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ADMA Biologics: Almost Ready To Run Between The Toes Of Giants

Simon Daly profile picture
Simon Daly


  • ADMA’s lead product candidate has generated very positive clinical data, and is positioned to meet a very high unmet medical need.
  • ADMA has acquired a specialised hyper-immune fractionation facility, without having to expend high upfront capital investment costs or pass a burdensome approval timeline. ADMA will be the first company in.
  • The burden of lifting the regulatory hold at the Boca facility is much lower than might be perceived by investors at present.

1. Introduction to the Investment Thesis

ADMA Biologics is a healthcare company that is based in Boca Raton, Florida. The company is aiming to commercialize a novel high-titer hyper-immune globulin product for the treatment of RSV and related respiratory viruses in immune compromised patients. ADMA listed as a public company in February 2013 (on the NASDAQ OTC market through a reverse merger).

The two main contentions of this positive investment thesis are; 1), the burden of lifting the regulatory hold at the Boca Raton facility, while being a significant challenge for management, should prove to be within reach; 2), The long-term potential of entering the plasma market as a small supplier of niche high-value hyperimmune products is a very attractive business proposition for ADMA. While it is unusual for large and strategically important fractionation facilities to experience regulatory issues, the overall regulatory landscape pertaining to plasma processing, fractionation and logistics is clearly defined by the relevant regulatory authorities.

ADMA has had three capital injections since it took control of the Boca facility. It obtained additional financing as part of the BTBU transaction, it refinanced its debt with Marathon Asset Management, and it raised $39.1m in additional equity. ADMA management is now confident that it will have sufficient cash resources to progress the company into the first half of 2018, in advance of key corporate milestones. ADMA's current cash burn rate is c.$3m to c.$3.5m per month, and the company ended Q3 2017 with c.$13m in cash. Revenues for the nine months of 2017 were $10.8m. Through the transaction agreement, ADMA secured a ten-year plasma supply agreement with Biotest AG (and/or its successors), along with a three-year post-closing agreement, for the purchase of RSV plasma from the two collection centers, at a price equal to cost plus 5% (excl-inflation). Biotest AG is currently engaged

This article was written by

Simon Daly profile picture
Value investing

Analyst’s Disclosure: I am/we are long ADMA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Important: Disclaimer No aspect of this research piece is intended to be relied on as investment advice. The content is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you have read in this report and wish to rely upon, whether for the purpose of making an investment decision or otherwise.

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Comments (7)

Very detailed analysis. Ready to fly...
Nice job Simon.
You covered ADMA's complete recent scenario. And thanks for interesting plasma market and industry information. Pretty much in line with ADMA's latest webcast on Monday.
Btw.. ADMA's CEO was asked on his webcast about his estimate on RI-002 future revenues.. He said that hyper-immune products like Nabi-HB were sold for $500-700 per gram. He also said that the 400,000 liter capacity fractionation facility was generating 80-90 mill./year prior to the FDA's warning letter. And that with ADMA as is today, they could obviously generate considerably more in revenue.
Sounds good. I keep my shares :D
JJPP profile picture
A ton of useful and great information however a bit too long for the average reader/investor. May have been better broken up into 2/3 pieces. Thanks for taking the time to put this together. Long ADMA
Faria Capital Management profile picture
"ADMA Biologics is a sub-$100m capitalization healthcare company"

Might want to double check your math.
moderena profile picture
Wow, quite a detailed report. I bought this stock right before they got the CRL. As you state in your article the CRL was not issued on the drug but the facility making the drug. You also state that the FDA did not demand a capital investment but employee training and procedures at the plant needed to be improved.

Why does it take over a year to implement improved training and procedures? The time that it has taken to address the issues in the CRL has seemed painfully slow.

Nice report - thanks.
Yes, this has been disconcertingly slow.... but holding on may add in
Simon Daly profile picture
The full version of this research piece can be read on my blog at :http://bit.ly/2FYaIS5
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