UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2021
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ________ to ________
Commission file number 001-36728
(Exact Name of Registrant as Specified in Its Charter)
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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(Address of Principal Executive Offices)
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(Zip Code)
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(201 ) 478-5552
(Registrant’s Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐
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Accelerated filer ☐
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Smaller reporting company
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of August 6, 2021, there were 132,769,471 shares of the issuer’s common stock
outstanding.
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
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Item 1.
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1 |
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1
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2
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3
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4
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5
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Item 2.
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23
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Item 3.
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37
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Item 4.
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37
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38
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Item 1.
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38
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Item 1A.
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38
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Item 2.
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68
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Item 3.
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68
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Item 4.
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68
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Item 5.
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68
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Item 6.
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68
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69
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This Quarterly Report on Form 10-Q includes our trademarks, trade names and service marks, such as “ASCENIV™,”
“Nabi-HB®” and “BIVIGAM®,” which are protected under applicable intellectual property
laws and are the property of ADMA Biologics, Inc., or its subsidiaries. Solely for convenience, trademarks, trade names and service marks referred to in this report may appear without the ®, ™ or SM symbols, but such references are not
intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names and service marks. We do not intend our use or display of
other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.
Special Note Regarding Forward-Looking Statements
Some of the information in this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. These statements include, among others, statements about:
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our ability to continue as a going concern;
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our ability to manufacture BIVIGAM and ASCENIV on a commercial scale and commercialize these products as a result of their approval by the U.S. Food and Drug
Administration (the “FDA”) in 2019;
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our plans to develop, manufacture, market, launch and expand our commercial infrastructure and commercialize our current and future products and the success of such
efforts;
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the safety, efficacy and expected timing of and our ability to obtain and maintain regulatory approvals for our current products and product candidates, and the
labeling or nature of any such approvals;
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the achievement of or expected timing, progress and results of clinical development, clinical trials and potential regulatory approvals for our product candidates;
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our dependence upon our third-party customers and vendors and their compliance with applicable regulatory requirements;
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our belief that we have addressed the delays experienced with final drug product Good Manufacturing Practices (“GMP”) release testing by our third-party vendors by
adding additional release testing laboratories to our FDA-approved consortium listed in our drug approval documents;
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our ability to obtain adequate quantities of FDA-approved plasma with proper specifications;
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our plans to increase our supplies of source plasma, which include plasma collection center expansion and reliance on third-party supply agreements as well as any
extensions to such agreements;
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the potential indications for our products and product candidates;
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potential investigational new product applications;
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the acceptability of any of our products, including BIVIGAM, ASCENIV and Nabi-HB, for any purpose, including FDA-approved indications, by physicians, patients or
payers;
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our plans to evaluate the clinical and regulatory paths to grow the ASCENIV franchise through expanded FDA-approved uses;
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Federal, state and local regulatory and business review processes and timing by such governmental and regulatory agencies of our business and regulatory
submissions;
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concurrence by the FDA with our conclusions concerning our products and product candidates;
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the comparability of results of our hyperimmune and immune globulin products to other comparably run hyperimmune and immune globulin clinical trials;
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the potential for ASCENIV and BIVIGAM to provide meaningful clinical improvement for patients living with Primary Immune Deficiency Disease, Primary Humoral
Immunodeficiency Disease (“PIDD” or “PI”) or other immune deficiencies or any other condition for which the products may be prescribed or evaluated;
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our ability to market and promote Nabi-HB in a highly competitive environment with increasing competition from other antiviral therapies and to generate meaningful
revenues from this product;
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our intellectual property position and the defense thereof, including our expectations regarding the scope of patent protection with respect to ASCENIV or other
future pipeline product candidates;
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our manufacturing capabilities, third-party contractor capabilities and vertical integration strategy;
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our plans related to the expansion of our manufacturing capacity, yield improvements, supply-chain robustness, in-house fill-finish capabilities, distribution and
other collaborative agreements and the success of such endeavors;
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our estimates regarding revenues, expenses, capital requirements, timing to profitability and the need for and availability of additional financing;
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possible or likely reimbursement levels for our currently marketed products;
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estimates regarding market size, projected growth and sales of our existing products as well as our expectations of market acceptance of ASCENIV and BIVIGAM;
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effects of the coronavirus COVID-19 pandemic on our business, financial condition, liquidity and results of operations, and our ability to continue operations in
the same manner as previously conducted prior to the macroeconomic effects of the COVID-19 pandemic;
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future domestic and global economic conditions or performance; and
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expectations for future capital requirements.
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These statements may be found under the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” sections of this Quarterly Report on Form 10-Q. Forward-looking statements may be identified by the use of terms such as “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,”
“plans,” “potential,” “predicts,” or “should” or the negative thereof or other variations thereof or comparable terminology. Our actual results could differ materially from those contained in the forward-looking statements due to the factors
described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and in this Quarterly
Report on Form 10-Q for the quarter ended June 30, 2021. Any forward-looking statement included or incorporated by reference in this Quarterly Report on Form 10-Q reflects our current views with respect to future events and is subject to these
and other risks, uncertainties and assumptions related to our operations, industry and future growth. These forward-looking statements speak only as of the dates such statements are made and we undertake no obligation to publicly update any
forward-looking statements or to publicly announce revisions to any of the forward-looking statements, unless otherwise required by the federal securities laws.
FINANCIAL INFORMATION
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Financial Statements.
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ADMA BIOLOGICS, INC. AND SUBSIDIARIES
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June 30,
2021
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December 31,
2020
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(Unaudited)
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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$
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Accounts receivable, net
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Inventories
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Prepaid expenses and other current assets
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Total current assets
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Property and equipment, net
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Intangible assets, net
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Goodwill
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Right to use assets
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Deposits and other assets
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TOTAL ASSETS
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$
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$
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Accounts payable
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$
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$
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Accrued expenses and other current liabilities
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Current portion of deferred revenue
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Current portion of lease obligations
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Total current liabilities
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Senior notes payable, net of discount
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Deferred revenue, net of current portion
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Lease obligations, net of current portion
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Other non-current liabilities
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TOTAL LIABILITIES
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COMMITMENTS AND CONTINGENCIES
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STOCKHOLDERS’ EQUITY
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Preferred Stock, $
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Common Stock - voting, $
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Additional paid-in capital
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Accumulated deficit
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(
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)
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(
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)
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TOTAL STOCKHOLDERS’ EQUITY
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$
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$
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The accompanying notes are an integral part of these condensed consolidated financial statements.
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
(Unaudited)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2021
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2020
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2021
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2020
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REVENUES:
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Product revenue
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$
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$
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$
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$
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License revenue
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Total revenues
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OPERATING EXPENSES:
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Cost of product revenue (exclusive of amortization expense shown below)
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Research and development
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Plasma center operating expenses
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Amortization of intangible assets
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Selling, general and administrative
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Total operating expenses
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LOSS FROM OPERATIONS
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(
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)
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(
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(
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(
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OTHER INCOME (EXPENSE):
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Interest income
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Interest expense
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(
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(
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(
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(
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Other expense
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(
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)
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(
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(
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(
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Other expense, net
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(
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(
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(
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(
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NET LOSS
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$
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(
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$
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(
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$
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(
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)
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$
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(
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)
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BASIC AND DILUTED LOSS PER COMMON SHARE
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$
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(
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)
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$
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(
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)
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$
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(
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)
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$
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(
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
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Basic and Diluted
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The accompanying notes are an integral part of these condensed consolidated financial statements.
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
STOCKHOLDERS’ EQUITY
(Unaudited)
For the Three and Six Months Ended June 30, 2021
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Common Stock
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Additional
Paid-in
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Accumulated
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Total
Stockholders’
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|||||||||||||||||
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Shares
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Amount
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Capital
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Deficit
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Equity
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Balance at December 31, 2020
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$
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$
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$
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(
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)
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$
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Stock-based compensation
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-
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Vesting of Restricted Stock Units, net of shares withheld for taxes and retired
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(
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(
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Issuance of common stock, net of offering expenses
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Net loss
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-
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(
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(
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|||||||||||||
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Balance at March 31, 2021
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(
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Stock-based compensation
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-
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Issuance of common stock, net of offering expenses
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Net loss
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-
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(
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)
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(
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|||||||||||||
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Balance at June 30, 2021
|
|
$
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$
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$
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(
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)
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$
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For the Three and Six Months Ended June 30, 2020
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Common Stock
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Additional
Paid-in
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Accumulated
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Total
Stockholders’
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|||||||||||||||||
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Shares
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Amount
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Capital
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Deficit
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Equity
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Balance at December 31, 2019
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$
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$
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$
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(
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)
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$
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Stock-based compensation
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-
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Issuance of common stock, net of offering expenses
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Exercise of stock options
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Net loss
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-
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(
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)
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(
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)
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|||||||||||||
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Balance at March 31, 2020
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(
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)
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||||||||||||||
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Stock-based compensation
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-
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Exercise of stock options
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Net loss
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-
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(
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)
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(
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)
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|||||||||||||
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Balance at June 30, 2020
|
|
$
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$
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$
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(
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)
|
$
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The accompanying notes are an integral part of these condensed consolidated financial statements.
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
(Unaudited)
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Six Months Ended June 30,
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||||||||
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2021
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2020
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss
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$
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(
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)
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$
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(
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)
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||
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Adjustments to reconcile net loss to net cash used in operating activities:
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Depreciation and amortization
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Loss on disposal of fixed assets
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Stock-based compensation
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Amortization of debt discount
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Amortization of license revenue
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(
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)
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(
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)
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||||
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Changes in operating assets and liabilities:
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||||||||
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Accounts receivable
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(
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)
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(
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)
|
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Inventories
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(
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)
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(
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)
|
||||
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Prepaid expenses and other current assets
|
(
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)
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(
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)
|
||||
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Deposits and other assets
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(
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)
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(
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)
|
||||
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Accounts payable
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(
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)
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(
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)
|
||||
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Accrued expenses
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||||||
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Other current and non-current liabilities
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(
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)
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(
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)
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||||
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Net cash used in operating activities
|
(
|
)
|
(
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)
|
||||
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CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
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Purchase of property and equipment
|
(
|
)
|
(
|
)
|
||||
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Proceeds from the sale of property and equipment
|
|
|
||||||
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Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
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CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
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Proceeds from issuance of common stock, net of offering expenses
|
|
|
||||||
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Proceeds from the exercise of stock options
|
|
|
||||||
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Taxes paid on vested Restricted Stock Units
|
(
|
)
|
|
|||||
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Proceeds from issuance of note payable
|
|
|
||||||
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Payments on finance lease obligations
|
(
|
)
|
(
|
)
|
||||
|
Net cash provided by financing activities
|
|
|
||||||
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Net (decrease) increase in cash and cash equivalents
|
(
|
)
|
|
|||||
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Cash and cash equivalents - beginning of period
|
|
|
||||||
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Cash and cash equivalents - end of period
|
$
|
|
$
|
|
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
| 1. |
ORGANIZATION AND BUSINESS
|
ADMA Biologics, Inc. (“ADMA” or the “Company”) is an end-to-end commercial
biopharmaceutical company dedicated to manufacturing, marketing and developing specialty plasma-derived biologics for the treatment of immunodeficient patients at risk for infection and others at risk for 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 BioCenters Georgia Inc. (“ADMA BioCenters”). ADMA BioManufacturing was formed in January 2017 to facilitate the acquisition of the Biotest Therapy Business Unit (“BTBU”) from BPC Plasma, Inc. (formerly Biotest
Pharmaceuticals Corporation) (“BPC” and, together with Biotest AG, “Biotest”) on June 6, 2017. The acquisition included certain assets (the “Biotest Assets”) of BTBU, which included the FDA-licensed BIVIGAM and Nabi-HB immunoglobulin products,
and an FDA-licensed plasma fractionation manufacturing facility located in Boca Raton, FL (the “Boca Facility”) (the “Biotest Transaction”). BTBU had previously been the Company’s third-party contract manufacturer. ADMA BioCenters is the
Company’s source plasma collection business with eight plasma collection facilities in various stages of approval and development
located throughout the U.S., two of which hold an approved license with the U.S. Food and Drug Administration (the “FDA”) while a
third facility has a Biologics License Application (“BLA”) pending FDA approval.
The Company has three FDA-approved products, all of which are currently marketed and commercially available: (i) BIVIGAM (Immune Globulin Intravenous, Human), an Intravenous Immune Globulin (“IVIG”)
product indicated for the treatment of Primary Humoral Immunodeficiency (“PI”), also known as Primary Immunodeficiency Disease (“PIDD”), and for which the Company received FDA approval on May 9, 2019 and commenced commercial sales in August
2019; (ii) ASCENIV (Immune Globulin Intravenous, Human – slra 10% Liquid), an IVIG product indicated for the treatment of PI, for which the Company received FDA approval on April 1, 2019 and commenced first commercial sales in October 2019; and
(iii) Nabi-HB (Hepatitis B Immune Globulin, Human), which is indicated for the treatment of acute exposure to blood containing Hepatitis B surface antigen (“HBsAg”) and other listed exposures to Hepatitis B. In addition to its commercially
available immunoglobulin products, the Company provides contract manufacturing and laboratory services for certain clients and generates revenues from the sale of intermediate by-products that result from the immunoglobulin production process.
The Company seeks to develop a pipeline of plasma-derived therapeutics, and its products and product candidates are intended to be used by physician specialists focused on caring for immune-compromised patients with or at risk for certain
infectious diseases.
As of June 30, 2021, the Company had working capital of $153.2 million, including $42.4
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, the Company’s
management currently believes that its cash, cash equivalents, projected revenue and accounts receivable will be sufficient to fund ADMA’s operations, as currently conducted, into the fourth quarter of 2021. In order to have sufficient cash to
fund its operations thereafter, the Company anticipates it will need to raise additional capital before the end of the fourth quarter of 2021. These estimates may change based upon several factors, including the success of the Company’s
commercial sales of its products, manufacturing ramp-up activities, the acceptability of ADMA’s immune globulin products by physicians, patients or payers and the various financing options that may be available to the Company. In addition, the
Company’s end-to-end production cycle from procurement of raw materials to commercial release of finished product can take between
and 12 months or potentially longer, requiring substantial investments in raw material plasma and other manufacturing materials. The
Company currently has no firm commitments for additional financing, and there can be no assurance 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.
5
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
Due to numerous risks and uncertainties associated with FDA review, inspections and approvals related to the
Company’s products or the labeled indications of such products, ongoing compliance requirements and capacity expansion efforts at the Company’s Boca Facility and future commercialization of the Company’s products, including the Company’s
ability to obtain adequate quantities of FDA-approved plasma with proper specifications on acceptable terms for use in the Company’s manufacturing process, as well as the additional uncertainties surrounding the COVID-19 pandemic (see Note 10),
the Company is unable to estimate with certainty the amounts of increased capital outlays and operating expenditures required to fund its commercial and development activities. The Company’s current estimates may be subject to change as
circumstances regarding its business requirements evolve. 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 commercialization, product development or clinical activities or delay or discontinue the approval efforts for any of the Company’s products or product candidates. The Company has
reported cumulative losses since inception in June 2004 through June 30, 2021 of $377.8 million. 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.
The Company may decide to raise capital through public or private equity offerings or debt financings, or
obtain a bank credit facility or enter into corporate collaboration and licensing arrangements. The sale of additional equity or debt securities, if convertible, could result in dilution to the Company’s existing stockholders and, in such
event, the market value 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. In addition, the Company is exploring additional contract manufacturing arrangements and other business development opportunities, which may provide additional liquidity to the Company.
During the six months ended June 30, 2021, the Company raised $59.1 million from the open market sale agreement dated August 5, 2020, as amended, (the “2020 Sale Agreement”) with Jefferies LLC (“Jefferies”), pursuant to which the
Company could offer and sell, from time to time, at its option, through or to Jefferies, shares of the Company’s common stock (see Note 8). In July of 2021, the Company raised an additional $1.5 million under the 2020 Sale Agreement, and the Company has reached the maximum amount of funds that can be raised under the 2020 Sale Agreement.
On May 28, 2021, the Company entered into a new Open Market Sale AgreementSM (the “2021 Sale Agreement”) with
Jefferies, pursuant to which the Company may offer and sell, from time to time, at its option, through or to Jefferies, up to an aggregate of $50,000,000
of shares of the Company’s common stock. As of August 11, 2021, there have been no sales of common stock under the 2021 Sale
Agreement.
There can be no assurance that the Company’s approved products will be commercially viable, or that research
and development, plant capacity expansion, plasma center build-outs or other capital improvements will be successfully completed or that any product developed in the future will be approved. The Company is subject to risks common to companies
in the biotechnology and pharmaceutical manufacturing industries 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.
| 2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards
Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (the “FASB”).
6
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the
annual audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March
25, 2021. The accompanying consolidated balance sheet as of December 31, 2020 was derived from the audited financial statements as of and for the year ended December 31, 2020. These condensed consolidated interim financial statements have been
prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X, and therefore omit or condense certain footnotes and other information normally included in complete consolidated financial statements prepared in
accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all normal and recurring
adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of June 30, 2021 and its results of operations, changes
in equity and cash flows for the three and six months ended June 30, 2021.
During the three and six months ended June 30, 2021 and 2020, comprehensive loss was equal to the net loss
amounts presented for the respective periods in the accompanying condensed consolidated statements of operations. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full fiscal
year.
Use of estimates
The preparation of financial statements requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates. Significant estimates include the realizable value of accounts receivable, valuation of inventory, assumptions used in projecting future liquidity and capital requirements, assumptions used in the fair value of awards
granted under the Company’s equity incentive plans and warrants issued in connection with the issuance of notes payable and the valuation allowance for the Company’s deferred tax assets.
Fair value of financial instruments
The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents,
accounts receivable and accounts payable, are shown at cost which approximates fair value due to the short-term nature of these instruments. The debt outstanding under the Company’s senior secured term loan (see Note 7) approximates fair value
due to the variable interest rate on this debt.
Accounts receivable
Accounts receivable is reported at realizable value, net of allowances for contractual credits and doubtful
accounts in the amount of $0.2 million and $0.1 million at June 30, 2021 and December 31, 2020, respectively, which are recognized in the period the related revenue is recorded. The Company
extends credit to its customers based upon an evaluation of each customer’s financial condition and credit history. Evaluations of the financial condition and associated credit risk of customers are performed on an ongoing basis. Based
on these evaluations, the Company has concluded that its credit risk is minimal. At June 30, 2021, six customers accounted for an
aggregate of 94 % of the Company’s total accounts receivable, and at December 31, 2020, three customers accounted for approximately 92 % of the
Company’s total accounts receivable.
Inventories
Raw materials inventory consists of various materials purchased from suppliers,
including normal source plasma, used in the production of the Company’s products. Work-in-process and finished goods inventories (see Note 3) reflect the cost of raw materials as well as costs for direct and indirect labor, primarily salaries,
wages and benefits for applicable employees, as well as an allocation of overhead costs related to the Boca Facility including utilities, property taxes, general repairs and maintenance, consumable supplies and depreciation. The allocation of
Boca Facility overhead to inventory is generally based upon the estimated square footage of the Boca Facility that is used in the production of the Company’s products relative to the total square footage of the facility.
Inventories, including plasma intended for resale and plasma intended for internal
use in the Company’s manufacturing, commercialization or research and development activities, are carried at the lower of cost or net realizable value determined by the first-in, first-out method. Net realizable value is generally determined
based upon the consideration the Company expects to receive when the inventory is sold, less costs to deliver the inventory to the recipient. The estimates for net realizable value of inventory are based on contractual terms or upon historical
experience and certain other assumptions, and the Company believes that such assumptions are reasonable. Inventory is periodically reviewed to ensure that its carrying value does not exceed its net realizable value, and adjustments are recorded
to write down such inventory, with a corresponding charge to cost of product revenue, when the carrying value or historical cost exceeds its estimated net realizable value. In addition, costs associated with the production of conformance or
engineering lots that would not qualify as immediately available for commercial sale are charged to cost of product revenue and not capitalized into inventory.
7
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
Goodwill
Goodwill represents the excess of purchase price over the fair value of net assets acquired by the Company.
Goodwill at June 30, 2021 and December 31, 2020 was $3.5
Goodwill is not amortized but is assessed for impairment on an annual basis or more frequently if impairment
indicators exist. The Company has the option to perform a qualitative assessment of goodwill to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount, including goodwill and
other intangible assets. If the Company concludes that this is the case, then it must perform a goodwill impairment test by comparing the fair value of the reporting unit to its carrying value. An impairment charge is recorded to the extent the
reporting unit’s carrying value exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The Company performs its annual goodwill impairment test as of October 1 of each year. The Company’s annual
goodwill impairment test as of October 1, 2020 did not result in a goodwill impairment charge, and the Company did no
Impairment of long-lived assets
The Company assesses the recoverability of its long-lived assets, which include property and equipment and
finite-lived intangible assets, whenever significant events or changes in circumstances indicate impairment may have occurred. If indicators of impairment exist, projected future undiscounted cash flows associated with the asset are compared to
its carrying amount to determine whether the asset’s carrying value is recoverable. Any resulting impairment is recorded as a reduction in the carrying value of the related asset in excess of fair value and a charge to operating results. For
the three and six months ended June 30, 2021 and 2020, the Company determined that there was no
Revenue recognition
Revenues for the three and six months ended June 30, 2021 and 2020 are comprised of (i) revenues from the
sale of the Company’s immunoglobulin products, BIVIGAM, ASCENIV and Nabi-HB, (ii) product revenues from the sale of human plasma collected through the Company’s Plasma Collection Centers business segment, (iii) contract manufacturing and
laboratory services revenue, (iv) revenues from the sale of intermediate by-products; and (v) license and other revenues primarily attributable to the out-licensing of ASCENIV to Biotest in 2012 to market and sell this product in Europe and
selected countries in North Africa and the Middle East. Biotest has provided the Company with certain services and financial payments in accordance with the related Biotest license agreement and is obligated to pay the Company certain amounts
in the future if certain milestones are achieved. Deferred revenue is amortized into income over the term of the Biotest license, representing a period of approximately 22 years.
Product revenue is recognized when the customer is deemed to have control over the product. Control is
determined based on when the product is shipped or delivered and title passes to the customer. Revenue is recorded in an amount that reflects the consideration the Company expects to receive in exchange. Revenue from the sale of the Company’s
immunoglobulin products is recognized when the product reaches the customer’s destination, and is recorded net of estimated rebates, price protection arrangements and customer incentives, including prompt pay discounts, wholesaler chargebacks
and other wholesaler fees. These estimates are based on historical experience and certain other assumptions, and the Company believes that such estimates are reasonable. For revenues associated with contract manufacturing and the sale of
intermediates, control transfers to the customer and the performance obligation is satisfied when the customer takes possession of the product from the Boca Facility or from a third-party warehouse that is utilized by the Company.
8
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
Product revenues from the sale of human plasma collected at the Company’s plasma collection centers are
recognized at the time control of the product has been transferred to the customer, which generally occurs at the time of shipment. Product revenues are recognized at the time of delivery if the Company retains control of the product during
shipment.
For the six months ended June 30, 2021, five customers represented an aggregate of 85 % of the Company’s
consolidated revenues. For the six months ended June 30, 2020, three customers represented an aggregate of 81 % of the Company’s consolidated revenues.
Cost of product revenue
Cost of product revenue includes costs associated with the manufacture of the Company’s FDA approved
products, intermediates and the sale of human source plasma, as well as expenses related to conformance batch production, process development and scientific and technical operations when these operations are attributable to marketed products.
When the activities of these operations are attributable to new products in development, the expenses are classified as research and development expenses.
Loss per common share
Basic loss per common share is computed by dividing net loss attributable to common
stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per common share is calculated by dividing net loss attributable to common stockholders, as adjusted for the effect of dilutive
securities, if any, by the weighted average number of shares of common stock and dilutive common stock outstanding during the period. Potentially dilutive common stock includes the shares of common stock issuable upon the exercise of
outstanding stock options and warrants, using the treasury stock method. Potentially dilutive common stock is excluded from the diluted loss per common share computation to the extent that it would be anti-dilutive. As a result, no
potentially dilutive securities are included in the computation of any of the accompanying diluted loss per share amounts in the accompanying condensed consolidated financial statements as the Company reported a net loss for all periods
presented. For the six months ended June 30, 2021 and 2020, the following securities were excluded
from the calculation of diluted loss per common share because of their anti-dilutive effects:
|
For the Six Months Ended June 30,
|
||||||||
|
2021
|
2020
|
|||||||
|
Stock options
|
|
|
||||||
|
Restricted stock units
|
|
|
||||||
|
Warrants
|
|
|
||||||
|
|
|
|||||||
Stock-based compensation
The Company follows recognized accounting guidance which requires all equity-based payments, including grants
of stock options, to be recognized in the statement of operations as compensation expense based on their fair values at the date of grant. Compensation expense related to awards to employees and directors with service-based vesting conditions
is recognized on a straight-line basis over the associated vesting period of the award based on the grant date fair value of the award. Stock options granted under the Company’s equity incentive plans generally have a four-year vesting period and a term of 10
years. Pursuant to ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718), the Company has elected not to establish a forfeiture rate, as stock-based compensation expense
related to forfeitures of unvested stock options is fully reversed at the time of forfeiture.
Income Taxes
The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events
that have been included in the consolidated financial statements or its tax returns. Under this method, deferred tax assets and liabilities are recognized for the temporary differences between the tax bases of assets and liabilities and their
respective financial reporting amounts at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company records a valuation allowance on its deferred tax assets if it is more likely than not
that the Company will not generate sufficient taxable income to utilize its deferred tax assets. The Company is subject to income tax examinations by major taxing authorities for all tax years since 2016 and for previous periods as it relates
to the Company’s net operating loss carryforwards.
9
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
In accordance with U.S. GAAP, the Company is required to determine whether a tax position of the Company is
more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is
measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. Derecognition of a tax benefit previously recognized could result in the Company recording a tax liability that would reduce
net assets. Based on its analysis, the Company has determined that it has not incurred any liability for unrecognized tax benefits as of June 30, 2021 and December 31, 2020, and during the three and six months ended June 30, 2021 and 2020, the
Company recognized no
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments –
Credit Losses (Topic 326) (“ASU 2016-13”), which requires financial assets to be presented at the net amount expected to be collected, with an allowance for credit losses to be deducted from the amortized cost basis of the financial
asset such that the net carrying value of the asset is presented as the amount expected to be collected. Under ASU 2016-13, the entity’s statement of operations is required to reflect the measurement of credit losses for newly recognized
financial assets, as well as expected increases or decreases in expected credit losses that have taken place during the period. For public business entities, ASU 2016-13 is effective for fiscal years beginning after December 15, 2019. The
Company adopted ASU 2016-13 on January 1, 2020, and the adoption of this update did not have a significant impact on the Company’s consolidated financial statements.
| 3. |
INVENTORIES
|
The following table provides the components of inventories:
|
June 30,
2021
|
December 31,
2020
|
|||||||
|
Raw materials
|
$
|
|
$
|
|
||||
|
Work-in-process
|
|
|
||||||
|
Finished goods
|
|
|
||||||
|
Total inventories
|
$
|
|
$
|
|
||||
Raw materials includes plasma and other materials expected to be used in the production of BIVIGAM, ASCENIV
and Nabi-HB, as there are alternative uses for these materials that provide a probable future benefit or will be consumed in the production of goods expected to be available for sale. All other activities and materials associated with the
production of inventories used in research and development activities are expensed as incurred.
Work-in-process inventory primarily consists of bulk drug substance and unlabeled filled vials of the
Company’s immunoglobulin products. Finished goods inventory is comprised of immunoglobulin product inventory and related intermediates that are available for commercial sale, as well as plasma collected at the Company’s plasma collection
centers which is expected to be sold to third-party customers.
10
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
| 4. |
INTANGIBLE ASSETS
|
Intangible assets at June 30, 2021 and December 31, 2020 consist of the following:
|
June 30, 2021
|
December 31, 2020
|
|||||||||||||||||||||||
|
Cost
|
Accumulated
Amortization |
Net
|
Cost
|
Accumulated
Amortization |
Net
|
|||||||||||||||||||
|
Trademark and other intangible rights related to Nabi-HB
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Rights to intermediates
|
|
|
|
|
|
|
||||||||||||||||||
|
Customer contract
|
|
|
|
|
|
|
||||||||||||||||||
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||
All of the Company’s intangible assets were acquired in the Biotest Transaction. Amortization
expense related to these intangible assets was $0.2 0.4 Estimated aggregate future aggregate amortization expense is expected to be as follows:
|
2021
|
$
|
|
||
|
2022
|
|
|||
|
2023
|
|
|||
|
2024
|
|
| 5. |
PROPERTY AND EQUIPMENT
|
Property and equipment and related accumulated depreciation are summarized as follows:
|
June 30, 2021
|
December 31, 2020
|
|||||||
|
Manufacturing and laboratory equipment
|
$
|
|
$
|
|
||||
|
Office equipment and computer software
|
|
|
||||||
|
Furniture and fixtures
|
|
|
||||||
|
Construction in process
|
|
|
||||||
|
Leasehold improvements
|
|
|
||||||
|
Land
|
|
|
||||||
|
Buildings and building improvements
|
|
|
||||||
|
|
|
|||||||
|
Less: Accumulated depreciation
|
(
|
)
|
(
|
)
|
||||
|
Total property and equipment, net
|
$
|
|
$
|
|
||||
Fixed assets are stated at cost less accumulated depreciation. Depreciation is calculated using the
straight-line method over the asset’s estimated useful life. Land is not depreciated. The buildings were assigned a useful life of 30
years. Property and equipment other than land and buildings have useful lives ranging from to 10 years. Leasehold improvements are amortized over the lesser of the lease term or their estimated useful lives.
The Company recorded depreciation expense on property and equipment for
the three and six months ended June 30, 2021 of $1.1 million and $2.2 million, respectively. Depreciation expense for the three and six months ended June 30, 2020 was $0.7 million and $1.3 million, respectively.
11
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
| 6. |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
|
Accrued expenses and other current liabilities at June 30, 2021 and December 31, 2020 are as follows:
|
June 30, 2021
|
December 31, 2020
|
|||||||
|
Accrued rebates
|
$
|
|
$
|
|
||||
|
Accrued distribution fees
|
|
|
||||||
|
Accrued payroll
|
|
|
||||||
|
Accrued testing
|
|
|
||||||
|
Accrued incentives
|
|
|
||||||
|
Accrued severance
|
|
|
||||||
|
Other
|
|
|
||||||
|
Total accrued expenses and other current liabilities
|
$
|
|
$
|
|
||||
| 7. |
DEBT
|
A summary of outstanding senior notes payable is as follows:
|
June 30, 2021
|
December 31, 2020
|
|||||||
|
Notes payable
|
$
|
|
$
|
|
||||
|
Less:
|
||||||||
|
Debt discount
|
(
|
)
|
(
|
)
|
||||
|
Senior notes payable
|
$
|
|
$
|
|
||||
Under the Credit Agreement and Guaranty, as amended from time to time, (the “Perceptive Credit Agreement”)
with Perceptive Credit Holdings II, LP, as the lender and administrative agent (“Perceptive”), the Company has a principal balance outstanding to Perceptive in the form of senior secured notes payable to Perceptive aggregating to $100.0 million with a maturity date of March 1, 2024
(the “Maturity Date”), subject to acceleration pursuant to the Perceptive Credit Agreement, including upon an Event of Default (as defined in the Perceptive Credit Agreement). On the Maturity Date, the Company will pay Perceptive the entire
outstanding principal amount and any accrued and unpaid interest thereon. Prior to the Maturity Date, there are no scheduled principal payments due under the Perceptive Credit Agreement.
Borrowings under the Perceptive Credit Agreement bear interest at a rate per annum equal to 7.5 % plus the greater of (i) one-month
LIBOR and (ii) 3.5 %; provided, however, that upon, and during the continuance of, an Event of Default, the interest rate will
automatically increase by an additional 400 basis points. Accrued interest is payable to Perceptive on the last day of each month
during the term of the Perceptive Credit Facility. The rate of interest in effect as of June 30, 2021 was 11.0 %, and the Company
paid interest to Perceptive during the six months ended June 30, 2021 and 2020 in the amount of $5.5 million and $4.4 million, respectively.
All of the Company’s obligations under the Perceptive Credit Agreement are secured by a first-priority lien
and security interest in substantially all of the Company’s tangible and intangible assets, including intellectual property and all of the equity interests in the Company’s subsidiaries. The Perceptive Credit Agreement contains certain
representations and warranties, affirmative covenants, negative covenants and conditions that are customarily required for similar financings. The negative covenants restrict or limit the ability of the Company and its subsidiaries to, among
other things and subject to certain exceptions contained in the Perceptive Credit Agreement, incur new indebtedness; create liens on assets; engage in certain fundamental corporate changes, such as mergers or acquisitions, or changes to the
Company’s or its subsidiaries’ business activities; make certain Investments or Restricted Payments (each as defined in the Perceptive Credit Agreement); change its fiscal year; pay dividends; repay other certain indebtedness; engage in certain
affiliate transactions; or enter into, amend or terminate any other agreements that have the impact of restricting the Company’s ability to make loan repayments under the Perceptive Credit Agreement. In addition, the Company must (i) at all
times prior to the Maturity Date maintain a minimum cash balance of $3.0 million; and (ii) as of the last day of each fiscal quarter
commencing with the fiscal quarter ended June 30, 2019, report revenues for the trailing 12-month period that exceed the amounts set forth in the Perceptive Credit Agreement, which range from $7.0 million for the fiscal quarter ended June 30, 2019 to $55.0
million for the fiscal quarter ending December 31, 2021. At June 30, 2021, the Company was in compliance with all of the covenants contained in the Perceptive Credit Agreement.
12
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
As a result of the fees paid to Perceptive and the value of the warrants issued to Perceptive under the terms
of the Perceptive Credit Agreement, the Company recognized an aggregate discount on the senior secured notes in the amount of $7.1
million. The Company records debt discount as a reduction to the face amount of the debt, and the debt discount is amortized as interest expense over the life of the debt using the interest method. Based on the fair value of the Perceptive
Warrants and the aggregate amount of fees and expenses associated with obtaining the Perceptive Credit Facility, the effective interest rate on senior secured notes payable to Perceptive as of June 30, 2021 was approximately 13.7 %.
| 8. |
STOCKHOLDERS’ EQUITY
|
Preferred Stock
The Company is currently authorized to issue up to 10 0.0001 no
Common Stock
As of June 30, 2021 and December 31, 2020, the Company was authorized to issue 300,000,000 and 150,000,000 shares,
respectively, of its common stock, $0.0001 131,872,026 and 104,902,888 shares of common stock were
outstanding as of June 30, 2021 and December 31, 2020, respectively. On May 27, 2021, the Company’s stockholders approved an amendment to the Company’s certificate of incorporation which increased the number of shares of common stock that the
Company is authorized to issue from 150,000,000 to 300,000,000 . After giving effect to the 17,073,357 shares reserved for
outstanding warrants and awards issued or reserved for future issuance under the Company’s equity incentive plans, as of June 30, 2021 there were 151,054,617
shares of common stock available for issuance.
On August 5, 2020, the Company entered into the 2020 Sale Agreement with Jefferies (see Note 1), pursuant to
which the Company could offer and sell, from time to time, at its option, through or to Jefferies, up to an aggregate of $50 million
of shares of the Company’s common stock. On November 5, 2020 and February 3, 2021, the Company and Jefferies amended the 2020 Sale Agreement to provide for increases in the aggregate offering amount under the Sale Agreement such that the
Company could sell shares having an aggregate offering price of up to $105.4 million under the 2020 Sale Agreement, as amended.
During the six months ended June 30, 2021, the Company issued and sold 26,907,753 shares of common stock under the 2020 Sale
Agreement and received net proceeds of $59.1 million (see Note 14).
On May 28, 2021, the Company entered into the 2021 Sale Agreement with Jefferies, pursuant to which the
Company may offer and sell, from time to time, at its option, through or to Jefferies, up to an aggregate of $50,000,000 of shares of
the Company’s common stock. As of the date of this report, there have been no sales of common stock under this agreement.
On February 11, 2020, the Company completed an underwritten public offering of 23,500,000 shares of its common stock for gross proceeds of $82.3 million. On February 21, 2020, the Company sold an additional 3,525,000 shares pursuant to
the underwriters’ exercise of their option to purchase additional shares of the Company’s common stock for additional gross proceeds of $12.3
million. The Company received net proceeds, after underwriting discounts and other expenses associated with the offering, of approximately $88.7
million.
Warrants
At June 30, 2021 and December 31, 2020, the Company had outstanding warrants to purchase an aggregate of 4,528,160 2.82
13
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
Equity Incentive Plans
The fair value of stock options granted under the Company’s 2007 Employee Stock Option Plan
(the “2007 Plan”) and the ADMA Biologics, Inc. 2014 Omnibus Incentive Compensation Plan, as amended and restated (the “2014 Plan”), was determined on the date of grant using the Black-Scholes option valuation model. The Black-Scholes model
was developed for use in estimating the fair value of publicly traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of certain subjective assumptions including
the expected stock price volatility. The stock options granted to employees and directors have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the
fair value estimate. The following assumptions were used to determine the fair value of options granted during the six months ended June 30, 2021 and
2020:
|
Six Months Ended June 30,
|
|||
|
2021
|
2020
|
||
|
Expected term
|
|
|
|
|
Volatility
|
|
|
|
|
Dividend yield
|
|
|
|
|
Risk-free interest rate
|
|
|
|
During the six months ended June 30, 2021 and 2020, the Company granted options to purchase an aggregate of 1,658,050 and 1,232,500 shares of
common stock, respectively, to its directors, employees and certain third-party service providers. The weighted average remaining contractual life of stock options outstanding and expected to vest at June 30, 2021 is 6.5 5.2 years.
A summary of the Company’s option activity under the 2007 Plan and 2014 Plan and related information is as
follows:
|
Shares
|
Weighted
Average
Exercise Price
|
|||||||
|
Options outstanding, vested and expected to vest at December 31, 2020
|
|
$
|
|
|||||
|
Forfeited
|
(
|
)
|
$
|
|
||||
|
Expired
|
(
|
)
|
$
|
|
||||
|
Granted
|
|
$
|
|
|||||
|
Exercised
|
|
$
|
|
|||||
|
Options outstanding, vested and expected to vest at June 30, 2021
|
|
$
|
|
|||||
|
Options exercisable
|
|
$
|
|
|||||
As of June 30, 2021, the Company had $4.2 million of unrecognized compensation expense related to options granted under the Company’s equity incentive plans, which is expected to be recognized over a
weighted-average period of 2.6 years.
During the six months ended June 30, 2021 and 2020, the Company granted Restricted Stock Units
(“RSUs”) representing an aggregate of 542,244 and 341,000 shares, respectively, to certain management employees of the Company and to members of its Board of Directors. The RSUs vest annually over a period of four years for employees and semi-annually over a period of one year
for directors. During the six months ended June 30, 2021, 87,750 shares vested in connection with grants of RSUs. With respect to
these vested RSUs, 26,365 shares valued at approximately $59,000 were withheld by the Company to cover employees’ tax liabilities. On March 25, 2021, these shares were retired by the Company and were no longer outstanding as of
June 30, 2021. A summary of the Company’s unvested RSU activity and related information is as follows:
14
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
|
Shares
|
Weighted
Average Grant
Date Fair Value
|
|||||||
|
Balance at December 31, 2020
|
|
$
|
|
|||||
|
Granted
|
|
$
|
|
|||||
|
Vested
|
(
|
)
|
$
|
|
||||
|
Forfeited
|
(
|
)
|
$
|
|
||||
|
Balance at June 30, 2021
|
|
$
|
|
|||||
As of June 30, 2021, the Company had $1.5 million of unrecognized compensation expense related to unvested RSUs granted under the Company’s equity incentive plans, which is expected to be recognized over a
weighted-average period of 3.3 years.
Total stock-based compensation expense for all awards granted under the Company’s equity incentive plans for
the three months and six months June 30, 2021 and 2020 is as follows:
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
|
2021
|
2020
|
2021
|
2020
|
|||||||||||||
|
Research and development
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Plasma center operating expenses
|
|
|
|
|
||||||||||||
|
Selling, general and administrative
|
|
|
|
|
||||||||||||
|
Cost of product revenue
|
|
|
|
|
||||||||||||
|
Total stock-based compensation expense
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
| 9. |
RELATED PARTY TRANSACTIONS
|
The Company leases an office building and equipment from Areth, LLC (“Areth”)
pursuant to an agreement for services effective as of January 1, 2016, as amended from time to time. Rent expense for the six months ended June 30, 2021 and 2020 amounted to $60,000 0.1 million. This amount was immaterial to the consolidated financial
statements for the three and six months ended June 30, 2020. Dr. Grossman and Adam Grossman each own shares of Genesis.
See Note 7 for a discussion of the Company’s credit facility and related
transactions with Perceptive, a holder of more than 10 % of the Company’s common stock.
During the three and six months ended June 30, 2021, in connection with the
resignation of Dr. James Mond, the Company’s former Chief Scientific and Medical Officer, the Company recognized an expense and corresponding liability in the amount of $0.8 million for estimated payments to be made under a separation and transition agreement with Dr. Mond. Such payments are to be made in scheduled installments over a period of 10 months.
In connection with the February 2020 public offering of the Company’s common stock
(see Note 8) on February 11, 2020: (i) Perceptive Advisors, a principal stockholder of ADMA, purchased 4,563,700 shares of common stock
through one of its affiliates, (ii) Dr. Grossman purchased 22,857 shares of common stock directly and 22,857 shares indirectly through an entity he controls, (iii) Lawrence P. Guiheen, a director of the Company, purchased 20,000 shares of common stock, (iv) Mr. Grossman purchased 28,571 shares of common stock directly and 57,143 shares indirectly through an
entity he controls, (v) Brian Lenz, the Company’s Executive Vice President and Chief Financial Officer, purchased 7,142 shares of common
stock, and (vi) Dr. Mond purchased 4,285 shares of common stock, all at the public offering price of $3.50 per share.
15
| Index |
|
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
| 10. |
COMMITMENTS AND CONTINGENCIES
|
General Legal Matters
From time to time the Company is or may become subject to certain legal proceedings and claims arising in
connection with the normal course of its business. Management does not expect that the outcome of any such claims or actions will have a material effect on the Company’s liquidity, results of operations or financial condition.
COVID-19 Pandemic
The Company continues to monitor the ongoing developments related to the COVID-19 pandemic, including the
emergence of the Delta variant and other resistant strains of the coronavirus, and its impacts to the Company’s commercial and manufacturing operations and plasma collection facilities, including collections of source plasma, procurement of raw
materials and packaging materials, a portion of which are sourced internationally, and the testing of finished drug product that is required prior to its availability for commercial sale. A substantial portion of such testing has historically
been performed by contract laboratories outside the United States.
The Company had experienced some delays with final drug product release testing by third-party vendors. In
response to these delays, the Company added additional release testing laboratories to its FDA-approved consortium listed in its drug approval documents which the Company believes has adequately addressed this issue. In addition, due to a
combination of previous state and local “shelter-in-place” orders, as well as government stimulus packages, persisting social distancing measures and varying roll-outs of vaccinations by state, the Company has experienced lower than normal
donor collections at its FDA approved plasma collection centers. The Company was also subject to delays in shipments of source plasma from its contracted third-party suppliers, as well as delays in deliveries for personal protective equipment,
reagents and other non-plasma raw materials and supplies used in the manufacture and distribution of its products. The Company is also subject to supply chain delays as a result of certain of its suppliers diverting significant resources
towards the rapid development and distribution of COVID-19 vaccines and, as a result, the Company may elect to carry more raw materials inventory than it has in the past. The COVID-19 pandemic has also impacted, to a certain degree, the
Company’s customer engagement initiatives, whereby ADMA’s sales and medical affairs field personnel have faced difficulties communicating directly with physicians and other healthcare professionals, as well as the cancellation or postponement
of a number of key scientific and medical meetings, further limiting the Company’s ability to communicate with potential customers. The Company has implemented a comprehensive suite of virtual engagement initiatives, however, clinician
engagement has been reduced due to rapidly evolving COVID-19 priorities at U.S. medical c