1. ORGANIZATION AND BUSINESS
|12 Months Ended|
Dec. 31, 2018
|Organization, Consolidation and Presentation of Financial Statements [Abstract]|
|1. ORGANIZATION AND BUSINESS||
ADMA Biologics, Inc. (“ADMA” or the “Company”) is a vertically integrated commercial biopharmaceutical and specialty immunoglobulin company that manufactures, markets and develops specialty plasma-derived biologics for the treatment of immune deficiencies and the prevention and treatment of certain infectious diseases. The Company’s targeted patient populations include immune-compromised individuals who suffer from an underlying immune deficiency disorder or who may be immune-suppressed for medical reasons. ADMA operates through its wholly-owned subsidiaries ADMA BioManufacturing, LLC (“ADMA BioManufacturing”) and ADMA Bio Centers Georgia Inc. (“ADMA Bio Centers”). ADMA BioManufacturing was formed in January 2017 to facilitate the acquisition of the Biotest Therapy Business Unit (“BTBU”) from Biotest Pharmaceuticals Corporation (“BPC” and, together with Biotest AG, “Biotest”) as more fully described below. ADMA Bio Centers is the Company’s source plasma collection business with, as of December 31, 2018, plasma collection facilities located in Norcross, GA, Marietta, GA and Kennesaw, GA, all of which hold approved licenses with the U.S. Food and Drug Administration (the “FDA”). Effective January 1, 2019, in connection with the Biotest Transaction defined below, the Company transferred its Norcross, GA and Marietta, GA plasma collection facilities to BPC (see Notes 3 and 17).
As more fully discussed in Note 3, on June 6, 2017, ADMA completed the acquisition of certain assets (the “Biotest Assets”) of BTBU, which included two FDA-licensed products, Nabi-HB (Hepatitis B Immune Globulin, Human) and BIVIGAM (Immune Globulin Intravenous, Human), and a plasma fractionation manufacturing facility located in Boca Raton, FL (the “Boca Facility”) (the “Biotest Transaction”). In addition to Nabi-HB and BIVIGAM, the Company provides contract manufacturing services for certain clients and expects to generate revenues from the sale of intermediate by-products which result from the immunoglobulin production process. The Boca Facility is FDA-licensed and certified by the German Health Authority. Immediately following the closing of the Biotest Transaction, the Biotest Assets were contributed into ADMA BioManufacturing.
Nabi-HB is a hyperimmune globulin that is rich in antibodies to the Hepatitis B virus. Nabi-HB is indicated for the treatment of acute exposure to blood containing hepatitis B surface antigen (“HBsAg”), prenatal exposure to infants born to HBsAg-positive mothers, sexual exposure to HBsAg-positive persons and household exposure to persons with acute Hepatitis B virus infection. FDA approval for Nabi-HB was received on March 24, 1999. Under ADMA’s ownership, production of Nabi-HB resumed during the third quarter of 2017, resulting in ongoing commercial revenues.
BIVIGAM is an intravenous immune globulin indicated for the treatment of primary humoral immunodeficiency. FDA approval for BIVIGAM was received on December 19, 2012, and product sales commenced in the first quarter of 2013. In December 2016, Biotest temporarily suspended the commercial production of BIVIGAM in order to focus on the completion of planned improvements to the manufacturing process. ADMA resumed production of BIVIGAM during the fourth quarter of 2017. During the second half of 2018, the Company submitted a Prior Approval Supplement (the “PAS”) with the FDA for BIVIGAM to amend its FDA-approved Biologics License Application (“BLA”) which, once approved, would enable the Company to relaunch and commercialize this product in the U.S. Although the Company believes that the FDA is actively reviewing the PAS submission for BIVIGAM drug substance and the related documents that the Company has provided to the FDA subsequent to the original PAS submission, the Company cannot provide any assurance or predict with certainty the schedule for when the Company will, if at all, receive authorization from the FDA with respect to the PAS. In addition, the anticipated relaunch of BIVIGAM is dependent upon the timing of certain FDA decisions, production slots available with the Company’s contract fill/finish provider, approvals that may need to be obtained for product labeling as well as other commercial requirements and regulatory factors.
Prior to the closing of the Biotest Transaction in June 2017, BTBU was the Company’s third-party manufacturer for its lead pipeline product candidate, RI-002, for the treatment of Primary Immune Deficiency Disease (“PIDD”). In the third quarter of 2015, the FDA accepted for review the Company’s BLA for RI-002 (the “RI-002 BLA”) for the treatment of PIDD. In July 2016, the FDA issued a Complete Response Letter (the “CRL”) to the Company for the RI-002 BLA (the “RI-002 CRL”). The RI-002 CRL reaffirmed the issues set forth in the November 2014 warning letter (the “Warning Letter”) that had been issued by the FDA to Biotest related to certain compliance issues identified at the Boca Facility, but did not cite any concerns with the clinical safety or efficacy data for RI-002 submitted in the RI-002 BLA, nor did the FDA request any additional clinical studies be completed prior to FDA approval of RI-002. The FDA identified in the RI-002 CRL, among other things, certain outstanding inspection issues and deficiencies related to chemistry, manufacturing and controls and Good Manufacturing Practices at the Boca Facility and certain of the Company’s third-party vendors, and requested documentation of corrections for a number of these issues. The FDA indicated in the RI-002 CRL that it cannot grant final approval of the RI-002 BLA until, among other things, these deficiencies are resolved. Upon the completion of the Biotest Transaction, ADMA gained control over the regulatory, quality, general operations and drug substance manufacturing process at the Boca Facility. In April 2018, the FDA inspected the Boca Facility and in July 2018 the Company’s FDA status with respect to the Boca Facility improved from Official Action Indicated to Voluntary Action Indicated, and the Company determined that this inspection of the Boca Facility was been successfully closed out. Upon the Company’s receipt of the improved FDA compliance status, the Company responded to the CRL through resubmitting the RI-002 BLA on September 28, 2018. Upon approval of the RI-002 BLA by the FDA, if received, the Company intends to commercialize RI-002. The Company cannot provide any assurances or predict with certainty the schedule for when the Company will, if at all, receive approval from the FDA for the RI-002 BLA.
As of December 31, 2018, the Company had working capital of $34.9 million, including $22.8 million of cash and cash equivalents. Based upon the Company’s projected revenue and expenditures for 2019, including continued implementation of the Company’s commercialization and expansion activities, the proceeds from the refinancing of the Company’s senior debt and release of funds from the debt service reserve account in February 2019 (see Notes 7 and 17), as well as certain other assumptions, the Company’s management currently believes that its cash, cash equivalents, projected revenue and accounts receivable, along with the $27.5 million it anticipates being able to draw down under its senior credit facility, which is contingent upon, among other things, the FDA approval of either the BIVIGAM PAS or the RI-002 BLA (see Note 17), will be sufficient to fund ADMA’s operations, as currently conducted, into the fourth quarter of 2019. In order to have sufficient cash to fund its operations thereafter and to continue as a going concern, the Company will need to raise additional capital by the fourth quarter of 2019. However, if the Company does not receive FDA approval of either the BIVIGAM PAS or the RI-002 BLA, management believes that the Company’s cash balance will be sufficient to fund ADMA’s operations, as currently conducted, into the third quarter of 2019, and the Company will be required to raise additional capital by the third quarter of 2019. These estimates may change based upon how quickly the Company is able to obtain FDA approval for BIVIGAM and RI-002, commercial manufacturing ramp-up activities and the various financing options being explored. The Company currently has no firm commitments for additional financing, and there can be no assurances that the Company will be able to secure additional financing on terms that are acceptable to the Company, or at all. Furthermore, if the Company’s assumptions underlying its estimated expenses and revenues are incorrect, it may have to raise additional capital sooner than currently anticipated.
Due to numerous risks and uncertainties associated with FDA approval of the Company’s products, ongoing remediation and capacity expansion efforts at the Company’s Boca Facility and potential future commercialization of the Company’s products and product candidates, the Company is unable to estimate with certainty the amounts of increased capital outlays and operating expenditures required to fund its development activities. The Company’s current estimates may be subject to change as circumstances regarding its business requirements evolve. The Company may decide to raise capital through public or private equity offerings or debt financings, or obtain a bank credit facility or corporate collaboration and licensing arrangements. The sale of additional equity or debt securities, if convertible, could result in dilution to the Company’s stockholders and, in such event, the value and potential future market price of its common stock may decline. The incurrence of additional indebtedness would result in increased fixed obligations and could also result in covenants that would restrict the Company’s operations or other financing alternatives. Failure to secure any necessary financing in a timely manner and on commercially reasonable terms could have a material adverse effect on the Company’s business plan and financial performance and it could be forced to delay or discontinue its product development, clinical trial or commercialization activities, delay or discontinue the approval efforts for any of the Company’s potential products or potentially cease operations. The Company has reported cumulative losses since inception in June 2004 through December 31, 2018 of $216.4 million. Management believes that the Company will continue to incur net losses and negative net cash flows from operating activities to fund its operations and meet its obligations on a timely basis through the foreseeable future. As such, these factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments related to the recoverability and classification of asset carrying amounts and the classification of liabilities that might be necessary from the outcome of this uncertainty.
In February 2019, the Company refinanced its senior debt (see Note 17) whereby the Company received net proceeds of approximately $4.4 million, and an additional $4.0 million, which was reflected as restricted cash in the accompanying consolidated balance sheet at December 31, 2018 (see Notes 2 and 7), was released by the Company’s then-senior creditor to the Company.
The entire disclosure for the business description and basis of presentation concepts. Business description describes the nature and type of organization including but not limited to organizational structure as may be applicable to holding companies, parent and subsidiary relationships, business divisions, business units, business segments, affiliates and information about significant ownership of the reporting entity. Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS).
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef