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Item 2. Management’s Discussion and Analysis

2022-11-09 compared with 2022-08-10 · 280 added, 273 removed, 239 unchanged (70% 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, 2021, filed on March 24, 2022 (the “2021 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, 2021, filed on March 24, 2022 (the “2021 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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We may also seek to develop a pipeline of plasma-derived therapeutics, including but not limited to, a product based on our most recently approved patent application under U.S.

10,259,865 related to methods

of treatment and prevention of S.

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.

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The ‘206 Patent relates to methods of treating respiratory infections and expands ADMA’s estate of patents encompassing its proprietary immunotherapeutic compositions.

In particular, the ‘206 Patent encompasses use

of standardized, hyperimmune globulin for treating respiratory infections including those caused by respiratory syncytial virus (“RSV”), coronavirus, influenza virus, parainfluenza virus, and metapneumovirus.

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 source plasma processing capability of up to 600,000 liters (the “Boca

Based on current production yields, our completed and ongoing supply chain enhancements and capacity expansion initiatives, we believe this facility has the potential to produce quantities of our immune globulin (“IG”) products to

generate 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

two to four years.

Based on our early 2022 revenue growth and gross margin trends, we have increased our total annual revenue target to greater than $130 million for fiscal year 2022.

Through our ADMA BioCenters subsidiary, we currently operate six FDA-licensed source plasma collection facilities in the U.S., with two additional collection facilities in operation and collecting plasma presently

under FDA licensing preparation and review and another two facilities under construction.

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.

In particular, the ‘206 Patent

encompasses use of standardized, hyperimmune globulin for treating respiratory infections including those caused by respiratory syncytial virus (“RSV”), coronavirus, influenza virus, parainfluenza virus, and metapneumovirus.

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.

“Boca Facility”).

to generate approximately $250 million or more in annual revenue beginning in 2024 and approximately $300 million or more thereafter, as well as achieving profitability during the first quarter of 2024, as we ramp-up production over the next

several years.

Based on our current 2022 revenue growth year-to-date, we have increased our total annual revenue target to approximately $145 million for fiscal year 2022.

Through our ADMA BioCenters subsidiary, we currently operate seven FDA-licensed source plasma collection facilities in the U.S., with two additional collection facilities in operation and collecting plasma presently

under FDA licensing preparation and review and another facility under construction.

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 also allows us to sell certain quantities of source and hyperimmune plasma to third-party 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 12 months, and we now have ten plasma collection centers in various stages of approval and development, including eight that are operational and collecting plasma.

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.

centers during the past 12 months, and we now have ten plasma collection centers in various stages of approval and development, including nine that are operational and collecting plasma.

In addition, three of our FDA-approved plasma collection

centers also have 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 2021 and thus far in 2022 with our plasma

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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 packaging services in light of the FDA approval 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 packaging services in light of the 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”),

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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.

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

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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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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 potentially further evaluate ASCENIV in immune-compromised patients infected with or at-risk for RSV infection or potentially other respiratory viral pathogens at an appropriate time.

Due to the COVID-19 pandemic, our plans

have been delayed.

We believe this clinical data together with the FDA approval for the treatment of

PIDD better positions ADMA to potentially further evaluate ASCENIV in immune-compromised patients infected with or at-risk for RSV infection or potentially other respiratory viral pathogens at an appropriate time.

Due to the COVID-19 pandemic,

our plans have been delayed.

In the future however, we may 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 and our commercial efforts are focused on the labeled indication of patients with PIDD.

Commercial sales

of ASCENIV commenced in October of 2019 and our commercial and medical education efforts are focused on the labeled indication of patients with PIDD.

Nabi-HB is a hyperimmune globulin that is rich in antibodies to the Hepatitis B virus.

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We continue to monitor the ongoing developments related to the COVID-19 pandemic, including the emergence of the Delta, Omicron and BA.2 variants and other resistant strains of the coronavirus, and its impacts to our

commercial and manufacturing operations and plasma collection facilities, including collections of source plasma, procurement of raw materials and packaging materials, a portion of which are sourced internationally, and the testing of finished drug

product that is required prior to its availability for commercial sale.

drug product that is required prior to its availability for commercial sale.

A substantial portion of such testing has historically been performed by contract laboratories outside the United States.

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 had

experienced 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

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

We are 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.

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

The COVID-19 pandemic has also impacted, to a certain

degree, our customer engagement initiatives, whereby ADMA’s sales and medical affairs field personnel have faced difficulties communicating directly with physicians and other healthcare professionals, as well as the cancellation or postponement of

a number of key scientific and medical meetings, further limiting our ability to communicate with potential customers.

We have implemented a comprehensive suite of virtual engagement initiatives;

however, clinician engagement has been reduced due

to rapidly evolving COVID-19 priorities at U.S.

medical centers.

The COVID-19 pandemic previously impacted, to a certain

degree, our customer engagement initiatives, whereby ADMA’s sales and medical affairs field personnel faced difficulties communicating directly with physicians and other healthcare professionals, as well as the cancellation or postponement of a

number of key scientific and medical meetings, further limiting our ability to communicate with potential customers.

The pandemic could also 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.

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

During the six months ended June 30, 2022 and 2021, our revenue attributable to international customers was approximately 7% and 14%, respectively, of our total revenues.

As we seek to grow this aspect of our business,

we may also be subject to the impacts of the COVID-19 pandemic in locations outside the United States.

Notwithstanding the foregoing, the COVID-19 pandemic to date has not had a material impact on our financial condition or results of operations, and we do not believe that our production operations at the Boca Facility,

our contract fill/finishers or our plasma collection facilities have been significantly impacted by the COVID-19 pandemic.

As a result, we do not anticipate and have not experienced 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, because we are unable to determine the ultimate severity or duration of the pandemic or its long-term

effects on, among other things, the global, national or local economies, the capital and credit markets or our workforce, customers or suppliers, at this time we are unable to predict whether COVID-19, or any known or future variant or government

order, will have a material adverse impact on our business, financial condition, liquidity and results of operations.

After the COVID-19 global pandemic has settled, we may continue to experience adverse impacts to our business as a result of

evolving macroeconomic factors, including general economic uncertainty, unemployment rates, inflationary pressures and any actual economic recession that has occurred or may occur in the future.

During the nine months ended September 30, 2022 and 2021, our revenue attributable to international customers was approximately 7% and 13%, respectively, of our total revenues.

As we seek to grow this aspect of our

business, we may also be subject to the impacts of the COVID-19 pandemic in locations outside the United States.

Facility, our contract fill/finishers or our plasma collection facilities have been significantly impacted by the COVID-19 pandemic.

As a result, we do not anticipate and have not experienced any material impairments with respect to any of our

long-lived assets, including our property and equipment, goodwill or intangible assets.

long-term effects on, among other things, the global, national or local economies, the capital and credit markets or our workforce, customers or suppliers, at this time we are unable to predict whether COVID-19, or any known or future variant or

government order, will have a material adverse impact on our business, financial condition, liquidity and results of operations.

After the COVID-19 global pandemic has settled, we may continue to experience adverse impacts to our business as a

result of evolving macroeconomic factors, including general economic uncertainty, unemployment rates, inflationary pressures and any actual economic recession that has occurred or may occur in the future.

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

and expenses.

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

The preparation of these condensed 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 rebates and certain other deductions from gross revenues, impairment of long-lived assets, 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.

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

Due to the estimation processes involved, the following summary of accounting estimates and their application are considered to be critical to understanding our business operations, financial condition and results of operations.

description of our significant accounting policies, see Note 2 to the Consolidated Financial Statements included in the 2021 10-K.

Estimates and assumptions used in projecting future liquidity and capital requirements are described in Note 1 to the

condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

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.

For a description of our significant accounting policies, see Note 2 to the Consolidated Financial Statements included in the 2021 10-K.

Estimates and assumptions used in projecting future liquidity and capital requirements are

described in Note 1 to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Our gross product revenues are subject to a variety of deductions, which are estimated and recorded in the same period that the revenues are recognized.

These deductions primarily consist of rebates, distribution fees,

chargebacks and sales allowances.

These deductions represent estimates of the related obligations, some of which are contractual in nature and do not require extensive judgment to be exercised by management, while other estimates require complex or

subjective matters of knowledge and judgment when estimating the impact of these revenue deductions on net revenues for a reporting period.

These deductions primarily consist of rebates, distribution

fees, chargebacks and sales allowances.

complex or subjective matters of knowledge and judgment when estimating the impact of these revenue deductions on net revenues for a reporting period.

Historically, adjustments to these estimates to reflect actual results or updated expectations have not been material to our overall business.

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Estimates that are most at risk for material adjustment are those associated with U.S.

Medicaid rebates because of the extensive time delay between the recording

of the accrual and its ultimate settlement, an interval that can generally take up to several years or more.

While our results of operations to date have not required any material adjustment due to this risk, the lag time between when this

obligation is initially recorded and ultimately settled could potentially materially impact our revenues and our results of operations in the future.

Medicaid rebates because of the extensive time delay between the

recording of the accrual and its ultimate settlement, an interval that can generally take up to several years or more.

While our results of operations to date have not required any material adjustment due to this risk, the lag time between when

this obligation is initially recorded and ultimately settled could potentially materially impact our revenues and our results of operations in the future.

Stock-Based Compensation and Valuation of Warrants

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

The Black-Scholes option valuation model was

developed for use in estimating the fair value of publicly traded options, which have no vesting restrictions and are fully transferable.

The Black-Scholes option valuation model

was developed for use in estimating the fair value of publicly traded options, which have no vesting restrictions and are fully transferable.

The Company’s employee stock options have characteristics significantly different from those of traded

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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.

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.

Any changes in

the foregoing Black-Scholes assumptions, or if we were to elect to utilize an alternative method for valuing stock options granted to employees, directors and officers, could potentially impact our stock-based compensation expense and our results

of operations.

The expected term of the options granted is in accordance with U.S.

Securities and Exchange Commission (“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.

Any changes in the foregoing Black-Scholes assumptions, or if we were to elect to utilize an alternative method for valuing stock options granted to employees, directors and officers, could potentially impact

our stock-based compensation expense and our results of operations.

We also use the Black-Scholes option valuation model for the purpose of estimating the fair value of warrants we issue from time to time in connection with the issuance of notes payable.

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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, 2022 and 2021, we determined that there was no impairment of our long-lived assets.

events or circumstances that may be indicative of impairment that would require the use of significant judgment by management include:

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, 2022 and 2021, we determined that there was no impairment of our long-lived

Examples of events or circumstances that may be indicative of impairment that would require the use of significant judgment by management include:

A significant adverse change in legal factors or in the business climate that could affect the value of the asset.

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An expectation of losses or reduced profits associated with an asset.

This could result, for example, from the introduction of a competitor’s product that impacts projected revenue growth, or a change in the acceptance of a product by

patients, physicians and payers that results in an inability to sustain projected product revenues.

This could result, for example, from the introduction of a competitor’s product that impacts projected revenue growth, or a change in the acceptance of a product

by patients, physicians and payers that results in an inability to sustain projected product revenues.

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

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market capitalization.

Determination of the fair value and carrying value of each reporting unit, relative to the fair value of the Company, requires management to employ certain estimates, assumptions and judgment, which we believe are reasonable.

However, any changes to these estimates and assumptions could impact our determination of whether or not our goodwill is impaired.

We did not recognize any impairment charges related to goodwill for the six months ended June 30, 2022 and 2021.

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

2022 and 2021.

Deferred Tax Assets

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factors such as prior earnings history, expected future earnings, carryback and carryforward periods and tax strategies.

We consider all positive and negative evidence to estimate if sufficient future taxable income will be generated to realize our

deferred tax assets.

We consider cumulative losses in recent years to be a significant type of negative evidence.

Based on our history of losses, at this time we have not included future projected taxable income as a source of income to recognize

We consider all positive and negative evidence to estimate if sufficient future taxable income will be generated to realize

our deferred tax assets.

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

The following table presents a summary of the changes in our results of operations for the three months ended June 30, 2022, our second fiscal quarter, compared to the three months ended June 30,

Three Months Ended June 30,

We consider cumulative losses in recent years to be a significant type of negative evidence.

Based on our history of losses, at this time we have not included future projected taxable income as a source of income to

recognize our deferred tax assets.

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

The following table presents a summary of the changes in our results of operations for the three months ended September 30, 2022, our third fiscal quarter, compared to the three months ended

September 30, 2021:

Three Months Ended September 30,

Increase (Decrease)

Cost of product revenue

Gross profit (loss)

Research and development expenses

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Interest expense

Other expense, net

We recorded total revenues of $33.9 million during the three months ended June 30, 2022, as compared to $17.8 million during the three months ended June 30, 2021, an increase of $16.1 million, or approximately 90%.

increase is due to increased sales of immunoglobulin products generated by our Boca Facility manufacturing operations in 2022, primarily ASCENIV and BIVIGAM, of $15.8 million, as we continue to expand our customer base for BIVIGAM and experience

increased physician, payer and patient acceptance and utilization of ASCENIV.

Other (expense) income, net

We recorded total revenues of $41.1 million during the three months ended September 30, 2022, as compared to $20.7 million during the three months ended September 30, 2021, an increase of $20.4 million, or

approximately 99%.

The increase is due to increased sales of immunoglobulin products, primarily ASCENIV and BIVIGAM, generated by our Boca Facility manufacturing operations in 2022 of $18.2 million, as we continue to experience increased

physician, payer and patient acceptance and utilization of ASCENIV and expand our customer base for BIVIGAM.

We also benefitted from an increase in sales of normal source plasma through ADMA BioCenters of $2.2 million.

Cost of Product Revenue and Gross Profit

Cost of product revenue was $26.1 million for the three months ended June 30, 2022, as compared to $18.8 million for the three months ended June 30, 2021.

This increase is primarily attributable to increased product

revenue costs related to the sale of our immunoglobulin products of $5.8 million and increased product revenue costs related to our ADMA BioCenters business segment in the amount of $0.4 million.

We also experienced an increase in unabsorbed

manufacturing expenses of approximately $0.8 million in the second quarter of 2022 as compared to the same period of year ago, which is indicative of certain inflationary pressures being experienced by our industry for labor, materials, freight,

fuel surcharges and third-party services.

For the three months ended June 30, 2022, we had gross profit of $7.8 million, as compared to a gross loss of $1.0 million for the same period of a year ago.

This gross profit improvement of $8.8 million was primarily

due to a more favorable mix of our higher margin products, notably ASCENIV, as well as the benefits we have begun to realize from our expanded plasma pool production scale process, allowing for a 4,400-liter plasma pool for the manufacture of our

BIVIGAM IVIG product, which was approved by the FDA in the second quarter of 2021.

Cost of product revenue was $31.4 million for the three months ended September 30, 2022, as compared to $20.3 million for the three months ended September 30, 2021.

This increase is primarily attributable to

increased product revenue costs related to the increased sales of our immunoglobulin products of $10.6 million and increased product revenue costs related to our ADMA BioCenters business segment in the amount of $2.0 million.

These increases were

partially offset by a decrease in unabsorbed manufacturing expenses of approximately $1.3 million in the third quarter of 2022 as compared to the same period of a year ago, due to higher production levels at the Boca Facility in 2022.

For the three months ended September 30, 2022, we had gross profit of $9.7 million, as compared to $0.4 million for the same period of a year ago.

This gross profit improvement of $9.3 million was primarily due to

the revenue increase discussed above and a more favorable mix of our higher margin products, notably ASCENIV, as well as the benefits we have begun to realize from our expanded production scale process, allowing for a 4,400-liter plasma pool for

the manufacture of our BIVIGAM IVIG product, which was approved by the FDA in the second quarter of 2021, as compared to our 2,200-liter plasma pool.

As a result, we achieved a gross margin of 23.5% in the third quarter of 2022 as compared to

1.9% in the third quarter of 2021.

Research and Development Expenses

Research and development (“R&D”) expenses totaled $0.9 million for the second quarter of 2022, as compared to $1.2 million for the second quarter of 2021.

The decrease is primarily due to lower expenditures related

to certain of our post-marketing commitments we have with the FDA, specifically the ASCENIV and BIVIGAM pediatric studies (see Note 10 to the consolidated financial statements), for which we anticipate increased expenses in the second half of 2022.

Research and development (“R&D”) expenses totaled $1.0 million for the third quarter of 2022, as compared to $0.8 million for the third quarter of 2021.

The increase is primarily due to higher expenditures

related to the BIVIGAM post-marketing commitments we have with the FDA (see Note 10 to the consolidated financial statements).

Plasma Center Operating Expenses

Subsequent to June 30, 2021, we opened four additional plasma collection centers.

As a result, for the three months ended June 30, 2022 we had increases in donor fees of $2.6 million, compensation and benefits of $1.3

million, softgoods and supplies of $0.7 million, donor testing expenses of $0.6 million, depreciation of $0.3 million, advertising of $0.1 million and rent of $0.1 million.

These increases were largely offset by a four-fold increase in plasma

collections in 2022, resulting in an additional $5.0 million of costs that were capitalized into inventory.

During the third quarter of 2021, we had five plasma collection centers in operation.

During the third quarter of 2022, we had eight plasma collection centers in operation, with our ninth collection center opening at

the end of the third quarter of 2022.

As a result, for the three months ended September 30, 2022 we had increases in donor fees of $3.4 million, compensation and benefits of $1.5 million, softgoods and supplies of $1.1 million, donor testing

expenses of $0.9 million, depreciation of $0.3 million, advertising of $0.1 million, software maintenance expense of $0.1 million, professional services of $0.2 million, transportation costs of $0.1 million and rent of $0.1 million.

increases were largely offset by substantially increased plasma collections resulting in an additional $6.5 million of costs that were capitalized into inventory.

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, 2022 and 2021.

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, 2022 and 2021.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses were $12.0 million for the three months ended June 30, 2022, an increase of $1.5 million from the three months ended June 30, 2021.

The increase reflects

higher employee compensation and related expenses, including travel, relocation and recruiting, in the amount of $1.3 million due to increased headcount associated with the overall size and scope of the organization and the stepped-up

commercialization efforts for BIVIGAM and ASCENIV, increased insurance expense of $0.4 million and increased expenses for market data and intelligence fees of $0.3 million to support the BIVIGAM and ASCENIV commercialization efforts and $0.1

million of increased marketing/advertising expenses.

These costs were partially offset by the severance obligation recognized in the second quarter of 2021 of $0.8 million related to the resignation of the Company’s former chief medical officer,

with no comparable amount in fiscal 2022.

Selling, general and administrative (“SG&A”) expenses were $12.9 million for the three months ended September 30, 2022, an increase of $2.2 million from the three months ended September 30, 2021.

reflects higher employee compensation and related expenses, including travel, relocation and recruiting, in the amount of $1.1 million due to increased headcount associated with the overall size and scope of the organization and the stepped-up

commercialization efforts for BIVIGAM and ASCENIV, increased insurance expense of $0.2 million, increased expenses for market intelligence and data fees of $0.7 million to support the BIVIGAM and ASCENIV commercialization efforts and $0.2 million

of increased marketing expenses.

Loss from Operations

Our operating loss was $9.2 million for the second quarter of 2022, as compared to $15.6 million for the second quarter of 2021.

Our operating loss was $9.3 million for the third quarter of 2022, as compared to $14.4 million for the third quarter of 2021.

The $5.1 million decrease in operating loss was mainly due to the improved gross profit

of $8.8 million and lower R&D expenses, partially offset by the increases in plasma center operating expenses and SG&A.

of $9.3 million, partially offset by the increases in plasma center operating expenses and SG&A.

Interest Expense

Interest expense for the three months ended June 30, 2022 was $4.6 million, as compared to $3.2 million for the three months ended June 30, 2021.

The increase is mainly due to approximately $52.8 million of additional

debt principal resulting from the refinancing of our senior credit facility on March 23, 2022 (see Note 7 to the consolidated financial statements and “Liquidity and Capital Resources”).

We expect our interest expense to continue to increase during

the remainder of 2022 and thereafter due to rising interest rates.

Our net loss was $13.8 million for the second quarter of 2022, as compared to $18.9 million for the second quarter of 2021.

Interest expense for the three months ended September 30, 2022 was $5.6 million, as compared to $3.3 million for the three months ended September 30, 2021.

The increase is mainly due to approximately $53.8 million of

additional debt principal resulting from the refinancing of our senior credit facility on March 23, 2022 (see Note 7 to the consolidated financial statements and “Liquidity and Capital Resources”).

We expect our interest expense to continue to

increase during the remainder of 2022 and thereafter due to rising interest rates.

Our net loss was $14.9 million for the third quarter of 2022, as compared to $17.7 million for the third quarter of 2021.

The $2.8 million decrease in net loss was mainly due to the narrowed operating loss, partially

offset by the increase in interest expense.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

The following table presents a summary of the changes in our results of operations for the six months ended June 30, 2022 compared to the six months ended June 30, 2021:

Six Months Ended June 30,

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

The following table presents a summary of the changes in our results of operations for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021:

Nine Months Ended September 30,

Increase (Decrease)

Cost of product revenue

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Other expense, net

We recorded total revenues of $63.0 million during the six months ended June 30, 2022, as compared to $33.9 million during the three months ended June 30, 2021, an increase of $29.1 million, or approximately 86%.

increase is due to increased sales of immunoglobulin products generated by our Boca Facility manufacturing operations in 2022, primarily ASCENIV and BIVIGAM, of $28.1 million.

We also benefitted from increased sales of normal source plasma through

ADMA BioCenters of $1.0 million.

Our consolidated revenues of $63.0 million for the first six months of 2022 includes sales of normal source plasma through ADMA BioCenters of $5.1 million (see Note 11 to the consolidated financial statements).

and beyond, we expect that substantially all of the plasma collected at our plasma collection facilities will be utilized in our Boca Facility manufacturing operations.

Therefore, we do not expect any significant revenue from the sale of normal

source plasma beginning in 2023.

We recorded total revenues of $104.1 million during the nine months ended September 30, 2022, as compared to $54.6 million during the nine months ended September 30, 2021, an increase of $49.5 million, or

approximately 91%.

The increase is primarily due to increased sales of immunoglobulin products, mainly ASCENIV and BIVIGAM, generated by our Boca Facility manufacturing operations in 2022 of $46.3 million.

We also benefitted from increased sales

of normal source and hyperimmune plasma through ADMA BioCenters of $3.2 million.

Our consolidated revenues of $104.1 million for the first nine months of 2022 includes sales of normal source plasma through our ADMA BioCenters subsidiary of $8.7 million (see Note 11 to the consolidated financial

In 2023 and beyond, we expect that a substantial portion of the plasma collected at our plasma collection facilities will be utilized in our Boca Facility manufacturing operations.

Therefore, we do not anticipate significant revenues

from the sale of normal source plasma beginning in 2023.

Cost of Product Revenue and Gross Profit

Cost of product revenue was $51.6 million for the six months ended June 30, 2022, as compared to $36.6 million for the six months ended June 30, 2021.

This increase of $15.0 million is primarily attributable to

increased product revenue costs related to the sale of our immunoglobulin products of $11.0 million and increased product revenue costs related to our ADMA BioCenters business segment in the amount of $1.3 million.

In addition, we also experienced

an increase in other manufacturing expenses of approximately $2.7 million in the first half of 2022 as compared to the same period of year ago.

Our gross profit of $11.4 million for the six months ended June 30, 2022 represents an improvement over the same period of a year ago of $14.2 million and is mainly due to the improved margins we are experiencing with

BIVIGAM at the larger plasma pool production scale, and to the increased relative contribution of ASCENIV to our total revenues.

As a result, we achieved a gross margin of 18.1% for the first six months of 2022, as compared to a negative gross

margin for the first six months of 2021.

We consider consolidated gross margin to be an important performance metric that we will monitor during the second half of 2022 and beyond.

Cost of product revenue was $83.0 million for the nine months ended September 30, 2022, as compared to $56.9 million for the nine months ended September 30, 2021.

This increase of $26.1 million is primarily

attributable to volume-related increases in product revenue costs related to the sale of our immunoglobulin products of $21.4 million and increased product revenue costs related to our ADMA BioCenters business segment in the amount of $3.3

In addition, we also experienced an increase in other manufacturing expenses of approximately $1.3 million in the first nine months of 2022 as compared to the same period of a year ago, which is indicative of certain inflationary

pressures being experienced by our industry for labor, materials, freight, fuel surcharges and third-party services.

Our gross profit of $21.1 million for the nine months ended September 30, 2022 represents an improvement over the same period of a year ago of $23.4 million and is mainly due to the higher sales volume, the improved

margins we are experiencing with BIVIGAM at the larger plasma pool production scale, and to the increased relative contribution of ASCENIV to our total revenues.

As a result, we achieved a gross margin of 20.3% for the first nine months of 2022,

as compared to a negative gross margin for the first nine months of 2021.

Research and Development Expenses

R&D expenses totaled $1.5 million for the six months ended June 30, 2022, as compared to $2.1 million for the six months ended June 30, 2021.

The decrease is primarily due to reduced compensation costs, including

stock-based compensation, of $0.5 million associated with R&D activities due to the resignation of our former Chief Medical and Scientific Officer in the second quarter of 2021, and to $0.1 million of lower expenses related to BIVIGAM clinical

studies which are part of our FDA post-marketing commitments .

R&D expenses totaled $2.5 million for the nine months ended September 30, 2022, as compared to $2.9 million for the nine months ended September 30, 2021.

The decrease is primarily due to reduced compensation

costs, including stock-based compensation, of $0.6 million associated with R&D activities due to the resignation of our former Chief Medical and Scientific Officer in the second quarter of 2021, partially offset by $0.2 million of increased

expenses related to BIVIGAM clinical studies which are part of our FDA post-marketing commitments .

Plasma Center Operating Expenses

During the first six months of 2022, we had seven plasma collection centers in operation, excluding our eighth plasma collection center that opened on June 30, 2022, as compared to four plasma collection centers in

operation during the first six months of 2021.

As a result, plasma center operating expenses increased by $2.9 million in the first six months of 2022 as compared to the same period of a year ago.

The increase is mainly comprised of higher donor

fees in the amount $4.7 million, employee compensation and benefits of $2.5 million, softgoods and supplies of $1.4 million, donor testing expenses of $1.0 million, depreciation expense of $0.6 million, software maintenance and professional

services of $0.3 million, shipping and freight costs of $0.2 million, advertising expenses of $0.2 million, utilities of $0.2 million and rent of $0.2 million, partially offset by significantly increased donor collections which had the impact of

reducing our operating expenses by $8.5 million, as such expenses were charged to inventory for future manufacturing or sales.

As we continue our planned expansion with the goal of having ten plasma collection centers licensed by the FDA by the end

of 2023, we expect our plasma center operating expenses to continue to increase.

Subsequent to September 30, 2021, we opened four new plasma collection centers.

As a result, plasma center operating expenses increased by $4.6 million in the first nine months of 2022 as compared to the same period

of a year ago.

The increase is mainly comprised of higher donor fees in the amount $8.1 million and increased expenses associated with employee compensation and benefits of $4.0 million, softgoods and supplies of $2.5 million, donor testing

expenses of $1.9 million, depreciation expense of $0.8 million, software maintenance and professional services of $0.6 million, shipping and freight costs of $0.2 million, advertising expenses of $0.3 million, janitorial and utilities expense of

$0.2 million, travel expense of $0.2 million and rent of $0.3 million, partially offset by significantly increased donor collections which had the impact of reducing our operating expenses by approximately $15.0 million, as such expenses were

charged to inventory for future manufacturing or sales.

As we continue our planned expansion with the goal of having ten plasma collection centers licensed by the FDA by the end of 2023, we expect our plasma center operating expenses to continue

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, 2022 and 2021.

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, 2022 and 2021.

Selling, General and Administrative Expenses

SG&A expenses were $25.7 million for the six months ended June 30, 2022, an increase of $5.2 million from the six months ended June 30, 2021.

The increase reflects $1.3 million of professional fees incurred in

connection with the Morgan Stanley strategic alternatives process in 2022 with no comparable amount in 2021.

In addition, we had an increase in employee compensation and related expenses, including travel, relocating and recruiting, in the amount

of $3.7 million due to increased headcount, increased insurance expense of $0.7 million, and increases in advertising/marketing expense of $0.3 million, software maintenance fees of $0.2 million and utilities of $0.1 million.

These costs were

partially offset by the absence of the $0.8 million severance obligation recognized in 2021 in connection with the resignation of our former chief medical officer and $0.5 million of third-party market intelligence fees for a one-time project

related to ASCENIV that concluded in the first quarter of 2021.

SG&A expenses were $38.6 million for the nine months ended September 30, 2022, an increase of $7.4 million from the nine months ended September 30, 2021.

The increase reflects $1.4 million of professional fees

incurred in connection with the Morgan Stanley strategic alternatives process in 2022 with no comparable amount in 2021.

In addition, we had an increase in employee compensation and related expenses, including travel, relocation and recruiting,

in the amount of $4.8 million, $1.9 million of which is stock-based compensation, due to increased headcount, increased insurance expense of $1.0 million, and increases in marketing expense of $0.3 million, market intelligence and data fees of

$1.0 million and utilities of $0.2 million.

These costs were partially offset by the absence of the $0.8 million severance obligation recognized in 2021 in connection with the resignation of our former chief medical officer with no comparable

amount in fiscal 2022 as well as lower repairs and maintenance expense in 2022 of $0.4 million.

Loss from Operations

Our operating loss was $24.0 million for the first six months of 2022, as compared to $30.7 million for the first six months of 2021.

The $6.8 million decrease in operating loss was mainly due to the improved gross

profit of $14.2 million and lower R&D expenses, largely offset by the increases in plasma center operating expenses and SG&A.

Our operating loss was $33.3 million for the first nine months of 2022, as compared to $45.2 million for the first nine months of 2021.

The $11.9 million decrease in operating loss was mainly due to the improved

gross profit of $23.4 million, largely offset by the increases in plasma center operating expenses and SG&A.

Interest Expense

The increase in interest expense of $1.5 million for the six months ended June 30, 2022 as compared to the same period of a year ago was mainly due to the additional indebtedness resulting from the refinancing of our

senior credit facility on March 23, 2022 (see “Liquidity and Capital Resources”).

Because our new senior credit facility allows us to pay “in kind” a portion of our monthly interest obligation, we expect our principal debt balance, along with the

associated interest, to increase each reporting period for the foreseeable future.

The increase in interest expense of $3.8 million for the nine months ended September 30, 2022 as compared to the same period of a year ago was mainly due to the additional indebtedness and increase in amortization of

debt discount resulting from the refinancing of our senior credit facility on March 23, 2022 (see “Liquidity and Capital Resources”).

Because our new senior credit facility allows us to pay “in kind” a portion of our monthly interest obligation,

as well as the expected continued rise in global interest rates, we expect our principal debt balance, along with the associated interest expense, to increase each reporting period for the foreseeable future.

Loss on Extinguishment of Debt

In connection with the refinancing of our senior credit facility on March 23, 2022, we incurred a loss on the extinguishment of debt in the amount of $6.7 million as a result of the redemption premium we paid to retire

our previously existing credit facility in the amount of $2.0 million, and the write-off of unamortized debt discount of $4.7 million related to that facility.

Our net loss was $38.8 million for the six months ended June 30, 2022, as compared to $37.3 million for the six months ended June 30, 2021, as the $6.8 million decrease in loss from operations for the period was more

than offset by the loss on extinguishment of debt in 2022 of $6.7 million, with no comparable amount in 2021, and the increase in interest expense resulting from our increased debt principal balance and rising interest rates.

retire our previously existing credit facility in the amount of $2.0 million, and the write-off of unamortized debt discount of $4.7 million related to that facility.

Our net loss was $53.7 million for the nine months ended September 30, 2022, as compared to $55.0 million for the nine months ended September 30, 2021, as the $11.9 million decrease in loss from operations for the

period was largely offset by the loss on extinguishment of debt in 2022 of $6.7 million, with no comparable amount in 2021, and to the increase in interest expense resulting from our increased debt principal balance and rising interest rates.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2022, we had working capital of $194.7 million, primarily consisting of $146.1 million of inventory, cash and cash equivalents of $52.4 million and accounts receivable of $18.9 million, partially offset by

accounts payable and accrued expenses of $27.3 million, as compared to working capital of $178.4 million, primarily consisting of $124.7 million of inventory, cash and cash equivalents of $51.1 million and accounts receivable of $28.6 million,

partially offset by $29.6 million of accounts payable and accrued expenses, as of December 31, 2021.

We have incurred an accumulated deficit of $450.9 million since inception, had negative cash flows from operations of $38.8 million and $65.5

million for the six months ended June 30, 2022 and 2021, respectively, and had negative cash flows from operations of $112.4 million and $102.0 million for the years ended December 31, 2021 and 2020, respectively.

We have funded our operations over

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

At September 30, 2022, we had working capital of $179.7 million, primarily consisting of $162.9 million of inventory, cash and cash equivalents of $34.9 million and accounts receivable of $20.9 million, partially

offset by current liabilities of $44.4 million, as compared to working capital of $178.4 million, primarily consisting of $124.7 million of inventory, cash and cash equivalents of $51.1 million and accounts receivable of $28.6 million, partially

offset by $30.4 million of current liabilities, as of December 31, 2021.

We have incurred an accumulated deficit of $465.8 million since inception, had negative cash flows from operations of $52.1 million and $78.9 million for the nine months

ended September 30, 2022 and 2021, respectively, and had negative cash flows from operations of $112.4 million and $102.0 million for the years ended December 31, 2021 and 2020, respectively.

We have funded our operations over the past few years

primarily from the sale of our equity and debt securities.

Our material cash requirements are primarily comprised of:

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We currently anticipate, based upon our projected revenue and expenditures,

that our current cash, cash equivalents and accounts receivable, including the proceeds received and expected to be received from the refinancing of our senior credit facility as discussed below, along with the remaining amounts available under the

distribution agreement for the sale of our common stock also discussed below, will be sufficient to fund our operations, as currently conducted, into the first quarter of 2024, at which time we believe we will begin to generate positive cash flow

from operations.

This time frame may change based on several factors, including the success of our commercial efforts with respect to the sale of our products and the acceptability of our immune globulin products by physicians, patients or payers,

and whether or not the assumptions underlying our projected revenues and expenses are correct.

If we are unable to raise additional capital if needed, including due to widespread liquidity constraints or significant market instability that could

result from the COVID-19 pandemic, inflationary pressures or other factors beyond our control, we may have to delay, curtail or eliminate some of our commercialization efforts or product development activities.

We are also continuing to evaluate a

variety of strategic alternatives through our ongoing engagement with Morgan Stanley as a financial advisor.

that our current cash, cash equivalents and accounts receivable, including the available funds from the March 2022 refinancing of our senior credit facility as discussed below, along with the remaining amounts available under the distribution

agreement for the sale of our common stock also discussed below, will be sufficient to fund our operations, as currently conducted, into the first quarter of 2024, at which time we believe we will begin to generate positive cash flow from

whether or not the assumptions underlying our projected revenues and expenses are correct.

Depending on the cost of capital, we may decide to raise capital through public or private equity offerings or debt financings, or we may enter into a

corporate collaboration or licensing arrangement.

The sale of additional or equity debt securities, if convertible, could result in dilution to our stockholders and, in such event, the value and potential future market price of our common stock

If we are unable to raise additional capital if needed, including due to widespread liquidity constraints or significant market instability that could result from the COVID-19 pandemic, inflationary pressures or other factors beyond

our control, we may have to delay, curtail or eliminate some of our commercialization efforts or product development activities.

ADMA continues to evaluate a variety of strategic alternatives through its ongoing engagement with Morgan Stanley.

The Company will communicate material developments as required by the SEC.

The exploration of value-creating opportunities remains a top corporate priority for ADMA.

On March 23, 2022, (the “Hayfin Closing Date”) we and all of our subsidiaries entered into a Credit and Guaranty Agreement (the “Hayfin Credit Agreement”) with Hayfin Services LLP (“Hayfin”).

Credit Agreement provides for a senior secured term loan facility in a principal amount of up to $175.0 million (the “Hayfin Credit Facility”), composed of (i) a term loan made on the Hayfin Closing Date in the principal amount of $150.0 million

(the “Hayfin Closing Date Loan”), and (ii) a delayed draw term loan in the principal amount of $25.0 million (the “Hayfin Delayed Draw Loan” and, together with the Hayfin Closing Date Loan, the “Hayfin Loans”).

The obligation of the lenders to make

the Hayfin Delayed Draw Loan expires on March 22, 2023, and is subject to the satisfaction of certain conditions, including, but not limited to, our meeting certain 12-month revenue targets as set forth in the Hayfin Credit Agreement.

Credit Facility has a maturity date of March 23, 2027 (the “Hayfin Maturity Date”), subject to acceleration pursuant to the Hayfin Credit Agreement, including upon an Event of Default (as defined in the Hayfin Credit Agreement).

Hayfin Credit Agreement provides for a senior secured term loan facility in a principal amount of up to $175.0 million (the “Hayfin Credit Facility”), composed of (i) a term loan made on the Hayfin Closing Date in the principal amount of $150.0

million (the “Hayfin Closing Date Loan”), and (ii) a delayed draw term loan in the principal amount of $25.0 million (the “Hayfin Delayed Draw Loan” and, together with the Hayfin Closing Date Loan, the “Hayfin Loans”).

The obligation of the

lenders to make the Hayfin Delayed Draw Loan expires on March 22, 2023, and is subject to the satisfaction of certain conditions, including, but not limited to, our meeting certain 12-month revenue targets as set forth in the Hayfin Credit

The Hayfin Credit Facility has a maturity date of March 23, 2027 (the “Hayfin Maturity Date”), subject to acceleration pursuant to the Hayfin Credit Agreement, including upon an Event of Default (as defined in the Hayfin Credit

On the Hayfin Closing Date, we used $100.0 million of the Hayfin Closing Date Loan to terminate and pay in full all of the outstanding obligations under our previous senior credit facility with

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proceeds to pay certain fees and expenses incurred in connection with this transaction.

In addition, a $1.8 million upfront fee payable to Hayfin was paid “in kind” and was added to the outstanding principal balance in accordance with the terms of

the Hayfin Credit Agreement.

In addition, a $1.8 million upfront fee payable to Hayfin was paid “in kind” and was added to the outstanding principal balance in accordance with the terms

of the Hayfin Credit Agreement.

The remainder of the proceeds received or to be received from the Hayfin Loans will be used for working capital and other general corporate purposes.

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interest on the Hayfin Loans for each monthly or quarterly interest period in an amount equal to 2.5% per annum.

Such interest paid “in kind” will reduce our quarterly cash interest obligation by approximately $1.0 million and will be added to the

principal amount of the outstanding debt under the Hayfin Credit Facility.

As a result, our outstanding debt principal on the Hayfin loans will increase each month as long as we elect to continue to pay a portion of our interest obligation “in

kind.” On the Hayfin Closing Date and through June 30, 2022, our interest rate was 10.75%.

On the last day of each calendar month or quarter during the term of the Hayfin Credit Facility, we are required to pay accrued interest to Hayfin of

approximately $1.1 million per month or $3.2 million per quarter, after giving effect to the “in kind” interest of 2.5% per annum, but without giving effect to the Hayfin Delayed Draw Loan.

Such interest paid “in kind” will reduce our quarterly cash interest obligation by approximately $1.0 million and will be added to

the principal amount of the outstanding debt under the Hayfin Credit Facility.

As a result, our outstanding debt principal on the Hayfin Loans will increase each month as long as we elect to continue to pay a portion of our interest obligation

“in kind.” On the Hayfin Closing Date and as of September 30, 2022, the stated interest rate on the Hayfin Loans interest rate was 10.75% and approximately 12.1%, respectively.

On the last day of each calendar month or quarter during the term of

the Hayfin Credit Facility, we are required to pay accrued interest to Hayfin of approximately $1.1 million per month or $3.2 million per quarter, after giving effect to the “in kind” interest of 2.5% per annum, but without giving effect to the

Hayfin Delayed Draw Loan, which we have yet to draw upon.

Our interest obligations under the Hayfin credit agreement are subject to variable interest rates based on the Term SOFR in effect at the beginning of each monthly interest period.

With the global rise

in interest rates, we expect our interest rate and our monthly cash interest obligation to increase over the remainder of fiscal 2022 and potentially into 2023 and beyond.

For example, our stated interest rate, which was 10.75% for the month of

June 2022, increased to approximately 11.125% for the month of July and is expected to be approximately 11.95% for the month of August.

With the global

rise in interest rates, we expect our interest rate and our monthly cash interest obligation to increase over the remainder of fiscal 2022 and into 2023 and beyond.

For example, our stated interest rate, which was 10.75% for the month of June

2022, increased to approximately 12.06% for the month of September and is expected to be approximately 13.34% for the month of November.

On the Hayfin Maturity Date, we will pay Hayfin the entire outstanding principal amount underlying the Hayfin Loans and any accrued and unpaid interest thereon, as well as an exit fee of 1.0% of the

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Prior to the Hayfin Maturity Date, there are no scheduled principal payments on the Hayfin Loans.

We may prepay outstanding principal on the Hayfin Loans at any time and from time to time upon five business

days’ prior written notice, subject to the payment to Hayfin of, (A) any accrued but unpaid interest on the prepaid principal amount plus (B) a prepayment fee in the amount equal to (i) 7.0% of the prepaid principal amount, if prepaid on or prior

to the first anniversary of the Hayfin Closing Date, (ii) 3.0% of the prepaid principal amount, if prepaid after the first anniversary of the Hayfin Closing Date and on or prior to the second anniversary of the Hayfin Closing Date, or (iii) 1.0% of

the prepaid principal amount, if prepaid after the second anniversary of the Hayfin Closing Date and on or prior to the third anniversary of the Hayfin Closing Date.

In addition, for any prepayments of principal, we are required to pay the 1.0%

exit fee for the amount of principal being paid.

We may prepay outstanding principal on the Hayfin Loans at any time and from time to time upon five

business days’ prior written notice, subject to the payment to Hayfin of, (A) any accrued but unpaid interest on the prepaid principal amount plus (B) a prepayment fee in the amount equal to (i) 7.0% of the prepaid principal amount, if prepaid on

or prior to the first anniversary of the Hayfin Closing Date, (ii) 3.0% of the prepaid principal amount, if prepaid after the first anniversary of the Hayfin Closing Date and on or prior to the second anniversary of the Hayfin Closing Date, or

(iii) 1.0% of the prepaid principal amount, if prepaid after the second anniversary of the Hayfin Closing Date and on or prior to the third anniversary of the Hayfin Closing Date.

In addition, for any prepayments of principal, we are required to

pay the 1.0% exit fee for the amount of principal being paid.

All of our obligations under the Hayfin Credit Agreement are secured by a first-priority lien and security interest in substantially all of our tangible and intangible assets, including intellectual

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The negative covenants restrict or limit our ability and the ability of our subsidiaries to, among other things and subject to certain exceptions contained in the Hayfin Credit Agreement, incur new indebtedness;

create liens on assets;

create liens on

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 Hayfin Credit Agreement);

our fiscal year;

make certain Investments or Restricted Payments (each as defined in the Hayfin Credit

change our fiscal year;

pay dividends;

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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

Hayfin Credit Agreement.

or enter into, amend or terminate any other agreements that have the impact of restricting our ability to make loan

repayments under the Hayfin Credit Agreement.

In addition, we are required (i) at all times prior to the Maturity Date to maintain a minimum cash balance of $6.0 million;

and (ii) as of the last day of each fiscal quarter commencing with the fiscal quarter ending June

30, 2022, report IVIG product and related revenues for the trailing 12-month period that exceed the amounts set forth in the Hayfin Credit Agreement, which range from $75.0 million for the fiscal quarter ending June 30, 2022 to $250.0 million for

the fiscal quarter ending December 31, 2026 and each fiscal quarter thereafter.

As of June 30, 2022, we were in compliance with all of the financial covenants contained in the Hayfin Credit Agreement.

and (ii) as of the last day of each fiscal quarter, report IVIG product and

related revenues for the trailing 12-month period that exceed the amounts set forth in the Hayfin Credit Agreement, which range from $75.0 million for the fiscal quarter ending June 30, 2022 to $250.0 million for the fiscal quarter ending

December 31, 2026 and each fiscal quarter thereafter.

As of September 30, 2022, we were in compliance with all of the financial covenants contained in the Hayfin Credit Agreement.

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 $53.8 million, and were used (i) to advance the commercial sales of our FDA approved products through the procurement of raw materials for the manufacturing of

BIVIGAM and ASCENIV;

of BIVIGAM and ASCENIV;

(ii) to expand our plasma collection facility network;

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

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”).

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”).

We currently intend to use any net proceeds from the sale of our common stock under the Distribution

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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, 2022 was $38.8 million, a decrease of $26.6 million from the same period of a year ago, mainly due to reductions in accounts receivable and a lower net loss

after non-cash items.

Cash used in operations for the nine months ended September 30, 2022 was $52.1 million, a decrease of $26.8 million from the same period of a year ago, mainly due to reductions in accounts receivable and a lower net

loss after non-cash items.

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

Six Months Ended June 30,

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 ended June 30, 2022 and 2021 was $6.8 million and $7.0 million, respectively, consisting of capital expenditures for the construction and buildout of new plasma

collection centers and related equipment and capital expenditures at the Boca Facility.

We expect our total capital expenditures will be between $5.0 million and $10.0 million for the remainder of fiscal 2022, mainly for continued plasma collection

center expansion.

Net cash used in investing activities for the nine months ended September 30, 2022 and 2021 was $10.2 million and $9.8 million, respectively, consisting of capital expenditures for the construction and buildout of

new plasma collection centers and related equipment and capital expenditures at the Boca Facility.

We expect our total capital expenditures will be between $2.0 million and $4.0 million for the remainder of fiscal 2022, mainly for continued

plasma collection center expansion and additional upgrades to the Boca Facility manufacturing operations.

Net Cash Provided by Financing Activities

Cash provided by financing activities of $47.0 million for the six months ended June 30, 2022 and mainly consisted of proceeds received from the Hayfin Credit Facility, net of payments to retire our previously existing

credit facility with Perceptive.

Cash provided by financing activities of $59.0 million for the six months ended June 30, 2021 was mainly comprised of net proceeds received from the issuance of our common stock (see Note 8 to the consolidated

financial statements).

Cash provided by financing activities was $46.1 million for the nine months ended September 30, 2022 and mainly consisted of proceeds received from the Hayfin Credit Facility, net of payments to retire our previously

existing credit facility with Perceptive.

Cash provided by financing activities of $67.2 million for the nine months ended September 30, 2021 was mainly comprised of net proceeds received from the issuance of our common stock (see Note 8 to the

consolidated financial statements).

Effect of Inflation

Although inflation or changing prices did not have a significant impact on our revenues or net loss for the year ended December 31, 2020 or the first six months of 2021, inflation did impact a number of facets of our

business during the year ended December 31, 2021 and the first six months of 2022 at both of our business segments.

business during the year ended December 31, 2021 and the first nine months of 2022 at both of our business segments.

We experienced price increases for, among other items, certain raw materials, consumable supplies, services for repairs and

maintenance of our facilities, shipping and freight charges, fuel surcharges and labor costs.

We expect this trend to continue at least into the second half of 2022 or longer, which could have a significant impact on our future results of

In addition, some of our plasma purchase agreements provide for annual price increases that are tied to various consumer price indices, which have resulted in higher than historical percentage price increases and has resulted in and is

expected to continue to result in higher source plasma and other raw material and supplies costs in 2022 and future periods.

maintenance of our facilities, utilities, shipping and freight charges, fuel surcharges and labor costs.

We expect this trend to continue at least into 2023 or longer, which could have a significant impact on our future results of operations.

addition, some of our plasma purchase agreements provide for annual price increases that are tied to various consumer price indices, which have resulted in higher than historical percentage price increases and has resulted in and is expected to

continue to result in higher source plasma and other raw material and supplies costs in the remainder of 2022 and future periods.

Off-Balance Sheet Arrangements

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What changed 10-Q

Item 2. Management’s Discussion and Analysis