Good afternoon, and welcome to ADMA Biologics Second Quarter 2021 Financial Results and Corporate Update Conference Call on Wednesday, August 11, 2021. At this time all participants lines are in a listen-only mode. There will be question and answer session will follow. Please be advised that this call is being recorded at the company's request. And will be available on the company's website approximately two hours following the end of the call. At this time, I would like to introduce Skyler Bloom, Director, Investor Relations and Corporate Strategy at ADMA Biologics. Please go ahead.

Welcome, everyone, and thank you for joining us this afternoon to discuss ADMA Biologics financial results for the second quarter of 2021 and recent corporate updates. I'm joined today by Adam Grossman, President and Chief Executive Officer; and Brian Lenz, Executive Vice President and Chief Financial Officer. During today's call, Adam will provide some introductory comments and provide a corporate update, and then Brian will provide an overview of the company's second quarter 2021 financial results. Finally, Adam will then provide some brief summary remarks before opening up the call for your questions. Earlier today, we issued a press release detailing the second quarter 2021 financial results and summarize certain second quarter achievements and recent corporate updates. The release is available on our website at www.admabiologics.com. Before we begin our formal comments, I'll remind you that we will be making forward-looking assertions during today's call that represent the company's intentions expectations or beliefs concerning future events, which constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. All forward-looking statements are subject to factors, risks and uncertainties such as those detailed in today's press release announcing this call and in our filings with the SEC, which may cause actual results to differ materially from the results expressed or implied by such statements. In addition, any forward-looking statements represent our views only as of this date of this call and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update any such statements, except as required by the federal securities laws. We refer you to the disclosure notice section in our earnings release we issued today in the Risk Factors section of our 2020 annual report on Form 10-K and our quarterly report on Form 10-Q for the second quarter ended June 30, 2021, for a discussion of important factors that could cause actual results to differ materially from these forward-looking statements. With that, I would now like to turn the call over to Adam Grossman. Adam?

Thank you, Skyler. Good afternoon, everyone, and thank you for joining us on today's call. We hope those joining us today continue to remain healthy and safe. ADMA continues to excel with the commercial launch and revenue ramp up of its immunoglobulin and hyperimmune globulin product portfolio as well as more broadly, advancing our company's strategic goals to create value for stockholders in the periods to come. The underlying business trends for our commercial immune globulin business have never been stronger, and the operational execution by our organization across business segments cannot be overstated. The significant strides made during the first half of 2021 form the foundation for continued quarter-on-quarter over the remainder of the year and thereafter. The totality of our achievements to date will enable ADMA to enter the next phase of its profit oriented growth strategy from a position of strength. The multiyear investment and remediation initiatives will be successfully winding down with the anticipated approval of the Vanrx aseptic fill/finish machine over the coming months. And as a result, the company is now on the precipice of realizing significant operating leverage on its pathway to corporate profitability. During the second quarter of 2021 ADMA exceeded analysts' consensus top line revenue forecasts for the fourth consecutive quarter, generating record quarterly revenues of $17.8 million representing a 129% growth rate compared to the second quarter of 2020. Additionally, the company's successfully narrowed our gross and net losses year over year. A trend ADMA believes can continue in the coming quarters and further accelerate throughout 2022. While ADMA's revenue and execution of its business plan have seen record and favorable results over the past several quarters, it is important to highlight that pandemic related headwinds have impacted and continue to impact ADMA's commercial launch phase. Further, these records second…

Thank you, Adam. Since we issued a press release earlier today, outlining our second quarter 2021 financial results, I'll just review some of the highlights. For the second quarter of 2021, total revenues were $17.8 million, compared to $7.8 million for the second quarter of 2020. This represents an increase of $10 million, or approximately 129%. The revenue growth for the second quarter of 2021, compared to the second quarter of 2020 was favorably impacted by the continued commercial ramp up of our IDIG product portfolio, and expanding customer base at both our buyer centers plasma collection segment, as well as in our bio manufacturing segment. Additionally, ADMA grew its total asset base to a quarter end balance of approximately $232.8 million, which includes approximately $100 million in inventory. ADMA expects the robust inventories which are recorded at the company's cost to support quarter-over-quarter revenue growth throughout 2021 and beyond, as well as meet the production needs to achieve longer term revenue guidance of $300 million or more. This inventory balance consists of raw materials, including source plasma, and other materials expected to be used in the production, as well as work in process and finished goods inventories comprised of our commercial IDIG products and intermediate fractions. In the periods ahead, ADMA anticipates continuing to purchase raw materials, while also growing its internal plasma collection center network, building work in process inventories, as well as finished goods inventories. Given the ongoing industry plasma collection constraints as ADMA previously characterized, we intend to retain a portion of our growing inventories as safety stock, which we believe will help solidify our emerging position as a reliable supplier to our customers, distribution partners and prescribers over the coming quarters. Our consolidated net loss for the second quarter of 2021 was approximately $18.9 million or $0.15 loss per basic and diluted share, compared to a consolidated net loss of approximately $20.2 million or $0.23 loss per basic and diluted share for the second quarter of 2020. The decrease in year-over-year net loss was primarily attributable to increased revenues and improved gross margins. With this being the fourth consecutive quarter of revenue growth, we anticipate this trend to continue in the periods ahead. With that, I will now turn the call back over to Adam for closing remarks.

Thank you, Brian. Within two years following FDA approval of ASCENIV and BIVIGAM ADMA had successfully established end to end control of its manufacturing chain. And while doing so, has also built a high caliber commercial organization well positioned to compete in the rapidly growing US immune globulin market. This market is expected to reach approximately $17.2 billion in annual revenues by 2027. ADMA's 2021 year-to-date accomplishments across business segments, will enable the company to accelerate robust financial trends in the period ahead and enter the next phase of what we believe will be a multi-decade profit oriented lifecycle opportunity. In the short term, we now anticipate exiting 2021, with an annualized revenue run rate of approximately $100 million or more. Additionally, and as communicated in prior calls, we as a management team and board of directors have invested significant capital into the company. And we are acutely aware of the valuation disconnect between ADMA's appreciating intrinsic value in the company's current market cap. We are aligned with your stockholders. As such, we are 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 other co-development agreements or arrangements. We look forward to a strong remainder of 2021 and the bright future for ADMA biologics. In closing, I'd like to thank you, our stockholders for your continued support. As your investment in ADMA helps to advance our mission to save lives, make good efficacious, safe products that help our friends, family and neighbors. Please donate plasma and help save lives. And with that, I'd now like to open up the call for your questions.

[Operator Instructions] And our first question comes from Anthony Petrone from Jefferies. Your line is now open.

Thanks, good afternoon, everyone. Congratulations on another trunk [ph] 2Q here. I'm going to start with the $100 million target exiting this year. Just wondering what the mix of if again, Nabi and ASCENIV is in there. So that'd be the first question and then on the disclosure here on the CDMO arrangements. When we think about the plant in Boca, you're eventually getting to an operational capacity of 600,000 liters, which should we be thinking about in terms of allocation to future potential CDMO agreements? And I'll have a couple of follow ups.

Sure. Thanks, Anthony. Thanks for your kind words, hope you're staying safe up there in New York. So it's a great time to be in the immune globulin business. Some I think that you know, you stay on top of current events with the collection segment as well as how that flows through to finished goods and a number of our competitors large mid-size and the smaller players, they're not taking on new customers right now. They're talking about having tightness of supply anticipated later this year, early next year. We're hearing that there are substantial countries in Europe, in the EU that are truly under supplied at the present time and I'm not sure how much longer the competitors are able to take product from one country and bring it into the US. So the outlook for our revenue growth really looks very, very strong. Again, we've got more product in the supply chain and coming online than we never had before. And regarding your question about the $100 million potential run rate that we would be achieving later this year, you know, as we've previously said, to you and others, and on these calls our current mix is pretty much 90.10, 80.20 right now, but again being the majority of the product that we are producing and distributing and selling out of this plant. We are seeing growth in our hyperimmune product segment, utilization of Nabi and the press release earlier this week regarding now having the one ml size back on the market, certainly is welcome to our customers. So we're very, very excited there. And we hope to gain some more market share back since we haven't had the one ml product on the market for a while. And ASCENIV is growing at a steady pace,…

Sure. And I could add a little bit more color to the revenue mix Anthony as we saw in this quarter actually, compared to the first quarter of ‘21, we have a negative 11% gross margin actually, that numbers been cut in half now to negative 6% gross margin. And that's really attributable to sell a more of our hyper immune globulin products. So that product mix is already starting to see a shift, the hyperimmune globulins, as we mentioned previously have a 70% to 80% gross margin and our standard IDIG product. Globulins have a gross margin of 20% to 30%. So we've already started seeing that product mix really start in the second quarter, we think that that's going to continue that trend. We've also in this quarter as a result of the increased revenues. We've seen more customers that have been added, we've expanded our customer base. And again, we're selling more of our hyperimmune products into the market and of being well received.

That's helpful. And couple of follow ups here would be one just to reiterate on a plasma collection side, you're eight in the process of getting to the eight centers. I just want to confirm that exiting 2022. The target is still for 10 operational centers. So that would be the first question. And then secondly, just you know, as you speak to inventories, and you mentioned safety stock, maybe what should we be thinking of as we look at the inventory going forward, what percent of your balances will be represented by safety stock? Thanks again and congrats again on the quarter.

Sure, okay. Also, I can take those questions. With regards to the centers we currently do have eight centers in various stages of development. Two are FDA approved, five centers are collecting plasma at present, by the end of 2022 we want to have 10 centers or more under our corporate umbrella, by 2024 we'd like to have all those 10 centers or more FDA approved, and really being in a place will be self-sufficient to bring in from a supply chain standpoint, the majority if not all of our raw materials, may be 600,000 liters of revenue or liters of plasma coming in from our plasma centers. Now, as you look at our inventories, ending the second quarter of 2021, we have $100 million in inventory, and half of that inventory. And this is a testament to show how much production, we've really been able to ramp up here in Boca, our working processes close to $50 million. And that's a testament to show how much the production has continued to increase here, we just got the 4400 approval process approved by the FDA just in April. So we think that that whip number is going to continue to grow, which is a good sign because as that whip number working process number moves through the manufacturing and filling phase of our seven to 12 month production lifecycle. A lot of that product is then going to go into the final phase, the finished good phase. So to answer your question, roughly, how much finished goods would we estimate to have on a quarterly basis if we're, since we've got it to $250 million Anthony in 2024, we say roughly a blended margin of about 50%. On a quarterly basis, you're looking at somewhere between $60 million and $70 million, a quarter at 50% gross margin, if they can somewhere around $30 million to $40 million. And it's at our cost of finished goods. So we're certainly well on our way, having a balance sheet of $100 million in inventory. At our cost thinking we've got about 50% gross margin on that number. We're certainly setting ourselves up for a very strong foundation that we've created to beat or achieve quarter-on-quarter, year-over-year revenue growth, again, which is a testament to these recently published financials for our second quarter.

Thanks, again.

Thank you. And our next question comes from Elliot Wilbur from Raymond James. Your line is now open.

Thanks. Good afternoon. First question for Brian, maybe just following up on kind of your commentary around cogs and inventory. Specifically thinking about the cogs line, always a lot of questions when you have negative margins. But just kind of think about how this line progresses or changes going forward as your top line increases. I guess if I look at second quarter revenue went up sequentially, around $1.8 million, cogs would have around $1 million. Is that how we're going to see things progress going forward? Basically, you're going to start to see 40% to 50% incremental margin through incremental revenue dollar on top of sort of the average cogs run rate we seen in the last quarter, just trying to figure out how exactly that number is going to trend as sales continue to accelerate?

Sure, thanks for the question, Elliott. So a couple things with cogs. When we achieve the $250 million run rate from a revenue standpoint in 2024, will essentially be at very close to full capacity production 90% to 100% capacity production producing that much product to get to that level. We're certainly not there yet. So we currently do have some unabsorbed manufacturing overhead costs that are still in the cost of product revenue line but as we continue to scale up operations, most importantly, as I mentioned about the 4400 scale up. As we continue to produce more BIVIGAM at the 4400 liter, more products, more margins are going to be improved to essentially generate those additional revenues. So when you think about the, really the main variable cost, going from a 2200 to a 4400 liter batch is just the raw material, not a very small modest amount of additional direct labor, but the overhead is essentially the same. So revenues, to put it simplistically, will be outpacing the overall cogs number in the not too distant future. Number one, because of the 4400 liter batches we're producing now that we're going to be releasing next year. Number two, the second half of this year, we have the 4400 liter batches, the conformance batches that we manufactured previously, once we got the FDA approval to just this past April a couple months ago, we're hoping to be selling, we hope to expect to be selling those batches in the second half of this year, so you will see margins continue to improve there. And again, just thinking about the lifecycle timeframe of 4400 liter production, it will take seven to 12 months. So we're going to start realizing some of those synergies, cost efficiencies, margin improvement as we've seen this quarter from the previous quarter. We expect those trends to continue the second half of this year and certainly accelerating into the first half of 2022.

I also think Elliott, if I can just add something else to take note of is that with any drug manufacturing, and I think in the comments, you know, Brian and I have both said that producing biologics is certainly complicated complex and not the easiest thing in the world. But there's always the possibility of some onetime one off charges and expenses. And they're unpredictable. And these are just things that, it's hard for us to guide using analyst and others, but I think that as we continue to produce more, the effects of maybe some of these discrepancies and one off occurrences could be less meaningful. Additionally, I think with the pandemic and certain issues regarding supply chain, raw material, disposables, consumables, testing, reagents, et cetera, other supplies, there are some costs, shipping charges one time expensive. I mean, honestly, I try don't have to really say these types of things. But you need to get a truck delivered with ethanol, but there's no driver, but you may have to offer the driver an extra $5000 grand to get in the truck to come down here to drive it to you. I mean, there are there are some very interesting things that are going on across industries with the supply chain that you know, they're just unpredictable right now. But to Brian's point, we expect revenues to continue to increase the product mix is certainly improving the acceptance of our hyperimmune is growing. And I think that, you know, as we've reported previously the margins on our hyperimmune products are typically call it 60% to 80% gross margin product. The more of those that we can sell, the better our overall cogs are going to be as an operating business unit in the bio manufacturing segment.

Thanks, Adam, if I can ask you a question is well, I mean, historically, Nabi is been a relatively steady product, but can you speak to any factors that might be driving marginally increased demand there? And similar question on ASCENIV, what may be driving the incremental volume there? Is it just overall demand for IDIG and then there's capacity constraint or is it more specifically tied to the emergence or the increase in RSV infections that we've been hearing about in the media?

Sure, with respect to [indiscernible] flows across the market. Again, we're not, I'm not hearing about any of our competitors having supply chain issues, but you never know what's occurring there. You know, we've got a pretty competitive price in the marketplace. I know that some of our competitors across our immunoglobulin portfolio, and there immunoglobulin portfolio they've taken some price increases. We feel very good about our pricing across products and we've recently announced a price increase that's going to take effect, I think, in the next week or so, on NABI, and we've got a competitive price. We've got a good product, as you know it's got a brand name out there. You know, there are some other factors I think. People are still hunkering down and cohabitation with other people but hepatitis certainly is a labeled indicated use for the drug. And, quite frankly, I think, awareness, maybe some of the marketing programs and some of the campaigns that we spent money on and invested on, I like to think that that they're working. With respect to ASCENIV, as you know, what differentiates ASCENIV from BIVIGAM and from other immunoglobulins on the market is our patented method of how we identify and screen plasma donors. And we collect from donors who are tested to have high levels of neutralizing antibodies to respiratory syncytial virus. And our patent state that these donors also seem to have high antibody levels to a panel of other respiratory viral pathogens. And, I cannot explain it. It defies everything that I've ever learned throughout my 25 year career in the RSV, immune globulin space. But global awareness of RSV is heightened. The CDC put out some guidelines a couple of months ago, at least for the southeast region of the United States.…

Thanks. And one last question. If I may, can you just talk a little bit about the 100 ml, while offering how important that is to expanding the franchise? I know it's available in limited quantities currently. But when do you have so you know when you're kind of at a full run rate with respect to that presentation, just curious if that just allows you to expand business with existing customers, does it open new doors just because that's sort of the preferred offering in the market? Just strategically, what does that mean in terms of growing the franchise going forward?

You know, it's first of all, it's something all of our competitors have. We have been commercial with a 5 gram, 50 ml vial size. When I was a younger man and I was selling IDIG. When you only have 5 gram vials to sell, it was a lot harder than having 10s or 20s. If you think about it, you know, the product is dose typically immune globulin is dosed at 500 milligrams per kg of body weight. So you take a 70 kilogram adult, you're talking roughly 30 to 40 grams is a dose. So in a hospital pharmacist or when a homecare pharmacist is preparing the immune globulin for infusion, typically, you will either pull it into a type of infusion transfer bag, or you're going to hang each individual vial, would you rather hang three vials or pull three vials? Or would you rather pull seven vials, I mean, it's a factor of labor costs. And you know, when you're looking at our customer, and our customer really are the home care companies and the hospitals that are the place where patients are infusing the products, they look at this, like they're a manufacturing organization also, and their time is worth money and they look at these things. So, having the 100 ml vial certainly helps us to be more competitive, especially in the higher volume, higher throughput, specialty pharmacies, home care organizations and hospitals where time is extremely valuable. I think that it also demonstrates our commitment to improving product quality, and the diversity of our available offerings. You know, these are all things and commercial manufacturing business does. So I think when you factor all this together, we don't have plans in the short term for additional vial sizes, we plan to offer for…

Thank you. Adam.

And thank you. And with that, ladies and gentlemen, we are currently out of time, I'd like to turn the call back Adam for additional closing remark.

Thanks, everybody. Hope you found the call interesting again, to the ADMA team that's listening. Truly proud of you. You guys doing a great job. Let's keep helping the patients that are counting on us to our shareholders again, we appreciate your continued support and your investment in this business allows us to do the great work and help you know our fellow citizens. So thanks again thanks for dialing into the call, donate plasma, help save lives. And we wish you all a healthy and safe evening. Take care.

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