ADMA BIOLOGICS, INC. 10-Q

Item 2. 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. OVERVIEW Our Business ADMA Biologics, Inc. (the “Company,” “ADMA,” “we,” “us” or “our”) is an end-to-end commercial biopharmaceutical company dedicated to manufacturing, marketing and developing specialty plasma-derived biologics for the treatment of immunodeficient patients at risk for infection and others at risk for certain infectious diseases. 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. Food and Drug Administration (the “FDA”) approval, all of which are currently marketed and commercially available: (i) BIVIGAM (Immune Globulin Intravenous, Human), an Intravenous Immune Globulin (“IVIG”) product indicated for the treatment of Primary Humoral Immunodeficiency (“PI”), also known as Primary Immunodeficiency Disease (“PIDD”), and for which we received FDA approval on May 9, 2019 and commenced commercial sales in August 2019; (ii) ASCENIV (Immune Globulin Intravenous, Human – slra 10% Liquid), an IVIG product indicated for the treatment of PI, for which we received FDA approval on April 1, 2019 and commenced first commercial sales in October 2019; and (iii) Nabi-HB (Hepatitis B Immune Globulin, Human), which is indicated for the treatment of acute exposure to blood containing HBsAg and other listed exposures to Hepatitis B. We seek to develop a pipeline of plasma-derived therapeutics, including a product based on our most recently approved patent application under U.S. Patent No. 10,259,865 related to methods of treatment and prevention of S. pneumonia infection for an immunoglobulin manufactured to contain standardized antibodies to numerous serotypes of S. pneumoniae . 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”). Based on current production yields, our ongoing supply chain enhancements and capacity expansion initiatives, we believe this facility has the potential to produce quantities of our immune globulin (“IG”) products of more than $250 million in 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. 23 Index Through our ADMA BioCenters subsidiary, we currently operate FDA-licensed source plasma collection facilities in the U.S. This business unit, which we refer to as our Plasma Collection Centers business segment, 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 nine plasma collection centers in various stages of approval and development, including five that are operational and collecting plasma. 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. 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. In January 2020, we announced our entry into a 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 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 the Boca Facility (the “Biotest Transaction”). Recent Developments 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. Our Products BIVIGAM 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 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. 24 Index 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 United States. We resumed production of BIVIGAM during the fourth quarter of 2017 and commercial production is ongoing, using our FDA-approved IVIG manufacturing process under U.S. Department of Health and Human Services (“HHS”) License No. 2019. The commercial re-launch and first commercial sales for this product commenced in August of 2019. 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. We 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. ASCENIV 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 viruses, and prevent against infection and disease. We manufacture ASCENIV under HHS License No. 2019 using a process known as fractionation. The Centers for Medicare and Medicaid Services (“CMS”) has issued a permanent, product-specific-J-code for ASCENIV. Under the Healthcare Common Procedure Coding System (“HCPCS”), the J-code (J1554) became effective April 1, 2021. As part of our proprietary manufacturing process for ASCENIV, we leverage our unique, patented plasma donor screening methodology and tailored plasma pooling design, which blends normal source plasma and plasma from donors tested to have high levels of neutralizing antibody titers to respiratory syncytial virus (“RSV”) using our proprietary microneutralization testing assay. We are able to identify the high titer or “hyperimmune” plasma that meets our internal and required specifications for ASCENIV with our patented testing methods and assay. This type of high titer plasma is typically found in less than 10% of the total donor collection samples we test. ASCENIV is approved for the treatment of Primary Immune Deficiency Disorder (“PIDD”), a class of inherited genetic disorders that causes a deficient or absent immune system in adults and adolescents (12 to 17 years of age). Our pivotal Phase 3 clinical trial in 59 PIDD patients met the primary endpoint of no Serious Bacterial Infections reported during 12 months of treatment. Secondary efficacy endpoints further demonstrated the benefits of ASCENIV in the low incidence of infection, therapeutic antibiotic use, days missed from work/school/daycare and unscheduled medical visits and hospitalizations. We believe this clinical data together with the FDA approval for the treatment of PIDD better positions ADMA to further evaluate ASCENIV in immune-compromised patients infected with or at-risk for RSV infection or potentially other respiratory viral pathogens. Due to the COVID-19 pandemic, our plans have been delayed. In the future however, we plan to work with the FDA and the immunology and infectious disease community to design an appropriate clinical trial to evaluate the use of ASCENIV in this patient population. Commercial sales of ASCENIV commenced in October of 2019. Nabi-HB Nabi-HB is a hyperimmune globulin that is rich in antibodies to the Hepatitis B virus. Nabi-HB is a purified human polyclonal antibody product collected from plasma donors who have been previously vaccinated with a Hepatitis B vaccine. Nabi-HB is indicated for the treatment of acute exposure to blood containing HBsAg, prenatal exposure of infants born to HBsAg-positive mothers, sexual exposure to HBsAg-positive persons and household exposure to persons with acute Hepatitis B virus infection in specific, listed settings. Hepatitis B is a potentially life-threatening liver infection caused by the Hepatitis B virus. It is a major global health problem. It can cause chronic infection and puts people at high risk of death from cirrhosis and liver cancer. Nabi-HB has a well-documented record of long-term safety and effectiveness since its initial market introduction. The FDA approved Nabi-HB on March 24, 1999. Production of Nabi-HB at the Boca Facility has continued under our leadership since the third quarter of 2017. In early 2018, we received authorization from the FDA for the release of our first commercial batch of Nabi-HB for commercial distribution in the U.S. and we continue to manufacture Nabi-HB under HHS License No. 2019. 25 Index 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 materials, a portion of which are sourced internationally, and testing of finished drug product that is required prior to its availability for commercial sale. Such testing has historically been performed by contract laboratories outside the 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 cancellation due to the pandemic. 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. Although 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. 26 Index 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. GAAP”). 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. 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 estimates. Significant estimates include the realizable value of accounts receivable, valuation of inventory, assumptions used in projecting future liquidity and capital requirements, assumptions used in the fair value of awards granted under 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. GAAP require difficult, subjective and/or complex judgments about matters that are inherently uncertain and, as a result, actual results could differ from those estimates. Due to the estimation processes involved, the following summary of accounting policies and their application are considered to be critical to understanding our business operations, financial condition and results of operations. For a detailed discussion on the application of these and our other accounting policies, see Note 2 to the Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q. Revenue Recognition 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 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 shipment. 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 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. (“Biolife”), BioCare and Reliance represented an aggregate of 82% of our consolidated revenues. 27 Index Accounts Receivable Accounts receivable are reported at realizable value, net of allowances for contractual credits and doubtful accounts, which are recognized in the period the related revenue is recorded. We extend credit to our customers based upon an evaluation of each customer’s financial condition and credit history. Evaluations of the financial condition and associated credit risk of customers are performed on an ongoing basis. Based on these evaluations, we have concluded that our credit risk is minimal. Cost of Product Revenue Cost of product revenue includes costs associated with the manufacture of the Company’s FDA approved products, intermediates and the sale of human source plasma, as well as expenses related to conformance batch production, process development and scientific and technical operations when these operations are attributable to marketed products. When the activities of these operations are attributable to new products in development, their expenses are classified as research and development expenses. As a manufacturer of biological products, we are subject to the risks inherent in biological production, which could include normal course losses and failures inherent in the manufacturing process. As our biologics production levels increase there may be normal course inventory losses as we ensure product quality and compliance with current Good Manufacturing Practices (“cGMP”), FDA, state and local regulations, or due to testing results not meeting specifications. Such losses are charged to cost of product revenue in the period they are incurred. 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 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. 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. 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 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. 28 Index Inventories Raw materials inventory consists of various materials purchased from suppliers, including normal source plasma, that are used in the production of our products. 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. 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 realizable value determined by the first-in, first-out method. Net realizable value is generally determined based upon the consideration we expect to receive when the inventory is sold, less costs to deliver the inventory to the recipient. The estimates for net realizable value of inventory are based on contractual terms or upon historical experience and certain other assumptions which we believe are reasonable. Inventory is periodically reviewed to ensure that its carrying value does not exceed its net realizable value, and adjustments are recorded to write down such inventory, with a corresponding charge to cost of product revenue, when the carrying value or historical cost exceeds its estimated net realizable value. Impairment of Long-Lived Assets We assess the recoverability of our long-lived assets, which include property and equipment and finite-lived intangible assets, whenever significant events or changes in circumstances indicate impairment may have occurred. If indicators of impairment exist, projected future undiscounted cash flows associated with the asset are compared to its carrying amount to determine whether the asset’s carrying value is recoverable. Any resulting impairment is recorded as a reduction in the carrying value of the related asset in excess of fair value and a charge to operating results. For the nine months ended September 30, 2021 and 2020, we determined that there was no impairment of our long-lived assets. 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 nine months ended September 30, 2021 and 2020. Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”), which requires financial assets to be presented at the net amount expected to be collected, with an allowance for credit losses to be deducted from the amortized cost basis of the financial asset such that the net carrying value of the asset is presented as the amount expected to be collected. Under ASU 2016-13, the entity’s statement of operations is required to reflect the measurement of credit losses for newly recognized financial assets, as well as expected increases or decreases in expected credit losses that have taken place during the period. For public business entities, ASU 2016-13 is effective for fiscal years beginning after December 15, 2019. We adopted ASU 2016-13 on January 1, 2020, and the adoption of this update did not have a significant impact on our consolidated financial statements. 29 Index 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, 2021 2020 Increase (Decrease) Revenues $ 20,680,550 $ 10,276,358 $ 10,404,192 Cost of product revenue (exclusive of amortization expense shown below) 20,295,213 11,855,464 8,439,749 Gross profit (loss) 385,337 (1,579,106 ) 1,964,443 Research and development expenses 770,557 1,708,391 (937,834 ) Plasma center operating expenses 3,146,221 1,218,898 1,927,323 Amortization of intangibles 178,838 178,838 - Selling, general and administrative expenses 10,726,797 9,115,744 1,611,053 Loss from operations (14,437,076 ) (13,800,977 ) (636,099 ) Interest expense (3,298,680 ) (3,091,200 ) (207,480 ) Other income (expense), net 22,802 (25,276 ) 48,078 Net loss $ (17,712,954 ) $ (16,917,453 ) $ (795,501 ) Revenues 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 $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 $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 $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 collections. 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. 30 Index 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 September 30, 2021 and 2020. Selling, General and Administrative Expenses 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 $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 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”). Net Loss 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, 2021 2020 Increase (Decrease) Revenues $ 54,559,758 $ 28,263,696 $ 26,296,062 Cost of product revenue (exclusive of amortization expense shown below) 56,897,959 42,180,319 14,717,640 Gross loss (2,338,201 ) (13,916,623 ) 11,578,422 Research and development expenses 2,917,072 4,893,549 (1,976,477 ) Plasma center operating expenses 8,191,890 2,597,444 5,594,446 Amortization of intangibles 536,514 536,514 - Selling, general and administrative expenses 31,198,880 25,750,458 5,448,422 Loss from operations (45,182,557 ) (47,694,588 ) 2,512,031 Interest expense (9,741,110 ) (8,875,597 ) (865,513 ) Other (expense) income, net (74,531 ) 229,411 (303,942 ) Net loss $ (54,998,198 ) $ (56,340,774 ) $ 1,342,576 31 Index Revenues 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 $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 $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 $2.9 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 $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 $0.5 million for the nine months ended September 30, 2021 and 2020. Selling, General and Administrative Expenses 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. 32 Index Loss from Operations 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 $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”). Net Loss 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 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 $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. 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, 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 facility. 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. 33 Index 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 achieved commercial status, to cover our operating expenses and meet our obligations on a timely basis. The COVID-19 pandemic has negatively affected the global economy and created significant volatility and disruption to the financial markets. Failure to secure any necessary financing in a timely manner and on commercially reasonable terms could have a material adverse effect on our business plan and financial performance and we could be forced to delay or discontinue our capacity expansion, commercialization, product development or clinical trial activities, delay or discontinue the approval efforts for any of our product candidates, or potentially cease operations. In addition, we could also be forced to reduce or forgo 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, 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. 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. 34 Index 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 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; (iv) expanding our plasma collection facility network; and (v) research and development and business development opportunities. On February 11, 2019 (the “Perceptive Closing Date”), we and all of our subsidiaries entered into a Credit Agreement and Guaranty (the “Perceptive Credit Agreement”) with Perceptive Credit Holdings II, LP, as the lender and administrative agent (“Perceptive”). The Perceptive Credit Agreement, as amended, provides for a senior secured term loan facility in a principal amount of $100.0 million (the “Perceptive Credit Facility”), comprised of (i) a term loan 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). 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. Borrowings under the Perceptive Credit Agreement bear interest at a rate per annum equal to 7.5% plus the greater of (i) one-month LIBOR and (ii) 3.5%; provided, however, that upon, and during the continuance of, an Event of Default, the interest rate will automatically increase by an additional 400 basis points. Accrued interest of approximately $0.9 million per month is payable to Perceptive on the last day of each month during the term of the Perceptive Credit Facility. The rate of interest in effect as of 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 thereafter and prior to the Maturity Date. 35 Index All of our obligations under the Perceptive Credit Agreement are secured by a first-priority lien and security interest in substantially all of our tangible and intangible assets, including intellectual property and all of the equity interests in our subsidiaries. The Perceptive Credit Agreement contains certain representations and warranties, affirmative covenants, negative covenants and conditions that are customarily required for similar financings. The negative covenants restrict or limit our ability and that of our subsidiaries to, among other things and subject to certain exceptions contained in the Perceptive Credit Agreement, incur new indebtedness; create liens on assets; engage in certain fundamental corporate changes, such as mergers or acquisitions, or changes to our or our subsidiaries’ business activities; make certain Investments or Restricted Payments (each as defined in the Perceptive Credit Agreement); change our fiscal year; pay dividends; repay other certain indebtedness; engage in certain affiliate transactions; or enter into, amend or terminate any other agreements that have the impact of restricting our ability to make loan repayments under the Perceptive Credit Agreement. In addition, we must (i) at all times prior to the Maturity Date maintain a minimum cash balance of $3.0 million; and (ii) as of the last day of each fiscal quarter commencing with the fiscal quarter ended June 30, 2019, report revenues for the trailing 12-month period that exceed the amounts set forth in the Perceptive Credit Agreement, which range from $45.4 million for the fiscal quarter ended September 30, 2021 to $55.0 million for the fiscal quarter ending December 31, 2021. 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 approximately $88.7 million. The proceeds from this offering were used (i) for the procurement of raw materials for the manufacturing of BIVIGAM and ASCENIV; (ii) to support the ongoing commercial sales of BIVIGAM and ASCENIV; (iii) to expand the manufacturing capacity of our Boca Facility and enhance our supply chain capabilities; (iv) to expand our plasma collection facility network; (v) for research and development and business development opportunities; and (vi) for general corporate purposes and other capital expenditures. Cash Flows The following table sets forth a summary of our cash flows for the periods indicated: Nine Months Ended September 30, 2021 2020 Net cash used in operating activities $ (78,903,751 ) $ (69,783,522 ) Net cash used in investing activities (9,835,404 ) (9,126,359 ) Net cash provided by financing activities 67,228,573 111,832,791 Net change in cash and cash equivalents (21,510,582 ) 32,922,910 Cash and cash equivalents - beginning of period 55,921,152 26,752,135 Cash and cash equivalents - end of period $ 34,410,570 $ 59,675,045 Net Cash Used in Operating Activities 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: 36 Index Nine Months Ended September 30, 2021 2020 Net loss $ (54,998,198 ) $ (56,340,774 ) Non-cash expenses, gains and losses 7,620,142 6,126,420 Changes in accounts receivable (7,155,331 ) (2,864,617 ) Changes in inventories (32,587,273 ) (16,687,794 ) Changes in prepaid expenses and other current assets (2,812,580 ) (1,252,828 ) Changes in accounts payable and accrued expenses 11,735,352 1,422,652 Other (705,863 ) (186,581 ) Cash used in operations $ (78,903,751 ) $ (69,783,522 ) Net Cash Used in Investing Activities 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 $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. Cash 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 nine months ended September 30, 2021 or in 2020 or 2019. Off-Balance Sheet Arrangements None. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not applicable.