UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2021
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ________ to ________
Commission file number 001-36728
(Exact Name of Registrant as Specified in Its Charter)
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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(Address of Principal Executive Offices)
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(Zip Code)
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(201 ) 478-5552
(Registrant’s Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐
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Accelerated filer ☐
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Smaller reporting company
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of August 6, 2021, there were 132,769,471 shares of the issuer’s common stock
outstanding.
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
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Item 1.
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1 |
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1
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2
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3
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4
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5
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Item 2.
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23
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Item 3.
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37
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Item 4.
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37
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38
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Item 1.
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38
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Item 1A.
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38
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Item 2.
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68
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Item 3.
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68
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Item 4.
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68
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Item 5.
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68
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Item 6.
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68
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69
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This Quarterly Report on Form 10-Q includes our trademarks, trade names and service marks, such as “ASCENIV™,”
“Nabi-HB®” and “BIVIGAM®,” which are protected under applicable intellectual property
laws and are the property of ADMA Biologics, Inc., or its subsidiaries. Solely for convenience, trademarks, trade names and service marks referred to in this report may appear without the ®, ™ or SM symbols, but such references are not
intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names and service marks. We do not intend our use or display of
other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.
Special Note Regarding Forward-Looking Statements
Some of the information in this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. These statements include, among others, statements about:
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our ability to continue as a going concern;
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our ability to manufacture BIVIGAM and ASCENIV on a commercial scale and commercialize these products as a result of their approval by the U.S. Food and Drug
Administration (the “FDA”) in 2019;
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our plans to develop, manufacture, market, launch and expand our commercial infrastructure and commercialize our current and future products and the success of such
efforts;
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the safety, efficacy and expected timing of and our ability to obtain and maintain regulatory approvals for our current products and product candidates, and the
labeling or nature of any such approvals;
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the achievement of or expected timing, progress and results of clinical development, clinical trials and potential regulatory approvals for our product candidates;
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our dependence upon our third-party customers and vendors and their compliance with applicable regulatory requirements;
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our belief that we have addressed the delays experienced with final drug product Good Manufacturing Practices (“GMP”) release testing by our third-party vendors by
adding additional release testing laboratories to our FDA-approved consortium listed in our drug approval documents;
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our ability to obtain adequate quantities of FDA-approved plasma with proper specifications;
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our plans to increase our supplies of source plasma, which include plasma collection center expansion and reliance on third-party supply agreements as well as any
extensions to such agreements;
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the potential indications for our products and product candidates;
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potential investigational new product applications;
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the acceptability of any of our products, including BIVIGAM, ASCENIV and Nabi-HB, for any purpose, including FDA-approved indications, by physicians, patients or
payers;
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our plans to evaluate the clinical and regulatory paths to grow the ASCENIV franchise through expanded FDA-approved uses;
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Federal, state and local regulatory and business review processes and timing by such governmental and regulatory agencies of our business and regulatory
submissions;
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concurrence by the FDA with our conclusions concerning our products and product candidates;
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the comparability of results of our hyperimmune and immune globulin products to other comparably run hyperimmune and immune globulin clinical trials;
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the potential for ASCENIV and BIVIGAM to provide meaningful clinical improvement for patients living with Primary Immune Deficiency Disease, Primary Humoral
Immunodeficiency Disease (“PIDD” or “PI”) or other immune deficiencies or any other condition for which the products may be prescribed or evaluated;
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our ability to market and promote Nabi-HB in a highly competitive environment with increasing competition from other antiviral therapies and to generate meaningful
revenues from this product;
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our intellectual property position and the defense thereof, including our expectations regarding the scope of patent protection with respect to ASCENIV or other
future pipeline product candidates;
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our manufacturing capabilities, third-party contractor capabilities and vertical integration strategy;
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our plans related to the expansion of our manufacturing capacity, yield improvements, supply-chain robustness, in-house fill-finish capabilities, distribution and
other collaborative agreements and the success of such endeavors;
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our estimates regarding revenues, expenses, capital requirements, timing to profitability and the need for and availability of additional financing;
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possible or likely reimbursement levels for our currently marketed products;
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estimates regarding market size, projected growth and sales of our existing products as well as our expectations of market acceptance of ASCENIV and BIVIGAM;
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effects of the coronavirus COVID-19 pandemic on our business, financial condition, liquidity and results of operations, and our ability to continue operations in
the same manner as previously conducted prior to the macroeconomic effects of the COVID-19 pandemic;
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future domestic and global economic conditions or performance; and
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expectations for future capital requirements.
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These statements may be found under the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” sections of this Quarterly Report on Form 10-Q. Forward-looking statements may be identified by the use of terms such as “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,”
“plans,” “potential,” “predicts,” or “should” or the negative thereof or other variations thereof or comparable terminology. Our actual results could differ materially from those contained in the forward-looking statements due to the factors
described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and in this Quarterly
Report on Form 10-Q for the quarter ended June 30, 2021. Any forward-looking statement included or incorporated by reference in this Quarterly Report on Form 10-Q reflects our current views with respect to future events and is subject to these
and other risks, uncertainties and assumptions related to our operations, industry and future growth. These forward-looking statements speak only as of the dates such statements are made and we undertake no obligation to publicly update any
forward-looking statements or to publicly announce revisions to any of the forward-looking statements, unless otherwise required by the federal securities laws.
FINANCIAL INFORMATION
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Financial Statements.
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ADMA BIOLOGICS, INC. AND SUBSIDIARIES
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June 30,
2021
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December 31,
2020
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(Unaudited)
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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$
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Accounts receivable, net
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Inventories
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Prepaid expenses and other current assets
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Total current assets
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Property and equipment, net
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Intangible assets, net
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Goodwill
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Right to use assets
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Deposits and other assets
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TOTAL ASSETS
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$
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$
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Accounts payable
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$
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$
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Accrued expenses and other current liabilities
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Current portion of deferred revenue
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Current portion of lease obligations
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Total current liabilities
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Senior notes payable, net of discount
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Deferred revenue, net of current portion
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Lease obligations, net of current portion
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Other non-current liabilities
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TOTAL LIABILITIES
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COMMITMENTS AND CONTINGENCIES
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STOCKHOLDERS’ EQUITY
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Preferred Stock, $
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Common Stock - voting, $
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Additional paid-in capital
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Accumulated deficit
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(
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)
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(
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)
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TOTAL STOCKHOLDERS’ EQUITY
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$
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$
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The accompanying notes are an integral part of these condensed consolidated financial statements.
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
(Unaudited)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2021
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2020
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2021
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2020
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REVENUES:
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Product revenue
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$
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$
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$
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$
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License revenue
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Total revenues
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OPERATING EXPENSES:
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Cost of product revenue (exclusive of amortization expense shown below)
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Research and development
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Plasma center operating expenses
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Amortization of intangible assets
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Selling, general and administrative
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Total operating expenses
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LOSS FROM OPERATIONS
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(
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)
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(
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(
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(
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OTHER INCOME (EXPENSE):
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Interest income
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Interest expense
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(
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(
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(
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(
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Other expense
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(
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)
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(
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(
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(
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Other expense, net
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(
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(
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(
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(
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NET LOSS
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$
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(
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$
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(
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$
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(
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)
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$
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(
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)
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BASIC AND DILUTED LOSS PER COMMON SHARE
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$
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(
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)
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$
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(
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)
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$
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(
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)
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$
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(
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
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Basic and Diluted
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The accompanying notes are an integral part of these condensed consolidated financial statements.
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
STOCKHOLDERS’ EQUITY
(Unaudited)
For the Three and Six Months Ended June 30, 2021
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Common Stock
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Additional
Paid-in
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Accumulated
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Total
Stockholders’
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|||||||||||||||||
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Shares
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Amount
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Capital
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Deficit
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Equity
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Balance at December 31, 2020
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$
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$
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$
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(
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)
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$
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Stock-based compensation
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-
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Vesting of Restricted Stock Units, net of shares withheld for taxes and retired
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(
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(
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Issuance of common stock, net of offering expenses
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Net loss
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-
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(
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(
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|||||||||||||
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Balance at March 31, 2021
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(
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Stock-based compensation
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-
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Issuance of common stock, net of offering expenses
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Net loss
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-
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(
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)
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(
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|||||||||||||
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Balance at June 30, 2021
|
|
$
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$
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$
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(
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)
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$
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For the Three and Six Months Ended June 30, 2020
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Common Stock
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Additional
Paid-in
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Accumulated
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Total
Stockholders’
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|||||||||||||||||
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Shares
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Amount
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Capital
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Deficit
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Equity
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Balance at December 31, 2019
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$
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$
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$
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(
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)
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$
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Stock-based compensation
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-
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Issuance of common stock, net of offering expenses
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Exercise of stock options
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Net loss
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-
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(
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)
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(
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)
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|||||||||||||
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Balance at March 31, 2020
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(
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)
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||||||||||||||
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Stock-based compensation
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-
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Exercise of stock options
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Net loss
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-
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(
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)
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(
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)
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|||||||||||||
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Balance at June 30, 2020
|
|
$
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$
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$
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(
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)
|
$
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The accompanying notes are an integral part of these condensed consolidated financial statements.
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
(Unaudited)
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Six Months Ended June 30,
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||||||||
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2021
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2020
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss
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$
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(
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)
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$
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(
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)
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||
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Adjustments to reconcile net loss to net cash used in operating activities:
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Depreciation and amortization
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Loss on disposal of fixed assets
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Stock-based compensation
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Amortization of debt discount
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Amortization of license revenue
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(
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)
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(
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)
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||||
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Changes in operating assets and liabilities:
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||||||||
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Accounts receivable
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(
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)
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(
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)
|
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Inventories
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(
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)
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(
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)
|
||||
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Prepaid expenses and other current assets
|
(
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)
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(
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)
|
||||
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Deposits and other assets
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(
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)
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(
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)
|
||||
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Accounts payable
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(
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)
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(
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)
|
||||
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Accrued expenses
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||||||
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Other current and non-current liabilities
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(
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)
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(
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)
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||||
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Net cash used in operating activities
|
(
|
)
|
(
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)
|
||||
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CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
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Purchase of property and equipment
|
(
|
)
|
(
|
)
|
||||
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Proceeds from the sale of property and equipment
|
|
|
||||||
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Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
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CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
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Proceeds from issuance of common stock, net of offering expenses
|
|
|
||||||
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Proceeds from the exercise of stock options
|
|
|
||||||
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Taxes paid on vested Restricted Stock Units
|
(
|
)
|
|
|||||
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Proceeds from issuance of note payable
|
|
|
||||||
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Payments on finance lease obligations
|
(
|
)
|
(
|
)
|
||||
|
Net cash provided by financing activities
|
|
|
||||||
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Net (decrease) increase in cash and cash equivalents
|
(
|
)
|
|
|||||
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Cash and cash equivalents - beginning of period
|
|
|
||||||
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Cash and cash equivalents - end of period
|
$
|
|
$
|
|
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
| 1. |
ORGANIZATION AND BUSINESS
|
ADMA Biologics, Inc. (“ADMA” or the “Company”) is an end-to-end commercial
biopharmaceutical company dedicated to manufacturing, marketing and developing specialty plasma-derived biologics for the treatment of immunodeficient patients at risk for infection and others at risk for certain infectious diseases. The
Company’s targeted patient populations include immune-compromised individuals who suffer from an underlying immune deficiency disorder or who may be immune-suppressed for medical reasons.
ADMA operates through its wholly-owned subsidiaries ADMA BioManufacturing, LLC (“ADMA
BioManufacturing”) and ADMA BioCenters Georgia Inc. (“ADMA BioCenters”). ADMA BioManufacturing was formed in January 2017 to facilitate the acquisition of the Biotest Therapy Business Unit (“BTBU”) from BPC Plasma, Inc. (formerly Biotest
Pharmaceuticals Corporation) (“BPC” and, together with Biotest AG, “Biotest”) on June 6, 2017. The acquisition included certain assets (the “Biotest Assets”) of BTBU, which included the FDA-licensed BIVIGAM and Nabi-HB immunoglobulin products,
and an FDA-licensed plasma fractionation manufacturing facility located in Boca Raton, FL (the “Boca Facility”) (the “Biotest Transaction”). BTBU had previously been the Company’s third-party contract manufacturer. ADMA BioCenters is the
Company’s source plasma collection business with eight plasma collection facilities in various stages of approval and development
located throughout the U.S., two of which hold an approved license with the U.S. Food and Drug Administration (the “FDA”) while a
third facility has a Biologics License Application (“BLA”) pending FDA approval.
The Company has three FDA-approved products, all of which are currently marketed and commercially available: (i) BIVIGAM (Immune Globulin Intravenous, Human), an Intravenous Immune Globulin (“IVIG”)
product indicated for the treatment of Primary Humoral Immunodeficiency (“PI”), also known as Primary Immunodeficiency Disease (“PIDD”), and for which the Company received FDA approval on May 9, 2019 and commenced commercial sales in August
2019; (ii) ASCENIV (Immune Globulin Intravenous, Human – slra 10% Liquid), an IVIG product indicated for the treatment of PI, for which the Company received FDA approval on April 1, 2019 and commenced first commercial sales in October 2019; and
(iii) Nabi-HB (Hepatitis B Immune Globulin, Human), which is indicated for the treatment of acute exposure to blood containing Hepatitis B surface antigen (“HBsAg”) and other listed exposures to Hepatitis B. In addition to its commercially
available immunoglobulin products, the Company provides contract manufacturing and laboratory services for certain clients and generates revenues from the sale of intermediate by-products that result from the immunoglobulin production process.
The Company seeks to develop a pipeline of plasma-derived therapeutics, and its products and product candidates are intended to be used by physician specialists focused on caring for immune-compromised patients with or at risk for certain
infectious diseases.
As of June 30, 2021, the Company had working capital of $153.2 million, including $42.4
million of cash and cash equivalents. Based upon the Company’s current projected revenue and expenditures, including capital expenditures and continued implementation of the Company’s commercialization and expansion activities, the Company’s
management currently believes that its cash, cash equivalents, projected revenue and accounts receivable will be sufficient to fund ADMA’s operations, as currently conducted, into the fourth quarter of 2021. In order to have sufficient cash to
fund its operations thereafter, the Company anticipates it will need to raise additional capital before the end of the fourth quarter of 2021. These estimates may change based upon several factors, including the success of the Company’s
commercial sales of its products, manufacturing ramp-up activities, the acceptability of ADMA’s immune globulin products by physicians, patients or payers and the various financing options that may be available to the Company. In addition, the
Company’s end-to-end production cycle from procurement of raw materials to commercial release of finished product can take between
and 12 months or potentially longer, requiring substantial investments in raw material plasma and other manufacturing materials. The
Company currently has no firm commitments for additional financing, and there can be no assurance that the Company will be able to secure additional financing on terms that are acceptable to the Company, or at all. Furthermore, if the Company’s
assumptions underlying its estimated expenses and revenues are incorrect, it may have to raise additional capital sooner than currently anticipated.
5
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
Due to numerous risks and uncertainties associated with FDA review, inspections and approvals related to the
Company’s products or the labeled indications of such products, ongoing compliance requirements and capacity expansion efforts at the Company’s Boca Facility and future commercialization of the Company’s products, including the Company’s
ability to obtain adequate quantities of FDA-approved plasma with proper specifications on acceptable terms for use in the Company’s manufacturing process, as well as the additional uncertainties surrounding the COVID-19 pandemic (see Note 10),
the Company is unable to estimate with certainty the amounts of increased capital outlays and operating expenditures required to fund its commercial and development activities. The Company’s current estimates may be subject to change as
circumstances regarding its business requirements evolve. Failure to secure any necessary financing in a timely manner and on commercially reasonable terms could have a material adverse effect on the Company’s business plan and financial
performance and it could be forced to delay or discontinue its commercialization, product development or clinical activities or delay or discontinue the approval efforts for any of the Company’s products or product candidates. The Company has
reported cumulative losses since inception in June 2004 through June 30, 2021 of $377.8 million. As such, these factors raise
substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments related to the recoverability and classification of asset carrying amounts and the
classification of liabilities that might be necessary from the outcome of this uncertainty.
The Company may decide to raise capital through public or private equity offerings or debt financings, or
obtain a bank credit facility or enter into corporate collaboration and licensing arrangements. The sale of additional equity or debt securities, if convertible, could result in dilution to the Company’s existing stockholders and, in such
event, the market value of its common stock may decline. The incurrence of additional indebtedness would result in increased fixed obligations and could also result in covenants that would restrict the Company’s operations or other financing
alternatives. In addition, the Company is exploring additional contract manufacturing arrangements and other business development opportunities, which may provide additional liquidity to the Company.
During the six months ended June 30, 2021, the Company raised $59.1 million from the open market sale agreement dated August 5, 2020, as amended, (the “2020 Sale Agreement”) with Jefferies LLC (“Jefferies”), pursuant to which the
Company could offer and sell, from time to time, at its option, through or to Jefferies, shares of the Company’s common stock (see Note 8). In July of 2021, the Company raised an additional $1.5 million under the 2020 Sale Agreement, and the Company has reached the maximum amount of funds that can be raised under the 2020 Sale Agreement.
On May 28, 2021, the Company entered into a new Open Market Sale AgreementSM (the “2021 Sale Agreement”) with
Jefferies, pursuant to which the Company may offer and sell, from time to time, at its option, through or to Jefferies, up to an aggregate of $50,000,000
of shares of the Company’s common stock. As of August 11, 2021, there have been no sales of common stock under the 2021 Sale
Agreement.
There can be no assurance that the Company’s approved products will be commercially viable, or that research
and development, plant capacity expansion, plasma center build-outs or other capital improvements will be successfully completed or that any product developed in the future will be approved. The Company is subject to risks common to companies
in the biotechnology and pharmaceutical manufacturing industries including, but not limited to, dependence on collaborative arrangements, development by the Company or its competitors of new technological innovations, dependence on key
personnel, protection of proprietary technology, and compliance with FDA and other governmental regulations and approval requirements.
| 2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards
Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (the “FASB”).
6
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the
annual audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March
25, 2021. The accompanying consolidated balance sheet as of December 31, 2020 was derived from the audited financial statements as of and for the year ended December 31, 2020. These condensed consolidated interim financial statements have been
prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X, and therefore omit or condense certain footnotes and other information normally included in complete consolidated financial statements prepared in
accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all normal and recurring
adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of June 30, 2021 and its results of operations, changes
in equity and cash flows for the three and six months ended June 30, 2021.
During the three and six months ended June 30, 2021 and 2020, comprehensive loss was equal to the net loss
amounts presented for the respective periods in the accompanying condensed consolidated statements of operations. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full fiscal
year.
Use of estimates
The preparation of financial statements requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates. Significant estimates include the realizable value of accounts receivable, valuation of inventory, assumptions used in projecting future liquidity and capital requirements, assumptions used in the fair value of awards
granted under the Company’s equity incentive plans and warrants issued in connection with the issuance of notes payable and the valuation allowance for the Company’s deferred tax assets.
Fair value of financial instruments
The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents,
accounts receivable and accounts payable, are shown at cost which approximates fair value due to the short-term nature of these instruments. The debt outstanding under the Company’s senior secured term loan (see Note 7) approximates fair value
due to the variable interest rate on this debt.
Accounts receivable
Accounts receivable is reported at realizable value, net of allowances for contractual credits and doubtful
accounts in the amount of $0.2 million and $0.1 million at June 30, 2021 and December 31, 2020, respectively, which are recognized in the period the related revenue is recorded. The Company
extends credit to its customers based upon an evaluation of each customer’s financial condition and credit history. Evaluations of the financial condition and associated credit risk of customers are performed on an ongoing basis. Based
on these evaluations, the Company has concluded that its credit risk is minimal. At June 30, 2021, six customers accounted for an
aggregate of 94 % of the Company’s total accounts receivable, and at December 31, 2020, three customers accounted for approximately 92 % of the
Company’s total accounts receivable.
Inventories
Raw materials inventory consists of various materials purchased from suppliers,
including normal source plasma, used in the production of the Company’s products. Work-in-process and finished goods inventories (see Note 3) reflect the cost of raw materials as well as costs for direct and indirect labor, primarily salaries,
wages and benefits for applicable employees, as well as an allocation of overhead costs related to the Boca Facility including utilities, property taxes, general repairs and maintenance, consumable supplies and depreciation. The allocation of
Boca Facility overhead to inventory is generally based upon the estimated square footage of the Boca Facility that is used in the production of the Company’s products relative to the total square footage of the facility.
Inventories, including plasma intended for resale and plasma intended for internal
use in the Company’s manufacturing, commercialization or research and development activities, are carried at the lower of cost or net realizable value determined by the first-in, first-out method. Net realizable value is generally determined
based upon the consideration the Company expects to receive when the inventory is sold, less costs to deliver the inventory to the recipient. The estimates for net realizable value of inventory are based on contractual terms or upon historical
experience and certain other assumptions, and the Company believes that such assumptions are reasonable. Inventory is periodically reviewed to ensure that its carrying value does not exceed its net realizable value, and adjustments are recorded
to write down such inventory, with a corresponding charge to cost of product revenue, when the carrying value or historical cost exceeds its estimated net realizable value. In addition, costs associated with the production of conformance or
engineering lots that would not qualify as immediately available for commercial sale are charged to cost of product revenue and not capitalized into inventory.
7
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
Goodwill
Goodwill represents the excess of purchase price over the fair value of net assets acquired by the Company.
Goodwill at June 30, 2021 and December 31, 2020 was $3.5
Goodwill is not amortized but is assessed for impairment on an annual basis or more frequently if impairment
indicators exist. The Company has the option to perform a qualitative assessment of goodwill to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount, including goodwill and
other intangible assets. If the Company concludes that this is the case, then it must perform a goodwill impairment test by comparing the fair value of the reporting unit to its carrying value. An impairment charge is recorded to the extent the
reporting unit’s carrying value exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The Company performs its annual goodwill impairment test as of October 1 of each year. The Company’s annual
goodwill impairment test as of October 1, 2020 did not result in a goodwill impairment charge, and the Company did no
Impairment of long-lived assets
The Company assesses the recoverability of its long-lived assets, which include property and equipment and
finite-lived intangible assets, whenever significant events or changes in circumstances indicate impairment may have occurred. If indicators of impairment exist, projected future undiscounted cash flows associated with the asset are compared to
its carrying amount to determine whether the asset’s carrying value is recoverable. Any resulting impairment is recorded as a reduction in the carrying value of the related asset in excess of fair value and a charge to operating results. For
the three and six months ended June 30, 2021 and 2020, the Company determined that there was no
Revenue recognition
Revenues for the three and six months ended June 30, 2021 and 2020 are comprised of (i) revenues from the
sale of the Company’s immunoglobulin products, BIVIGAM, ASCENIV and Nabi-HB, (ii) product revenues from the sale of human plasma collected through the Company’s Plasma Collection Centers business segment, (iii) contract manufacturing and
laboratory services revenue, (iv) revenues from the sale of intermediate by-products; and (v) license and other revenues primarily attributable to the out-licensing of ASCENIV to Biotest in 2012 to market and sell this product in Europe and
selected countries in North Africa and the Middle East. Biotest has provided the Company with certain services and financial payments in accordance with the related Biotest license agreement and is obligated to pay the Company certain amounts
in the future if certain milestones are achieved. Deferred revenue is amortized into income over the term of the Biotest license, representing a period of approximately 22 years.
Product revenue is recognized when the customer is deemed to have control over the product. Control is
determined based on when the product is shipped or delivered and title passes to the customer. Revenue is recorded in an amount that reflects the consideration the Company expects to receive in exchange. Revenue from the sale of the Company’s
immunoglobulin products is recognized when the product reaches the customer’s destination, and is recorded net of estimated rebates, price protection arrangements and customer incentives, including prompt pay discounts, wholesaler chargebacks
and other wholesaler fees. These estimates are based on historical experience and certain other assumptions, and the Company believes that such estimates are reasonable. For revenues associated with contract manufacturing and the sale of
intermediates, control transfers to the customer and the performance obligation is satisfied when the customer takes possession of the product from the Boca Facility or from a third-party warehouse that is utilized by the Company.
8
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
Product revenues from the sale of human plasma collected at the Company’s plasma collection centers are
recognized at the time control of the product has been transferred to the customer, which generally occurs at the time of shipment. Product revenues are recognized at the time of delivery if the Company retains control of the product during
shipment.
For the six months ended June 30, 2021, five customers represented an aggregate of 85 % of the Company’s
consolidated revenues. For the six months ended June 30, 2020, three customers represented an aggregate of 81 % of the Company’s consolidated revenues.
Cost of product revenue
Cost of product revenue includes costs associated with the manufacture of the Company’s FDA approved
products, intermediates and the sale of human source plasma, as well as expenses related to conformance batch production, process development and scientific and technical operations when these operations are attributable to marketed products.
When the activities of these operations are attributable to new products in development, the expenses are classified as research and development expenses.
Loss per common share
Basic loss per common share is computed by dividing net loss attributable to common
stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per common share is calculated by dividing net loss attributable to common stockholders, as adjusted for the effect of dilutive
securities, if any, by the weighted average number of shares of common stock and dilutive common stock outstanding during the period. Potentially dilutive common stock includes the shares of common stock issuable upon the exercise of
outstanding stock options and warrants, using the treasury stock method. Potentially dilutive common stock is excluded from the diluted loss per common share computation to the extent that it would be anti-dilutive. As a result, no
potentially dilutive securities are included in the computation of any of the accompanying diluted loss per share amounts in the accompanying condensed consolidated financial statements as the Company reported a net loss for all periods
presented. For the six months ended June 30, 2021 and 2020, the following securities were excluded
from the calculation of diluted loss per common share because of their anti-dilutive effects:
|
For the Six Months Ended June 30,
|
||||||||
|
2021
|
2020
|
|||||||
|
Stock options
|
|
|
||||||
|
Restricted stock units
|
|
|
||||||
|
Warrants
|
|
|
||||||
|
|
|
|||||||
Stock-based compensation
The Company follows recognized accounting guidance which requires all equity-based payments, including grants
of stock options, to be recognized in the statement of operations as compensation expense based on their fair values at the date of grant. Compensation expense related to awards to employees and directors with service-based vesting conditions
is recognized on a straight-line basis over the associated vesting period of the award based on the grant date fair value of the award. Stock options granted under the Company’s equity incentive plans generally have a four-year vesting period and a term of 10
years. Pursuant to ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718), the Company has elected not to establish a forfeiture rate, as stock-based compensation expense
related to forfeitures of unvested stock options is fully reversed at the time of forfeiture.
Income Taxes
The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events
that have been included in the consolidated financial statements or its tax returns. Under this method, deferred tax assets and liabilities are recognized for the temporary differences between the tax bases of assets and liabilities and their
respective financial reporting amounts at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company records a valuation allowance on its deferred tax assets if it is more likely than not
that the Company will not generate sufficient taxable income to utilize its deferred tax assets. The Company is subject to income tax examinations by major taxing authorities for all tax years since 2016 and for previous periods as it relates
to the Company’s net operating loss carryforwards.
9
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
In accordance with U.S. GAAP, the Company is required to determine whether a tax position of the Company is
more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is
measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. Derecognition of a tax benefit previously recognized could result in the Company recording a tax liability that would reduce
net assets. Based on its analysis, the Company has determined that it has not incurred any liability for unrecognized tax benefits as of June 30, 2021 and December 31, 2020, and during the three and six months ended June 30, 2021 and 2020, the
Company recognized no
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments –
Credit Losses (Topic 326) (“ASU 2016-13”), which requires financial assets to be presented at the net amount expected to be collected, with an allowance for credit losses to be deducted from the amortized cost basis of the financial
asset such that the net carrying value of the asset is presented as the amount expected to be collected. Under ASU 2016-13, the entity’s statement of operations is required to reflect the measurement of credit losses for newly recognized
financial assets, as well as expected increases or decreases in expected credit losses that have taken place during the period. For public business entities, ASU 2016-13 is effective for fiscal years beginning after December 15, 2019. The
Company adopted ASU 2016-13 on January 1, 2020, and the adoption of this update did not have a significant impact on the Company’s consolidated financial statements.
| 3. |
INVENTORIES
|
The following table provides the components of inventories:
|
June 30,
2021
|
December 31,
2020
|
|||||||
|
Raw materials
|
$
|
|
$
|
|
||||
|
Work-in-process
|
|
|
||||||
|
Finished goods
|
|
|
||||||
|
Total inventories
|
$
|
|
$
|
|
||||
Raw materials includes plasma and other materials expected to be used in the production of BIVIGAM, ASCENIV
and Nabi-HB, as there are alternative uses for these materials that provide a probable future benefit or will be consumed in the production of goods expected to be available for sale. All other activities and materials associated with the
production of inventories used in research and development activities are expensed as incurred.
Work-in-process inventory primarily consists of bulk drug substance and unlabeled filled vials of the
Company’s immunoglobulin products. Finished goods inventory is comprised of immunoglobulin product inventory and related intermediates that are available for commercial sale, as well as plasma collected at the Company’s plasma collection
centers which is expected to be sold to third-party customers.
10
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
| 4. |
INTANGIBLE ASSETS
|
Intangible assets at June 30, 2021 and December 31, 2020 consist of the following:
|
June 30, 2021
|
December 31, 2020
|
|||||||||||||||||||||||
|
Cost
|
Accumulated
Amortization |
Net
|
Cost
|
Accumulated
Amortization |
Net
|
|||||||||||||||||||
|
Trademark and other intangible rights related to Nabi-HB
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Rights to intermediates
|
|
|
|
|
|
|
||||||||||||||||||
|
Customer contract
|
|
|
|
|
|
|
||||||||||||||||||
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||
All of the Company’s intangible assets were acquired in the Biotest Transaction. Amortization
expense related to these intangible assets was $0.2 0.4 Estimated aggregate future aggregate amortization expense is expected to be as follows:
|
2021
|
$
|
|
||
|
2022
|
|
|||
|
2023
|
|
|||
|
2024
|
|
| 5. |
PROPERTY AND EQUIPMENT
|
Property and equipment and related accumulated depreciation are summarized as follows:
|
June 30, 2021
|
December 31, 2020
|
|||||||
|
Manufacturing and laboratory equipment
|
$
|
|
$
|
|
||||
|
Office equipment and computer software
|
|
|
||||||
|
Furniture and fixtures
|
|
|
||||||
|
Construction in process
|
|
|
||||||
|
Leasehold improvements
|
|
|
||||||
|
Land
|
|
|
||||||
|
Buildings and building improvements
|
|
|
||||||
|
|
|
|||||||
|
Less: Accumulated depreciation
|
(
|
)
|
(
|
)
|
||||
|
Total property and equipment, net
|
$
|
|
$
|
|
||||
Fixed assets are stated at cost less accumulated depreciation. Depreciation is calculated using the
straight-line method over the asset’s estimated useful life. Land is not depreciated. The buildings were assigned a useful life of 30
years. Property and equipment other than land and buildings have useful lives ranging from to 10 years. Leasehold improvements are amortized over the lesser of the lease term or their estimated useful lives.
The Company recorded depreciation expense on property and equipment for
the three and six months ended June 30, 2021 of $1.1 million and $2.2 million, respectively. Depreciation expense for the three and six months ended June 30, 2020 was $0.7 million and $1.3 million, respectively.
11
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
| 6. |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
|
Accrued expenses and other current liabilities at June 30, 2021 and December 31, 2020 are as follows:
|
June 30, 2021
|
December 31, 2020
|
|||||||
|
Accrued rebates
|
$
|
|
$
|
|
||||
|
Accrued distribution fees
|
|
|
||||||
|
Accrued payroll
|
|
|
||||||
|
Accrued testing
|
|
|
||||||
|
Accrued incentives
|
|
|
||||||
|
Accrued severance
|
|
|
||||||
|
Other
|
|
|
||||||
|
Total accrued expenses and other current liabilities
|
$
|
|
$
|
|
||||
| 7. |
DEBT
|
A summary of outstanding senior notes payable is as follows:
|
June 30, 2021
|
December 31, 2020
|
|||||||
|
Notes payable
|
$
|
|
$
|
|
||||
|
Less:
|
||||||||
|
Debt discount
|
(
|
)
|
(
|
)
|
||||
|
Senior notes payable
|
$
|
|
$
|
|
||||
Under the Credit Agreement and Guaranty, as amended from time to time, (the “Perceptive Credit Agreement”)
with Perceptive Credit Holdings II, LP, as the lender and administrative agent (“Perceptive”), the Company has a principal balance outstanding to Perceptive in the form of senior secured notes payable to Perceptive aggregating to $100.0 million with a maturity date of March 1, 2024
(the “Maturity Date”), subject to acceleration pursuant to the Perceptive Credit Agreement, including upon an Event of Default (as defined in the Perceptive Credit Agreement). On the Maturity Date, the Company will pay Perceptive the entire
outstanding principal amount and any accrued and unpaid interest thereon. Prior to the Maturity Date, there are no scheduled principal payments due under the Perceptive Credit Agreement.
Borrowings under the Perceptive Credit Agreement bear interest at a rate per annum equal to 7.5 % plus the greater of (i) one-month
LIBOR and (ii) 3.5 %; provided, however, that upon, and during the continuance of, an Event of Default, the interest rate will
automatically increase by an additional 400 basis points. Accrued interest is payable to Perceptive on the last day of each month
during the term of the Perceptive Credit Facility. The rate of interest in effect as of June 30, 2021 was 11.0 %, and the Company
paid interest to Perceptive during the six months ended June 30, 2021 and 2020 in the amount of $5.5 million and $4.4 million, respectively.
All of the Company’s obligations under the Perceptive Credit Agreement are secured by a first-priority lien
and security interest in substantially all of the Company’s tangible and intangible assets, including intellectual property and all of the equity interests in the Company’s subsidiaries. The Perceptive Credit Agreement contains certain
representations and warranties, affirmative covenants, negative covenants and conditions that are customarily required for similar financings. The negative covenants restrict or limit the ability of the Company and its subsidiaries to, among
other things and subject to certain exceptions contained in the Perceptive Credit Agreement, incur new indebtedness; create liens on assets; engage in certain fundamental corporate changes, such as mergers or acquisitions, or changes to the
Company’s or its subsidiaries’ business activities; make certain Investments or Restricted Payments (each as defined in the Perceptive Credit Agreement); change its fiscal year; pay dividends; repay other certain indebtedness; engage in certain
affiliate transactions; or enter into, amend or terminate any other agreements that have the impact of restricting the Company’s ability to make loan repayments under the Perceptive Credit Agreement. In addition, the Company must (i) at all
times prior to the Maturity Date maintain a minimum cash balance of $3.0 million; and (ii) as of the last day of each fiscal quarter
commencing with the fiscal quarter ended June 30, 2019, report revenues for the trailing 12-month period that exceed the amounts set forth in the Perceptive Credit Agreement, which range from $7.0 million for the fiscal quarter ended June 30, 2019 to $55.0
million for the fiscal quarter ending December 31, 2021. At June 30, 2021, the Company was in compliance with all of the covenants contained in the Perceptive Credit Agreement.
12
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
As a result of the fees paid to Perceptive and the value of the warrants issued to Perceptive under the terms
of the Perceptive Credit Agreement, the Company recognized an aggregate discount on the senior secured notes in the amount of $7.1
million. The Company records debt discount as a reduction to the face amount of the debt, and the debt discount is amortized as interest expense over the life of the debt using the interest method. Based on the fair value of the Perceptive
Warrants and the aggregate amount of fees and expenses associated with obtaining the Perceptive Credit Facility, the effective interest rate on senior secured notes payable to Perceptive as of June 30, 2021 was approximately 13.7 %.
| 8. |
STOCKHOLDERS’ EQUITY
|
Preferred Stock
The Company is currently authorized to issue up to 10 0.0001 no
Common Stock
As of June 30, 2021 and December 31, 2020, the Company was authorized to issue 300,000,000 and 150,000,000 shares,
respectively, of its common stock, $0.0001 131,872,026 and 104,902,888 shares of common stock were
outstanding as of June 30, 2021 and December 31, 2020, respectively. On May 27, 2021, the Company’s stockholders approved an amendment to the Company’s certificate of incorporation which increased the number of shares of common stock that the
Company is authorized to issue from 150,000,000 to 300,000,000 . After giving effect to the 17,073,357 shares reserved for
outstanding warrants and awards issued or reserved for future issuance under the Company’s equity incentive plans, as of June 30, 2021 there were 151,054,617
shares of common stock available for issuance.
On August 5, 2020, the Company entered into the 2020 Sale Agreement with Jefferies (see Note 1), pursuant to
which the Company could offer and sell, from time to time, at its option, through or to Jefferies, up to an aggregate of $50 million
of shares of the Company’s common stock. On November 5, 2020 and February 3, 2021, the Company and Jefferies amended the 2020 Sale Agreement to provide for increases in the aggregate offering amount under the Sale Agreement such that the
Company could sell shares having an aggregate offering price of up to $105.4 million under the 2020 Sale Agreement, as amended.
During the six months ended June 30, 2021, the Company issued and sold 26,907,753 shares of common stock under the 2020 Sale
Agreement and received net proceeds of $59.1 million (see Note 14).
On May 28, 2021, the Company entered into the 2021 Sale Agreement with Jefferies, pursuant to which the
Company may offer and sell, from time to time, at its option, through or to Jefferies, up to an aggregate of $50,000,000 of shares of
the Company’s common stock. As of the date of this report, there have been no sales of common stock under this agreement.
On February 11, 2020, the Company completed an underwritten public offering of 23,500,000 shares of its common stock for gross proceeds of $82.3 million. On February 21, 2020, the Company sold an additional 3,525,000 shares pursuant to
the underwriters’ exercise of their option to purchase additional shares of the Company’s common stock for additional gross proceeds of $12.3
million. The Company received net proceeds, after underwriting discounts and other expenses associated with the offering, of approximately $88.7
million.
Warrants
At June 30, 2021 and December 31, 2020, the Company had outstanding warrants to purchase an aggregate of 4,528,160 2.82
13
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
Equity Incentive Plans
The fair value of stock options granted under the Company’s 2007 Employee Stock Option Plan
(the “2007 Plan”) and the ADMA Biologics, Inc. 2014 Omnibus Incentive Compensation Plan, as amended and restated (the “2014 Plan”), was determined on the date of grant using the Black-Scholes option valuation model. The Black-Scholes model
was developed for use in estimating the fair value of publicly traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of certain subjective assumptions including
the expected stock price volatility. The stock options granted to employees and directors have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the
fair value estimate. The following assumptions were used to determine the fair value of options granted during the six months ended June 30, 2021 and
2020:
|
Six Months Ended June 30,
|
|||
|
2021
|
2020
|
||
|
Expected term
|
|
|
|
|
Volatility
|
|
|
|
|
Dividend yield
|
|
|
|
|
Risk-free interest rate
|
|
|
|
During the six months ended June 30, 2021 and 2020, the Company granted options to purchase an aggregate of 1,658,050 and 1,232,500 shares of
common stock, respectively, to its directors, employees and certain third-party service providers. The weighted average remaining contractual life of stock options outstanding and expected to vest at June 30, 2021 is 6.5 5.2 years.
A summary of the Company’s option activity under the 2007 Plan and 2014 Plan and related information is as
follows:
|
Shares
|
Weighted
Average
Exercise Price
|
|||||||
|
Options outstanding, vested and expected to vest at December 31, 2020
|
|
$
|
|
|||||
|
Forfeited
|
(
|
)
|
$
|
|
||||
|
Expired
|
(
|
)
|
$
|
|
||||
|
Granted
|
|
$
|
|
|||||
|
Exercised
|
|
$
|
|
|||||
|
Options outstanding, vested and expected to vest at June 30, 2021
|
|
$
|
|
|||||
|
Options exercisable
|
|
$
|
|
|||||
As of June 30, 2021, the Company had $4.2 million of unrecognized compensation expense related to options granted under the Company’s equity incentive plans, which is expected to be recognized over a
weighted-average period of 2.6 years.
During the six months ended June 30, 2021 and 2020, the Company granted Restricted Stock Units
(“RSUs”) representing an aggregate of 542,244 and 341,000 shares, respectively, to certain management employees of the Company and to members of its Board of Directors. The RSUs vest annually over a period of four years for employees and semi-annually over a period of one year
for directors. During the six months ended June 30, 2021, 87,750 shares vested in connection with grants of RSUs. With respect to
these vested RSUs, 26,365 shares valued at approximately $59,000 were withheld by the Company to cover employees’ tax liabilities. On March 25, 2021, these shares were retired by the Company and were no longer outstanding as of
June 30, 2021. A summary of the Company’s unvested RSU activity and related information is as follows:
14
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
|
Shares
|
Weighted
Average Grant
Date Fair Value
|
|||||||
|
Balance at December 31, 2020
|
|
$
|
|
|||||
|
Granted
|
|
$
|
|
|||||
|
Vested
|
(
|
)
|
$
|
|
||||
|
Forfeited
|
(
|
)
|
$
|
|
||||
|
Balance at June 30, 2021
|
|
$
|
|
|||||
As of June 30, 2021, the Company had $1.5 million of unrecognized compensation expense related to unvested RSUs granted under the Company’s equity incentive plans, which is expected to be recognized over a
weighted-average period of 3.3 years.
Total stock-based compensation expense for all awards granted under the Company’s equity incentive plans for
the three months and six months June 30, 2021 and 2020 is as follows:
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
|
2021
|
2020
|
2021
|
2020
|
|||||||||||||
|
Research and development
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Plasma center operating expenses
|
|
|
|
|
||||||||||||
|
Selling, general and administrative
|
|
|
|
|
||||||||||||
|
Cost of product revenue
|
|
|
|
|
||||||||||||
|
Total stock-based compensation expense
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
| 9. |
RELATED PARTY TRANSACTIONS
|
The Company leases an office building and equipment from Areth, LLC (“Areth”)
pursuant to an agreement for services effective as of January 1, 2016, as amended from time to time. Rent expense for the six months ended June 30, 2021 and 2020 amounted to $60,000 0.1 million. This amount was immaterial to the consolidated financial
statements for the three and six months ended June 30, 2020. Dr. Grossman and Adam Grossman each own shares of Genesis.
See Note 7 for a discussion of the Company’s credit facility and related
transactions with Perceptive, a holder of more than 10 % of the Company’s common stock.
During the three and six months ended June 30, 2021, in connection with the
resignation of Dr. James Mond, the Company’s former Chief Scientific and Medical Officer, the Company recognized an expense and corresponding liability in the amount of $0.8 million for estimated payments to be made under a separation and transition agreement with Dr. Mond. Such payments are to be made in scheduled installments over a period of 10 months.
In connection with the February 2020 public offering of the Company’s common stock
(see Note 8) on February 11, 2020: (i) Perceptive Advisors, a principal stockholder of ADMA, purchased 4,563,700 shares of common stock
through one of its affiliates, (ii) Dr. Grossman purchased 22,857 shares of common stock directly and 22,857 shares indirectly through an entity he controls, (iii) Lawrence P. Guiheen, a director of the Company, purchased 20,000 shares of common stock, (iv) Mr. Grossman purchased 28,571 shares of common stock directly and 57,143 shares indirectly through an
entity he controls, (v) Brian Lenz, the Company’s Executive Vice President and Chief Financial Officer, purchased 7,142 shares of common
stock, and (vi) Dr. Mond purchased 4,285 shares of common stock, all at the public offering price of $3.50 per share.
15
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
| 10. |
COMMITMENTS AND CONTINGENCIES
|
General Legal Matters
From time to time the Company is or may become subject to certain legal proceedings and claims arising in
connection with the normal course of its business. Management does not expect that the outcome of any such claims or actions will have a material effect on the Company’s liquidity, results of operations or financial condition.
COVID-19 Pandemic
The Company continues to monitor the ongoing developments related to the COVID-19 pandemic, including the
emergence of the Delta variant and other resistant strains of the coronavirus, and its impacts to the Company’s commercial and manufacturing operations and plasma collection facilities, including collections of source plasma, procurement of raw
materials and packaging materials, a portion of which are sourced internationally, and the testing of finished drug product that is required prior to its availability for commercial sale. A substantial portion of such testing has historically
been performed by contract laboratories outside the United States.
The Company had experienced some delays with final drug product release testing by third-party vendors. In
response to these delays, the Company added additional release testing laboratories to its FDA-approved consortium listed in its drug approval documents which the Company believes has adequately addressed this issue. In addition, due to a
combination of previous state and local “shelter-in-place” orders, as well as government stimulus packages, persisting social distancing measures and varying roll-outs of vaccinations by state, the Company has experienced lower than normal
donor collections at its FDA approved plasma collection centers. The Company was also subject to delays in shipments of source plasma from its contracted third-party suppliers, as well as delays in deliveries for personal protective equipment,
reagents and other non-plasma raw materials and supplies used in the manufacture and distribution of its products. The Company is also subject to supply chain delays as a result of certain of its suppliers diverting significant resources
towards the rapid development and distribution of COVID-19 vaccines and, as a result, the Company may elect to carry more raw materials inventory than it has in the past. The COVID-19 pandemic has also impacted, to a certain degree, the
Company’s customer engagement initiatives, whereby ADMA’s sales and medical affairs field personnel have faced difficulties communicating directly with physicians and other healthcare professionals, as well as the cancellation or postponement
of a number of key scientific and medical meetings, further limiting the Company’s ability to communicate with potential customers. The Company has implemented a comprehensive suite of virtual engagement initiatives, however, clinician
engagement has been reduced due to rapidly evolving COVID-19 priorities at U.S. medical centers.
The pandemic could also impact the Company’s ability to interact with the FDA or other regulatory authorities
and may result in delays in the conduct of inspections or review of pending applications or submissions. During the second quarter of 2021, the Company was notified by the FDA that its submission for the approval of its in-house fill-finish
process utilizing a recently installed aseptic filling machine will require a site inspection, either in person or virtually, of the Boca Facility. Although the inspection was completed in July of 2021, the FDA’s review of the Company’s
regulatory filing with respect to its in-house fill-finish process and new aseptic filling machine remains ongoing. Although the Company anticipates receiving regulatory approval of this submission in the second half of 2021, no assurances can
be provided as to the timing for completion of this FDA review or any other regulatory submissions or applications that may be impacted by restrictions related to COVID-19.
Notwithstanding the foregoing, the COVID-19 pandemic to date has not had a material impact on the Company’s
financial condition or results of operations, and the Company does not believe that its production operations at the Boca Facility, the Company’s contract fill/finishers or its plasma collection facilities have been significantly impacted by
the COVID-19 pandemic. As a result, the Company does not anticipate and has not experienced any material impairments with respect to any of its long-lived assets, including the Company’s property and equipment, goodwill or intangible assets.
16
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
Although the COVID-19 pandemic has not, to date, materially adversely impacted the Company’s capital and
financial resources, because the Company is unable to determine the ultimate severity or duration of the pandemic or its long-term effects on, among other things, the global, national or local economies, the capital and credit markets or the
Company’s workforce, customers or our suppliers, at this time the Company is unable to predict whether COVID-19 will have a material adverse impact on the Company’s business, financial condition, liquidity and results of operations.
Vendor Commitments
Pursuant to the terms of a plasma purchase agreement with BPC dated as of November 17, 2011 (the “2011 Plasma
Purchase Agreement”), the Company agreed to purchase from BPC an annual minimum volume of source plasma containing antibodies to RSV to be used in the manufacture of ASCENIV. The Company must purchase a to-be-determined and agreed upon annual
minimum volume from BPC, but may also collect high-titer RSV plasma from up to five wholly-owned ADMA plasma collection facilities.
During 2015, the Company and BPC amended the 2011 Plasma Purchase Agreement to allow the Company the ability to collect its raw material RSV high-titer plasma from other third-party collection organizations, thus allowing the Company to expand
its reach for raw material supply as it executes its commercialization plans for ASCENIV. Unless terminated earlier, the 2011 Plasma Purchase Agreement expires in June 2027, after which it may be renewed for two additional five-year periods if
agreed to by the parties. As part of the closing of the Biotest Transaction, the parties amended the 2011 Plasma Purchase Agreement to extend the initial term through the ten-year anniversary of the closing date of the Biotest Transaction. On December 10, 2018, BPC assigned its rights and obligations under the 2011 Plasma Purchase Agreement
to Grifols Worldwide Operations Limited (“Grifols”) as its successor-in-interest, effective January 1, 2019. On January 1, 2019, Grifols and the Company entered into an additional amendment to the 2011 Plasma Purchase Agreement for the purchase
of source plasma containing antibodies to RSV from Grifols. Pursuant to this amendment, until January 1, 2022, the Company may purchase RSV plasma from Grifols from the two plasma collection centers that were transferred to BPC on January 1, 2019 at a price equal to cost plus (5 %) (without any additional increase due to
inflation).
On June 6, 2017, the Company and BPC entered into a Plasma Supply Agreement pursuant to which BPC supplies,
on an exclusive basis subject to certain exceptions, to ADMA BioManufacturing an annual minimum volume of hyperimmune plasma that contain antibodies to the Hepatitis B virus for the manufacture of Nabi-HB. The Plasma Supply Agreement has a 10 -year term. On July 19, 2018, the Company and BPC entered into an amendment to the Plasma Supply Agreement to provide, among other things, that in
the event BPC elects not to supply in excess of ADMA BioManufacturing’s specified amount of Hepatitis B plasma and ADMA BioManufacturing is unable to secure Hepatitis B plasma from a third party at a price that is within a low double- digit
percentage of the price that ADMA BioManufacturing pays to BPC, then BPC shall reimburse ADMA BioManufacturing for the difference in price ADMA BioManufacturing incurs. On December 10, 2018, BPC assigned its rights and obligations under the
Plasma Supply Agreement to Grifols, effective January 1, 2019.
On June 6, 2017, the Company and BPC entered into a Plasma Purchase Agreement (the “2017 Plasma Purchase
Agreement”), pursuant to which ADMA BioManufacturing purchases normal source plasma (“NSP”) from BPC at agreed upon annual quantities and prices. The 2017 Plasma Purchase Agreement has an initial term of five years after which the 2017 Plasma Purchase Agreement may be renewed for additional two terms of two years each upon the mutual written consent
of the parties. On July 19, 2018, the Company and BPC entered into an amendment to the 2017 Plasma Purchase Agreement to, among other things, provide agreed upon amounts of normal source plasma to be supplied by BPC to ADMA BioManufacturing in
calendar year 2019 at a specified price per liter, provided that ADMA BioManufacturing delivers a valid purchase order to BPC. Additionally, pursuant to the amendment to the 2017 Plasma Purchase Agreement, BPC agreed that, for calendar years
2020 and 2021, it shall supply no less than a high double-digit percentage of ADMA BioManufacturing’s requested NSP amounts, provided that such requested NSP amounts are within an agreed range, at a price per liter to be mutually determined.
Furthermore, pursuant to the amendment to the 2017 Plasma Purchase Agreement, in the event BPC fails to supply ADMA BioManufacturing with at least a high double-digit percentage of ADMA BioManufacturing’s requested NSP amounts, BPC shall
promptly reimburse ADMA BioManufacturing the difference in price ADMA BioManufacturing incurs due to BPC’s election not to supply NSP to ADMA BioManufacturing in such amounts as requested. On December 10, 2018, BPC assigned its rights and
obligations under the Plasma Purchase Agreement to Grifols, effective January 1, 2019.
17
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
Effective as of May 12, 2021, the Company and Grifols amended the foregoing 2017 Plasma Purchase Agreement
whereby, among other things, the term of the agreement was extended through December 31, 2022, while certain historical provisions were deleted. In order to maintain a reliable supply of raw material plasma thereafter, the Company is in
late-stage discussion with multiple third-party suppliers of NSP to supplement the 2017 Plasma Purchase Agreement, and the Company has also increased the number of planned plasma collection center buildouts and is continuing to increase its
plasma collection capabilities at its ADMA BioCenters plasma collection centers business segment.
The Company purchases substantially all of its raw material plasma from Grifols. For the six months ended
June 30, 2021, plasma purchases from Grifols totaled $17.5 million, or approximately 67 % of the Company’s total inventory purchases. For the six months ended June 30, 2020, plasma purchases from Grifols totaled approximately $3.7 million, representing approximately 42 %
of the Company’s total inventory purchases.
Post-marketing commitments
In connection with the approval of the BLA for BIVIGAM, on December 19, 2012 Biotest committed to perform two
additional post-marketing studies, a pediatric study to evaluate the efficacy and safety of BIVIGAM in children and adolescents, and a post-authorization safety study to further assess the potential risk of hypotension and hepatic and renal
impairment in BIVIGAM-treated patients with primary humoral immunodeficiency. These studies are still pending completion. ADMA has assumed the remaining obligations, and the costs of the studies will be expensed as incurred as research and
development expenses. The Company currently expects both studies to be completed by June of 2023.
In connection with the FDA’s approval of ASCENIV on April 1, 2019, the Company is required to perform a
pediatric study to evaluate the safety and efficacy of ASCENIV in children and adolescents. This study is required to be completed by June of 2023.
Employment contracts
The Company has entered into employment agreements with its executive management team consisting of its
President and Chief Executive Officer, its Executive Vice President and Chief Financial Officer and its former Executive Vice President, Chief Medical Officer and Chief Scientific Officer (see Note 9).
Other commitments
In the normal course of business, the Company enters into contracts that contain a variety of
indemnifications with its employees, licensors, suppliers and service providers. Further, the Company indemnifies its directors and officers who are, or were, serving at the Company’s request in such capacities. The Company’s maximum exposure
under these arrangements is unknown as of June 30, 2021. The Company does not anticipate recognizing any significant losses relating to these arrangements.
| 11. |
SEGMENTS
|
The Company is engaged in the manufacture, marketing and development of specialty
plasma-derived biologics. The Company’s ADMA BioManufacturing segment reflects the Company’s immunoglobulin manufacturing, commercial and development operations in Boca Raton, FL, acquired on June 6, 2017 (see Note 1). The Plasma Collection
Centers segment as of June 30, 2021 consists of eight plasma collection facilities in various
stages of approval and development located throughout the U.S., two of which hold an approved license with the FDA while a third
facility has a BLA pending FDA approval. The Corporate segment includes general and administrative overhead expenses. The Company defines its segments as those business units whose operating results are regularly reviewed by the
chief operating decision maker (“CODM”) to analyze performance and allocate resources. The Company’s CODM is its President and Chief Executive Officer. Summarized financial information concerning reportable segments is shown in the following tables:
18
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
|
Three Months Ended June 30, 2021
|
||||||||||||||||
|
ADMA
BioManufacturing
|
Plasma Collection
Centers
|
Corporate
|
Consolidated
|
|||||||||||||
|
Revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Cost of product revenue
|
|
|
|
|
||||||||||||
|
Loss from operations
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Interest and other expense, net
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Net loss
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Depreciation and amortization expense
|
|
|
|
|
||||||||||||
|
Total assets
|
|
|
|
|
||||||||||||
|
Three Months Ended June 30, 2020
|
||||||||||||||||
|
ADMA
BioManufacturing
|
Plasma Collection
Centers
|
Corporate
|
Consolidated
|
|||||||||||||
|
Revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Cost of product revenue
|
|
|
|
|
||||||||||||
|
Loss from operations
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Interest and other expense, net
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Net loss
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Depreciation and amortization expense
|
|
|
|
|
||||||||||||
|
Total assets
|
|
|
|
|
||||||||||||
19
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
|
Six Months Ended June 30, 2021
|
||||||||||||||||
|
ADMA
BioManufacturing
|
Plasma Collection
Centers
|
Corporate
|
Consolidated
|
|||||||||||||
|
Revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Cost of product revenue
|
|
|
|
|
||||||||||||
|
Loss from operations
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Interest and other expense, net
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Net loss
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Capital expenditures
|
|
|
|
|
||||||||||||
|
Depreciation and amortization expense
|
|
|
|
|
||||||||||||
|
Six Months Ended June 30, 2020
|
||||||||||||||||
|
ADMA
BioManufacturing
|
Plasma Collection
Centers
|
Corporate
|
Consolidated
|
|||||||||||||
|
Revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Cost of product revenue
|
|
|
|
|
||||||||||||
|
Loss from operations
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Interest and other expense, net
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Net loss
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Capital expenditures
|
|
|
|
|
||||||||||||
|
Depreciation and amortization expense
|
|
|
|
|
||||||||||||
Net revenues according to geographic area, based on the location of where the product is shipped, is as follows:
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
|
2021
|
2020
|
2021
|
2020
|
|||||||||||||
|
United States
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
International
|
|
|
|
|
||||||||||||
|
Total revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
20
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
| 12. |
LEASE OBLIGATIONS
|
The Company leases certain properties and equipment for its ADMA BioCenters subsidiary and certain equipment
for its ADMA BioManufacturing subsidiary, which leases provide the right to use the underlying assets and require lease payments through the respective lease terms which expire at various dates through 2032. The Company’s lease agreements do
not contain any material residual value guarantees or material restrictive covenants.
The Company determines if an arrangement is an operating lease at inception. Leases with an initial term of
12 months or less are not recorded on the balance sheet. All other leases are recorded on the balance sheet with assets representing the right to use the underlying asset for the lease term and lease liabilities representing the obligation to
make lease payments arising from the lease. Right-to-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term and include options to extend or terminate the
lease when they are reasonably certain to be exercised. The present value of the lease payments is determined using the Company’s incremental borrowing rate of 13 %. The Company’s lease expense is recognized on a straight-line basis over the lease term and is reflected in Plasma center operating expenses and Selling, general and administrative expenses. Aggregate lease
expense for the Company’s leases for the three months ended June 30, 2021 and 2020 was approximately $0.4 million and $0.1 million, respectively. Aggregate lease expense for the six months ended June 30, 2021 and 2020 was approximately $0.7 million and $0.2 million,
respectively. Cash paid for the Company’s leases for the three months ended June 30, 2021 and 2020 was approximately $0.3 million and
$0.1 million, respectively. Cash paid for the Company’s leases for the six months ended June 30, 2021 and 2020 was approximately $0.5 million and $0.2 million,
respectively.
During the six months ended June 30, 2021, the Company recognized additional right to use
assets and corresponding lease liabilities of $2.8 three new property leases where the Company intends to open additional plasma collection facilities. Including a finance lease the Company entered into in June 2018, the
Company has aggregate lease liabilities of $7.5 million and $4.7 million as of June 30, 2021 and December 31, 2020, respectively, which are comprised primarily of the leases for the Company’s plasma collection centers and an
administrative office lease related to the Company’s ADMA BioCenters subsidiary. The Company’s operating leases have a weighted average remaining term of 9.3 years. Scheduled payments under the Company’s lease obligations are as follows:
|
Remainder of 2021
|
$
|
|
|||
|
Year ended December 31, 2022
|
|
||||
|
2023
|
|
||||
|
2024
|
|
||||
|
2025
|
|
||||
|
2026
|
|
||||
|
Thereafter
|
|
||||
|
Total payments
|
|
||||
|
Less: imputed interest
|
(
|
)
|
|||
|
Current portion
|
(
|
)
|
|||
|
Balance at June 30, 2021
|
$
|
|
On June 11, 2021, the Company entered into an additional property lease
that the Company intends to use to store certain inventory for its ADMA BioManufacturing business segment. The Company has not taken possession of this leased property and its lease commencement date has not been determined. With the
exception of a security deposit and six months’ rent totaling $0.3 million, no payments have been made under this lease. The initial term of the lease is for 90 months with monthly rental payments varying between approximately $14,000 and $24,000 , including common area maintenance charges.
21
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
| 13. |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
Supplemental cash flow information for the six months ended June 30, 2021 and 2020 is as follows:
|
2021
|
2020
|
|||||||
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
||||||||
|
Cash paid for interest
|
$
|
|
$
|
|
||||
|
Non-cash Financing and Investing Activities:
|
||||||||
|
Equipment acquired reflected in accounts payable and accrued liabilities
|
$
|
|
$
|
|
||||
|
Right-to-use assets in exchange for lease obligations
|
$
|
|
$
|
|
||||
| 14. |
SUBSEQUENT EVENTS
|
On July 26, 2021, the Company sold an additional 897,445 shares of its common stock under the 2020 Sale Agreement and received net proceeds of approximately $1.5 million, which represents the remaining amount that could be raised under the 2020 Sale Agreement as of June 30, 2021. In accordance with terms of the 2020 Sale
Agreement, the 2020 Sale Agreement automatically terminated upon the foregoing sale of common stock.
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
The following discussion of our financial condition and results of operations, which refers to our historical results, should be read in conjunction with the other sections of this Quarterly Report
on Form 10-Q, including “Risk Factors” and our unaudited consolidated financial statements and the notes thereto appearing elsewhere herein, and in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of
Operations set forth in our Annual Report on Form 10-K for the year ended December 31, 2020, filed on March 25, 2021 (the “2020 10-K”). The various sections of this discussion contain a number of forward-looking statements, all of which are based
on our current expectations and could be affected by the uncertainties and risk factors described throughout or referenced within this Quarterly Report on Form 10-Q. See “Special Note Regarding Forward-Looking Statements.” Our actual results may
differ materially from our current expectations.
OVERVIEW
Our Business
ADMA Biologics, Inc. (the “Company,” “ADMA,” “we,” “us” or “our”) is an end-to-end commercial biopharmaceutical company dedicated to manufacturing, marketing and developing specialty plasma-derived biologics for the
treatment of immunodeficient patients at risk for infection and others at risk for certain infectious diseases. Our targeted patient populations include immune-compromised individuals who suffer from an underlying immune deficiency disorder or who
may be immune-suppressed for medical reasons.
We currently have three products with U.S. Food and Drug Administration (the “FDA”) approval, all of which are currently marketed and commercially available: (i) BIVIGAM (Immune Globulin Intravenous, Human), an
Intravenous Immune Globulin (“IVIG”) product indicated for the treatment of Primary Humoral Immunodeficiency (“PI”), also known as Primary Immunodeficiency Disease (“PIDD”), and for which we received FDA approval on May 9, 2019 and commenced
commercial sales in August 2019; (ii) ASCENIV (Immune Globulin Intravenous, Human – slra 10% Liquid), an IVIG product indicated for the treatment of PI, for which we received FDA approval on April 1, 2019 and commenced first commercial sales in
October 2019; and (iii) Nabi-HB (Hepatitis B Immune Globulin, Human), which is indicated for the treatment of acute exposure to blood containing HBsAg and other listed exposures to Hepatitis B. We seek to develop a pipeline of plasma-derived
therapeutics, including a product based on our most recently approved patent application under U.S. Patent No. 10,259,865 related to methods of treatment and prevention of S. pneumonia infection for an
immunoglobulin manufactured to contain standardized antibodies to numerous serotypes of S. pneumoniae. Our products and product candidates are intended to be used by physician specialists focused on caring
for immune-compromised patients with or at risk for certain infectious diseases.
We manufacture these products at our FDA-licensed, plasma fractionation and purification facility located in Boca Raton, Florida with a peak annual processing capability of up to 600,000 liters (the “Boca Facility”).
Based on current production yields, our ongoing supply chain enhancements and capacity expansion initiatives, we believe this facility has the potential to produce quantities of our immune globulin (“IG”) products of more than $250 million in
annual revenue beginning in 2024 and potentially in excess of $300 million of annual revenue thereafter, as well as achieving profitability during the first quarter of 2024, as we ramp-up production over the next three to five years. We anticipate
exiting 2021 approaching an annualized revenue run rate of approximately $100 million or more.
Through our ADMA BioCenters subsidiary, we currently operate FDA-licensed source plasma collection facilities in the U.S. This business unit, which we refer to as our Plasma Collection Centers business segment,
provides us with a portion of our blood plasma for the manufacture of our products and product candidates, and also allows us to sell certain quantities of source plasma to customers for further manufacturing. As a part of our planned supply chain
robustness initiative, we have opened four new plasma collection centers during the past 18 months, and we now have eight plasma collection centers in various stages of approval and development, including five that are fully operational and
collecting plasma. With respect to our fully operational plasma collection centers, two plasma collection centers currently hold FDA licenses, while a third collection center has a Biologics License Application (“BLA”) under review pending FDA
approval. In addition, one of our FDA-approved plasma collection centers also has approvals from the Korean Ministry of Food and Drug Safety (“MFDS”), as well as FDA approval to operate a Hepatitis B immunization program. After giving effect to the
progress we made in 2020 and thus far in 2021 with our plasma collection network expansion, we believe we remain on track to achieve our goal of having 10 or more plasma collection centers operating in the U.S. by 2024. A typical plasma collection
center, such as those operated by ADMA BioCenters, can collect approximately 30,000 to 50,000 liters of source plasma annually, which may be sold for different prices depending upon the type of plasma, quantity of purchase and market conditions at
the time of sale. Plasma collected from ADMA BioCenters’ facilities that is not used to manufacture our products or product candidates is sold to third-party customers in the U.S. and in other locations outside the U.S. where we are approved under
supply agreements or in the open “spot” market.
We sell plasma-derived intermediate fractions to certain customers, which are generated as part of our FDA-approved manufacturing process for IG and IVIG products. In January 2020, we announced our entry into a
five-year manufacturing and supply agreement to produce and sell these intermediate by-products, which are used as the starting raw material to produce other plasma-derived biologics. In addition, from time to time we provide contract manufacturing
and testing services for certain third-party clients. We also provide laboratory contracting services to certain customers and anticipate providing contract filling, labeling and packing services upon FDA approval and implementation of our in-house
fill-finish capabilities.
On June 6, 2017, we completed the acquisition of certain assets (the “Biotest Assets”) of the Therapy Business Unit (“BTBU”) of Biotest Pharmaceuticals Corporation (“BPC” and, together with Biotest AG, “Biotest”),
which included two FDA-licensed products, Nabi-HB and BIVIGAM, and an FDA-licensed plasma fractionation facility located in Boca Raton, FL (the “Boca Facility”) (the “Biotest Transaction”).
Recent Developments
On July 20, 2021, we announced that the FDA completed a Pre-Approval Inspection of the Boca Facility related to our application for approval of our Vanrx SA25 aseptic fill-finish machine and our related internal
fill-finish processes, the drug product component of our manufacturing process. The inspection concluded successfully with no Form 483 observations. The FDA review of our regulatory filing related to approval of the new fill-finish machine remains
ongoing, with anticipated regulatory approval in the second half of 2021. The anticipated approval would provide us with internal fill-finish production capabilities for our commercial products, which is expected to result in greater patient
supply consistency and, coupled with the approval of our expanded plasma pool production scale process that we received earlier this year as discussed below, significantly improved operational efficiencies and gross margins.
Effective as of May 12, 2021, we entered into a Second Amendment to our Plasma Purchase Agreement with Grifols Worldwide Operations Limited (“Grifols”) whereby, among other provisions, we extended the term of our
supply agreement for the purchase of normal source plasma (“NSP”) through December 31, 2022, while certain historical provisions were deleted. In order to maintain a reliable supply of raw material plasma thereafter, we are in late-stage
discussions with multiple third-party plasma suppliers to provide us with a long-term supply of NSP, which will be supplemented by our accelerated plasma center expansion activities, whereby we expect to have more than 10 plasma collection centers
in operation by 2024. We expect these initiatives will ensure the raw material plasma supply necessary to meet our anticipated peak annual plasma processing capability of up to 600,000 liters.
On April 28, 2021, we announced that the FDA granted approval for our expanded IVIG plasma pool production scale process, allowing for a 4,400-liter plasma pool for the manufacture of our commercial product BIVIGAM. We
expect this increased IVIG plasma pool scale, which will allow us to produce BIVIGAM at an expanded capacity, will utilize the same equipment, release testing assays and labor force, and to have a favorable impact on our gross margins and operating
results, potentially beginning late in the fourth quarter of 2021.
On April 26, 2021, we announced the opening of our fourth plasma collection facility in the U.S. Pursuant to updated FDA guidance to obtain approval for plasma collection centers, sponsors are now required to collect
plasma donations for three months prior to submitting a BLA filing. Accordingly, we filed a BLA for this plasma collection facility during the third quarter of 2021. Prior to receiving FDA approval, ADMA is permitted to collect plasma donations at
this site and upon receipt of FDA approval we can utilize the plasma collected for further use in our IVIG manufacturing operations or for third party sale.
Our Products
BIVIGAM
BIVIGAM is a plasma-derived IVIG that contains a broad range of antibodies similar to those found in normal human plasma. These antibodies are directed against bacteria and viruses,
and help to protect PI patients against serious infections. BIVIGAM is a purified, sterile, ready-to-use preparation of concentrated human Immunoglobulin G antibodies indicated for the treatment of PI, a group of genetic disorders. This includes,
but is not limited to, the humoral immune defect in common variable immunodeficiency, X-linked agammaglobulinemia, congenital agammaglobulinemia, Wiskott-Aldrich syndrome and severe combined immunodeficiency. These PIs are a group of genetic
disorders. Based on recent estimates, these disorders are no longer considered to be very rare, with as many as one in every 1,200 people in the United States having some form of PI.
On May 9, 2019, the FDA approved the Prior Approval Supplement (the “PAS”) for the use of our IVIG manufacturing process, thereby enabling us to re-launch and commercialize this product in the
United States. We resumed production of BIVIGAM during the fourth quarter of 2017 and commercial production is ongoing, using our FDA-approved IVIG manufacturing process under U.S. Department of Health and Human Services (“HHS”) License No. 2019.
The commercial re-launch and first commercial sales for this product commenced in August of 2019.
On April 28, 2021, we announced that the FDA has granted approval for our expanded plasma pool production scale process, allowing for a 4,400-liter plasma pool for the manufacture of our BIVIGAM IVIG product. We expect
this increased IVIG plasma pool scale, which will allow us to produce BIVIGAM at an expanded capacity, will utilize the same equipment, release testing assays and labor force, and to have a favorable impact on our gross margins and operating
results, potentially beginning late in the fourth quarter of 2021.
ASCENIV
ASCENIV is a plasma-derived IVIG that contains naturally occurring polyclonal antibodies, which are proteins that are used by the body’s immune system to neutralize microbes, such as bacteria and
viruses, and prevent against infection and disease. We manufacture ASCENIV under HHS License No. 2019 using a process known as fractionation. The Centers for Medicare and Medicaid Services (“CMS”) has issued a permanent, product-specific-J-code for
ASCENIV. Under the Healthcare Common Procedure Coding System (“HCPCS”), the J-code (J1554) became effective April 1, 2021. As part of our proprietary manufacturing process for ASCENIV, we leverage our unique, patented plasma donor screening
methodology and tailored plasma pooling design, which blends normal source plasma and plasma from donors tested to have high levels of neutralizing antibody titers to respiratory syncytial virus (“RSV”) using our proprietary microneutralization
testing assay. We are able to identify the high titer or “hyperimmune” plasma that meets our internal and required specifications for ASCENIV with our patented testing methods and assay. This type of high titer plasma is typically found in less
than 10% of the total donor collection samples we test.
ASCENIV is approved for the treatment of Primary Immune Deficiency Disorder (“PIDD”), a class of inherited genetic disorders that causes a deficient or absent immune system in adults and
adolescents (12 to 17 years of age). Our pivotal Phase 3 clinical trial in 59 PIDD patients met the primary endpoint of no Serious Bacterial Infections reported during 12 months of treatment. Secondary efficacy endpoints further demonstrated the
benefits of ASCENIV in the low incidence of infection, therapeutic antibiotic use, days missed from work/school/daycare and unscheduled medical visits and hospitalizations. We believe this clinical data together with the FDA approval for the
treatment of PIDD better positions ADMA to further evaluate ASCENIV in immune-compromised patients infected with or at-risk for RSV infection or potentially other respiratory viral pathogens. Due to the COVID-19 pandemic, our plans have been
delayed. In the future however, we plan to work with the FDA and the immunology and infectious disease community to design an appropriate clinical trial to evaluate the use of ASCENIV in this patient population. Commercial sales of ASCENIV
commenced in October of 2019.
Nabi-HB
Nabi-HB is a hyperimmune globulin that is rich in antibodies to the Hepatitis B virus. Nabi-HB is a purified human polyclonal antibody product collected from plasma donors who have been previously vaccinated with a
Hepatitis B vaccine. Nabi-HB is indicated for the treatment of acute exposure to blood containing HBsAg, prenatal exposure of infants born to HBsAg-positive mothers, sexual exposure to HBsAg-positive persons and household exposure to persons with
acute Hepatitis B virus infection in specific, listed settings. Hepatitis B is a potentially life-threatening liver infection caused by the Hepatitis B virus. It is a major global health problem. It can cause chronic infection and puts people at
high risk of death from cirrhosis and liver cancer. Nabi-HB has a well-documented record of long-term safety and effectiveness since its initial market introduction. The FDA approved Nabi-HB on March 24, 1999. Production of Nabi-HB at the Boca
Facility has continued under our leadership since the third quarter of 2017. In early 2018, we received authorization from the FDA for the release of our first commercial batch of Nabi-HB for commercial distribution in the U.S. and we continue to
manufacture Nabi-HB under HHS License No. 2019.
IMPACT OF THE COVID-19 CRISIS
We continue to closely monitor ongoing developments in connection with the COVID-19 global pandemic, including the emergence of the Delta variant and other resistant strains of the novel coronavirus, and its impacts to
our commercial and manufacturing operations and plasma collection facilities, including but not limited to potential disruptions to our supply chain operations, including collections of source plasma, procurement of raw materials and packaging
materials, a portion of which are sourced internationally, and testing of finished drug product that is required prior to its availability for commercial sale. Such testing has historically been performed by contract laboratories outside the
United States. In addition, travel and other restrictions that have been implemented in the United States have impacted our commercial engagement efforts with respect to some of our products, including BIVIGAM and ASCENIV, as trade shows, industry
and medical conferences and other events we had been planning to utilize and exhibit and attend with our staff to increase awareness of our products by physicians and payers remain subject to reduction in scope, rescheduling or outright
cancellation due to the pandemic.
We had experienced some delays with our third-party vendors and testing laboratories which perform final drug product GMP release testing. In response to these delays, we added additional release testing laboratories
to our FDA approved consortium listed in our drug approval documents which we believe has adequately addressed this issue. In July 2020, we began receiving FDA lot releases with testing data from our new testing laboratory vendor. In addition, due
to a combination of previous state and local “shelter-in-place” orders, as well as government stimulus packages, persisting social distancing measures and varying roll-outs of vaccinations by state, we have been experiencing lower than normal donor
collections at our FDA-approved plasma collection centers. We were also subject to delays in shipments of source plasma from our contracted third-party suppliers, as well as delays in deliveries for personal protective equipment, reagents and other
non-plasma raw materials and supplies used in the manufacture and distribution of our products. We are also subject to supply chain delays as a result of certain of our suppliers diverting significant resources towards the rapid development and
distribution of COVID-19 vaccines and, as a result, we may elect to carry more raw materials inventory than we have in the past. In addition, we have also experienced challenges with respect to our customer engagement initiatives, as our sales and
medical affairs field forces face difficulties communicating directly with physicians and other healthcare professionals and the cancellation or postponement of a number of key scientific and medical conferences, further limiting our ability to
communicate with potential customers. We have implemented a comprehensive suite of virtual engagement initiatives, though clinician engagement remains lower due to continuing COVID-19-related priorities at U.S. medical centers.
The pandemic could further impact our ability to interact with the FDA or other regulatory authorities and may result in delays in the conduct of inspections or review of pending applications or submissions. During
the second quarter of 2021, we were notified by the FDA that our submission for the approval of our in-house fill-finish process utilizing our Vanrx SA25 Workcell aseptic filling machine will require a site inspection, either in person or
virtually. Although the inspection was completed in July of 2021, the FDA’s review of our regulatory filing with respect to our in-house fill-finish process and new aseptic filling machine remains ongoing. Although we anticipate receiving
regulatory approval of this submission in the second half of 2021, no assurances can be provided as to the timing for completion of this FDA review or any other regulatory submissions or applications that may be impacted by restrictions related to
COVID-19.
As of the date of this report, we do not believe that the operations and immunoglobulin and plasma products production at our Boca Facility, our contract fill/finishers or our plasma collection facilities have been
significantly impacted by the COVID-19 pandemic. As a result, as of the date of this report, we have not experienced, and currently do not anticipate, any material impairments with respect to any of our long-lived assets, including our property and
equipment, goodwill or intangible assets.
Although the COVID-19 pandemic has not, to date, materially adversely impacted our capital and financial resources, due to the economic uncertainty that has resulted from the pandemic, and the potential impact of such
to our stakeholders, we are unable to predict with certainty any potential impacts to our business. Although we believe the effects of the COVID-19 pandemic on our business and our operations will be temporary, at the present time we are unable to
determine the ultimate duration of the pandemic or its long-term effects on, among other things, the global, national or local economies, the capital and credit markets, our workforce, our customers or our suppliers. As a result, we are unable to
predict whether the COVID-19 crisis will have a material adverse impact on our business, financial condition, liquidity and results of operations.
RESULTS OF OPERATIONS
Critical Accounting Policies and Estimates
This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our consolidated financial statements, which have been prepared in accordance with Accounting
Principles Generally Accepted in the United States of America (“U.S. GAAP”). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses. On an ongoing basis, we evaluate these estimates and assumptions, including those described below. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the
circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results and experiences may differ materially from these
estimates. Significant estimates include the realizable value of accounts receivable, valuation of inventory, assumptions used in projecting future liquidity and capital requirements, assumptions used in the fair value of awards granted under our
equity incentive plans and warrants issued in connection with the issuance of notes payable and the valuation allowance for our deferred tax assets.
Some of the estimates and assumptions we have to make under U.S. GAAP require difficult, subjective and/or complex judgments about matters that are inherently uncertain and, as a result, actual results could differ
from those estimates. Due to the estimation processes involved, the following summary of accounting policies and their application are considered to be critical to understanding our business operations, financial condition and results of
operations. For a detailed discussion on the application of these and our other accounting policies, see Note 2 to the Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.
Revenue Recognition
Revenues for the six months ended June 30, 2021 and 2020 are comprised of (i) revenues from the sale of our FDA-approved immunoglobulin products, (ii) product revenues from the sale of human plasma collected from our
Plasma Collection Centers business segment, (iii) product revenues from the sale of intermediate fractions, (iv) contract manufacturing and testing revenue from certain clients, and (v) license revenues attributable to the out-licensing of ASCENIV
in December 2012 to Biotest AG (“Biotest”) to market and sell this product in Europe and selected countries in North Africa and the Middle East. Biotest has provided us with certain services and financial payments in accordance with the related
Biotest license agreement and is obligated to pay us certain amounts in the future if certain milestones are achieved. Deferred revenue is amortized into income over the term of the Biotest license, representing a period of approximately 22 years.
Product revenue is recognized when the customer is deemed to have control over the product. Control is determined based on when the product is shipped or delivered and title passes to the customer. Revenue is recorded
in an amount that reflects the consideration we expect to receive in exchange. Revenue from the sale of immunoglobulin products is generally recognized when the product reaches the customer’s destination, and is recorded net of distributor fees,
estimated rebates, price protection arrangements and customer incentives, including prompt pay discounts, wholesaler chargebacks and other wholesaler fees. These estimates are based on historical experience and certain other assumptions, and we
believe that such estimates are reasonable. For revenues associated with sales of our intermediates or contract manufacturing, control transfers to the customer and the performance obligation is satisfied when the customer takes possession of the
product from the Boca Facility or a third-party warehouse that is utilized by the Company.
Product revenues from the sale of human plasma collected at our plasma collection centers are recognized at the time control of the product has been transferred to the customer, which generally occurs at the time of
shipment. Product revenues are recognized at the time of delivery if we retain control of the product during shipment. Payments received from customers where the foregoing revenue recognition criteria have not been satisfied are recorded as
deferred revenue, which is reflected as a liability in our consolidated balance sheets.
For the six months ended June 30, 2021, five customers, BioCARE, Inc. (“BioCare”), Biolife Plasma Services, L.P. (“Biolife”), Reliance Life Sciences Pvt Limited (“Reliance”), Priority Healthcare Distribution, Inc.
(“Curascript”) and AmerisourceBergen Drug Corporation (“AmerisourceBergen”) represented an aggregate of 85% of our consolidated revenues. For the six months ended June 30, 2020, BioCare, Biolife and Reliance
represented an aggregate of 81% of our consolidated revenues.
Accounts Receivable
Accounts receivable are reported at realizable value, net of allowances for contractual credits and doubtful accounts, which are recognized in the period the related revenue is recorded. We extend credit to our
customers based upon an evaluation of each customer’s financial condition and credit history. Evaluations of the financial condition and associated credit risk of customers are performed on an ongoing basis. Based on these evaluations, we have
concluded that our credit risk is minimal.
Cost of Product Revenue
Cost of product revenue includes costs associated with the manufacture of the Company’s FDA approved products, intermediates and the sale of human source plasma, as well as expenses related to conformance batch
production, process development and scientific and technical operations when these operations are attributable to marketed products. When the activities of these operations are attributable to new products in development, their expenses are
classified as research and development expenses.
As a manufacturer of biological products, we are subject to the risks inherent in biological production, which could include normal course losses and failures inherent in the manufacturing process. As our biologics
production levels increase there may be normal course inventory losses as we ensure product quality and compliance with current Good Manufacturing Practices (“cGMP”), FDA, state and local regulations, or due to testing results not meeting
specifications. Such losses are charged to cost of product revenue in the period they are incurred.
Stock-Based Compensation
All equity-based payments, including grants of stock options and restricted stock units (“RSUs”) are recognized at their estimated fair value at the grant date, and compensation expense is recognized on a straight-line
basis over the grantee’s requisite vesting period. During the six months ended June 30, 2021, we granted RSUs to certain members of our management and employees representing an aggregate 542,244 shares of common stock, and during the six months
ended June 30, 2020, we granted RSUs to members of our Board of Directors and certain members of our management and employees representing an aggregate of 341,000 shares of common stock. For the purpose of valuing stock options granted to our
employees, directors and officers, we use the Black-Scholes option pricing model. We granted options to purchase an aggregate of 1,658,050 and 1,232,500 shares of common stock to management, employees and directors during the six months ended June
30, 2021 and 2020, respectively. To determine the risk-free interest rate, we utilized the U.S. Treasury yield curve in effect at the time of the grant with a term consistent with the expected term of our awards. The expected term of the options
granted is in accordance with SEC Staff Accounting Bulletins 107 and 110, and is based on the average between vesting terms and contractual terms. The expected dividend yield reflects our current and expected future policy for dividends on our
common stock. The expected stock price volatility for our stock options was calculated by examining the historical volatility of our common stock since our common stock became publicly traded in the fourth quarter of 2013. We will continue to
analyze the expected stock price volatility and expected term assumptions and will adjust our Black-Scholes option pricing assumptions as appropriate. In accordance with ASU No. 2016-09, Improvements to Employee
Share-Based Payment Accounting (Topic 718), we have elected not to establish a forfeiture rate, as stock-based compensation expense related to forfeitures of unvested stock options is fully reversed at the time of forfeiture.
Research and Development Expenses
Our research and development (“R&D”) costs consist of clinical research organization costs, costs related to clinical trials, testing and evaluation of new or alternative products or processes, studies for
potentially extending a product’s approved and labeled expiration dating and other potential label expansions, post-marketing commitment studies for BIVIGAM and ASCENIV and wages, benefits and stock-based compensation for employees directly related
to research and development activities. All research and development costs are expensed as incurred.
Inventories
Raw materials inventory consists of various materials purchased from suppliers, including normal source plasma, that are used in the production of our products. Work-in-process and finished goods inventories reflect
the cost of raw materials as well as costs for direct and indirect labor, primarily salaries, wages and benefits for applicable employees, as well as an allocation of overhead costs related to the Boca Facility including utilities, property taxes,
general repairs and maintenance, consumable supplies and depreciation. The allocation of Boca Facility overhead to inventory is generally based upon the estimated square footage of the Boca Facility that is used in the production of our products
relative to the total square footage of the facility.
Inventories, including plasma intended for resale and plasma intended for internal use in the Company’s manufacturing, commercialization or research and development activities, are carried at the lower of cost or net
realizable value determined by the first-in, first-out method. Net realizable value is generally determined based upon the consideration we expect to receive when the inventory is sold, less costs to deliver the inventory to the recipient. The
estimates for net realizable value of inventory are based on contractual terms or upon historical experience and certain other assumptions which we believe are reasonable. Inventory is periodically reviewed to ensure that its carrying value does
not exceed its net realizable value, and adjustments are recorded to write down such inventory, with a corresponding charge to cost of product revenue, when the carrying value or historical cost exceeds its estimated net realizable value.
Impairment of Long-Lived Assets
We assess the recoverability of our long-lived assets, which include property and equipment and finite-lived intangible assets, whenever significant events or changes in circumstances indicate impairment may have
occurred. If indicators of impairment exist, projected future undiscounted cash flows associated with the asset are compared to its carrying amount to determine whether the asset’s carrying value is recoverable. Any resulting impairment is recorded
as a reduction in the carrying value of the related asset in excess of fair value and a charge to operating results. For the six months ended June 30, 2021 and 2020, we determined that there was no impairment of our long-lived assets.
Goodwill is not amortized, but is assessed for impairment on an annual basis or more frequently if impairment indicators exist. We have the option to perform a qualitative assessment of goodwill to determine whether it
is more likely than not that the fair value of the reporting unit associated with the goodwill is less than its carrying amount, including goodwill and other intangible assets. If we conclude that this is the case, then we must perform a goodwill
impairment test by comparing the fair value of the reporting unit to its carrying value. An impairment charge is recorded to the extent the reporting unit’s carrying value exceeds its fair value, with the impairment loss recognized not to exceed
the total amount of goodwill allocated to that reporting unit. We did not recognize any impairment charges related to goodwill for the six months ended June 30, 2021 and 2020.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”), which requires financial assets to be presented at the net
amount expected to be collected, with an allowance for credit losses to be deducted from the amortized cost basis of the financial asset such that the net carrying value of the asset is presented as the amount expected to be collected. Under ASU
2016-13, the entity’s statement of operations is required to reflect the measurement of credit losses for newly recognized financial assets, as well as expected increases or decreases in expected credit losses that have taken place during the
period. For public business entities, ASU 2016-13 is effective for fiscal years beginning after December 15, 2019. We adopted ASU 2016-13 on January 1, 2020, and the adoption of this update did not have a significant impact on our consolidated
financial statements.
Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020
The following table presents a summary of the changes in our results of operations for the three months ended June 30, 2021, our second fiscal quarter, compared to the three months ended June 30,
2020:
|
Three Months Ended June 30,
|
||||||||||||
|
2021
|
2020
|
Increase
(Decrease)
|
||||||||||
|
Revenues
|
$
|
17,830,590
|
$
|
7,787,594
|
$
|
10,042,996
|
||||||
|
Cost of product revenue (exclusive of amortization expense shown below)
|
18,832,624
|
13,495,629
|
5,336,995
|
|||||||||
|
Gross loss
|
(1,002,034
|
)
|
(5,708,035
|
)
|
4,706,001
|
|||||||
|
Research and development expenses
|
1,158,866
|
1,656,420
|
(497,554
|
)
|
||||||||
|
Plasma center operating expenses
|
2,803,326
|
877,902
|
1,925,424
|
|||||||||
|
Amortization of intangibles
|
178,838
|
178,838
|
-
|
|||||||||
|
Selling, general and administrative expenses
|
10,438,168
|
8,702,630
|
1,735,538
|
|||||||||
|
Loss from operations
|
(15,581,232
|
)
|
(17,123,825
|
)
|
1,542,593
|
|||||||
|
Interest expense
|
(3,246,680
|
)
|
(3,067,306
|
)
|
(179,374
|
)
|
||||||
|
Other (expense) income, net
|
(77,391
|
)
|
13,040
|
(90,431
|
)
|
|||||||
|
Net loss
|
$
|
(18,905,303
|
)
|
$
|
(20,178,091
|
)
|
$
|
1,272,788
|
||||
Revenues
We recorded total revenues of $17.8 million during the three months ended June 30, 2021, as compared to $7.8 million during the three months ended June 30, 2020, an increase of $10.0 million, or approximately 130%. The
increase is due to increased sales of our immunoglobulin products generated by our Boca Facility manufacturing operations in 2021.
Our revenues for the second quarter of 2021 as compared to the same period of a year ago were favorably impacted by the continued commercial scale-up, expanding customer base at both our ADMA BioManufacturing and ADMA
BioCenters plasma collection center business segments and physician/payer acceptance of BIVIGAM and ASCENIV following these products’ FDA approvals on May 9, 2019 and April 1, 2019, respectively, while we continued to benefit from the manufacturing
and supply agreement we entered into in January 2020 to produce and sell intermediate fractions to a certain customer. In addition, revenues in the second quarter of 2020 were negatively impacted by COVID-19-related delays with some of our
third-party vendors and testing laboratories which perform final drug product GMP release testing. In response to these delays, we added additional release testing laboratories to our FDA approved consortium listed in our drug approval documents
which we believe has adequately addressed this issue.
Cost of Product Revenue
Cost of product revenue was $18.8 million for the three months ended June 30, 2021, as compared to $13.5 million for the three months ended June 30, 2020. This increase reflects higher product revenue costs in 2021 of
$7.6 million corresponding to the increase in immunoglobulin revenues, partially offset by the absence of conformance batch production expenses in 2020 of $3.2 million.
Research and Development Expenses
R&D expenses totaled $1.2 million for the three months ended June 30, 2021, as compared to $1.7 million for the three months ended June 30, 2020. The decrease is primarily due to reduced compensation costs
associated with R&D activities during the quarter of $0.3 million, and the absence of $0.2 million of non-recurring costs incurred in 2020 associated with our participation in a third-party clinical research
project.
Plasma Center Operating Expenses
Plasma center operating expenses were $2.8 million for the three months ended June 30, 2021, as compared to $0.9 million for the three months ended June 30, 2020. Plasma center operating expenses consist of certain
general and administrative plasma center costs, including rent, maintenance, utilities, compensation and benefits for center and administrative staff, advertising and promotion expenses and computer software fees related to donor collections. The
increase in plasma center operating expenses is mainly attributable to increased staffing and travel expenses related to our plasma center expansion activities. We had four plasma collection centers in operation during the second quarter of 2021,
as compared to one plasma collection center in operation during the second quarter of 2020. We also had four other plasma collection centers in various stages of construction or development during the second quarter of 2021.
Amortization of Intangibles
Amortization expense pertains to the amortization of intangible assets acquired in the Biotest Transaction and was $0.2 million for the three months ended June 30, 2021 and 2020.
Selling, General and Administrative Expenses
Selling, general and administrative (“SG&A”) expenses were $10.4 million for the three months ended June 30, 2021, an increase of $1.7 million from the three months ended June 30, 2020. The increase was primarily
due to higher employee compensation and related expenses of $1.2 million related to staffing increases, largely in support of our commercialization efforts for BIVIGAM and ASCENIV and increased insurance expense of $0.3 million. In addition, in
connection with the resignation of our former Chief Medical Officer in the second quarter of 2021, we recognized an expense and corresponding liability in the amount of $0.8 million for estimated payments we expect to make under a separation and
transition agreement. These increases were partially offset by lower third-party market intelligence and consulting fees associated with our ASCENIV commercialization efforts.
Loss from Operations
Our operating loss was $15.6 million for the second quarter of 2021, as compared to $17.1 million for the second quarter of 2020. The $1.5 million decrease in operating loss was mainly due to the significant narrowing
of our gross loss of $4.7 million and the reduction in R&D expenses, partially offset by the increases in SG&A and plasma center operating expenses.
Interest Expense
Interest expense increased by approximately $0.2 million for the three months ended June 30, 2021 as compared to the same period of a year ago. The increase reflects the refinancing of $15 million of subordinated debt
in December 2020 whereby the interest rate increased from 6% to 11% per annum, as the maturity date on this indebtedness was extended from June 2022 to March 2024 (see “Liquidity and Capital Resources”).
Net Loss
Our net loss was $18.9 million for the three months ended June 30, 2021, as compared to $20.2 million for the three months ended June 30, 2020. The $1.3 million decrease in net loss was primarily due to the decreased
operating loss for the quarter of $1.5 million, partially offset by the increase in interest expense.
Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020
The following table presents a summary of the changes in our results of operations for the six months ended June 30, 2021, compared to the six months ended June 30, 2020:
|
Six Months Ended June 30,
|
||||||||||||
|
2021
|
2020
|
Increase
(Decrease)
|
||||||||||
|
Revenues
|
$
|
33,879,208
|
$
|
17,987,338
|
$
|
15,891,870
|
||||||
|
Cost of product revenue (exclusive of amortization expense shown below)
|
36,602,746
|
30,324,855
|
6,277,891
|
|||||||||
|
Gross loss
|
(2,723,538
|
)
|
(12,337,517
|
)
|
9,613,979
|
|||||||
|
Research and development expenses
|
2,146,515
|
3,185,158
|
(1,038,643
|
)
|
||||||||
|
Plasma center operating expenses
|
5,045,669
|
1,378,546
|
3,667,123
|
|||||||||
|
Amortization of intangibles
|
357,676
|
357,676
|
-
|
|||||||||
|
Selling, general and administrative expenses
|
20,472,083
|
16,634,714
|
3,837,369
|
|||||||||
|
Loss from operations
|
(30,745,481
|
)
|
(33,893,611
|
)
|
3,148,130
|
|||||||
|
Interest expense
|
(6,442,430
|
)
|
(5,784,397
|
)
|
(658,033
|
)
|
||||||
|
Other (expense) income, net
|
(97,333
|
)
|
254,687
|
(352,020
|
)
|
|||||||
|
Net loss
|
$
|
(37,285,244
|
)
|
$
|
(39,423,321
|
)
|
$
|
2,138,077
|
||||
Revenues
We recorded total revenues of $33.9 million during the six months ended June 30, 2021, as compared to $18.0 million during the six months ended June 30, 2020, an increase of $15.9 million, or approximately 88%. The
increase is due to increased sales of our immunoglobulin products generated by our Boca Facility manufacturing operations in 2021, largely driven by the expansion of our customer base at both of our business segments that took place subsequent to
June 30, 2020.
Our revenues for the first six months of 2021 as compared to the same period of a year ago were favorably impacted by the continued commercial scale-up and increasing physician/payer acceptance of BIVIGAM and ASCENIV
following these products’ FDA approvals on May 9, 2019 and April 1, 2019, respectively, while we also continued to benefit from the manufacturing and supply agreement we entered into in January 2020 to produce and sell intermediate fractions to a
certain customer. Revenues in the first six months of 2021 were also favorably impacted by the approvals we received from the FDA to implement a Hepatitis B immunization program at one of our FDA-approved plasma collection centers and from MFDS for
the sale of source plasma into South Korea.
Cost of Product Revenue
Cost of product revenue was $36.6 million for the six months ended June 30, 2021, as compared to $30.3 million for the six months ended June 30, 2020. This increase reflects higher product revenue costs in 2021 of
$13.6 million corresponding to the increase in immunoglobulin revenues, partially offset by the absence of conformance batch production expenses in 2020 of $7.3 million. The lack of such expenses in 2021, combined with the increase in revenues,
resulted in a reduction of our gross loss in the amount of $9.6 million, or 78%, in the first half of 2021 as compared to the first half of 2020.
Research and Development Expenses
R&D expenses totaled $2.1 million for the six months ended June 30, 2021, as compared to $3.2 million for the six months ended June 30, 2020. R&D expenses in 2020 included non-recurring charges of $0.4 million
related to a study we conducted to potentially extend ASCENIV’s approved and labeled expiration dating, and $0.2 million related to our participation in a third-party clinical research project. We also
experienced a reduction in R&D related compensation expenses due to the resignation of our former Chief Medical Officer on June 8, 2021.
Plasma Center Operating Expenses
Plasma center operating expenses were $5.0 million for the six months ended June 30, 2021, as compared to $1.4 million for the six months ended June 30, 2020. The increase in plasma center operating expenses is mainly
attributable to increased staffing and related expenses, including travel expenses, of $2.3 million, as well as increases in rent expense of $0.4 million, depreciation expense of $0.3 million, donor fees of $0.2 million, advertising expenses of
$0.1 million and utilities of $0.1 million, all related to our plasma center expansion activities.
Amortization of Intangibles
Amortization expense pertains to the amortization of intangible assets acquired in the Biotest Transaction and was $0.4 million for the six months ended June 30, 2021 and 2020.
Selling, General and Administrative Expenses
SG&A expenses were $20.5 million for the six months ended June 30, 2021, an increase of $3.8 million from the six months ended June 30, 2020. The increase was primarily due to higher employee compensation and
related expenses of $2.2 million related to staffing increases, largely in support of our commercialization efforts for BIVIGAM and ASCENIV, recognition of the $0.8 million related to the separation and transition agreement with our former Chief
Medical Officer and $0.7 million of increased insurance expense.
Loss from Operations
Our operating loss was $30.7 million for the first six months of 2021, as compared to $33.9 million for the first six months of 2020. The $3.1 million decrease in operating loss was mainly due to the increase in
revenues and corresponding reduction in gross loss and decrease in R&D expenses, partially offset by the increases in SG&A and plasma center operating expenses.
Interest Expense
Interest expense was $6.4 million for the six months ended June 30, 2021, as compared to $5.8 million for the six months ended June 30, 2020. The increase reflects the additional interest expense associated with the
Perceptive Tranche III Loan which we drew down on March 20, 2020, as well as the higher interest on the $15 million note formerly due to Biotest that we refinanced in December 2020 (see “Liquidity and Capital Resources”).
Net Loss
Our net loss was $37.3 million for the six months ended June 30, 2021, as compared to $39.4 million for the six months ended June 30, 2020. The decrease in net loss of $2.1 million was primarily due to the decreased
operating loss for the quarter of $3.1 million, the increase in interest expense of $0.7 million, and the decrease in interest income of $0.2 million due to the reduction of interest rates that took place during the first quarter of 2020.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2021, we had working capital of $153.2 million, including cash and cash equivalents of $42.4 million, and stockholders’ equity of $111.6 million, as compared to working capital of $133.8 million,
including cash and cash equivalents of $55.9 million, and stockholders’ equity of $88.2 million as of December 31, 2020. We have incurred an accumulated deficit of $377.8 million since inception, had negative cash flows from operations of $65.5
million and $45.9 million for the six months ended June 30, 2021 and 2020, respectively, and negative cash flows from operations of $102.0 million and $76.2 million for the years ended December 31, 2020 and 2019, respectively. We have funded our
operations over the past few years primarily from the sale of our equity and debt securities.
We expect to continue to spend substantial amounts on procurement of raw material plasma and other raw materials necessary to scale up our manufacturing operations, commercial product launches, capacity expansion at
the Boca Facility, building additional plasma collection facilities, product development, quality assurance, regulatory affairs and conducting clinical trials for our product candidates and purchasing clinical trial materials, some of which may be
required by the FDA. In addition, our end-to-end production cycle from procurement of raw materials to commercial release of finished product can take between seven and 12 months or potentially longer, requiring substantial investments in raw
material plasma and other manufacturing materials. We expect that we will not be able to generate a sufficient amount of product revenue to achieve profitability until the beginning of 2024 and, as a result, we expect that we will need to continue
to finance our operations through additional equity or debt financings or through corporate collaboration and licensing arrangements. Based upon our projected revenues and projected expenditures, including capital expenditures and continued
implementation of our commercialization and expansion activities, we currently believe that our cash, cash equivalents, projected revenue and accounts receivable will be sufficient to fund our operations, as currently conducted, into the fourth
quarter of 2021. In order to have sufficient cash to fund our operations thereafter, we will need to raise additional capital before the end of the fourth quarter of 2021. These estimates and timeframes may change based upon several factors,
including the success of our commercial manufacturing ramp-up activities, the acceptability and reimbursement of BIVIGAM and ASCENIV by physicians, patients or payers, and the various financing options that may be available to us. We currently have
no firm commitments for additional financing, and there can be no assurances that we will be able to secure additional financing on terms that are acceptable to us, or at all. Furthermore, if our assumptions underlying our estimated expenses and
revenues are incorrect, we may have to raise additional capital sooner than currently anticipated.
On May 28, 2021, we entered into an Open Market Sale AgreementSM (the “2021 Sale Agreement”) with Jefferies LLC (“Jefferies”), pursuant
to which we may offer and sell, from time to time, at our option, through or to Jefferies, up to an aggregate of $50,000,000 of shares of our common stock. We intend to use the net proceeds from any offering under the 2021 Sale Agreement for
general corporate purposes, including procurement of raw materials, source plasma, supply chain initiatives and production expenditures, funding expansion of plasma centers, working capital, capital expenditures, expansion and resources for
commercialization activities, and other potential research and development and business opportunities. We may decide to utilize the 2021 Sale Agreement from time to time in order to supplement our cash resources and fund our operations beyond the
fourth quarter of 2021. As of the date of this report, there have been no sales of common stock under the 2021 Sale Agreement.
Our long-term liquidity depends upon our ability to raise additional capital, fund capacity expansion and commercial programs and generate sufficient revenues from our products, several of which have only recently
achieved commercial status, to cover our operating expenses and meet our obligations on a timely basis. The COVID-19 pandemic has negatively affected the global economy and created significant volatility and disruption to the financial markets.
Failure to secure any necessary financing in a timely manner and on commercially reasonable terms could have a material adverse effect on our business plan and financial performance and we could be forced to delay or discontinue our capacity
expansion, commercialization, product development or clinical trial activities, delay or discontinue the approval efforts for any of our product candidates, or potentially cease operations. In addition, we could also be forced to reduce or forgo
sales and marketing efforts and forgo attractive business opportunities.
Due to numerous risks and uncertainties associated with the COVID-19 pandemic, FDA reviews, inspections and approvals related to our products and processes, patient/payer acceptance of our products, ongoing compliance
and maintenance requirements and capacity expansion efforts at the Boca Facility, we are unable to estimate with certainty the amounts of increased capital outlays and operating expenditures required to fund our commercialization and other
development activities. Our current estimates may be subject to change as circumstances regarding our business requirements evolve and are also subject to the effect of potential new government orders, policies and procedures that we must comply
with which are outside of our control. As such, these factors raise substantial doubt about our ability to continue as a going concern.
We may decide to raise capital through public or private equity offerings or debt financings, obtain a bank credit facility or enter into corporate collaboration and licensing arrangements. The sale of additional
equity or debt securities, if convertible, could result in dilution to our stockholders and, in such event, the market value of our common stock may decline. The incurrence of additional indebtedness would result in increased fixed obligations and
could also result in covenants that would restrict our operations or other financing alternatives. In addition, we are exploring additional contract manufacturing arrangements and other business development opportunities, which may provide
additional liquidity to us. We are also considering alternative business opportunities to maximize stockholder value including, for example, the acquisition or sale of specific assets or businesses, collaboration and/or license agreements or
co-development agreements.
On August 5, 2020, we entered into an Open Market Sale Agreement (the “2020 Sale Agreement”) with Jefferies, pursuant to which we could offer and sell, from time to time, at our option, through or to Jefferies, up to
an aggregate of $50 million of shares of our common stock. On November 5, 2020 and February 3, 2021, we and Jefferies entered into amendments to the 2020 Sale Agreement (as amended, the “Amended 2020 Sale Agreement”) to provide for an increase in
the aggregate offering amount under the Amended 2020 Sale Agreement, such that, as of February 3, 2021, we could sell shares having a gross aggregate offering price of up to $105.4 million.
For the year ended December 31, 2020, we sold 18,537,907 shares of our common stock under the Amended 2020 Sale Agreement and received net proceeds in the amount of $42.5 million. During the six months ended June 30,
2021, we sold an additional 26,907,753 shares of our common stock and received net proceeds of $59.1 million, and during July of 2021 we sold an additional 897,445 shares of our common stock under the Amended 2020 Sale Agreement and received net
proceeds of approximately $1.5 million. As of the date of this report, we cannot raise any additional funds under the Amended 2020 Sale Agreement. The net proceeds from this offering were or are being used for
general corporate purposes, which may include (i) the procurement of raw materials for the manufacturing of BIVIGAM and ASCENIV; (ii) supporting the ongoing commercial sales of our IVIG products; (iii) expanding the manufacturing capacity of our
Boca Facility, including supply chain functions, and enhancing the robustness of our supply chain oversight; (iv) expanding our plasma collection facility network; and (v) research and development and business development opportunities.
On February 11, 2019 (the “Perceptive Closing Date”), we and all of our subsidiaries entered into a Credit Agreement and Guaranty (the “Perceptive Credit Agreement”) with Perceptive Credit Holdings II, LP, as the
lender and administrative agent (“Perceptive”). The Perceptive Credit Agreement, as amended, provides for a senior secured term loan facility in a principal amount of $100.0 million (the “Perceptive Credit Facility”), comprised of (i) a term loan
made on the Perceptive Closing Date in the principal amount of $45.0 million, as evidenced by the Company’s issuance of a promissory note (the “Perceptive Tranche I Note”) in favor of Perceptive on the Perceptive Closing Date (the “Perceptive
Tranche I Loan”), (ii) a term loan in the principal amount of $27.5 million (the “Perceptive Tranche II Loan”) evidenced by the Company’s issuance of a promissory note (the “Perceptive Tranche II Note”) in favor of Perceptive on May 3, 2019, (iii)
a term loan in the principal amount of $12.5 million evidenced by the Company’s issuance of a promissory note (the “Perceptive Tranche III Note”) in favor of Perceptive on March 20, 2020 (the “Perceptive Tranche III Loan”); and (iv) a term loan in
the principal amount of $15 million evidenced by our issuance of a promissory note in favor of Perceptive on December 8, 2020 (the “Perceptive Tranche IV Loan”, and together with the Perceptive Tranche I Loan, the Perceptive Tranche II Loan and the
Perceptive Tranche III Loan, the “Perceptive Loans”). The Perceptive Tranche III Loan is the result of an amendment to the Perceptive Credit Agreement that the Company and Perceptive entered into on May 3, 2019 (the “First Perceptive Amendment”),
and the Perceptive Tranche III Loan became available to the Company upon the approval of BIVIGAM on May 9, 2019. The Perceptive Tranche IV Loan is the result of an amendment to the Perceptive Credit Facility entered into on December 8, 2020 (the
“Second Perceptive Amendment”), which also extended the maturity date of the Perceptive Credit Facility to March 1, 2024 (the “Maturity Date”), subject to acceleration pursuant to the Perceptive Credit Agreement, including upon an Event of Default
(as defined in the Perceptive Credit Agreement).
The proceeds from the Perceptive Tranche IV Loan were used to retire the $15.0 million subordinated note we had payable to Biotest, which had a maturity date of June 17, 2022.
Borrowings under the Perceptive Credit Agreement bear interest at a rate per annum equal to 7.5% plus the greater of (i) one-month LIBOR and (ii) 3.5%; provided, however, that upon, and during the continuance of, an
Event of Default, the interest rate will automatically increase by an additional 400 basis points. Accrued interest of approximately $0.9 million per month is payable to Perceptive on the last day of each month during the term of the Perceptive
Credit Facility. The rate of interest in effect as of the Perceptive Closing Date and at June 30, 2021 was 11.0%.
On the Maturity Date, we are required to pay Perceptive the entire outstanding principal amount underlying the Perceptive Loans and any accrued and unpaid interest thereon. There are no scheduled principal payments on
the Perceptive Loans prior to the Maturity Date. We may prepay outstanding principal on the Perceptive Loans at any time and from time to time upon three business days’ prior written notice, subject to the payment to Perceptive of (A) any accrued
but unpaid interest on the prepaid principal amount plus (B) a redemption premium amount equal to (i) 5.0% of the prepaid principal amount, if prepaid on or prior to December 31, 2021, (ii) 2.0% of the prepaid principal amount, if prepaid after
December 31, 2021 and on or prior to December 31, 2022, (iii) 4.0% of the prepaid principal amount, if prepaid after December 31, 2022 and on or prior to December 31, 2023, and (iv) 5.0% of the prepaid principal amount, if prepaid any time
thereafter and prior to the Maturity Date.
All of our obligations under the Perceptive Credit Agreement are secured by a first-priority lien and security interest in substantially all of our tangible and intangible assets, including intellectual property and
all of the equity interests in our subsidiaries. The Perceptive Credit Agreement contains certain representations and warranties, affirmative covenants, negative covenants and conditions that are customarily required for similar financings. The
negative covenants restrict or limit our ability and that of our subsidiaries to, among other things and subject to certain exceptions contained in the Perceptive Credit Agreement, incur new indebtedness; create liens on assets; engage in certain
fundamental corporate changes, such as mergers or acquisitions, or changes to our or our subsidiaries’ business activities; make certain Investments or Restricted Payments (each as defined in the Perceptive Credit Agreement); change our fiscal
year; pay dividends; repay other certain indebtedness; engage in certain affiliate transactions; or enter into, amend or terminate any other agreements that have the impact of restricting our ability to make loan repayments under the Perceptive
Credit Agreement. In addition, we must (i) at all times prior to the Maturity Date maintain a minimum cash balance of $3.0 million; and (ii) as of the last day of each fiscal quarter commencing with the fiscal quarter ended June 30, 2019, report
revenues for the trailing 12-month period that exceed the amounts set forth in the Perceptive Credit Agreement, which range from $37.3 million for the fiscal quarter ended June 30, 2021 to $55.0 million for the fiscal quarter ending December 31,
2021. At June 30, 2021, we were in compliance with all of the covenants contained in the Perceptive Credit Agreement.
In February 2020, we completed an underwritten public offering of 27,025,000 shares of our common stock and received net proceeds, after underwriting discounts and other expenses associated with the offering, of
approximately $88.7 million. The proceeds from this offering were used (i) for the procurement of raw materials for the manufacturing of BIVIGAM and ASCENIV; (ii) to support the ongoing commercial sales of BIVIGAM and ASCENIV; (iii) to expand the
manufacturing capacity of our Boca Facility and enhance our supply chain capabilities; (iv) to expand our plasma collection facility network; (v) for research and development and business development opportunities; and (vi) for general corporate
purposes and other capital expenditures.
Cash Flows
The following table sets forth a summary of our cash flows for the periods indicated:
|
Six Months Ended June 30,
|
||||||||
|
2021
|
2020
|
|||||||
|
Net cash used in operating activities
|
$
|
(65,491,363
|
)
|
$
|
(45,931,435
|
)
|
||
|
Net cash used in investing activities
|
(7,046,735
|
)
|
(6,241,284
|
)
|
||||
|
Net cash provided by financing activities
|
59,025,904
|
101,201,706
|
||||||
|
Net change in cash and cash equivalents
|
(13,512,194
|
)
|
49,028,987
|
|||||
|
Cash and cash equivalents - beginning of period
|
55,921,152
|
26,752,135
|
||||||
|
Cash and cash equivalents - end of period
|
$
|
42,408,958
|
$
|
75,781,122
|
||||
Net Cash Used in Operating Activities
Cash used in operations for the six months ended June 30, 2021 was $65.5 million, an increase of $19.6 million from the same period of a year ago, mainly due to an increases in inventory and accounts receivable. The
following table illustrates the primary components of our cash flows from operations:
|
Six Months Ended June 30,
|
||||||||
|
2021
|
2020
|
|||||||
|
Net loss
|
$
|
(37,285,244
|
)
|
$
|
(39,423,321
|
)
|
||
|
Non-cash expenses, gains and losses
|
5,057,077
|
3,873,479
|
||||||
|
Changes in accounts receivable
|
(10,307,304
|
)
|
(3,044,246
|
)
|
||||
|
Changes in inventories
|
(18,164,144
|
)
|
(2,936,614
|
)
|
||||
|
Changes in prepaid expenses and other current assets
|
(2,655,397
|
)
|
(2,159,834
|
)
|
||||
|
Changes in accounts payable and accrued expenses
|
(1,925,710
|
)
|
(1,865,637
|
)
|
||||
|
Other
|
(210,641
|
)
|
(375,262
|
)
|
||||
|
Cash used in operations
|
$
|
(65,491,363
|
)
|
$
|
(45,931,435
|
)
|
||
Net Cash Used in Investing Activities
Net cash used in investing activities for the six months ending June 30, 2021 was $7.0 million, which primarily consisted of $4.3 million for the construction and buildout of new plasma centers and related equipment
and capital expenditures at the Boca Facility of $2.7 million, which includes equipment purchases and implementation of our in-house fill/finish capabilities. Cash used in investing activities of $6.2 million for the six months ended June 30, 2020
was mainly attributable to capital expenditures at the Boca Facility. Although we have no specific material commitments for capital expenditures as of June 30, 2021, we expect our total capital expenditures will be between $6.0 million and $12.0
million for the remainder of fiscal 2021.
Net Cash Provided by Financing Activities
Cash provided by financing activities was $59.0 million for the six months ended June 30, 2021 and primarily consisted of proceeds received from the Amended Sale Agreement. Cash provided by financing activities of
$101.2 million for the same period of a year ago was comprised of $88.7 million of net proceeds received from our underwritten public offering in February 2020 and $12.5 million of proceeds from the Perceptive Tranche III Loan received in March
2020.
Effect of Inflation
Inflation or changing prices did not have a significant impact on our net revenues, operating expenses or net loss for the six months ended June 30, 2021 or in 2020 or 2019.
Off-Balance Sheet Arrangements
None.
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk.
|
Not applicable.
| Item 4. |
Controls and Procedures.
|
Evaluation of Disclosure Controls and Procedures
We designed our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), to provide reasonable assurance
that information required to be disclosed by us in reports we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s (the “SEC”)
rules and forms, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.
Under the supervision of and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure
controls and procedures as of June 30, 2021. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures as of June 30, 2021 were functioning effectively to
provide reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii)
accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosures.
A control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. We do not expect that our disclosure controls and procedures or our internal
control over financial reporting are able to prevent with certainty all errors and all fraud.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
OTHER INFORMATION
| Item 1. |
Legal Proceedings.
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We may become subject to certain legal proceedings and claims arising in connection with the normal course of our business. In the opinion of management, there are currently no material pending legal proceedings that
would have a material adverse effect on our consolidated financial position, results of operations or cash flows.
| Item 1A. |
Risk Factors
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Summary of Risk Factors
Below is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized
in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in this Form 10-K and our other filings with the SEC, before making
an investment decision regarding our common stock.
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To date, we have generated limited product revenues, have a history of losses and will need to raise additional capital to operate our business, which may not be available on favorable terms, if at all.
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Our auditor’s report contains a going concern statement.
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We are currently not profitable and may never become profitable.
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The COVID-19 pandemic and efforts to reduce its spread has significantly affected worldwide economic conditions, and could have a material adverse impact on our business, liquidity, financial condition and results of operations, as well
as a change to the overall market size and potential for our products.
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We contract with third parties for the filling, packaging, testing and labeling of the drug substance we manufacture. This reliance on third parties carries the risk that the services upon which we rely may not be performed in a timely
manner or according to our specifications, which could delay the availability of our finished drug product and could adversely affect our commercialization efforts and our revenues.
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The estimates of market opportunity and forecasts of market and revenue growth included in our filings may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, our business could fail to grow
at similar rates, if at all.
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Both of our business segments and our facilities are subject to periodic inspections by the FDA, which, depending on the outcome of such inspection, could result in certain FDA actions, including the issuance of observations, notices,
citations or warning letters.
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Business interruptions could adversely affect our business.
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If we are unsuccessful in obtaining regulatory approval for any of our product candidates or if any of our product candidates do not provide positive results, we may be required to delay or abandon development of such product, which
would have a material adverse impact on our business.
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If the results of our clinical trials do not support our product candidate claims, completing the development of such product candidate may be significantly delayed or we may be forced to abandon development of such product candidate
altogether.
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If we do not obtain and maintain the necessary U.S. or international regulatory approvals to commercialize a product candidate, we will not be able to sell that product candidate, which would make it difficult for us to recover the costs
of researching and developing such product candidate.
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Although we have received approval from the FDA to market ASCENIV as a treatment for PIDD, our ability to market or seek approval for ASCENIV for alternative indications could be limited and FDA could require clinical trials beyond what
we may deem to be reasonable. Unless additional clinical trials are successfully conducted and the FDA approves a BLA or other required submission for review, we may not be authorized to market ASCENIV for any other indication.
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With the approval to market ASCENIV, BIVIGAM and Nabi-HB, there can be no assurance that we will be successful in developing and expanding commercial operations or balancing our research and development activities with our
commercialization activities.
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We depend on third-party researchers, developers and vendors to develop, manufacture, supply materials or test products and product candidates, and such parties are outside of our control.
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We may be unable to successfully expand our manufacturing processes to fulfill demand for our products or increase our production capabilities through the addition of new equipment, including if we do not obtain requisite approval from
the FDA.
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Our products, and any additional products for which we may obtain marketing approval in the future, could be subject to post-marketing restrictions or withdrawal from the market and we could be subject to substantial penalties if we fail
to comply with regulatory requirements or if we experience unanticipated problems with our products following approval.
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Historically, a few customers have accounted for a significant amount of our total revenue and accounts receivable and the loss of any of these customers could have a material adverse effect on our business, results of operations and
financial condition.
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Issues with product quality and compliance could have a material adverse effect upon our business, subject us to regulatory actions and cause a loss of customer confidence in us or our products.
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If physicians, payers and patients do not accept and use our current products or our future product candidates, our ability to generate revenue from these products will be materially impaired.
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Our long-term success may depend on our ability to supplement our existing product portfolio through new product development or the in-license or acquisition of other new products, product candidates and label expansion of existing
products, and if our business development efforts are not successful, our ability to achieve profitability may be adversely impacted.
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Our ADMA BioCenters operations collect information from donors in the U.S. that subjects us to consumer and health privacy laws, which could create enforcement and litigation exposure if we fail to meet their requirements.
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The Perceptive Credit Facility is subject to acceleration in specified circumstances, which may result in Perceptive taking possession and disposing of any collateral.
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If we are unable to protect our patents, trade secrets or other proprietary rights, if our patents are challenged or if our provisional patent applications do not get approved, our competitiveness and business prospects may be materially
damaged.
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Cyberattacks and other security breaches could compromise our proprietary and confidential information, which could harm our business and reputation.
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Our ability to continue to produce safe and effective products depends on the safety of our plasma supply, testing by third parties and the timing of receiving the testing results, and manufacturing processes against transmittable
diseases.
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We could become supply-constrained and our financial performance would suffer if we cannot obtain adequate quantities of FDA-approved source plasma with proper specifications or other necessary raw materials.
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We require additional funding and may be unable to raise capital in the future, which would force us to delay, curtail or eliminate one or more of our research and development programs or potentially modify our ongoing operations,
commercialization efforts and expansion plans, as well as impact the overall business plan for the organization.
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The market price of our common stock may be volatile and may fluctuate in a way that is disproportionate to our operating performance.
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Risk Factors
Described below are various risks and uncertainties that may affect our business. These risks and uncertainties are not the only ones we face. You should recognize that other significant risks and uncertainties may
arise in the future, which we cannot foresee at this time. Also, the risks that we now foresee might affect us to a greater or different degree than expected. Certain risks and uncertainties, including ones that we currently deem immaterial or that
are similar to those faced by other companies in our industry or business in general, may also affect our business. If any of the risks described below actually occur, our business, financial condition or results of operations could be materially
and adversely affected. You should carefully consider the following risk factors and the section entitled “Special Note Regarding Forward-Looking Statements” before you decide to invest in our securities.
Risks Relating to our Business
To date, we have generated limited product revenues, have a history of losses and will need to raise additional capital to operate our business, which may not be available on favorable terms, if at
all.
Our long-term liquidity depends upon our ability to grow our commercial programs, expand our commercial operations at the Boca Facility, improve our supply-chain capabilities, improve production yields, provide more
control and visibility for timing of commercial product releases, raise additional capital, fund and successfully implement our research and development and commercial programs, establish and build out a commercial sales force, medical affairs
organization and commercial infrastructure and meet our ongoing obligations. In addition, our end-to-end production cycle from procurement of raw materials to commercial release of finished product can take between seven and 12 months or
potentially longer, requiring substantial investments in raw material plasma and other manufacturing materials.
We currently anticipate, based upon our projected revenue and expenditures, that our current cash, cash equivalents and accounts receivable will be sufficient to fund our operations into the fourth quarter of 2021.
This time frame may change based upon how quickly we are able to execute on our commercialization efforts and operational initiatives. However, if the assumptions underlying our estimated revenues and expenses prove to be incorrect, we may have to
raise additional capital sooner than we currently expect. We anticipate that we will not be able to generate a sufficient amount of product revenue to achieve profitability until the beginning of 2024 and, as a result, we anticipate that we will
need to continue to finance our operations through additional equity or debt financings or corporate collaboration and licensing arrangements. If we are unable to raise additional capital as needed, we will have to delay, curtail or eliminate our
commercialization efforts as well as product development activities. Even if we are able to raise additional capital, such financings may only be available on unattractive terms, resulting in significant dilution of stockholders’ interests and, in
such event, the value and potential future market price of our common stock may decline. In addition, if we raise additional funds through license arrangements or through the disposition of any of our assets, it may be necessary to relinquish
potentially valuable rights to our product candidates or assets or grant licenses on terms that are not favorable to us.
In addition, the auditor’s report on our financial statements for the year ended December 31, 2020 includes a going concern paragraph. To date, our products have not generated significant revenue. As a result, we have
suffered recurring losses and require significant additional cash resources to execute our business plan. These losses are expected to continue for an extended period of time. These factors raise substantial doubt about our ability to continue as a
going concern beyond one year from the date of filing this Quarterly Report on Form 10-Q. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should we be
unable to continue as a going concern within one year after the date the financial statements are issued.
We recognize that we will need to raise additional capital in order to continue to execute our business plan in the future. Historically, the major source of our cash has been from proceeds from various public and
private offerings of our common stock. The actual amount of cash that we will need is subject to many factors. There can be no assurances that additional financing will be available when needed or that management will be able to obtain financing on
terms acceptable to us or that we will become profitable and generate positive operating cash flow. If we are unable to raise sufficient additional funds, we will have to scale back our operations.
We are currently not profitable and may never become profitable.
We have a history of losses and expect to incur substantial losses and negative operating cash flows into fiscal 2023, and we may never achieve or maintain profitability. For the six months ended June 30, 2021 and
2020, we incurred net losses of $37.3 million and $39.4 million, respectively, and for the years ended December 31, 2020 and 2019, we incurred net losses of $75.7 million and $48.3 million, respectively. From our inception in 2004 through June 30,
2021, we have incurred an accumulated deficit of $377.8 million. We expect that we will not be able to generate a sufficient amount of product revenue to achieve profitability until the beginning of 2024 and, as a result, we expect that we will
need to continue to finance our operations through additional equity or debt financings or corporate collaboration and licensing agreements. We also expect to continue to incur significant operating and capital expenditures and anticipate that our
operating expenses will increase substantially in the foreseeable future as we:
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expand commercialization and marketing efforts;
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implement additional internal systems, controls and infrastructure;
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hire additional personnel;
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expand and build out our plasma center network; and
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expand production capacity at the Boca Facility.
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As a result, we will need to generate significant revenues in order to achieve and maintain profitability. We may not be able to generate these revenues or achieve profitability in the future. These factors raise
substantial doubt about our ability to continue as a going concern. Our failure to achieve or maintain profitability could negatively impact the value of our securities.
The COVID-19 pandemic and efforts to reduce its spread has significantly affected worldwide economic conditions, and could have a material adverse impact on our business,
liquidity, financial condition and results of operations
The COVID-19 pandemic, including the Delta variant and other resistant strains of the coronavirus, has the potential to adversely impact several aspects of each of our business segments, our commercial manufacturing
operations and plasma collection facilities, including but not limited to potential disruptions to our supply-chain operations, including procurement of raw materials and packaging materials, a portion of which are sourced internationally, and the
testing of finished drug product that is required prior to its availability for commercial sale. Such testing has historically been performed by contract laboratories outside the United States. While we do not believe that the COVID-19 pandemic
has significantly affected operations and immunoglobulin production at our Boca Facility or our ADMA BioCenters plasma collection operations at this time, we may experience adverse effects in the future, particularly in light of the recent increase
in COVID-19 cases in the State of Florida. For example, our employees becoming ill, the imposition of additional mandatory remote working environments and federal, state and local responses to the pandemic could materially affect the efficiency and
pace of our operations and manufacturing at our Boca Facility. Employee or donor illness, if not properly managed, could also impact the quality of our products and product candidates. In addition, travel and other restrictions that have been
implemented in the United States could impact our commercial efforts with respect to any of our products, including BIVIGAM and ASCENIV, as trade shows, industry and medical conferences and other events we had been planning to utilize and exhibit
and attend with our staff to increase awareness of our products by physicians and payers are subject to limitations, rescheduling or outright cancellation in response to the pandemic. Also, due to a combination of previous state and local
“shelter-in-place” orders, as well as government stimulus packages, persisting social distancing measures and varying roll-outs of vaccinations by state, we have experienced, and may experience in the future, lower than expected donor collections
at our FDA-licensed plasma collection centers. We were also subject to delays in shipments of source plasma from our contracted third-party suppliers, as well as delays in deliveries for personal protective equipment, reagents and other non-plasma
raw materials and supplies used in the manufacture and distribution of our products. We have also experienced supply chain delays as a result of significant resources being diverted towards the rapid development and distribution of COVID-19
vaccines, which could result in our need to carry more inventory that we have in the past, which would put an additional strain on our cash resources.
In the future we may continue to experience pandemic-related challenges with respect to obtaining and manufacturing a sufficient amount of supplies, raw materials, and finished product to meet our need for commercial
and clinical product supply. If we or any of our suppliers or manufacturers are adversely impacted by the pandemic or the restrictions resulting from the outbreak, if they or we cannot obtain the necessary supplies, or if third parties need to
prioritize other products or customers over us, including under the Defense Production Act, we may experience future delays or disruptions in our supply chain, which could have a material and adverse impact on our business. Moreover, we, our
suppliers, and any third-party manufacturers may also need to implement measures and changes, or deviate from typical requirements, because of the pandemic that may otherwise adversely impact our supply chains or the quality of the resulting
products or supplies. Depending on the change, we may need to obtain FDA pre-approval or otherwise provide the FDA with a notification of the change.
To the extent that we or our partners are conducting clinical trials, the pandemic could cause delays or disruptions in these or future development programs. By example, the pandemic may result in slower enrollment,
the need to suspend enrollment into studies, patient withdrawals, postponement of planned clinical or preclinical studies, redirection of site resources from studies, study modification, suspension, or termination, the introduction of remote study
procedures and modified informed consent procedures, study site changes, direct delivery of investigational products to patient homes requiring state licensing, study deviations or noncompliance, and changes or delays in site monitoring. The
foregoing may require that we consult with relevant review and ethics committees, IRBs, and the FDA. The foregoing may also impact the integrity of our study data. The effects of the COVID-19 pandemic may also increase the need for clinical trial
patient monitoring and regulatory reporting of adverse effects. The pandemic could further impact our ability to interact with the FDA or other regulatory authorities and may result in delays in the conduct of inspections or review of pending
applications or submissions. During the second quarter of 2021, we were notified by the FDA that our submission for the approval of our in-house fill-finish process utilizing our Vanrx SA25 Workcell aseptic filling machine will require a site
inspection, either in person or virtually. Although the inspection was completed in July of 2021, the FDA’s review of our regulatory filing with respect to our in-house fill-finish process and new aseptic filling machine remains ongoing. Although
we anticipate receiving regulatory approval of this submission in the second half of 2021, no assurances can be provided as to the timing for completion of this FDA review or any other regulatory submissions or applications that may be impacted by
restrictions related to COVID-19 or other circumstances unknown to us presently or that are out of our direct control. Due to the potential impact of the COVID-19 outbreak on clinical trials, drug development, and manufacturing, the FDA issued a
number of guidances specifically concerning COVID-19, including guidances with respect to blood and blood components. The FDA’s guidance is continually evolving.
Since the onset of the COVID-19 pandemic, there has been a noticeable decline in certain medical prescriptions attributed to lower incident rates for illnesses, fewer RSV, influenza and other respiratory viral
pathogen-infected patients, hospital admissions and a reduction in doctor visits. In addition, physical and social distancing guidelines issued by public health authorities and the resulting global changes in human behavior have resulted in an
observed reduction in infection transmission rates and spread of bacterial and viral infections, resulting in lower rates of infection across all patient populations, which, if continued, could potentially negatively impact the use of our IVIG
products by patients.
The COVID-19 pandemic may also result in changes in laws and regulations. By example, in March 2020, the U.S. Congress passed the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, which includes
various provisions regarding FDA drug shortage reporting requirements, as well as provisions regarding supply chain security, such as risk management plan requirements, and the promotion of supply chain redundancy and domestic manufacturing. This
and any future changes in law may require that we change our internal processes and procedures to ensure continued compliance.
The ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on our business, operations, or financial condition, or on
healthcare systems or the global economy as a whole. Although the COVID-19 pandemic has not adversely affected our capital and financial resources to date, the pandemic’s effects could have a material impact on our ability to access the capital
markets as needed and on our operations and business, including those of the third parties on which we rely. Because we are unable to determine the ultimate severity or duration of the pandemic or its effects on, among other things, the global,
national or local economies, the capital and credit markets, our workforce, our customers or our suppliers, at this time we are unable to predict whether COVID-19 will have a material adverse impact on our business, financial condition, liquidity
and results of operations.
We contract with third parties for the filling, packaging, testing and labeling of the drug substance we manufacture. This reliance on third parties carries the risk that the
services upon which we rely may not be performed in a timely manner or according to our specifications, which could delay the availability of our finished drug product and could adversely affect our commercialization efforts and our revenues.
Third-party fill/finish providers may not perform as agreed or in accordance with FDA requirements. Any significant problem that our fill/finish providers experience could delay or interrupt our
supply of finished drug product until the service provider cures the problem or until we locate, negotiate for, validate and receive FDA approval for an alternative provider (when necessary), if one is available. Failure to obtain the needed
fill/finish services could have a material and adverse effect on our business, financial condition and results from operations.
Although we have built our own fill/finish suite within the Boca Facility, we also intend to continue to utilize third parties to supplement our fill/finish process for final drug substance. In
addition, our recently completed fill/finish suite has yet to be validated and approved by the FDA. Our anticipated reliance on a limited number of third-party manufacturers exposes us to the following risks:
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we may be unable to identify contract fill/finishers on acceptable terms or at all because the number of potential service providers is limited and the FDA must inspect and qualify any contract manufacturers for current cGMP compliance
as part of our marketing application;
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a new fill/finisher would have to be educated in, or develop substantially equivalent processes for, the production of our products and product candidates;
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the COVID-19 pandemic could adversely affect our contracted fill/finishers’ operations, supply chain or workforce;
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our contracted fill/finishers’ resources and level of expertise with plasma-derived biologics may be limited, and therefore they may require a significant amount of support from us in order to implement and maintain the infrastructure
and processes required to deliver our finished drug product;
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our third-party fill/finishers might be unable to timely provide finished drug product in sufficient quantity to meet our commercial needs;
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contract manufacturers may not be able to execute our inspection procedures and required tests appropriately;
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contract manufacturers are subject to ongoing periodic unannounced inspection by the FDA and corresponding state agencies to ensure strict compliance with cGMP and other government regulations, and we do not have control over third-party
providers’ compliance with these regulations;
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our third-party fill/finishers could breach or terminate their agreements with us; and
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our contract fill/finishers may have unacceptable or inconsistent drug product quality success rates and yields, and we have no direct control over our contract fill/finishers’ ability to maintain adequate quality control, quality
assurance and qualified personnel.
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Each of these risks could delay or prevent the completion of our finished drug product and the release of finished drug product by the FDA, which could result in higher costs or adversely impact the
commercialization of our products. These risks could also result in the delay in obtaining clinical supply, which would delay our development programs. In addition, our contract fill/finishers and our other third-party vendors may source their
materials and supplies globally, and are therefore subject to supply disruptions in the event of fire, weather related events such as hurricanes, wind and rain, other acts of God or force majeure events or global health occurrences and
emergencies, including the COVID-19 pandemic.
The estimates of market opportunity and forecasts of market and revenue growth included in our filings may prove to be inaccurate, and even if the markets in which we compete
achieve the forecasted growth, our business could fail to grow at similar rates, if at all.
Market opportunity estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate, including as a result of
changing circumstances during the ongoing COVID-19 pandemic. In particular, the size and growth of the overall U.S. IVIG and source plasma markets are subject to significant variables that can be difficult to measure, estimate or quantify. Our
business depends on, among other things, successful commercialization of our existing products, market acceptance of such products and ensuring that our products are safe and effective. Further, there can be no assurance that we will be able to
generate the revenue that we believe our products and plasma facilities are capable of generating. As a result, we may not be able to accurately forecast or predict revenue. For these reasons, the estimates and forecasts in our filings relating to
revenue generation and growth may prove to be inaccurate. Even if the markets in which we compete meet our size estimates and forecasted growth, our business could fail to grow at similar rates, if at all.
Both of our business segments and our facilities, as well as our suppliers and contractors, are subject to periodic inspections by the FDA, which, depending on the outcome of such inspection, could
result in certain FDA actions, including the issuance of observations, notices, citations or warning letters.
We and our suppliers and contractors may be unable to comply with our specifications, cGMP requirements and with other FDA, state, and foreign regulatory requirements for commercial
and clinical supply. The FDA is authorized to perform inspections of our and our suppliers’ facilities, including the Boca Facility. The FDA also must inspect and approve our and our third-parties’ facilities before they may be used for
commercial production. At the end of such an inspection, the FDA could issue a Form 483 Notice of Inspectional Observations, which could cause us to modify certain activities identified during the inspection and may not approve the use of the
facility. Following such inspections, the FDA may issue an untitled letter as an initial correspondence that cites violations that do not meet the threshold of regulatory significance of a warning letter. FDA guidelines also provide for the
issuance of warning letters for violations of “regulatory significance” for which the failure to adequately and promptly achieve correction may be expected to result in an enforcement action. FDA also may issue warning letters and untitled letters
in connection with events or circumstances unrelated to an FDA inspection.
We may not be able to timely resolve concerns raised by the FDA as a result of an inspection or without expending significant resources. We are unable to control the timing of FDA inspections, responses, meeting
requests, teleconference requests, requests for clarifications and similar regulatory communications, as well as whether or not the FDA will change its requirements, guidance or expectations. If the FDA determines that we have not remediated the
issues identified in a warning letter or any other inspection issues and deficiencies, any failure of ours to address or provide requested documentation of corrections for these issues could disrupt our business operations and the timing of our
commercialization efforts and could have a material adverse effect on our financial condition and operating results.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the
success of our business.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and
wastes. Our commercial manufacturing and any research and development activities involve the use of biological and hazardous materials and produce hazardous waste products. We generally contract with third parties for the disposal of these
materials and wastes. We cannot eliminate the risk of contamination or injury from these materials, which could cause an interruption of our commercialization efforts, research and development efforts and business operations, environmental damage
resulting in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. Although we believe that the safety procedures utilized internally
and by our third-party manufacturers for handling and disposing of these materials generally comply with the standards prescribed by these laws and regulations, we cannot guarantee that this is the case or eliminate the risk of accidental
contamination or injury from these materials. In such an event, we may be held liable for any resulting damages and such liability could exceed our resources and state or federal or other applicable authorities may curtail our use of certain
materials and/or interrupt our business operations. Furthermore, environmental laws and regulations are complex, change frequently and have tended to become more stringent. We cannot predict the impact of such changes and cannot be certain of our
future compliance. In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our commercial manufacturing,
research and development, or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties, or other sanctions.
Business interruptions could adversely affect our business.
Our operations, including our headquarters located in Ramsey, NJ, the Boca Facility and our plasma collection facilities, are vulnerable to interruption by fire, weather related events such as hurricanes, wind and
rain, other acts of God or force majeure events, electric power loss, telecommunications failure, equipment failure and breakdown, human error, employee issues, global health occurrences such as the COVID-19 pandemic, and emergencies, product
liability claims and events beyond our control. While we maintain several insurance policies with reputable carriers that provide partial coverage for a variety of these risks, including replacing or rebuilding a part of our facilities, these
policies are subject to the insurance carriers’ final determination of compensation to us and we may not have adequate coverage if we need to rebuild or replace our inventory, infrastructure, business income or our entire facility. In addition,
our disaster recovery plans for our facilities may not be adequate and we do not have an alternative manufacturing facility or contractual arrangements with other manufacturers in the event of a casualty to or destruction of any of our facilities.
If we are required to rebuild or relocate any of our facilities, a substantial investment in improvements and equipment would be necessary. We carry only a limited amount of business interruption insurance, which may not sufficiently compensate us
for losses that may occur. As a result, any significant business interruption could adversely affect our business and results of operations.
If we are unsuccessful in obtaining regulatory approval for any of our product candidates or if any of our product candidates do not provide positive results, we may be required to delay or abandon
development of such product, which would have a material adverse impact on our business.
Product candidates require extensive clinical data analysis and regulatory review and may require additional testing. Clinical trials and data analysis can be very expensive, time-consuming and difficult to design and
implement. The conduct of preclinical studies and clinical trials is subject to numerous risks and results of the studies and trials are highly uncertain. Human clinical trials are very
expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. The clinical trial process is also time-consuming. Furthermore, delays or setbacks can occur at any stage of the process, and we
could encounter problems that cause us to abandon our product development programs and related INDs or BLAs, or to repeat clinical trials. The evolving COVID-19 pandemic may directly or indirectly affect the pace of enrollment in clinical trials as
patients may be restricted in traveling to and accessing healthcare facilities and physicians’ offices. Additionally, such healthcare facilities and offices have their limited resources directed towards treating patients with COVID-19 symptoms. The
commencement and completion of clinical trials for any current or future development product candidate may be delayed by several factors, including:
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unforeseen safety issues;
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determination of dosing issues;
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lack of effectiveness during clinical trials;
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slower than expected rates of patient recruitment;
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inability to monitor patients adequately during or after treatment
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inability or unwillingness of medical investigators to follow our clinical protocols; and
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temporary suspension resulting from the COVID-19 pandemic.
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We cannot be certain as to what type and how many clinical trials the FDA, or equivalent foreign regulatory agencies, will require us to conduct before we may successfully gain approval to market any of our product
candidates that still require FDA approval. Prior to approving a new drug or biologic, the FDA generally requires that the effectiveness of the product candidate (which is not typically fully investigated until Phase 3) be demonstrated in two
adequate and well-controlled clinical trials. However, if the FDA or an equivalent foreign regulatory authority determines that our Phase 3 clinical trial results do not demonstrate a statistically significant, clinically meaningful benefit with an
acceptable safety profile, or if a relevant regulator requires us to conduct additional Phase 3 clinical trials in order to gain approval, we will incur significant additional development costs and commercialization of these products would be
prevented or delayed and our business would be adversely affected.
In addition, the FDA or an independent institutional review board may not permit us to commence a clinical trial, may require amendments to our clinical trial protocols, or may suspend our clinical trials at any time
if it appears that we are exposing participants to unacceptable health risks or if the FDA or IRB finds deficiencies in our IND submissions or the conduct of these trials. Therefore, we cannot provide any assurance or predict with certainty the
schedule for future clinical trials. In the event we do not ultimately receive regulatory approval for our product candidates, we may be required to terminate development of such product candidates. If we fail to obtain regulatory approval to
market and sell our product candidates, or if approval is delayed, we will be unable to generate revenue from the sale of these products, our potential for generating positive cash flow will be diminished and the capital necessary to fund our
operations will increase.
If the results of our clinical trials do not support our product candidate claims, completing the development of such product candidate may be significantly delayed or we may be forced to abandon
development of such product candidate altogether.
We cannot be certain that the clinical trial results of our product candidates will support our product candidates’ claims. Success in preclinical testing and early clinical trials does not ensure that later clinical
trials will be successful, and we cannot be sure that the results of later clinical trials will replicate the results of prior clinical trials and preclinical testing.
The clinical trial process may fail to demonstrate that our product candidates are safe for humans and effective for indicated uses. This failure would cause us to abandon a product candidate and may delay development
of other product candidates. Any delay in, or termination of, our clinical trials will delay our ability to commercialize our product candidates and generate product revenues.
Other issues that may impact our clinical trials and that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, include:
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We may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites and our CROs;
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Regulators may require us to perform additional or unanticipated clinical trials to obtain approval or we may be subject to additional post-marketing testing, surveillance, or REMS requirements to maintain regulatory approval;
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Our third-party contractors may fail to comply with regulatory requirements or the clinical trial protocol, or meet their contractual obligations to us in a timely manner, or at all, or we may be required to engage in additional clinical
trial site monitoring;
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The cost of clinical trials of our product candidates may be greater than we anticipate or we may have insufficient funds for a clinical trial or to pay the substantial user fees required by FDA upon the filing of a marketing
application;
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The supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate;
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We may not be able to achieve sufficient study enrollment, subjects may drop out or be withdrawn from out studies, we may have delays in adding new investigators or clinical trial sites, or we may experience a withdrawal of clinical
trial sites;
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There may be flaws in our clinical trial design that are not discoverable until the clinical trial has progressed;
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The FDA or comparable foreign regulatory authorities may disagree with our intended indications or study design, including endpoints, or our interpretation of data from preclinical studies and clinical trials, may find that a product
candidate’s benefits do not outweigh its safety risks, or may require that we conduct additional development or study work;
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The FDA or comparable foreign regulatory authorities may fail to approve or subsequently find fault with the manufacturing processes or our contract manufacturer’s manufacturing facility for clinical and future commercial supplies;
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We may need to make changes to our product candidates that require additional testing or that cause our product candidates to perform differently than expected;
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Global trade policies that may impact our or our manufacturers’ ability to obtain raw materials and/or finished product for commercialization;
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FDA or comparable regulatory authorities may take longer than we anticipate to make decisions on our products or product candidates; and
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We may not be able to demonstrate that a product or product candidate provides an advantage over current standards of care or current or future competitive therapies in development.
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In addition, our clinical trials involve a relatively small patient population. Because of the small sample size, the results of these clinical trials may not be indicative of future results. In addition, certain
portions of our clinical trials and product testing for our product candidates may be performed outside of the U.S., and therefore, may not be performed in accordance with standards normally required by the FDA and other regulatory agencies.
If we do not obtain and maintain the necessary U.S. or international regulatory approvals to commercialize a product candidate, we will not be able to sell that product candidate, which would make
it difficult for us to recover the costs of researching and developing such product candidate.
If we are not be able to generate revenue from our products and product candidates, our sources of revenue may continue to be from a product mix consisting only of plasma collection and sales revenues, revenues
generated from sales of our FDA-approved commercial products, revenues generated from ongoing contract manufacturing for third parties and revenues generated from the sales of manufacturing intermediates. We cannot assure you that we will receive
the approvals necessary to commercialize any product candidate we may acquire or develop in the future. In order to obtain FDA approval of any product candidate requiring FDA approval, our clinical development must demonstrate that the product
candidate is safe for humans and effective for its intended use, and we must successfully complete an FDA BLA review. Obtaining FDA approval of a product candidate generally requires significant research and testing, referred to as preclinical
studies, as well as human tests, referred to as clinical trials. Satisfaction of the FDA’s regulatory requirements typically takes many years, depends upon the type, complexity and novelty of the product candidate and requires substantial resources
for research, development and testing. We cannot predict whether our research and clinical approaches will result in products that the FDA considers safe for humans and effective for indicated uses. The FDA has substantial discretion in the product
approval process and may require us to conduct additional preclinical and clinical testing or to perform post-marketing studies or may require additional CMC or other data and information, and the development and provision of this data and
information may be time-consuming and expensive. The approval process may also be delayed by changes in government regulation, future legislation, diversion of resources for FDA review during the ongoing COVID-19 pandemic or administrative action
or changes in FDA policy that occur prior to or during our regulatory review. Delays in obtaining regulatory approvals may:
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delay commercialization of, and our ability to derive revenues from, our product candidate;
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impose costly procedures on us; and
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diminish any competitive advantages that we may otherwise enjoy.
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Even if we comply with all FDA requests, the FDA may ultimately reject our product candidate’s BLA. In addition, the FDA could determine that we must test additional subjects and/or require that we conduct further
studies with more subjects. We may never obtain regulatory approval for any future potential product candidate or label expansion activity. Failure to obtain FDA approval of any of our product candidates will severely undermine our business by
leaving us without the ability to generate additional accretive revenues. There is no guarantee that we will ever be able to develop or acquire other product candidates. In foreign jurisdictions, we must receive approval from the appropriate
regulatory authorities before we can commercialize any products or product candidates outside the U.S. Foreign regulatory approval processes generally include all of the risks and uncertainties associated with the FDA review, inspection and
approval procedures described above. We cannot assure you that we will receive the approvals necessary to commercialize any product candidate for sale outside the U.S.
Although we have received approval from the FDA to market ASCENIV as a treatment for PIDD, our ability to market or seek approval for ASCENIV for alternative indications could be limited, unless
additional clinical trials are conducted successfully and the FDA approves a BLA or other required submission for review.
The FDA and other governmental authorities strictly regulate and monitor marketing, labeling, advertising and promotion of prescription drugs. These regulations include standards and restrictions for direct-to-consumer
advertising, industry-sponsored scientific and educational activities, promotional activities involving the Internet and off-label promotion. The FDA generally does not allow drugs to be promoted for “off-label” uses — that is, uses that are not
described in the product’s labeling and that differ from those that were approved by the FDA. The FDA limits approved uses to those studied by a company in its clinical trials. In addition to the FDA approval required for new formulations, any new
indication for an approved product also requires FDA approval. Although we have received approval from the FDA to market ASCENIV as a treatment for PIDD, we cannot be sure whether we will be able to obtain FDA approval for any desired future
indications for ASCENIV.
While physicians in the U.S. may choose, and are generally permitted, to prescribe drugs for uses that are not described in the product’s labeling, and for uses that differ from those tested in clinical studies and
approved by the regulatory authorities, our ability to promote our products is narrowly limited to those indications that are specifically approved by the FDA. “Off-label” uses are common across medical specialties and may constitute an appropriate
treatment for some patients in varied circumstances. Regulatory authorities in the U.S. generally do not regulate the behavior of physicians in their choice of treatments. Regulatory authorities do, however, restrict communications by
pharmaceutical companies on the subject of off-label use. If the FDA determines that our promotional activities fail to comply with the FDA’s regulations or guidelines, we may be subject to warnings from, or enforcement action by, these
authorities. In addition, our failure to follow FDA rules and guidelines related to promotion and advertising may cause the FDA to issue warning letters or untitled letters, bring an enforcement action against us, suspend or withdraw an approved
product from the market, require a recall or institute fines or civil fines, or could result in disgorgement of money, operating restrictions, injunctions or criminal prosecution, among other consequences, any of which could harm our reputation and
our business.
With the approval of ASCENIV, there can be no assurance that we will be successful in developing and expanding commercial operations or balancing our research and development activities with our
commercialization activities.
Since receiving FDA approval for ASCENIV, we have been commercializing this product while also continuing our research and development activities. There can be no assurance that we will be able to successfully manage
the balance of our research and development operations with our commercialization activities. Potential investors and stockholders should be aware of the problems, delays, expenses and difficulties frequently encountered by companies balancing
development of product candidates, which can include problems such as unanticipated issues relating to clinical trials and receipt of approvals from the FDA and foreign regulatory bodies, with commercialization efforts, which can include problems
related to managing manufacturing and supply, including supply chain constraints directly or indirectly caused by the ongoing COVID-19 pandemic and government responses thereto, reimbursement, marketing challenges, development of a comprehensive
compliance program, and other related and additional costs. For example, the raw material plasma we collect and procure to manufacture ASCENIV using our patented proprietary microneutralization assay is comprised of plasma collected from donors
which contains high titer antibodies to RSV. This high titer plasma which meets our internal specifications for the manufacture of ASCENIV that we are able to identify with our patented testing assay amounts
to less than 10% of the total donor collection samples we test. Our product candidates will require significant additional research and clinical trials, and we will need to overcome significant regulatory burdens prior to commercialization in the
U.S. and other countries. In addition, we may be required to spend significant funds on building out our commercial operations. There can be no assurance that after the expenditure of substantial funds and efforts, we will successfully develop and
commercialize any of our product candidates, generate any significant revenues or ever achieve and maintain a substantial level of sales of our products.
We depend on third-party researchers, developers and vendors to develop, manufacture or test products and product candidates, as well as for other pre-and-post approval services, and such parties
are, to some extent, outside of our control.
We depend on independent investigators and collaborators, such as universities and medical institutions, contract laboratories, clinical research organizations, contract manufacturers, contract fill/finishers and
consultants to conduct our preclinical activities, clinical trials, CMC testing and other activities under agreements with us. These collaborators are not our employees and we cannot control the amount or timing of resources that they devote to our
programs or the impact that the ongoing COVID-19 pandemic will have on such third parties. These investigators may not assign as great a priority to our programs or pursue them as diligently as we would if we were undertaking such programs
ourselves. If outside collaborators fail to devote sufficient time and resources to our product-development programs, or if their performance is substandard, our trials may be repeated, extended, delayed, or terminated, the approval of our FDA
application(s), if any, and our introduction of new products, if any, will be delayed. We or they may also be subject to regulatory enforcement actions and we may not be able to meet commercial demand. These collaborators may also have
relationships with other commercial entities, some of whom may compete with us. If our collaborators assist our competitors at our expense, our competitive position would be harmed. Additionally, any change in the regulatory compliance status of
any of our vendors may impede our ability to receive approval for our product candidates.
We may be unable to successfully expand our manufacturing processes to fulfill demand for our products or increase our production capabilities through the addition of new equipment, including if we
do not obtain requisite approval from the FDA.
We currently anticipate expanding the manufacturing capacity of our Boca Facility by approximately 50% or more. We also anticipate expanding our production capabilities through the addition of our fill-finish machine
at our Boca Facility. Following the expansion of any of our manufacturing processes or the addition of new equipment, such as our fill-finish machine, we will need to validate the expanded facility and equipment and have it inspected by the FDA.
Given the significant delays that may result during the validation process, including due to any diverted FDA attention during the COVID-19 pandemic, we may experience a significant supply shortage of our products or our production capabilities may
be limited until completion of and validation of our facility expansion and new manufacturing equipment.
Our products, and any additional products for which we may obtain marketing approval in the future, could be subject to post-marketing restrictions or
withdrawal from the market and we could be subject to substantial penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our products following approval.
Our products, and any additional products for which we may obtain marketing approval in the future, could be subject to post-marketing restrictions, new FDA guidance, or other regulatory actions, such as withdrawal
from the market. Such products, as well as the manufacturing processes, post-marketing studies and measures, labeling, advertising and promotional activities for such products, among other things, are subject to ongoing regulatory compliance
requirements, and oversight, review, and inspection by the FDA and other regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, adherence
with labeling and promotional requirements and restrictions, requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirements regarding safeguarding the drug supply
chain as well as the distribution of samples to physicians and recordkeeping. For example, the FDA’s approval of our PAS to allow for the commercial relaunch of BIVIGAM requires us to conduct specified post-marketing studies related to our
manufacturing controls and processes, and submit specified post-marketing reports to the FDA. If, during the post-marketing period (after marketing approval) previously unknown adverse events, discovery that the product is less effective than
previously thought, or other potential concerns regarding our products or their manufacturing processes emerge, or we are observed in any way to fail to comply with the numerous regulatory requirements to which we are subject, those circumstances
may yield various results, including:
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restrictions on such products or manufacturing processes;
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restrictions on the labeling or marketing of a product;
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restrictions on product distribution or use;
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clinical holds or termination of clinical trials;
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requirements to conduct further post-marketing studies or clinical trials, implement risk mitigation strategies, or to issue corrective information;
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warning letters or untitled letters;
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withdrawal of the products from the market;
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refusal to approve pending applications or supplements to approved applications that we submit;
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recall of products;
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restrictions on coverage by third-party payers;
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fines, restitution or disgorgement of profits or revenues;
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suspension or withdrawal of marketing approvals;
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refusal to permit the import or export of products;
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FDA debarment, suspension and debarment from government contracts, and refusal of orders under existing government contracts, exclusion from healthcare programs, consent decrees, or corporate integrity agreements;
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product seizure or detention; or
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injunctions or the imposition of civil or criminal penalties.
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Historically, a few customers have accounted for a significant amount of our total revenue and accounts receivable and the loss of any of these customers could have a material adverse effect on our
business, results of operations and financial condition.
For the six months ended June 30, 2021, five customers, BioCare, Biolife, Reliance, Curascript and AmerisourceBergen, represented an aggregate of 85% of our consolidated revenues. For the year ended December 31, 2020,
three customers, BioCare, Reliance and Biolife, represented an aggregate of 82% of our consolidated revenues.
As of June 30, 2021, six customers, Curascript, BioCare, 1ST America Infusion Services, LLC, Reliance, Biolife and AmerisourceBergen,
represented a total of 94% of our consolidated accounts receivable. As of December 31, 2020, three customers, BioCare, Reliance and Curascript, represented a total of 92% of our consolidated accounts receivable.
The loss of any key customers or a material change in the revenue generated by any of these customers could have a material adverse effect on our business, results of operations and financial condition. Moreover, we
anticipate deriving increased revenue from some of these customers over the next few years. Factors that could influence our relationships with our customers include, among other things:
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our ability to sell our products at competitive prices;
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our ability to maintain features and quality standards for our products sufficient to meet the expectations of our customers;
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our ability to produce and deliver a sufficient quantity of our products in a timely manner to meet our customers’ requirements; and
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the impact of the ongoing COVID-19 pandemic and government responses thereto on our customers and their businesses, operations and financial condition.
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Additionally, an adverse change in the financial condition of any of our key customers could negatively affect revenue derived from such customer, which in turn could have a material adverse effect on our business and results of operations.
Issues with product quality and compliance could have a material adverse effect upon our business, subject us to regulatory actions and cause a loss of customer confidence in us or our products.
Our success depends upon the quality of our products. Quality management plays an essential role in meeting customer requirements, preventing defects, improving our products and services and assuring the safety and
efficacy of our products. Our future success depends on our ability to maintain and continuously improve our quality management program. A quality or safety issue may result in failure to obtain product approval, adverse inspection reports, warning
letters, product recalls or seizures, monetary sanctions, injunctions to halt manufacture and distribution of products, civil or criminal sanctions, costly litigation, refusal of a government to grant approvals and licenses, restrictions on
operations or withdrawal of existing approvals and licenses. An inability to address a quality or safety issue by us or by a third-party vendor in an effective and timely manner may also cause negative publicity or a loss of customer confidence in
us or our current or future products, which may result in the loss of sales and difficulty in successfully commercializing our current products and launching new products.
In addition, as a manufacturer of biological products, we are subject to the risks inherent in biological production, which could include normal course losses and failures inherent in the manufacturing process. As our
biologics production levels increase, there may be normal course inventory losses or write-downs as we ensure product quality and compliance with cGMP, FDA, state and local regulations, or due to testing results not meeting specifications. As a
result, our operating results are subject to potentially significant variability from one reporting period to the next should such normal course losses occur in any given period.
If physicians, payers and patients do not accept and use our current products or our future product candidates, our ability to generate revenue from these products will be materially impaired.
Even if the FDA approves a product made by us, physicians, payers and patients may not accept and use it. Acceptance and use of our products depends on a number of factors including, but not limited to:
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perceptions by members of the healthcare community, including physicians, about the safety and effectiveness of our products;
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cost-effectiveness of our products relative to competing products;
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availability of reimbursement for our products from government or other healthcare payers; and
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the effectiveness of marketing and distribution efforts by us and our licensees and distributors, if any.
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The failure of our current or future products to find market acceptance would harm our business and could require us to seek additional financing or make such financing difficult to obtain on favorable terms, if at all.
Our long-term success may depend on our ability to supplement our existing product portfolio through new product development or the in-license or acquisition of other new products, product
candidates and label expansion of existing products, and if our business development efforts are not successful, our ability to achieve profitability may be adversely impacted.
Our current product development portfolio consists primarily of label expansion activities for Nabi-HB, BIVIGAM and ASCENIV, as well as expanding our IP estate with patents issued for S.
Pneumoniae hyperimmune IG. We have initiated small scale preclinical activities to potentially expand our current portfolio through new product development efforts or to in-license or acquire additional products and product candidates. If
we are not successful in developing or acquiring additional products and product candidates, we will have to depend on our ability to successfully commercialize ASCENIV, as well as our ability to generate revenue from Nabi-HB, BIVIGAM, contract
manufacturing, intermediate fractions and plasma attributable to the operations of ADMA BioCenters, to support our operations.
Our ADMA BioCenters operations collect information from donors in the U.S. that subjects us to consumer and health privacy laws, which could create enforcement and litigation exposure if we fail to
meet their requirements.
Consumer privacy is highly protected by federal and state law. The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical
Health Act of 2009 (“HITECH”), and their respective implementing regulations, impose, among other things, obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually
identifiable health information held by covered entities and business associates. A “covered entity” is the primary type of HIPAA-regulated entity. Health plans/insurers, healthcare providers engaging in standard transactions (insurance/health
plan claims and encounters, payment and remittance advice, claims status, eligibility, enrollment/disenrollment, referrals and authorizations, coordination of benefits and premium payments), and healthcare clearinghouses (switches that convert data
between standard and non-standard data sets) are covered entities. A “business associate” provides services to covered entities (directly or as subcontractors to other business associates) involving arranging, creating, receiving, maintaining, or
transmitting protected health information (“PHI”) on a covered entity’s behalf. In order to legally provide access to PHI to service providers, covered entities and business associates must enter into a “business associate agreement” (“BAA”) with
the service provider PHI recipient. Among other things, HITECH made certain aspects of the HIPAA’s rules (notably the Security Rule) directly applicable to business associates – independent contractors or agents of covered entities that receive or
obtain protected health information in connection with providing a service on behalf of a covered entity. HITECH also created four new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to
business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal court to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil
actions. The HHS Office of Civil Rights (“OCR”) has increased its focus on compliance and continues to train state attorneys general for enforcement purposes. OCR has recently increased both its efforts to audit HIPAA compliance and its level of
enforcement, with one recent penalty exceeding $5.0 million.
While we are not a covered entity or business associate subject to HIPAA, even when HIPAA does not apply, according to the U.S. Federal Trade Commission (the “FTC”), failing to take appropriate steps to keep consumers’
personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C § 45(a). The FTC expects a company’s data security measures to be reasonable and
appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Medical data is considered sensitive data
that merits stronger safeguards. The FTC’s guidance for appropriately securing consumers’ personal information is similar to what is required by the HIPAA Security Rule. In addition, states impose a variety of laws protecting consumer information,
with certain sensitive information such as HIV/Sexually Transmitted Disease status subject to heightened standards. In addition, federal and state privacy, data security, and breach notification laws, rules and regulations, and other laws apply to
the collection, use and security of personal information, including social security number, driver’s license numbers, government identifiers, credit card and financial account numbers. Some state privacy and security laws apply more broadly than
HIPAA and associated regulations. For example, California recently enacted legislation – the California Consumer Privacy Act, or CCPA – which went into effect January 1, 2020, and will be amended by the California Privacy Rights Act, effective
January 1, 2023. The CCPA, among other things, creates new data privacy obligations for covered companies and provides new privacy rights to California residents, including the right to opt out of certain disclosures of their information. The CCPA
also creates a private right of action with statutory damages for certain data breaches, thereby potentially increasing risks associated with a data breach. It remains unclear what, if any, modifications will be made to this legislation or how it
will be interpreted. We could be subject to enforcement action and litigation exposure if we fail to adhere to these data privacy and security laws.
The Perceptive Credit Facility is subject to acceleration in specified circumstances, which may result in Perceptive taking possession and disposing of any collateral.
On February 11, 2019 (the “Perceptive Closing Date”), we entered into the Perceptive Credit Agreement with Perceptive Credit Holdings II, LP, as the lender and administrative agent (“Perceptive”). The Perceptive Credit
Agreement, as amended, currently provides for a senior secured term loan facility in the principal amount of $100.0 million (the “Perceptive Credit Facility”), comprised of (i) a term loan made on the Perceptive Closing Date in the principal amount
of $45.0 million, as evidenced by our issuance of a promissory note in favor of Perceptive on the Perceptive Closing Date (the “Perceptive Tranche I Loan”), (ii) a term loan in the principal amount of $27.5 million evidenced by our issuance of a
promissory note in favor of Perceptive on May 3, 2019 (the “Perceptive Tranche II Loan”), (iii) a term loan in the principal amount of $12.5 million evidenced by our issuance of a promissory note in favor of Perceptive on March 20, 2020, (the
“Perceptive Tranche III Loan”); and (iv) a term loan in the principal amount of $15 million evidenced by our issuance of a promissory note in favor of Perceptive on December 8, 2020 (the “Perceptive Tranche IV Loan,” and together with the
Perceptive Tranche I Loan, the Perceptive Tranche II Loan and the Perceptive Tranche III Loan, the “Perceptive Loans”). The Perceptive Loans each have a maturity date of March 1, 2024, subject to acceleration pursuant to the Perceptive Credit
Agreement, including upon an Event of Default (as defined in the Perceptive Credit Agreement). The Perceptive Loans are secured by substantially all of our assets, including our intellectual property. Events of Default include, among others,
non-payment of principal, interest, or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments, cross-defaults to material contracts and events constituting a change of
control. In addition to an increase in the rate of interest on the Perceptive Loans of 4% per annum, the occurrence of an Event of Default could result in, among other things, the termination of commitments under the Perceptive Credit Facility, the
declaration that all outstanding Loans are immediately due and payable in whole or in part, and Perceptive taking immediate possession of, and selling, any collateral securing the Perceptive Loans.
Developments by competitors may render our products or technologies obsolete or non-competitive.
The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change. Our current products and any future product we may develop will have to compete with
other marketed therapies. In addition, other companies may pursue the development of pharmaceuticals that target the same diseases and conditions that we are targeting. We face competition from pharmaceutical and biotechnology companies in the U.S.
and abroad. In addition, companies pursuing different but related fields represent substantial competition. Many of these organizations competing with us have substantially greater financial resources, larger research and development staffs and
facilities, longer product development history in obtaining regulatory approvals and greater manufacturing and marketing capabilities than we do. These organizations also compete with us to attract qualified personnel and parties for acquisitions,
joint ventures or other collaborations.
If we are unable to protect our patents, trade secrets or other proprietary rights, if our patents are challenged or if our provisional patent applications do not get approved, our competitiveness
and business prospects may be materially damaged.
As we move forward in clinical development we are also uncovering novel aspects of our products and are drafting patents to cover our inventions. We rely on a combination of patent rights, trade secrets and
nondisclosure and non-competition agreements to protect our proprietary intellectual property, and we will continue to do so. There can be no assurance that our patents, trade secret policies and practices or other agreements will adequately
protect our intellectual property. Our issued patents may be challenged, found to be over-broad or otherwise invalidated in subsequent proceedings before courts or the U.S. Patent and Trademark Office. Even if enforceable, we cannot provide any
assurances that they will provide significant protection from competition. The processes, systems, and/or security measures we use to preserve the integrity and confidentiality of our data and trade secrets may be breached, and we may not have
adequate remedies as a result of any such breaches. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. There can be no assurance that the confidentiality, nondisclosure and non-competition
agreements with employees, consultants and other parties with access to our proprietary information to protect our trade secrets, proprietary technology, processes and other proprietary rights, or any other security measures relating to such trade
secrets, proprietary technology, processes and proprietary rights, will be adequate, will not be breached, that we will have adequate remedies for any breach, that others will not independently develop substantially equivalent proprietary
information or that third parties will not otherwise gain access to our trade secrets or proprietary knowledge. To the extent that our consultants, contractors or collaborators use intellectual property owned by others in their work for us,
disputes may arise as to the rights in related or resulting know-how and inventions.
We could lose market exclusivity of a product earlier than expected.
In the pharmaceutical and biotechnology industries, the majority of an innovative product’s commercial value is realized during its market exclusivity period. In the U.S. and in some other countries, when market
exclusivity expires and generic or biosimilar versions are approved and marketed or when biosimilars are introduced (even if only for a competing product), there are usually very substantial and rapid declines in a product’s revenues.
Market exclusivity for our products is based upon patent rights and certain regulatory forms of exclusivity. The scope of our patent rights may vary from country to country and may also be dependent on the availability
of meaningful legal remedies in a country. The failure to obtain patent and other intellectual property rights, or limitations on the use or loss of such rights, could be material to us. In some countries, basic patent protections for our products
may not exist because certain countries did not historically offer the right to obtain specific types of patents and/or we (or our licensors) did not file in those markets. In addition, the patent environment can be unpredictable and the validity
and enforceability of patents cannot be predicted with certainty. Absent relevant patent protection for a product, once the data exclusivity period expires, generic versions can be approved and marketed.
Patent rights covering our products may become subject to patent litigation. In some cases, manufacturers may seek regulatory approval by submitting their own clinical trial data to obtain marketing approval or choose
to launch a generic product “at risk” before the expiration of our patent rights/or before the final resolution of related patent litigation. Enforcement of claims in patent litigation can be very costly, time-consuming and no assurance can be
given that we will prevail. In addition, any such litigation may divert our management’s attention from our core business and reduce the resources available for our clinical development, manufacturing and marketing activities, and consequently have
a material and adverse effect on our business and prospects, regardless of the outcome. There is no assurance that ASCENIV, or any other of our products for which we are issued a patent, will enjoy market exclusivity for the full time period of the
respective patent.
Third parties could obtain patents that may require us to negotiate licenses to conduct our business, and there can be no assurance that the required licenses would be available on reasonable terms
or at all.
We may not be able to operate our business without infringing third-party patents. Numerous U.S. and foreign patents and pending patent applications owned by third parties exist in fields that relate to the development
and commercialization of IG. In addition, many companies have employed intellectual property litigation as a way to gain a competitive advantage. It is possible that infringement claims may occur as the number of products and competitors in our
market increases. In addition, to the extent that we gain greater visibility and market exposure as a public company, we face a greater risk of being the subject of intellectual property infringement claims. We cannot be certain that the conduct of
our business does not and will not infringe intellectual property or other proprietary rights of others in the U.S. and in foreign jurisdictions. If our products, methods, processes and other technologies are found to infringe third-party patent
rights, we could be prohibited from manufacturing and commercializing the infringing technology, process or product unless we obtain a license under the applicable third-party patent and pay royalties or are able to design around such patent. We
may be unable to obtain a license on terms acceptable to us, or at all, and we may not be able to redesign our products or processes to avoid infringement. Even if we are able to redesign our products or processes to avoid an infringement claim,
our efforts to design around the patent could require significant time, effort and expense and ultimately may lead to an inferior or more costly product and/or process. Any claim of infringement by a third party, even those without merit, could
cause us to incur substantial costs defending against the claim and could distract our management from our business. Furthermore, if any such claim is successful, a court could order us to pay substantial damages, including compensatory damages for
any infringement, plus prejudgment interest and could, in certain circumstances, treble the compensatory damages and award attorney fees. These damages could be substantial and could harm our reputation, business, financial condition and operating
results. A court also could enter orders that temporarily, preliminarily or permanently prohibit us, our licensees, if any, or our customers from making, using, selling, offering to sell or importing one or more of our products or practicing our
proprietary technologies or processes, or could enter an order mandating that we undertake certain remedial activities. Any of these events could seriously harm our business, operating results and financial condition.
If we are unable to successfully manage our growth, our business may be harmed.
Our success will depend on the expansion of our commercial and manufacturing activities, supply of plasma and overall operations and the effective management of our growth, which will place a significant strain on our
management and on our administrative, operational and financial resources. To manage this growth, we must expand our facilities, augment our operational, financial and management systems and hire and train additional qualified personnel. Our
ability to accomplish each of these factors may be negatively impacted as a consequence of the COVID-19 pandemic. If we are unable to manage our growth effectively, our business could be harmed.
The loss of one or more key members of our management team could adversely affect our business.
Our performance is substantially dependent on the continued service and performance of our management team, who have extensive experience and specialized expertise in our business. In particular, the loss of Adam S.
Grossman, our President and Chief Executive Officer, could adversely affect our business and operating results. We do not have “key person” life insurance policies for any members of our management team. We have employment agreements with each of
our executive officers; however, the existence of an employment agreement does not guarantee retention of members of our management team and we may not be able to retain those individuals for the duration of or beyond the end of their respective
terms. The loss of services of key personnel, or the inability to attract and retain additional qualified personnel, could result in delays in development or approval of our product candidates and diversion of management resources.
Cyberattacks and other security breaches could compromise our proprietary and confidential information, which could harm our business and reputation.
In the ordinary course of our business, we generate, collect and store proprietary information, including intellectual property and business information. The secure storage, maintenance, and transmission of and access
to this information is important to our operations and reputation. Computer hackers may attempt to penetrate our computer systems and, if successful, misappropriate our proprietary and confidential information including e-mails and other electronic
communications. Further, while many of our employees and certain suppliers with whom we do business operate in a remote working environment during the COVID-19 pandemic, the risk of cybersecurity attacks and data breaches, particularly through
phishing attempts, may be increased as we and third parties with whom we interact leverage our IT infrastructure in unanticipated ways during the ongoing COVID-19 pandemic. In addition, an employee, contractor, or other third party with whom we do
business may attempt to obtain such information, and may purposefully or inadvertently cause a breach involving such information. While we have certain safeguards in place to reduce the risk of and detect cyberattacks, including a Company-wide
cybersecurity policy, our information technology networks and infrastructure may be vulnerable to unpermitted access by hackers or other breaches, or employee error or malfeasance. Any such compromise of our data security and access to, or public
disclosure or loss of, confidential business or proprietary information could disrupt our operations, damage our reputation, provide our competitors with valuable information and subject us to additional costs, which could adversely affect our
business.
If we are unable to hire and retain a substantial number of qualified personnel, our ability to sustain and grow our business may be harmed.
Our success depends in part on our ability to attract, motivate, and retain a sufficient number of qualified employees across various areas of our operations, such as research and development, manufacturing operations,
and sales, who understand and appreciate our strategy and culture and are able to contribute to our mission. We will need to hire additional qualified personnel with expertise in commercialization, sales, marketing, medical affairs, reimbursement,
government regulation, formulation, quality control, manufacturing and finance and accounting. In particular, over the next 12-24 months, we expect to hire several new employees devoted to commercialization, sales, marketing, medical and scientific
affairs, regulatory affairs, quality control, finance and general and operational management. Qualified individuals of the requisite caliber and number needed to fill these positions may be in short supply in some areas. We compete for qualified
individuals with numerous biopharmaceutical companies, universities and other research institutions. Competition for such individuals is intense, and we cannot assure you that our search for such personnel will be successful, particularly if the
COVID-19 pandemic causes significant changes in the competitive market for such personnel or travel restrictions related to COVID-19 prevent qualified personnel from applying for employment. If we are unable to hire and retain personnel capable of
consistently performing at a high level, our business and operations could be materially adversely affected. Additionally, any material increases in existing employee turnover rates or increases in labor costs could have a material adverse effect
on our business, financial condition or operating results.
We currently collect human blood plasma at our ADMA BioCenters facilities, and if we cannot maintain FDA approval for these facilities or obtain FDA approval for additional facilities that we create
or acquire rights to, we may be adversely affected and may not be able to sell or use this human blood plasma for future commercial purposes.
We intend to maintain FDA approval of our ADMA BioCenters collection facilities for the collection of human blood plasma and we may seek other governmental and regulatory approvals for these facilities. We also plan to
grow through the building and licensing of additional ADMA BioCenters facilities in various regions of the U.S. Collection facilities are subject to FDA and potentially other governmental and regulatory inspections and extensive regulation,
including compliance with current cGMP and blood standards, FDA and other government approvals, as applicable. Failure to comply with applicable governmental regulations or to receive applicable approvals for our future facilities may result in
enforcement actions, such as adverse inspection reports, warning or untitled letters, product recalls or seizures, monetary sanctions, injunctions to halt manufacture and distribution of products, civil or criminal sanctions, costly litigation,
refusal of regulatory authority approvals and licenses, restrictions on operations or withdrawal of existing approvals and licenses, any of which may significantly delay or suspend our operations for these locations, potentially having a materially
adverse effect on our ability to manufacture our products or offer for sale plasma collected at the affected sites.
We manufacture our current marketed products, pipeline products, and products for third parties in our manufacturing and testing facilities, and if we or our vendors cannot maintain appropriate
FDA status for these facilities, we may be adversely affected, and may not be able to sell, manufacture or commercialize these products.
There are no assurances we will be able to maintain compliance with all FDA or other regulations. Our third-party vendors may perform activities for themselves or other clients and we may not be privy to all
regulatory findings or issues discovered by the FDA or other regulatory agencies. Such findings, which are out of our control, may adversely affect our ability to continue to work with these vendors, or our ability to release commercial drug
product or perform necessary testing or other actions for us or our clients, which may be required in order to remain FDA compliant or to commercialize our products.
We may incur substantial liabilities and may be required to limit commercialization of our products in response to product liability lawsuits.
The testing and marketing of medical products entail an inherent risk of product liability. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be
required to limit commercialization of our products. Even successful defense, however, could impair our results of operations. Our inability to obtain and maintain sufficient product liability insurance at an acceptable cost to protect against
potential product liability claims could prevent or inhibit the commercialization of pharmaceutical products we develop, either alone or with collaborators.
Many of our business practices are subject to scrutiny by federal and state regulatory authorities, as well as to lawsuits brought by private citizens under federal and state laws. Failure to comply
with applicable law or an adverse decision in lawsuits may result in adverse consequences to us.
The laws governing our conduct in the U.S. are enforceable on the federal and state levels by criminal, civil and administrative penalties. Violations of laws such as the Federal Food, Drug, and Cosmetic Act, the
Social Security Act (including the Anti-Kickback Statute), the Public Health Service Act and the civil and criminal Federal False Claims Act, the civil monetary penalty statute, requirements regarding the reporting and repayment of overpayments,
other fraud and abuse laws and any regulations promulgated under the authority of the preceding, may result in jail sentences, fines or exclusion from federal and state programs, as may be determined by Medicare, Medicaid and HHS and other
regulatory authorities as well as by the courts. Similarly, the violation of applicable laws, rules and regulations of states, including the State of Florida with respect to the manufacture and marketing of our products and product candidates may
result in jail sentences, fines or exclusion from applicable state programs. There can be no assurance that our activities will not come under the scrutiny of federal and/or state regulators and other government authorities or that our practices
will not be found to violate applicable laws, rules and regulations or prompt lawsuits by private citizen “relators” under federal or state false claims laws.
For example, under the Anti-Kickback Statute and similar state laws and regulations, the offer or payment of anything of value for patient referrals, or in return for purchasing, leasing, ordering or arranging for or
recommending the purchase, lease, or ordering of any time or service reimbursable in whole or in part by a federal healthcare program is prohibited. This places constraints on the marketing and promotion of products and on common business
arrangements, such as discounted terms and volume incentives for customers in a position to recommend or choose products for patients, such as physicians and hospitals, and these practices can result in substantial legal penalties, including, among
others, exclusion from the Medicare and Medicaid programs. Arrangements with referral sources such as purchasers, group purchasing organizations, physicians and pharmacists must be structured with care to comply with applicable requirements.
Legislators and regulators may seek to further restrict the scope of financial relationships that are considered appropriate. For example, HHS recently promulgated a regulation that is effective in two phases. First, the regulation excludes from
the definition of “remuneration” limited categories of (a) PBM rebates or other reductions in price to a plan sponsor under Medicare Part D or a Medicaid Managed Care Organization plan reflected in point-of sale reductions in price and (b) PBM
service fees. Second, effective January 1, 2023, the regulation expressly provides that rebates to plan sponsors under Medicare Part D either directly to the plan sponsor under Medicare Part D, or indirectly through a pharmacy benefit manager will
not be protected under the anti-kickback discount safe harbor.
Also, certain business practices, such as payments of consulting fees to healthcare providers, sponsorship of educational or research grants, charitable donations, interactions with healthcare providers that prescribe
products for uses not approved by the FDA and financial support for continuing medical education programs, must be conducted within narrowly prescribed and controlled limits to avoid any possibility of wrongfully influencing healthcare providers to
prescribe or purchase particular products or as a reward for past prescribing. Under the Patient Protection and Affordable Care Act (“ACA”) and the companion Health Care and Education Reconciliation Act, which together are referred to as the
“Healthcare Reform Law,” payments and transfers of value by pharmaceutical manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with
certain exceptions) to or at the request of covered recipients, such as, but limited to, physicians, physician assistants, nurse practitioners, clinical nurse specialists and certified registered nurse anesthetists and teaching hospitals, must be
tracked and reported to CMS, and are publicly disclosed. Such “applicable manufacturers” are also required to report certain ownership interests held by physicians and their immediate family members. A number of states have similar laws in place.
Additional and stricter prohibitions could be implemented by federal and state authorities. Where such practices have been found to be improper incentives to use such products, government investigations and assessments of penalties against
manufacturers have resulted in substantial damages and fines. Many manufacturers have been required to enter into consent decrees or orders that prescribe allowable corporate conduct.
Failure to satisfy requirements under the Federal Food, Drug, and Cosmetic Act can also result in penalties, as well as requirements to enter into consent decrees or orders that prescribe allowable corporate conduct.
In addition, while regulatory authorities generally do not regulate physicians’ discretion in their choice of treatments for their patients, they do restrict communications by manufacturers on unapproved uses of approved products or on the
potential safety and efficacy of unapproved products in development. Companies in the U.S., Canada and the European Union cannot promote approved products for other indications that are not specifically approved by the competent regulatory
authorities such as the FDA in the U.S., nor can companies promote unapproved products. In limited circumstances, companies may disseminate to physicians information regarding unapproved uses of approved products or results of studies involving
investigational products. If such activities fail to comply with applicable regulations and guidelines of the various regulatory authorities, we may be subject to warnings from, or enforcement action by, these authorities. Furthermore, if such
activities are prohibited, it may harm demand for our products. Promotion of unapproved drugs or devices or unapproved indications for a drug or device is a violation of the Federal Food, Drug, and Cosmetic Act and subjects us to civil and criminal
sanctions. Furthermore, sanctions under the Federal False Claims Act have recently been brought against companies accused of promoting off-label uses of drugs, because such promotion induces the use and subsequent claims for reimbursement under
Medicare and other federal programs. Similar actions for off-label promotion have been initiated by several states for Medicaid fraud. The Healthcare Reform Law significantly strengthened provisions of the Federal False Claims Act, the
Anti-Kickback Statute that applies to Medicare and Medicaid, and other healthcare fraud provisions, leading to the possibility of greatly increased qui tam suits by relators for perceived violations. Violations or allegations of violations of the
foregoing restrictions could materially and adversely affect our business.
We are required to report detailed pricing information, net of included discounts, rebates and other concessions, to CMS for the purpose of calculating national reimbursement levels, certain federal prices and certain
federal and state rebate obligations. Inaccurate or incomplete reporting of pricing information could result in liability under the False Claims Act, the federal Anti-Kickback Statute and various other laws, rules and regulations.
We will need to establish systems for collecting and reporting this data accurately to CMS and institute a compliance program to assure that the information collected is complete in all respects. If we report pricing
information that is not accurate to the federal government, we could be subject to fines and other sanctions that could adversely affect our business. If we choose to pursue clinical development and commercialization in the European Union or
otherwise market and sell our products outside of the U.S., we must obtain and maintain regulatory approvals and comply with regulatory requirements in such jurisdictions. The approval procedures vary among countries in complexity and timing. We
may not obtain approvals from regulatory authorities outside the U.S. on a timely basis, if at all, which would preclude us from commercializing products in those markets.
In addition, some countries, particularly the countries of the European Union, regulate the pricing of prescription pharmaceuticals. In these countries, pricing discussions with governmental authorities can take
considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to
other available therapies. Such trials may be time-consuming and expensive and may not show an advantage in efficacy for our products. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at
unsatisfactory levels, in either the U.S. or the European Union, we could be adversely affected.
Also, under the U.S. Foreign Corrupt Practices Act, the U.S. has increasingly focused on regulating the conduct by U.S. businesses occurring outside of the U.S., generally prohibiting remuneration to foreign officials
for the purpose of obtaining or retaining business. To enhance compliance with applicable healthcare laws, and mitigate potential liability in the event of noncompliance, regulatory authorities such as the HHS Office of Inspector General (the
“OIG”) have recommended the adoption and implementation of a comprehensive healthcare compliance program that generally contains the elements of an effective compliance and ethics program described in Section 8B2.1 of the U.S. Sentencing Commission
Guidelines Manual. Increasing numbers of U.S.-based pharmaceutical companies have such programs. We will need to adopt healthcare compliance and ethics programs that would incorporate the OIG’s recommendations and train our employees. Such a
program may be expensive and may not provide assurance that we will avoid compliance issues.
We are also required to comply with the applicable laws, rules, regulations and permit requirements of the various states in which our business operates, including the State of Florida where our manufacturing facility
is located. These regulations and permit requirements are not always in concert with applicable federal laws, rules and regulations regulating our business. Although compliant with applicable federal requirements, we may be required to comply
with additional state laws, rules, regulations and permits. Failure to appropriately comply with such state requirements could result in temporary or long-term cessation of our manufacturing operations, as well as fines and other sanctions. Any
such penalties may have a material adverse effect on our business and results of operations.
We are subject to extensive and rigorous governmental regulation, including the requirement of FDA and other federal, state and local business regulatory approval
before our products and product candidates may be lawfully marketed, and our ability to obtain regulatory approval of our products and product candidates from the FDA in a timely manner, access the public markets and obtain necessary capital in
order to properly capitalize and continue our operations may be hindered by inadequate funding for the FDA, the SEC and other state and local government agencies.
Both before and after the approval of our products, our products, operations, facilities, suppliers and contract research organizations are subject to extensive regulation by federal, state and local governmental
authorities in the U.S. and other countries, with regulations differing from country to country. In the U.S., the FDA regulates, among other things, the pre-clinical testing, clinical trials, manufacturing, safety, efficacy, potency, labeling,
storage, record keeping, quality systems, advertising, promotion, sale and distribution of therapeutic products. Failure to comply with applicable requirements could result in, among other things, one or more of the following actions: notices of
violation, untitled letters, warning letters, complete response letters, fines and other monetary penalties, unanticipated expenditures, delays in approval or refusal to approve a product or product candidate, product recall or seizure,
interruption of manufacturing or clinical trials, operating restrictions, injunctions and criminal prosecution. Our products and product candidates cannot be lawfully marketed in the U.S. without FDA and other federal, state and local business
regulatory approval. Any failure to receive the marketing approvals necessary to commercialize our product or product candidates could harm our business.
Additionally, the ability of the FDA and other federal, state and local business regulatory agencies to review and approve products and product candidates can be affected by a variety of factors, including government
budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at the FDA and other federal, state and local business regulatory agencies
have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political
process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies may also slow the time necessary for products and product candidate submissions to be reviewed and/or approved by necessary government agencies, which
would adversely affect our business. For example, over the last several years, including in December 2018 and January 2019, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA and SEC, have had to
furlough critical employees and stop critical activities. If a prolonged government shutdown reoccurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions and other reporting requirements
which could have a material adverse effect on our business. Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.
The manufacturing processes for plasma-based biologics are complex and involve biological intermediates that are susceptible to contamination and impurities.
Plasma is a raw material that is susceptible to damage and contamination and may contain human pathogens, any of which would render the plasma unsuitable as raw material for further manufacturing. For instance,
improper storage of plasma, by us or third-party suppliers, may require us to destroy some of our raw material. If unsuitable plasma is not identified and discarded prior to the release of the plasma to the manufacturing process, it may be
necessary to discard intermediate or finished product made from that plasma or to recall any finished product released to the market, resulting in a charge to cost of product revenue. The manufacture of our plasma products is an extremely complex
process of fractionation, purification, testing, filling and finishing. Our products can become non-releasable or otherwise fail to meet our stringent specifications or regulatory agencies’ specifications through a failure in one or more of these
process steps. We may detect instances in which an unreleased product was produced without adherence to our manufacturing procedures or plasma used in our production process was not collected or stored in a compliant manner consistent with our cGMP
or other regulations. Such an event of noncompliance would likely result in our determination that the implicated products should not be released or maybe replaced or withdrawn from the market and therefore should be destroyed. Once manufactured,
our plasma-derived products must be handled carefully and kept at appropriate temperatures. Our failure, or the failure of third parties that supply, test, ship or distribute our products or product components to properly care for our products, may
require that those products be destroyed. Even if handled properly, biologics may form or contain particulates or have other issues or problems after storage which may require products to be destroyed or recalled. While we expect to write off small
amounts of work-in-progress in the ordinary course of business due to the complex nature of plasma, our processes and our products, unanticipated events may lead to write-offs and other costs materially in excess of our expectations and the
reserves we have established for these purposes. Such write-offs and other costs could cause material fluctuations in our results of operations. Product or component quality issues may also result in regulatory enforcement actions, liability,
corrective actions and recalls, among other actions, as described elsewhere in this annual report.
Furthermore, contamination of our products could cause investors, consumers, or other third parties with whom we conduct business to lose confidence in the reliability of our manufacturing procedures, which could
adversely affect our revenues. In addition, faulty or contaminated products that are unknowingly distributed could result in patient harm, threaten the reputation of our products and expose us to product liability damages and claims from companies
for whom we do contract manufacturing.
Our ability to continue to produce safe and effective products depends on the safety of our plasma supply, testing by third parties and the timing of receiving the testing results, and manufacturing
processes against transmittable diseases.
Despite overlapping safeguards, including the screening of donors and other steps to remove or inactivate viruses and other infectious disease-causing agents, the risk of transmissible disease through blood plasma
products cannot be entirely eliminated. For example, since plasma-derived therapeutics involves the use and purification of human plasma, there has been concern raised about the risk of transmitting HIV, prions, West Nile virus, H1N1 virus or
“swine flu” and other blood-borne pathogens through plasma-derived products. There are also concerns about the future transmission of H5N1 virus, or “bird flu.” In the 1980s, thousands of hemophiliacs worldwide were infected with HIV through the
use of contaminated Factor VIII. Other producers of Factor VIII, though not us, were defendants in numerous lawsuits resulting from these infections. New infectious diseases emerge in the human population from time to time. If a new infectious
disease has a period during which time the causative agent is present in the bloodstream but symptoms are not present, it is possible that plasma donations could be contaminated by that infectious agent. Typically, early in an outbreak of a new
disease, tests for the causative agent do not exist. During this early phase, we must rely on screening of donors for behavioral risk factors or physical symptoms to reduce the risk of plasma contamination. Screening methods are generally less
sensitive and specific than a direct test as a means of identifying potentially contaminated plasma units. During the early phase of an outbreak of a new infectious disease, our ability to manufacture safe products would depend on the manufacturing
process’ capacity to inactivate or remove the infectious agent. To the extent that a product’s manufacturing process is inadequate to inactivate or remove an infectious agent, our ability to manufacture and distribute that product would be
impaired. If a new infectious disease were to emerge in the human population, such as COVID-19, or if there were a reemergence of an infectious disease, the regulatory and public health authorities could impose precautions to limit the transmission
of the disease that would impair our ability to procure plasma, manufacture our products or both. Such precautionary measures could be taken before there is conclusive medical or scientific evidence that a disease poses a risk for plasma-derived
products. In recent years, new testing and viral inactivation methods have been developed that more effectively detect and inactivate infectious viruses in collected plasma. There can be no assurance, however, that such new testing and inactivation
methods will adequately screen for, and inactivate, infectious agents in the plasma used in the production of our products.
We could become supply-constrained and our financial performance would suffer if we cannot obtain adequate quantities of FDA-approved source plasma with proper specifications or other necessary raw
materials.
In order for plasma to be used in the manufacturing of our products, the individual centers at which the plasma is collected must generally be licensed by the FDA and approved by the regulatory authorities of any
country in which we may wish to commercialize our products. When we open a new plasma center, and on an ongoing basis after licensure, it must be inspected by the FDA for compliance with cGMP and other regulatory requirements. Therefore, even if we
are able to construct new plasma collection centers to complement our current plasma collection facilities, an unsatisfactory inspection could prevent a new center from being licensed or risk the suspension or revocation of an existing license,
among other enforcement actions. We do not and will not have adequate plasma to manufacture our products. Therefore, we are reliant on the purchase of plasma from third parties to manufacture our products. We can give no assurances that appropriate
plasma will be available to us on commercially reasonable terms, or at all, to manufacture our products. Further, the COVID-19 pandemic has resulted in, and may continue to result in, significant constraints in raw material supply across various
different industries, including the supply of plasma. It is possible that in the future, the COVID-19 pandemic and government responses thereto will have an adverse effect on our ability to source plasma from donors in quantity and quality
sufficient for our manufacturing processes. In order to maintain a plasma center’s license, its operations must continue to conform to cGMP and other regulatory requirements. In the event that we determine that plasma was not collected in
compliance with cGMP and other applicable regulatory requirements, we may be unable to use and may ultimately destroy plasma collected from that center, which would be recorded as a charge to cost of product revenue. Additionally, if non-compliance
in the plasma collection process is identified after the impacted plasma has been pooled with compliant plasma from other sources, entire plasma pools, in-process intermediate materials and final products could be impacted. Consequently, we could
experience significant inventory impairment provisions and write-offs which could adversely affect our business and financial results. We plan to increase our supplies of plasma for use in the manufacturing processes through increased purchases of
plasma from third-party suppliers as well as collections from our existing ADMA BioCenters plasma collection facilities. This strategy is dependent upon our ability to maintain a cGMP compliant environment at our plasma collection facilities and to
expand production and attract donors to our facilities. There is no assurance that the FDA will inspect and license any of our current or future unlicensed plasma collection facilities in a timely manner consistent with our production plans. If we
misjudge the readiness of a center for an FDA inspection, we may lose credibility with the FDA and cause the FDA to more closely examine all of our operations. Such additional scrutiny could materially hamper our operations and our ability to
increase plasma collections. Our ability to expand production and increase our plasma collection facilities to more efficient production levels may be affected by changes in the economic environment and population in selected regions where ADMA
BioCenters operates its current or future plasma facilities, by the entry of competitive plasma centers into regions where ADMA BioCenters operates such centers, by misjudging the demographic potential of individual regions where ADMA BioCenters
expects to expand production and attract new donors, by unexpected facility related challenges, or by unexpected management challenges at selected plasma facilities held by us from time to time.
Our ability to commercialize our products, alone or with collaborators, will depend in part upon the extent to which reimbursement will be available from governmental agencies, health
administration authorities, private health maintenance organizations and health insurers and other healthcare payers, and also depends upon the approval, timing and representations by the FDA or other governmental authorities for our product
candidates.
Our ability to generate product revenues will be diminished if our products sell for inadequate prices or patients are unable to obtain adequate levels of coverage. Significant uncertainty exists as to the
reimbursement status of newly approved healthcare products, as well as to the timing, language, specifications and other details pertaining to the approval of such products. Healthcare payers, including Medicare, are challenging the prices charged
for medical products and services. Government and other healthcare payers increasingly attempt to contain healthcare costs by limiting both coverage and the level of reimbursement for products. Even if one of our product candidates is approved by
the FDA, insurance coverage may not be available, and reimbursement levels may be inadequate, to cover such product. If government and other healthcare payers do not provide adequate coverage and reimbursement levels for one of our products, once
approved, market acceptance of such product could be reduced. Prices in many countries, including many in Europe, are subject to local regulation and certain pharmaceutical products, such as plasma-derived products, are subject to price controls in
several of the world’s principal markets, including many countries within the European Union. In the U.S., where pricing levels for our products are substantially established by third-party payers, including Medicare, if payers reduce the amount of
reimbursement for a product, it may cause groups or individuals dispensing the product to discontinue administration of the product, to administer lower doses, to substitute lower cost products or to seek additional price-related concessions. These
actions could have a negative effect on our financial results, particularly in cases where our products command a premium price in the marketplace, or where changes in reimbursement induce a shift in the site of treatment. The existence of direct
and indirect price controls and pressures over our products could materially adversely affect our financial prospects and performance.
The new biosimilar pathway established as part of healthcare reform may make it easier for competitors to market biosimilar products.
The Healthcare Reform Law introduced an abbreviated licensure pathway for biological products that are demonstrated to be biosimilar to an FDA-licensed biological product. A biological product may be demonstrated to
be “biosimilar” if data shows that, among other things, the product is “highly similar” to an already-approved biological product, known as a reference product, and has no clinically meaningful differences in terms of safety and effectiveness from
the reference product. The law provides that a biosimilar application may be submitted as soon as four years after the reference product is first licensed, and that the FDA may not make approval of an application effective until 12 years after the
reference product was first licensed. Since the enactment of the law, the FDA has issued several guidance documents to assist sponsors of biosimilar products in preparing their approval applications. Moreover, in an effort to increase competition
in the biologic product marketplace, Congress, the executive branch, and the FDA have taken certain legislative and regulatory steps. For example, in 2020 the FDA finalized a guidance to facilitate biologic product importation. The 2020 Further
Consolidated Appropriations Act included provisions requiring that sponsors of approved biologic products provide samples of the approved products to persons developing biosimilar products within specified timeframes, in sufficient quantities, and
on commercially reasonable market-based terms The FDA approved the first biosimilar product in 2015 and has since approved a number of biosimilars. As a result of the biosimilar pathway in the U.S., we expect in the future to face greater
competition from biosimilar products, including a possible increase in patent challenges.
The implementation of the Healthcare Reform Law in the U.S. may adversely affect our business.
Through the March 2010 adoption of the Healthcare Reform Law in the U.S., substantial changes are being made to the current system for paying for healthcare in the U.S., including programs to extend medical benefits to
millions of individuals who currently lack insurance coverage. This reform establishes significant cost-saving measures with respect to several government healthcare programs, including Medicaid and Medicare Parts B and D, that may cover the cost
of our future products, and these efforts could have a material adverse impact on our future financial prospects and performance. For example, in order for a manufacturer’s products to be reimbursed by federal funding under Medicaid, the
manufacturer must enter into a Medicaid rebate agreement with the Secretary of HHS and pay certain rebates to the states based on utilization data provided by each state to the manufacturer and to CMS and pricing data provided by the manufacturer
to the federal government. The states share these savings with the federal government, and sometimes implement their own additional supplemental rebate programs. Under the Medicaid drug rebate program, the rebate amount for most branded drug
products was previously equal to a minimum of 15.1% of the Average Manufacturer Price (“AMP”) or the AMP less Best Price, whichever is greater. Effective January 1, 2010, the Healthcare Reform Law generally increased the size of the Medicaid
rebates paid by manufacturers for single source and innovator multiple source (brand name) drug products from a minimum of 15.1% to a minimum of 23.1% of AMP, subject to certain exceptions. For non-innovator multiple source (generic) products, the
rebate percentage was increased from a minimum of 11.0% to a minimum of 13.0% of AMP. In 2010, the Healthcare Reform Law also newly extended this rebate obligation to prescription drugs covered by Medicaid managed care organizations. These
increases in required rebates may adversely affect our future financial prospects and performance. In order for a pharmaceutical product to receive federal reimbursement under the Medicare Part B and Medicaid programs or to be sold directly to U.S.
government agencies, the manufacturer must extend discounts to entities eligible to participate in the 340B drug pricing program. The required 340B discount on a given product is calculated based on the AMP and Medicaid rebate amounts reported by
the manufacturer. As the 340B drug pricing is determined based on AMP and Medicaid rebate data, the revisions to the Medicaid rebate formula and AMP definition described above could cause the required 340B discount to increase.
Effective in 2011, the Healthcare Reform Law imposed an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents, apportioned among these entities
according to their market share in certain government healthcare programs. These fees may adversely affect our future financial prospects and performance.
The Healthcare Reform Law also created new rebate obligations for our products under Medicare Part D, a partial, voluntary prescription drug benefit created by the U.S. federal government primarily for persons 65 years
old and over. The Part D drug program is administered through private insurers that contract with CMS. Beginning in 2011, the Healthcare Reform Law generally requires that in order for a drug manufacturer’s products to be reimbursed under Medicare
Part D, the manufacturer must enter into a Medicare Coverage Gap Discount Program agreement with the Secretary of HHS, and reimburse each Medicare Part D plan sponsor an amount now equal to 70% savings for the manufacturer’s brand name drugs and
biologics which the Part D plan sponsor has provided to its Medicare Part D beneficiaries who are in the “donut hole” (or a gap in Medicare Part D coverage for beneficiaries who have expended certain amounts for drugs). The Part D plan sponsor is
responsible for calculating and providing the discount directly to its beneficiaries and for reporting these amounts paid to CMS’s contractor, which notifies drug manufacturers of the rebate amounts it must pay to each Part D plan sponsor. The
rebate requirement could adversely affect our future financial performance, particularly if contracts with Part D plans cannot be favorably renegotiated or the Part D plan sponsors fail to accurately calculate payments due in a manner that
overstates our rebate obligation. Regarding access to our products, the Healthcare Reform Law established and provided significant funding for a Patient-Centered Outcomes Research Institute to coordinate and fund Comparative Effectiveness Research
(“CER”). While the stated intent of CER is to develop information to guide providers to the most efficacious therapies, outcomes of CER could influence the reimbursement or coverage for therapies that are determined to be less cost-effective than
others. Should any of our products be determined to be less cost effective than alternative therapies, the levels of reimbursement for these products, or the willingness to reimburse at all, could be impacted, which could materially impact our
future financial prospects and results.
There have been repeated attempts by Congress to repeal or change the Healthcare Reform Law and there are ongoing legal challenges, including at the Supreme Court, which may contribute to the uncertainty of the ongoing
implementation and impact of the law and also underscores the potential for additional reform going forward. We cannot assure that the law, as currently enacted or as amended in the future, will not adversely affect our business and financial
results and we cannot predict how future federal or state legislative or administrative changes relating to healthcare reform will affect our business. Certain provisions of enacted or proposed legislative changes may negatively impact coverage
and reimbursement of, or rebates paid by manufacturers for, healthcare items and services. We will continue to evaluate the effect that the Healthcare Reform Law and any potential changes may have on our business.
Corporate responsibility, specifically related to environmental, social and governance (“ESG”) matters, may impose additional costs and expose us to new risks.
Public ESG and sustainability reporting is becoming more broadly expected by investors, stockholders and other third parties. Certain organizations that provide corporate governance
and other corporate risk information to investors and stockholders have developed, and others may in the future develop, scores and ratings to evaluate companies and investment funds based upon ESG or “sustainability” metrics. Many investment
funds focus on positive ESG business practices and sustainability scores when making investments and may consider a company’s ESG or sustainability scores as a reputational or other factor in making an investment decision. In addition, investors,
particularly institutional investors, use these scores to benchmark companies against their peers and if a company is perceived as lagging, these investors may engage with such company to improve ESG disclosure or performance and may also make
voting decisions, or take other actions, to hold these companies and their boards of directors accountable. Board diversity is an ESG topic that is, in particular, receiving heightened attention by investors, stockholders, lawmakers and listing
exchanges. Certain states have passed laws requiring companies to meet certain gender and ethnic diversity requirements on their boards of directors. We may face reputational damage in the event our corporate responsibility initiatives or
objectives, including with respect to board diversity, do not meet the standards set by our investors, stockholders, lawmakers, listing exchanges or other constituencies, or if we are unable to achieve an acceptable ESG or sustainability rating
from third-party rating services. A low ESG or sustainability rating by a third-party rating service could also result in the exclusion of our common stock from
consideration by certain investors who may elect to invest with our competition instead. Ongoing focus on corporate responsibility matters by investors and other parties as described above may impose additional costs or expose us to new risks.
Risks Relating to our Finances, Capital Requirements and Other Financial Matters
We require additional funding and may be unable to raise capital when needed, which would force us to delay, curtail or eliminate one or more of our research and development programs or
commercialization efforts.
Our operations have consumed substantial amounts of cash since inception. For the six months ended June 30, 2021 and 2020, we had negative cash flows from operations of $65.5 million and $45.9 million, respectively,
and for the years ended December 31, 2020 and 2019, we had negative cash flows from operations of approximately $102.0 million and $76.2 million, respectively. We expect to continue to spend substantial amounts on procurement of raw material plasma
and other raw materials necessary to scale up our manufacturing operations, commercial product launches, capacity expansion at the Boca Facility, building additional plasma collection facilities, product development, quality assurance, regulatory
affairs and conducting clinical trials for our product candidates and purchasing clinical trial materials, some of which may be required by the FDA. In addition, our end-to-end production cycle from procurement of raw materials to commercial
release of finished product can take between seven and 12 months or potentially longer, requiring substantial investments in raw material plasma and other manufacturing materials. We expect that we will not be able to generate a sufficient amount
of product revenue to achieve profitability until the beginning of 2024 and, as a result, we expect that we will need to continue to finance our operations through additional equity or debt financings or corporate collaboration and licensing
agreements. We currently anticipate, based upon our projected revenue and expenditures, that our current cash, cash equivalents and accounts receivable will be sufficient to fund our operations, as currently conducted, into the fourth quarter of
2021. In order to have sufficient cash to fund our operations thereafter, we will need to raise additional equity or debt financing before the end of the fourth quarter of 2021. This time frame may change based upon how quickly we are able to
execute on our operational initiatives and the various financing options that may be available to us in 2021. However, if the assumptions underlying our estimated expenses prove to be incorrect, we may have to raise additional capital sooner than
we currently expect. Until such time, if ever, as we can generate a sufficient amount of product revenue to achieve profitability, we expect to continue to finance our operations through additional equity or debt financings or corporate
collaboration and licensing arrangements. If we are unable to raise additional capital as needed, including due to widespread liquidity constraints or significant market instability that could result from the COVID-19 pandemic, we will have to
delay, curtail or eliminate our commercialization efforts or our product development activities.
We may not have cash available to us in amounts sufficient to enable us to make interest or principal payments on our indebtedness when due.
The Perceptive Credit Facility provides for term loans of up to an aggregate principal amount of $100.0 million, all of which has been drawn down and is currently outstanding. Borrowings under the Perceptive Credit
Facility bear interest at a rate per annum equal to 7.5% plus the greater of (i) one-month LIBOR and (ii) 3.5%; provided, however, that upon, and during the continuance of, an Event of Default, the interest rate will automatically increase by an
additional 400 basis points. We are required to make monthly payments of interest during the term of the Perceptive Credit Facility of approximately $0.9 million, with all principal and unpaid interest due at maturity. The Perceptive Credit
Facility has a maturity date of March 1, 2024, subject to acceleration pursuant to the Perceptive Credit Agreement, including upon an Event of Default. All of our obligations under the Perceptive Credit Facility are secured by a first-priority lien
and security interest in substantially all of our and our subsidiaries’ tangible and intangible assets, including intellectual property, and all of the equity interests in our subsidiaries.
Our current cash, cash equivalents and accounts receivable will not be sufficient to repay all of our current outstanding debt obligations as they mature. If we are unable to obtain additional financing and are
otherwise unable to become profitable and generate cash from operations in the amounts necessary to repay our outstanding debt obligations when due, including as a result of the impact of the COVID-19 pandemic, our creditors would be able to
accelerate all of the amounts due and, in the case of the Perceptive Credit Facility, seek to enforce their security interests, which could lead to our creditors taking immediate possession of and selling substantially all of our assets with no
return provided to our stockholders.
Raising additional funds by issuing securities or through licensing or lending arrangements may cause dilution to our existing stockholders, restrict our operations or require us to relinquish
proprietary rights.
To the extent that we raise additional capital by issuing equity securities, the share ownership of existing stockholders will be diluted. Any future debt financing may involve covenants that, among other restrictions,
limit our ability to incur liens or additional debt, pay dividends, redeem or repurchase our common stock, make certain investments or engage in certain merger, consolidation or asset sale transactions. In addition, if we raise additional funds
through licensing arrangements or the disposition of any of our assets, it may be necessary to relinquish potentially valuable rights to our product candidates or grant licenses on terms that are not favorable to us.
Our cash and cash equivalents could be adversely affected if the financial institutions in which we hold our cash and cash equivalents fail.
We regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance Corporation insurance limit. While we monitor the cash balances in our operating accounts on a daily
basis and adjust the balances as appropriate, these balances could be impacted, and there could be a material adverse effect on our business, if one or more of the financial institutions with which we deposit cash fails or is subject to other
adverse conditions in the financial or credit markets. To date, we have experienced no loss or lack of access to our invested cash or cash equivalents; however, we can provide no assurance that access to our invested cash and cash equivalents will
not be impacted by adverse conditions in the financial and credit markets.
If we fail to maintain proper and effective internal control over financial reporting in the future, our ability to produce accurate and timely financial statements could be impaired, which could
harm our operating results, investors’ views of us and, as a result, the value of our common stock.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and related rules, our management is required to report on the effectiveness of our internal control over financial reporting. The
rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. To comply with the requirements of being a
reporting company under the Exchange Act, we have been required to upgrade, and may need to implement further upgrades, to our financial, information and operating systems, implement additional financial and management controls, reporting systems
and procedures and hire additional accounting and finance staff.
Consequently, we have incurred increased costs related to our compliance with Section 404 of the Sarbanes-Oxley Act and will continue to do so. Our Audit Committee has retained the services of BDO, a Sarbanes-Oxley
advisor, to assist with our internal control over financial reporting and information technology relating to Section 404. Moreover, if we are not able to comply with the requirements of Section 404 applicable to us in a timely manner, or if we or
our independent registered public accounting firm identifies deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our common stock could decline and we could be subject to
sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.
Our ability to use our net operating loss carryforwards (“NOLs”) may be limited.
We have incurred substantial losses during our history. As of December 31, 2020, we had federal and state NOLs of $239.8 million and $172.6 million, respectively. Federal and State NOLs of approximately $115.8 million
and $90.0 million, respectively, will begin to expire at various dates beginning in 2027, if not limited by triggering events prior to such time. Under the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), changes in our
ownership, in certain circumstances, will limit the amount of federal NOLs that can be utilized annually in the future to offset taxable income. In particular, Section 382 of the Code imposes limitations on a company’s ability to use NOLs upon
certain changes in such ownership. If we are limited in our ability to use our NOLs in future years in which we have taxable income, we will pay more taxes than if we were able to fully utilize our NOLs. The Biotest Transaction on June 6, 2017
resulted in a change in ownership of ADMA under Section 382 and, as a result, we were required to write off $57.6 million of federal NOLs. We may experience ownership changes in the future as a result of subsequent changes in our stock ownership
that we cannot predict or control that could result in further limitations being placed on our ability to utilize our federal NOLs.
Risks Associated with our Common Stock
The market price of our common stock may be volatile and may fluctuate in a way that is disproportionate to our operating performance.
Our stock price may experience substantial volatility as a result of a number of factors, including:
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sales or potential sales of substantial amounts of our common stock;
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uncertainties in the equity markets related to the effects of the COVID-19 pandemic;
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delay or failure in initiating or completing preclinical or clinical trials or unsatisfactory results of these trials;
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delay in a decision by federal, state or local business regulatory authority;
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the timing of acceptance, third-party reimbursement and sales of BIVIGAM and ASCENIV;
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announcements about us or about our competitors, including clinical trial results, regulatory approvals or new product introductions;
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developments concerning our licensors or third-party vendors;
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litigation and other developments relating to our patents or other proprietary rights or those of our competitors;
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conditions in the pharmaceutical or biotechnology industries;
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governmental regulation and legislation;
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overall market volatility;
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variations in our anticipated or actual operating results; and
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change in securities analysts’ estimates of our performance, or our failure to meet analysts’ expectations.
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Many of these factors are beyond our control. The stock markets in general, and the market for pharmaceutical and biotechnology companies in particular, have historically experienced extreme price and volume fluctuations. These fluctuations
often have been unrelated or disproportionate to the operating performance of these companies. These broad market and industry factors could reduce the market price of our common stock, regardless of our actual operating performance.
Sales of a substantial number of shares of our common stock, or the perception that such sales may occur, may adversely affect the market price of our common stock.
As of August 6, 2021, most of our 132,769,471 outstanding shares of common stock, as well as a substantial number of shares of our common stock underlying outstanding warrants, were available for sale in the public
market, subject to certain restrictions with respect to sales of our common stock by our affiliates, either pursuant to Rule 144 under the Securities Act, or under effective registration statements. Sales of a substantial number of shares of our
common stock, or the perception that such sales may occur, could cause the market price of our common stock to decline or adversely affect demand for our common stock.
Our affiliates control a substantial amount of our shares of common stock. Provisions in our Second Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), our
Amended and Restated Bylaws (the “Bylaws”) and Delaware law might discourage, delay or prevent a change in control of our Company or changes in our management and, therefore, depress the trading price of our common stock.
As of June 30, 2021, Perceptive, our directors and executive officers and their affiliates beneficially owned approximately 18% of the outstanding shares of our common stock. Provisions of our Certificate of
Incorporation, our Bylaws and Delaware law may have the effect of deterring unsolicited takeovers or delaying or preventing a change in control of our Company or changes in our management, including transactions in which our stockholders might
otherwise receive a premium for their shares over then current market prices. In addition, these provisions may limit the ability of stockholders to approve transactions that they may deem to be in their best interests. These provisions include:
| • |
the inability of stockholders to call special meetings;
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classification of our Board and limitation on filling of vacancies could make it more difficult for a third party to acquire, or discourage a third party from seeking to acquire control of our Company; and
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authorization of the issuance of “blank check” preferred stock, with such designation rights and preferences as may be determined from time to time by the Board, without any need for action by stockholders.
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In addition, Section 203 of the Delaware General Corporation Law prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person which together
with its affiliates owns, or within the last three years, has owned 15% of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is
approved in a prescribed manner. The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential
acquirers of our company, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition. In addition, as a result of the concentration of ownership of our shares of common stock, our stockholders may, from
time to time, observe instances where there may be less liquidity in the public markets for our securities.
Our Board also recently adopted a short-term stockholder rights agreement with an expiration date of December 15, 2021 and an ownership trigger threshold of 10%. This stockholder rights agreement could render more
difficult or discourage a merger, tender offer or assumption of control of the Company that is not approved by our Board. The rights agreement, however, should not interfere with any merger, tender or exchange offer or other business combination
approved by our Board. In addition, the rights agreement does not prevent our Board from considering any offer that it considers to be in the best interest of the Company’s stockholders.
We have never paid and do not intend to pay cash dividends in the foreseeable future. As a result, capital appreciation, if any, will be your sole source of gain.
We have never paid cash dividends on any of our capital stock and we currently intend to retain future earnings, if any, to fund the development and growth of our business. In addition, the terms of existing and future
debt agreements may preclude us from paying dividends. For example, the Perceptive Credit Agreement prohibits us from paying dividends. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the
foreseeable future.
If we fail to adhere to the strict listing requirements of the Nasdaq Global Market (“Nasdaq”), we may be subject to delisting. As a result, our stock price may decline and our common stock may be
delisted. If our stock were no longer listed on Nasdaq, the liquidity of our securities likely would be impaired.
Our Common Stock currently trades on the Nasdaq Global Market under the symbol “ADMA.” If we fail to adhere to Nasdaq’s strict listing criteria, including with respect to stock price, market capitalization and
stockholders’ equity, our stock may be delisted. This could potentially impair the liquidity of our securities not only in the number of shares that could be bought and sold at a given price, which may be depressed by the relative illiquidity, but
also through delays in the timing of transactions and the potential reduction in media coverage. As a result, an investor might find it more difficult to dispose of our common stock. We believe that current and prospective investors would view an
investment in our common stock more favorably if it continues to be listed on Nasdaq. Any failure at any time to meet the Nasdaq continued listing requirements could have an adverse impact on the value and trading activity of our common stock.
Although we currently satisfy the listing criteria for Nasdaq, if our stock price declines dramatically, we could be at risk of failing to meet the Nasdaq continued listing criteria.
Penny stock regulations may affect your ability to sell our common stock.
Because the price of our common stock currently trades below $5.00 per share, our common stock is subject to Rule 15g-9 under the Exchange Act, which imposes additional sales practice requirements on broker-dealers
which sell these securities to persons other than established customers and accredited investors. Under these rules, broker-dealers who recommend penny stocks to persons other than established customers and “accredited investors” must make a
special written suitability determination for the purchaser and receive the purchaser’s written agreement to a transaction prior to sale, which includes an acknowledgement that the purchaser’s financial situation, investment experience and
investment objectives forming the basis for the broker-dealer’s suitability determination are accurately stated in such written agreement. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a
penny stock, of a disclosure schedule explaining the penny stock market and the associated risks. The additional burdens imposed upon broker-dealers by these requirements could discourage broker-dealers from effecting transactions in our common
stock and may make it more difficult for holders of our common stock to sell shares to third parties or to otherwise dispose of them.
Our Board may, without stockholder approval, issue and fix the terms of shares of preferred stock and issue additional shares of common stock adversely affecting the rights of
holders of our common stock.
Our Certificate of Incorporation authorizes the issuance of up to 10,000,000 shares of “blank check” preferred stock, with such designation rights and preferences as may be determined from time to time by the Board.
Currently, our Certificate of Incorporation authorizes the issuance of up to 300,000,000 shares of common stock. As of June 30, 2021, there were 151,054,617 shares remaining available for issuance, after giving effect to 12,997,322 shares of our
common stock that were subject to outstanding stock options, Restricted Stock Units and warrants as of June 30, 2021 that may be issued by us without stockholder approval, as well as an additional 4,076,035 shares reserved for the future issuance
of awards under our equity compensation plans.
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds.
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None.
| Item 3. |
Defaults Upon Senior Securities.
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None.
| Item 4. |
Mine Safety Disclosures.
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Not applicable.
| Item 5. |
Other Information.
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On August 6, 2021, the Company entered into a Separation Agreement and Release (the “Separation Agreement”) with James Mond (“Mond”),
following his voluntary resignation on June 8, 2021 (the “Separation Date”) from his former role as Chief Medical Officer and Chief Scientific Officer of the Company, as previously reported in the Company’s Current Report on Form 8-K filed with
the SEC on June 14, 2021. Subject to the expiration of a revocation period, the Separation Agreement will become effective on August 12, 2021 (the “Effective Date”).
Under the terms of the Separation Agreement, Mond will receive approximately $0.8 million in certain separation benefits, subject to
his continued compliance with the terms of the Separation Agreement, including: (i) salary continuation for a period of ten months beginning on August 1, 2021 through May 1, 2022 (the “Severance Period”); (ii) certain cash payments subject to
customary and ordinary tax withholdings, as payments for bonus, the forfeiture of restricted stock units, reimbursement of certain expenses; (iii) an extension providing that, subject to the terms and conditions of the applicable plan or award
agreement, Mond has twenty-four (24) months to exercise vested options from the Effective Date; (iv) at his election, the Company will reimburse Mond the same employer premium percentage contribution in effect on the Separation Date for continued
health coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) through the Severance Period; and (v) payment for accrued and unused paid time off.
Pursuant to the Separation Agreement, Mond has agreed to cooperate with the Company during the Severance Period to assist with
transition matters and among other items, has released all prior, existing or future claims he had, has or may have against the Company and has agreed to certain customary confidentiality, non-disparagement, work-product assignment, non-compete
and non-solicitation provisions.
The foregoing description of the Separation Agreement does not purport to be complete and is qualified in its entirety by reference to
the full text of the Separation Agreement, which is filed herewith as Exhibit 10.2.
| Item 6. |
Exhibits
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See the Exhibit Index immediately following the signature page of this Quarterly Report on Form 10-Q.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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ADMA Biologics, Inc.
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Date: August 11, 2021
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By:
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/s/ Adam S. Grossman
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Name:
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Adam S. Grossman
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Title:
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President and Chief Executive Officer
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Date: August 11, 2021
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By:
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/s/ Brian Lenz
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Name:
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Brian Lenz
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Title:
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Executive Vice President and Chief Financial Officer
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EXHIBIT INDEX
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Exhibit Number
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Description
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Certificate of Amendment of the Second Amended and Restated Certificate of Incorporation of ADMA Biologics, Inc., dated as of May 27, 2021 (incorporated by reference to Exhibit 3.1 of the Company’s Current
Report on Form 8-K filed with the SEC on May 28, 2021).
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Open Market Sale AgreementSM, dated May 28, 2021, by and between ADMA Biologics, Inc. and Jefferies LLC (incorporated by
reference to Exhibit 1.1 of the Company’s Current Report on Form 8-K filed with the SEC on May 28, 2021).
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Separation Agreement and Release, dated August 6, 2021, by and between ADMA Biologics, Inc. and James Mond.
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Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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Certification of Principal Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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Certification of Principal Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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101*
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The following materials from ADMA Biologics, Inc.’s Form 10-Q for the quarter ended June 30, 2021, formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets as of
June 30, 2021 (Unaudited) and December 31, 2020, (ii) Condensed Consolidated Statements of Operations (Unaudited) for the three and six months ended June 30, 2021 and 2020, (iii) Condensed Consolidated Statements of Changes in Stockholders’
Equity (Unaudited) for the three and six months ended June 30, 2021 and 2020, (iv) Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2021 and 2020, and (v) Notes to (Unaudited) Condensed
Consolidated Financial Statements.
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104
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
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| * |
Filed herewith.
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| ** |
In accordance with SEC Release 33-8238, Exhibit 32.1 and 32.2 are being furnished and not filed.
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70
Exhibit 10.2
SEPARATION AGREEMENT AND RELEASE
THIS SEPARATION AGREEMENT AND RELEASE (the “Agreement”) is made and entered into by and between Dr. James Mond (hereafter “Employee”)
and ADMA Biologics, Inc. on behalf of itself and each of its subsidiaries, affiliates, divisions, predecessors, successors, and assigns (hereinafter referred to collectively as the “Company” or “ADMA Biologics”).
Pursuant to the terms and conditions set forth herein and in consideration of the premises and mutual promises contained herein, it is
agreed by and between Employee and the Company as follows:
1. Separation Date: Employee’s last date of employment with ADMA Biologics was June 8, 2021 (the “Separation Date”). Employee agrees and
represents that from and after the Separation Date, Employee will not be, nor will Employee hold himself out as, an employee, consultant, affiliate or agent of ADMA Biologics. While not an employee of ADMA Biologics after the Separation Date,
Employee agrees to abide by the confidentiality and other obligations of this Agreement as set forth herein.
2. Separation Benefits: In consideration of the releases and covenants given by Employee as set forth in this Agreement and Employee’s
compliance therewith, and provided that Employee signs and does not revoke this Agreement and further complies with its terms and conditions, ADMA Biologics agrees as follows:
(a) Salary Continuation: For a period of ten (10) months beginning on August 1, 2021 through May 1, 2022 (the “Severance Period”), the Company will pay Employee
on a monthly basis the equivalent of his monthly base salary subject to the tax withholdings used prior to the Separation Date (the “Severance Payments”) paid on the regularly scheduled payroll dates. The first Severance Payment will be made on
the next regularly scheduled payroll date following the Effective Date of this Agreement. Severance Payments are contingent on Employee’s continued compliance with the terms of this Agreement including, but not limited to, cooperation pursuant to
Section 8 below.
(b) Bonus Payment: The Company will pay employee the total gross sum of $140,000.00, subject to the customary and ordinary tax withholdings, payable as follows:
(1) $70,000.00 paid within 30 days of the Effective Date; and (2) $70,000.00 paid at the expiration of the Severance Period.
(c) Restricted Stock Unit Payment: Employee forfeits all unvested restricted stock units and in lieu thereof the Company shall pay Employee the total gross sum of
$175,000.00 subject to the customary and ordinary tax withholdings, payable as follows: (1) 87,500.00 paid within 30 days of the Effective Date; and (2) $87,500.00 paid at the expiration of the Severance Period.
(d) Exercise Extension: Employee shall have twenty-four (24) months to exercise any stock option vested as of the Effective Date of this Agreement. All options
remain otherwise subject to the terms and conditions of any plan document and/or grant agreement.
1
(e) Repricing Participation: In the event the Company’s Board of Directors approves a stock option exchange program or other repricing mechanism, then Employee’s
vested stock options shall be, subject to the terms and conditions of the Company’s equity incentive plan, able to participate in any such program or repricing that occurs during the Severance Period. The options are otherwise subject to the
terms and conditions of any plan document and/or grant agreement.
(f) Expense Reimbursement: The Company agrees to reimburse Employee’s relocation expenses in the total gross sum $30,000.00, subject to the customary and ordinary
tax withholdings, paid within 30 days of the Effective Date.
(g) Attorneys’ Fees: The Company will pay Employee’s legal fees and costs incurred in negotiating this Agreement in the total gross sum of $15,000.00, payable
within 30 days of the Effective Date of this Agreement by a check made payable to Neuberger Quinn Gielen Rubin Gibber P.A., One South Street, 27th Floor, Baltimore, MD 21202. This payment will be reported as “miscellaneous” income on Forms 1099
to be issued to Employee and Neuberger Quinn Gielen Rubin Gibber P.A. Employee’s counsel will provide the Company with fully executed W-9s for Neuberger Quinn Gielen Rubin Gibber P.A and Employee.
(h) COBRA: If Employee timely elects continued health coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA), the Company agrees to reimburse
Employee the same employer premium percentage contribution in effect on the Separation Date through the Severance Period, provided Employee remains eligible for COBRA benefits and does not qualify for health coverage under another employer during
this period. Accordingly, Employee agrees to notify Company as soon as possible after Employee becomes eligible for health insurance coverage under another employer or ceases to be eligible for COBRA benefits. Notwithstanding the foregoing, if
the payments made by the Company under this Section 2(h) would violate the nondiscrimination rules or result in the imposition of penalties under the Patient Protection and Affordable Care Act of 2010 and related regulations and guidance, the
parties agree to reform this Section 2(h) as necessary to ensure compliance. Payment(s) under this Section will be made within fourteen (14) days of submission by Employee of proof of payment.
(i) Employee acknowledges
that Employee would not be entitled to receive the consideration set forth in this Section 2 absent execution of this Agreement and agrees that the amount of the consideration set forth herein is greater than any amount Employee is otherwise
entitled to receive from ADMA Biologics, Inc. and/or the Releasees (as that term is defined below) under any law, contract, policy, promise, expectation, or otherwise, either as compensation, wages, commissions, incentives, accrued but unused
vacation or paid time off, severance, benefits, reimbursements, damages, or otherwise. In the event the Internal Revenue Service, or any other state or local taxing entity, or any court or other tribunal of competent jurisdiction, determines
that all or part of these payments are remuneration for which any taxes are due and owing by the Company, except the Company’s employer share/contribution, Employee shall be solely responsible for the payment of such taxes. Employee agrees not
to make a claim against the Company for the payment of any such taxes, or for any related interest or penalties. Employee also agrees to indemnify the Company for any amounts paid, including, but not limited to, interest and penalties, in
connection with any taxes that Employee may owe based on these payments.
2
3. Business Expense Reimbursement: The
Company will reimburse Employee for all approved and documented business expenses incurred prior to the Separation Date, provided that Employee submits to the Company prior to the Effective Date, an expense report with adequate documentation of
such expenses in accordance with the Company’s policies.
4. Other Rights and Benefits: As of the Separation Date, Employee’s (i) accrual of paid time off, (ii) participation in any and all health,
dental and prescription plans, and (iii) participation in any and all Life, AD&D, long term disability, and 401(k) retirement savings plans will terminate. Employee’s execution of this Agreement shall not diminish any benefits vested
pursuant to the terms of any Employee Retirement Income Security Act of 1974 (ERISA) employee pension or 401(k) benefit plan, which benefits shall continue to be subject to the terms of applicable plan documents. The Company shall pay Employee
for 33.75 hours of vacation/PTO.
5. Full Discharge of Obligations: Employee understands and agrees that Employee is not entitled to, and will not receive, any payments or
benefits of any kind (including but not limited to wages, bonus payments, incentive compensation payments, or other payments to which Employee otherwise might have been entitled) from the Company except as expressly set forth herein above.
Employee further represents that Employee has or will receive all compensation, including salary payments, due and owing through the Separation Date. In addition, Employee understands and agrees that after the Separation Date, Employee will not
accrue any further benefits under any of the Company’s applicable plans.
6. Release: As a material inducement to the Company to enter into this Agreement and to give Employee the benefits described above, Employee
forever releases and discharges the Company and each of its predecessors, successors, assigns, partners, directors, officers, members, managers, stockholders, employees, representatives, attorneys, agents, divisions, subsidiaries, and affiliates
(and the past and present partners, directors, officers, members, managers, stockholders, employees, representatives, attorneys and agents of such divisions, subsidiaries and affiliates), and all persons acting by, through, under, or in concert
with any of them (hereinafter the “Releasees”), from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and
expenses (including attorneys’ fees and costs actually incurred) of any nature whatsoever, in law or equity, known or unknown, suspected or unsuspected, that Employee and Employee’s issue, heirs, representatives, successors, agents, executors,
administrators and assigns ever had, now has or hereafter can, shall or may have for, upon, or by reason of any matter, cause or thing whatsoever through the date of this Agreement, including but not limited to any claims arising out of his
employment by the Company and the cessation of such employment; any claims for unpaid wages, back pay, bonuses, incentive pay, vacation pay, legal fees, severance or other compensation; any claims arising under any contracts, express or implied,
or any covenant of good faith and fair dealing, express or implied; any tort, including without limitation intentional infliction of emotional distress, defamation, fraud and breach of duty; any legal restrictions on the Company’s right to
terminate employees; and any federal, state, local, or other governmental common law, statute, regulation, or ordinance, including without limitation: Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination
in Employment Act of 1967, the Older Workers’ Benefit Protection Act, the Genetic Information Nondiscrimination Act of 2008, the Worker and Adjustment Retraining Notification (“WARN”) Act, the Illinois WARN statutes, the New Jersey WARN statutes,
the New Jersey Law Against Discrimination, the New Jersey Conscientious Employee Protection Act, the New Jersey Family Leave Act, the New Jersey Temporary Disability Benefits Law, the New Jersey Wage Payment Law, the New Jersey Wage and Hour Law,
the New Jersey Workers’ Compensation Law, the Americans with Disabilities Act, the Florida Whistleblower Protection Act, the Florida Workers’ Compensation Retaliation provision, the Florida Minimum Wage Act, the Florida Constitution, the Florida
Fair Housing Act, the Equal Pay Act, the Employee Retirement Income Security Act, the Rehabilitation Act of 1973, and the Family and Medical Leave Act of 1993, each of the foregoing as amended; provided, however, that nothing contained herein shall serve to waive any (a) claims or rights that, pursuant to law, cannot be legally waived or subject to a release of this kind, such as claims for
unemployment or workers’ compensation benefits; (b) rights to vested benefits under any applicable retirement plans as of the Separation Date; (c) rights to vested stock options and rights arising under any stock option agreement and Company
equity incentive plan; and/or (d) claims arising under or to enforce the terms of this Agreement. Moreover, nothing herein shall be construed to prohibit Employee from filing a charge with, or participating in any investigation or proceeding
conducted by, the Equal Employment Opportunity Commission or a comparable state or local agency (“EEOC”); provided, however, that Employee agrees and covenants to waive his right to recover monetary damages in any such EEOC charge, complaint, or
lawsuit filed by Employee or by any other person, organization, or other entity on Employee’s behalf with respect to the claims lawfully released by this Agreement.
3
7. Representations:
(a) The Company represents
and acknowledges that it is not aware of any claim, if any, that it may have against Employee as of the signing of this Agreement.
(b) Employee acknowledges
that as an employee of the Company it has been Employee’s obligation to advise the Company completely and candidly of all facts of which Employee is aware that constitute or might constitute violations of the Company’s ethical standards or legal
or regulatory obligations. Employee represents and warrants that Employee is not aware of any such facts or that Employee has previously advised the Company about any such facts. Employee further agrees to advise the Company in the future of all
such facts that come to Employee’s attention; and
(c) Employee, for himself
and Employee’s issue, heirs, representatives, successors, agents, executors, administrators, and assigns, represents and warrants that, to the fullest extent permitted by law, Employee has not filed any complaints or charges or lawsuits against
the Company with any governmental agency or court.
8. Cooperation: Employee and the Company agree that certain matters in which Employee has been involved during his employment may require his
cooperation with the Company in the future. Accordingly, to the extent reasonably requested by the Company and to help ensure a smooth and honorable transition from the Company, during business hours for the duration of the Severance Period,
Employee agrees to cooperate with the Company upon its reasonable request to provide assistance via telephone, e-mail or in-person meetings in connection with any matters in which Employee was involved while employed by the Company. In
particular, but without limitation, Employee agrees to make himself reasonably available via telephone, e-mail or in-person meetings during such period to the Company to respond to requests by the Company for information relating to scientific or
intellectual property matters within the scope of Employee’s responsibility prior to the Separation Date, including with respect to Company patents, patent applications or other formal intellectual property related documents, any Company-related
scholarly articles, any litigation, arbitration or governmental or regulatory inquiry or investigation, or similar proceeding, and to provide truthful testimony to any court, agency or other adjudicatory body.
4
9. Confidentiality: (a) Employee agrees not to disclose, divulge, publish, communicate, publicize, disseminate or otherwise reveal, either
directly or indirectly, any Confidential Information (as defined below) to any person, natural or legal, who is not affiliated with the Company (i.e., employees, principal stockholders and directors), otherwise bound by an agreement with the
Company or obligation of confidentiality for the benefit of the Company or in need of such information in connection with services to be provided for the benefit of the Company. The term "Confidential Information" means all information in any
form relating to the past, present or future business affairs, including without limitation, research, development or business plans, operations or systems, of the Company or a person not a party to this Agreement whose information the Company
has in its possession under obligations of confidentiality, which is disclosed by the Company to Employee or which is produced or developed while Employee is an owner of, employee or director of the Company. The term “Confidential Information”
shall not include any information of the Company which becomes publicly known through no wrongful act of Employee or is received from a person not a party to this Agreement who is free to disclose it to Employee. To the fullest extent permitted
by law, Employee further agrees not to divulge to anyone (other than the Company or any persons employed or designated by ADMA Biologics), publish, or make use of any such Confidential Information without the prior written consent of the
Company. Employee (i) may make and retain electronic copies of his contact list and calendar and (ii) may retain any documentation relevant to and reasonably necessary to file his income tax returns. Employee’s obligations in this Section are
in addition to any of Employee’s continuing obligations under the Confidentiality, Non-Disclosure, E-Mail, Telephone, Fax and Computer Policy and Agreement, provided to Employee when Employee began employment with the Company (“Confidentiality
and Non-Disclosure Agreement”), as well as the Company’s Insider Trading Policy which continuing obligations remain in full force and effect and are expressly incorporated herein.
(b) Nothing in this
Agreement is intended to or shall preclude Employee from: (i) providing truthful testimony on any subject matter in response to a valid subpoena, court order, regulatory request or other judicial, administrative or legal process or otherwise as
required by law, in which event Employee shall notify the Company of the anticipated testimony in writing, unless prohibited to do so by law, as promptly as practicable after receiving any such request and at least ten (10) business days prior to
providing such testimony (or, if such notice is not possible under the circumstances, with as much prior notice as is possible) so that the Company may seek a protective order or other appropriate remedy; or (ii) reporting, without any prior
authorization from, or notification to, the Company, possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Securities and Exchange Commission, the Department of Justice, Congress,
and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. If such a protective order or other remedy described in clause (i) of the foregoing sentence is not
obtained, or the Company waives compliance with this Agreement, Employee shall furnish only that portion of such subject matter that is legally required and shall exercise all reasonable efforts to obtain reliable assurance that confidential
treatment will be accorded to the subject matter to be disclosed.
5
(c) Employee is hereby
further notified in accordance with the Defend Trade Secrets Act of 2016 that Employee will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (i) is made in confidence
to a federal, state, or local government official, either directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a
lawsuit or other proceeding, if such filing is made under seal.
(d) Employee expressly
agrees to keep secret and strictly confidential, the circumstances leading up to this Agreement except: (a) with the prior written consent of the Company; (b) to Employee’s attorney or tax preparers, provided such individuals are specifically
instructed to maintain such information as confidential and agree to keep said information strictly confidential and not disclose it to others; or (c) as may be required by law, including in response to valid legal process or upon request by a
government taxing authority or other government entity. Moreover, this Agreement and its terms shall not be used or disclosed in any court, arbitration or legal proceedings, except to enforce the provisions of this Agreement, in which case the
Agreement shall be filed under seal. In the event that Employee is compelled to make disclosures related to any released party pursuant to a subpoena or other court process, or Employee has advance notice that a subpoena or other court process
may result in the disclosure of confidential information, or Employee should reasonably conclude that a subpoena or other court process may result in the disclosure of Confidential Information, then Employee shall provide advance written notice
of such compelled disclosure to the Company within sufficient time for the Company to object to disclosure. The Employee expressly agrees and acknowledges that the Company may publicly disclose the existence and terms of this Agreement,
including through the Company’s filings with the Securities and Exchange Commission.
10. Return of Company Property: As of the Effective Date, Employee will have returned to the Company all
Confidential Information, files, memoranda, and records, cardkey passes, door and file keys, computer access codes, software, corporate credit card, equipment, including cell phones and computers, and other property which he received, acquired,
or prepared in connection with his employment with the Company, and any and all copies, duplicates, reproductions, synopses, and/or excerpts thereof (collectively, “Company Property”). Employee further agrees and certifies herein that by no later
than the Effective Date, Employee has permanently and irrevocably deleted any and all intangible Company Property, including any Company emails or documents sent to, by or from any Company employee, including himself, which exists or is stored
(i) in any e-mail account; (ii) in any “cloud” account; or (iii) on any computer, tablet, cellular phone or smartphone, the foregoing of which are accessible, controlled, or owned by him. The consideration detailed in Section 2 above is
contingent on Employee’s compliance with his obligations under this Section.
6
11. Non-Disparagement: Employee agrees not to directly or indirectly, or encourage others, to defame, disparage or criticize the Company, its
business plan, procedures, products, services, development, finances, financial condition, capabilities or other aspect of its business, or any of its stockholders in any medium (whether oral, written, electronic or otherwise, whether currently
existing or hereafter created), to any person or entity, without limitation in time. Nothing in this Agreement is intended to (a) preclude the Employee from making any truthful statement to the extent required by law or by any court, arbitrator,
mediator or administrative or legislative body with actual or apparent jurisdiction to order such person to disclose or make accessible such information; or (b) unlawfully impair or interfere with Employee’s rights under Section 7 of the National
Labor Relations Act. The Company agrees to instruct Adam Grossman and Brian Lenz to not directly or indirectly, or encourage others, to defame or disparage Employee in any medium (whether oral, written, electronic or otherwise). The parties
understand that this provision is a material one.
12. Work Product Assignment: Employee
hereby assigns to the Company all of his right, title and interest in and to, and shall disclose promptly to the Company, any and all work product, developments, processes, inventions, ideas and discoveries, and works of authorship developed,
discovered, improved, authored, derived, invented or acquired by Employee during the period of his employment by the Company (collectively, "Work Product"), whether or not during business hours, that are either related to the scope of Employee 's
employment by the Company or make use, in any manner, to the dedicated resources of the Company, and agrees that such Work Product shall be and shall remain the exclusive property of the Company. The parties hereto understand that the term Work
Product includes, but is not limited to, all work product developed, discovered, improved, authored, derived, invented or acquired by Employee that: (i) incorporates or reflects any Confidential information, (ii) relates to the business of the
Company or the Company's actual or anticipated research and development with respect to Confidential Information, or (iii) results from any work performed by Employee for the Company. Work Product shall not include anything relating to a
potential transaction or matter which involves the business of the Company as then conducted (or is related thereto, or a business the Company is then contemplating entering) and may be an investment or business opportunity or of prospective
economic or competitive advantage to the Company, with respect to which the Board of Directors of the Company has made a determination not to pursue.
13. Non-Competition: Employee absolutely
and unconditionally covenants and agrees that, for the period commencing on the Separation Date through the period ending 12 months thereafter (the “Restrictive Period”), Employee will not, either directly or indirectly, solely or jointly with
any other person or persons, as an employee, consultant or advisor, or as an individual proprietor, partner, stockholder, director, officer, joint venturer, investor, lender or in any other capacity (whether or not engaged in business for
profit), engage or participate in a Competing Business (as defined below). Nothing herein contained shall, however, prohibit Employee’s acquisition or ownership of (i) stock or securities listed on a national or regional securities exchange or
the Nasdaq Stock Market, so long as such investments, in the aggregate, in any particular business enterprise constitute less than five percent (5%) of the total issued and outstanding stock and securities of such enterprise or (ii) passive
investment in units or other interests in private equity or hedge funds to similar investment vehicles. The term “Competing Business” means (i) the manufacture and sale of immune globulin intravenous (IGIV) and hyperimmune immunoglobulin (IG),
(ii) plasma collection, (iii) the manufacture of plasma products competitive with products manufactured by or under development by the Company, (iv) the manufacture of vaccines to stimulate hyperimmune donors, and (v) any other specific business
being conducted by the Company during the term of the Employee’s employment with the Company. Nothing herein shall restrict the ability of any of the Permitted Entities, as such term is used in Employee’s Amended and Restated Employment
Agreement (which is otherwise superseded), to continue the conduct of their existing businesses.
7
14. Non-Solicitation: Employee
absolutely and unconditionally covenants and agrees that, during the Restrictive Period, Employee will not, either directly or indirectly, for any reason, whether for Employee’s own account or for the account of any other person, natural or
legal, without the prior written consent of the Company: (i) solicit, employ, deal with or otherwise interfere with any contract or relationship of the Company with any employee, officer, director or any independent contractor of the Company,
while such person or entity is employed by or associated with the Company or in the case of former employees within one year of the termination of such person's employment with the Company during the Restrictive Period, unless such person was
terminated without cause by the Company, (ii) solicit, accept, deal with or otherwise interfere with any contract or relationship of the Company with any independent contractor, customer, client or supplier of the Company or with any person,
natural or legal the effect of which would have an adverse effect on the Company, or (iii) solicit or otherwise interfere with any existing or proposed contract between the Company and any other person, natural or legal. Other than responding to
requests made pursuant to Section 8, Employee agrees not to contact or communicate with employees, directors or independent contractors of the Company except for personal reasons. Without limitation to the foregoing, Employee may continue to
work with any independent contractor, customer, client or supplier of the Company, or with any person, natural or legal, who or which has had a previous relationship with any of the Permitted Entities, as such term is used in Employee’s Amended
and Restated Employment Agreement (which is otherwise superseded), and which may continue to have such a relationship while honoring any commitments or obligations that it may have with the Company or with whom the Employee had a preexisting
relationship prior to the Employee’s employment with the Company.
15. Indemnification: The Company shall
abide by any preexisting obligations to indemnify Employee pursuant to the Company Charter.
16. Rule of Ambiguities: It is agreed and understood that the general rule that ambiguities are to be construed against the drafter shall not
apply to this Agreement. In the event that any language in this Agreement is found or claimed to be ambiguous, each party shall have the same opportunity to present evidence as to the actual intent of the parties with respect to any such
ambiguous language without any inference or presumption being drawn against the drafter.
17. Severability: It is the desire and intent of the parties that the provisions of this Agreement shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Moreover, if any one or more of the provisions contained in this Agreement shall be held to be excessively broad as to
duration, scope, activity or subject, such provisions shall be construed by limiting or reducing them so as to be enforceable to the maximum extent compatible with applicable law.
8
18. Non-Admission of Liability: This Agreement is not, and shall not in any way be construed as, an admission by the Company that it has acted
wrongfully with respect to Employee or any other person, or that Employee has any rights whatsoever against the Company except as set forth herein. The Company specifically disclaims any liability to or wrongful acts against Employee or any
other person.
19. Representation: Employee acknowledges that he was advised by the Company to consult with an attorney of his own choosing concerning the
waivers contained in this Agreement, that Employee retained Thomas M. Wood IV, Esq., and that the waivers Employee has made herein are knowing, conscious, and with full appreciation that Employee is forever foreclosed from pursuing any of the
rights so waived.
20. No Modification: No waiver or modification of this Agreement or any term or provision hereof shall be binding unless it is in writing and
signed by the parties hereto or their expressly authorized representatives.
21. Choice of Law; Dispute Resolution: This Agreement shall be construed in accordance with the laws of the State of Florida without regard to
conflicts of law principles. Employee and the Company hereby submit to the exclusive jurisdiction of the state and federal courts located in Florida (and waive the defenses of lack of jurisdiction or inconvenient forum to the maintenance of any
such action or proceeding in such venue) for any proceedings to obtain injunctive relief for a breach or threatened breach of any covenants herein.
22. Injunctive Relief: Employee agrees and acknowledges that the Company will be irreparably harmed by any breach, or threatened breach, by
Employee of this Agreement and that monetary damages would be grossly inadequate. Accordingly, Employee agrees that in the event of a breach or threatened breach by Employee of this Agreement, the Company shall be entitled to immediate
injunctive or other preliminary or equitable relief, as appropriate, in addition to all other remedies available at law and equity, without being required to post a bond.
23. No Disclosure: Other than as may be required by law, Employee agrees not to disclose to anyone, other than Employee’s immediate family,
accountant, and attorney, the contents of this Agreement, the circumstances surrounding it, or its terms, conditions, and negotiation, including the dollar amounts set forth herein, and then only upon their express agreement not to disclose such
subject matter to another person, except as required by law.
24. Entire Agreement: This Agreement sets forth the entire agreement between the parties hereto and fully supersedes and replaces any and all
prior agreements, arrangements, or understandings (whether oral or written) between the parties hereto pertaining to the subject matter hereof. Employee acknowledges and agrees that in signing this Agreement, Employee has not relied upon any
representation, promise, or inducement that is not expressly set forth in this Agreement. All prior written agreements between Employee and the Company remain in effect unless modified by the provisions herein.
9
25. Revocation Period; Effective Date: Employee shall have a period of twenty-one (21) days from the date on which a copy of this Agreement has
been delivered to Employee to consider whether to sign it. In the event that Employee elects to sign and return to the Company a copy of this Agreement, Employee has a period of seven (7) days following the date of Employee’s execution to revoke
this Agreement (the “Revocation Period”) by delivering a written letter to ADMA Biologics, Inc., 5800 Park of Commerce Blvd., NW, Boca Raton, FL 33487, Attention: Kim Tripodo, Executive Director & Head of Human Resources, within the
Revocation Period notifying ADMA Biologics of Employee’s revocation. Employee further acknowledges and agrees that, in the event that Employee revokes this Agreement, the Agreement shall have no force or effect, and Employee shall have no right
to receive any of the benefits provided for hereunder. Provided that Employee signs and does not revoke the Agreement as set forth above, it shall become effective on the eighth (8th) day following Employee’s execution of this
Agreement (the “Effective Date”). Employee acknowledges and agrees that, in the event Employee does not sign this Agreement within such twenty-one (21) day period or revokes his consent during the additional seven (7) day period described above:
(i) the Agreement shall have no force or effect and Employee’s last day of employment with the Company was the Separation Date.
26. Voluntary Execution: Employee hereby acknowledges that Employee has read and that Employee understands the foregoing Agreement and that
Employee has affixed their signature hereto voluntarily and without coercion.
27. Counterparts: This Agreement may be executed in any number of counterparts, which together shall be effective as if they were a single
document. Signatures on the Agreement transmitted by email or facsimile copy shall have the same force and effect as original signatures.
28. Cost of Enforcement: In the event of litigation involving this Agreement, the non-prevailing party shall reimburse the prevailing party for
all costs and expenses, including reasonable attorneys’ fees and expenses, incurred in connection with any such litigation or arbitration, including any appeal therefrom.
PLEASE READ CAREFULLY. THIS SEPARATION AGREEMENT AND RELEASE INCLUDES A RELEASE OF KNOWN AND UNKNOWN CLAIMS.
|
EMPLOYEE
|
ADMA Biologics, Inc.
|
|||
|
By:
|
/s/ James Mond
|
By:
|
/s/ Adam Grossman
|
|
|
Name:
|
James Mond
|
Name:
|
Adam Grossman
|
|
|
Title:
|
Title:
|
President & CEO
|
||
|
Date:
|
August 4, 2021
|
Date:
|
August 6, 2021
|
|
10
Exhibit 31.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Adam S. Grossman, certify that:
| 1. |
I have reviewed this Quarterly Report on Form 10-Q of ADMA Biologics, Inc.;
|
| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
|
| 4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
| a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
| b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
| c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
|
| d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
| 5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
|
| a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
| b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date: August 11, 2021
|
By:
|
/s/ Adam S. Grossman
|
|
Name:
|
Adam S. Grossman
|
|
|
Title:
|
President and Chief Executive Officer
(Principal Executive Officer)
|
Exhibit 31.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Brian Lenz, certify that:
| 1. |
I have reviewed this Quarterly Report on Form 10-Q of ADMA Biologics, Inc.;
|
| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
|
| 4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
| a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
| b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
| c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
|
| d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
| 5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
|
| a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
financial information; and
|
| b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date: August 11, 2021
|
By:
|
/s/ Brian Lenz
|
|
Name:
|
Brian Lenz
|
|
|
Title:
|
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Exhibit 32.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ADMA Biologics, Inc., a Delaware corporation (the “Company”), on Form 10-Q for the quarter ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I,
Adam S. Grossman, President and Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| 1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
| 2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
Date: August 11, 2021
|
By:
|
/s/ Adam S. Grossman
|
|
Name:
|
Adam S. Grossman
|
|
|
Title:
|
President and Chief Executive Officer
(Principal Executive Officer)
|
Exhibit 32.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ADMA Biologics, Inc., a Delaware corporation (the “Company”), on Form 10-Q for the quarter ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I,
Brian Lenz, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: August 11, 2021
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By:
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/s/ Brian Lenz
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Name:
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Brian Lenz
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Title:
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Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
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