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 summarizing 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 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 seeing record new ASCENIV patient starts and promising persistence and adherence trends as certain patients progress through their third year on therapy. Equally encouraging, ASCENIV's prescriber base is expanding, and we anticipate this will further compound the growth among existing prescribers and institutions. The value proposition of our product offerings was highlighted at the Annual 2023 IDWeek International Conference, where ADMA sponsored a symposium with two national clinical experts. First among these opinion leaders was Dr. Aliyah Baluch, who discussed the heightened severity of respiratory viral infections or RVIs in immune compromised patients with up to 80% mortality risk in some cases. Dr. Baluch emphasized the lack of standard RVI management approaches leading to an unmet need and further touched on emerging therapies. Additionally, Dr. Jolan Walter highlighted the evolving approach to managing infectious diseases in immune compromised patients, focusing on RVI management. She introduced ASCENIV, a unique intravenous immune globulin with increased antibody titer levels against respiratory pathogens. Dr. Walter presented a case where ASCENIV effectively managed recurrent respiratory infections that were unresponsive to standard immune globulin therapy and shared her own real-world experience demonstrating the drug's clinical impact in this setting. All told, we are encouraged to see ASCENIV's unique product profile continuing to resonate in clinical practice and the real world setting. The therapy is accelerating demand trends, and healthy growth attribution continually catalyzes us to favorably rethink the ultimate size of the market opportunity. We reiterate that we believe we are in the early innings here with the product's total potential. Turning to our 2024/2025 corporate growth initiatives, all activities continue to progress as planned. We have successfully expanded ASCENIV's production to the 4,400-liter manufacturing scale, enhancing the product's margin, yield, and capacity. We expect to realize these profitability benefits beginning late in the fourth quarter and more materially in 2024. Additionally, our post-marketing clinical studies are progressing well and may lead to label expansion with a potential pediatric age group, if successful, further strengthening our product portfolio. Our excitement continues to build as we see the potential impact of our manufacturing immunoglobulin yield enhancement initiatives. During the third quarter, we made significant strides in scaling up our processes and conducting laboratory bench scale runs and analysis. If ultimately successful, we believe enhanced production yields will be transformative in providing increased finished goods output, which would substantially increase ADMA's peak revenues and earnings potential. While it's important to note that these opportunities won't have a potential financial impact until 2025, we cannot overemphasize our enthusiasm for the promising benefits this opportunity offers on both the top and bottom lines. On the plasma supply front, we are confident in our ability to meet the increased production to our class for our immunoglobulin portfolio. Our BioCenters collection network expansion, in addition to our contractually secured third-party supply contracts, provide us with the flexibility needed to meet the growing end-market demand for ADMA's immunoglobulin product portfolio. Currently, all 10 collection centers in our network are operational, with nine already FDA licensed, and we anticipate achieving FDA licensure for our 10th and final collection center by the end of this year, with plasma supply self-sufficiency also expected by year-end. Reflecting on ADMA's journey, it's become evident that our success is a direct result of the unwavering dedication and hard work exhibited by our exceptional staff members. Our remarkable transformation from a virtual clinical stage biotech company to one that is now cGMP-compliant has an end-to-end controlled supply chain now positioned for rapid advancement with a highly profitable commercial trajectory. Thank you for your relentless efforts, which not only drive our accomplishments, but also create a meaningful impact in the lives of those who depend on us. It is the collective spirit and teamwork that truly make our workplace exceptional. We appreciate the commitment, passion, and diligence that each team member brings to the table. It's this dedication that propels our organization's triumphs and empowers us to maintain complete control of operations in alignment with our core vision. We believe the solid foundation lays the groundwork for even greater success in the future. With this said, I would now like to turn the call over to Brian for a review of the third quarter financials. Brian?

Thank you, Adam. We issued a press release earlier today outlining our third quarter 2023 financial results, and we'll also be issuing our third quarter 10-Q later this afternoon, which we encourage you to read in conjunction with our comments and discussion points 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 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 a year ago. 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 to grow gross profits over the coming periods. We are pleased to report, as Adam mentioned earlier, that for the first time in corporate history, ADMA has achieved GAAP net income profitability and has generated first-time positive operating cash flow. During the third quarter of 2023, GAAP net income reached $2.6 million as compared to a GAAP net loss of $14.9 million for the third quarter of 2022. Our operating cash flow for the three months ended September 30, 2023, totaled $12 million, increasing ADMA's cash on hand to $74.2 million at the end of the third quarter of 2023. ADMA grew adjusted EBITDA to $12.7 million for the three months ended September 30, 2023, as compared to an adjusted EBITDA loss of $6.1 million the same period a year ago. The improvement is driven primarily by increased sales, gross profit, and fiscal operating management of our business segments. Based on ADMA's third quarter adjusted EBITDA growth and cash generation, the company's current net leverage ratio has organically improved to an impressive 1.6x. We believe we anticipate the balance sheet will continue to strengthen over the coming periods enabled by forecasted operating cash flow and growing adjusted EBITDA. Lastly, the ADMA BioCenters network now consists of nine FDA-licensed plasma collection centers, with our 10th center operational and collecting plasma, which is pending FDA licensure anticipated by year-end 2023. Additionally, 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 continue to achieve record all-time highs and remain considerably above our organization's pre-pandemic levels. With that, I will now turn the call back over to Adam for closing remarks.

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 are dedicated 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. Our first question will come from Kristen Kluska of Cantor Fitzgerald. Your line is open.

Hi, good afternoon, and congrats on achieving 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 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. It's been a while since I've actually been asked this question. This was a common inquiry back in the days of the IPO, but we have issued patents for ASCENIV, and there's an entire IP estate that covers the composition and the use of the product. The main IP is around the identification and selection of the plasma donors specifically in 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, and I believe the patents run into 2035. Yes. I did not anticipate the question, Kristen, but we do have IP protection here. This is not a secret. A number of the things that we do are protected by trade secrets, and many of the processes we implement have issued IP. The drug, formerly known as RI-002, was in clinical trials back in 2012, 2013, and 2014. Now, here we are, almost in 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 we utilize. 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. 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. I think it'd just be really helpful to truly understand what has 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. 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 it has 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 everyone that works at the company. All the little things that we do come together so that people are responding positively. I think you see this with lots of products that have early adopters. Going back to my days as a marketing student in college, there are different lifecycles that a product goes through. You have early adopters, those waiting to get the newest and greatest iPhone, who are the first users, they try all the apps, and then the bugs get fixed, and more people start buying it, leading to mass appeal. We're probably at that stage where the early adopters have worked closely with our organization, and we’ve published many 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. 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 my teams are present at. We've invested and built a medical educational speakers bureau throughout the United States. When patients do well, they advocate, lending their stories to our website, where new patient advocacy videos are being posted online. I think it’s just we provide an alternative. Everything we've said we’re going to do from the beginning, we're doing. So nothing's changing; everything is just coming together a little faster than what we anticipated. I receive numerous positive messages and texts that people want me to mention, but I am who I am. We are who we are at ADMA; regular people trying to do a good job and make good products that help people. That's what we're doing here. We're doing our best to provide reasonable guidance. I remember the second quarter of 2020 when we did not meet our top-line number, and I paid for it. I never want that to happen again. I want my shareholders happy, my staff happy, and ultimately, healthy and happy customers and patients. If you don't like our guidance approach, there are many other stocks you can buy, but for the time being, we believe our guidance is fair and attainable. We want folks to make their investment decisions based not on unattainable numbers that others fail to meet but based on reality that we create positive outcomes with our great team. So thanks to everyone listening; it doesn't happen without each and every one of you. Let's keep working honestly and efficiently to save lives.

Thanks, Adam.

Thank you, Kristen. Safe travels.

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

Hey, Adam. How are you? Thanks, and congratulations on 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 mentioned in a press release that your prescriber base and patient base for ASCENIV continues to grow. You're mentioning net new prescribers as a common statistic among therapeutic companies, as well as NRx statistics. Can you disclose, I guess, where those are trending in broad strokes? How many new prescribers are coming on board each quarter, I guess, on average? Also, what percentage 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 product penetration and our medical messaging, and that's translating into this accelerated growth. There are more prescribers, and this really ties back to Kristen's question about early adopters and prescribers. The best way to convince a physician to use a drug is for another physician to say, my patients have done well on this drug, plain and simple. I can hire reps, medical affairs people, and market all I want, but when a colleague is at a conference with another colleague discussing experiences, that is the kind of marketing that you cannot buy. This real-world feedback is key. We're having conversations in the immune deficient sphere, and all product use comes from primary and secondary immune deficient patients who are not thriving on IG and have comorbidities. Once a doctor sees results with ASCENIV, they're quicker to treat subsequent patients with the product. We're seeing more prescribers getting comfortable advocating for the therapy to payers, which has been a significant barrier in the past. We’ve spent considerable time discussing durability, and many analysts had doubts about whether this growth was sustainable. What I'm finding is that these patients are akin to annuities; they require ongoing infusions for their treatment. And as we see sustained health and vitality among these patients, we are seeing a compound effect on our prescriber base.

Absolutely. And the follow-up should be for Brian. Regarding gross margin here, it's well above our estimates for the quarter and drove the EBITDA beat. A couple questions: you referenced that at least there were some ASCENIV batches successfully transitioned to the 4,400-liter pool. Are we reading this correctly that that product can be fully transitioned to 4,400 by the end of the year, early 2024? 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. We've certainly seen more upward mobility or more utilization of ASCENIV than we originally forecasted. Regarding the 2,200-liter manufacturing batches of ASCENIV transitioning to 4,400-liter batches, we've pretty much sold out of the 2,200. The gross margin going from 2,200 to 4,400 is certainly meaningful. Historically, we were looking at 80% to 85% gross margin per ASCENIV in that 2,200-liter range. Now we’re higher than 85%, probably closer to the upper 80s, with some point maybe even low 90s for ASCENIV as we continue to sell only 4,400-liter batches.

To be clear though, in the third quarter, the gross margin has been 36.6%. You're not seeing any monetization of the 4,400-liter ASCENIV yet. This will be on a go-forward basis, and it won't materially kick in until the beginning of next year.

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

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? 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 ASCENIV and BIVIGAM in the third quarter? Then I have a couple more.

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

The mix historically was around 75%, 25%, or 70%, 30%, and then we would start looking at 65%, 35% as we had migrated, and we've really transitioned to that 65%, 35% mix, heading closer to 60%, 40%. So currently, it's around a 60%, 40% standard margin for BIVIGAM and a higher margin for ASCENIV.

I'll say, Gary, that this is conservative. Let's see where we go throughout 2024. But that's where we are currently. I know in the past, I've said, is there a chance to get to 50:50? Probably, but I don't know the timing. For the time being, 70:30; 65:35 is where we see ourselves right now with the potential to adjust as needed.

Okay, great. And then, 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?

Everything's high on my list. I know you've been following the company; what is this, your third call, fourth call now? We're always doing everything all the time. Let's just say we are aware of opportunities and proactively pursuing them. We will do the right thing for this business as we have since its founding, and it can only improve from here.

Three quarters of positive EBITDA, total assets of $350 million, and our first quarter of net income, along with positive cash flow. These successes are precisely what lenders and banks look for. We'll do our best to look at the cost of capital, especially with the interest rates that have risen this year. We have refinanced in May, reducing the overall interest rate by 100 basis points. We certainly think there are opportunities to do the same or even more in the future as our financials keep improving.

Okay, great. And the last question is just on the patients. What are you doing specifically to try and activate patients? One, first in terms of 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? Also, concerning patients going through IG treatment, are you making them aware of potential therapies they might consider as well? I'm curious if that's an important piece of the puzzle. Thanks.

Absolutely. Look, patients advocate for themselves in 2023 if they're smart and want to get better. We're seeing patients out there advocating for themselves. If you haven’t seen the new additions to the ASCENIV website, there are two patient advocates sharing their stories, discussing how they learned about this drug at conferences from their doctors. This has been a key part of our strategy. We work closely with many patient advocacy groups, and we think that's helping add to ASCENIV's growth. Regarding donor incentives, I’m not sure if we're raising our donor payments yet; however, there is a lot of plasma donors available. The donor fees across the board are coming down. Brian can elaborate on that. But I shared in past calls that our testing capabilities for RSV donor screening is now operational, helping us identify more high-quality donors faster. Owning our collection centers allows us to choose which donors we collect from; we have more control over this process than with third-party providers. Every donor we identify as an appropriate supplier for an ASCENIV plasma pool becomes available to us, ensuring consistency in our product.

To add on regarding the plasma centers, we're very pleased with the exponential growth. It was just a few years ago, back in 2020, we began our supply chain robustness initiatives with just one center. Now, in 2023, we have 10 centers collecting, with nine having FDA approvals, and we hope to receive FDA approval for our last center by the end of the year. Again, we're grateful for the growth we’ve achieved. Thank you to our BioCenters employees for the ramp-up and expansion, as well as our donors who contribute to our success.

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, thank you for the supportive messages and positive feedback. There’s only one time in our company's history that we can say we are net income positive for the first time. This is the collaborative effort of many people. Thank you for trusting in mine and my father's vision. It makes me a little emotional, but we will keep doing what we say we will. Flatten your vaccines, maintain good hygiene, and keep the world a safe place. Thank you for 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.