ADMA Biologics - Growing Revenues At 20% CAGR On Path To Profitability And Higher Valuations

Summary

• ADMA will report $13.9M 4Q 2020 revenues (16% Y/Y growth) and FY 2020 about $42.2M (up 44% Y/Y). Both revenues highest in ADMA's history will be reported on March 11.
• ADMA expects Q/Q and Y/Y revenue growth across 2021 and achieving profitability with revenues of $250M or greater by 2024. This growth rate is double the sector's projected growth.
• ADMA might be an acquisiton target because of ongoing industry consolidation and high growth rate. ADMA enacted a poison pill likely to get a higher valuation and more favorable terms.
• ADMA anticipates 2021 will be another year of achieving value-creating milestones, including executing on the ongoing production ramp up and inventory build to support annual revenue generation in excess of $250 million by 2024 which will provide for substantial profitability.
• On December 9, 2020 ADMA announced that it had amended its existing term loan to add an additional $15M to its credit facility with Perceptive Advisors. This action reduces the likelihood of dilutive financing in the near future. The company had $59.7M cash at September 2020. Five analysts have an $8.4/share price target on this $2.6/share stock.

Discussion

I believe most of us will agree that the overall market valuation has gone way ahead of itself and a significant correction could happen any day. This will be most significant for EV, tech, and some biotechs with small and nano caps being the hardest hit. I have seen flashes of it in the last two weeks with significant corrections on some individual stocks that I follow. Most biotechs have set their 52-week highs recently and many of them by a wide margin. Many of them are destined to fall significantly once a sustained correction begins to take hold.  So I am starting to shift from high volatility stocks to those offering long term, sustained growth. One of them is ADMA Biologics which is currently trading at $2.6 with an $8.4/share price target and a BUY consensus average from 5 analysts.

On January 19, 2021, ADMA Biologics provided a bullish unaudited preliminary Q4 2020 update. The company will report 4Q and FY 2020 on March 11, 2021. 

Highlights:

• The company expects to report $13.9M 4Q 2020 revenues which equates to about a 16% Y/Y growth. FY 2020 total revenues will be about $42.2M. This corresponds to a 44% Y/Y growth rate. Both, the quarterly and yearly revevenues to be reported on March 11, 2020are the highest in ADMA's history.
• The company expects Q/Q and Y/Y revenue growth across 2021 and achieving profitability with peak revenues of $250M or greater by 2024.
• ADMA plans to complete supply chain enhancements and capacity expansion programs as early as mid-2021.
• Post FDA approval, its newly installed fill-finish machine as well as the IVIG manufacturing scale increase should enable ADMA to realize significant operating efficiencies and improved gross margins beginning potentially as early as mid-2021.
• By 2024, ADMA's plasma collection center network will achieve the goal of building up to 10 plasma collection centers in the U.S.
• During 2021, ADMA expects two regulatory approval decisions for the company's Knoxville (DONE - Febbruary 1, 2021) and Maryville, TN plasma collection centers; it also anticipates filing BLAs for two additional plasma collection centers during 2021. 

President & CEO Adam Grossman commented :

“We are extremely pleased with our preliminary record fourth quarter and full year 2020 revenue results. ADMA’s continued execution through COVID-19 headwinds is a testament to our organization’s unwavering commitment to provide patients with products to ensure the continuity of care. Our 2020 full year operating results, we believe, will ultimately unlock significant value for ADMA shareholders."

“2021 is poised to be a transformative year for ADMA as we continue to execute on our mission of providing specialty immune globulin products to patients and building a highly profitable, end-to-end biologics manufacturing company.”

Mr. Grossman continued,

“Throughout 2021 and beyond, we anticipate delivering ongoing quarter-over-quarter revenue growth. We also anticipate realizing robust operating efficiencies as early as mid-2021, pending United States Food and Drug Administration (FDA) decisions regarding ADMA’s submissions for its supply chain enhancement initiatives, most notably consisting of our Intravenous Immune Globulin (IVIG) production scale increase and for our in-house aseptic fill-finish production line. Additionally, we expect to potentially obtain FDA approvals in 2021 for two new plasma collection centers located in Knoxville and Maryville, TN (DONE February 1, 2021) as well as file Biologics License Applications (BLAs) for an additional two plasma collection centers."

"COVID-19 notwithstanding, ADMA remained on track in 2020 and achieved all its stated 2020 strategic and operating objectives. We anticipate 2021 will be another year of achieving value-creating milestones, including executing on the ongoing production ramp up and inventory build to support annual revenue generation in excess of $250 million by 2024 which will provide for substantial profitability.”

About ADMA Biologics

According to its website, ADMA Biologics (ADMA) is a vertically-integrated end-to-end commercial biopharmaceutical company focused on develping, manufacturing, and marketing specialty plasma-derived products and human immune globulins targeted to niche patient populations for the treatment and prevention of certain infectious diseases and management of immune compromised patient populations who suffer from an underlying immune deficiency disease, or who may be immune compromised for other medical reasons. 

ADMA currently manufactures and markets three FDA-approved plasma-derived biologics for the treatment of immune deficiencies and the prevention of certain infectious diseases:

• ASCENIV™ (immune globulin intravenous, human – slra 10% liquid) for the treatment of primary humoral immunodeficiency (PI);
• BIVIGAM^® (immune globulin intravenous, human) for the treatment of PI;
• NABI-HB^® (hepatitis B immune globulin, human) to provide enhanced immunity against hepatitis B.

On January 26, 2021, the company announced that 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) will become effective April 1, 2021 and will replace the currently issued C-code for ASCENIV (C9072), which can continue to be utilized in the interim for reimbursement purposes. According to the press release: "The Company will retain transitional pass-through status granted for ASCENIV from CMS."

The press release further states:

"Permanent J-codes are used by commercial insurers and government payers to standardize claims submissions and reimbursements for medications, such as ASCENIV, that are administered by a healthcare professional in an outpatient setting. While not a guarantee of payment, these codes enable timely claims adjudication and processing, and consequently facilitate a simplified pathway to prescription, administration and ultimately patient utilization".

Simply put, by having a J-code, that streamlines the process, one can use one code across all payers for reimbursement. Therefore, the simpler the system is to get reimbursed, the better it is for patients because it allows for smoother utilization and fewer billing errors that may impact patients. The benefits for providers like ADMA are even more significant.

ADMA President & CEO Adam Grossman commented:

“The issuance of this product-specific J-code by CMS for ASCENIV is a significant milestone in the product’s commercial launch. This J-code will provide for a streamlined and permanent reimbursement process in all outpatient treatment settings.”

"The J-code implementation will accelerate and expand patient access to ASCENIV, and as a result, increases our confidence in the ongoing commercial roll-out, in addition to the product’s potential contribution to our overall 2024 revenue target of $250 million or more.”

Permanent J-codes are used by commercial insurers and government payers to standardize claims submissions and reimbursements for medications, such as ASCENIV, that are administered by a healthcare professional in an outpatient setting. While not a guarantee of payment, these codes enable timely claims adjudication and processing, and consequently facilitate a simplified pathway to prescription, administration and ultimately patient utilization.

The growth of ASCENIV could be exponential in the years to come as the company has set its eyes on additional potentially multi-billion dollar indications through  label expansions as seen in the following slide:

New Developments COVID-19 Related

1 - ImmunoRank Will Be  Huge For ADMA

ADMA Biological announced on September 3, 2020 the launch of COVID-19 ImmunoRank Neutralization MICRO-ELISA. This is a proprietary, fully-validated ELISA assay for the detection of SARS-CoV-2 neutralizing antibodies in plasma.

According to the press release:

"ImmunoRank™ was developed in collaboration with Leinco Technologies, Inc. (“Leinco”). ImmunoRank is intended for use as an aid to identify individuals who produce an adaptive immune response to SARS-CoV-2, indicating recent or prior infection, and specifically for the detection of circulating SARS-CoV-2 neutralizing antibodies in human plasma of all immune globulin classes."

"ImmunoRank is designed to test up to 90 samples per test kit with 99.8% specificity. The assay procedure takes approximately 80 minutes. An Emergency Use Authorization (EUA) submission is currently being prepared for review and potential approval by the U.S. Food and Drug Administration. We will report on material regulatory and commercial developments as we progress. ADMA has submitted patents for ImmunoRank in the U.S. and certain foreign markets. Both ADMA and Leinco are named as co-inventors on the patents."

ADMA President & CEO Adam Grossman commented

“We are confident the ImmunoRank assay will be an efficient and effective tool for selecting high titer convalescent plasma units containing neutralizing antibodies to SARS-CoV-2 both for the treatment of COVID-19 patients as well as identifying plasma that can be used for development and production of hyperimmune globulins to treat COVID-19."

“Current screening methods to identify circulating SARS-CoV-2 neutralizing antibodies are labor and cost intensive and take multiple days to complete. This assay can be run in approximately 80 minutes, resulting in numerous tests per day, and can be performed at a fraction of the cost of other, more laborious assays. We believe this proprietary assay will result in important potential product and business development opportunities as we continue to seek out meaningful ways to help patients battling COVID-19.”

Under the terms of the collaboration agreement between ADMA and Leinco, ADMA has the right to use, market and commercialize ImmunoRank for the screening and selection of human plasma units or plasma pools containing SARS-CoV-2 neutralizing antibodies, for manufacturing products such as plasma proteins for therapeutic use, including but not limited to producing intravenous immunoglobulins (“IVIG”) or hyperimmune globulin products, for the screening of convalescent plasma or vaccinated plasma donors, as well as combining these products with SARS-CoV-2 neutralizing monoclonal antibodies. ADMA also has the rights for commercializing ImmunoRank test kits for use by plasma donation centers to screen donors for neutralizing antibodies to SARS-CoV-2. Leinco will be responsible for manufacturing ImmunoRank and has the right to market and sell the assay for all other potential markets, other than those reserved exclusively to ADMA.

ADMA President & CEO Adam Grossman commented during the company's 3Q 2020 conference call

"With respect to our ongoing COVID-19 development efforts, we continue to work with our development partner towards a regulatory submission and potential EUA for ImmunoRank, a proprietary antibody assay that we believe if approved has the potential to provide faster, simpler, and a more cost effective way to identify SARS-CoV-2 high titer convalescent plasma for using both in treating COVID-19 patients, as well as for creating COVID-19 hyperimmune globulins."

On September 29, 2020, partner Leinco Technologies announced that it had launched their ImmunoRank Neutralization MICRO-ELISA for COVID-19. The press release stated:

"Leinco Technologies in collaboration with ADMA Biologics has developed a proprietary, fully validated assay termed COVID-19 ImmunoRank™ Neutralization MICRO-ELISA test. This standard 96-well ELISA based assay is a game changer for evaluating convalescent plasma, antibody therapies and determining the effectiveness of vaccines for COVID-19."

Below is a picture that Leico posted on the press release:

In addition of potentially becoming a key test during the implementation of convalescent plasma programs, ImmunoRank may potentially be used for the screening of people prior to vaccination, to avoid vaccinating individuals who already have a circulating antibody response; individuals who have doubts about the vaccine may choose this path. The test can also be used to prove further that an individual had previously had COVID-19 and is now assumed immune, and can also be used by governments to manage the prevalence of COVID-19 immunity in the population. Additionally, the test can be used to monitor patients serological response in the weeks and months following vaccination, as their immune system builds an antibody response to the virus. in summary, with the onset of vaccinations, the use of antibody testing such as ImmunoRank will be much more prevalent.

2 - Ever heard of Convalescent Plasma as a therapy for COVID-19?.

I am sure you have as former President Donald Trump bullied the FDA to grant convalescent plasma Emergency Use Authorization on August 23, 2020. The FDA press release stated that it has authorized the use of blood plasma from patients who have recovered from Covid-19 as a treatment for the disease. I recall that President Trump’s press secretary heralded the decision as a “major therapeutic breakthrough.” 

On February 4, 2021, the FDA amended the convalescent plasma EUA to authorize only the use of high titer COVID-19 convalescent plasma, for the treatment of hospitalized patients with COVID-19, early in the disease course.

Convalescent plasma therapy, to treat patients suffering from COVID 19 is a leading trend in the plasma therapy market. Convalescent plasma is the plasma extracted from the individuals who have been cured of a particular viral infection, as they have antibodies that protect and make them immune to that particular organism. The convalescent plasma is transfused to the patient who is suffering from the viral infection to neutralize the viral infection and induce the active immune response to cure the infection. Convalescent plasma therapy is found to be a safe treatment to cure the patients infected with the coronavirus.

For most people in emerging markets convalescent plasma therapy is the preferred way of survival following COVID-19 exposure. Also, a large percentage of the population in those countries are afraid of vaccine side effects and would not consider them. Worse yet, many of those countries are governed by corrupt people and the money allocated for vaccines are going straight into foreign bank accounts. Finaly, few of those countries have the infrastructure to store and deploy vaccines where needed. In Boilivia recently, vaccines were delivered from a central location to several cities using refrigerated trucks designed to ship frozen chicken. It is unlikely that those vaccines were effective when they reached their destination because of the significantly lower temperatures required for transportation and storage. 

The global plasma therapy market is expected to grow from $187.67M in 2019 to $246.95M in 2020 at a compound annual growth rate (OTC:CAGR) of 31.6%. The growth is mainly attributed to the COVID-19 outbreak and the urgent need to treat a growing number of cases. The use of convalescent plasma collected from individuals who have recovered from COVID-19 is one investigational treatment being explored for COVID-19. The market is then expected to stabilize and grow at a CAGR of 5.7% to reach 291.6 million in 2023.

Globally, convalescent plasma is among a host of potential therapeutics that have been undergoing testing in clinical trials. The hope is that infusions of antibody-rich plasma from those who have recovered from Covid-19 can be injected into ill patients, kickstarting their immune system and allowing them to fight off the virus until they can generate their own antibodies.

Developing a hyperimmune will require plasma donation from many individuals who have fully recovered from COVID-19, and whose blood contains antibodies that can fight the novel coronavirus. Once collected, the “convalescent” plasma would then be transported to manufacturing facilities (ADMA and others) where it undergoes proprietary processing, including effective virus inactivation and removal processes, and then is purified into the product. 

ADMA is one of the members of the COVIg-19 Plasma Alliance (it's not a typo, Ig stands for Immnunoglobulin) which includes Biotest, BPL, CSL Behring, LFB, Octapharma, Takeda, BioPharma Plasma, GC Pharma, Liminal BioSciences, and Sanquin. The Bill & Melinda Gates Foundation is providing advisory support. Microsoft is providing technology including the Alliance website and the Plasma Bot for donor recruitment. The Global Plasma Alliance was announced on April 6, 2020 and boasted to begin immediately with the investigational development of one, unbranded anti-SARS-CoV-2 polyclonal hyperimmune immunoglobulin medicine with the potential to treat individuals with serious complications from COVID-19. 

Expanding Operations and Partnerships to Fuel Growth

To get from $40M in 2020 to $240M in 2024 revenues, the company will have to increase capacity and logistical capabilities significantly going forward. By all indications the company is doing just that to the extent that CEO Grossman suggested that the company is ahead of schedule in this regard.

Recall that in the company's 4Q 2020 pre-announcement ADMA President & CEO Adam Grossman commented:

“Throughout 2021 and beyond, we anticipate delivering ongoing quarter-over-quarter revenue growth. We also anticipate realizing robust operating efficiencies as early as mid-2021, pending United States Food and Drug Administration (FDA) decisions regarding ADMA’s submissions for its supply chain enhancement initiatives, most notably consisting of our Intravenous Immune Globulin (IVIG) production scale increase and for our in-house aseptic fill-finish production line. Additionally, we expect to potentially obtain FDA approvals in 2021 for two new plasma collection centers located in Knoxville and Maryville, TN (DONE February 1, 2021) as well as file Biologics License Applications (BLAs) for an additional two plasma collection centers."

"We anticipate 2021 will be another year of achieving value-creating milestones, including executing on the ongoing production ramp up and inventory build to support annual revenue generation in excess of $250 million by 2024 which will provide for substantial profitability.”

ADMA executed on all of its 2020 strategic objectives, including:

• "Navigated COVID-19 operating headwinds evidenced by preliminary total revenues of approximately $42.2 million generated for the first full calendar year of commercialization, in addition to significantly building inventory balances throughout the year, establishing a solid basis for continued quarter-over-quarter revenue growth."
• "Expanded ADMA BioCenters’ plasma collection center network on schedule with the construction of two new collection centers which are currently operational and collecting plasma, as well as initiated the establishment of three additional collection centers. The Company currently has six plasma collection centers under its corporate umbrella at various stages of approval and development."
• "Refinanced ADMA’s senior secured term loan with Perceptive Advisors, which among other things, consolidated ADMA’s long term debt and provided for a two year extension of the interest-only period through March 2024, which we believe will allow ADMA to reach profitability prior to maturity. As part of the refinancing transaction, the Company negotiated a $1 million principal reduction to the payoff of ADMA’s subordinated debt facility prior to maturity without any prepayment penalty."
• "Advanced supply chain enhancements and capacity expansion initiatives in-line with Company provided timelines and maintained anticipated regulatory decisions and FDA interactions."
• "Expanded the Company’s IP portfolio with new patents and developed the ImmunoRank™ Neutralization MICRO-ELISA to detect the presence and levels of COVID-19 neutralizing antibodies."
• "Entered into a manufacturing and supply agreement to produce and sell plasma-derived intermediate fractions which is expected to contribute $10-20 million in revenues at full scale."
• "Hosted an exclusive educational event at IDWeek 2020 on respiratory viral infections and novel treatment modalities, as well as presented new data on the preparation of a hyperimmune globulin for the prevention and treatment of Streptococcus pneumonia in an on-demand poster session."

ADMA is focused on the following key strategic priorities in 2021:

• "Generate ongoing quarter-over-quarter and year-over-year revenue growth throughout 2021 and beyond as the Company progresses towards achieving profitability with peak revenues of $250 million or greater by 2024."
• "Continue building ADMA’s inventory balance to support anticipated ongoing revenue growth and solidify ADMA’s position as a reliable supplier for the growing U.S. immune globulin marketplace ultimately ensuring the continuity of immune globulin supply for our patients and customers."
• "Complete certain supply chain enhancements and capacity expansion programs as early as mid-2021. Once FDA approved, the Company’s newly installed fill-finish machine as well as the IVIG manufacturing scale increase should allow ADMA to realize significant operating efficiencies and improved gross margins beginning potentially as early as mid-2021. These projects will ultimately position the Company to be fully vertically integrated with in-house control over the Company’s most critical manufacturing functions."
• "Expand ADMA’s plasma collection center network to achieve the goal of building up to 10 plasma collection centers in the U.S. by 2024. During 2021, ADMA expects two regulatory approval decisions for the Company’s Knoxville (DONE February 1, 2021) and Maryville, TN plasma collection centers. ADMA also anticipates filing BLAs for two additional plasma collection centers during 2021."
• "The global demand for U.S. source plasma for further manufacturing continues to outpace the available supply. And these investments into our ADMA BioCenters Plasma Collection business unit are anticipated to support ongoing production and growth for our end-to-end biologics manufacturing company into the future."
• "With the ADMA Biologics organization focused more than ever on commercial execution. We remain committed to tightly managing our expense structure, while we work towards achieving our previously provided operating targets, including reaching revenues of $250 million or more over the next three to five years."

Manufacturing and Supply Agreement to Produce and Sell Plasma-Derived Intermediates

On January 7, 2021 the company announced its entry into a 5-year manufacturing and supply agreement with an undisclosed partner to produce and sell plasma-derived intermediate fractions from ADMA’s FDA-approved Immune Globulin (IG) manufacturing process.

Adam Grossman, ADMA’s President and CEO commented:

“A core element of our business strategy is to leverage and maximize the revenue we generate from the available manufacturing capacity at our FDA-approved plasma-derived products production facility. Through the production of our own marketed assets, BIVIGAM^®, ASCENIV™ and NABI-HB^®, we will now be able to generate additional revenue over and above the sales of the FDA-approved drugs themselves.”

“Based on current production and forecasted market sales volumes, we estimate that these additional revenues from the sale of these fractions will add between $5 million and $10 million to our annual revenues for 2020 and 2021 respectively. Depending on future plant capacity utilization and potential expansion, as well as our forecasted IG production ramp, we believe this contract has the potential to generate between $10 million and $20 million per year from 2022 through 2024."

"We are proud to be an emerging partner of choice for plasma-derived intermediate fractions and we look forward to providing high quality products to this new partner and delivering the highest level of service and value to all of our customers to support our overall growth objectives.”

"With this newly executed agreement, ADMA is now able to further maximize the revenue per liter of plasma fractionated in the Boca Raton plant and sell these fractions so they may be processed by a third party into their own therapeutic products under their own licensed manufacturing processes.

ADMA owns and operates a 400,000 liter annual capacity plasma fractionation and purification facility located in Boca Raton, FL. This manufacturing plant is licensed by the U.S. FDA. In addition to manufacturing its three FDA-approved products BIVIGAM^®, ASCENIV™ and NABI-HB^® at this facility, ADMA provides contract manufacturing services for pharmaceutical and biotech companies as well as produces and sells plasma-derived intermediate fractions."

Plasma contains many therapeutic proteins which control a number of processes and functions in the body. With ADMA’s FDA-approved manufacturing process, which the company uses to produce its three FDA-approved and marketed immune globulins, other non-IG proteins that are valuable for other functions in our bodies (also known as “fractions”) are removed. These fractions are used as the starting raw material to produce other plasma-derived biologics such as Factor VIII, Albumin, C1 Esterase Inhibitor and Alpha 1 anti-trypsin amongst others.

The following slide from the company's November 2020 Corporate Presentation highlights the flexibily that is built into its current infreastructure to take advantage of contract-manufacturing opportunities as discussed above:

ADMA Biologics' Addressable Market Opportunity

According to a recent market research, the global intravenous immunoglobulin IG) market was valued at $9 billion in 2017, and is projected to reach $16 billion by 2025, registering a CAGR of 7.5% from 2018 to 2025. Immunoglobulins are highly complex entities and specific in their action. They are obtained from blood by fractionation process and purified for therapeutic and nontherapeutic applications. Different classes of immunoglobulin such as IgG, IgA, and IgM are used for the treatment of various immunological and neurological diseases.

Market Research Bureau (Research published in May 2019) estimates that the US IG market will grow from $6.8 billion in $13.9 billion in 2025 (Source: ADMA November 2020 Corporate Presentation). Most of the growth in recent years has been through M&A and because ADMA is outpacing this market with a projected 20%+ CAGR to 2025 compared to 10.9% for the indusrty, it could be a tempting acquisition target for a larger player.

Key market players that includes Baxter international Inc., CSL Ltd., Grifols S.A, Octapharma AG, Kedrion Biopharma Inc., LFB group, Biotest AG, China Biologics Products, Inc., Takeda Pharmaceuticals, and Bayer Healthcare.

Other players in the value chain include Hualan Biological Engineering Inc., Omrix Biopharmaceuticals Ltd., Behring GmbH, Shanghai RAAS Blood Products Co., Ltd., Option Care Enterprises, Inc., ADMA Biologics, Inc., and BioScrip, Inc.  As seen in the following slide, ADMA and other smaller players only had about 3% of the 2018 US IG market share. I should note that ADMA's revenues have grown from $17M in 2018 to a projected $42.2M in 2020. 

As I've discusssed above, the company aims to increase its share of that huge pie by capitalizing on several opportunities and challenges ranging from:

• Infrastucture expansions;
• Supply-chain optimizations;
• Label expansions such as those being considered for ASCENIV;
• Monetizing dark horses with huge potential upside such as convalescent plasma and COVID-19 ImmunoRank Neutralization MICRO-ELISA, for the detection of SARS-CoV-2 neutralizing antibodies in plasma once the FDA grants it the coveted EUA;
• The most recent example of the company clicking on all cylinders was the January 7, 2021 agreement to produce and sell plasma-derived intermediates. This new high-margin revenue source could contribute as much as $20M in a couple of years
• And I am certain that ADMA's resourceful and visionary management will find more creative ways to increse the top and bottom line in order to achieve significant profitability in a couple of years.

Financials

The company had $59.7M at September 30, 2020. CEO Grossman stated: "We believe our revenue growth is going to outpace our increased expenditures going forward."

Supporting this thinking, on December 9, 2020 the company announced that it had amended its existing term loan to add an additional $15 million to the total size of its credit facility with Perceptive Advisors. This action reduces the likelihood of dilutive financing in the near future.

Here are a few highlights of this important amendment:

• ADMA amends its existing senior secured term loan with Perceptive Advisors providing an additional loan tranche of $15M raising the total size of the credit facility to $100M.
• The new facility will provide a two-year extension of the interest only period through the duration of the credit facility now maturing in March 2024.
• Borrowings under the Perceptive credit agreement bear interest at a rate per annum equal to 7.5% plus the greater of one-month LIBOR and 3.5%.

Joseph Edelman, CEO of Perceptive Advisors commented:

“This upsized loan amendment demonstrates Perceptive’s long-term view for the plasma industry and ADMA’s important role as a reliable producer of plasma-derived biologics. We remain committed to supporting ADMA’s business and unlocking shareholder value that we believe has yet to be realized. We are optimistic that the asset value of manufactured plasma and plasma collection centers will continue to appreciate into the future.”

Adam Grossman, President and CEO of ADMA added:

“This amendment to our senior secured term loan, with its increased size and extended maturities, strengthens our long-term capital position and allows us to continue to execute on our strategic priorities, including supply chain enhancement initiatives and plasma center expansion, in addition to generating considerable near-term and ongoing revenue growth.”

“Despite ongoing COVID-19 headwinds, we remain on track to achieve our previously provided guidance for topline revenues of $250 million or greater by 2024, and we are confident that we are well-positioned to achieve profitability prior to the new 2024 maturity date of the loan."

"The continued support from Perceptive, who remains our largest equity holder, is a testament to the shareholder value that we believe will be created as we execute on these corporate objectives and establish ADMA as the only fully integrated American plasma fractionator.”

Sam Chawla, Portfolio Manager at Perceptive commented:

“Perceptive is pleased to provide additional capital to support ADMA’s near-term revenue and profitability growth strategy. The Company has made significant progress and has met all of our goals and objectives to date. We look forward to seeing ADMA’s continued progress and supporting the Company’s mission and value creating business objectives, focused on improving healthcare options for patients at risk of infectious diseases.”

Poison Pill Adoption

In this section I will post the excellent insight on this topic offered by SeekingAlpha contributor Jeffrey Himelson in his January 5, 2021 article entitled "ADMA Biologics: A Perfect Storm:"

"The icing on the cake is that my hypothesis that ADMA is trading at an undervalued level is that ADMA recently adopted a poison pill. (The cake of my hypothesis is its strong recent performance, trading at its enterprise value on just the value of its future plasma operating centers and strong insider buying). In law school, I spent many weeks studying poison pills and why boards of companies adopt them."

"The poison pill was a brilliant invention from famous lawyer Martin Lipton of well-known law firm Wachtell, which was invented in the early 1980s as a defense to the wave of hostile takeovers that the market was experiencing from corporate raiders. Without getting too much in the weeds, it essentially provides a defense from a takeover attempt without board approval. The board of a company gets concerned with the company being valued very cheaply and having shareholders getting too focused on the short-term benefit of a potential buyout at a higher level than the current trading range but a level that the board considers undervalued based on a long-term value."

"In the Press Release, management noted that it "was not adopted in response to any specific takeover proposal, any current accumulation of shares, or any currently threatened or pending effort to acquire control of ADMA of which the Board of Directors is aware." Nonetheless, given that ADMA hired Morgan, Lewis & Bockius LLP (a big law firm with high billing rates) to implement this plan (even as it seeks to reduce its operating losses), I believe that the board truly feels as though ADMA is undervalued, and there is a significant chance that they face a takeover offer in the coming months, especially given how few players there are in this industry."

Investopedia states the following about "poison pills:

"The mechanism protects minority shareholders and avoids the change of control of company management. Implementing a poison pill may not always indicate that the company is not willing to be acquired. At times, it may be enacted to get a higher valuation or more favorable terms for the acquisition."

I believe as SeekingAlpha's Jeffrey Himelson does that the company is being pursued by larger entities most likely in the same sector and as Investopedia suggests, the company might have enacted thepoison pill on December 16, 2020 "to get a higher valuation or more favorable terms for the acquisition."

Analyst Opinion

Currently, five analysts have a consensus BUY rating on ADMA stock with an $8.4/share average price target. This represents over 300% potential appreciation for value investors entering the stock now.

Institutional and Insider Ownership

ADMA Biologics has 216 institutional owners and shareholders that have filed 13D/G or 13F forms with the Securities Exchange Commission (SEC). These institutions hold a total of 55,168,280 shares. Largest shareholders include Perceptive Advisors Llc, BlackRock Inc., Vanguard Group Inc, Marshall Wace, Llp, VTSMX - Vanguard Total Stock Market Index Fund Investor Shares, 683 Capital Management, LLC, Consonance Capital Management LP, IWM - iShares Russell 2000 ETF, State Street Corp, and Franklin Resources Inc.

Insiders own 38.2M shares, or about 62% of the float, CEO Grossman owns about 1.7M shares of common stock.

CEO Grossman and other insiders have been consistent buyers of ADMA stock. The following table reflects this tendency (also observe that insiders have not been selling stock):

Conclusions

• The company expects to report $13.9M 4Q 2020 revenues which equates to about a 16% Y/Y growth. FY 2020 total revenues will be about $42.2M. This corresponds to a 44% Y/Y growth rate. Both, the quarterly and yearly revevenues to be reported on March 11, 2020are the highest in ADMA's history.
• The company expects Q/Q and Y/Y revenue growth across 2021 and achieving profitability with peak revenues of $250M or greater by 2024. This growth rate is double the sector's projected growth through 2025.
• ADMA Biologics announced on September 3, 2020 the launch of COVID-19 ImmunoRank Neutralization MICRO-ELISA. This is a fast, proprietary, fully validated ELISA assay for the detection of SARS-CoV-2 neutralizing antibodies in plasma. The company is awaiting FDA EUA for this important addition to its intellectual property and revenue-generating asset.
• ADMA anticipates 2021 will be another year of achieving value-creating milestones, including executing on the ongoing production ramp up and inventory build to support annual revenue generation in excess of $250 million by 2024 which will provide for substantial profitability.
• On December 9, 2020 ADMA announced that it had amended its existing term loan to add an additional $15M to its credit facility with Perceptive Advisors. This action reduces the likelihood of dilutive financing in the near future. The company had $59.7M cash at September 2020.
• On January 7, 2021 the company announced its entry into a 5-year manufacturing and supply agreement with an undisclosed partner to produce and sell plasma-derived intermediate fractions from ADMA’s FDA-approved Immune Globulin (IG) manufacturing process. This is expected to become a $20M revenue source by 2024.
• I expect the company to monetize on dark horses with huge potential upside such as convalescent plasma and COVID-19 ImmunoRank Neutralization MICRO-ELISA, for the detection of SARS-CoV-2 neutralizing antibodies in plasma once the FDA grants it the coveted EUA.
• Market Research Bureau (Research published in May 2019) estimates that the US IG market will grow from $6.8 billion in $13.9 billion in 2025. Most of the growth in recent years has been through M&A and because ADMA is outpacing this market with a projected 20%+ CAGR to 2025 compared to $10.9% for the industry, it could be a tempting acquisition target for a larger player.
• ImmunoRank could be a game changer in valuation once granted EUA.  ImmunoRank is designed to test up to 90 samples per test kit with 99.8% specificity. The assay procedure takes approximately 80 minutes. An Emergency Use Authorization (EUA) submission is currently being prepared for review and potential approval by the U.S. Food and Drug Administration.
• ADMA will report on material regulatory and commercial developments related to ImmunoRank. ADMA has submitted patents for ImmunoRank in the U.S. and certain foreign markets. Both ADMA and Leinco are named as co-inventors on the patents 
• I believe as SeekingAlpha's Jeffrey Himelson does that the company is being pursued by larger entities most likely in the same sector and as Investopedia suggests, the company might have enacted the poison pill on December 16, 2020 "to get a higher valuation or more favorable terms for the acquisition."
• ADMA Biologics has 216 institutional owners and shareholders that have filed 13D/G or 13F forms with the Securities Exchange Commission (SEC). These institutions hold a total of 55,168,280 shares. Largest shareholders include Perceptive Advisors Llc, BlackRock Inc., and Vanguard Group.
• Insiders own 38.2M shares, or about 62% of the float, CEO Grossman owns about 1.7M shares of common stock and has been a consistent buyer of the stock at market conditions and not just options. This reflects confidence in the future of the company.
• Currently, five analysts have a consensus BUY rating on ADMA stock with an $8.4/share average price target. This represents over 300% potential appreciation for value investors entering the stock now.
• My price target is $5+/share at the end of 1Q 2021 and $8+/share during 4Q 2021. I value ADMA stock as Strong Buy.
• Investors interested in purchasing ADMA stock should take the time to read the Risks and Uncertainties as detailed in the company's most recent 10-K and 10-Q filings with the SEC.