam is next chapter will be defined by margin expansion and earnings growth. We are going to continue to leverage our operating structure, we're going to continue to drive top line, we're going to.

Speaker Change: To focus on high margin products and make those margins, even better with yield enhancement in again by doing that by leveraging leveraging our operating structure, we're going to continue to drive margin expansion and we're going to continue to drive net income we're going to continue to drive EBITDA.

Speaker Change: That's our plan.

Speaker Change: Margin.

Speaker Change: And earnings growth.

Speaker Change: I'm going to get a T shirt okay.

Speaker Change: The mantra.

Speaker Change: Okay Awesome, just a couple more quick ones just on the Eskimo New program when could we see some animal data on it now that you. It looks like you've identified a lab to do that study and then congrats on getting KPMG.

Speaker Change: You've contracted with them for 2020 for the year end audit just when do you think youll finalized 2025 with them we've been getting some questions on that thank you.

Speaker Change: So okay.

Speaker Change: <unk> one I wrote down your last part of the question about Kpmg's when will we finalized engaging them for 25.

Speaker Change: Yes, correct.

Speaker Change: People, obviously are excited to see that you engage them for this year just.

Speaker Change: Yeah, Thanks, Mark and thanks for your question, Okay, I just want.

Speaker Change: I just wanted to make sure. It was the same crazy question that I'm getting from investors as well okay.

Speaker Change: So let's start with SG&A year over year, one so we successfully produced a pilot scale batch of product.

Speaker Change: So excited our scientific team here, our scientific technical ops team.

Speaker Change: With doing everything that theyre doing for yield enhancement.

Speaker Change: And I said, hey, let's let's let's push them, even harder and we're very excited to be here.

Speaker Change: We are evaluating labs, where we're currently writing and drafting testing protocols I don't really have a timeline, but I want everything done immediately.

Speaker Change: Hope.

Speaker Change: In the third quarter of next year.

Speaker Change: Probably going to get.

Speaker Change: Yelled at when I walk out of this conference room, but my hope is you know.

Speaker Change: Sometime in the back half of next year early back half, we should have some some some data.

Speaker Change: But please don't hold me to it and if it comes earlier great but.

Speaker Change: I want to answer your question I want to be straight with you. We're very excited about this opportunity, but obviously the priority for us is yield enhancement the priority for us is expanding our production capabilities here to ramp up to be in a position that as soon as rapidly possible, we can be producing from the yield enhanced process.

Speaker Change: Next year and the goal is to sell as much yield enhanced product as we can in the second half of 2024.

Speaker Change: Excuse me second half of 2025.

Speaker Change: And certainly all of 26 will be from yield enhanced produce drug with respect to KPMG I mean, there are new auditor.

Speaker Change: It's so funny to me when people ask these questions but.

Speaker Change: No one ever asked me well as Congress is going to continue to be your outerwear after they finish your.

Speaker Change: Year end audit here.

Speaker Change: There are they are our new audit firm.

Speaker Change: There are new independent registered accounting firm that we are going to be working with from now for the foreseeable future.

Speaker Change: They are currently actively working with Brad and his team.

Speaker Change: Are going to continue to work with them and we believe that we're going to be filing our our 2024 10-K on or before the filing deadline, which I believe is March 3rd 25.

Speaker Change: We're working rapidly to meet or exceed that deadline, but I don't think there's any reason why anyone should doubt that KPMG is not going to be our auditor for 25, and 26%, 27% 28, all the way into the future. We spent 17 years with Cowen Resnick I tell the partners of KPMG I don't know if im working in <unk>.

Speaker Change: 17 years.

Speaker Change: Because I'm not as young as I used to be but if I am.

Speaker Change: We're very loyal here I don't know, Brad if you want to add anything to add.

Brad Tate: Lately agreed completely agree.

Speaker Change: Okay fair enough and thank you for clarifying that.

Brad Tate: Congrats again no problem.

Brad Tate: No. Thank you look we.

Brad Tate: We're very proud of transitioning to a big four.

Brad Tate: Artist firm and I think it just really represents the growth of the business and the maturation of our processes and our operations. So.

We're excited to be working with.

Brad Tate: <unk> I mean, it's an important milestone in our organization and we don't expect.

Speaker Change: Any go forward impact on the numbers <unk> filing timelines as Adam has said and we are happy to have engaged KPMG and have their service.

Speaker Change: Great. Thank you.

Speaker Change: That concludes our question and answer session.

Speaker Change: Hey, Matt.

Speaker Change: During the conference back over to Adam Grossman for closing remarks.

Adam Grossman: Thank you very much everybody. We really appreciate your continued support and partnership.

Speaker Change: Our donors, we certainly thank our staff.

Speaker Change: And we're here to make good products that help people to our stockholders. We appreciate you putting up with some of the pain last quarter, but it's behind US now and I think the forward looking outlook is nothing but but bright for us. So thank you very much donate plasma help save lives and.

Speaker Change: Stay healthy and safe and have a happy Thanksgiving.

Speaker Change: Ladies and gentlemen, this concludes today's call. Thank you all for joining you may now disconnect.

Please wait the conference will begin shortly.

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Sylvia: Thank you for standing by my name is Sylvia and I will be conference operator today.

Speaker Change: At this time I would like to welcome everyone.

Speaker Change: Biologics the Nacho.

Sylvia: Alright.

Sylvia: Third quarter 294.

Sylvia: All lines have been placed on mute.

Sylvia: The background of nice.

Sylvia: The speaker's remarks, there will be a question and answer session.

Speaker Change: If you would like to ask a question Jordan.

Sylvia: The press Star followed by the number one on your telephone keypad.

Speaker Change: If you would like to withdraw your question. Please.

Speaker Change: First one I cant thank you Helen.

Speaker Change: Now I'd like to turn the call over to.

Sylvia: Skyler.

Skyler Bloom: Please go ahead.

Speaker Change: Welcome everyone and thank you for joining us this afternoon to discuss <unk> biologics financial results for the third quarter of 2024, and recent corporate updates I'm joined today by Adam Grossman, President and Chief Executive Officer, and Brad <unk>, Chief Financial Officer and Treasurer during.

Speaker Change: Today's call Adam will provide some introductory comments and provide an update on corporate progress and then Brad will provide an overview of the company's third quarter 2024 financial results. Finally, Adam will then provide some brief summary remarks before opening the call up for questions earlier.

Speaker Change: Earlier today, we issued a press release detailing the third quarter 2024 financial results and summarize certain achievements and recent corporate updates. The release is available on our website at www dot asthma biologics dot com.

Speaker Change: 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 1095.

Speaker Change: 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 SEC filings, which may cause actual results to differ materially from the results expressed or implied by such statements. In addition, any forward looking statements represent our views only.

Speaker Change: As of the date of this call and should not be relied upon as representing our views as of any subsequent date, we specifically disclaim any obligations to us to update any such statements except as required by the federal Securities laws.

Speaker Change: We refer you to the disclosure notice section in our earnings release, we issued today and the risk factors section of our quarterly report on Form 10-Q for the quarter ended September 32024 for a discussion of important factors that could cause actual results to differ materially from these forward looking statements.

Speaker Change: Please note that the discussion on today's call include certain non-GAAP financial measures, including adjusted EBITDA. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP metrics is available in our earnings release.

Speaker Change: I would now like to turn the call over to Adam Grossman Adam go ahead.

Adam Grossman: Thank you Skyler and welcome everyone to today's call.

Speaker Change: Third quarter has been another period of exceptional performance for asthma.

Adam Grossman: Total revenues reached $119 8 million, reflecting an increase of 78% year over year.

Speaker Change: Adjusted EBITDA rose to $45 4 million.

Speaker Change: Representing a growth rate of 256% from the previous year, while net income increased by 13, 100% year over year to $35 $9 million.

Speaker Change: We successfully achieved sequential growth from our second quarter financial baseline.

Speaker Change: And revenue and earnings further solidifying our position as one of the fastest growing and profitable companies in the biotech sector.

Speaker Change: These achievements are a testament to the dedication and hard work of our teams as well as the real world benefits that immuno compromised patients are experiencing on our therapies.

Speaker Change: We believe the future of add Matt has never been brighter and we are exceedingly optimistic about the opportunities that lie ahead.

Speaker Change: We believe our commitment to financial and operational excellence is reflected in these results.

Speaker Change: In turn we are yet again, revising our financial guidance upwards for both 2024 and 2025.

Speaker Change: Based on current market trends, we now expect total revenues to exceed $415 million in 2024 and $465 million in 2025.

Speaker Change: With adjusted EBITDA projected to surpass $160 million and $215 million, respectively in 2024 and 2025.

Speaker Change: We are also raising GAAP net income guidance for $24 25 to more than $120 million and $165 million respectively.

Speaker Change: As we expect to close out 2024 on a strong note and look forward to next year.

Speaker Change: We anticipate significant margin expansion driven by an ongoing revenue shift towards attentive.

Speaker Change: We see incentive emerging as a potential billion dollar revenue opportunity with substantial growth headroom in branded durability potentially extending thereafter through 2030 and beyond.

Speaker Change: Demand for incentive is strengthening.

Speaker Change: With forward looking metrics broadly supporting sustained growth momentum.

Speaker Change: In response, we are strategically adjusted our production schedule, providing for greater incentive production throughput and as a result, we anticipate an accelerating pace of earnings growth.

Speaker Change: To further bolster our supply availability, we've implemented plasma donor retention programs aimed at increasing high titer plasma collections within our network, which are already showing positive results.

Speaker Change: Additionally, we are actively partnering with third party plasma collectors to secure even more high titer plasma.

Speaker Change: These combined efforts reinforced our confidence in advancing incentives rapid growth trajectory.

Speaker Change: We believe we are well prepared to meet the growing end user demand and deliver increasing units of incentives to immunocompromised patients in need.

Speaker Change: This quarter, we also made significant progress with our yield enhancement production project as well as our strep pneumonia hyper immune globulin pipeline program, which we referred to as S. G 001.

Speaker Change: We are pleased to announce that we successfully completed production of a pilot scale batch of SG 001.

Speaker Change: Additionally, we've identified a prospective laboratory partner.

And we are engaged in discussions for their services in order to initiate animal model studies.

Speaker Change: Like with incentives preclinical development.

Speaker Change: We believe the data obtained from animal model studies will provide an understanding of the potential for SG 001, and aid in identifying the appropriate development pathway for potential future human clinical evaluations.

Speaker Change: We remain confident that this program can be developed and brought to market in a highly capital efficient manner.

Speaker Change: And if approved <unk> could potentially generate $300 million to $500 million or more in high margin annual revenue.

Also on the R&D front.

Speaker Change: I am pleased to announce that all patients and incentives post marketing pediatric study.

Speaker Change: Now successfully completed their treatment schedule and that the clinical trial database of on track to be locked during the fourth quarter of 2024.

Speaker Change: The successful enrollment and execution by our team further illustrates the strength of Atmos internal R&D engine and speaks to our highly capital efficient and nimble approach to the development of specialty biologics for patients in need.

Speaker Change: Admin now anticipates filing its efficacy supplement to incentives biologic license application over the coming quarters with potential label expanding approval during the first half of 2026.

Speaker Change: Incentives pediatric label expansion if approved may further strengthen the product positioning and utilization in the immune compromised patient setting.

Speaker Change: Our immunoglobulin production yield enhancement initiative is also progressing as planned.

Speaker Change: We anticipate regulatory approval and the commencement of commercial sales of immunoglobulin produced from our innovative process. During the second half of 2025, which could lead to a substantial increase in revenue and earnings growth beginning in the second half of 2025 with further acceleration projected into 2020.

Speaker Change: Six and beyond.

Speaker Change: In the third quarter, we continued the implementation of <unk>, our artificial intelligence.

Speaker Change: And machine learning platform across the commercial operations of the business.

Vince: Vince it's staggered rollout began in February of 2024.

Vince: <unk> has delivered impressive outcomes, including increased production efficiency enhanced manufacturing visibility optimized commercial planning streamline plasma pooling and reduce variability in FTE hours.

Vince: We expect further optimization of our commercial growth strategy is analytics reaches full deployment strengthening our rapidly growing earnings projections and aiding with the identification of organizational efficiencies.

Vince: Our balance sheet continues to strengthen and we are confident in achieving net leverage neutrality during the fourth quarter, driven by increasing organic cash flows and growing adjusted EBITDA.

Vince: This strong financial position should provide us with substantial flexibility moving forward.

Vince: In terms of capital allocation, we are unwaveringly committed to deploy resources in a way that maximizes stockholder value and lowers admin cost of capital.

Vince: Our commercial portfolio of life changing medicines continues to provide significant benefits to patients addressing unmet medical needs for the immuno compromised.

Vince: We take immense pride in the impact we make on patient donors and public health.

Vince: These accomplishments are a direct result of our team's unwavering dedication and we extend our sincere appreciation for their goal oriented hard work.

Is this collaborative spirit that sets our workplace part.

Speaker Change: Finally prior to turning the call over to Brad who will speak to this matter in additional detail.

Speaker Change: I'd like to address the recent auditor transition.

Speaker Change: Although we received notice of cone resnick's transition sooner than we anticipated. We are pleased to announce that we have now engaged KPMG as our new independent audit firm.

Speaker Change: We think Kona I think for the 17 years of being our audit partner.

Speaker Change: During which we had no disagreements at any point during our working tenure or any matter of accounting principles or practices financial statements disclosure or auditing scope or procedure.

We appreciate <unk> continued support and commitment to adena and ensuring a smooth transition to KPMG.

Speaker Change: With this said I would now like to turn the call over to Brad for a review of the third quarter 2020 for financials.

Brad Tate: Thank you Adam we issued a press release earlier today outlining our third quarter 2024 financial results. We will also be issuing our third quarter 10-Q 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.

Speaker Change: I will now discuss some of the key financial highlights from the third quarter.

Speaker Change: As Adam mentioned total revenues were $119 8 million for the quarter ended September 32024.

Speaker Change: As compared to $67 3 million for the quarter ended September 32023.

Speaker Change: The increase of $52 6 million or approximately 78%.

Speaker Change: Gross profits were $59 7 million for the quarter ended September 32024, as compared to $24 7 million for the quarter ended September 32023, an increase of $35 million as a result.

Speaker Change: <unk>, a corporate gross margin of 50% in the third quarter of 2024 as compared to 37% in the third quarter of 2023.

Speaker Change: Third quarter 2020 for corporate gross margins were adversely impacted due to an outsized spot sale of low margin normal sourced plasma.

Speaker Change: This normal source plasma available for sale is due to our designed shift production throughput toward a status.

Speaker Change: <unk> for this impact corporate gross margins would have been in the mid <unk> on a normalized basis.

Speaker Change: For the third quarter.

Speaker Change: During the third quarter adjusted EBITDA was $45 4 million as compared to adjusted EBITDA of $12 7 million for the quarter ended September 32023.

Speaker Change: Increase of $32 6 million.

Speaker Change: Or approximately 256%.

Speaker Change: GAAP net income was $35 9 million for the quarter ended September 32024, compared to a GAAP net income of $2 6 million for the quarter ended September 32023.

Speaker Change: Increase of 13, 100%.

Speaker Change: As we expect to finish 2024 from a position of strength. We believe we are just beginning to generate financial results that demonstrate the distinct operating leverage that our business can realize if our revenue continues to grow as planned and fixed expenses are tightly managed.

Speaker Change: Based on the robust $25 million of operating cash flow generated during the third quarter and a significant adjusted EBIT growth.

Speaker Change: Company's current net leverage ratio is organically improve to approximately onex annualized Inc. Third quarter results.

Speaker Change: We anticipate the balance sheet will continue to strengthen over the coming periods augmented by forecasted free cash flow and growing adjusted EBITDA.

Speaker Change: Expanding on Adam's earlier comments regarding the auditor transition.

Speaker Change: We are pleased to have engaged in onboarding, a new big four independent Auditor KPMG.

Speaker Change: This transition to a big four accounting firm as an important milestone as our organization matures and if earnings continue to rapidly expand as expected. We look forward to the next chapter with KPMG and we thank them for the timely and efficient completion of their new client onboarding process with that.

Speaker Change: I will now turn the call back over to Adam for closing remarks.

Adam Grossman: Thank you Brad.

Adam Grossman: Our commitment to innovation and performance continues to drive substantial growth and value creation, which we believe positions adama for both near term and long term success.

Speaker Change: We expect to finish 2024 on a high note and embark on 2025 from a position of significant strength.

Speaker Change: In the periods ahead, we anticipate delivering sustained revenue growth and continuing to drive a favorable shift in our revenue mix and production schedule towards incentive.

Speaker Change: We believe this would result in significant margin expansion and earnings growth.

Speaker Change: We are confident our strong balance sheet allows us to be capable stewards of stockholder capital and maximize equity value all supporting our rapid growth trajectory.

Speaker Change: Looking beyond 2025, we aim to leverage our innovative commercial model agile specialty biologics production platform and in house R&D engine to unlock revenue and earnings opportunities that could significantly exceed our current projections.

Speaker Change: The collective impact of our internal donor retention programs and third party high titer plasma supply initiatives positions us to potentially reach a $1 billion annual revenue milestone as rapidly as possible with further growth opportunities extending thereafter.

Speaker Change: We are confident that these strategies will enable us to meet the rapidly growing demand for incentives across both short term and peak period.

Thank you all for your continued support and dedication.

Speaker Change: We will continue to build on admin successes.

Speaker Change: And with that we'd now like to open up the call for questions operator.

Speaker Change: Thank you we will now open the line for a question.

Speaker Change: First I want to join the queue.

Speaker Change: We are called upon to answer your question listen in Manhattan.

Speaker Change: Please pickup your handset and Schrader.

Speaker Change: He is not on mute when asking your question.

Speaker Change: Your first question comes from the line of.

Speaker Change: Please call Scott.

Speaker Change: Gary Please.

Speaker Change: Hi, everyone. Thanks for taking my questions and congrats again on a great quarter I'm not sure if I'm familiar with any company raising guidance five times in the year. So.

Speaker Change: He may have the record on that one.

Speaker Change: So I saw in the press release this might be one of the first times I think you've put it in writing about the potential for this to be a 1 billion dollar revenue opportunity. So I was hoping you can maybe give us a little bit more color around some of the work that you've been doing to get more hyper immune plasma as thats likely.

Speaker Change: Going to be the driver to get you to those numbers.

Speaker Change: Hello, Oh, sorry.

Speaker Change: Hakan.

Speaker Change: Can you hear us.

Speaker Change: Yes, Karen conference.

Speaker Change: We were talking about the potential opportunity and we just have a lot of great visibility.

Speaker Change: Into what we think is a.

Speaker Change: A very compelling operating leverage trajectory.

Speaker Change: As we look at the demand indicators. They continued to remain strong. So I don't have to reiterate the same thing I've been saying for the last couple of quarters. I mean, the patients are there and we've defined appropriate use all of that stuff still still holds true.

Speaker Change: But we've been.

Implementing a VIP donor program, we have been implementing.

Speaker Change: Methods with <unk> to identify where we can optimize plasma collections and how we can build our pools and when we just look at all of the factors that are going into this we're able to accelerate the identification of these donors and collect more plasma.

Speaker Change: The real the real.

Speaker Change: Hampering to signings growth is really around the raw material supply.

Speaker Change: Production capacity, we've got the ability to switch from <unk> to us and begin to plan from here what we make.

Speaker Change: Same process for a Senate Bill again.

Speaker Change: We've invested in some additional.

Speaker Change: Testing machine and equipment, even more were delivered in the last couple of weeks that have been.

Speaker Change: Validated and turned on and and we're working with our third party collectors and we are currently negotiating with them on.

Speaker Change: Ways to potentially add some more centers and we will provide updates to that in the future, but but as we look at this right now we believe that we're going to identify high titer RSP plasma donors faster. We believe that we are implementing strategies to retain these donors.

Speaker Change: For longer periods of time maximize the number of collections that we can get out of these donors as him.

Speaker Change: I'm sure you recall I've said, it a bunch of times.

Speaker Change: Donors donate.

Speaker Change: <unk> twice, a week up to eight times per month.

Speaker Change: And we are implementing strategies to attract these donors and retain them for longer. So when you put all of this together, we we believe that the demand is there and if we if we find the path we're going to make more sense and you heard in the prepared remarks that I said that we've we've strategically shifted.

Speaker Change: More production from bid again to incentive all throughout this year and we're going to continue to do that so as we look forward.

Speaker Change: I don't know when it's going to happen Kristen, but I know that.

Speaker Change: That we're all working very very rapidly here is it 25 no is it 2006 now could it be.

Speaker Change: 27, 28 29 sure.

Speaker Change: We really are very optimistic about our forward looking outlook.

Speaker Change: And I think when you couple this with with yield enhancements.

Which also in the prepared remarks, we we.

Speaker Change: Put some brackets around timelines here.

Speaker Change: Certainly in the back half of 'twenty, five we expect to see accelerating revenue and certainly margin accretion.

Speaker Change: But it's going to expand rapidly in 2026, when you really look at what the opportunity that we have with the ability to gain 20% more finished goods from the same starting material.

Speaker Change: 100% of what we're going to sell in 2026 will be made from what we believe will be the then approved yield enhanced process youre going to see margins expand substantially.

Speaker Change: 26 forward. So we will give additional guidance like we always do in the beginning of the year.

Speaker Change: Around the Jpmorgan conference, but.

Speaker Change: Working to identify donors faster.

Retain these donors keep them engaged on our plasma centers.

Speaker Change: Incentivize our third party collectors, you put all of those things together and we're really encouraged by the durability of what we're building here and we think its truly unique.

Speaker Change: And just to add to Adam Sandler.

Speaker Change: Sure I was just going to say just to add to Adam's point, we're going to accelerate towards that $1 billion threshold as soon as possible to Adam's earlier comments, but the key point is it's not over there there is growth headroom thereafter, and we're going to continue to chase it.

Speaker Change: Thank you for that can you can you give a little bit more specific metrics behind this VIP donor program is implemented in all kind of your collections facilities and just in general can you speak to what Youre seeing once you initiated that in terms of footprint traffic or is it the same donors coming.

Speaker Change: And one.

Speaker Change: One more time a month like what can you give us in terms of that and recognize it's still early days for this program.

Speaker Change: It's a program that we've kicked off earlier this year I believe at this stage it is.

Speaker Change: In all of our centers all of our 10 centers.

Speaker Change: I mean, it's a pretty simple formula Kristen, but I'm not going to give all the details so my competitors now but.

Speaker Change: I can tell you that we treat our donors well we've always believed that.

Speaker Change: The donors are.

Speaker Change: <unk>.

Speaker Change: It's upon but.

Speaker Change: <unk> blood of our ability to impact and improve the lives of patients in need.

Speaker Change: Build nice tenors, we keep clean centers we are.

Speaker Change: Working on donor retention strategies and programs that certainly include compensation.

We are seeing donors don't anything more frequently we are seeing going donors donating longer and.

Speaker Change: I think that from the data that I've seen and we have one of our RSV plateau meetings today the trend as we are collecting more plasma than we ever have before.

Speaker Change: Not only from our internal centers, but also from our third party collectors. So youre going to see look maybe I'll just touch on this.

Speaker Change: We had a one off in the quarter, where we sold some normal source plasma.

Speaker Change: We don't really want to be in a very very low margin negative margin.

Speaker Change: <unk> plasma.

Speaker Change: Selling business anymore, but what we're doing is we're looking at our inventory, where we're taking a very very.

Speaker Change: Hum.

Speaker Change: Hard look at all of this and we only want to keep inventory and plasma that we can use to make the products that we want to make and that's mainly so.

Speaker Change: These are all things that I think that investors and our analysts can look at to understand that.

Speaker Change: Positioning this business appropriately.

Speaker Change: <unk> not only to do $1 billion, but we do believe that there is room.

Speaker Change: Like I've said before that if we could fill the whole plant, which again I'm not guiding to I don't I don't know if it can happen, but we certainly want to try but if we were to building entire plants.

Speaker Change: All five 600000 liters a year that we can process.

Speaker Change: <unk>.

Speaker Change: You could be generating.

Speaker Change: Somewhere in the range of $2 billion annually. So we are we're going to keep pushing hard we're going to keep treating guard to owners currently we're going to keep paying them to come back we're going to keep explaining to them why the plasma that's inside them is so powerful and so beneficial.

Speaker Change: Immunocompromised patients that are at high risk of infectious diseases.

Speaker Change: Thanks, Thanks, again and congrats again.

Speaker Change: Thank you for your support Kristen Thank you Kristen.

Speaker Change #100: And your next question comes from the line of Anthony Picture.

Speaker Change #101: <unk>. Please go ahead.

Speaker Change #102: Alright, Thanks, Tim doing regulation.

Adam Grossman: Doing very well, Adam Thanks, again, and congratulations on another strong quarter here.

Speaker Change #103: Maybe I'll stick on the supply into the equation.

Speaker Change #104: Couple of high level ones.

Speaker Change #104: When you think of just churn as churn a big issue.

Speaker Change #105: Adam are you actually losing any of these donors. It sounds like retention is actually quite high so just a little bit on the churn.

Speaker Change #105: And then when you think of just how youre managing that inventory.

Speaker Change #106: Are you fully at a level, where you have enough safety stock.

Speaker Change #106: That youre able to sort of supply these longer term contracts. So that would be the first high level, one and I'll have a follow up thanks.

Speaker Change #107: So we're always losing donors Anthony Unfortunately naturally occurring antibody doesn't stay around forever.

Speaker Change #107: Some donors it does but the majority of donor stay on the program for a period of time as I've always said and then they fall off we're constantly testing. These donors, we're constantly adding new donors.

Speaker Change #107: Donors.

Speaker Change #107: Move they have lives up like everybody else, but.

Speaker Change #107: We're doing absolutely everything that we possibly can to ensure that the donors, who we do identify that have high titers too.

Speaker Change #107: RSV antibodies come back as frequently as possible.

Speaker Change #107: I'd be lying to you Anthony if I said to you yes sure. We've got all the safety stock we need from our plasma supply standpoint, because we don't if we did then I'd be making much more assertive and I think you'd see revenues growing even faster, but we've got plenty of.

Speaker Change #107: Work in process material, we've got plenty of plasma inventory to continue to producing.

Speaker Change #107: Drug to continue.

Speaker Change #107: Continue to drive that revenue mix shifts towards a Senate, which we're seeing every single quarter every single period.

Speaker Change #107: For the last couple of.

Speaker Change #107: Sure.

Speaker Change #107: Quarters here.

Speaker Change #107: Is the majority of our revenue.

Speaker Change #107: It continues to grow.

Speaker Change #107: <unk>.

Speaker Change #107: We're doing everything we can anthony to build that safety stock.

Speaker Change #107: I think if some of our negotiations proved successful and if some of our activities with some of our third party suppliers proved to be successful.

Speaker Change #107: Hopefully, we'll have something to announce.

Speaker Change #107: Around jpmorgan, but our goal is to.

Speaker Change #107: Find as many centers around the country, who are willing to sell at plasma.

Speaker Change #107: Collect that plasma so we'll we'll we'll keep you posted there but.

Speaker Change #107: We certainly feel very very optimistic.

We're also our attorneys wouldn't let me say some of the things that I've said today.

Speaker Change #107: Okay.

Speaker Change #108: Fair enough.

Speaker Change #109: Go ahead, Barry just real quick I, just going back to the spot sale.

Adam Grossman: No Adam asthma, we're opportunistic if we need to do a spot buy we will do a spot buy if we need to do a spot sale, we're going to do a spot sale and of course, we do that to align our plasma inventory with our production needs and in this case, we made a spot sale as we continue our designated are designed to shift of.

Adam Grossman: <unk> two <unk> and we will continue to be opportunistic when it comes to plasma whether it's doing spot sales our spotlight.

Speaker Change #110: Very helpful. And then a quick follow up just again high level more of a macro.

Speaker Change #110: And there are obviously big events this week.

Speaker Change #110: There is a change in administration coming change at the Senate level there'll be new personnel, let FDA here.

Speaker Change #111: So maybe just your thoughts on how administration influences FDA.

Speaker Change #111: And what that potentially means just for the plasma space in general and general and admin specifically thanks again.

Speaker Change #111: Okay.

Anthony: Thank you Anthony I mean, it's.

Speaker Change #113: But that's quite a question you could see the smile on my face here I mean, I don't know how to answer that because I really don't really have visibility yet into who is going to be where and I know that theres a lot of conjecture out there, but what I think I can speak to are the facts and the facts are that.

Speaker Change #113: Since Obama.

Speaker Change #113: Trump.

Speaker Change #113: Bye.

Speaker Change #113: Now going back to Trump.

Speaker Change #114: Theres been bipartisan agreement across the board that plasma derived therapies have been excluded from price negotiations they recovered under Obamacare.

Speaker Change #114: I anticipate that.

Speaker Change #114: With another Trump administration.

Speaker Change #114: Wouldnt anticipate that there would be a lot of changes there.

Speaker Change #114: I can speak to is.

Speaker Change #115: I think you know this for those who don't.

Speaker Change #115: And the current chairman of the <unk>.

Speaker Change #116: Plasma protein Therapeutics Association North American Board.

Speaker Change #116: The plasma protein Therapeutics Association as the industry Association that advocates for.

Speaker Change #116: Access and availability of plasma derived therapies for all patients that receive these therapies as well as for industry in the.

Speaker Change #116: The association working with Representatives from all of the member companies.

Speaker Change #116: <unk> formed a plasma caucus, so I believe I think I'm right. There are about 38 sitting Congress.

Speaker Change #116: Congress people, who are on the plasma caucus I think capital Hill is pretty well versed in the scarcity of plasma you can only use plasma collected from U S citizens in the United States.

Speaker Change #116: In order to make these products for the U S population.

And I really feel that we.

Speaker Change #116: All of us in the in the plasma derivatives industry.

Speaker Change #116: We're in a good position here with the change of administration.

Speaker Change #116: Specifically regarding Admah, I mean, something that ive been championing about our company for a long long time.

Speaker Change #116: And I was shouting from the rooftops a little bit during the last Trump administration is.

Speaker Change #116: We are the last of the Mohicans, where the last 100% U S domiciled.

Speaker Change #116: Plasma derived therapeutics.

Speaker Change #116: Producing company one.

Speaker Change #116: 100% of our manner, 100% of our manufacturing supply chain is in the United States. So we make our drug here in Boca Raton, Florida, we fill a Senate bill the game here in Boca Raton. We also have a third party fill finish facility in Virginia all of our.

Speaker Change #116: Finished goods distribution is out of Tennessee.

Speaker Change #117: Tennessee I believe.

Speaker Change #117: We only sell our products in the United States.

Speaker Change #117: So we feel really good about some of the some.

Speaker Change #118: Some of the noise out there, but I think it would be premature Anthony to really comment specifically, but I can tell you that if there is legislation passed that hey, if you make your goods.

Speaker Change #118: In the good old U S. Today.

Speaker Change #118: We would meet that criteria so.

Speaker Change #118: It's been a mission of ours was one of our founding principles I always felt that very very important that the United States also controls some of their manufacturing capabilities and that is a U S company.

Speaker Change #118: Some of this control and here we are we're making good products, we're putting more product into the market every single quarter and we feel real good about it but.

Speaker Change #118: I don't think the change in administration will will provide any negative impacts whatsoever to add Bob or other plasma derived drugs on the market I know that you cover some other companies there but.

Speaker Change #118: From a business perspective, we feel very good about.

Speaker Change #118: The opportunities that lie ahead.

Speaker Change #119: Very good. Thank you so much congrats I'll hop back in.

Speaker Change #120: Thank you thanks Anthony.

Speaker Change #121: And your next question comes from the line of.

Gary Nachman: Gary Nachman.

Speaker Change #123: Adrian when teams. Please go ahead.

Okay.

Speaker Change #124: Good afternoon, guys my congrats as well on the strong quarter. So just thank you for your incentive supply availability, obviously the topic de jure.

Speaker Change #125: Adam do you think you need any more plasma donor facilities of your own to have more plasma supply can those 10 facilities and then the third parties get you.

Speaker Change #126: So the $1 billion target.

Speaker Change #127: And is there any risk to you sharing the methods of screening for high RSV titers with third parties.

Great question. Thank you Anthony.

Speaker Change #127: Sure.

Speaker Change #127: So you are correct that question do we need.

Speaker Change #127: Do we need more centers no do we want more centers no 10 centers gives us a great base for which we can collect and have control over some of our internal collection for the high titer plasma.

Speaker Change #127: As I've said to you in the past.

Speaker Change #127: Our private conversations and also as I say publicly.

Speaker Change #127: We certainly care very much about what we do and our staff is certainly trained.

Speaker Change #127: Two two.

Speaker Change #127: Maximize the number of collections that were getting from any specific donor that we identify as being high titer.

Speaker Change #127: Our 10 centers collect more on average than any of our third party collectors and I really think thats because there are and we control who is donating in the chair and we control what we compensate those donors with so our 10 centers from my perspective collect more than say one of our third party centers.

Speaker Change #127: Ken collect and we're going to continue to do that so no. We were not investing in any more centers, we're not going to build centers at this time, we're not buying any additional centers and is enough.

Speaker Change #127: That's where it's going to stay with respect to the methods of screening I think thats, a great question and I want to make sure that you and others understand this we don't give away our secret sauce to anybody first of all its patented second of all all of the testing all of the science is done by asthma.

Speaker Change #127: So what one of our third party collectors will do is we get a sample tube.

Speaker Change #127: Every new donor that walks into their center in any given week.

Speaker Change #127: So typically do centers have between 2500 donors, depending upon the size of the center per week. Some centers have more so right now we're collecting from I want to say about 70% 80 centers.

Speaker Change #127: Maybe a few more but.

Speaker Change #127: We're getting call it hundreds of thousands of samples every week that we do testing on in either our laboratory here in Boca Raton, or we have a laboratory, who we partnered with for many many years.

Speaker Change #127: That does screening and tighter testing for us as well so all of the science is controlled by us.

Speaker Change #127: All of the third party collector will know is that we say we want donor number.

Sure.

Speaker Change #127: One four 603, we want the owner of $146 nine Thats all they know.

Speaker Change #127: They don't know what the donors titers are they don't know whether theyre titers are super high or in the middle range or in the lower high range. All they know is that we're going to pay them more money for that leader of plaza that they collect from that donor. So all of the science is kept in house again, all of our testing methodologies are.

Speaker Change #127: And protected as well as we have certain knowhow and other trade secrets that we employ around the testing and screening, but our third party collectors love us because essentially they are collecting the same thing that they are always collecting which is just regular plasma, but we're going to pay them more money for it.

Speaker Change #127: So.

Speaker Change #127: The only thing that one of our third party collectors differently as they collect an extra sample tube and they send us I think it's five ml plasma for donor and we test it in our screening assay.

Speaker Change #128: Alright, great that color is very helpful and comforting.

Speaker Change #129: So I mean, you had a really strong quarter, but.

Speaker Change #130: I'm curious.

Speaker Change #130: Why didn't you take full year guidance more than you did just when you look at what <unk> might be could it be a sequentially down quarter.

Speaker Change #130: In the fourth quarter.

Speaker Change #131: What might cause that.

Speaker Change #131: So I wanted to confirm that the yield enhancement.

Speaker Change #131: The benefit in the second half of next year.

Speaker Change #132: Not in the car in 2025 guidance.

Speaker Change #132: So let me take the second part of your question first the yield enhancement benefit.

Speaker Change #132: Not yet contemplated in our guidance number again, we don't have FDA approval, yet and we do take a conservative approach to guidance, we're going to continue to take the same conservative approach that.

Speaker Change #132: We've employed.

Since the beginning.

Speaker Change #132: And maybe I'll, just start off and Brad certainly.

Brad Tate: Add some more color but.

Gary Nachman: Yes, Gary we're talking already about that there was a one time opportunistic plasma sale in the corner I think it was about $67 million.

Speaker Change #133: So we're not going to have that next quarter.

Speaker Change #133: We are seeing growth of attentive, we are seeing growth of bit again, but again being conservative we are not going to have $6 million worth of revenue.

Speaker Change #133: Revenue generation from.

Speaker Change #133: Plasma sales in the quarter. Additionally.

Speaker Change #133: Additionally, and maybe I'll make mention of this year.

Speaker Change #133: We've also voluntarily stopped producing one ml nabi HB from the market.

Speaker Change #133: We only now produce the five ml product.

The margins were not great on the one ml and candidly with the Paducah fees, where they where it just didn't it didn't make sense. So we're not going to be selling any.

Speaker Change #133: One ml nabil in the fourth quarter, we do hope that we pick up that business.

Speaker Change #133: Five ml revenue, but thats yet to be determined but.

Speaker Change #133: <unk>.

Speaker Change #133: It would be a down corner on the topline, but I think that when you look at guidance we've increased.

Speaker Change #133: EBITDA and net income guidance for the quarter, because we do believe that the revenue mix is going to continue to shift.

Speaker Change #133: Towards assertive and higher margin.

Products. So we feel very good about where we are ending the year, we feel really good about where next year is going to be and again.

Speaker Change #133: To your to your question about yield enhancement.

Gary Nachman: 2026 is going to be gangbusters I mean, we're just so excited about what the future holds for us there, but Brad it's Gary.

Speaker Change #134: Gary we're focusing on <unk> and the incentive.

Speaker Change #134: Mix shift, we're focusing on yield enhancement, we're focusing on our high margin products and when you think about it admins next chapter will be defined by margin expansion and earnings growth. We are going to continue to leverage our operating structure. We're going to continue to drive top line, we're going to continue to focus on high margin products and make those margins even <unk>.

Speaker Change #134: With yield enhancement in again by doing that by leveraging leveraging our operating structure, we're going to continue to drive margin expansion, we're going to continue to drive net income we're going to continue to drive EBITDA.

That's our plan.

Speaker Change #134: Margin.

Speaker Change #134: And earnings growth.

Speaker Change #134: Get a T shirt, okay. That's the mantra.

Speaker Change #134: Okay.

Speaker Change #135: Just a couple more quick ones just on the estimate on your program when could we see some animal data on it now that you. It looks like you've identified a lab to do that study and then congrats on getting KPMG.

Speaker Change #135: You've contracted with them for 2020 for the year end audit just when do you think youll finalized 2025 with them we've been getting some questions on that thank you.

Speaker Change #136: So okay.

Speaker Change #137: <unk> one I wrote down your last part of the question about Kpmg's when would we finalized engaging them for 25.

Speaker Change #137: Yes, correct.

Speaker Change #138: People, obviously are excited to see that you engage them for this year just.

Speaker Change #138: Yes.

Speaker Change #139: Thanks for your question, Okay, I just want.

Speaker Change #139: I just wanted to make sure. It was the same crazy question that I'm getting from investors as well okay.

Speaker Change #139: So let's start with SG&A year over year, one so we successfully produced a pilot scale batch of product.

Speaker Change #139: So excited.

Speaker Change #139: Our scientific team here, our scientific technical ops team.

Sure.

We're doing everything that theyre doing for yield enhancement.

Speaker Change #140: Caitlin and I said, hey, let's let's let's push them, even harder and we're very excited to be here.

We are evaluating labs, we're currently writing and drafting testing protocols I don't really have a timeline, but I want everything done immediately.

Speaker Change #141: I would hope.

Speaker Change #141: In the third quarter of next year.

Speaker Change #141: Im probably going to get.

Speaker Change #141: Yelled at when I walk out of this conference room, but my hope is you know.

Speaker Change #141: Sometime in the back half of next year early back half, we should have some some some data.

Speaker Change #141: But please don't hold me to it and if it comes earlier great but.

Speaker Change #141: I want to answer your question I want to be straight with you. We're very excited about this opportunity, but obviously the priority for us is yield enhancement the priority for us is expanding our production capabilities here to ramp up to be in a position that as soon as rapidly possible, we can be producing from the yield enhanced process.

Speaker Change #141: Next year and the goal is to sell as much yield enhanced product as we can in the second half of 2024.

Speaker Change #142: Excuse me second half of 2025.

Speaker Change #142: And certainly all of 26 will be from yield enhanced produce drug with respect to KPMG I mean, there are new auditor.

Speaker Change #143: It's so funny to me when people ask these questions but.

Speaker Change #143: No one ever asked me well as Congress is going to continue to be your auditor after they finish your.

Speaker Change #143: Year end audit here.

Speaker Change #143: There are they are our new audit firm.

Speaker Change #143: Our new independent registered accounting firm that we are going to be working with from now for the foreseeable future.

Speaker Change #143: They are currently actively working with Brad and his team.

Speaker Change #143: We are going to continue to work with them and we believe that we're going to be filing our our 2024 10-K on or before the filing deadline, which I believe is March 325.

Speaker Change #143: Working rapidly to meet or exceed that deadline, but I don't think theres any reason why anyone should doubt that KPMG is not going to be our auditor for 25, and 26%, 27% 28, all the way into the future. We spent 17 years with Cowen Resnick I'd tell the partners of KPMG I don't know if im working in other <unk>.

Speaker Change #143: 17 years.

I'm not as young as I used to be but if I am.

Speaker Change #144: We're very loyal here I don't know, Brad if you want to add anything to that completely agreed completely accurate.

Speaker Change #145: Okay fair enough and thank you for clarifying that congrats.

Speaker Change #145: Congrats again no problem.

Speaker Change #145: So thank you look we are very proud of transitioning to a big four.

Speaker Change #145: Audit firm and I think it just really represents the growth of the business and the maturation of our processes and our operations. So.

Speaker Change #145: We are excited to be working with them.

Speaker Change #146: Totally I mean, it's an important milestone in our organization and we don't expect.

Speaker Change #147: Any go forward impact on the numbers <unk> filing timelines as Adam has said and we are happy to have engaged KPMG and have their service.

Speaker Change #148: Great. Thank you.

Speaker Change #148: Okay.

Speaker Change #148: That concludes our question and answer session.

Speaker Change #148: Now during the conference back over to Ed.

Speaker Change #149: I'm, Joe Smith for closing remarks.

Speaker Change #150: Thank you very much everybody. We really appreciate your continued support and partnership we think our donors, we certainly thank our staff.

Speaker Change #150: We're here to make good products that help people to our stockholders. We appreciate you putting up with some of the pain last quarter, but it's behind US now and I think the forward looking outlook is nothing but but right for us. So thank you very much donate plasma help save lives and.

Speaker Change #150: Stay healthy and safe and have a happy Thanksgiving.

Speaker Change #151: Ladies and gentlemen, this concludes today's call. Thank you all for joining you may now disconnect.

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