ADMA Biologics, Inc. (“ADMA” or the “Company”) is a vertically integrated commercial biopharmaceutical company that manufactures, markets and develops specialty plasma-derived biologics for the treatment of Primary Immune Deficiency Disease (“PIDD”) and the prevention and treatment of certain infectious diseases. The Company’s targeted patient populations include immune-compromised individuals who suffer from an underlying immune deficiency disorder or who may be immune-suppressed for medical reasons. ADMA operates through its wholly-owned subsidiaries ADMA BioManufacturing, LLC (“ADMA BioManufacturing”) and ADMA Bio Centers Georgia Inc. (“ADMA Bio Centers”). ADMA BioManufacturing was formed in January 2017 to facilitate the acquisition of the Biotest Therapy Business Unit (“BTBU”) of Biotest Pharmaceuticals Corporation (“BPC” and, together with Biotest AG, “Biotest”) as more fully described below. ADMA Bio Centers is the Company’s source plasma collection business, with facilities located in Norcross, GA, Marietta, GA and Kennesaw, GA. All three of the Company’s plasma collection facilities have approved licenses with the U.S. Food and Drug Administration (the “FDA”) and the Norcross, GA and Marietta, GA facilities have certifications from the German Health Authority (the “GHA”) and the Korean Ministry of Food and Drug Safety.

As discussed in Note 3, on June 6, 2017, ADMA completed the acquisition of certain assets (the “Biotest Assets”) of BTBU, which include two FDA-licensed products, Nabi-HB (Hepatitis B Immune Globulin, Human) and BIVIGAM (Immune Globulin Intravenous, Human), and a plasma fractionation facility located in Boca Raton, FL (the “Boca Facility”) (the “Biotest Transaction”). In addition to Nabi-HB and BIVIGAM, BTBU also provides contract manufacturing services for certain clients, including the sale of intermediate by-products. The Boca Facility is FDA-licensed and certified by the GHA. Immediately following the closing of the Biotest Transaction, the Biotest Assets were contributed into ADMA BioManufacturing.

Nabi-HB is a hyperimmune globulin that is rich in antibodies to the hepatitis B virus. Nabi-HB is indicated for the treatment of acute exposure to blood containing hepatitis B surface antigen (“HBsAg”), prenatal exposure to infants born to HBsAg-positive mothers, sexual exposure to HBsAg-positive persons and household exposure to persons with acute Hepatitis B virus infection. FDA approval for Nabi-HB was received on March 24, 1999. Under ADMA’s leadership, the production of Nabi-HB resumed during the third quarter of 2017, resulting in subsequent commercial sales.

BIVIGAM is indicated for the treatment of primary humoral immunodeficiency. FDA approval for BIVIGAM was received on December 19, 2012, and sales commenced in the first quarter of 2013. In December 2016, Biotest temporarily suspended the commercial production of BIVIGAM in order to focus on the completion of planned improvements to the manufacturing process. ADMA resumed production of BIVIGAM during the fourth quarter of 2017. The Company submitted a Prior Approval Supplement (the “PAS”) for BIVIGAM to amend the FDA-approved Biologics License Application (“BLA”) for BIVIGAM and once approved, ADMA intends to relaunch BIVIGAM in the United States. The Prescription Drug User Fee Act (“PDUFA”) target action date for the PAS is December 18, 2018. The BIVIGAM inventory of three conformance batches produced in the fourth quarter of 2017 and the first quarter of 2018 was used in connection with, and as the basis for, the prepared and submitted PAS, which was accepted for review by the FDA in July 2018. Upon approval of the PAS by the FDA, the Company intends to relaunch BIVIGAM. This relaunch is expected to take place during the first half of 2019, at which time the Company believes the conformance lots currently in inventory can be labeled and will be available for commercial sale. The anticipated relaunch of BIVIGAM is dependent upon the timing of certain FDA decisions, production slots available with the Company’s contract fill/finish provider as well as other commercial requirements and regulatory factors.

Prior to the closing of the Biotest Transaction, BTBU was the Company’s third-party manufacturer for RI-002. In the third quarter of 2015, the FDA accepted for review the Company’s BLA for RI-002 (the “RI-002 BLA”) for the treatment of PIDD. In July 2016, the FDA issued a Complete Response Letter (the “CRL”) to the Company for the RI-002 BLA. Although the CRL did not cite any concerns with the clinical safety or efficacy data for RI-002 submitted in the RI-002 BLA, nor did the FDA request any additional clinical studies be completed prior to FDA approval of RI-002, the CRL reaffirmed the issues set forth in the November 2014 warning letter (the “Warning Letter”) that had been issued by the FDA to Biotest related to certain compliance issues identified at the Boca Facility, and also identified certain outstanding inspection issues and deficiencies at the Boca Facility and certain of the Company’s third-party vendors, and requested documentation of corrections for a number of these issues. The FDA indicated in the CRL that it cannot grant final approval of the BLA until, among other things, these deficiencies are resolved. Upon the completion of the Biotest Transaction, ADMA gained control over the regulatory, quality, general operations and drug substance manufacturing process at the Boca Facility, and the Company’s highest priority has been the remediation of the outstanding compliance issues that were identified at the Boca Facility in the Warning Letter. The Company has been working with a consulting firm consisting of quality management systems and biologics production subject matter experts in order to improve the FDA inspection classification relative to the Warning Letter compliance issues as indicated in the CRL. Based on communication received from the FDA in July 2018 following the April 2018 FDA inspection, the Company has determined that the April 2018 compliance inspection of the Boca Facility has been successfully closed out. The Company responded to the CRL and resubmitted the RI-002 BLA on September 28, 2018. As part of the RI-002 BLA resubmission, ADMA produced three conformance batches of inventory during the first quarter of 2018, which was used in connection with such BLA submission. The Company believes that this RI-002 inventory can be used for commercial sale once the RI-002 BLA is approved by the FDA. In October 2018, the FDA acknowledged receipt of the Company’s RI-002 BLA resubmission and set a target action date under PDUFA of April 2, 2019. Upon approval of the RI-002 BLA by the FDA, the Company intends to commercialize RI-002 during the first half of 2019, with a full commercial launch anticipated for the second half of 2019.

As of September 30, 2018, the Company had working capital of $52.6 million, including $42.4 million of cash and cash equivalents. Based upon the Company’s current projected revenue and expenditures, including capital expenditures and regulatory and consulting fees for the remediation of the Warning Letter and ongoing discussions with the FDA, as well as continuing implementation of the Company’s commercialization and expansion activities and certain other assumptions, the Company’s management currently believes that its cash, cash equivalents, projected revenue and accounts receivable, along with the additional $10.0 million it is able to access under its senior credit facility, will be sufficient to fund ADMA’s operations, as currently conducted, into the second quarter of 2019. In order to have sufficient cash to fund its operations thereafter and to continue as a going concern, the Company will need to raise capital prior to the end of the second quarter of 2019. These estimates may change based upon how quickly the Company is able to execute on its quality management systems’ remediation plans for the ADMA BioManufacturing operations, timing of receipt of communications, determinations and feedback from the FDA regarding inspectional outcomes and remediation activities undertaken to date, commercial manufacturing ramp-up activities and the various financing options available to the Company. The Company currently has no firm commitments for additional financing, and there can be no assurances that the Company will be able to secure additional financing on terms that are acceptable to the Company, or at all. Furthermore, if the Company’s assumptions underlying its estimated expenses and revenues are incorrect, it may have to raise additional capital sooner than currently anticipated.

Due to numerous risks and uncertainties associated with ongoing remediation efforts, regulatory review processes and the research and development and potential future commercialization of its products and product candidates, the Company is unable to estimate with certainty the amounts of increased capital outlays and operating expenditures associated with its development activities. The Company’s current estimates may be subject to change as circumstances regarding its business requirements evolve. The Company may decide to raise capital through public or private equity offerings or debt financings, or obtain a bank credit facility or corporate collaboration and licensing arrangements. The sale of additional equity or debt securities, if convertible, could result in dilution to the Company’s stockholders and, in such event, the value and potential future market price of its common stock may decline. The incurrence of additional indebtedness would result in increased fixed obligations and could also result in covenants that would restrict the Company’s operations or other financing alternatives. Failure to secure any necessary financing in a timely manner and on commercially reasonable terms could have a material adverse effect on the Company’s business plan and financial performance and it could be forced to delay or discontinue its product development, clinical trial or commercialization activities, delay or discontinue the approval efforts for any of the Company’s potential products or potentially cease operations. The Company has reported losses since inception in June 2004 through September 30, 2018 of $198.4 million. Management believes that the Company will continue to incur net losses and negative net cash flows from operating activities to fund its research and development and commercial programs and to meet its obligations on a timely basis through the foreseeable future. As such, these factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed 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 if the Company is unable to continue as a going concern.

In June 2018, the Company completed an underwritten public offering of its common stock and received net proceeds of $42.9 million (see Note 5).

There can be no assurance that the Company’s research and development will be successfully completed or that any product will be approved or commercially viable. The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, dependence on collaborative arrangements, development by the Company or its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, and compliance with FDA and other governmental regulations and approval requirements.