Good afternoon, and welcome to the ADMA Biologics Second Quarter 2023 Financial Results and Corporate Update Conference Call on Wednesday, August 9, 2023. Please be advised that this call is being recorded at the company's request and will be available on the company's website approximately two hours following the end of the call. At this time, I would like to introduce Skyler Bloom, Senior Director, Business Development and Corporate Strategy at ADMA Biologics. Please go ahead.

Welcome, everyone, and thank you for joining us this afternoon to discuss ADMA Biologics' financial results for the second 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 an update on corporate progress, and then Brian will provide an overview of the company's second quarter 2023 financial results. Finally, Adam will then provide some brief summary remarks before opening up the call for questions. Earlier today, we issued a press release detailing the second quarter 2023 financial results and summarizing certain achievements in recent corporate updates. This 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 as well as 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 quarter ended June 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 and adjusted net loss. A reconciliation of these non-GAAP financial measures to the nearest comparable GAAP metric is available in our earnings release. With that said, I would now like to turn the call over to Adam Grossman. Adam?

Thank you, Skyler. We're proud to report that we continue to rapidly grow our adjusted EBITDA base, which during the second quarter totaled $6.4 million, representing 160% sequential growth compared to the first quarter of 2023. This accomplishment was facilitated by an impressive 77% year-over-year increase in total revenues, which reached $60.1 million in the second quarter. This robust revenue growth has resulted in meaningful operating leverage, underpinned by continued gross profit growth and disciplined management of operating expenditures. Based on the strong momentum established year-to-date, we are now raising fiscal year 2023 total revenue guidance to more than $240 million, upwardly revised from the $220 million previously provided. Additionally, we remain confident in sustaining our growth trajectory in adjusted EBITDA throughout the remainder of 2023 and beyond. The encouraging business trends and compelling forward-looking indicators have enabled ADMA to increase fiscal year 2024 and fiscal year 2025 total revenue guidance to at least $275 million and $325 million, respectively, and otherwise reiterate confidence in meeting or exceeding all profitability targets. In our view, ADMA's year-to-date financial results, combined with the increased financial guidance, place ADMA among only a select few stand-alone biopharma companies with comparable revenue growth profiles and adjusted EBITDA generation. We believe this financial profile, coupled with ADMA's unique asset scarcity value, positions the company amongst an elite biopharma peer group. Our continued success in the growing USD 10 billion immunoglobulin end market is attributable to our innovative business model, unique product portfolio, targeted medical education efforts, and most importantly, our core focus on treating underserved immune-deficient patient populations. Since launching commercially, ADMA has been unwavering in its specialized focus on the primary immune-deficient patient population. We believe it is this concentration that has enabled ADMA to maintain its position as the fastest-growing provider of immune globulin in the United States marketplace. During the second quarter, we treated a record number of primary immune-deficient patients and gained strong market share, paving the way for promising new business prospects and expected go-forward success in this market segment. Our evolving product mix continues to maintain its favorable and strengthening trajectory in 2023. We believe the growth of ASCENIV is driven by its unique composition and utilization among immunoglobulin therapies and its real-world evidence to improve outcomes for at-risk immune compromised patients with primary immunodeficiency, or PI. The value proposition of ASCENIV within the immune globulin landscape was further articulated during our presence at the 2023 Clinical Immunology Society Annual Meeting, which took place during the second quarter. At this meeting, ADMA sponsored a well-attended medical education symposium presented by a nationally recognized key opinion leader, who spoke about the real-world challenges associated with respiratory viral infections in patients with PI. Despite the availability of standard immunoglobulin therapies, experts noted that more than 90% of patients with PI continue to experience recurrent infections and associated complications. Clinical data presented at the CIS meeting highlighted that more than a third of this population continue to experience bronchiectasis, along with a rapid decline in lung function, adversely impacting outcomes and causing quality of life issues for patients and their families. Of particular significance, certain patients with PI exhibit T cell defects and thus can experience prolonged respiratory viral infections that present risks for bacterial superinfections and poor outcomes. The real-world case report presented an at-risk patient that was successfully treated with ASCENIV. We are encouraged to see the unique product profile of ASCENIV continues to resonate in clinical practice and real-world settings. Along these lines, we are seeing signs of patient and prescriber persistence bolstered by a record expansion of new accounts and reorder prescribing velocity among existing customers. We anticipate that this therapy will continue to capture an even greater share of our overall product portfolio mix over the coming periods and beyond. During the second quarter and in recent periods, we made progress in advancing growth opportunities that will, if successful, further enhance our position in the market and increase our potential earnings power. One such opportunity is the recent successful advancement of multiple ASCENIV batches through production at the expanded 4,400-liter manufacturing scale. This expansion is expected to improve the product's margin profile and increase plant production throughput capacity, supporting our forecasted rapid growth trajectory. We anticipate these benefits may be realized beginning later in 2023 and into 2024 and beyond. Secondly, the advancement of our yield enhancement initiatives is showing promise. The company has made progress with development scale and laboratory analysis with the potential to increase both peak revenues and margin potential upon the successful validation of commercial scale production and receipt of requisite regulatory approvals. The impact of yield enhancement initiatives, if successful, could provide for potentially transformative upside to the company's peak financial targets. Finally, our ongoing post-marketing clinical studies are progressing well and may provide label expansion opportunities, further strengthening our product portfolio compared to our immune globulin peers. As we have detailed in today's press release, I'd like to reiterate that the increased revenue guidance we have provided does not yet include any potential upside from these growth initiatives should they materialize. We look forward to updating the market on these developments. On the normal source and RSV plasma supply front, we believe we are well prepared to support all upwardly revised revenue forecast for our immunoglobulin portfolio. The rapid expansion of our Biocenters collection network in addition to our contractually secured third-party supply contracts provide us with the financial and supply chain flexibility needed to meet our immune globulin portfolio's growing end market demand. Currently, all 10 collection centers in our network are operational, with 9 now FDA licensed. We anticipate achieving complete FDA licensure before year-end 2023 for our tenth collection center, after which we believe we will have established cost-competitive plasma supply self-sufficiency. As we reflect on our journey and the milestones we've achieved, it becomes evident that ADMA's success is a direct result of the unwavering dedication and hard work exhibited by our exceptional employees. It is with great appreciation that we recognize the commitment, passion, and diligence that each team member brings to the table, driving our organization's triumphs and enabling us to take complete control of operations aligning with our core vision. We believe this solid foundation paves the way for even greater expected success in the future. We extend our gratitude to the entire ADMA Biologics and ADMA BioCenters teams for your relentless efforts you put in day in and day out. Your remarkable contributions not only fuel our accomplishments, but also make a meaningful difference in the lives of those who rely on us. It is the collective spirit and teamwork that make our workplace truly exceptional. With this said, I'd now like to turn the call over to Brian for a review of the second quarter 2023 financials.

Thank you, Adam. We issued a press release earlier today outlining our second quarter 2023 financial results, and we will be also issuing our second 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 will now discuss some of the key highlights from the second quarter. As Adam mentioned earlier, total revenues for the three months ended June 30, 2023, were approximately $60.1 million as compared to $33.9 million during the three months ended June 30, 2022. This represents an increase of $26.2 million or approximately 77%. The increase is attributed to our higher sales of our immunoglobulin products driven by increased physician, payer, and patient acceptance and utilization as well as expansion of our customer base. The growth in product revenues during the quarter was partially offset by a $1.4 million decrease in third-party plasma sales from our BioCenters business segment, and this was consistent with our expectations in the context of fulfilling our long-term plasma supply agreement during the first quarter of 2023. Our gross profit for the three months ended June 30, 2023, was $16.7 million as compared to $7.8 million for the same period of a year ago, and this represents an increase of $8.9 million. As a result of this increase, ADMA achieved a gross margin of 27.8% in the second quarter of 2023 as compared to 22.9% in the second quarter of 2022. Importantly, accounting for an estimated $2.1 million impact on a second quarter cost of goods sold pertaining to an IT disruption, which the company took responsive steps to rapidly remediate and normal course production and operations have resumed across our business units, ADMA estimates second quarter 2023 contemplated gross margin would have been 31% to 32% on a normalized basis. We believe the pathway is well paved to continue to grow gross profits over the coming periods. Our consolidated net loss was $6.4 million for the second quarter of 2023 as compared to $13.8 million for the second quarter of 2022. The $7.4 million decrease in net loss was mainly due to the narrowed operating loss of $8.7 million attributable to the increased revenues, gross profit and the increase of interest income of $0.4 million, partially offset by the $1.7 million increase in interest expense. Adjusting for $2.8 million in total of nonrecurring charges related to the IT disruption, our adjusted net loss was $3.6 million for the second quarter of 2023, a significant period-over-period improvement. ADMA grew adjusted EBITDA to $6.4 million for the three months ended June 30, 2023, as compared to an adjusted EBITDA loss of $6.3 million for the same period of a year ago. The adjusted EBITDA improvement was driven primarily by increased sales and gross profit. We anticipate continued adjusted EBITDA growth throughout this year and beyond. ADMA's balance sheet remains strong. At June 30, 2023, ADMA had working capital of $224.3 million, primarily consisting of $161.8 million of inventory, cash and cash equivalents of $62.5 million and $36.7 million of accounts receivable. This was partially offset by current liabilities of $42 million. Lastly, our ADMA BioCenters network now consists of 9 FDA licensed collection centers with 1 final center operational and collecting plasma which is pending FDA licensure anticipated for year-end 2023. In the same period, we forecast raw material plasma supply self-sufficiency from all 10 of our centers. We remain encouraged by the real-time improvements in donor foot traffic and collection volumes, which continued to achieve record all-time highs, and we remain considerably above our organization's pre-pandemic levels. With that, I'll now turn the call back over to Adam for closing remarks.

Thank you, Brian. The company's growth and business trends are stronger than ever, and we believe our forward-looking visibility allows us to confidently meet or exceed our newly increased financial targets. With a solid foundation in our supply chain and commercial infrastructure, we anticipate maintaining best-in-class revenue growth and potentially achieving an ultimate margin profile at the upper bound amongst our IG peers. In the immediate period ahead, we expect to grow adjusted EBITDA and advance towards net income profitability. We are additionally committed to thoughtfully pursuing new growth opportunities, and we are optimistic about the potential they hold for further enhancing our profitability over the near and longer term. We are excited to build on the momentum of the second quarter of 2023 and to drive further success and stockholder value. Although ADMA terminated its financial advisory agreement with Morgan Stanley, the evaluation of strategic business alternatives remains ongoing and a top corporate priority for the company. Thank you for your continued support and trust in the company. We look forward to our journey ahead. I would like to thank you, our stockholders, for your continued support as 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, I'd now like to open up your call for questions.

Our first question comes from Gary Nachman with Raymond James.

Good afternoon, it was a strong quarter and we have raised our guidance. It's great to be here. Adam, could you elaborate on the uptake of ASCENIV? Specifically, what types of patients are being treated with it and what is the reimbursement situation considering its higher price point? Additionally, what is the persistence among both patients and physicians that you mentioned? Can you share what portion of revenue currently comes from ASCENIV compared to BIVIGAM? Also, what initiatives do you have in place to further increase the uptake of ASCENIV?

Thank you for the great questions. There's a lot there, so I hope I touch on everything. To answer your third question first, roughly about a third of the revenue is coming from our higher-margin products. We're seeing sequential growth quarter-over-quarter and increased uptake. We tried in the prepared remarks to emphasize that we're really trying to delineate that these are primary immune-deficient patients. These are people diagnosed with one or more forms of immune deficiency. Some patients may even be medically immune compromised. They have co-morbidities, risk factors, T-cell issues, and bronchiectasis, increasing the risk of respiratory viral infections. These patients are typically on standard immunoglobulin therapy but don't seem to do that well. They continue to have problems and miss days of work and school. Prior to ASCENIV, there was no alternative for these patients, just standard IVIg, switching from one brand to another. ASCENIV really offers the first type of product made in a unique way that's protected by our patents. We use plasma collected from donors tested to have high titers to certain respiratory viral pathogens and then blend the plasma making a product with a differentiated antibody profile. I can tell you, Gary, that the data shows we're seeing improved outcomes in these patients. Patients are durable, staying on therapy for multiple years. We're in our third year since the commercial launch of the product. It's been a grassroots effort, and we're observing more rapid uptake. You asked about payers and reimbursement; we're not seeing challenges there. Patients with documented persistent and chronic infections often cost the system a lot of money because they're hospitalized one or more times per year. The pharmacoeconomic rationale is gaining momentum. Since every IVIG has a unique J-code, reimbursement is being received for the product. We're penetrating existing accounts; once clinicians see the results in their challenging immune-deficient patients, they're willing to try the product in additional patients. We're seeing rapid utilization and a more rapid uptick quarter-over-quarter. ASCENIV is still in the early innings. In the primary immune-deficient market, roughly 250,000 to 500,000 people are diagnosed with one or more forms of primary immune deficiency, and we feel that about 10% to 30% of these could be our target market. Tens of thousands of patients remain untapped. We're now making ASCENIV at the 4,400-liter scale, so the margins you're seeing today are from product we made last year. As we’re looking at our yields and efficiency, we think we’ve got wind at our backs. We feel really confident that the drug is doing what we intended. We have focused on the primary immune-deficient market since the company was founded, recognizing an unmet medical need 15 years ago. We’ve seen the benefits of that today. We are proud of being the vocal champion for the immune-deficient population that typically lacks a voice. I hope I touched on most of your question.

Just a quick follow-up. When you consider the raised guidance for this year and then for '24 and '25, what are you factoring in the mix in terms of ASCENIV and BIVIGAM in that guidance? Is it one-third and two-thirds? And can you provide context around the magnitude of potential upside from a greater mix shift to ASCENIV and also the label expansion opportunities and yield enhancement? Are you limited in any way with your plasma supply if you can achieve some of those other targets?

Great questions, Gary. Historically, we said our higher-margin products, ASCENIV and Nabi-HB, represent a 70-30 split between BIVIGAM as the primary revenue driver and ASCENIV and Nabi sharing a smaller share. We’re seeing increased utilization of ASCENIV and moving closer to a 65-35 split. We're seeing growth on all sides, so it's not fixed. There is potential to get to a 60-40, and maybe even a 50-50 split in the future. Roughly about 10% of plasma donors have the antibody profile we're looking for ASCENIV batches. We have 10 collection centers open and collecting plasma, and we're controlling which donors come in. We're running promotions and strategies for recruiting donors with the right antibody profile. We're implementing testing in-house as well, which will expedite donor identification and reduce costs. The plasma collected for ASCENIV exceeds 10% of our overall collections. We still believe ASCENIV has an 80% margin, which could improve to 90% plus. You touched on yield enhancement strategies, and while we won't specify how much, we think this could lead to potentially transformative upside to our financial targets. The guidance provided today does not factor in increased yields or a greater mix of higher-margin products. We intentionally set our guidance conservatively, as we prefer to exceed expectations. There's substantial potential for upside. However, achieving goals in biologics does take time. We have work ahead to create conformance batches and collect stability data, and we believe we have a lot of upside to our profitability metrics that are not yet reflected in our guidance.

Our next question comes from Anthony Petrone with Mizuho.

Congrats here on another great quarter, really kind of just looking at the history now, I think six quarters of consistent growth and raised guidance. So great to see, and congratulations to the team. Maybe, Adam, we hosted an immunologist call a few weeks ago just exploring the use case for ASCENIV, and a few interesting data points came out of that call. One is that, in particular, in this individual's practice, they are actually seeing benefits in these patients where they were refractory to traditional immunoglobulin. So maybe from the company standpoint and anecdotally, when you think about these complex immune-deficient patients, that are susceptible to follow-on respiratory infections, they're complex, and they're not responding to immunoglobulins. What are you hearing from a broader set of your immunologists that are treating these patients? So that would be the first question. And the second question is one of the data points that came out of that call is perhaps there needs to be more physician education around the benefits of ASCENIV in order to unlock really having this product reach more of these complex patients. What is the go-to-market strategy here now that ASCENIV is sort of becoming a go-to solution?

Thanks, Anthony. Great question, and I appreciate your continued support. The easiest answer I can give you is that patients are doing very well on ASCENIV. That has been our story since the beginning. Building it one patient at a time, the durability of the drug, increasing revenue, and positive financial metrics all support that ASCENIV is improving outcomes for these patients. To address the second part of your question, we have affected lives. Our staff, ADMA employees, and others have seen the emails from patients and prescribers about positive outcomes. Many IVIGs require prior authorizations, and while payers may have a higher cost approval process for ASCENIV, we see acceptance with appropriate documentation. Again, reimbursement is ongoing for patients who truly need the product. We are grateful for patients who want to become ambassadors for the drug. We’re making investments in marketing and education efforts for both physicians and patients, and we're enhancing outreach to advocacy groups to provide information for those facing primary immunodeficiency. This will improve awareness of ASCENIV's availability. Although we won't need a large commercial force, we’ve grown our team to about 35-40 people and are hiring strategically. Our medical education efforts and the engagement of our scientific communications group to include patient advocacy are enhancing outreach. We’re excited to showcase real-world treatment journeys for potential patients on ASCENIV. We have noticed that patients who are transitioned to ASCENIV from other IVIG treatments achieve improved outcomes. We are proud that we are the first to create drug delivery in this manner and are excited about the future for ADMA and our patients.

That's very helpful. And just two quick follow-ups. One would be on pipeline; just curious, we haven't heard anything on subcutaneous versions of BIVIGAM and ASCENIV. Is that in the cards at some point? And then Brian, just on plasma supply, we're at 10 centers in total, and 9 have FDA clearance. Is 10% kind of the right number? Or when you look out over the next 2 to 3 years, do you think that the plasma network collection base grows beyond the 10 we’re at today?

Thanks, Anthony. So I’ll start by saying we have IP in our armamentarium, and when the time is right, we’ll let you know about subcutaneous options. But right now, we're laser-focused on market penetration and maximizing efficiencies for ASCENIV. We're producing more product than ever at the 4,400-liter scale, and I believe we have substantial upside available. Our guidance continues to strengthen, and it's encouraging to see that we reached a $60 million quarter, something that was previously unattained. Our next steps involve building on our successes, improving operational efficiencies, and focusing on yield enhancements to maximize margins. I'll turn it over to Brian to address the question on the plasma centers.

Sure. Thank you, Adam. Regarding your question on the number of plasma centers, our centers are performing much better than expected. We're encouraged by the positive trends, including daily and weekly record collections. We're also realizing efficiencies, including lower donor fees and higher collection rates. However, we don't plan to add more than the existing 10 centers. All centers are already operational. We received FDA approval for our ninth center and anticipate approval for the final center by year-end. Our current focus remains on achieving plasma supply self-sufficiency while optimizing operations within this framework.

Our next question comes from Kristen Kluska with Cantor Fitzgerald.

Congratulations on another really solid quarter here. First question I have is maybe something I didn't really fully appreciate about the story is that the KOL community and treating physicians are a lot more tight-knit than I expected. So just given that you've continued to showcase your data and findings and just the word of mouth around these positive case studies. I wanted to ask how much of the trading community you estimate is aware of the added benefits that ASCENIV is showing here? And then looking into the next two years or so, anything beyond your guidance that you're working on in terms of getting the word out more, like conference appearances or the potential patient representatives as well?

Sure. Thank you, Kristen. You may have been present at the CIS conference, which showcased that while there are several key opinion leaders who control a large portion of the primary immunodeficiency population, we believe there's ample room for growth. We think many more clinicians and prescribers are just beginning to learn about ASCENIV. As part of our strategy, we have also started running print advertisement campaigns targeting prominent immunology journals, recognizing that clinicians are still receptive to traditional marketing channels. ASCENIV is becoming recognized as synonymous with the immune deficiency landscape. There's tremendous potential for further penetration among existing prescribers. Many prescribers have a significant percentage of their patient population that have co-morbidities. As we continue publishing more data and the pharmacoeconomic impact grows clearer, we foresee additional growth acceleration at current institutions. Your other question regarding subcutaneous forms is pertinent; while we don't plan to pursue subcutaneous routes currently, we have seen interest from other clinicians. We've heard feedback from prescribers who are learning and exploring ASCENIV's benefits in novel applications. We have considerable room for expansion and improvement.

Yes, it does. Thank you. And then you noted with ASCENIV that you're not really having too many challenges, but I'm curious if you can comment on the trends at the provider level in terms of provider consistency, and how do you work with those providers who may have more questions and could be hesitant?

We have a great market access team and patient assistance program. Data shows that many IVIGs require prior authorization. It's not uncommon for payers to ask for extensive information from prescriber and patient. Our coverage is encouraging. The mix between public and private payers is about 50-50. In many cases, ASCENIV is utilized later in a patient’s treatment journey after patients have failed several other therapies. We aim to be the last line of defense for patients who truly need an alternative therapy. This trajectory is resonating among patients and their families, and we are committed to making a difference in their lives. We prioritize patient outcomes and the benefits of ASCENIV in discussions with prescribers and payers alike. We've invested in outreach to advocates and community groups, working with them to raise further awareness of the opportunities available at ADMA and improve the lives of our patients. Thank you, everyone, for your interest, attention, and time. I appreciate you dialing into the call. Again, we're still in the early innings. I think there’s a lot of upside here, and we appreciate your continued support. Donate plasma, help save lives by visiting admabiocenters.com. Please visit one of our 10 collection centers that may be near you and stay healthy. Have a very great evening. We appreciate you.

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 remarks.

Thank you, everybody.

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