Good afternoon, and welcome to the ADMA Biologics Third Quarter 2023 Financial Results and Corporate Update Conference Call on Wednesday, November 8, 2023. At this time, all participants are in a listen-only mode. There will be a question-and-answer session to follow. Please be advised that this call is being recorded at the company's request and will be available on the company's website approximately two hours following the end of the call. At this time, I would like to introduce Skyler Bloom, Head of Business Development 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 third quarter of 2023 and recent corporate updates. I am joined today by Adam Grossman, President and Chief Executive Officer; and Brian Lenz, Executive Vice President, Chief Financial Officer and General Manager of ADMA BioCenters. During today's call, Adam will provide some introductory comments and provide an update on corporate progress, and then Brian will provide an overview of the company's third quarter 2023 financial results. Finally, 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 third quarter 2023 financial results and summarize certain achievements in 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 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 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 2022 Annual Report on Form 10-K for the year ended December 31, 2022, as well as our quarterly report on Form 10-Q for the third quarter ended September 30, 2023, for a discussion of important factors that could cause actual results to differ materially from these forward-looking statements. Please note that the discussion on today's call includes certain non-GAAP financial measures, including adjusted EBITDA. A reconciliation of the non-GAAP financial measures to the nearest comparable GAAP metric is available in our earnings release. With that, I would now like to turn the call over to Adam Grossman. Adam?

Thank you, Skyler, and welcome, everyone. We are pleased to present a number of firsts today, with strong financial results for the third quarter of 2023, which underscore both our unwavering commitment to the continuity of patient care and steady financial execution for our stockholders. Total third quarter revenues reached $67.3 million, representing an impressive 64% growth rate year-over-year. This rapid growth enabled a 98% quarter-over-quarter increase in adjusted EBITDA to $12.7 million. Furthermore, it gives me great pleasure to announce that for the first time in ADMA's history, we are profitable with GAAP net income reaching $2.6 million during the third quarter. We also generated positive free cash flow for the first time in corporate history, totaling $11.6 million during the quarter. These milestone results are a testament to the efficiency of our organization and our relentless focus on maintaining top tier revenue growth, while judiciously managing expenses. We fully anticipate this positive trajectory will continue to drive earnings growth for the foreseeable future. Building on the momentum we've established this year, we've revised our total revenue guidance higher yet again for fiscal years 2023 through 2025. We now anticipate generating revenues during these periods of more than $250 million, $290 million, and $335 million, respectively. Our company's success in carving a solid niche in the $10 billion immunoglobulin end market. It is a direct result of our innovative business model, diverse product portfolio and our targeted medical education, marketing, and market access initiatives. We remain the fastest growing provider of immunoglobulin in the U.S. marketplace with a specialization in treating immune deficient patients. Specifically within the later line at risk primary immune deficient patient population segment, ASCENIV continues to make significant inroads in the third quarter leading ASCENIV demand metrics hit all-time highs across the Board. We are…

Thank you, Adam. We issued a press release earlier today outlining our third quarter 2023 financial results, and we'll be also issuing our third quarter 10-Q later this afternoon, which we would encourage you to read in conjunction with our comments and discussion points we will make during today's call. I'll now discuss some of the key highlights from the third quarter. As Adam mentioned earlier, total revenues for the three months ended September 30, 2023, were approximately $67.3 million as compared to $41.1 million during the three months ended September 30, 2022. This represents an increase of $26.2 million, or approximately 64%. The increase is attributed to higher sales of our immunoglobulin products, driven by increased physician, payer, and patient acceptance and utilization, as well as the expansion of our customer base. The growth in product revenues during the quarter was partially offset by a $3.1 million decrease in third-party plasma sales from our BioCenters business segment, which was consistent with our expectations in the context of fulfilling our long-term plasma supply agreement during the first quarter of 2023, while also providing a significant supply of normal source and high titer plasma to our Boca facility for the manufacturing of the ASCENIV and BIVIGAM as we migrate toward plasma supply self-sufficiency. Gross profit for the three months ended September 30, 2023, was $24.7 million as compared to $9.7 million for the same period of a year ago. And this represents an increase of $15 million, which is attributed to selling more of our higher margin product ASCENIV during 2023 as compared to 2022. As a result, ADMA achieved a corporate gross margin of 36.6% in the third quarter of 2023 as compared to 23.5% in the third quarter of 2022. We believe the pathway is well paved to continue…

Thank you, Brian. ADMA's business prospects and company morale have never been higher. All systems and teams are working in concert across our organization. We are committed to finishing 2023 on a high note and entering 2024 from a position of strength. 2023 with all of its challenges is truly proving to be a banner year for the entire organization. With ADMA's cash holdings growing to $74.2 million during the third quarter and adjusted EBITDA annualizing at more than $50 million, we have established a strong foundation from which we anticipate continuous growth in both revenues and profits. Our ongoing corporate initiatives, particularly those centered on enhancing immunoglobulin manufacturing yields have the potential to further accelerate ADMA's growth outlook and peak earnings potential. We believe that our financial achievements and growth outlook position ADMA as a distinguished player among standalone biopharma companies with substantial barriers to entry in the United States immunoglobulin market and a robust intellectual property estate. In the case of ASCENIV, we are confident in our ability to deliver one of the most durable earnings growth stories in the biopharma industry. Our accomplishments in the third quarter of 2023 reflect our commitment to patient care, financial growth and market leadership. We are enthusiastic about the opportunities ahead and our dedication to delivering value to our stockholders and patients. Thank you for your continued support and trust in the company. We wholeheartedly appreciate those of you who have supported us through this journey and we are committed to delivering for you in the periods to come. Your investment in ADMA helps to advance our mission to save lives and make high quality, safe and efficacious products that help our friends, family and neighbors. Please donate plasma and help save lives. With that, we will now open up the call for your questions. Operator?

Thank you. [Operator Instructions]. Our first question will come from Kristen Kluska of Cantor Fitzgerald. Your line is open.

Hi, good afternoon, and congrats on achieving the profitability. This came quite a few quarters ahead of your internal goals, so great job with that.

Hi, Kristen.

Again, so one question that we've been getting a lot lately, and I think it'd be great to hear your comments on, is just around IP and protect protection around ASCENIV, it's clearly served as a highly differentiated product contributing to a lot of success. So can you talk about what you're doing and what you've done to protect that, please?

Absolutely. Thank you, Kristen. And it's been a while since I've actually been asked this question. This was a question from back in the days of the IPO, but we have issued patents for ASCENIV, and there's an entire IP estate, which covers the composition and the use of the product. The main IP is around the identification and selection of the plasma donors [Technical Difficulty] the plasma pools, in order to ensure that there is some consistency in the anti-RSV antibody levels in the final product. So this IP has been issued. I believe the patents run into 2035. Yes. I did not anticipate the question, Kristen, but we do have IP protection here. And look, we -- this is not a secret. A number of the things that we do are protected by trade secrets. A number of the things that we do have issued IP for. But the drug in its form, formerly known as RI-002 was in clinical trials back in 2012, 2013, 2014. And here we are in essentially almost 2024. And there is no competitive threat looking at a product like ASCENIV with the unique antibiotic profile that this product has because of the unique donors that we use to make the drug. So we feel very good about our positioning. We feel very good about our place in the market. And again, there are no competitive threats that we're aware of that will be able to make the same compositional claims that we do with ASCENIV.

Okay. Thanks for that. And it wasn't that long ago that you were guiding to the Street that the peak revenues you think the company could produce would be over $250 million, $300 million. And now those numbers look small relative to what you're seeing potentially for 2024 and 2025. So we ask this every earnings call. I recognize that. But I think it'd just be really helpful to truly understand like what has really changed over these last few quarters that give you such a high degree of confidence that you can even guide revenues to the Street through 2025. Thanks again.

Thanks, Kristen. Its -- you're asking a different question than you've asked before. I mean, what's changed? Nothing's changed. Everything's working. It's working the same way that it has been for the last couple of years. It's the medical education strategy, it's the marketing campaigns, it's the conversations with payers, it's our sales force, it's everybody that works at the company. It's all the little things that we do come together in such a way that people are responding positively. And I think that you see this with lots of products who have early -- going back to my days as a marketing student in college, there are different lifecycles that a product goes through. And you have early adopters and you have these people who wait online to get the newest and greatest iPhone and they're the first users and they try all the apps and then the bugs get fixed and then more people start buying it and then you have the mass appeal. And I guess I would say that we're probably in that stage where the early adopters have worked very closely with our organization and we published a lot of articles around the real world clinical benefits that folks are seeing in these problematic immune deficient patients. We've been spending more money on marketing and medical education post-COVID now that everybody's getting back into the real world. I mean its -- yes, people are still getting sick, but I think people are not afraid to travel to these conferences. We're seeing record attendance at the shows that my teams are present at. And we've invested and built a medical educational speakers bureau that are all throughout the regions of the United States. And I think when patients do well and they're advocating and they're lending…

Thanks, Adam.

Thank you, Kristen. Safe travels.

Thank you. And one moment please, for our next question. The next question will come from Anthony Petrone of Mizuho Group. Your line is open.

Hey, Anthony.

How are you, Adam? Thanks, and congratulations another good quarter. I was on the second quarter 2020 earnings call and turned the page a few years, and it's a huge difference. You have in a press release, Adam, that your prescriber base and patient base for ASCENIV continues to grow. You're getting at net new prescribers as a common statistic out there for therapeutics companies as well know NRx statistics. Can you disclose I guess kind of where those are trending broad strokes? How many new prescribers are coming on Board each quarter, I guess on average? And maybe what percent of this target comorbid primary immune deficient market do you think is penetrated by ASCENIV at this point? It seems like we're just getting started here and then I'll have a couple thoughts for Brian.

Thanks, Anthony. We are expanding the depth of our products penetration and our medical messaging, and that's really what is translating into this accelerated growth. There are more prescribers. And again, I think it goes back to the answer that I had to Kristen's question around the early adopters and the prescribers that are out there. I mean, look, the best way to convince a physician to use a drug is another physician telling them, my patients have done well on this drug, plain and simple. I mean, I can hire all the reps and all the medical affairs people and I can put my name and lights all I want, but when a colleague is at a symposium or at a medical conference with another colleague and they're saying, hey, do you use this stuff? And they say, I actually do and I like it. That's the kind of advertising and promotion and benefit that you can't buy. It just happens because it's real world. So it's really that people are getting comfortable with the product. There the price is certainly unique for an IG. It's priced on the higher end of the hyperimmune, if you will specialty IG scale. But I think that that the benefits and the outcomes that they're seeing in the real world, people understand why it is what it is. It's special plasma that the drug is made from. And it's only made in this way by ADMA. And I think that really, it's the grassroots marketing effort that we've taken to our story, to our commercial, throughout the commercial launch of the product that really is translating into increased number of patients going on the product. We're really only having these conversations in the immune deficient world that's where we spend our time,…

Absolutely. And the follow-up should be, Brian, maybe a little bit on gross margin here, well above our estimate in the quarter drove the EBITDA beat to some extent here, of course, so a couple of questions. One is you referenced that at least there were some ASCENIV batches that were successfully transitioned to 4,400 liter pool. Are we reading this right that that product can be fully transitioned to 4,400 by the end of the year, early 2024? And if so, what does that do to gross margin? Does that represent upside to this 40% to 50% target in the outer years? Thanks again and congratulations.

Sure. Thank you, Anthony. So regarding ASCENIV, we've certainly seen more upward mobility or more utilization of ASCENIV than we originally forecasted. And with regards to the 2,200 manufacturing batches of ASCENIV transitioning getting FDA approval not long ago to the 4,400 liter batches, they pretty much sold out of the 2,200. The gross margin going from 2,200 to 4,400 is certainly very meaningful. I would say that historically, we were looking at 80% to 85% gross margin per ASCENIV in that 2,200 liter range. Say now we're higher than 85%, probably closer to the upper 80%s some point in time, maybe even low 90% range for ASCENIV as we continue to sell only 4,400 liter batches.

Anthony, it's Skyler. To be clear though, in the third quarter gross margin has been 36.6%. You're not seeing any monetization of the 4,400 liter ASCENIV right. It's on a go-forward basis and it really materially will not kick in until the beginning of next year is the way that we think about it.

Thank you. [Operator Instructions]. One moment please, for our next question. Our next question will come from Gary Nachman of Raymond James. Your line is open.

Hey, Gary.

Hi guys, good afternoon, and very nice quarter.

Thank you.

So first question, how has your contracting been going with the big physician buying groups for both ASCENIV and BIVIGAM? And I want to get a sense of how much visibility you have on how much product you'll be able to supply them. So I'm curious what you see looking into that funnel, when you look out over the next nine to 12 months. And then, specifically, what was the mix for a set of BIVIGAM in the third quarter? And then I have a couple more.

What was the mix? Did we know of the mix?

The mix, historically, we said we'd be in that 75%, 25%, 70%, 30%, and then we would start looking at 65%, 35% and we've really migrated to that 65%, 35%, heading more towards 60%, 40% standard margin BIVIGAM, higher margin ASCENIV that 60%, 40% mix right now.

And I'll say, Gary that, that is conservative. Let's see where we go in through 2024. But that's where we're seeing. I know in the past I've said, is there a chance that you get to 50:50? Probably. Do I know when that is? No, I don't. I put my finger on it. No, but do we get there? Does ASCENIV at some point in time potentially surpass BIVIGAM? Probably. When do we get there? I don't know. But for the time being, for modeling purposes and the guidance that we feel comfortable with, we said 70:30; 65:35, is probably where we are and 60:40 is where we're going to go. The first part of your question was regarding contracting and payer reimbursement. I mean, we're very pleased. I mean, you see the growth between public and private payers. We're very, very happy. Our patient hub, we leverage the patient hub. It's proved very effective and it's been very, very important in the getting new prescribers comfortable and providing patients with some assistance with their co-pays and with other expenses as it may relate to their ASCENIV or BIVIGAM infusions. Again, ASCENIV to the drug for the appropriate at-risk population. Again, they're staying on drug. They have these chronic persistent infections that they wind up clearing, but they have underlying bronchiectasis, they have underlying COPD, they have underlying asthma. On the ASCENIV website, we go through a whole battery of all these different risk factors that patients may have. We're spending a lot of time talking about ASCENIV here, but BIVIGAM is a high flyer. I mean just as soon as it hits inventory, it's out the door. I mean, we've got so many patients on BIVIGAM right now, and keeping up with demand is certainly a challenge. And I'm sure all my staff listening right now is chuckling, but we really can't keep it stock. And we think a lot of this has to do with the fact that there's multiple years now of clinical experience. Payers are seeing that they're using less premedication with these patients and there's less AEs. And there are a lot of interesting differentiating factors about our IG compared with our competitors. And we think that that's really helping us manage the payer, work with the payer well, and from a contracting perspective, again we feel very, very pleased with our current payer address.

Okay. Great. And then, I mean with the consistent positive EBITDA now for a few quarters, and now the positive cash flow, at what point would you consider a debt refinancing? Is that high on your list? When you're looking at --?

Gary, everything's always high on my list. And I know you've been following the company. What is this, your third call, fourth call now?

Second call.

We're always doing everything all the time. Let's just say that I mean we're not stupid. We see the markets there. Look at our financials, look at how they've changed and evolved. I mean we're having conversations all the time with all types of people. This is the answer that we give to you, and this is the answer we give to all of our shareholders when we have our one-on-one calls, we're always having conversations. And I'll just say, stay tuned. We will do the right thing for this business, as I believe that we've done since its founding. And it can only improve from where we are. And I think that we finally flip the pages right, Brian, on EBITDA and on net income. And these are the things banks want to see.

Three quarters of positive EBITDA, total assets $350 million, first quarter of net income, positive cash flow. These are things that lenders, banks like to see, certainly. And we're going to do everything we can, as Adam mentioned, to look at the cost of capital, look at this interest rate that has grown over the year. We have refinanced. We refinanced in May, lowered the overall interest rate 100 basis points. We certainly think there's opportunities to do the same or if not more, in the future as our financials continue to improve over time.

Okay. Great. And last question is just on the patients. What are you doing specifically to try and activate patients? One, first in terms of the donor supply, just to get more donors, specifically for ASCENIV. Are you increasing your incentives now that you see what kind of return you're getting? And then, just also in terms of patients that have been going through the IG treatment, maybe they could then make physicians aware as well. I'm curious if that's an important piece of the puzzle. Thanks.

Absolutely. I mean, look, patients advocate for themselves in 2023 if you're a smart patient and if you're somebody who wants to get better. What we see is that patients are out there advocating for themselves. Gary, if you haven't seen the new additions to the ASCENIV website, there are two patient advocates who tell their story and they talk about how they -- one patient talks about how their doctor said, hey, I learned about this drug at a conference and I think it might be right for you. The other patient said, I learned about this drug, went to my doctor and I said, don't you think this is right for me? So I think that certainly is a big part of this. We have -- look, we're a smallish company, but we are spending more time marketing to patients. We are working much more closely and in a much broader capacity with the patient advocacy groups Immune Deficiency Foundation, Jeffrey Modell Foundation, amongst others. And we think that that certainly is helping add to the growth for ASCENIV. What was the first part of your question?

Donors.

Oh, donors, yes, yes, yes. I mean, look, do we pay our donors more? I don't know if donors are listening. I don't think we are paying them that much more right now. There is a plethora of plasma donors out there today. Donor fees are coming down across the Board. Brian certainly can speak more specifically to that in a moment. But I've talked about this, I think in past calls, and it's funny that you asked the question, Gary, because maybe I had a management team meeting with everybody at the company this week and we're talking about how we've got testing up and running in-house here for RSV donor screening and that certainly is going to help expedite the accessioning of these donors, the identification of which donors in our collection center network have the highest levels of neutralizing antibodies to RSV in the panel of respiratory pathogens that we look for. And what I can tell you is that part of our supply chain robustness in owning our own centers is we can choose which donors we're collecting plasma from. So we're not saying that our third-party providers have not been great. They've been fantastic. And we love you all, and we hope you keep selling us good, high quality plasma. But if you work for ADMA, I have more control over what you do, plain and simple. I don't care about sending it to somebody else. I don't care if it has to go into that box. I want it where I want it, and that's what I want. So we can easily ensure that we get every single RSV high titer donor that we identify in testing. That is not something that I can say with our third-party vendors. We lose donors. Every unit…

Just to add on a bit about the plasma centers, we're very pleased with the exponential growth. It was just a few years ago back in 2020, when we embarked on a supply chain robustness initiative where we only had one center. Back in 2020, we had three centers that were collecting and one center that was FDA approved. Fast-forward to 2023, we now have 10 centers collecting with nine FDA approvals, and the last center we're hoping to receive FDA approval by the end of the year. So again, we're very pleased with the exponential growth. We'd like to thank our BioCenters employees for the ramp up and the expansion, as well as our donors who go and donate because we couldn't do what we do without you.

Absolutely. Excellent. Thank you for all that detail. That was really helpful.

Thanks, Gary.

Thank you. This will conclude the Q&A portion of the conference. I would now like to turn the conference back to the CEO, Adam Grossman, for closing remarks.

Thanks, everybody. It's been a hell of a journey to get here for those of you who've been here since the beginning, thanks for sticking around. For those of you who are joining us now for the first time, welcome. I really mean it when I say it to all my staff; I'm getting tons of texts here. You all matter. You all make a difference in the lives of all these patients. To all the shareholders, nice texts and messages that we've received. Thank you very much. There's only one time in a company's history that you can say that your first time net income positive. So this is the collaborative efforts of many, many people. Thanks for outing faith in mine, my father's vision. It makes me a little bit emotional to think about it. But look, we're going to keep doing what we say. We're going to keep under promising and over delivering, and donate some plasma, take your vaccines, wash your hands, use PURELL, keep the world a safe place. And thank you for everything that you do. We appreciate your time and commitment to ADMA Biologics. Have a good evening, everybody.

This concludes today's conference call. Thank you all for participating. You may now disconnect and have a pleasant day.