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ADMA: FDA Accepts BLA for RI-002 & Approves Second Plasma Collection Center

By: Nisha Hirani, MD & David Bautz, PhD 

NASDAQ:ADMA

ADMA Biologics, Inc. (ADMA) has had a busy few months. For the purpose of this report, we will offer an update on the ADMA story and milestones that the company recently achieved. The company remains laser focused on getting RI-002 approved, and in our opinion, continues to move in the right direction towards this goal. 

FDA Accepts BLA for RI-002 

On September 21, 2015, ADMA announced that the Biologics License Application (BLA) for RI-002 was accepted for review by the U.S. Food and Drug Administration (FDA). The PDUFA date for the FDA to complete the review is scheduled for the second half of 2016. As a reminder, on July 31, 2015, ADMA announced submission of its RI-002 BLA to the FDA, seeking marketing authorization of its lead product candidate, and the FDA had 60 days to review the application to determine whether ADMA’s BLA submission for RI-002 was complete and acceptable for filing. Under PDUFA V, the BLA filing fee is usually $2.3 million, but since ADMA submitted a small business waiver application that was approved the company will not have to pay this fee. We view this as meaningful, and believe the company is on the right track towards approval and commercialization. 

We would also like to mention that on September 30, 2015, ADMA announced that it received a milestone payment from Biotest Aktiengesellschaft (Biotest AG) as a result of the filing of its BLA for RI-002 with the FDA, which is in accordance with the license agreement entered into on December 31, 2012. As per management, the milestone funds received under the existing license agreement will go towards commercialization efforts for RI-002.

If all goes well and the BLA is approved, we could see a potential approval of RI-002 during the second half of 2016. Management believes that first commercial sales could also occur in the second half of 2016.

FDA Approves Second Plasma Center 

On September 17, 2015, ADMA announced that its second plasma center received FDA approval to sell human source plasma within the U.S. The center is located in Marietta, GA, and is over 10,000 square feet with the potential to support over 50 donor beds. We were expecting the facility to receive approval in the fourth quarter of 2015 or the first quarter of 2016, and so we view this early news as great for the company. Prior to approval, ADMA's second plasma center was collecting plasma in order to build up inventory, and any plasma that was not used to manufacture RI-002 will be released for sale now that approval of the facility by the FDA in place. We still believe that ADMA continues to retain plasma in order to build up inventory in preparation for commercial manufacturing of RI-002 related to the anticipated product launch during the second half of 2016. 

We like the concept of ADMA BioCenters because it is a revenue-generating and cost-lowering operation. ADMA BioCenters are FDA-licensed source plasma collection facilities that provide a portion of plasma for the manufacturing of lead product candidate, RI-002, in addition to a revenue stream. 

ADMA Strengthens Intellectual Property Portfolio 

On August 31, 2015, ADMA announced that the U.S. Patent and Trademark Office (USPTO) issued United States Patent 9,107,906 entitled, “Compositions and Methods for the Treatment of Immunodeficiency.” The patent relates to the use of human plasma immunoglobulin compositions containing select antibody titers that are specific for a plurality of respiratory pathogens; methods of identifying human donors and donor samples for use in the compositions; methods of manufacturing the compositions; and methods of utilizing the compositions by prophylactic and/or therapeutic treatments (such as passive immunization). The term of the newly issued patent extends to January 2035. As a reminder, on June 30, 2015, ADMA announced that the U.S. Patent and Trademark Office (USPTO) had issued a Notice of Allowance for U.S. patent application 14/592,721 entitled “Compositions and Methods for the Treatment of Immunodeficiency.” We believe this is great news for ADMA as it not only strengthens the company’s intellectual property portfolio, but also offer protection of RI-002 and is an important step towards commercialization of RI-002, if approved.

Moving Along with RI-002 

As mentioned above, ADMA recently achieved several milestones including receiving the FDA’s acceptance of the BLA submission for RI-002, and obtaining FDA approval of the second ADMA BioCenters plasma collection center in Marietta, Georgia. ADMA has several anticipated milestones on the horizon, and in our opinion, the potential approval of RI-002 for the indication of PIDD is of utmost importance. Remaining anticipated milestones that we would like to highlight include:



We note that the current management team has met prior commitments and milestones in a timely fashion (for instance, most recently with the BLA filing, and FDA approval of the second plasma center), and we are hoping that the trend continues. ADMA’s current strategy for moving RI-002 forward includes: 


Conclusion
 

We continue to view the area of infection prevention (such as RSV) in immunocompromised patients (specifically PIDD, transplantation, and chemotherapy) to be one of significant unmet medical need. We believe there are multiple high-value milestones on the horizon for ADMA. With the BLA accepted for review, FDA approval of the second center in place, we see things as moving in the right direction. There is a well-established FDA regulatory path to approval, and we see RI-002 gaining approval during the second half of 2016. Management anticipates product launch as early as the second half of 2016 if FDA approval is received in accordance with the standard review timeline. 

As of June 30, 2015, ADMA had $23.9 million of total cash and short term investments (consisting primarily of $7.8 million of cash and cash equivalents and $15.9 million of short-term investments) as compared to $21.9 million at December 31, 2014. Our model suggests current cash provides adequate funding into 2016. 

We have slightly adjusted our model to include potential revenues from the second plasma center for the third and fourth quarters of 2015. Based on our assumptions, we calculate a fair value for ADMA at approximately $250 million. With a market cap of approximately $105 million, we feel that the market does not yet fully appreciate ADMA’s potential. With a fully diluted share count of 12.2 million as of June 30, 2015, this equates to a fair value target price of approximately $20 per share. Should RI-002 prove to be an effective treatment for additional indications, there is the possibility for significant upside to this valuation. We continue to view ADMA as a compelling investment opportunity, and look forward to seeing management execute on its strategy.

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  • Continuing commercialization and marketing preparation for RI-002
  • Obtaining FDA approval to manufacture and market RI-002 for the treatment of PIDD
  • First Commercial Sales of RI-002
  • Initiating new specialty plasma collection programs at ADMA BioCenters
  • Exploring other possible indications for RI-002
  • Developing additional plasma-derived products for the treatment of infectious diseases in immunocompromised patient populations
  • Expanding the network of ADMA BioCenters facilities, both to maintain control of a portion of the raw material supply and to generate additional revenue through the collection and sale of source plasma to third party customers