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 September 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 November 5, 2021, there were 195,813,817 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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39
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Item 1.
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39
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Item 1A.
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39
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Item 2.
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69
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Item 3.
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70
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Item 4.
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70
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Item 5.
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70
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Item 6.
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70
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71
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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 Current Good Manufacturing Practices (“cGMP”) 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 (“IG”) 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 September 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
| Item 1. |
Financial Statements.
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ADMA BIOLOGICS, INC. AND SUBSIDIARIES
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September 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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||||
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TOTAL STOCKHOLDERS’ EQUITY
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||||||
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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 September 30,
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Nine Months Ended September 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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)
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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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)
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Other income (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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)
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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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(
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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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(
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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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)
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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 Nine Months Ended September 30, 2021
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Common Stock
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Additional
Paid-in
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Accumulated
|
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
|
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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|||||||||||||||
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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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(
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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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|||||||||||||
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Balance at March 31, 2021
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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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|||||||||||||||
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Issuance of common stock, net of offering expenses
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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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|||||||||||||
| Balance at June 30, 2021 | ( |
) | ||||||||||||||||||
| Issuance of common stock, net of offering expenses | ||||||||||||||||||||
| Vesting of Restricted Stock Units, net of shares withheld for taxes and retired | ( |
) | ( |
) | ||||||||||||||||
| Stock-based compensation | - |
|||||||||||||||||||
| Net loss |
- |
( |
) | ( |
) | |||||||||||||||
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Balance at September 30, 2021
|
|
$
|
|
$
|
|
$
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(
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)
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$
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|
||||||||||
For the Three and Nine Months Ended September 30, 2020
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Common Stock
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Additional
Paid-in
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Accumulated
|
Total
Stockholders’
|
|||||||||||||||||
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Shares
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Amount
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Capital
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Deficit
|
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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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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|||||||||||||||
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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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|||||||||||||
| Balance at June 30, 2020 | ( |
) | ||||||||||||||||||
| Stock-based compensation | - |
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| Vesting of restricted stock units | ( |
) | ||||||||||||||||||
| Issuance of common stock, net of offering expenses | ||||||||||||||||||||
| Net loss |
- |
( |
) | ( |
) | |||||||||||||||
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Balance at September 30, 2020
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
(Unaudited)
|
Nine Months Ended September 30,
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||||||||
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2021
|
2020
|
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CASH FLOWS FROM OPERATING ACTIVITIES:
|
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Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
||
|
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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Changes in operating assets and liabilities:
|
||||||||
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Accounts receivable
|
(
|
)
|
(
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)
|
||||
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Inventories
|
(
|
)
|
(
|
)
|
||||
|
Prepaid expenses and other current assets
|
(
|
)
|
(
|
)
|
||||
|
Deposits and other assets
|
(
|
)
|
(
|
)
|
||||
|
Accounts payable
|
|
(
|
)
|
|||||
|
Accrued expenses
|
|
|
||||||
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Other current and non-current liabilities
|
|
(
|
)
|
|||||
|
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
||||
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Purchase of property and equipment
|
(
|
)
|
(
|
)
|
||||
|
Proceeds from the sale of property and equipment
|
|
|
||||||
|
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Proceeds from issuance of common stock, net of offering expenses
|
|
|
||||||
|
Proceeds from the exercise of stock options
|
|
|
||||||
|
Taxes paid on vested Restricted Stock Units
|
(
|
)
|
|
|||||
|
Proceeds from issuance of note payable
|
|
|
||||||
|
Payments on finance lease obligations
|
(
|
)
|
(
|
)
|
||||
|
Net cash provided by financing activities
|
|
|
||||||
|
Net (decrease) increase in cash and cash equivalents
|
(
|
)
|
|
|||||
|
Cash and cash equivalents - beginning of period
|
|
|
||||||
|
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
| 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 nine plasma collection facilities in various stages of approval and development
located throughout the U.S., three of which hold an approved license with the U.S. Food and Drug Administration (the “FDA”).
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 September
30, 2021, the Company had working capital of $142.4 million, including $34.4 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, including the proceeds received from the underwritten public offering
completed by the Company on October 25, 2021 (see Note 14), will be sufficient to fund ADMA’s operations, as currently conducted, through the first half of 2022. In order to have sufficient cash to fund its operations thereafter, the Company
anticipates it will need to raise additional capital during the second half of 2022, which includes the Company’s plans to refinance and expand upon its existing debt facility. The
Company believes that a debt refinancing and expansion of its current debt facility, combined with the proceeds received from the foregoing public offering further discussed in Note 14, will be sufficient to fund its operations into the first
quarter of 2024, at which time the Company believes its operations will be cash flow positive. The Company is also evaluating a variety of strategic and financing alternatives and has engaged Morgan Stanley as a financial advisor in
connection with certain of those strategic alternatives. There can be no assurances that the Company will be able to successfully refinance or expand its existing debt to obtain additional non-dilutive financing. 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, including for refinancing or
expanding the Company’s debt, 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
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 September 30, 2021 of $395.5 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.
During the nine months ended September 30, 2021, the Company raised $67.3
million from the sale of its common stock (see Note 8). On October 25, 2021, the Company completed an underwritten public offering which raised an additional $53.9 million from the sale of its common stock (see Note 14). 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.
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
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 September 30, 2021 and its results of operations,
changes in equity and cash flows for the three and nine months ended September 30, 2021.
During the three and nine months ended September 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 September 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 September 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
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
September 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, 2021 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
nine months ended September 30, 2021 and 2020, the Company determined that there was no
Revenue Recognition
Revenues for the three and nine months ended September 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
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 nine months ended September 30, 2021, four customers represented an aggregate of 74 % of the
Company’s consolidated revenues. For the nine months ended September 30, 2020, three customers represented an aggregate of 82 % 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 nine months ended September 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 Nine Months Ended September 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
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 September 30, 2021 and December 31, 2020, and during the three and nine months ended September 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:
|
September 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.
These materials will be consumed in the production of goods expected to be available for sale or otherwise have alternative uses that provide a probable future benefit. 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
ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 4. |
INTANGIBLE ASSETS
|
Intangible assets at September 30, 2021 and December 31, 2020 consist of the following:
|
September 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 0.5 Estimated aggregate future aggregate amortization expense is expected to be as follows:
|
Remainder of 2021
|
$
|
|
||
|
2022
|
|
|||
|
2023
|
|
|||
|
2024
|
|
| 5. |
PROPERTY AND EQUIPMENT
|
Property and equipment and related accumulated depreciation are summarized as
follows:
|
September 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
|
$
|
|
$
|
|
||||
Property and equipment 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
nine months ended September 30, 2021 of $1.2 million and $3.4 million, respectively. Depreciation expense for the three and nine months ended September 30, 2020 was $0.9 million and $2.2 million, respectively.
11
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 September 30, 2021 and December 31, 2020 are as follows:
|
September 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:
|
September 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 September 30, 2021 was 11.0 %, and the
Company paid interest to Perceptive during the nine months ended September 30, 2021 and 2020 in the amount of $8.3 million and $6.8 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 September 30, 2021, the Company was in compliance with all of the covenants contained in the Perceptive Credit Agreement.
12
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 September 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 September 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 138,313,817 and 104,902,888 shares of common stock were
outstanding as of September 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 16,828,915 shares reserved for
outstanding warrants and awards issued or reserved for future issuance under the Company’s equity incentive plans, as of September 30, 2021 there were 144,641,489
shares of common stock available for issuance.
On August 5, 2020, the Company entered into an open market sale agreement (as amended from time to time, the “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, 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 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 Sale Agreement, as amended. During the nine months ended
September 30, 2021, the Company issued and sold 27,805,198 shares of common stock under the 2020 Sale Agreement and received net
proceeds of $60.4 million. The Sale Agreement was terminated on August 31, 2021.
On September 3, 2021, the Company
entered into a distribution agreement with Raymond James & Associates, Inc., as agent (“Agent”), pursuant to which the Company may offer and sell, from time to time, at its option, through or
to the Agent, up to an aggregate of $50 million of
shares of the Company’s common stock (the “Distribution Agreement”). The Company currently intends to use any net proceeds from the sale of its common stock under the Distribution Agreement for general corporate purposes, including
procurement of raw materials, source plasma, supply chain initiatives and production expenditures, funding expansion of plasma centers, working capital, capital expenditures, expansion and resources for commercialization activities, and other
potential research and development and business opportunities. During the nine months ended September 30, 2021, the Company issued 5,540,831
shares of its common stock under the Distribution Agreement and received net proceeds of $6.9 million.
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 September 30, 2021 and December 31, 2020, the Company had outstanding warrants to purchase an aggregate of 4,528,160 2.82
13
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 nine months ended September 30, 2021 and 2020:
|
Nine Months Ended September 30,
|
||||||||
|
2021
|
2020
|
|||||||
|
Expected term
|
|
|
||||||
|
Volatility
|
|
%
|
|
%
|
||||
|
Dividend yield
|
|
|
||||||
|
Risk-free interest rate
|
|
%
|
|
%
|
||||
During the nine months ended September 30, 2021 and 2020, the Company granted options to purchase an aggregate of 1,757,050 and 1,398,412 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 September 30, 2021 is 6.3 5.1 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 September 30, 2021
|
|
$
|
|
|||||
|
Options exercisable
|
|
$
|
|
|||||
As of September 30, 2021, the Company had $3.7 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 2.5 years.
During the nine months ended September 30, 2021 and 2020, the Company granted Restricted Stock Units
(“RSUs”) representing an aggregate of 4,332,244 and 361,000 shares, respectively, to certain management employees of the Company and to members of its Board of Directors. Except for the RSUs granted under the Company’s retention incentive program discussed below, the RSUs generally vest annually over a period of four years for employees and semi-annually over a period of one year for directors. On September
28, 2021, the Company implemented a retention incentive program for the Company’s executive management and certain employees (see Note 10), whereby the Company issued an aggregate of 3,780,000 RSUs, of which 2,632,500 are time-based RSUs and 1,147,500 are milestone-based RSUs. Fifty percent
of the time-based RSUs granted under the retention bonus program will vest on December 31, 2022, with the remainder vesting in quarterly installments through December 31, 2024. The milestone-based RSUs will vest upon achievement of the
applicable milestone, with each milestone required to be achieved on or prior to December 31, 2022. The Company will periodically assess the probability of vesting for each milestone-based RSU and will adjust compensation expense based on
its probability assessment.
During the nine months ended September 30, 2021, 92,750 shares vested in connection with grants of RSUs. With respect to these vested RSUs, 27,850 shares valued at approximately $62,000 were withheld by the Company to cover employees’
tax liabilities. These shares have been retired by the Company and were no longer outstanding as of September 30, 2021. A summary of the Company’s
unvested RSU activity and related information is as follows:
14
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
|
|
$
|
||||||