What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-10 compared with 2021-08-11 · 331 added, 324 removed, 245 unchanged (73% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion of our financial condition and results of operations, which refers to our historical results, should be read in conjunction with the other sections of this Quarterly Report

on Form 10-Q, including “Risk Factors” and our unaudited consolidated financial statements and the notes thereto appearing elsewhere herein, and in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of

Operations set forth in our Annual Report on Form 10-K for the year ended December 31, 2020, filed on March 25, 2021 (the “2020 10-K”).

The various sections of this discussion contain a number of forward-looking statements, all of which are based

on our current expectations and could be affected by the uncertainties and risk factors described throughout or referenced within this Quarterly Report on Form 10-Q.

See “Special Note Regarding Forward-Looking Statements.” Our actual results may

differ materially from our current expectations.

The following discussion of our financial condition and results of operations, which refers to our historical results, should be read in conjunction with the other sections of this Quarterly

Report on Form 10-Q, including “Risk Factors” and our unaudited consolidated financial statements and the notes thereto appearing elsewhere herein, and in conjunction with the Management’s Discussion and Analysis of Financial Condition and

Results of Operations set forth in our Annual Report on Form 10-K for the year ended December 31, 2020, filed on March 25, 2021 (the “2020 10-K”).

The various sections of this discussion contain a number of forward-looking statements, all of

which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout or referenced within this Quarterly Report on Form 10-Q.

See “Special Note Regarding Forward-Looking Statements.” Our

actual results may differ materially from our current expectations.

ADMA Biologics, Inc.

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treatment of immunodeficient patients at risk for infection and others at risk for certain infectious diseases.

Our targeted patient populations include immune-compromised individuals who suffer from an underlying immune deficiency disorder or who

may be immune-suppressed for medical reasons.

Our targeted patient populations include immune-compromised individuals who suffer from an underlying immune deficiency disorder or

who may be immune-suppressed for medical reasons.

We currently have three products with U.S.

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immunoglobulin manufactured to contain standardized antibodies to numerous serotypes of S.

Our 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.

Our 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.

We manufacture these products at our FDA-licensed, plasma fractionation and purification facility located in Boca Raton, Florida with a peak annual processing capability of up to 600,000 liters (the “Boca Facility”).

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annual revenue beginning in 2024 and potentially in excess of $300 million of annual revenue thereafter, as well as achieving profitability during the first quarter of 2024, as we ramp-up production over the next three to five years.

We anticipate

exiting 2021 approaching an annualized revenue run rate of approximately $100 million or more.

anticipate exiting 2021 approaching an annualized revenue run rate of approximately $100 million or more.

Through our ADMA BioCenters subsidiary, we currently operate FDA-licensed source plasma collection facilities in the U.S.

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provides us with a portion of our blood plasma for the manufacture of our products and product candidates, and also allows us to sell certain quantities of source plasma to customers for further manufacturing.

As a part of our planned supply chain

robustness initiative, we have opened four new plasma collection centers during the past 18 months, and we now have eight plasma collection centers in various stages of approval and development, including five that are fully operational and

As a part of our planned supply

chain robustness initiative, we have opened four new plasma collection centers during the past 18 months, and we now have nine plasma collection centers in various stages of approval and development, including five that are operational and

collecting plasma.

With respect to our fully operational plasma collection centers, two plasma collection centers currently hold FDA licenses, while a third collection center has a Biologics License Application (“BLA”) under review pending FDA

In addition, one of our FDA-approved plasma collection centers also has approvals from the Korean Ministry of Food and Drug Safety (“MFDS”), as well as FDA approval to operate a Hepatitis B immunization program.

After giving effect to the

progress we made in 2020 and thus far in 2021 with our plasma collection network expansion, we believe we remain on track to achieve our goal of having 10 or more plasma collection centers operating in the U.S.

A typical plasma collection

center, such as those operated by ADMA BioCenters, can collect approximately 30,000 to 50,000 liters of source plasma annually, which may be sold for different prices depending upon the type of plasma, quantity of purchase and market conditions at

the time of sale.

Plasma collected from ADMA BioCenters’ facilities that is not used to manufacture our products or product candidates is sold to third-party customers in the U.S.

With respect to our operational plasma collection centers, three plasma collection centers currently hold FDA licenses.

In addition, one of our FDA-approved plasma collection centers also has approvals from the Korean Ministry

of Food and Drug Safety (“MFDS”), as well as FDA approval to operate a Hepatitis B immunization program.

After giving effect to the progress we made in 2020 and thus far in 2021 with our plasma collection network expansion, we believe we remain

on track to achieve our goal of having 10 or more plasma collection centers licensed by the FDA by the end of 2023.

A typical plasma collection center, such as those operated by ADMA BioCenters, can collect approximately 30,000 to 50,000 liters

of source plasma annually, which may be sold for different prices depending upon the type of plasma, quantity of purchase and market conditions at the time of sale.

Plasma collected from ADMA BioCenters’ facilities that is not used to manufacture

our products or product candidates is sold to third-party customers in the U.S.

and in other locations outside the U.S.

where we are approved under

supply agreements or in the open “spot” market.

where we are approved under supply agreements or in the open “spot” market.

We sell plasma-derived intermediate fractions to certain customers, which are generated as part of our FDA-approved manufacturing process for IG and IVIG products.

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five-year manufacturing and supply agreement to produce and sell these intermediate by-products, which are used as the starting raw material to produce other plasma-derived biologics.

In addition, from time to time we provide contract manufacturing

and testing services for certain third-party clients.

We also provide laboratory contracting services to certain customers and anticipate providing contract filling, labeling and packing services upon FDA approval and implementation of our in-house

fill-finish capabilities.

In addition, from time to time we provide contract

manufacturing and testing services for certain third-party clients.

We also provide laboratory contracting services to certain customers and anticipate providing contract filling, labeling and packing services in light of the recent FDA approval

of our in-house fill-finish capabilities.

On June 6, 2017, we completed the acquisition of certain assets (the “Biotest Assets”) of the Therapy Business Unit (“BTBU”) of Biotest Pharmaceuticals Corporation (“BPC” and, together with Biotest AG, “Biotest”),

which included two FDA-licensed products, Nabi-HB and BIVIGAM, and an FDA-licensed plasma fractionation facility located in Boca Raton, FL (the “Boca Facility”) (the “Biotest Transaction”).

which included two FDA-licensed products, Nabi-HB and BIVIGAM, and the Boca Facility (the “Biotest Transaction”).

Recent Developments

On July 20, 2021, we announced that the FDA completed a Pre-Approval Inspection of the Boca Facility related to our application for approval of our Vanrx SA25 aseptic fill-finish machine and our related internal

fill-finish processes, the drug product component of our manufacturing process.

The inspection concluded successfully with no Form 483 observations.

The FDA review of our regulatory filing related to approval of the new fill-finish machine remains

ongoing, with anticipated regulatory approval in the second half of 2021.

The anticipated approval would provide us with internal fill-finish production capabilities for our commercial products, which is expected to result in greater patient

supply consistency and, coupled with the approval of our expanded plasma pool production scale process that we received earlier this year as discussed below, significantly improved operational efficiencies and gross margins.

Effective as of May 12, 2021, we entered into a Second Amendment to our Plasma Purchase Agreement with Grifols Worldwide Operations Limited (“Grifols”) whereby, among other provisions, we extended the term of our

supply agreement for the purchase of normal source plasma (“NSP”) through December 31, 2022, while certain historical provisions were deleted.

In order to maintain a reliable supply of raw material plasma thereafter, we are in late-stage

discussions with multiple third-party plasma suppliers to provide us with a long-term supply of NSP, which will be supplemented by our accelerated plasma center expansion activities, whereby we expect to have more than 10 plasma collection centers

in operation by 2024.

On September 8, 2021, we announced that the FDA has granted approval for our Vanrx SA25 aseptic fill-finish machine and our related internal fill-finish processes.

This approval provides us with in-house fill-finish

operations, capable of sufficiently addressing our forecasted production requirements for our FDA approved commercial products.

With our fill-finish machine and related processes operational, we are anticipating meaningfully improved gross

margins, enhanced patient supply consistency, accelerated inventory production cycle times, and increased control and visibility of commercial product lot releases.

We also expect that the approval of our in-house fill-finish processes and

capabilities will provide us with the opportunity to onboard new fill-finish contract manufacturing opportunities with third parties as a potential new revenue stream.

Effective as of May 12, 2021, we entered into a Second Amendment to our Plasma Purchase Agreement with Grifols Worldwide Operations Limited (“Grifols”) whereby, among other provisions, we

extended the term of our supply agreement for the purchase of normal source plasma (“NSP”) through December 31, 2022, while certain historical provisions were deleted.

In order to maintain a reliable supply of raw material plasma thereafter, we

have executed additional agreements with multiple third-party plasma suppliers of NSP to provide us with a long-term supply of NSP, which will be supplemented by our accelerated plasma center expansion activities, whereby we expect to have 10 or

more plasma collection centers licensed by the FDA by the end of 2023.

We expect these initiatives will ensure the raw material plasma supply necessary to meet our anticipated peak annual plasma processing capability of up to 600,000 liters.

On April 28, 2021, we announced that the FDA granted approval for our expanded IVIG plasma pool production scale process, allowing for a 4,400-liter plasma pool for the manufacture of our commercial product BIVIGAM.

expect this increased IVIG plasma pool scale, which will allow us to produce BIVIGAM at an expanded capacity, will utilize the same equipment, release testing assays and labor force, and to have a favorable impact on our gross margins and operating

results, potentially beginning late in the fourth quarter of 2021.

On April 26, 2021, we announced the opening of our fourth plasma collection facility in the U.S.

Pursuant to updated FDA guidance to obtain approval for plasma collection centers, sponsors are now required to collect

plasma donations for three months prior to submitting a BLA filing.

Accordingly, we filed a BLA for this plasma collection facility during the third quarter of 2021.

Prior to receiving FDA approval, ADMA is permitted to collect plasma donations at

this site and upon receipt of FDA approval we can utilize the plasma collected for further use in our IVIG manufacturing operations or for third party sale.

BIVIGAM is a plasma-derived IVIG that contains a broad range of antibodies similar to those found in normal human plasma.

These antibodies are directed against bacteria and viruses,

and help to protect PI patients against serious infections.

BIVIGAM is a purified, sterile, ready-to-use preparation of concentrated human Immunoglobulin G antibodies indicated for the treatment of PI, a group of genetic disorders.

This includes,

but is not limited to, the humoral immune defect in common variable immunodeficiency, X-linked agammaglobulinemia, congenital agammaglobulinemia, Wiskott-Aldrich syndrome and severe combined immunodeficiency.

These PIs are a group of genetic

Based on recent estimates, these disorders are no longer considered to be very rare, with as many as one in every 1,200 people in the United States having some form of PI.

BIVIGAM is a plasma-derived IVIG that contains a broad range of antibodies similar to those found in normal human

These antibodies are directed against bacteria and viruses, and help to protect PI patients against serious infections.

BIVIGAM is a purified, sterile, ready-to-use preparation of concentrated human Immunoglobulin G antibodies indicated

for the treatment of PI, a group of genetic disorders.

This includes, but is not limited to, the humoral immune defect in common variable immunodeficiency, X-linked agammaglobulinemia, congenital agammaglobulinemia, Wiskott-Aldrich syndrome and

severe combined immunodeficiency.

These PIs are a group of genetic disorders.

Based on recent estimates, these

disorders are no longer considered to be very rare, with as many as one in every 1,200 people in the United States having some form of PI.

On May 9, 2019, the FDA approved the Prior Approval Supplement (the “PAS”) for the use of our IVIG manufacturing process, thereby enabling us to re-launch and commercialize this product in the

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On April 28, 2021, we announced that the FDA has granted approval for our expanded plasma pool production scale process, allowing for a 4,400-liter plasma pool for the manufacture of our BIVIGAM IVIG product.

this increased IVIG plasma pool scale, which will allow us to produce BIVIGAM at an expanded capacity, will utilize the same equipment, release testing assays and labor force, and to have a favorable impact on our gross margins and operating

results, potentially beginning late in the fourth quarter of 2021.

operating results, potentially beginning late in the fourth quarter of 2021.

ASCENIV is a plasma-derived IVIG that contains naturally occurring polyclonal antibodies, which are proteins that are used by the body’s immune system to neutralize microbes, such as bacteria and

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2019 using a process known as fractionation.

The Centers for Medicare and Medicaid Services (“CMS”) has issued a permanent, product-specific-J-code for

The Centers for Medicare and Medicaid Services (“CMS”) has issued a permanent, product-specific-J-code

Under the Healthcare Common Procedure Coding System (“HCPCS”), the J-code (J1554) became effective April 1, 2021.

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IMPACT OF THE COVID-19 CRISIS

We continue to closely monitor ongoing developments in connection with the COVID-19 global pandemic, including the emergence of the Delta variant and other resistant strains of the novel coronavirus, and its impacts to

our commercial and manufacturing operations and plasma collection facilities, including but not limited to potential disruptions to our supply chain operations, including collections of source plasma, procurement of raw materials and packaging

to our commercial and manufacturing operations and plasma collection facilities, including but not limited to potential disruptions to our supply chain operations, including collections of source plasma, procurement of raw materials and packaging

materials, a portion of which are sourced internationally, and testing of finished drug product that is required prior to its availability for commercial sale.

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United States.

In addition, travel and other restrictions that have been implemented in the United States have impacted our commercial engagement efforts with respect to some of our products, including BIVIGAM and ASCENIV, as trade shows, industry

and medical conferences and other events we had been planning to utilize and exhibit and attend with our staff to increase awareness of our products by physicians and payers remain subject to reduction in scope, rescheduling or outright

industry and medical conferences and other events we had been planning to utilize and exhibit and attend with our staff to increase awareness of our products by physicians and payers remain subject to reduction in scope, rescheduling or outright

cancellation due to the pandemic.

We had experienced some delays with our third-party vendors and testing laboratories which perform final drug product GMP release testing.

In response to these delays, we added additional release testing laboratories

to our FDA approved consortium listed in our drug approval documents which we believe has adequately addressed this issue.

In July 2020, we began receiving FDA lot releases with testing data from our new testing laboratory vendor.

In addition, due

to a combination of previous state and local “shelter-in-place” orders, as well as government stimulus packages, persisting social distancing measures and varying roll-outs of vaccinations by state, we have been experiencing lower than normal donor

collections at our FDA-approved plasma collection centers.

We were also subject to delays in shipments of source plasma from our contracted third-party suppliers, as well as delays in deliveries for personal protective equipment, reagents and other

non-plasma raw materials and supplies used in the manufacture and distribution of our products.

We are also subject to supply chain delays as a result of certain of our suppliers diverting significant resources towards the rapid development and

distribution of COVID-19 vaccines and, as a result, we may elect to carry more raw materials inventory than we have in the past.

In addition, we have also experienced challenges with respect to our customer engagement initiatives, as our sales and

medical affairs field forces face difficulties communicating directly with physicians and other healthcare professionals and the cancellation or postponement of a number of key scientific and medical conferences, further limiting our ability to

communicate with potential customers.

We have implemented a comprehensive suite of virtual engagement initiatives, though clinician engagement remains lower due to continuing COVID-19-related priorities at U.S.

Due to a combination of previous state and local “shelter-in-place” orders, as well as government stimulus packages, persisting social distancing measures and varying roll-outs of vaccinations by state, we have been

experiencing lower than normal donor collections at our FDA-approved plasma collection centers.

We were also subject to delays in shipments of source plasma from our contracted third-party suppliers, as well as delays in deliveries for personal

protective equipment, reagents and other non-plasma raw materials and supplies used in the manufacture and distribution of our products.

We are also subject to supply chain delays as a result of certain of our suppliers diverting significant

resources towards the rapid development and distribution of COVID-19 vaccines and, as a result, we may elect to carry more raw materials inventory than we have in the past.

In addition, we have also experienced challenges with respect to our

customer engagement initiatives, as our sales and medical affairs field forces face difficulties communicating directly with physicians and other healthcare professionals and the cancellation or postponement of a number of key scientific and

medical conferences, further limiting our ability to communicate with potential customers.

We have implemented a comprehensive suite of virtual engagement initiatives, though clinician engagement remains lower due to continuing COVID-19-related

priorities at U.S.

medical centers.

The pandemic could further impact our ability to interact with the FDA or other regulatory authorities and may result in delays in the conduct of inspections or review of pending applications or submissions.

the second quarter of 2021, we were notified by the FDA that our submission for the approval of our in-house fill-finish process utilizing our Vanrx SA25 Workcell aseptic filling machine will require a site inspection, either in person or

Although the inspection was completed in July of 2021, the FDA’s review of our regulatory filing with respect to our in-house fill-finish process and new aseptic filling machine remains ongoing.

Although we anticipate receiving

regulatory approval of this submission in the second half of 2021, no assurances can be provided as to the timing for completion of this FDA review or any other regulatory submissions or applications that may be impacted by restrictions related to

we have received several FDA approvals during the past few months and an FDA inspection of the Boca Facility was completed in July of 2021, no assurances can be provided as to the timing for completion of any other regulatory submissions or

applications that may be impacted by restrictions related to COVID-19.

As of the date of this report, we do not believe that the operations and immunoglobulin and plasma products production at our Boca Facility, our contract fill/finishers or our plasma collection facilities have been

significantly impacted by the COVID-19 pandemic.

As a result, as of the date of this report, we have not experienced, and currently do not anticipate, any material impairments with respect to any of our long-lived assets, including our property and

equipment, goodwill or intangible assets.

Although the COVID-19 pandemic has not, to date, materially adversely impacted our capital and financial resources, due to the economic uncertainty that has resulted from the pandemic, and the potential impact of such

to our stakeholders, we are unable to predict with certainty any potential impacts to our business.

Although we believe the effects of the COVID-19 pandemic on our business and our operations will be temporary, at the present time we are unable to

determine the ultimate duration of the pandemic or its long-term effects on, among other things, the global, national or local economies, the capital and credit markets, our workforce, our customers or our suppliers.

As a result, we are unable to

predict whether the COVID-19 crisis will have a material adverse impact on our business, financial condition, liquidity and results of operations.

As a result, as of the date of this report, we have not experienced, and currently do not anticipate, any material impairments with respect to any of our long-lived assets, including our property

and equipment, goodwill or intangible assets.

such to our stakeholders, we are unable to predict with certainty any potential impacts to our business.

Although we believe the effects of the COVID-19 pandemic on our business and our operations will be temporary, at the present time we are

unable to determine the ultimate duration of the pandemic or its long-term effects on, among other things, the global, national or local economies, the capital and credit markets, our workforce, our customers or our suppliers.

As a result, we

are unable to predict whether the COVID-19 crisis will have a material adverse impact on our business, financial condition, liquidity and results of operations.

RESULTS OF OPERATIONS

Critical Accounting Policies and Estimates

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our consolidated financial statements, which have been prepared in accordance with Accounting

Principles Generally Accepted in the United States of America (“U.S.

The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues

and expenses.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our consolidated financial statements, which have been prepared in accordance with

Accounting Principles Generally Accepted in the United States of America (“U.S.

The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets,

liabilities, revenues and expenses.

On an ongoing basis, we evaluate these estimates and assumptions, including those described below.

We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the

circumstances.

We base our estimates on our historical experience and on various other assumptions that we believe to be

reasonable under the circumstances.

These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results and experiences may differ materially from these

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 our

equity incentive plans and warrants issued in connection with the issuance of notes payable and the valuation allowance for our deferred tax assets.

Actual results and experiences may

differ materially from these estimates.

value of awards granted under our equity incentive plans and warrants issued in connection with the issuance of notes payable and the valuation allowance for our deferred tax assets.

Some of the estimates and assumptions we have to make under U.S.

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Revenue Recognition

Revenues for the six months ended June 30, 2021 and 2020 are comprised of (i) revenues from the sale of our FDA-approved immunoglobulin products, (ii) product revenues from the sale of human plasma collected from our

Plasma Collection Centers business segment, (iii) product revenues from the sale of intermediate fractions, (iv) contract manufacturing and testing revenue from certain clients, and (v) license revenues attributable to the out-licensing of ASCENIV

in December 2012 to Biotest AG (“Biotest”) to market and sell this product in Europe and selected countries in North Africa and the Middle East.

Biotest has provided us with certain services and financial payments in accordance with the related

Biotest license agreement and is obligated to pay us 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.

Revenues for the nine months ended September 30, 2021 and 2020 are comprised of (i) revenues from the sale of our FDA-approved immunoglobulin products, (ii) product revenues from the sale of human plasma collected

from our Plasma Collection Centers business segment, (iii) product revenues from the sale of intermediate fractions, (iv) contract manufacturing and testing revenue from certain clients, and (v) license revenues attributable to the out-licensing

of ASCENIV in December 2012 to Biotest AG (“Biotest”) to market and sell this product in Europe and selected countries in North Africa and the Middle East.

Biotest has provided us with certain services and financial payments in accordance with

the related Biotest license agreement and is obligated to pay us 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 we expect to receive in exchange.

Revenue from the sale of immunoglobulin products is generally recognized when the product reaches the customer’s destination, and is recorded net of distributor fees,

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 we

believe that such estimates are reasonable.

For revenues associated with sales of our intermediates or contract manufacturing, control transfers to the customer and the performance obligation is satisfied when the customer takes possession of the

product from the Boca Facility or a third-party warehouse that is utilized by the Company.

Product revenues from the sale of human plasma collected at our 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

Product revenues are recognized at the time of delivery if we retain control of the product during shipment.

recorded in an amount that reflects the consideration we expect to receive in exchange.

Revenue from the sale of immunoglobulin products is generally recognized when the product reaches the customer’s destination, and is recorded net of

distributor fees, 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 we believe that such estimates are reasonable.

For revenues associated with sales of our intermediates or contract manufacturing, control transfers to the customer and the performance obligation is satisfied when the customer

takes possession of the product from the Boca Facility or a third-party warehouse that is utilized by the Company.

Product revenue from the sale of human plasma collected at our plasma collection centers is recognized at the time control of the product has been transferred to the customer, which generally occurs at the time of

Product revenue is recognized at the time of delivery if we retain control of the product during shipment.

Payments received from customers where the foregoing revenue recognition criteria have not been satisfied are recorded as

deferred revenue, which is reflected as a liability in our consolidated balance sheets.

For the six months ended June 30, 2021, five customers, BioCARE, Inc.

(“BioCare”), Biolife Plasma Services, L.P.

(“Biolife”), Reliance Life Sciences Pvt Limited (“Reliance”), Priority Healthcare Distribution, Inc.

(“Curascript”) and AmerisourceBergen Drug Corporation (“AmerisourceBergen”) represented an aggregate of 85% of our consolidated revenues.

For the six months ended June 30, 2020, BioCare, Biolife and Reliance

represented an aggregate of 81% of our consolidated revenues.

For the nine months ended September 30, 2021, four customers, BioCARE, Inc.

(“BioCare”), Reliance Life Sciences Pvt Limited (“Reliance”), Priority Healthcare Distribution, Inc.

(“Curascript”) and AmerisourceBergen

Drug Corporation (“AmerisourceBergen”) represented an aggregate of 74% of our consolidated revenues.

For the nine months ended September 30, 2020, three customers, Biolife Plasma Services, L.P.

BioCare and Reliance represented an aggregate of 82% of our consolidated revenues.

Accounts Receivable

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Stock-Based Compensation

All equity-based payments, including grants of stock options and restricted stock units (“RSUs”) are recognized at their estimated fair value at the grant date, and compensation expense is recognized on a straight-line

basis over the grantee’s requisite vesting period.

During the six months ended June 30, 2021, we granted RSUs to certain members of our management and employees representing an aggregate 542,244 shares of common stock, and during the six months

ended June 30, 2020, we granted RSUs to members of our Board of Directors and certain members of our management and employees representing an aggregate of 341,000 shares of common stock.

For the purpose of valuing stock options granted to our

employees, directors and officers, we use the Black-Scholes option pricing model.

We granted options to purchase an aggregate of 1,658,050 and 1,232,500 shares of common stock to management, employees and directors during the six months ended June

30, 2021 and 2020, respectively.

All equity-based payments, including grants of stock options and Restricted Stock Units (“RSUs”) are recognized at their estimated fair value at the grant date, and compensation expense is recognized on a

straight-line basis over the grantee’s requisite vesting period.

During the nine months ended September 30, 2021, we granted RSUs to certain members of our management and employees representing an aggregate of 4,332,244 shares of common stock

(see Notes 8 and 10 to the Consolidated Financial Statements), and during the nine months ended September 30, 2020, we granted RSUs to members of our Board of Directors and certain members of our management and employees representing an aggregate

of 361,000 shares of common stock.

For the purpose of valuing stock options granted to our employees, directors and officers, we use the Black-Scholes option pricing model.

We granted options to purchase an aggregate of 1,757,050 and 1,398,412

shares of common stock to management, employees and directors during the nine months ended September 30, 2021 and 2020, respectively.

To determine the risk-free interest rate, we utilized the U.S.

Treasury yield curve in effect at the time of the grant with a term consistent with the expected term of our awards.

The expected term of the options

granted is in accordance with SEC Staff Accounting Bulletins 107 and 110, and is based on the average between vesting terms and contractual terms.

The expected dividend yield reflects our current and expected future policy for dividends on our

common stock.

The expected stock price volatility for our stock options was calculated by examining the historical volatility of our common stock since our common stock became publicly traded in the fourth quarter of 2013.

We will continue to

analyze the expected stock price volatility and expected term assumptions and will adjust our Black-Scholes option pricing assumptions as appropriate.

Treasury yield curve in effect at the time of the

grant with a term consistent with the expected term of our awards.

The expected term of the options granted is in accordance with SEC Staff Accounting Bulletins 107 and 110, and is based on the average between vesting terms and contractual terms.

The expected dividend yield reflects our current and expected future policy for dividends on our common stock.

The expected stock price volatility for our stock options was calculated by examining the historical volatility of our common stock

since our common stock became publicly traded in the fourth quarter of 2013.

We will continue to analyze the expected stock price volatility and expected term assumptions and will adjust our Black-Scholes option pricing assumptions as

In accordance with ASU No.

2016-09, Improvements to Employee

Share-Based Payment Accounting (Topic 718) , we have 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.

2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718) , we have 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.

Research and Development Expenses

Our research and development (“R&D”) costs consist of clinical research organization costs, costs related to clinical trials, testing and evaluation of new or alternative products or processes, studies for

potentially extending a product’s approved and labeled expiration dating and other potential label expansions, post-marketing commitment studies for BIVIGAM and ASCENIV and wages, benefits and stock-based compensation for employees directly related

to research and development activities.

potentially extending a product’s approved and labeled expiration dating and other potential label expansions, post-marketing commitment studies as required by the FDA for BIVIGAM and ASCENIV and wages, benefits and stock-based compensation for

employees directly related to research and development activities.

All research and development costs are expensed as incurred.

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Work-in-process and finished goods inventories 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 our products

relative to the total square footage of the facility.

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 our

products relative to the total square footage of the facility.

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.

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

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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 six months ended June 30, 2021 and 2020, we determined that there was no impairment of our long-lived assets.

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 nine months ended September 30, 2021 and 2020, we determined that there was no impairment of our long-lived

Goodwill is not amortized, but is assessed for impairment on an annual basis or more frequently if impairment indicators exist.

We have the option to perform a qualitative assessment of goodwill to determine whether it

is more likely than not that the fair value of the reporting unit associated with the goodwill is less than its carrying amount, including goodwill and other intangible assets.

If we conclude that this is the case, then we 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, with the impairment loss recognized not to exceed

the total amount of goodwill allocated to that reporting unit.

We did not recognize any impairment charges related to goodwill for the six months ended June 30, 2021 and 2020.

We have the option to perform a qualitative assessment of goodwill to determine whether

it is more likely than not that the fair value of the reporting unit associated with the goodwill is less than its carrying amount, including goodwill and other intangible assets.

If we conclude that this is the case, then we 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, with the impairment loss recognized not

to exceed the total amount of goodwill allocated to that reporting unit.

We did not recognize any impairment charges related to goodwill for the nine months ended September 30, 2021 and 2020.

Recent Accounting Pronouncements

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financial statements.

Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

The following table presents a summary of the changes in our results of operations for the three months ended June 30, 2021, our second fiscal quarter, compared to the three months ended June 30,

Three Months Ended June 30,

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

The following table presents a summary of the changes in our results of operations for the three months ended September 30, 2021, our third fiscal quarter, compared to the three months ended

September 30, 2020:

Three Months Ended September 30,

Increase (Decrease)

Cost of product revenue (exclusive of amortization expense shown below)

Gross profit (loss)

Research and development expenses

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Interest expense

Other (expense) income, net

We recorded total revenues of $17.8 million during the three months ended June 30, 2021, as compared to $7.8 million during the three months ended June 30, 2020, an increase of $10.0 million, or approximately 130%.

increase is due to increased sales of our immunoglobulin products generated by our Boca Facility manufacturing operations in 2021.

Our revenues for the second quarter of 2021 as compared to the same period of a year ago were favorably impacted by the continued commercial scale-up, expanding customer base at both our ADMA BioManufacturing and ADMA

BioCenters plasma collection center business segments and physician/payer acceptance of BIVIGAM and ASCENIV following these products’ FDA approvals on May 9, 2019 and April 1, 2019, respectively, while we continued to benefit from the manufacturing

and supply agreement we entered into in January 2020 to produce and sell intermediate fractions to a certain customer.

In addition, revenues in the second quarter of 2020 were negatively impacted by COVID-19-related delays with some of our

third-party vendors and testing laboratories which perform final drug product GMP release testing.

In response to these delays, we added additional release testing laboratories to our FDA approved consortium listed in our drug approval documents

which we believe has adequately addressed this issue.

Other income (expense), net

We recorded total revenues of $20.7 million during the three months ended September 30, 2021, as compared to $10.3 million during the three months ended September 30, 2020, an increase of $10.4 million, or

approximately 101%.

The increase is due to increased sales across our entire portfolio of immunoglobulin products generated by our Boca Facility manufacturing operations in 2021, as we continue to expand our customer base for BIVIGAM and

experience increased physician, payer and patient acceptance of ASCENIV.

We also continued to benefit from the manufacturing and supply agreement we entered into in January 2020 to produce and sell intermediate fractions to a certain customer.

Cost of Product Revenue

Cost of product revenue was $18.8 million for the three months ended June 30, 2021, as compared to $13.5 million for the three months ended June 30, 2020.

This increase reflects higher product revenue costs in 2021 of

$7.6 million corresponding to the increase in immunoglobulin revenues, partially offset by the absence of conformance batch production expenses in 2020 of $3.2 million.

Cost of product revenue was $20.3 million for the three months ended September 30, 2021, as compared to $11.9 million for the three months ended September 30, 2020.

This increase is primarily attributable to the

increase in sales volume of our immunoglobulin products.

Research and Development Expenses

R&D expenses totaled $1.2 million for the three months ended June 30, 2021, as compared to $1.7 million for the three months ended June 30, 2020.

The decrease is primarily due to reduced compensation costs

associated with R&D activities during the quarter of $0.3 million, and the absence of $0.2 million of non-recurring costs incurred in 2020 associated with our participation in a third-party clinical research

R&D expenses totaled $0.8 million for the three months ended September 30, 2021, as compared to $1.7 million for the three months ended September 30, 2020.

In the third quarter of 2020, we completed the

implementation and qualification of a new filling line at our contract fill-finisher with associated costs of approximately $0.6 million, with no comparable amount in 2021.

We also had reduced compensation costs, including stock-based

compensation, associated with R&D activities during the quarter of $0.4 million, partially offset by expenses associated with ASCENIV post marketing commitments in 2021 of $0.2 million.

Plasma Center Operating Expenses

Plasma center operating expenses were $2.8 million for the three months ended June 30, 2021, as compared to $0.9 million for the three months ended June 30, 2020.

Plasma center operating expenses consist of certain

general and administrative plasma center costs, including rent, maintenance, utilities, compensation and benefits for center and administrative staff, advertising and promotion expenses and computer software fees related to donor collections.

increase in plasma center operating expenses is mainly attributable to increased staffing and travel expenses related to our plasma center expansion activities.

We had four plasma collection centers in operation during the second quarter of 2021,

as compared to one plasma collection center in operation during the second quarter of 2020.

We also had four other plasma collection centers in various stages of construction or development during the second quarter of 2021.

Plasma center operating expenses were $3.1 million for the three months ended September 30, 2021, as compared to $1.2 million for the three months ended September 30, 2020.

Plasma center operating expenses consist of

certain general and administrative plasma center costs, including rent, maintenance, utilities, compensation and benefits for center and administrative staff, advertising and promotion expenses and computer software fees related to donor

From the beginning of the fourth quarter of 2020 through the end of third quarter of 2021, we opened three new plasma collection centers and began the construction and buildout of a fourth plasma collection center.

These expansion

efforts resulted in significantly increased staffing and travel expenses, as well as increases in donor fees, rent, softgoods and consumable supplies and depreciation expense.

Amortization of Intangibles

Amortization expense pertains to the amortization of intangible assets acquired in the Biotest Transaction and was $0.2 million for the three months ended June 30, 2021 and 2020.

Amortization expense pertains to the amortization of intangible assets acquired in the Biotest Transaction and was $0.2 million for the three months ended September 30, 2021 and 2020.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses were $10.4 million for the three months ended June 30, 2021, an increase of $1.7 million from the three months ended June 30, 2020.

The increase was primarily

due to higher employee compensation and related expenses of $1.2 million related to staffing increases, largely in support of our commercialization efforts for BIVIGAM and ASCENIV and increased insurance expense of $0.3 million.

In addition, in

connection with the resignation of our former Chief Medical Officer in the second quarter of 2021, we recognized an expense and corresponding liability in the amount of $0.8 million for estimated payments we expect to make under a separation and

transition agreement.

These increases were partially offset by lower third-party market intelligence and consulting fees associated with our ASCENIV commercialization efforts.

Selling, general and administrative (“SG&A”) expenses were $10.7 million for the three months ended September 30, 2021, an increase of $1.6 million from the three months ended September 30, 2020.

The increase was

primarily due to higher employee compensation, increased staffing and travel and related expenses of $1.4 million, largely in support of our commercialization efforts for BIVIGAM and ASCENIV, increased insurance expense of $0.3 million and

increased software maintenance expense of $0.3 million as we enhance our information technology systems and replace and modernize such systems in order to maintain compliance with cGMP.

These costs were partially offset by lower third-party

market intelligence and consulting fees associated with certain of our ASCENIV commercialization efforts.

Loss from Operations

Our operating loss was $15.6 million for the second quarter of 2021, as compared to $17.1 million for the second quarter of 2020.

The $1.5 million decrease in operating loss was mainly due to the significant narrowing

of our gross loss of $4.7 million and the reduction in R&D expenses, partially offset by the increases in SG&A and plasma center operating expenses.

Our operating loss was $14.4 million for the third quarter of 2021, as compared to $13.8 million for the third quarter of 2020.

The $0.6 million increase in operating loss was mainly due to the increased SG&A and

plasma center operating expenses, partially offset by our improved gross profit (loss) of $2.0 million and lower R&D expenses.

Interest Expense

Interest expense increased by approximately $0.2 million for the three months ended June 30, 2021 as compared to the same period of a year ago.

The increase reflects the refinancing of $15 million of subordinated debt

in December 2020 whereby the interest rate increased from 6% to 11% per annum, as the maturity date on this indebtedness was extended from June 2022 to March 2024 (see “Liquidity and Capital Resources”).

Our net loss was $18.9 million for the three months ended June 30, 2021, as compared to $20.2 million for the three months ended June 30, 2020.

The $1.3 million decrease in net loss was primarily due to the decreased

operating loss for the quarter of $1.5 million, partially offset by the increase in interest expense.

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

The following table presents a summary of the changes in our results of operations for the six months ended June 30, 2021, compared to the six months ended June 30, 2020:

Six Months Ended June 30,

Interest expense increased by approximately $0.2 million for the three months ended September 30, 2021 as compared to the same period of a year ago.

The increase reflects the refinancing of $15 million of

subordinated debt in December 2020 whereby the interest rate increased from 6% to 11% per annum, as the maturity date on this indebtedness was extended from June 2022 to March 2024 (see “Liquidity and Capital Resources”).

Our net loss was $17.7 million for the three months ended September 30, 2021, as compared to $16.9 million for the three months ended September 30, 2020.

The $0.8 million increase in net loss was primarily due to the

increased operating loss for the quarter of $0.6 million, and to the increase in interest expense.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

The following table presents a summary of the changes in our results of operations for the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020:

Nine Months Ended September 30,

Increase (Decrease)

Cost of product revenue (exclusive of amortization expense shown below)

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Other (expense) income, net

We recorded total revenues of $33.9 million during the six months ended June 30, 2021, as compared to $18.0 million during the six months ended June 30, 2020, an increase of $15.9 million, or approximately 88%.

increase is due to increased sales of our immunoglobulin products generated by our Boca Facility manufacturing operations in 2021, largely driven by the expansion of our customer base at both of our business segments that took place subsequent to

June 30, 2020.

Our revenues for the first six months of 2021 as compared to the same period of a year ago were favorably impacted by the continued commercial scale-up and increasing physician/payer acceptance of BIVIGAM and ASCENIV

following these products’ FDA approvals on May 9, 2019 and April 1, 2019, respectively, while we also continued to benefit from the manufacturing and supply agreement we entered into in January 2020 to produce and sell intermediate fractions to a

certain customer.

Revenues in the first six months of 2021 were also favorably impacted by the approvals we received from the FDA to implement a Hepatitis B immunization program at one of our FDA-approved plasma collection centers and from MFDS for

the sale of source plasma into South Korea.

We recorded total revenues of $54.6 million for the nine months ended September 30, 2021, as compared to $28.3 million for the nine months ended September 30, 2020, an increase of $26.3 million, or approximately 93%.

The increase is due to increased sales of our immunoglobulin products generated by our Boca Facility manufacturing operations in 2021, largely driven by the expansion of our customer base at both of our business segments that took place

subsequent to September 30, 2020.

Our revenues for the first nine months of 2021 as compared to the same period of a year ago were favorably impacted by the continued commercial scale-up and increasing physician/payer acceptance of BIVIGAM and

ASCENIV following these products’ FDA approvals on May 9, 2019 and April 1, 2019, respectively, while we also continued to benefit from the manufacturing and supply agreement we entered into in January 2020 to produce and sell intermediate

fractions to a certain customer.

Revenues in the first nine months of 2021 were also favorably impacted by the approvals we received from the FDA to implement a Hepatitis B immunization program at one of our FDA-approved plasma collection centers

and from MFDS for the sale of source plasma into South Korea.

Cost of Product Revenue

Cost of product revenue was $36.6 million for the six months ended June 30, 2021, as compared to $30.3 million for the six months ended June 30, 2020.

This increase reflects higher product revenue costs in 2021 of

$13.6 million corresponding to the increase in immunoglobulin revenues, partially offset by the absence of conformance batch production expenses in 2020 of $7.3 million.

Cost of product revenue was $56.9 million for the nine months ended September 30, 2021, as compared to $42.2 million for the nine months ended September 30, 2020.

This increase reflects higher product revenue costs

in 2021 corresponding to the increase in immunoglobulin revenues, partially offset by the absence of conformance batch production expenses in 2020 of $7.3 million.

The lack of such expenses in 2021, combined with the increase in revenues,

resulted in a reduction of our gross loss in the amount of $9.6 million, or 78%, in the first half of 2021 as compared to the first half of 2020.

resulted in a reduction of our gross loss in the amount of $11.6 million, or 83%, for the first nine months of 2021 as compared to the first nine months of 2020.

Research and Development Expenses

R&D expenses totaled $2.1 million for the six months ended June 30, 2021, as compared to $3.2 million for the six months ended June 30, 2020.

R&D expenses in 2020 included non-recurring charges of $0.4 million

related to a study we conducted to potentially extend ASCENIV’s approved and labeled expiration dating, and $0.2 million related to our participation in a third-party clinical research project.

experienced a reduction in R&D related compensation expenses due to the resignation of our former Chief Medical Officer on June 8, 2021.

R&D expenses totaled $2.9 million for the nine months ended September 30, 2021, as compared to $4.9 million for the nine months ended September 30, 2020.

R&D expenses in 2020 included non-recurring charges of

$1.4 million related to the implementation and qualification of a new filling line at our contract fill-finisher, $0.4 million related to a study we conducted to potentially extend ASCENIV’s approved and

labeled expiration dating, and $0.2 million related to our participation in a third-party clinical research project.

We also experienced a reduction in R&D related compensation expenses due to the resignation of our former Chief Medical

Officer on June 8, 2021, which was offset by an increase in post-marketing commitment clinical studies in 2021 for BIVIGAM and ASCENIV as required by the FDA.

Plasma Center Operating Expenses

Plasma center operating expenses were $5.0 million for the six months ended June 30, 2021, as compared to $1.4 million for the six months ended June 30, 2020.

The increase in plasma center operating expenses is mainly

attributable to increased staffing and related expenses, including travel expenses, of $2.3 million, as well as increases in rent expense of $0.4 million, depreciation expense of $0.3 million, donor fees of $0.2 million, advertising expenses of

$0.1 million and utilities of $0.1 million, all related to our plasma center expansion activities.

Plasma center operating expenses were $8.2 million for the nine months ended September 30, 2021, as compared to $2.6 million for the nine months ended September 30, 2020.

The increase in plasma center operating

expenses is mainly attributable to the increased number of plasma collection centers in operation resulting in higher staff and related expenses, including travel expenses, of $3.6 million, as well as increases in rent expense of $0.6 million,

depreciation expense of $0.5 million, donor fees of $0.5 million, advertising expenses of $0.2 million, softgoods and consumable supplies of $0.2 million, all related to our plasma center expansion activities.

As of September 30, 2021 we had five

plasma collection centers that were operational and collecting plasma.

We also have four additional plasma collection centers under construction and development.

For those plasma centers that have not yet become operational, we are still required

to incur staffing, training and travel costs during the build-out period so that these facilities are operational on the day they open.

Amortization of Intangibles

Amortization expense pertains to the amortization of intangible assets acquired in the Biotest Transaction and was $0.4 million for the six months ended June 30, 2021 and 2020.

Amortization expense pertains to the amortization of intangible assets acquired in the Biotest Transaction and was $0.5 million for the nine months ended September 30, 2021 and 2020.

Selling, General and Administrative Expenses

SG&A expenses were $20.5 million for the six months ended June 30, 2021, an increase of $3.8 million from the six months ended June 30, 2020.

The increase was primarily due to higher employee compensation and

related expenses of $2.2 million related to staffing increases, largely in support of our commercialization efforts for BIVIGAM and ASCENIV, recognition of the $0.8 million related to the separation and transition agreement with our former Chief

Medical Officer and $0.7 million of increased insurance expense.

SG&A expenses were $31.2 million for the nine months ended September 30, 2021, an increase of $5.4 million from the nine months ended September 30, 2020.

The increase was primarily due to higher employee

compensation, increased staffing and related expenses of $3.7 million, largely in support of our commercialization efforts for BIVIGAM and ASCENIV, along with the increase in the overall size and scope of our operations.

In addition, during the

second quarter of 2021 we recognized an expense and corresponding liability in the amount of $0.8 million related to the separation and transition agreement with our former Chief Medical Officer.

We also incurred $1.0 million of increased

insurance expense primarily related to our Boca Facility and plasma center expansion.

Loss from Operations

Our operating loss was $30.7 million for the first six months of 2021, as compared to $33.9 million for the first six months of 2020.

The $3.1 million decrease in operating loss was mainly due to the increase in

revenues and corresponding reduction in gross loss and decrease in R&D expenses, partially offset by the increases in SG&A and plasma center operating expenses.

Our operating loss was $45.2 million for the first nine months of 2021, as compared to $47.7 million for the first nine months of 2020.

The $2.5 million decrease in operating loss was mainly due to the increases in

revenues and corresponding reduction in gross loss and decrease in R&D expenses, largely offset by the increases in plasma center operating expenses and SG&A.

Interest Expense

Interest expense was $6.4 million for the six months ended June 30, 2021, as compared to $5.8 million for the six months ended June 30, 2020.

The increase reflects the additional interest expense associated with the

Perceptive Tranche III Loan which we drew down on March 20, 2020, as well as the higher interest on the $15 million note formerly due to Biotest that we refinanced in December 2020 (see “Liquidity and Capital Resources”).

Our net loss was $37.3 million for the six months ended June 30, 2021, as compared to $39.4 million for the six months ended June 30, 2020.

The decrease in net loss of $2.1 million was primarily due to the decreased

operating loss for the quarter of $3.1 million, the increase in interest expense of $0.7 million, and the decrease in interest income of $0.2 million due to the reduction of interest rates that took place during the first quarter of 2020.

Interest expense was $9.7 million for the nine months ended September 30, 2021, as compared to $8.9 million for the nine months ended September 30, 2020.

The increase reflects the additional interest expense

associated with the Perceptive Tranche III Loan which we drew down on March 20, 2020, as well as the higher interest on the $15 million note formerly due to Biotest that we refinanced in December 2020 (see “Liquidity and Capital Resources”).

Our net loss was $55.0 million for the nine months ended September 30, 2021, as compared to $56.3 million for the nine months ended September 30, 2020.

The decrease in net loss of $1.3 million was primarily due to

increased revenues and the decreased operating loss for the quarter of $2.5 million, partially offset by the increase in interest expense of $0.9 million, and the decrease in interest income of $0.2 million due to the reduction of interest rates

that took place during the first quarter of 2020.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2021, we had working capital of $153.2 million, including cash and cash equivalents of $42.4 million, and stockholders’ equity of $111.6 million, as compared to working capital of $133.8 million,

As of September 30, 2021, we had working capital of $142.4 million, including cash and cash equivalents of $34.4 million, and stockholders’ equity of $102.8 million, as compared to working capital of $133.8 million,

including cash and cash equivalents of $55.9 million, and stockholders’ equity of $88.2 million as of December 31, 2020.

We have incurred an accumulated deficit of $395.5 million since inception, had negative cash flows from operations of $78.9

million and $45.9 million for the six months ended June 30, 2021 and 2020, respectively, and negative cash flows from operations of $102.0 million and $76.2 million for the years ended December 31, 2020 and 2019, respectively.

We have funded our

operations over the past few years primarily from the sale of our equity and debt securities.

We expect to continue to spend substantial amounts on procurement of raw material plasma and other raw materials necessary to scale up our manufacturing operations, commercial product launches, capacity expansion at

the Boca Facility, building additional plasma collection facilities, product development, quality assurance, regulatory affairs and conducting clinical trials for our product candidates and purchasing clinical trial materials, some of which may be

required by the FDA.

In addition, our end-to-end production cycle from procurement of raw materials to commercial release of finished product can take between seven and 12 months or potentially longer, requiring substantial investments in raw

material plasma and other manufacturing materials.

We expect that we will not be able to generate a sufficient amount of product revenue to achieve profitability until the beginning of 2024 and, as a result, we expect that we will need to continue

to finance our operations through additional equity or debt financings or through corporate collaboration and licensing arrangements.

Based upon our projected revenues and projected expenditures, including capital expenditures and continued

implementation of our commercialization and expansion activities, we currently believe that our cash, cash equivalents, projected revenue and accounts receivable will be sufficient to fund our operations, as currently conducted, into the fourth

quarter of 2021.

In order to have sufficient cash to fund our operations thereafter, we will need to raise additional capital before the end of the fourth quarter of 2021.

These estimates and timeframes may change based upon several factors,

including the success of our commercial manufacturing ramp-up activities, the acceptability and reimbursement of BIVIGAM and ASCENIV by physicians, patients or payers, and the various financing options that may be available to us.

We currently have

no firm commitments for additional financing, and there can be no assurances that we will be able to secure additional financing on terms that are acceptable to us, or at all.

Furthermore, if our assumptions underlying our estimated expenses and

revenues are incorrect, we may have to raise additional capital sooner than currently anticipated.

On May 28, 2021, we entered into an Open Market Sale Agreement SM (the “2021 Sale Agreement”) with Jefferies LLC (“Jefferies”), pursuant

to which we may offer and sell, from time to time, at our option, through or to Jefferies, up to an aggregate of $50,000,000 of shares of our common stock.

We intend to use the net proceeds from any offering under the 2021 Sale 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.

We may decide to utilize the 2021 Sale Agreement from time to time in order to supplement our cash resources and fund our operations beyond the

fourth quarter of 2021.

As of the date of this report, there have been no sales of common stock under the 2021 Sale Agreement.

million and $69.8 million for the nine months ended September 30, 2021 and 2020, respectively, and negative cash flows from operations of $102.0 million and $76.2 million for the years ended December 31, 2020 and 2019, respectively.

funded our operations over the past few years primarily from the sale of our equity and debt securities.

We expect to continue to spend substantial amounts on procurement of raw material plasma and other raw materials necessary to scale up our manufacturing operations, scale up of our commercialization efforts, capacity

expansion at the Boca Facility, building additional plasma collection facilities, product development, quality assurance, regulatory affairs and conducting post-marketing clinical trials for our FDA-approved products.

In addition, our end-to-end

production cycle from procurement of raw materials to commercial release of finished product can take between seven and 12 months or potentially longer, requiring substantial investments in raw material plasma and other manufacturing materials.

We expect that we will not be able to generate a sufficient amount of product revenue to achieve profitability until the beginning of 2024 and, as a result, we expect that we will need to continue to finance our operations through additional

equity or debt financings or through corporate collaboration and licensing arrangements.

We are currently evaluating a variety of strategic and financing alternatives and have engaged Morgan Stanley as a financial advisor in connection with

certain of those strategic alternatives.

Based upon our projected revenues and projected expenditures, including capital expenditures and continued implementation of our commercialization and expansion activities, we currently believe that our

cash, cash equivalents, projected revenue and accounts receivable, including the proceeds received from the October 25, 2021 underwritten public offering discussed below, will be sufficient to fund our operations, as currently conducted, through

the first half of 2022.

In order to have sufficient cash to fund our operations thereafter, we will need to raise additional capital during the second half of 2022, which includes our plans to refinance and expand upon, our existing debt

We believe that a refinancing and expansion of our current debt facility will be sufficient to fund our operations into the first quarter of 2024, at which time we believe our operations will be cash flow positive.

These estimates and

timeframes may change based upon several factors, including the success of our commercial manufacturing ramp-up activities, the acceptability and reimbursement of BIVIGAM and ASCENIV by physicians, patients or payers, and the various financing

options that may be available to us.

We currently have no firm commitments for additional financing, and there can be no assurances that we will be able to secure additional financing on terms that are acceptable to us, or at all.

Furthermore, if

our assumptions underlying our estimated expenses and revenues are incorrect, we may have to raise additional capital sooner than currently anticipated.

On October 25, 2021, we completed an underwritten public offering whereby we issued 57.5 million shares of our common stock and received gross proceeds of $57.5 million.

Net proceeds, after underwriting discounts and

expenses associated with the offering, were approximately $53.9 million.

We intend to use the net proceeds from this offering (i) to advance the commercial sales of our FDA approved products through the

procurement of raw materials for the manufacturing of BIVIGAM and ASCENIV;

(ii) to expand our plasma collection facility network;

(iii) to scale up the manufacturing capacity of the Boca Facility and make continuous improvements in order to

adhere to cGMP compliance;

(iv) to explore business development opportunities;

and (v) for general corporate purposes and other capital expenditures.

Our long-term liquidity depends upon our ability to raise additional capital, fund capacity expansion and commercial programs and generate sufficient revenues from our products, several of which have only recently

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sales and marketing efforts and forgo attractive business opportunities.

Due to numerous risks and uncertainties associated with the COVID-19 pandemic, FDA reviews, inspections and approvals related to our products and processes, patient/payer acceptance of our products, ongoing compliance

and maintenance requirements and capacity expansion efforts at the Boca Facility, we are unable to estimate with certainty the amounts of increased capital outlays and operating expenditures required to fund our commercialization and other

development activities.

Our current estimates may be subject to change as circumstances regarding our business requirements evolve and are also subject to the effect of potential new government orders, policies and procedures that we must comply

with which are outside of our control.

compliance and maintenance requirements, capacity expansion efforts at the Boca Facility, expansion of our plasma collection center network and supply chain disruptions, we are unable to estimate with certainty the amounts of increased capital

outlays and operating expenditures required to fund our commercialization and other development activities.

Our current estimates may be subject to change as circumstances regarding our business requirements evolve and are also subject to the

effect of potential new government orders, policies and procedures that we must comply with which are outside of our control.

As such, these factors raise substantial doubt about our ability to continue as a going concern.

We may decide to raise capital through public or private equity offerings or debt financings, obtain a bank credit facility or enter into corporate collaboration and licensing arrangements.

The sale of additional

equity or debt securities, if convertible, could result in dilution to our stockholders and, in such event, the market value of our common stock may decline.

The incurrence of additional indebtedness would result in increased fixed obligations and

could also result in covenants that would restrict our operations or other financing alternatives.

In addition, we are exploring additional contract manufacturing arrangements and other business development opportunities, which may provide

additional liquidity to us.

We are also considering alternative business opportunities to maximize stockholder value including, for example, the acquisition or sale of specific assets or businesses, collaboration and/or license agreements or

co-development agreements.

On August 5, 2020, we entered into an Open Market Sale Agreement (the “2020 Sale Agreement”) with Jefferies, pursuant to which we could offer and sell, from time to time, at our option, through or to Jefferies, up to

an aggregate of $50 million of shares of our common stock.

On November 5, 2020 and February 3, 2021, we and Jefferies entered into amendments to the 2020 Sale Agreement (as amended, the “Amended 2020 Sale Agreement”) to provide for an increase in

the aggregate offering amount under the Amended 2020 Sale Agreement, such that, as of February 3, 2021, we could sell shares having a gross aggregate offering price of up to $105.4 million.

There can be no assurances

that we will be able to successfully refinance or expand our existing debt to obtain additional non-dilutive financing.

The sale of additional equity or debt securities, if convertible, could result in dilution to our stockholders and, in such

event, the market value of our common stock may decline.

The incurrence of additional indebtedness would result in increased fixed obligations and could also result in covenants that would restrict our operations or other financing alternatives.

In addition, we are exploring additional contract manufacturing arrangements and other business development opportunities, which may provide additional liquidity to us.

We are also considering alternative business opportunities to maximize

stockholder value including, for example, the acquisition or sale of specific assets or businesses, collaboration and/or license agreements or co-development agreements.

On September 3, 2021, we entered into a distribution agreement with Raymond James & Associates, Inc., as agent (“Agent”), pursuant to which we may offer and sell, from time to

time, at our option, through or to the Agent, up to an aggregate of $50 million of shares of our common stock (the “Distribution Agreement”).

During the nine months ended September 30, 2021, we issued 5,540,831 shares of our common stock

under the Distribution Agreement and received net proceeds of $6.9 million.

We may decide to utilize the Distribution Agreement from time to time in order to supplement our cash resources and fund

our operations.

On August 5, 2020, we entered into an Open Market Sale Agreement (the “Sale Agreement”) with Jefferies LLC (“Jefferies”), pursuant to which we could offer and sell, from time to time, at our option, through or to

Jefferies, up to an aggregate of $50 million of shares of our common stock.

On November 5, 2020 and February 3, 2021, we and Jefferies entered into amendments to the Sale Agreement (as amended, the “Amended Sale Agreement”) to provide for an

increase in the aggregate offering amount under the Amended Sale Agreement, such that, as of February 3, 2021, we could sell shares having a gross aggregate offering price of up to $105.4 million.

For the year ended December 31, 2020, we sold 18,537,907 shares of our common stock under the Amended Sale Agreement and received net proceeds in the amount of $42.5 million.

During the six months ended June 30,

2021, we sold an additional 26,907,753 shares of our common stock and received net proceeds of $59.1 million, and during July of 2021 we sold an additional 897,445 shares of our common stock under the Amended 2020 Sale Agreement and received net

proceeds of approximately $1.5 million.

As of the date of this report, we cannot raise any additional funds under the Amended 2020 Sale Agreement.

The net proceeds from this offering were or are being used for

general corporate purposes, which may include (i) the procurement of raw materials for the manufacturing of BIVIGAM and ASCENIV;

During the nine months ended September

30, 2021, we sold an additional 27,805,198 shares of our common stock and received net proceeds of $60.4 million.

The net proceeds from this offering were or are being used for general corporate purposes, which

may include (i) the procurement of raw materials for the manufacturing of BIVIGAM and ASCENIV;

(ii) supporting the ongoing commercial sales of our IVIG products;

(iii) expanding the manufacturing capacity of our

Boca Facility, including supply chain functions, and enhancing the robustness of our supply chain oversight;

(iii) expanding the manufacturing capacity of our Boca Facility, including supply

chain functions, and enhancing the robustness of our supply chain oversight;

(iv) expanding our plasma collection facility network;

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made on the Perceptive Closing Date in the principal amount of $45.0 million, as evidenced by the Company’s issuance of a promissory note (the “Perceptive Tranche I Note”) in favor of Perceptive on the Perceptive Closing Date (the “Perceptive

Tranche I Loan”), (ii) a term loan in the principal amount of $27.5 million (the “Perceptive Tranche II Loan”) evidenced by the Company’s issuance of a promissory note (the “Perceptive Tranche II Note”) in favor of Perceptive on May 3, 2019, (iii)

a term loan in the principal amount of $12.5 million evidenced by the Company’s issuance of a promissory note (the “Perceptive Tranche III Note”) in favor of Perceptive on March 20, 2020 (the “Perceptive Tranche III Loan”);

and (iv) a term loan in

the principal amount of $15 million evidenced by our issuance of a promissory note in favor of Perceptive on December 8, 2020 (the “Perceptive Tranche IV Loan”, and together with the Perceptive Tranche I Loan, the Perceptive Tranche II Loan and the

Perceptive Tranche III Loan, the “Perceptive Loans”).

The Perceptive Tranche III Loan is the result of an amendment to the Perceptive Credit Agreement that the Company and Perceptive entered into on May 3, 2019 (the “First Perceptive Amendment”),

and the Perceptive Tranche III Loan became available to the Company upon the approval of BIVIGAM on May 9, 2019.

The Perceptive Tranche IV Loan is the result of an amendment to the Perceptive Credit Facility entered into on December 8, 2020 (the

“Second Perceptive Amendment”), which also extended the maturity date of the Perceptive Credit Facility to 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).

(iii) a term loan in the principal amount of $12.5 million evidenced by the Company’s issuance of a promissory note (the “Perceptive Tranche III Note”) in favor of Perceptive on March 20, 2020 (the “Perceptive Tranche III Loan”);

and (iv) a term

loan in the principal amount of $15 million evidenced by our issuance of a promissory note in favor of Perceptive on December 8, 2020 (the “Perceptive Tranche IV Loan”, and together with the Perceptive Tranche I Loan, the Perceptive Tranche II

Loan and the Perceptive Tranche III Loan, the “Perceptive Loans”).

The Perceptive Tranche III Loan is the result of an amendment to the Perceptive Credit Agreement that the Company and Perceptive entered into on May 3, 2019 (the “First Perceptive

Amendment”), and the Perceptive Tranche III Loan became available to the Company upon the approval of BIVIGAM on May 9, 2019.

The Perceptive Tranche IV Loan is the result of an amendment to the Perceptive Credit Facility entered into on December

8, 2020 (the “Second Perceptive Amendment”), which also extended the maturity date of the Perceptive Credit Facility to 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).

The proceeds from the Perceptive Tranche IV Loan were used to retire the $15.0 million subordinated note we had payable to Biotest, which had a maturity date of June 17, 2022.

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Credit Facility.

The rate of interest in effect as of the Perceptive Closing Date and at June 30, 2021 was 11.0%.

The rate of interest in effect as of the Perceptive Closing Date and at September 30, 2021 was 11.0%.

On the Maturity Date, we are required to pay Perceptive the entire outstanding principal amount underlying the Perceptive Loans and any accrued and unpaid interest thereon.

There are no scheduled principal payments on

the Perceptive Loans prior to the Maturity Date.

We may prepay outstanding principal on the Perceptive Loans at any time and from time to time upon three business days’ prior written notice, subject to the payment to Perceptive of (A) any accrued

but unpaid interest on the prepaid principal amount plus (B) a redemption premium amount equal to (i) 5.0% of the prepaid principal amount, if prepaid on or prior to December 31, 2021, (ii) 2.0% of the prepaid principal amount, if prepaid after

December 31, 2021 and on or prior to December 31, 2022, (iii) 4.0% of the prepaid principal amount, if prepaid after December 31, 2022 and on or prior to December 31, 2023, and (iv) 5.0% of the prepaid principal amount, if prepaid any time

There are no scheduled principal payments

on the Perceptive Loans prior to the Maturity Date.

We may prepay outstanding principal on the Perceptive Loans at any time and from time to time upon three business days’ prior written notice, subject to the payment to Perceptive of (A) any

accrued but unpaid interest on the prepaid principal amount plus (B) a redemption premium amount equal to (i) 5.0% of the prepaid principal amount, if prepaid on or prior to December 31, 2021, (ii) 2.0% of the prepaid principal amount, if prepaid

after December 31, 2021 and on or prior to December 31, 2022, (iii) 4.0% of the prepaid principal amount, if prepaid after December 31, 2022 and on or prior to December 31, 2023, and (iv) 5.0% of the prepaid principal amount, if prepaid any time

thereafter and prior to the Maturity Date.

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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 $37.3 million for the fiscal quarter ended June 30, 2021 to $55.0 million for the fiscal quarter ending December 31,

At June 30, 2021, we were in compliance with all of the covenants contained in the Perceptive Credit Agreement.

revenues for the trailing 12-month period that exceed the amounts set forth in the Perceptive Credit Agreement, which range from $45.4 million for the fiscal quarter ended September 30, 2021 to $55.0 million for the fiscal quarter ending December

At September 30, 2021, we were in compliance with all of the covenants contained in the Perceptive Credit Agreement.

In February 2020, we completed an underwritten public offering of 27,025,000 shares of our common stock and received net proceeds, after underwriting discounts and other expenses associated with the offering, of

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The following table sets forth a summary of our cash flows for the periods indicated:

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash used in operating activities

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Net Cash Used in Operating Activities

Cash used in operations for the six months ended June 30, 2021 was $65.5 million, an increase of $19.6 million from the same period of a year ago, mainly due to an increases in inventory and accounts receivable.

following table illustrates the primary components of our cash flows from operations:

Six Months Ended June 30,

Cash used in operations for the nine months ended September 30, 2021 was $78.9 million, an increase of $9.1 million from the same period of a year ago, mainly due to an increases in inventory and accounts receivable,

partially offset by increases in accounts payable and accrued expenses.

The following table illustrates the primary components of our cash flows from operations:

Nine Months Ended September 30,

Non-cash expenses, gains and losses

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Net Cash Used in Investing Activities

Net cash used in investing activities for the six months ending June 30, 2021 was $7.0 million, which primarily consisted of $4.3 million for the construction and buildout of new plasma centers and related equipment

and capital expenditures at the Boca Facility of $2.7 million, which includes equipment purchases and implementation of our in-house fill/finish capabilities.

Cash used in investing activities of $6.2 million for the six months ended June 30, 2020

was mainly attributable to capital expenditures at the Boca Facility.

Although we have no specific material commitments for capital expenditures as of June 30, 2021, we expect our total capital expenditures will be between $6.0 million and $12.0

million for the remainder of fiscal 2021.

Net cash used in investing activities for the nine months ended September 30, 2021 was $9.8 million, which primarily consisted of $6.0 million for the construction and buildout of new plasma collection centers and

related equipment and capital expenditures at the Boca Facility of $3.8 million, which includes equipment purchases and implementation of our in-house fill/finish capabilities.

Cash used in investing activities of $9.1 million for the nine months

ended September 30, 2020 was attributable to $6.6 million of capital expenditures at the Boca Facility and $2.5 million for the construction of new plasma centers.

We expect our total capital expenditures will be between $3.0 million and $6.0

million for the remainder of fiscal 2021, mainly for continued plasma collection center expansion.

Net Cash Provided by Financing Activities

Cash provided by financing activities was $59.0 million for the six months ended June 30, 2021 and primarily consisted of proceeds received from the Amended Sale Agreement.

Cash provided by financing activities of

$101.2 million for the same period of a year ago was comprised of $88.7 million of net proceeds received from our underwritten public offering in February 2020 and $12.5 million of proceeds from the Perceptive Tranche III Loan received in March

Cash provided by financing activities was $67.2 million for the nine months ended September 30, 2021 and primarily consisted of proceeds received from the Amended Sale Agreement and the Distribution Agreement.

provided by financing activities of $111.8 million for the same period of a year ago was comprised of $88.7 million of net proceeds received from our underwritten public offering in February 2020, $12.5 million of proceeds from the Perceptive

Tranche III Loan received in March 2020 and $10.6 million from the Amended Sale Agreement.

Effect of Inflation

Inflation or changing prices did not have a significant impact on our net revenues, operating expenses or net loss for the six months ended June 30, 2021 or in 2020 or 2019.

Inflation or changing prices did not have a significant impact on our net revenues, operating expenses or net loss for the nine months ended September 30, 2021 or in 2020 or 2019.

Off-Balance Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis