Adma Biologics, Inc. Q4 FY2023 Earnings Call

Good afternoon. And welcome to the ADMA Biologics Fourth Quarter and Full Year 2023 Financial Results and Business Update Conference Call on Wednesday, February 28, 2024. 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, 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 fourth quarter and full year of 2023 and recent corporate updates. I’m 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 us an update on corporate progress, and then Brian will provide an overview of the company’s fourth quarter and full year 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 fourth quarter and full year 2023 financial results and summarized certain achievements in recent corporate updates. They’re available on our website. 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 or implied by such statements. In addition, any forward-looking statements represent our views as of the date of this call and should not be relied upon as representing our views as of the 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 annual report on Form 10-K for the year ended December 31, 2023, for a discussion of the 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 income. A reconciliation of these non-GAAP financial measures to the nearest comparable GAAP metric is available in our release. With that, I would now like to turn the call over to Adam Grossman. Adam?

Thank you, Skyler, and welcome, everyone. We are extremely pleased with our 2023 performance, which marked first-time adjusted net income and positive cash flow from operations on a full year basis. We believe these significant milestones are a testament to both our unwavering commitment to the continuity of patient care and steady financial execution for our stockholders. During 2023, ADMA strengthened its position as one of the fastest-growing providers of immunoglobulin in the U.S. market and advanced its financial profile to become one of the fastest-growing and profitable biopharma companies in the United States. We believe our significantly strengthened balance sheet following the fourth quarter debt refinancing, as well as our robust forecasted earnings growth and cash generation, puts our company in a strong position as we start 2024 and look to the future. Full year 2023 total revenues grew by 68% to $258.2 million. This rapid growth enabled ADMA to generate positive adjusted net income and more than $40 million in adjusted EBITDA on a trailing 12-month basis. We believe these exceptional results speak to the efficiency in our organization’s operations and our relentless focus on maintaining top-tier revenue growth while judiciously managing overhead and expenses. We fully anticipate our positive trajectory will continue to drive earnings growth for the foreseeable future. As ADMA’s forward-looking business trends gain momentum, we’re revising financial guidance upwards for both 2024 and 2025, increasing top and bottom line projections. Based upon current market factors, we now anticipate generating revenues during these periods of more than $330 million and $380 million, respectively. At this level in 2024, we’ve increased adjusted EBITDA guidance to more than $90 million and adjusted net income to more than $65 million. Similarly, for 2025, we’ve increased adjusted EBITDA guidance to more than $140 million and net income guidance to more than $115 million. We believe our commercial success, driven in large part by the recent and continued growth of ASCENIV utilization, which we believe is attributable to our unwavering focus on the immune-deficient patient segment, especially in those PI patients who suffer from complex comorbidities. This specialized focus, in combination with our innovative business model, diverse product portfolio and our targeted medical education, marketing and market access initiatives, have provided ADMA with its highly differentiated messaging and product offerings. We believe we have successfully established an enduring and growing foothold within the U.S. IG landscape. Specific to ASCENIV, we are confident that there remains a significant growth opportunity for the product within its targeted addressable market, further penetrating the treatment setting comprised of immune-deficient patients grappling with these complex comorbidities. Launch metrics for ASCENIV remain broadly supported, and again, made new record highs across leading demand indicators, including measures of both breadth and depth. 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’s accelerating demand trends and healthy growth attribution continually catalyze us to favorably rethink the ultimate size of the market opportunity and we reiterate that we believe we are in the early innings with the product’s total potential. Prior to providing an update on our growth initiatives, I’ll spend a moment reviewing the recent implementation of our innovative AI program, ADMAlytics. Over the last year and a half, our internal information technology leadership team has been working tirelessly to develop ADMAlytics, which has now been successfully tailored to our organization’s bespoke needs and implemented for commercial use. ADMAlytics combines AI and machine learning and is designed to optimize and streamline certain of our intricate production processes. In the complex landscape of specialty biologics production, maintaining uninterrupted operations is paramount and we believe that ADMAlytics will further bolster our commitment to ensuring the continuity of patient care. We anticipate the program’s rollout across the organization will, in due course, bring far-reaching improvements and efficiencies across our operations and further support the company’s rapid earnings growth trajectory. The successful development and implementation of ADMAlytics aligns seamlessly with our overarching mission to continuously innovate production processes for specialty biologics, while also building on our reputation as a thought leader within the commercial specialty biologics markets our therapies serve. We applaud the ADMA IT team for their execution and success, bringing this innovative software to real-world application. Turning to our 2024-2025 corporate growth initiatives, all activities continue to progress as planned. We’ve successfully expanded ASCENIV production to the 4,400-liter manufacturing scale, enhancing the product’s margin, yield and capacity. We expect to realize these profitability benefits more materially as we progress into 2024. Additionally, our ASCENIV post-marketing clinical study is progressing well and may lead to label expansion with a potential pediatric age group if successful, further strengthening our product portfolio relative to competitive IG offerings. Our excitement continues to build as we see the potential impact of our manufacturing IG yield enhancement initiatives. During the fourth quarter, we made significant strides in scaling up our processes and conducting laboratory bench-scale runs and analyses. If ultimately successful, we believe enhanced production yields will be transformative in providing increased finished goods output, which would substantially increase ADMA’s peak revenue earnings potential. This exciting project remains on track and we will provide updates as developments unfold. Finally, earlier this year, we provided an update on our patented preclinical hyperimmune globulin program targeting strep pneumonia. While still in the early stages of preclinical development, we are excited to advance this program. Our interest in this potential new product opportunity stems from several key factors. Firstly, the market potential is significant and currently underserved. Streptococcus pneumonia is the primary cause of community-acquired pneumonia in the United States, ranking in the top 10 diseases for all-cause mortality. The growing prevalence of anti-infective resistance emphasizes the urgent need for both prophylactic and therapeutic interventions. Secondly, ADMA holds a strong patent portfolio for this specific hyperimmune globulin, providing for the development of an S. pneumo hyperimmune with IP defensible until at least 2037. Drawing from our successful development of ASCENIV through clinical and regulatory pathways, as well as our demonstrated commercial launch capabilities, we believe we are positioned to potentially replicate this success with the strep pneumonia program. If ultimately approved, we project this hyperimmune globulin could generate additional future peak revenue in the range of $300 million to $500 million annually. To reiterate, as evidenced by today’s increased earnings guidance, we will remain highly cost-disciplined in advancing this program through the preclinical development program. On the plasma supply front, I’m pleased to highlight that all 10 of our plasma collection centers are now FDA licensed and collection volumes are trending at the upper bound of our internal estimates. Foot traffic on a same-center basis continues to grow and reach new highs. All told, we’re confident in our ability to meet the increased production forecasts for our commercial IG portfolio. Reflecting on the journey of ADMA, it’s clear that our achievements stem directly from the unwavering commitment and hard work demonstrated by our outstanding and knowledgeable team members. The remarkable evolution from a young virtual biotech startup to a fully compliant end-to-end controlled supply chain and now advancing our position as one of the fastest growing and profitable biopharma companies in the U.S. It’s truly rare and remarkable. To our employees, we extend our heartfelt gratitude for your tenacity, perseverance and tireless dedication, which not only fuels our progress, but also leaves a significant impact on those we serve. It’s the collaborative ethos and collective effort that truly distinguish our workplace. We deeply value the dedication, enthusiasm and diligence exhibited by each team member of our team. It’s this steadfast devotion that drives our success and enables us to maintain firm control over our operations in line with our fundamental vision. We firmly believe this strong foundation paves the way for even greater accomplishments in the periods ahead. I’d now like to turn the call over to Brian for a review of the fourth quarter and full year 2023 financials.

Thank you, Adam. We issued a press release earlier today outlining our fourth quarter and full year 2023 financial results and we’ll be also issuing our full year 2023 10-K report later this afternoon, which we would encourage you to read in conjunction with our comments and discussion points we’ll make during today’s call. I’ll now discuss some of the key highlights from the fourth quarter and full year. As Adam mentioned earlier, total revenues were $73.9 million for the quarter ended December 31, 2023, as compared to $50 million for the quarter ended December 31, 2022, and this represents an increase of $23.9 million or approximately 48%. Total revenues for the year ended December 31, 2023 were $258.2 million and this represents 68% year-over-year growth. The increase is primarily related to increased sales of our immunoglobulin products, partially offset by a planned decrease in sales of plasma to third parties due to the increasing retention of plasma for our IVIG production. The decline in external plasma sales is consistent with our expectations as we are utilizing a greater percentage of our internally sourced plasma from our 10 FDA-licensed plasma collection facilities for our Boca facilities manufacturing of ASCENIV and BIVIGAM. Our gross profit for the three months ended December 31, 2023, was $31.1 million, as compared to $14.2 million for the same period of a year ago and this represents an increase of $16.9 million. Gross profit for the year ended December 31, 2023, was $88.9 million, representing an increase of $53.7 million compared to fiscal year 2022. The expansion of gross margins 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 42% in the fourth quarter of 2023, as compared to 28% in the fourth quarter of 2022. We believe the pathway is well paved to continue to grow gross profits over the coming periods. We are very pleased to report, as Adam mentioned earlier, that for the first time in corporate history, ADMA achieved first-time positive adjusted net income and positive cash flows from operations during 2023 on a full year basis. During the fourth quarter alone, adjusted net income reached $8.5 million, as compared to a net loss of $12.2 million for the fourth quarter of 2022. ADMA grew adjusted EBITDA to $40.3 million for the full year 2023, as compared to an adjusted EBITDA loss of $27.6 million for the full year 2022. For the three months ended December 31, 2023, ADMA generated $18.6 million of adjusted EBITDA, as compared to an adjusted EBITDA loss of $3.5 million in the same period of a year ago. The improvement is driven primarily by increased sales, gross profit and fiscal operating management of our business. Based on ADMA’s fourth quarter annualized adjusted EBITDA growth and cash and cash equivalents, the company’s current net leverage ratio has organically improved to approximately 1.1x. We anticipate the balance sheet will continue to strengthen over the coming periods, enabled by forecasted operating cash flow and growing adjusted EBITDA. Lastly, it is with pleasure to note that all 10 of our plasma centers within our BioCenter network are now FDA licensed and collecting plasma. This milestone marks the successful conclusion of our multiyear investment initiative to establish plasma supply self-sufficiency and we are now well positioned to support all of our growing internal production needs. Additionally, 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.

Thank you, Brian. ADMA’s business prospects and opportunities are vast and company morale has never been higher. Our organization is energized and unified and the performance-driven culture we have established at ADMA Biologics is bearing fruit. Our portfolio of life-changing medicines is providing significant real-world benefits to patients managing diseases of critical unmet need. In doing good for others, we’ve done well for our organization and our stockholders. Our business continues to strengthen and we believe we are well positioned to generate significant growth in cash flow for years to come. We anticipate 2024 being defined by top-tier revenue and earnings growth, significant cash generation and the further development of transformative growth initiatives, which, if successful, has the potential to significantly impact ADMA’s peak revenue and earnings targets. We believe ADMA’s proven internal R&D capabilities, broad IP estate and successful establishment of our innovative commercial business model positions the company for enduring success. Thank you for your continued support and trust in the company. We appreciate those of you who have supported us through this journey and we are committed to delivering for our stockholders 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. Before opening the call for Q&A, we announced earlier this afternoon that Brian will be transitioning from his current role of Executive Vice President, CFO and General Manager of ADMA BioCenters as part of a planned executive leadership change. To ensure a seamless transition, Brian will continue supporting the company in a consulting role effective April 1. Brian has served as CFO with distinction and dedication over the past 11 years. During his tenure, we’ve achieved significant milestones and navigated through various challenges with resilience. We wish Brian all the best and look forward to continuing to work with him during this transition period. With that, we’d like to open up the call for your questions.

Thank you. One moment for our first question. Our first question comes from Anthony Petrone with Mizuho. Please proceed.

Hey, Anthony.

Hey, Adam. Thanks for getting us in here and congratulations on another great quarter and a strong outlook. Maybe I’ll have a couple on just the moving parts on product mix and question on R&D and then one on margin. So maybe just in terms of the cadence between BIVIGAM and ASCENIV, maybe just a little bit on the shared landscape for traditional IG first, just considering that there seems to be some moving pieces out there just on the competitive landscape. Do you think more share comes up for bid as the year progresses and could that be a tailwind for BIVIGAM? And then on ASCENIV, maybe just an update on active prescribers and how sticky your existing prescriber base is and I’ll have one on margin for Brian?

Sure. Those are great questions. When discussing the share landscape, I believe 2023 was one of the largest growth years for our product in the past five years. Plasma supply has been strong, and both our IV and subcutaneous products have performed well. There were a few additional approvals for other products during the year, so the market currently has a good supply of product. As for the landscape, IV makes up about 80% and subcutaneous about 20% based on our observations. Regarding potential tailwinds for BIVIGAM, we're selling everything produced at our plant, including BIVIGAM and ASCENIV. Our products are well accepted in the market, and patients appreciate them. We are the only manufacturer still using centrifugation for these products, and there are articles suggesting potential benefits from this method. We have raised our guidance three times last year and once already in 2024. We really like ASCENIV, and it seems the patients and payers are responding positively as well. The drug is performing well among patients with complex immune deficiencies. The uptake is exceeding even our accelerated expectations, reflected in our guidance and financial performance. On an adjusted basis, achieving positive net income for the first time was a pleasant surprise, and we are very excited about it. I can tell you that when you create good products that help people and produce positive outcomes, it drives uptake. We have strong tailwinds as our team at ADMA produces safe and effective products, and we will continue to enhance product penetration and uptake as quickly as possible. I hope this answers your question.

Absolutely. Maybe to pivot to Brian first, congratulations on the 11 years and you’ll be missed and thanks for all the help along the way here. So good luck in the next chapter. And in terms of margin, maybe a little bit, Brian, on how much yield enhancement are we seeing in gross margin? And it looks like the hyperimmune R&D portfolio is going to progress here. So should we be expecting an uptick in R&D expenses in the second half of the year? Thanks again.

Well, thank you, Anthony, and it’s certainly been a long and overall successful 11 year run. So I appreciate the compliments and I still strongly believe in the company and its products and so we’ll be continuing to root the company on. As it relates to margin, we’re producing both products, ASCENIV and BIVIGAM at the 4,400 level. We have been for some time. So we’re going to be, all we’re selling is at the 4,400 higher margin scale. So ASCENIV closer to that 85%, where historically we were in that low 80%. So a nice increase, about 5% for ASCENIV. And BIVIGAM, we went from the high-teens, low-20%s. Now we’re in that 25%, approaching 30%. So we think that there’s still room, there’s still upside to go, and as Adam mentioned about the product mix, we think that there’s more opportunity for ASCENIV and going forward, that’s how we’ve been able to revise guidance now several times over the last year and a half.

Regarding R&D spending, we believe it's quite manageable. Yield enhancement is just a few million dollars. We are not overextending ourselves in any way. With our positive cash flow and net income, we plan to use that cash opportunistically to create value for shareholders. While our R&D expenses may increase slightly, it shouldn't be significant. We will be very responsible in our spending for the strep pneumonia product, which is still in its early stages. We will keep you updated on both manufacturing yield enhancement R&D, which we expect to file later this year or early next year, and we anticipate realizing financial benefits in the latter half of 2025.

Anthony? All right. I’m going to move along to the next question. One moment, please.

Sure.

And it comes from the line of Kristen Kluska with Cantor Fitzgerald. Please proceed.

How are you doing, Kristen?

Hi. Hey. Congrats on a really strong 2023. I don’t think I’ve seen a company raise guidance this many times and consistently deliver. And Brian, wishing you the very best. Should feel very proud of everything that you accomplished. So I wanted to ask, once upon a time, the company was talking about $300 million being the peak sales potential and today you talk about your enthusiasm, but you also characterize it as early innings. So I just want to get a general sense of how you’re thinking about, maybe you don’t have to give me a specific number, but what the peak sales could ultimately be if you continue seeing the cadence and the demand that you are?

Thank you, Kristen. That’s very kind of you to say. Your question has me smiling with all of my notes and everything that I see here. I mean, look, I think, what I should say is that, for those who followed our story and it’s been a hell of a ride, Brian, hasn’t it?

Certainly.

We’ve had to bob and weave and we’ve had regulatory challenges and we’ve had supply chain challenges, and you name it, there have been tons of challenges. But at the end of the day, we knew, based on the Phase 3 data for our drug, that we had a product that was unique. We had a product that provided very, very good results for the primary and all the secondary endpoints. There was something special in what we were making and there were things that were not published with respect to some of the patient diaries and our clinical trial team would get feedback from the coordinators at these sites about just the way patients were responding to the product. So we always knew there was something special. But how do you model that? How do you forecast this? There are certain things that occur when the product gets into the real world setting, which I know we’ve seen with other products. And I really do believe that, at that time, we were looking at our ability to get RSV plasma, our ability to produce. At one point in time, we were contract manufacturing, so how much capacity would our contract manufacturer give to us? So, I think the $300 million was a very, very fair, and honestly, appropriate forecast back then. With where we are today, I mean, I don’t want to say that we’re producing as fast as we can. We can’t keep up with the demand, but that’s the truth. We are producing as fast as we can. We’re working on strategies for identifying additional RSV plasma donors. We’re working with other third-party collectors to augment our internal supply to collect as much plasma as we possibly can. I can tell you that, the peak guidance that we’re giving for next year, we raised it to $380, am I correct?

Yeah.

We are not including any yield enhancement in our current projections and are not considering any contributions from BIVIGAM and ASCENIV for that matter. Our peak revenue estimates do not account for any potential in the latter half of the decade, particularly regarding strep pneumonia hypothermia. Hypothetically, if you look at our capacities, we have a 400-liter, 500,000-liter, and 600,000-liter plant. If all those were dedicated to ASCENIV, what would that yield? Fractionating 0.5 million liters of plasma at 4 grams per liter produces a significant amount of product. However, we are unsure if the payers will cover that volume or if the market will take it all. While I don't have all the answers, I do know that we have patients awaiting therapy, some who have been approved by their payer to switch from their current immunoglobulin to ASCENIV. We are manufacturing the product as quickly as possible, but the production timelines remain unchanged and can take anywhere from six to twelve months, depending on our team's effectiveness. We are doing our utmost. I maintain that we provide conservative guidance and consider this range. If our operating conditions hold, we anticipate continuing to exceed our guidance. Should any circumstances change, we will meet our guidance, and we will feel good about our progress. If trends persist and we can speed up certain programs, we see a real chance to surpass our expectations. Each year, we approach this in the same manner, and I am proud of our team and the ASCENIV drug that we’ve successfully launched, overcoming numerous challenges. The most gratifying aspect is the patient responses to ASCENIV; we are helping individuals who have experienced primary immunodeficiency for years and are not responding well to their current treatments. These patients can have complex and often unmanageable comorbidities, but upon switching to ASCENIV, they thrive. This impact on patient lives is what we value most at ADMA. We are in the early stages, and I can only emphasize that ASCENIV is making a significant difference in treatment practices within the market. Our strategies regarding medical education, marketing, market access, and sales are effectively aligning. From my viewpoint, very few companies of our size manage to launch products and remain independent. What the market is witnessing is a genuine success story—we are competing successfully against major players while establishing our differentiation, evidenced by our 14 consecutive quarterly beats. This is a testament to the quality of our products and the dedication of our team. I take pride in what we do, and while financial performance is important, prioritizing regulatory compliance and producing safe, effective products is crucial. Supporting physicians and patients lays the groundwork for everything else. Our financial performance is improving significantly, with dramatic costs control efforts stemming from our resource realignment last year. We are continuing on this path and are committed to delivering returns for our shareholders. We are intensely focused on shareholder value, and I believe our stock is undervalued. The cash generation we expect to see starting in the first quarter will be substantial and will enable us to accomplish many great things.

Awesome. Thanks for that response. And just the last question for me is, if you could talk about the metrics you’re seeing from a prescriber basis, specifically, is it more levered towards certain prescribers adding more patients versus getting new prescribers entirely on board or is it a blend of the two?

The answer is it's both. It's yes and it's yes. Clearly, the doctors who have seen results are very quick to identify new patients and get them on board. The number of prescribers is increasing every month and every quarter. We are exceeding all of our internal estimates and figures, Kristen. The prescribers are predominantly immunologists. Most of our sales occur in the outpatient setting. I can tell you that existing prescribers, once they acquire the product and know they will be reimbursed, feel comfortable adding patients. While there is a cost involved for any immunoglobulin that a doctor with an infusion practice incurs, I believe that people are now truly comfortable with this. We've put considerable effort into market access and medical education. Therefore, I expect the prescriber base to keep expanding. Additionally, I anticipate same-store sales to grow, and this is due to the drug. I believe our marketing strategy and medical education efforts are commendable, and while they are important, the drug itself is also very influential.

Thank you.

Thanks, Kristen, so much.

Thank you. One moment for our next question, please. And it comes from the line of Gary Nachman with Raymond James. Please proceed.

Great. Good afternoon, guys, and congrats on all the progress and good luck to you, Brian. We will definitely miss you. So, Adam, maybe just talk more about your plans to explore developing a hyperimmune product to treat pneumonia. What led to that decision and why do you think it could be a $300 million to $500 million opportunity? How you get there? And just reiterating that there’s no impact to profitability. So, just explain how that’s going to happen. And then also just, what are other hyperimmune products that you could potentially pursue? When could we hear about those? So, oh, and also just getting a sense of your capacity as you potentially expand into these other products while you’re still trying to obviously grow ASCENIV.

Thank you for the great questions, Gary. Regarding strep pneumonia, we have been sharing data since 2020 and 2021. Earlier this year, we announced our intention to start a program focused on it, given that it’s among the top 10 leading causes of death and the primary cause of community-acquired pneumonia. We see this issue practically. There are vaccines for those who can receive them, but immune-compromised patients typically do not respond well or at all to vaccination. This poses a significant challenge for patients with primary immune deficiency, cancer patients, post-surgical patients, and hospitalized elderly individuals. We believe there is an opportunity to address this gap, and while it’s too early to determine if our approach will be treatment or prevention, we are actively working to explore this. We have developed our plasma center network not only to secure our supply chain but also to evaluate new methods with plasma donors. Our work starts there. We have established a way to stimulate antibody production using commercially available vaccines in plasma donors and have observed the development of protective antibody titers. This is a crucial step in ensuring control of raw material since once we can produce the raw material, the subsequent steps become more manageable. We plan to test the product in animals later this year and have intellectual property to explore. From our data, an immune-competent person typically needs about 10 days to develop seroprotection after receiving a vaccine. This timeframe poses issues for vaccine-naïve elderly patients who are hospitalized, especially if they are immune-compromised. Many institutions follow protocols to administer vaccines, but this might not help these patients in a timely manner, given the waiting period for seroprotective antibodies. Historically, post-exposure treatments for rabies, tetanus, and hepatitis B involve providing both a globulin and a vaccine to safeguard during the seroconversion period. We see a similar opportunity here, potentially following a model like ASCENIV. Manufacturing a tighter immune globulin for the primary immune deficiency population would be easier, given the more accessible plasma supply. With the ability to stimulate our donors with a strep pneumonia vaccine, controlling the raw material supply becomes simpler. We believe these hyperimmunes could reach beyond the primary immune deficiency population and have utility across a wider range. Regarding capacity, I value all our products that drive revenue and maintain good gross margins. We currently boast the best gross margin profile among global plasma fractionators. Though I appreciate all our current offerings, the driving principle behind ADMA Biologics is to focus on creating products that others might overlook, specifically hyperimmunes aimed at particular infectious diseases. If we can produce antibodies through vaccination or detect naturally occurring antibodies with advanced testing, there are many possibilities. Additionally, we hold intellectual property that allows us to create hyperimmunes by blending a standard immunoglobulin pool with monoclonal antibodies. I believe our potential for growth is substantial. Our plant has the capability to produce around 2 million grams of immunoglobulin annually, and if that outputs hyperimmune globulin, the possibilities are virtually limitless. While I can’t provide definitive revenue predictions yet, I believe this could become a product generating over $300 million, paralleling where ASCENIV stands today. The plasma sourcing will be more manageable for a strep pneumonia hyperimmune, and considering the vast market for vaccines and the additional protections we could provide, these products could yield significant margins.

Okay. Great. That was very helpful. Thank you. And then just to follow up, I don’t think you mentioned this before, but could you give us a better sense of what is implied in the revenue guidance in terms of the mix between ASCENIV and BIVIGAM this year and next? And how aggressive can you be at paying down the debt? I’m curious how much that’s factored into the net income guidance for this year and next year.

These are all great questions. Gary, we want to emphasize that we're aiming for a balanced mix. Initially, we mentioned an 80-20 split and then a 70-30, and we're determined to achieve a 50-50 split eventually. We're doing exceptionally well, and this success isn’t solely linked to ASCENIV; BIVIGAM is also performing strongly. Our plasma collections are increasing, and the supply chain has improved post-COVID, leading to greater efficiencies within our operations. BIVIGAM is making a positive contribution as well. Our guidance this year is clear and straightforward, projecting at least $330 million in revenue and around $70 million in net income. My goal is to exceed these targets, and I urge all my ADMA team members to strive for this. We’re heavily focused on delivering returns to our shareholders. We strategically used our cash to pay down some debt and lower interest expenses. Regarding our guidance, we have not included any further debt repayments, but if we meet or surpass our forecasts, we have the flexibility to pay down debt without prepayment penalties, aided by the cash we generate. We're not looking to acquire new assets right now, as we are confident in managing our R&D costs and delivering on our internal R&D goals. As a significant shareholder, along with my family, I want to see our stock reach its true potential, which I believe is currently undervalued. Based on my observations from the latter half of 2023 and the beginning of 2024, I see positive momentum ahead as we continue generating cash and seek opportunities to enhance shareholder value.

Great. Thanks so much.

Thank you.

Thank you, Gary.

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

Thank you, everybody. Thank you to the analysts for the good questions. Donate plasma, help save lives again and stay safe. And thank you for your interest in ADMA Biologics and the products that we make to help save lives.

Ladies and gentlemen, this concludes the conference. You may now disconnect.