Good afternoon and welcome to the ADMA Biologics Fourth Quarter and Full Year 2020 Financial Results Conference Call on Thursday, March 25, 2021. At this time, all participants are in a listen-only mode and there will be a question-and-answer session to follow. Please be advised that this call is being recorded at the company's request and will be available on the company's website approximately 2 hours following the end of the call. At this time, I would like to introduce Skyler Bloom, Director, Investor Relations and Corporate Strategy at ADMA Biologics. Please go ahead.

Welcome, everyone, and thank you for joining us this afternoon to discuss ADMA Biologics financial results for the fourth quarter and full-year 2020. I'm joined today by Adam Grossman, President and Chief Executive Officer; and Brian Lenz, Executive Vice President and Chief Financial Officer. During today's call, Adam will provide some introductory comments and provide a corporate update and then Brian will provide an overview of the company's fourth quarter and year ended December 31, 2020 financial results. Adam will then provide some brief summary remarks before opening the call up for your questions. Earlier today, we issued a press release detailing the fourth quarter and full-year 2020 financial results. The release is available on our website at 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 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 to differ materially from the results expressed or implied by such statements. In addition, any forward-looking statements represent our views only as of this date of this recording and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update any such statements except as required by the federal securities laws. We refer you to the disclosure notice section in our earnings release we issued today and the Risk Factors section of our 2020 annual report on Form 10-K, which we expect to file following this conference call for a discussion of important factors that could cause actual results to differ materially from these forward-looking statements. With that, I'd like to now turn the call over to Adam Grossman. Adam?

Thank you, Skyler. Good afternoon, everyone, and thank you for joining us on today's call. We hope those joining us today continue to remain healthy and safe. 2020 was an unprecedented year for businesses and difficult for most of the nation due to the pandemic. Despite this enormous unforeseen challenge, ADMA Biologics delivered on its commitment to stockholders, customers, and most importantly the patients who were treated with our lifesaving plasma-derived therapeutics. Because of the focus and dedication of ADMA's workforce, we are pleased to report that 2020 was a year of multiple achievements, including record revenue of $42.2 million, which represents a 44% increase over 2019. This top line revenue milestone, taken together with the rapid expansion of our plasma collection center network, as well as delivering on all production and regulatory objectives as part of our supply chain enhancement initiatives, ADMA ended 2020 in the strongest position it has been in since inception. On the financial front, we substantially strengthened our balance sheet and ended 2020 with assets totaling $207.7 million. As evidenced by the increased production throughput we experienced during 2020, we significantly grew our inventories to a year-end balance of $81.5 million, as well as increased our accounts receivable and recorded investments in property, plant, and equipment. Although plasma collections for the industry, including for ADMA remained pressured due to, among other things, a present combination of government stimulus packages, persisting social distancing measures and different vaccination rollout state by state, I am proud to report that ADMA continues to successfully navigate the evolving COVID-19 operating backdrop and is producing its products in accordance to plan. All of our plasma collection centers remain fully operational, and we continue to see stabilizing and improving collection trends over recent periods, which we are hopeful will continue as vaccinations…

Thank you, Adam. Since we issued a press release earlier today outlining our fourth quarter and full-year 2020 financial results, I'll just review some of the highlights. For the three months ended December 31, 2020, total revenues were $14 million compared to $12 million for the fourth quarter of 2019. This represents an increase of $2 million or approximately 16%. The revenue growth for the fourth quarter of 2020 compared to the fourth quarter of 2019 was favorably impacted by the continued commercial ramp-up of our IVIG product portfolio. As Adam mentioned earlier, our total inventory as of December 31, 2020 was approximately $81.5 million, up approximately 54% from $53.1 million at year-end 2019. This inventory consists of raw materials, including source plasma and other materials expected to be used in the production of our three commercial products as well as work-in-process inventories for BIVIGAM, ASCENIV, and Nabi and finished goods of intermediate fractions as well as our three commercial immune globulin products. In accordance with US Generally Accepted Accounting Principles, the value of our inventory is stated at our cost. In the periods ahead, we anticipate continuing to purchase raw materials and building work-in-process inventories as well as finished goods inventories, which we believe will translate to quarter-over-quarter revenue growth throughout 2021 and beyond. Additionally, given COVID-19 related uncertainties across the pharmaceutical supply chain, we intend to retain a portion of our growing inventories as safety stock, which we believe will strengthen our position as a reliable supplier to customers, distribution partners, and prescribers over the coming quarters. Our consolidated net loss for the three months ended December 31, 2020 was $19.4 million or $0.20 loss per basic and diluted share compared to a consolidated net loss of $10.6 million or $0.18 loss per basic and diluted share for…

Thank you, Brian. The totality of our 2020 achievements leaves us well positioned to execute on our ongoing operating targets and advance toward our goal of generating substantial revenues and profitability from our multi-faceted product offerings across all business segments. We anticipate 2021 to be defined by continued commercial execution in addition to a series of value creating FDA decisions during the year with our supply chain, production and BioCenters plasma collection business segments. These anticipated upcoming FDA decisions include expanded 4,400 liter IVIG plasma pool production scale, in-house aseptic fill-finish capabilities with our installed equipment including our Vanrx SA25 and the continued expansion of our ADMA BioCenters plasma collection center network. Upon receipt of these FDA approvals, ADMA expects to realize significant operating efficiencies and improved gross margins beginning potentially as early as mid-2021, which we believe will ultimately support durable profitability with enhanced in-house control of our most critical manufacturing and operating functions. While our organization's focus remains singularly on achieving our near-term operating targets and ultimately progressing toward profitability, I'd like to take a moment to acknowledge several of our recent scientific developments. Notably, we presented a poster at IDWeek 2020 detailing the challenges in the management of respiratory viral infections. And more recently, we presented a late-breaking poster at the AAAAI conference, highlighting the potential clinical utility of a strep pneumonia hyperimmune globulin in vulnerable patient populations. ADMA continues to establish its reputation in the scientific and medical community as a thought leader in the development of specialty hyperimmune globulins. And when considered in combination with our expanding intellectual property estate, we believe ADMA could be a partner of choice for the rapid development of targeted infectious disease therapies as well as for a potential suitor moving forward. Management will continue to evaluate all of our business development options in order to maximize shareholder value. We entered 2021 from a position of strength across our value chain in the immune globulin end markets and in the context of our improving financial position and asset value. We look forward to executing on all of our commitments in 2021. And in doing so, we anticipate creating meaningful value for our shareholders in the near and mid-term. On behalf of the entire ADMA Biologics team, I thank you, our stockholders, for your continued support as your investment in ADMA helps to advance our mission to save lives and make good, safe products that help our friends, family and neighbors. Please donate plasma, get your vaccine, help save lives. And with that, we'd now like to open up the call for questions.

[Operator Instructions]. Our first question comes from Anthony Petrone with Jefferies.

Congratulations on a strong year through 2020. I'll just start off, maybe again just to – a little bit on timing. A couple of timing questions and I'll have some questions on supply and demand. On timing, maybe just an update on the FDA fill-finish clearance as well as BIVIGAM lot expansion, it sounds like that's still potentially a first half event. So, just an update there. Maybe a quick follow-up there will be, Brian, maybe to just walk us through under a scenario where both of those are secured in the first half, what does the sort of second half gross margin ramp look like from there, and I'll have a couple of follow-ups?

FDA is very engaged with ADMA right now. We're going through the review process. Our previous guidance, I believe we said was mid-year, but we are still on track. We feel very confident that we're in a good place with the review, and we feel very comfortable that you should see the approvals coming in sometime on or around mid-year, and then we've said second half to start realizing some of the accretion from the enhancements to the supply chain from these potential approvals, but everything is on track. The agency is very engaged. Being in the immune globulin space during COVID, you get a lot of attention from FDA and these are products that without them, many of the patients would not be able to survive and live normal productive lives. IVIG continues to remain on the FDA drug shortage list. ADMA continues to be a company that's saying that we've got more IG to bring to the market in 2021 than we had last year, and customers are being very receptive to it and the FDA is really working very closely with us to ensure that we can continue the continuity of supply and care for the market. Brian, you want to take Anthony's next part?

With regards to our second half gross margin ramp up, we reported earlier that we have about $8 million of our conformance lot manufacturing, taken the manufacturing of BIVIGAM from 2,200 liters to 4,400 liters. And in doing so, we had to expense those four-conformance lots in accordance to US GAAP. Now, when we receive FDA approval, hopefully in the middle of the year, we will be able to realize 100% gross margin sometime in the second half, maybe third, early part of fourth quarter for those four-conformance lots. If you back off the $8 million from the $61 million and the cost of product revenue, Anthony, we've already started to see gross losses narrow or, I should say, improve to the positive. So, we expect that trend to continue toward the second half, especially as we receive the FDA approval of the 4,400-liter capacity expansion.

And then couple follow-ups, and I'll hop back in queue. One would be, when we think about the manufacturing timeline today whether it's for BIVIGAM or ASCENIV, when you secure clearance for lot expansion and fill-finish in-house, what do you think that does for a timing on inventory turns from overall source plasma to finished goods? And then once you have that visibility in hand, how should we think about BIVIGAM contracting once visibility is enhanced? Thanks.

Our production cycle was 7 to 12 months. I think as I've said previously, we are on the longer end of that cycle time right now as we're using third parties for our aseptic fill-finish label pack et cetera, and we have seen improvements in this production cycle time throughout 2020 and we're actually looking at some data today, things are looking really good. Obviously, when we get to bring fill-finish in-house, and as I've said, we can just take the bulk and wheel it down the hallway into the fill-finish suite rather than putting it on the truck, shipping it up to our CMO during the appropriate identification testing, and getting into their queue. We believe that we can shave some time off of this. But no matter what, Anthony, it's still going to be within that 7- to 12-month window. Our hope is to be in that seven, eight, nine months range for the production cycle, but you really can't get it any faster than that. But we're currently on the outer bound of that cycle, which is where we've seen – we are seeing improvements. Our hope is that we are in, call it, seven to nine months as we go forward. With regard to BIVIGAM contracting and making sales, we're really seeing very, very good demand. Q1 happens to be shaping up really nicely, and we feel very good about the quarter as we wind down here. We're really building a good following and brand loyalty. We've got great reimbursement restructure for both BIVIGAM and ASCENIV. As we get more BIVIGAM available, our feeling is as patients continue to do well, our customers will continue to put more patients on our products. So, we feel very good about this. We're already cultivating and speaking with our distribution partners and our alternate sites of care, home infusion, specialty pharmacies that are working very, very closely with our field force and the prescribers, and we're really able to identify gaps in the market where they are not able to have complete supply with all the brands, all the sizes that they would like. So, we feel very good about bringing more product into the market. We feel that the demand is there. Based on our first quarter performance that I've seen so far, we really feel that we're on a good track to continue to deliver quarter-over-quarter revenue growth.

Our next question comes from Elliot Wilbur with Raymond James.

First question for yourself, Adam. Just if you could, certainly the build-out of the collection centers has progressed at a faster pace than what we would have anticipated over the past 12 months. Can you just talk about some of the decisions internally or the factors that have enabled you or led you to pull forward the build-out of the collection centers and then just what the messaging or body language has been from FDA in terms of review timelines? Certainly, approved last facility quicker than anticipated – or on a quicker-than-anticipated timeline, but just what you may be getting from the agency in terms of messaging that may influence your expectations around the timing of approval for the collection centers as well.

The decision to build more plasma centers, there is a simple answer and then there's a multifaceted answer. Quite frankly, we've got a plant that has a 400,000 liter capacity today. We're talking about being able to upsize our lots for – our production lot sizes for BIVIGAM sometime in middle of this year. One can reasonably assume that we may have more capacity in the future. We want to have control of our plasma supply. Not to be funny, but the reason why you're hearing for me today and why we own this and essentially vertically integrated provider of specialty immune globulin products is because we used to rely on third parties. When you rely on third parties, you don't have all the control you want. And even before COVID, ADMA management team was talking about building out our plasma centers, gaining more control, supply chain enhancements and I think what we've learned during COVID and really the way that we've been able to operate and navigate during COVID, we want to have as much control over our destiny as possible. I think that's what a potential acquirer would want to see in our business and I think that's really what our shareholders want to see from this business. So, first and foremost, collections have been down as reported from others in the industry as well as ADMA in my prepared remarks. We are being impacted. I don't believe that we're being impacted as severely as some of the other collectors that have made statements publicly. But we are seeing quarter-over-quarter improvements, week-over-week improvements with respect to collections up and down here and there, the government stimulus keeping things a little bit flat right now, but we're optimistic with the vaccination rollouts that things are going to improve. But…

I think you hit on the main points, Adam. The marketplace for plasma centers certainly has grown almost $15 million. There was a recent transaction of 25 centers that were acquired for about $15 million per center. So the market value is there, the marketplace is there and we just think it's a great opportunity to build more plasma centers and to become fully self-sufficient. As we said, we increased our guidance from 5 to 10 centers to 10 or more and we're certainly well on our way. Currently, having seven centers under our corporate umbrella at this present time.

Next question. With respect to the supply chain initiatives. The 4,400 liter capacity captive fill-finish, what are the remaining themes and factors in terms of obtaining FDA approval? Do they actually need to come onsite and inspect the equipment in the facility in order to sign-off? Is there something they can do remotely? Just curious, obviously, if they have an on-site inspection for that to occur.

Elliot, one thing I'll say is we are in an active review. So, I want to be cautious about the things that I say. But what I can tell you is that for the 4,400 liter plasma pool expansion, no inspection is required. That is a normal and customary prior approval supplement submission. We send in, they review our data, they review the specifications. Typically, that would be a paper review and there is no prior approval inspection required for that submission. For the installation of the fill/finish line and beginning all of the operations that go along with billing, labeling, packaging et cetera, typically, that would require an FDA on-site inspection. And I say typically because that's what's required in the code of federal regulation. Now, we've installed this Vanrx SA25. And a couple of investors over the last, I guess, the year or so that we've been talking about this machine, they ask me, why do you keep saying Vanrx SA25. And I say, well, that's material. It's very important for the reader to know, the investor to know, because the Vanrx is a – I get teased on the message boards and my kids make fun of me. But it's a state-of-the-art machine. It's a totally self-contained isolator system. And there is no customization of this system at all. So, the FDA has approved this device over 30 times, maybe 40 times now. And there was a precedent, I want to say, middle of last year, late last year, there was a Vanrx approved and a press release went out that there was a Vanrx approved at another company and they did not have a PAI. So, I can't comment on whether or not the FDA has come in or they haven't come in or they are…

And then just two final financial questions for Brian. Brian, you provided a total inventory number, a little over $81 million. If you happen to have it in front of you, could you tell us what the finished goods number was within that? And then, as we think about your prior commentary that you expect the top line to continue to grow over the course of 2021, given where we are currently, you obviously have a good line of sight into 1Q, how should we be thinking about the balance of the year in terms of the trajectory here? Would you expect growth to be relatively linear or should we be expecting more of a second half acceleration?

I do have the breakdown for the inventory, the different components of raw, WIP and finished goods. Finished goods for 2020 is $19 million of the $81 million and that increased from $5 million in 2019. So, $19 million of the $81 million is finished goods inventory for the year ended 2020. Regarding revenues, as Adam mentioned, we do feel really good about the first quarter, top line revenues here with about just less than a week left in the quarter. And then thinking about how the second half looks and just from an overall standpoint, we have publicly disclosed we anticipate quarter-over-quarter sequential top line revenue growth. Thinking about the second half, as we hopefully receive FDA approval of the 4,400 liter expansion and continue to receive market acceptance of our products, the J code April 1 for ASCENIV and then going forward, we feel very optimistic about the second half, again, thinking quarter-over-quarter sequential revenue growth.

Ladies and gentlemen, this will conclude our question-and-answer portion of the call. I'd like to turn it back over to Adam now for additional closing comments.

If there is nothing further, thank you very much everybody. And I want to thank you for dialing into our call. Thank you for your interest in ADMA, in plasma-derived therapies and immunoglobulins. And again, get your vaccine. There's a donatingplasma.org and find a plasma collection center near you. We need all donations, even those from our shareholders. So, thank you very much, stay healthy and safe and have a great afternoon.

Ladies and gentlemen, this does conclude the conference call for today. We appreciate your participation and you may now disconnect.