Quarterly report pursuant to Section 13 or 15(d)


9 Months Ended
Sep. 30, 2016
Accounting Policies [Abstract]  

ADMA Biologics, Inc. (“ADMA” or the “Company”) is a late stage biopharmaceutical company that develops, manufactures, and intends to commercialize specialty plasma-based biologics for the proposed treatment of immune deficiencies and prevention of certain infectious diseases. The Company’s targeted patient populations include immune-compromised individuals who suffer from an underlying immune deficiency disease or who may be immune-suppressed for medical reasons. ADMA also operates through its wholly-owned subsidiary, ADMA BioCenters Georgia, Inc., (“ADMA BioCenters”), a source plasma collection business with U.S. Food and Drug Administration (“FDA”) approved facilities in Norcross, Georgia and Marietta, Georgia.  Each facility holds certifications from the German Health Authority (“GHA”) and the Korean Ministry of Food and Drug Safety (“MFDS”).  ADMA BioCenters supplies ADMA with a portion of its raw material plasma for the manufacture of RI-002, ADMA’s lead product candidate, which the Company is currently developing for the treatment of Primary Immune Deficiency Disease (“PIDD”). A Biologics License Application (“BLA”) for RI-002 was submitted to the FDA and accepted for review during the third quarter of 2015.  In July 2016, the FDA issued a Complete Response Letter (“CRL”) to the Company for its BLA for RI-002.  The CRL did not cite any concerns with the clinical safety and efficacy data for RI-002, nor has the FDA requested any additional clinical studies be conducted prior to FDA approval of RI-002 for PIDD.  In its letter, among other things, the FDA focused on outstanding inspection issues and deficiencies at ADMA’s third-party vendors, including the Company’s contract drug substance and product manufacturer and its contract fill and finish provider and compliance issues with a third-party contract testing laboratory, and requested documentation of corrections for a number of those issues.  The FDA indicated that it cannot grant final approval of the BLA until, among other things, these deficiencies are resolved.  The Company continues to collaborate with its third-party vendors to identify solutions to the issues identified in the CRL and is preparing documentation for submission to the FDA to address the CRL. The Company and its vendors are awaiting certain feedback from the agency on submissions already made and the Company intends to provide a timeline for resubmission of the BLA for RI-002 as soon as practicable.


In May 2016, the Company completed an underwritten public offering of its common stock, raising gross proceeds of approximately $14.1 million, and subsequently borrowed an additional $4.0 million under its Loan and Security Agreement (“LSA”) with Oxford Finance LLC (“Oxford”), which brought the total principal borrowed to $20.0 million.  See Footnote 3.


As of September 30, 2016, the Company had working capital of $20.6 million, consisting primarily of $7.9 million of cash and cash equivalents, $11.0 million of short-term investments, $4.6 million of inventories, $1.3 million of accounts receivable and $0.5 million of prepaid expenses, offset primarily by $2.8 million of accounts payable, $1.8 million of accrued expenses and $0.1 million of deferred revenue.  Based upon the Company’s projected revenue and expenditures for 2016 and 2017, including regulatory and consulting fees for RI-002 associated with third-party manufacturers and ongoing discussions with the FDA, continuing implementation of the Company’s commercialization and expansion activities and certain other assumptions, management currently believes that its cash, cash equivalents, short-term investments, projected revenue and accounts receivable are sufficient to fund ADMA’s operations, as currently conducted, into the second half of 2017.  These estimates may change based upon whether or when the FDA approves RI-002, the timing of any required commercial manufacturing scale up activities or if any other assumptions of the Company change.  The Company has the option to borrow an additional $5.0 million through its current LSA, if RI-002 is approved by the FDA prior to January 31, 2017, which funding would also extend its interest only period for an additional six months pursuant to the May 2016 amendment to the LSA.  Other than this additional $5.0 million, the Company does not have any existing commitments for future funding.  In addition to traditional debt financing, the Company may also sell additional equity or convertible debt securities, each of which could result in dilution to the Company’s stockholders.  The incurrence of additional indebtedness would result in increased fixed obligations and if issued outside the LSA, could also result in additional covenants that would restrict the Company’s operations or other financing alternatives.  Additional equity or debt financing, grants, or corporate collaboration and potential licensing arrangements may not be available on acceptable terms, if at all.  If adequate funds are not available, the Company may be required to delay, reduce the scope of or eliminate the Company’s research and development programs, and delay or abandon potential commercialization efforts of the Company’s lead or other product candidates.  The Company has experienced net losses and negative cash flows from operations since inception in 2004 and expects these conditions to continue for the foreseeable future.  Since inception, the Company has raised capital from the sales of its equity securities and debt financings to sustain operations. The Company has reported cumulative losses since inception in June 2004 through September 30, 2016 of $102.4 million.  ADMA’s long-term liquidity will be dependent upon on its ability to obtain FDA approval for RI-002, to generate sales of RI-002 and potentially raise additional capital, to fund its research and development and commercial programs and to meet its obligations on a timely basis, if at all.


There can be no assurance that the Company’s research and development and commercial programs will be successfully completed or that any product will be approved or, if approved, be commercially viable.  The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, dependence on collaborative arrangements and third-party manufacturers, 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.