1. ORGANIZATION AND BUSINESS
|3 Months Ended|
Mar. 31, 2019
|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. BTBU had been the Company’s third-party manufacturer for its then-lead pipeline product candidate, previously referred to as “RI-002.” ADMA Bio Centers is the Company’s source plasma collection business with a plasma collection facility located in Kennesaw, GA which holds an approved license 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 FDA-approved Norcross, GA and Marietta, GA plasma collection facilities to BPC (see Note 11).
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.
On April 1, 2019, the FDA approved ASCENIV (Immune Globulin Intravenous, Human – slra 10% Liquid), formerly referred to as RI-002. ASCENIV is an Intravenous Immune Globulin (“IVIG”) drug product for the treatment of Primary Humoral Immunodeficiency Disease (“PIDD” or “PI”) in adults and adolescents (12 to 17 years of age). The Company anticipates having the product available for commercial launch during the second half of 2019.
Prior to the acquisition of BTBU and the FDA approval for ASCENIV, in July 2016 the FDA issued a Complete Response Letter (“CRL”) to the Company for the Company’s Biologics License Application (“BLA”) for RI-002. 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, 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 had indicated in the RI-002 CRL that it could not grant final approval of the RI-002 BLA until, among other things, these deficiencies were 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 successfully closed out.
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. BIVIGAM is currently under FDA review for the Prior Approval Supplement (the “PAS”) that the Company submitted to the FDA in June 2018 to amend BIVIGAM’s FDA-approved BLA which, once approved, would enable the Company to relaunch and commercialize this product in the U.S. In December 2018, the Company received a CRL from the FDA in response to the PAS (the “BIVIGAM CRL”), and the Company has since received several information requests from the FDA, each containing a limited number of questions. The Company believes that all requests contained in the various information requests were addressable, and has responded to all of them. The Company to date has not received a formal BIVIGAM CRL resubmission acknowledgement and has not received clarity on the FDA’s intended classification or review timing. Although the Company believes that the FDA is actively reviewing the PAS submission and subsequent information request responses, 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. Biotest had originally received FDA approval for BIVIGAM on December 19, 2012, prior to the acquisition of BTBU, 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.
As of March 31, 2019, the Company had working capital of $30.0 million, including $16.5 million of cash and cash equivalents. Based upon the Company’s current projected revenue and expenditures, including capital expenditures and continued implementation of the Company’s commercialization and expansion activities, 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 additional $40.0 million it is able to access under its senior credit facility, $12.5 million of which is contingent upon FDA approval of the PAS, 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 capital by the fourth quarter of 2019. These estimates may change based upon how quickly the Company is able to obtain FDA approval for BIVIGAM, 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 March 31, 2019 of $229.5 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 6) whereby the Company received net proceeds of approximately $4.2 million, and an additional $4.0 million, which was reflected as restricted cash in the accompanying consolidated balance sheet at December 31, 2018, was released by the Company’s then-senior creditor to the Company. On May x, 2019, the Company received the additional $27.5 million that was available to the Company under its senior credit facility and amended the facility to increase the total amount available under the facility by an additional $12.5 million (see Note 14).
There can be no assurance that the Company’s research and development will be successfully completed or that any product will be approved or commercially viable. The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, dependence on collaborative arrangements, development by the Company or its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, and compliance with FDA and other governmental regulations and approval requirements.
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