Last Updated on June 9, 2019 by Sultan Beardsley
ADMA Biologics (Nasdaq: ADMA), an innovator in the manufacturing and sale of intravenous immunoglobulin (IVIG) medicine, delivered a 23 minute presentation June 6th at the Jefferies 2019 Healthcare conference. The weeks leading up to the conference we have seen short-lived peaks and prolonged-vallies triggered by FDA approval of ADMA’s now third commercial product BIVIGAM, and a subsequent public offering raising $50 million dollars. Although it was saddening to see ADMA drop -12% today for reasons discussed in this article, and related to what appears to be Biotest Holdings selling stock, the presentation today by ADMA founder, president, and CEO Adam Grossman renewed my optimism. In the rest of this article I’ll discuss key points from the presentation.
BIVIGAM and ASCENIV…Coming To A Pharmacy Near You
Mr. Grossman stated that BIVIGAM’s commercial launch should happen by the end of the summer (August-September), and ASCENIV is to follow suite soon after (September-November). Something I found interesting was that BIVIGAM brought in between $50-70 M in top line revenue when it belonged to Biotest. Mr. Grossman did not specify if this was annual or quarterly revenue, but I am assuming annual. As Mr. Grossman said; “more importantly” the FDA approved RI-002, now called ASCENIV.
What sets ADMA apart from other IVIG suppliers in the U.S is their disease-specific approach. Both BIVIGAM and ASCENIV are approved for Primary Immune Deficiency Disease (PIDD). PIDD is caused by genetic defects in genes coding for antibodies that fight off pathogens. But, there are many different types of mutations that consequently result in different manifestation of PIDD. As such, BIVIGAM and ASCENIV have distinct compositions. This allows ADMA to reach more patients across the PIDD spectrum. For instance, BIVIGAM is better suited for general PIDD-types like “Bubble Boy Disease”, and ASCENIV is ideal for individuals with extremely high risk of contracting infections, especially the Respiratory syncytial virus (RSV).
ADMA has 5 patents in the U.S. pertaining to methods of manufacturing, refining, and testing plasma in producing IVIG products. The latest of which came April 17th and was for methods of treatment and prevention of S. pneumonia infection. Basically, ADMA harvests plasma from individuals previously vaccinated for the disease and pools their plasma. ASCENIV production is supported by 3 patents protecting the manufacturing and quality assurance methods used. IP protection for ADMA patents extend into 2030.
Poised For Growth
ADMA has 3 products approved in a growing market where demand is outpacing supply. The U.S immuno globulin (IG) market will probably pull in ~$7-10 billion in 2019. Its possible those figures double or triple by 2025. The reason being is not simply because manufacturers are producing more to satisfy demand (although that is happening too), but doctors are prescribing IVIG medicine more. On top of the numerous FDA approved uses, there are hundreds of off-label conditions Doctors are comfortable prescribing IVIG for. Insurance is generally willing to reimburse patients too.
Deeper market penetration of NABI-HB, and label expansion of ASCENIV are two additional potential revenue streams. An interesting idea Mr. Grossman mentioned was “maybe its time for the CDC to revise their prophylaxis disease prevention guidelines for victims of sexual assault”. For those of you unfamiliar with NABI-HB it is a preventative treatment for Hepatitis B infection; people who are sexually assaulted are often prescribed preventative treatments for sexually transmitted diseases.
ASCENIV is made by using ADMA’s proprietary testing method that identifies plasma samples with elevated RSV-antibody levels. Mr. Grossman stated that he anticipated updating shareholders later this summer about next-steps for expanding ACENIV’s label to include treating RSV infection. There is phase 2 data available on ADMA’s website where ASCENIV demonstrated robust efficacy in infected patients.
ADMA Operates Efficiently
I am impressed with how streamlined and resourceful ADMA is. As a vertically integrated company they are not reliant on other businesses for their products, materials, manufacturing, etc. Moreover, they capitalize on opportunities to generate revenue at several points in their production chain. Plasma that meets ADMA’s specified criteria gets manufactured into IVIG medicine. A portion of the remaining plasma is sold to third-parties. Furthermore, intermediate byproducts created during the manufacturing process are sold.
An Experienced And Competent Team
Maybe the most critical thing to consider when investing in a company is the quality of its leadership. At the end of the day, the only tangible thing there is is people. ADMA has executed its plans successfully since acquiring BIVIGAM, NABI-HB, and the Boca-Raton manufacturing facility in 2017. In September 2018 the aforementioned facility was upgraded from Office Action Indicated (OAI) to Voluntary Action Indicated (VAI). This is something Biotest was unable to achieve in 4 years. Despite getting complete response letter (CRL) in December 2018 for BIVIGAM’s PAS submission, ADMA’s management secured approval 5-months later. In the meantime they secured FDA approval of ASCENIV.
At the end of the day I am betting on the people at ADMA more than anything else. Today hurt, but I do not feel that anything has changed to weaken my investment thesis. Let’s get this bread baby!
I am/we are long ADMA. I was not compensated to write this.