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

Welcome, everyone, and thank you for joining us this afternoon to discuss ADMA Biologics' financial results for the second quarter 2023 and recent corporate updates. I am joined today by Adam Grossman, President and Chief Executive Officer; and Brian Lenz, Executive Vice President, Chief Financial Officer and General Manager of Adma Biocenters. During today's call, Adam will provide some introductory comments and provide an update on corporate progress, and then Brian will provide an overview of the company's second quarter 2023 financial results. Finally, Adam will then provide some brief summary remarks before opening up the call for questions. Earlier today, we issued a press release detailing the second quarter 2023 financial results and summarize certain achievements in recent corporate updates. This release is available on our website at www.admabiologics.com. Before we begin our formal comments, I'll remind you that we will be making forward-looking assertions during today's call that represent the company's intentions, expectations or beliefs concerning future events, which constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. All forward-looking statements are subject to factors, risks and uncertainties such as those detailed in today's press release announcing this call as well as in our filings with the SEC, which may cause actual results to differ materially from the results expressed or implied by such statements. In addition, any forward-looking statements represent our views only as of the date of this call and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update any such statements, except as required by the federal securities laws. We refer you to the disclosure notice section in our earnings release we issued today in the Risk Factors section of our 2022 annual report on Form 10-K for the year ended December 31, 2022, as well as our quarterly report on Form 10-Q for the quarter ended June 30, 2023, for a discussion of important factors that could cause actual results to differ materially from these forward-looking statements. Please note that the discussion on today's call includes certain non-GAAP financial measures, including adjusted EBITDA and adjusted net loss. A reconciliation of these non-GAAP financial measures to the nearest comparable GAAP metric is available in our earnings release. With that said, I would now like to turn the call over to Adam Grossman. Adam?

Thank you, Skyler. We're proud to report that we continue to rapidly grow our adjusted EBITDA base, which during the second quarter totaled $6.4 million, representing 160% sequential growth compared to the first quarter of 2023. This accomplishment was facilitated by an impressive 77% year-over-year increase in total revenues. Which reached $60.1 million in the second quarter. This robust revenue growth has resulted in meaningful operating leverage, underpinned by continued gross profit growth and disciplined management of operating expenditures. Based on the strong momentum established year-to-date, we are now raising fiscal year 2023 total revenue guidance to more than $240 million, upwardly revised from the $220 million previously provided. Additionally, we remain confident in sustaining our growth trajectory in adjusted EBITDA throughout the remainder of 2023 and beyond. The encouraging business trends and compelling forward-looking indicators have enabled ADMA to increase fiscal year 2024 and fiscal year 2025 total revenue guidance to at least $275 million and $325 million, respectively, and otherwise reiterate confidence in meeting or exceeding all profitability targets. In our view, ADMA's year-to-date financial results, combined with the increased financial guidance, place ADMA among only a select few stand-alone biopharma companies with comparable revenue growth profiles and adjusted EBITDA generation. We believe this financial profile, coupled with ADMAs unique asset scarcity value, position the company amongst an elite biopharma peer group. We believe our continued success in the growing USD 10 billion immunoglobulin end market is attributable to our innovative business model, unique product portfolio, targeted medical education efforts and most importantly, our core focus on treating underserved immune deficient patient populations. Since launching commercially, ADMA has been unwavering in its specialized focus on the primary immune deficient patient population. And we believe it is this concentration that has enabled ADMA to maintain its position as the…

Thank you Adam. We issued a press release earlier today outlining our second quarter 2023 financial results, and we will be also issuing our second quarter 10-Q later this afternoon, which we would encourage you to read in conjunction with our comments and discussion points we will make during today's call. I will now discuss some of the key highlights from the second quarter. As Adam mentioned earlier, Total revenues for the 3 months ended June 30, 2023, were approximately $60.1 million as compared to $33.9 million during the 3 months ended June 30, 2022. This represents an increase of $26.2 million or approximately 77%. The increase is attributed to our higher sales of our immunoglobulin products driven by increased physician, payer and patient acceptance and utilization as well as expansion of our customer base. The growth in product revenues during the quarter was partially offset by a $1.4 million decrease in third-party plasma sales from our BioCenters business segment, and this was consistent with our expectations in the context of fulfilling our long-term plasma supply agreement during the first quarter of 2023. Our gross profit for the 3 months ended June 30, 2023, was $16.7 million as compared to $7.8 million for the same period of a year ago, and this represents an increase of $8.9 million. As a result of this increase, ADMA achieved a gross margin of 27.8% in the second quarter of 2023 as compared to 22.9% in the second quarter of 2022. Importantly, accounting for an estimated $2.1 million impact on a second quarter cost of goods sold pertaining to an IT disruption, which the company took responsive steps to rapidly remediate and normal course production and operations have resumed across our business units, ADMA estimates second quarter 2023 contemplated gross margin would have been…

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

[Operator Instructions]. Our first question comes from Gary Nachman with Raymond James.

Good afternoon, nice quarter and raised guidance.No, it's good to be here. So Adam, maybe you could talk more about the uptake you're seeing with ASCENIV, Specifically, what types of patients are getting put on it -- and what's the reimbursement status given the higher price point for the product? And then also the persistence you're seeing for both the patients and the physicians that you mentioned -- so what portion of the revenue is currently ASCENIV versus BIVIGAM? And then what are some of your initiatives to expand that uptake with ASCENIV even further?

Thank you for the great questions. There's a lot there. So I hope I touch on everything. What I can say to answer one of your -- I think your third question first, roughly about 1/3 of the revenue is coming from our higher-margin products. We're seeing sequential growth quarter-over-quarter. We're seeing increased uptake. We tried in the prepared remarks in the press release to emphasize because we've been getting this question a lot from analysts, from investors who are these patients. And we're really trying very hard to delineate that these are primary immune-deficient patients. These are people that are diagnosed with 1 or more forms of immune deficiency. Some patients may even be medically immune compromised. And these patients have co-morbidities. They have other risk factors. They have T cell issues. They have bronchiectasis. They have an increased risk of respiratory viral infections. These are patients who are typically on standard immunoglobulin therapy, but don't seem to do that well. They continue to have problems. They continue to miss days of work and school. The long story short is that since ASCENIV, I should say, prior to ASCENIV, there was no alternative for these patients. It was just standard IVIg, switching from 1 brand to another. So ASCENIV really offers the first type of product where it's made in a unique way that's protected by our patents. We use plasma collected from donors that are tested to have high tires to certain respiratory viral pathogens and then we blend this plasma making a product that has a differentiated antibody profile. What I can tell you, Gary, is that the data that's out there in the public domain shows that we are seeing improved outcomes in these patients. Patients are durable. They're staying on therapy for multiple years at…

Just a quick follow-up. So when you consider the raised guidance for this year and then for '24 and '25, what are you factoring in the mix in terms of ASCENIV and BIVIGAM in that guidance? Is it 1/3 and 2/3. And then just put some context around the magnitude of potential upside from a greater mix shift to ASCENIV and also the label expansion opportunities and then further yield enhancement. So are you limited in any way with your plasma supply, if you can achieve some of those other targets?

Great questions also, Gary. And -- what we've always said historically is that our higher-margin products, ASCENIV and Nabi-HB. Historically, we said 70-30 split between BIVIGAM being the primary revenue driver and ASCENIV and Nabi being the smaller share. We're seeing increased utilization of ASCENIV. And what Brian and I have said in the last couple of calls is that we're seeing a move closer to that 65-35 split depending upon the quarter. We're growing on all sides. So it's not like fixed. But what I can tell you here is that is there a potential to get to a 60-40, maybe even 50-50 split in the out years, there is certainly a potential. Roughly about 10% of plasma donors have the antibody profile that we're looking for, for the plasma that's used as the starting material for ASCENIV batches. But being that we've got 10 collection centers open and collecting plasma. What I can tell you is that it's not just 10% of the plasma that we're collecting. We've got the power and the control to choose which people come in to donate plasma that day. And we may run special bonuses for donors that have the antibody profile for ASCENIV, we may run promotions where we pay them more. And what I can say is that the plasma that we're collecting for ASCENIV, it's more than 10% of our overall collections. We're implementing strategies in-house, which I've talked about on previous calls around accelerating testing, bringing some of the testing in-house, which will accelerate turnaround time for identifying these donors as well as reducing costs, but we're not paying our third-party labs to do this testing. That ultimately is going to lower our cost of goods and increase margins. So we've always said that ASCENIV is roughly an…

Our next question comes from Anthony Petrone with Mizuho.

Congrats here on another great quarter, really kind of just looking at the history here now, I think 6 quarters of [indiscernible] and raise. So it's great to see and congratulations to the team. Maybe, Adam, we hosted an immunologist call a few weeks ago just exploring the use case for ASCENIV, and a few interesting data points come out of that call. One is that, in particular, in this individual's practice, they are actually seeing benefits in these patients where they were "refractory to traditional" immunoglobulin. So maybe from the company standpoint and anecdotally, when you think about these complex immune deficient patients, that are susceptible to follow on respiratory infections. They're complex. They're not responding to immunoglobulins. What are you hearing from a broader set of your immunologists that are treating these patients. So that would be the first question. And the second question is 1 of the data points that came out of that call is perhaps there needs to be more physician education around the benefits of ASCENIV in order to unlock really having this product reach more of these complex patients. And so what is the sort of go-to-market strategy here now that ASCENIV is sort of becoming a go-to solution here? Are you increasing the sales efforts to reach more of these patients? And I have a follow-up for Brian.

Thanks, Anthony. Great question. I appreciate your continued support. The easiest answer I can give you is that patients are doing very well on ASCENIV. I mean that's been the story since the beginning. And again, I think building on that grassroots effort, 1 patient at a time, the durability of the drug, you see the increased revenues, you see the way that the financial metrics are playing out for the business. That doesn't happen when you don't have a product that isn't doing what you promise, and that's improving outcomes for these patients, full stop. I think that parlaying it into the second part of your question, what's next, what's changing? We have affected lives. And to the ADMA staff, that's on the call and others that are close to the company. I mean we've all seen the e-mails. We've seen the e-mails from the patients. We've seen e-mails from the prescribers, even the conversation with some of the payers. To be candid, where yes, the drug costs more, but it costs more to collect this plasma. And it's hard to find these donors. And when we find them, we try to keep them. But -- we make the product in a very reliable, reproducible and consistent way. It's a product that is not as variable from an antibody profile perspective that you see with other immunoglobulins to these antibodies that are outside of what the FDA has in the CFR for IG around measles,polio and diptheria. And what I can tell you is that patient outcomes, patients are doing better. Something that we're moving towards, and I think you'll see maybe by the end of the year, maybe beginning of next year in our marketing, medical affairs, scientific communications group. We've got patients now who want to be…

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

Thanks, Anthony. So I'll just start off by saying, look, we we've got IP in our armamentarium. And when the time is right, we'll certainly let you know. But right now, we're laser-focused on market penetration, building the brand penetration and awareness of ASCENIV, maximizing yields, finding ways to unlock more value for little expense. That's what we're focused on here. I can tell you that the -- the focus here is just driving what we already have that's working. It's continuing to penetrate into the primary immune deficient and the secondary immune deficient markets and grow what we know is working. We're making more product than ever at the 4,400 liter scale. This year was the first year that we've made batches and we made a couple of batches so far. But we're working on budgets for next year. We're looking at the production plan, and it's going to be all 4,400 all the time. more plasma through this plant, getting unabsorbed down, making more drug, having more output and then you couple that with the yield enhancement strategies bringing more fill finish in-house. I mean these are ways that we're going to improve our margin profile beyond anything that you and I have ever talked about over drinks or otherwise, Anthony. And I'll tell you that I'm very excited, we are still in the early days here at ADMA and being able to raise guidance to now 325 or more. I never thought in a million years we would be here. When we took this plan over and they had the warning letter, I never in a million years thought that I'd have $60 million quarters. This plant under the prior management never generated more than $55 million in a year, and we're doing that in a quarter, and we're just beginning. So that's what's next for us. What's next is to keep doing what we're doing, do it better, do it more efficiently to the ADMA staff on the call, I told you I was going to say this on the call, and it's up to you to make it happen. But I think it's the early days, and you're going to start seeing cash flow as Mr. Wonderful likes to say very, very soon. I'll let Brian answer the question on the centers.

Sure. Thank you, Adam. So Anthony, regarding your question on the number of plasma centers, our centers are performing much better than expected. We're seeing -- we're very encouraged by the positive trends, momentum I'd say, we're seeing daily and weekly record day collections. We're also seeing cost per liter efficiencies in some areas, lower donor fees, as I mentioned, higher collections. We're really focused on labor and center efficiencies. We don't -- we're not looking at building any more than 10 centers. All 10 centers are built, all 10 centers are collecting. As you saw in July, we received FDA approval for our ninth center we feel certainly encouraged of getting our tenth center approved by year-end. And for us, it's all about plasma supply self-sufficiency. And those goals that we set for ourselves in the beginning of 2023, are certainly coming to fruition for the number of leaders that we're collecting and putting through the plant. And again, we're very pleased with how the center is start performing. And again, no further CapEx for the centers, no further build-outs. And we're in a place right now as we look forward to the revised guidance revenue numbers our plasma centers will be fully self-sufficient for us.

Our next question comes from Kristen Kluska with Cantor Fitzgerald.

Congratulations on another really solid quarter here. First question I have is maybe something I didn't really fully appreciate about the story is that the KOL community and treating physicians are a lot more tight in it than I expected. So just given that you've continued to showcase your data and findings and just the word of mouth around these positive case studies. I wanted to ask how much of the trading community you estimate is aware of the added benefits that ASCENIV is showing here? And then looking into the next 2 years or so, anything beyond your guidance that you're working on in terms of getting the word out more in terms of like conference appearances and you talked about these potential patient representatives as well.

Sure. Thank you, Kristen, very much. And I think you were at -- you may have been at CIS, if I were...

I was Yes.

So thanks for taking an interest there. But you see it, look, there's -- there's a handful of KOLs, if you will, that control a large part of the PI population. But we think that there is headroom. We think that there are certainly many more clinicians out there, many more prescribers that are just learning about. Something that I was just thinking about as you were talking, we've also started running print -- print ad campaigns, which is strange, right? This is the world of digital. My experience and what our market research tells us is that immunologists like to pick up the actual journal of Clinical Immunology and -- and a couple of other publications and they like to actually flip the paper. So we started running print ads. And I think that, that speaks to the fact that ASCENIV is starting to be recognized. It's a brand name that is synonymous with immune deficiencies. I think it's something that we've really worked hard at joining the name ADMA, the name ASCENIV with immune-deficient population. But I do feel very confident that there is a lot of headroom available for us in gaining more -- we think that there is a ton of penetration opportunities among the existing prescriber base. Remember, roughly about 10%, 20%, 30% of every prescriber's patient population has these co-morbidities. And as we get more data in the public domain, as we're publishing more data, as the pharmacoeconomic impact is starting to show even more benefits, we think that we're going to see existing growth at same-store institutions. We think that there are tremendous growth prospects with new prescribers new infusion companies, new and specialty pharmacies that we haven't yet tapped into. And I really do see upside there. I don't think it was your question, but asked about subcutaneous. And I'll just touch on that for a second. While we have no intention today to go for a subcu route of administration. I want to say that there was a publication from another immunologist, KOL, who on their own, did a study and they administered ASCENIV in the subcutaneous route. I believe that, that publication was at a European meeting, I don't recall which one, but I can get back to you on that. But what I can say is that I think that, that answers part of your question is that prescribers are learning about the drug, and they're starting to get more comfortable with the product and use it in novel ways. So we feel good that there's a lot of room for us to grow. Hopefully, that answers the question.

Yes, it does thanks. And then you noted with ASCENIV that you're not really having too many challenges, but I'm curious if you can comment on the trends the provider level in terms of -- is it pretty consistent on a provider basis? And then how do you work with those providers that ask you more questions, perhaps you're a little bit more on the hesitant side.

We've got a great market access team. We got a great patient assistance program. I mean the data is out there. I mean many IVIGs, I want to say getting the data, I said it so many times. I want to say 70%, 80% of all IG requires a prior authorization anyway, whether it's on label or evidence based. So it's not unheard of for the payers to require a whole bunch of information from the prescriber and the treater for the product. Again, in the right patient population with the right co-morbidities and risk factors, we're seeing payer acceptance of the product in the right patient type. If you ask for the product for a patient that doesn't need the product, they're not going to get it. The mix between public and private is about a 50-50 split, but the value proposition is resonating. Our coverage is quite encouraging actually. And I'll tell you at the end of the day, it's being used later in a patient's treatment journey, if you will. They failed 1, 2, 3, 4 different IVIGs. And after a payer has tried 4 different IVIGs, all their preferred products, the patient has been hospitalized. They keep getting bacterial pneumonia, they're suffering. -- they try ASCENIV. And we've never said -- you've never heard me say, ASCENIV is the best frontline therapy. I'm not going to say that because that's not what it's for. ASCENIV is the product after you failed everything else, and you have nowhere else to turn, come to us, we're going to save your life. We're going to improve your life. And that's what we're seeing. And I think that analysts, investors, some people are like that doesn't resonate, that doesn't compute to them, and that's fine. But not everybody has to…

Okay. Great. And I know you guys are reaching about 10 years since you IPO-ed so you should feel very proud about all the progress you've made to today. So congratulations on that.

We're still here, still live. With growing EBITDA and net income around the corner.

Ladies and gentlemen, this will conclude our question-and-answer portion of the call. I'd like to turn it back over to Adam now for additional closing remarks.

Thank you, everybody. Thanks for your interest, attention and time. I appreciate you dialing into the call. Again, I think we're still in the early innings. I think there's a lot of upside here, and we appreciate your continued support. Donate Plasma, help save lives visit admabiocenters.com. Do visit 1 of our 10 collection centers that may be near you and stay healthy and have a very great evening. We appreciate you.

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