Good afternoon, and welcome to ADMA Biologics First Quarter 2021 Financial Results and Corporate Update on Wednesday, May 12, 2021. At this time all participants lines are in a listen-only mode. There will be question and answer session will follow. Please be advised that this call is being recorded at the company's request. And will be available on the company's website approximately two hours following the end of the call. At this time, I would like to introduce Skyler Bloom, 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 first quarter of 2021 and recent corporate updates. 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 first quarter ended March 31, 2021 financial results. Adam will then provide some brief summary remarks before opening up the call for your questions. Earlier today, we issued a press release detailing the first quarter 2021 financial results and summarize certain first quarter achievements and recent corporate updates. 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 call 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 in the Risk Factors section of our 2020 annual report on Form 10-K and our quarterly report on Form 10-Q for the first quarter ended March 31, 2021, for a discussion of important factors that could cause actual results to differ materially from these forward-looking statements. With that, I would now like to turn the call over to Adam Grossman. Adam?

Thank you, 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. ADMA is off to an excellent start to 2021 and the company's accomplishments during the first quarter and in the weeks thereafter, established the foundation for what we expect will be a very strong year of continued growth and asset value creation. We believe the transformative milestones achieved since the beginning of 2021 across both our Biocenters Plasma Collection segment as well as the Biomanufacturing segment meaningfully derisk the pathway for the company to continue to deliver revenue growth as well as ongoing strategic revenue growth as well as ongoing strategic and longer-term financial commitments to stockholders, including reaching profitability no later than the first quarter of 2024. Financially, ADMA exceeded analyst consensus top line revenue forecast, generating record revenues of $16 million during the quarter. This represents a 57% growth rate compared to the first quarter of 2020. Additionally, for the first time since the launch of ADMA's IDIG product portfolio, top line revenue growth outpaced operating spend which enabled the company to successfully narrow both gross losses as well as net losses quarter-over-quarter. A trend the company anticipates will continue in the coming quarters and accelerate throughout 2022. ADMA additionally grew its total asset value to a quarter-end balance of $235.7 million, which is approximately a 13% increase quarter-over-quarter. The growth in asset value notably includes $94.1 million in inventories, which ADMA expects will support continued production ramp-up as well as quarter-over-quarter revenue growth throughout 2021. In addition to ensuring the continuity of product supply into an ongoing supply-constrained immune globulin market. We strongly believe that ADMA's asset base and future growth prospects are substantially undervalued when compared to the valuations…

Thank you, Adam. Since we issued a press release earlier today outlining our first quarter 2021 financial results, I'll just review some of the highlights. For the 3 months ended March 31, 2021, total revenues were $16 million compared to $10.2 million for the first quarter of 2020. This represents an increase of $5.8 million or approximately 57%. The revenue growth for the first quarter of 2021 compared to the first quarter of 2020 was favorably impacted by the continued commercial ramp up of our IVIG product portfolio and expanding customer base in both our Biocenters Plasma Collection segment as well as in our Biomanufacturing segment. As Adam mentioned earlier, our total inventory as of March 31, 2021, was approximately $94.1 million, up 80% from $52.3 million in the first quarter of 2020. This inventory consists of raw materials, including source plasma and other materials expected to be used in the production as well as work in process and finished goods inventories comprised of our commercial IVIG products and intermediate fractions. In the periods ahead, we anticipate continuing to purchase raw materials while also growing our internal plasma collection center network 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 growing inventories as safety stock which we believe will strengthen our position as a reliable supplier to our customers, distribution partners and prescribers over the coming quarters. Our consolidated net loss for the quarter ended March 31, 2021, was $18.4 million or a $0.16 loss per basic and diluted share compared to a consolidated net loss of $19.2 million or a $0.26 loss per basic and diluted share for the quarter ended March 31, 2020. The decrease in year-over-year net loss was primarily attributable to increased revenues as a result of customer expansion and narrowing gross losses. The improved net loss was partially offset by increased plasma collection center operating expenses to support our biocenters plasma collection network expansion strategy, as well as an increase in SG&A expenses attributable to commercialization efforts for our IVIG product portfolio. With that, I will now turn the call back over to Adam for closing remarks.

Thank you, Brian. As evidenced by our recent accomplishments, including exceeding analyst consensus topline revenue forecast for three consecutive quarters. As well as continued operating success in the phase of COVID-19 challenges. ADMA continues to deliver on it commitment to stock holders and we look forward to building on the momentum we demonstrated during the first quarter of 2021. We believe ADMA enters the remainder of the year from a position of strength. The multiyear remediation and production enhancement objectives at our Biologics manufacturing plant are nearing a successful conclusion. ADMA's supply chain investments are on the precipice of yielding significant returns in the way of margin improvement, and anticipated quarter-over-quarter revenue growth is poised to continue throughout 2021 and beyond. Prior to opening up the call for Q&A, we would like to provide some brief commentary around the current stock price as well as to quantify the asset value demonstrated by precedent acquisitions within the highly acquisitive plasma-derived therapeutic space. As sizable common stockholders, we, as a management team, are acutely aware of the increasing disconnect between ADMA's market value and the intrinsic value that our asset base fairly commands. Although the total asset value recorded on our balance sheet, is $235.7 million in accordance with generally accepted accounting principles, valuations from precedent acquisitions of comparable plasma collection networks and fractionation facilities support, in our opinion, an asset value of $450 million to $650 million or more for ADMA's current asset base. We encourage the investment community to review the publicly available information and these valuations regarding plasma-derived therapies, production facilities on a global scale as well as the multiple transactions reported for plasma collection centers in the U.S. and abroad. What we do, the market we are entrenched in, the growing demand for plasma and plasma-derived therapies is a highly durable, sustainable and needed area of the biotech industry. Our capabilities, patents, regulatory and commercial successes should not be overlooked. What we do has significant barriers to entry, and ADMA is finding success in this market dominated by a select few players. ADMA has a strong foothold in the U.S. with an integrated end-to-end supply chain and production capabilities, something only substantially larger valued companies can stick a claim to. With consideration to the significant asset valuation arbitrage as well as the additional value yet to be realized for our anticipated future cash flows, we are actively evaluating all strategic and financial alternatives to maximize stockholder value and minimize equity dilution. We intend to update the market with developments as appropriate. 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 the lives of many and make good safe products that help our friends, family and neighbors. Please donate plasma, please help save lives. And with that, I'd now like to open up the call for your questions. Operator?

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

Congratulations on another strong quarter. Maybe -- maybe to begin, Adam, we can start a little bit on the inventory comments. $94 million and the desire to have a level of safety stock going forward. Maybe can you give us an idea of what that magic level is in safety stock and where do you expect that to be on a consistent basis going forward? And then secondly, on inventory cycles, can you also give us a sense of what the inventory cycle will look like in terms of timing, once the expanded leader pool process is fully up and running and then thinking ahead to Vanrx coming in, where is it today? And where will it trend to over time? And then I'll have a couple of follow-ups.

Sure. So let me touch on part of the inventory question. So from our perspective, it's all about the continuity of care for these patients. Our immunoglobulin products, Oseni and BIVIGAM are labeled for use in patients with primary humoral immune deficiency. These are patients who need these products every 3 to 4 weeks for the rest of their life. From our perspective, somewhere in 3 to 4 months of finished goods probably is a strong safety stock. But as you know, our production cycle times with the 4,400 liter approval or without, any of our immunoglobulin products are typically still going to be within a 7 to 12 month production cycle, Anthony. So nothing really changes there. I think I've said publicly, and I know that you and I have spoken about this. We're currently in the, call it, 10-, 11-month range today. You asked about ban Vanrx. With Vanrx, we're not totally comfortable on giving firm commitments, but we do believe it should shorten that time, but it's not going to make it any faster than that 7 to 12 month cycle. Quite frankly, the approval of the 4,400 liter process meaningfully derisks the company and our path to profitability. The fact that roughly about 80% or more of our production at the present time is coming from BIVIGAM. This is really going to substantially improve throughput into the facility, better utilizing that capacity, absorbing that manufacturing overhead and ultimately improving margins because we are keeping the fixed cost structure for certain consumables, single-use disposables, filters, labor, electricity, water, all of these things, a lot of it stays the same. So we anticipate significant margin improvements from this approval and more product coming out of the plant over the next 7 to 12 months as we are implementing this 4,400 process. Maybe to touch more on the inventory. Brian, maybe you can add some more color regarding the current inventory?

Sure. Thank you, Adam. So a couple of very encouraging things happened during this first quarter. Number one, our production efforts continued to increase. And that resulted in us allocating more direct labor more overhead directly to work in process and finished goods, which is attributed to building safety stock. The other thing that happened that was very encouraging during the quarter our unabsorbed manufacturing overhead continued to decrease. And again, that's as a result of continue to increase production as we moved through the first quarter, and we expect those trends to continue throughout the rest of the year, especially as we received approval for our 4,400 liter capacity expansion.

A couple of follow-ups would be to stick to margins and sort of the progression from here. A couple of follow-ups. One would be, as we think of absorb manufacturing overhead continuing to decline, maybe just a little bit more visibility on sort of where that number is today and where it can go over the next, say, 12 months, and then maybe a quick update on the BIVIGAM conformance lots is the timing of that still in 2021? And if so, when do you expect those to be realized?

Sure. I'll touch on the -- I'll touch on the unabsorbed manufacturing overhead. Over the past 3 quarters, we've seen several millions of dollars being essentially transferred out of unabsorbed manufacturing overhead moving direct labor hours and overhead into wet work in process as well as into finished goods. We expect that trend to continue, as I mentioned, throughout the rest of this year as we continue to expand our capacity going from 2,200 to 4,400 liters as well as into 2022 and 2023. And our margins -- gross losses will continue to narrow. We'll be turning a gross profit and then essentially, this is going to put us on a path to profitability.

And last for me, I'll hop back in queue. Appreciate the color here. Would just be on plasma collection centers. You mentioned that 3 are currently under development should have BLAs in place, at least a handful before the end of the year. And then there's a pipeline moving toward 10. So maybe jumping ahead to the end of '22, how many plasma centers in total should be up and running say, over the next 18 months by the end of '22? And I'll hop back in queue.

Sure. I would say, Anthony, Brian, you can certainly take it. But Anthony, we're talking -- we should have 10 centers over and operating by the end of '22. Absolutely. Brian, do you want to add some color?

Absolutely. So we have 2 FDA-approved centers currently. We have 1 on file with the BLA for hopefully another approval this year. We're going to file 2 additional BLAs by the end of this year. As Adam mentioned, we expect to have 10 or more centers open operating FDA-approved by the end of 2024. And we just restated or updated that guidance favorably to increase those number of centers to meet our demand as well as to become self-sufficient for our raw material normal source of plasma supply.

And I'll also say, Anthony, the real estate market is still pretty pretty good for retail space. Even though the market is opening up, we're still very opportunistic. We've got a number of locations and sites identified and I can tell you, we are accelerating this process. We feel really good now that we've got the 4,400 approval. I mean, the market will take more product. We're going to put more product into the plant. And we're going to sprint and run through walls to get to the promise and stated goal of $250 million of top line by year-end 24. And then again, we've revised the total top line to be able to generate in excess of $300 million with this recent FDA approval of the 4,400 liter. We might need to build some more plasma centers. We do say 10 or more, but we should have -- we've got 4 centers currently open and collecting right now, as Brian said, 3 more in development. We're hoping to have open by the end of the year, more BLAs on file. And next year, more of the same. We continue to knock down our milestones. We continue to hit our time lines within reasonable time frame, you see the FDA works with us. We're not just giving the lip service here. We appreciate the FDA's attention to the life-saving need of these drugs. We're getting approvals. We're delivering things during COVID, and it's still present. I may be based in Florida, but COVID is still around. We're managing the supply chain our contractors are managing inventories of the raw materials and the supplies, we need to build these plasma centers, and we continue to remain on track. We are not revising any of our time lines here we are moving forward full speed. We are a company firing on all cylinders, and we plan to continue to execute throughout the rest of this year, just like we've done in the beginning part of '21.

Our last question comes from the line of Elliot Wilbur with Raymond James. Your line is now open.

This is actually Michael Parolari on for Elliot. So first, if you could talk a little bit about just kind of the incremental importance of offering the 100 ml offering of BIVIGAM and how the company plans to really capitalize on that new market opportunity?

Sure. So how do I say this? A number of our competitors offer various vial sizes when we came to market with BIVIGAM, we offered a 5 gram 50 ml vial. If you read the package in your dosing, it's typically 300 to 800 milligrams per kg of body weight a typical dose from a built primary immune deficient patient, let's just say, is somewhere between 25 to 35 grams. Now the way IVIG typically is infused if a pharmacy will pull the product together into some sort of an administration bag. And the more vials they have to manipulate, the more work there is for the pharmacists. What our competitors do is they're able to offer the different vial sides in the 5 to 10-gram size, 50 ml, 100 ml size, and it allows for an easier administration of the product. So the importance of this 100 ml is that, look, we've been very successful with the introduction of BIVIGAM. With the singular vial presentation. And that shouldn't be lost on folks. People like BIVIGAM. BIVIGAM is a high-quality product, it's efficacious, and they've been using it. And now it puts us on the same playing field with a number of our competitors who offer multiple vial sizes. So we've got the ability to go to these higher volume clinics, higher volume infusion centers that okay. Maybe they were using some bit the game, but now it allows them to use more and faster. It puts us from the same playing field as a number of our competitors. We're really proud to be able to offer both vial size. To the customers who may be listening today, we've got some in inventory. But again, through the 7 to 12 month production cycle, I think as we get to the back half of this year and into 2022, I think we'll start to see more 100 ml vials available in the market. But we think it really just continues to keep ADMA at the forefront of being a competitive player at the site of care and offering an ease of administration to the caregiver.

And then maybe one for Brian. If you have it on hand, the finished goods number and inventory cadence for the rest of the year? And then also on that note you guys have mentioned multiple times about gross margin expansion. I know that historically, we typically look at inventory with a 40% margin and kind of back into a revenue number using that. How should we adjust that 40%? Or should we still go about thinking about it like that?

Sure. So regarding the first part of the question, finished goods, our finished goods number was $21.2 million of the $94.2 million. That number is -- has continued to grow quarter-over-quarter for the last several quarters. And this is where our safety stock is going to reside as well as some of our raw materials. All components; raw material, WIP and finished goods has continued to grow. And we think it's very important to show the -- our customers, suppliers, distributors that we're going to continue to build this inventory balance. In the past, we've said gross margins by 2024, 40% to 50%. As we see the 4,400 batches start rolling out, realizing we just received FDA approval just a few weeks ago. A 7 to 12 month manufacturing lead time, we hope to start seeing some of those gross margin improvements as we roll out the rest of this year and certainly into 2022. And those margins, our gross losses are going to narrow, gross profit will be realized in the very near future. And as I said, these things are going to continue to roll out in a very positive trend as we continue to see from the fourth quarter to the first quarter, gross losses are narrowing, net losses being -- is lower, and we're very encouraged for what we're seeing going forward.

And then last one from me. I believe you guys have said in the past that 10 to 12 or 10 to 14 plasma centers put you on the playing field for being fully self-sufficient. So just wondering if you could speak to what you're looking for in the new third-party supply contracts that you mentioned that you're in the process of negotiating for post 2022?

Sure. We reiterate that 10 or more centers certainly is going to get us to self-sufficiency. But I think as I've said previously, things may change, but why do they also stay the same. And the one thing I can say is I think it's good practice to have multiple suppliers, especially for your raw material. You never know when you're going to have an issue at a center, you never know when you're going to have a weather event, you never know when you're going to have some sort of outbreak. You just never know what's going to happen. So certainly, the goal is to rely heavily on internal supply, and that's the goal. You may have heard in my comments, we're exploring all potential alternatives to minimize dilution for shareholders here. So be it strategic, be it speaking with debt lenders, thinking about equity, whatever it may be. I think investors, acquirers, they want to know that you've got the capabilities to be self sufficient. We will have the capabilities to be 100% self sufficient. But the right thing to do is to bolster your supply with some plasma from third parties. This ensures consistency. It ensures a diverse donor base may come from centers from different geographic regions. And it allows you to also offset by having some contracts to supply plasma to other third parties to generate revenues, where we could potentially pay less from one of our suppliers and charge more to a potential customer. So we just think it's good prudent business practices to do this. Again, our goal to be totally self-sufficient to be able to support that now up to 600,000 liters of plasma fractionation capacity. With that capacity, typical plasma center pre-COVID was collecting about 50,000 liters annually. In light of…

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

Thank you very much, everybody. I just want to thank you for taking the time to listen in. I know it was an interesting Market Day, and we just want to thank you. ADMA Biologics, despite all the headwinds, we continue to deliver for you, our shareholders we continue to drive this. I cannot reiterate enough. Our asset value, as we reported today, $235 million is greater than where our market cap is today. We truly believe that this is an undervalued asset, and we're going to continue to create value for you and unlock this throughout the rest of the year. Donate plasma, get vaccinated, help save some lives. Visit www.admabiocenters.com to see where our plasma collection centers are. And if there's one near you, we'd love to see you as a donor. Stay healthy and safe, and we appreciate you all very much. Have a good afternoon.

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