ADMA - NASDAQ

Good afternoon. And welcome to the ADMA Biologics Fourth Quarter and Full Year 2023 Financial Results and Business Update Conference Call on Wednesday, February 28, 2024. At this time, all participants are in a listen-only mode. There will be a question-and-answer session to follow. Please be advised that this call is being recorded at the company’s request and will be available on the company’s website approximately two hours following the end of the call. At this time, I would like to introduce Skyler Bloom, Senior Director, Business Development and Corporate Strategy at ADMA Biologics. Please go ahead.

Welcome, everyone. And thank you for joining us this afternoon to discuss ADMA Biologics financial results for the fourth quarter and full year of 2023 and recent corporate updates. I’m joined today by Adam Grossman, President and Chief Executive Officer; and Brian Lenz, Executive Vice President, Chief Financial Officer and General Manager of ADMA BioCenters. During today’s call, Adam will provide some introductory comments and provide us an update on corporate progress, and then Brian will provide an overview of the company’s fourth quarter and full year 2023 financial results. Finally, Adam will then provide some brief summary remarks before opening up the call for your questions. Earlier today, we issued a press release detailing the fourth quarter and full year 2023 financial results and summarized certain achievements in recent corporate updates. They’re available on our website at www.admabiologics.com. Before we begin our formal comments, I’ll remind you that we will be making forward-looking assertions during today’s call that represent the company’s intentions, expectations or beliefs concerning future events, which constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. All forward-looking statements are subject to factors, risks and uncertainties, such as those detailed in today’s press release announcing this call and in our filings with the SEC, which may cause actual results to differ materially from the results or implied by such statements. In addition, any forward-looking statements represent our views as of the date of this call and should not be relied upon as representing our views as of the subsequent date. We specifically disclaim any obligation to update any such statements except as required by the federal securities laws. We refer you to the Disclosure Notice section in our earnings release we issued today in the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2023, for a discussion of the important factors that could cause actual results to differ materially from these forward-looking statements. Please note that the discussion on today’s call includes certain non-GAAP financial measures, including adjusted EBITDA and adjusted net income. A reconciliation of these non-GAAP financial measures to the nearest comparable GAAP metric is available in our release. With that, I would now like to turn the call over to Adam Grossman. Adam?

Thank you, Skyler, and welcome, everyone. We are extremely pleased with our 2023 performance, which marked first-time adjusted net income and positive cash flow from operations on a full year basis. We believe these significant milestones are a testament to both our unwavering commitment to the continuity of patient care and steady financial execution for our stockholders. During 2023, ADMA strengthened its position as one of the fastest-growing providers of immunoglobulin in the U.S. market and advanced its financial profile to become one of the fastest-growing and profitable biopharma companies in the United States. We believe our significantly strengthened balance sheet following the fourth quarter debt refinancing, as well as our robust forecasted earnings growth and cash generation, puts our company in a strong position as we start 2024 and look to the future. Full year 2023 total revenues grew by 68% to $258.2 million. This rapid growth enabled ADMA to generate positive adjusted net income and more than $40 million in adjusted EBITDA on a trailing 12-month basis. We believe these exceptional results speak to the efficiency in our organization’s operations and our relentless focus on maintaining top-tier revenue growth while judiciously managing overhead and expenses. We fully anticipate our positive trajectory will continue to drive earnings growth for the foreseeable future. As ADMA’s forward-looking business trends gain momentum, we’re revising financial guidance upwards for both 2024 and 2025, increasing top and bottomline projections. Based upon current market factors, we now anticipate generating revenues during these periods of more than $330 million and $380 million, respectively. At this level in 2024, we’ve increased adjusted EBITDA guidance to more than $90 million and adjusted net income to more than $65 million. Similarly, for 2025, we’ve increased adjusted EBITDA guidance to more than $140 million and net income guidance to more than $115 million. We believe our commercial success, driven in large part by the recent and continued growth of ASCENIV utilization, which we believe is attributable to our unwavering focus on the immune-deficient patient segment, especially in those PI patients who suffer from complex comorbidities. This specialized focus, in combination with our innovative business model, diverse product portfolio and our targeted medical education, marketing and market access initiatives, have provided ADMA with its highly differentiated messaging and product offerings. We believe we have successfully established an enduring and growing foothold within the U.S. IG landscape. Specific to ASCENIV, we are confident that there remains a significant growth opportunity for the product within its targeted addressable market, further penetrating the treatment setting comprised of immune-deficient patients grappling with these complex comorbidities. Launch metrics for ASCENIV remain broadly supported, and again, made new record highs across leading demand indicators, including measures of both breadth and depth. All told, we are encouraged to see ASCENIV’s unique product profile continuing to resonate in clinical practice and the real-world setting. The therapy’s accelerating demand trends and healthy growth attribution continually catalyze us to favorably rethink the ultimate size of the market opportunity and we reiterate that we believe we are in the early innings with the product’s total potential. Prior to providing an update on our growth initiatives, I’ll spend a moment reviewing the recent implementation of our innovative AI program, ADMAlytics. Over the last year and a half, our internal information technology leadership team has been working tirelessly to develop ADMAlytics, which has now been successfully tailored to our organization’s bespoke needs and implemented for commercial use. ADMAlytics combines AI and machine learning and is designed to optimize and streamline certain of our intricate production processes. In the complex landscape of specialty biologics production, maintaining uninterrupted operations is paramount and we believe that ADMAlytics will further bolster our commitment to ensuring the continuity of patient care. We anticipate the program’s rollout across the organization will, in due course, bring far-reaching improvements and efficiencies across our operations and further support the company’s rapid earnings growth trajectory. The successful development and implementation of ADMAlytics aligns seamlessly with our overarching mission to continuously innovate production processes for specialty biologics, while also building on our reputation as a thought leader within the commercial specialty biologics markets our therapies serve. We applaud the ADMA IT team for their execution and success, bringing this innovative software to real-world application. Turning to our 2024-2025 corporate growth initiatives, all activities continue to progress as planned. We’ve successfully expanded ASCENIV production to the 4,400-liter manufacturing scale, enhancing the product’s margin, yield and capacity. We expect to realize these profitability benefits more materially as we progress into 2024. Additionally, our ASCENIV post-marketing clinical study is progressing well and may lead to label expansion with a potential pediatric age group if successful, further strengthening our product portfolio relative to competitive IG offerings. Our excitement continues to build as we see the potential impact of our manufacturing IG yield enhancement initiatives. During the fourth quarter, we made significant strides in scaling up our processes and conducting laboratory bench-scale runs and analyses. If ultimately successful, we believe enhanced production yields will be transformative in providing increased finished goods output, which would substantially increase ADMA’s peak revenue earnings potential. This exciting project remains on track and we will provide updates as developments unfold. Finally, earlier this year, we provided an update on our patented preclinical hyperimmune globulin program targeting strep pneumonia. While still in the early stages of preclinical development, we are excited to advance this program. Our interest in this potential new product opportunity stems from several key factors. Firstly, the market potential is significant and currently underserved. Streptococcus pneumonia is the primary cause of community acquired pneumonia in the United States, ranking in the top 10 diseases for all-cause mortality. The growing prevalence of anti-infective resistance emphasizes the urgent need for both prophylactic and therapeutic interventions. Secondly, ADMA holds a strong patent portfolio for this specific hyperimmune globulin, providing for the development of an S. pneumo hyperimmune with IP defensible until at least 2037. Drawing from our successful development of ASCENIV through clinical and regulatory pathways, as well as our demonstrated commercial launch capabilities, we believe we are positioned to potentially replicate this success with the strep pneumonia program. If ultimately approved, we project this hyperimmune globulin could generate additional future peak revenue in the range of $300 million to $500 million annually. To reiterate, as evidenced by today’s increased earnings guidance, we will remain highly cost disciplined in advancing this program through the preclinical development program. On the plasma supply front, I’m pleased to highlight that all 10 of our plasma collection centers are now FDA licensed and collection volumes are trending at the upper bound of our internal estimates. Foot traffic on a same center basis continues to grow and reach new highs. All told, we’re confident in our ability to meet the increased production forecasts for our commercial IG portfolio. Reflecting on the journey of ADMA, it’s clear that our achievements stem directly from the unwavering commitment and hard work demonstrated by our outstanding and knowledgeable team members. The remarkable evolution from a young virtual biotech startup to a fully compliant end-to-end controlled supply chain and now advancing our position as one of the fastest growing and profitable biopharma companies in the U.S. It’s truly rare and remarkable. To our employees, we extend our heartfelt gratitude for your tenacity, perseverance and tireless dedication, which not only fuels our progress, but also leaves a significant impact on those we serve. It’s the collaborative ethos and collective effort that truly distinguish our workplace. We deeply value the dedication, enthusiasm and diligence exhibited by each team member of our team. It’s this steadfast devotion that drives our success and enables us to maintain firm control over our operations in line with our fundamental vision. We firmly believe this strong foundation paves the way for even greater accomplishments in the periods ahead. I’d now like to turn the call over to Brian for a review of the fourth quarter and full year 2023 financials.

Thank you, Adam. We issued a press release earlier today outlining our fourth quarter and full year 2023 financial results and we’ll be also issuing our full year 2023 10-K report later this afternoon, which we would encourage you to read in conjunction with our comments and discussion points we’ll make during today’s call. I’ll now discuss some of the key highlights from the fourth quarter and full year. As Adam mentioned earlier, total revenues were $73.9 million for the quarter ended December 31, 2023, as compared to $50 million for the quarter ended December 31, 2022, and this represents an increase of $23.9 million or approximately 48%. Total revenues for the year ended December 31, 2023 were $258.2 million and this represents 68% year-over-year growth. The increase is primarily related to increased sales of our immunoglobulin products, partially offset by a planned decrease in sales of plasma to third parties due to the increasing retention of plasma for our IVIG production. The decline in external plasma sales is consistent with our expectations as we are utilizing a greater percentage of our internally sourced plasma from our 10 FDA-licensed plasma collection facilities for our Boca facilities manufacturing of ASCENIV and BIVIGAM. Our gross profit for the three months ended December 31, 2023, was $31.1 million, as compared to $14.2 million for the same period of a year ago and this represents an increase of $16.9 million. Gross profit for the year ended December 31, 2023, was $88.9 million, representing an increase of $53.7 million compared to fiscal year 2022. The expansion of gross margins is attributed to selling more of our higher margin product ASCENIV during 2023 as compared to 2022. As a result, ADMA achieved a corporate gross margin of 42% in the fourth quarter of 2023, as compared to 28% in the fourth quarter of 2022. We believe the pathway is well paved to continue to grow gross profits over the coming periods. We are very pleased to report, as Adam mentioned earlier, that for the first time in corporate history, ADMA achieved first-time positive adjusted net income and positive cash flows from operations during 2023 on a full year basis. During the fourth quarter alone, adjusted net income reached $8.5 million, as compared to a net loss of $12.2 million for the fourth quarter of 2022. ADMA grew adjusted EBITDA to $40.3 million for the full year 2023, as compared to an adjusted EBITDA loss of $27.6 million for the full year 2022. For the three months ended December 31, 2023, ADMA generated $18.6 million of adjusted EBITDA, as compared to an adjusted EBITDA loss of $3.5 million the same period of a year ago. The improvement is driven primarily by increased sales, gross profit and fiscal operating management of our business. Based on ADMA’s fourth quarter annualized adjusted EBITDA growth and cash and cash equivalents, the company’s current net leverage ratio has organically improved to approximately 1.1x. We anticipate the balance sheet will continue to strengthen over the coming periods, enabled by forecasted operating cash flow and growing adjusted EBITDA. Lastly, it is with pleasure to note that all 10 of our plasma centers within our BioCenter network are now FDA licensed and collecting plasma. This milestone marks the successful conclusion of our multiyear investment initiative to establish plasma supply self-sufficiency and we are now well positioned to support all of our growing internal production needs. Additionally, we remain encouraged by the real-time improvements in donor foot traffic and collection volumes, which continue to achieve record all-time highs and remain considerably above our organization’s pre-pandemic levels. With that, I’ll now turn the call back over to Adam for closing remarks.

Thank you, Brian. ADMA’s business prospects and opportunities are vast and company morale has never been higher. Our organization is energized and unified and the performance-driven culture we have established at ADMA Biologics is bearing fruit. Our portfolio of life-changing medicines is providing significant real-world benefits to patients managing diseases of critical unmet need. In doing good for others, we’ve done well for our organization and our stockholders. Our business continues to strengthen and we believe we are well positioned to generate significant growth in cash flow for years to come. We anticipate 2024 being defined by top-tier revenue and earnings growth, significant cash generation and the further development of transformative growth initiatives, which, if successful, has the potential to significantly impact ADMA’s peak revenue and earnings targets. We believe ADMA’s proven internal R&D capabilities, broad IP estate and successful establishment of our innovative commercial business model positions the company for enduring success. Thank you for your continued support and trust in the company. We appreciate those of you who have supported us through this journey and we are committed to delivering for our stockholders in the periods to come. Your investment in ADMA helps to advance our mission to save lives and make high-quality, safe and efficacious products that help our friends, family and neighbors. Before opening the call for Q&A, we announced earlier this afternoon that Brian will be transitioning from his current role of Executive Vice President, CFO and General Manager of ADMA BioCenters as part of a planned executive leadership change. To ensure a seamless transition, Brian will continue supporting the company in a consulting role effective April 1st. Brian has served as CFO with distinction and dedication over the past 11 years. During his tenure, we’ve achieved significant milestones and navigated through various challenges with resilience. We wish Brian all the best and look forward to continuing to work with him during this transition period. With that, we’d like to open up the call for your questions. Operator?

Thank you. [Operator Instructions] One moment for our first question. Our first question comes from Anthony Petrone with Mizuho. Please proceed.

Hey, Anthony.

Hey, Adam. Thanks for getting us in here and congratulations on another great quarter and a strong outlook. Maybe I’ll have a couple on just the moving parts on product mix and question on R&D and then one on margin. So maybe just in terms of the cadence between BIVIGAM and ASCENIV, maybe just a little bit on the shared landscape for traditional IG first, just considering that there seems to be some moving pieces out there just on the competitive landscape. Do you think more share comes up for bid as the year progresses and could that be a tailwind for BIVIGAM? And then on ASCENIV, maybe just an update on active prescribers and how sticky your existing prescriber base is and I’ll have one on margin for Brian?

Sure. All great questions. I was just making some notes here. So when you refer to share landscape, I mean, IG in 2023, I think, it was one of the largest growth years in the last five plus years for the product. Plasma supply has been good. Both IV and subcu products have been good. There were a couple of other approvals, I think, for some other products during the year. So the market is pretty flush with product right now. The landscape, IV is about 80%, subcu is about 20% from what we see. But you may mention about, could there be some good tailwinds for BIVIGAM? Anthony, we’re selling everything we make out of this plant, be it BIVIGAM, be it ASCENIV. Our products are well tolerated in the market. Patients like our products. They’re good, safe products. We’re the only manufacturer that I’m aware of that’s still using centrifugation to make these products and there have been some articles published about how there could be some benefits there. The mix, I mean, look, we raised guidance, I think, it was three times last year. We’ve already raised guidance now once in 2024. What can I say about the mix? ASCENIV is really, we love the product. The patients love the product. I think the payers love the product. The physicians certainly love the product. The drug is doing well in the refractive, complex, comorbid, immune deficient patient, full stop. I think the uptake is growing more rapidly than even our accelerated case expectations and I think that that’s what you’re seeing in our guidance and in our financial performance. I mean, look, we -- on an adjusted basis, being net income positive for the first time, it was definitely a very pleasant surprise, lots of high fives around this office here. We’re really excited about it and all I can tell you, Anthony, is that if you make good products that help people and there’s good outcomes in the real world setting, that’s what really drives uptake here and I think that’s what you’re seeing. So I think we have a lot of tailwinds. I think the people at ADMA make a good, safe, efficacious product, all of our products and we’re going to continue to drive product penetration and uptake as fast as we can. I hope that that answers your question there.

Absolutely. Maybe to pivot to Brian first, congratulations on the 11 years and you’ll be missed and thanks for all the help along the way here. So good luck in the next chapter. And in terms of margin, maybe a little bit, Brian, on how much yield enhancement are we seeing in gross margin? And it looks like the hyperimmune R&D portfolio is going to progress here. So should we be expecting an uptick in R&D expenses in the second half of the year? Thanks again.

Well, thank you, Anthony, and it’s certainly been a long and overall successful 11 year run. So I appreciate the compliments and I still strongly believe in the company and its products and so we’ll be continuing to root the company on. As it relates to margin, we’re producing both products, ASCENIV and BIVIGAM at the 4,400 level. We have been for some time. So we’re going to be, all we’re selling is at the 4,400 higher margin scale. So ASCENIV closer to that 85%, where historically we were in that low 80%. So a nice increase, about 5% for ASCENIV. And BIVIGAM, we went from the high-teens, low-20%s. Now we’re in that 25%, approaching 30%. So we think that there’s still room, there’s still upside to go, and as Adam mentioned about the product mix, we think that there’s more opportunity for ASCENIV and going forward, that’s how we’ve been able to revise guidance now several times over the last year and a half.

Regarding R&D spend, Anthony, we think it’s really manageable. Yield enhancement, as we’ve said, it’s a few million dollars. I mean, we -- we’re not getting over our skis in any way, shape and form. I mean, being cash flow positive the way we are, net income positive the way we are, I mean, certainly we’re going to be opportunistic with that cash and use it to drive value for shareholders. But I can tell you that our R&D expense, I mean, sure, it’s going to pick up slightly, but it should not be in any material way. We’re going to really be very responsible in how we’re spending the R&D for the strep pneumonia product is, again, in its early stages and we’re going to keep you apprised of both manufacturing yield enhancement R&D, which, again, we think we should have on file later this year or early next year, probably realizing those financial benefits sometime in the back half of 2025.

Anthony? All right. I’m going to move along to the next question. One moment, please.

Sure.

And it comes from the line of Kristen Kluska with Cantor Fitzgerald. Please proceed.

How are you doing, Kristen?

Hi. Hey. Congrats on a really strong 2023. I don’t think I’ve seen a company raise guidance this many times and consistently deliver. And Brian, wishing you the very best. Should feel very proud of everything that you accomplished. So I wanted to ask, once upon a time, the company was talking about $300 million being the peak sales potential and today you talk about your enthusiasm, but you also characterize it as early innings. So I just want to get a general sense of how you’re thinking about, maybe you don’t have to give me a specific number, but what the peak sales could ultimately be if you continue seeing the cadence and the demand that you are?

Thank you, Kristen. That’s very kind of you to say. Your question has me smiling with all of my notes and everything that I see here. I mean, look, I think, what I should say is that, for those who followed our story and it’s been a hell of a ride, Brian, hasn’t it?

Certainly.

We’ve had to bob and weave and we’ve had regulatory challenges and we’ve had supply chain challenges, and you name it, there have been tons of challenges. But at the end of the day, we knew, based on the Phase 3 data for our drug, that we had a product that was unique. We had a product that provided very, very good results for the primary and all the secondary endpoints. There was something special in what we were making and there were things that were not published with respect to some of the patient diaries and our clinical trial team would get feedback from the coordinators at these sites about just the way patients were responding to the product. So we always knew there was something special. But how do you model that? How do you forecast this? There are certain things that occur when the product gets into the real world setting, which I know we’ve seen with other products. And I really do believe that, at that time, we were looking at our ability to get RSV plasma, our ability to produce. At one point in time, we were contract manufacturing, so how much capacity would our contract manufacturer give to us? So, I think the $300 million was a very, very fair, and honestly, appropriate forecast back then. With where we are today, I mean, I don’t want to say that we’re producing as fast as we can. We can’t keep up with the demand, but that’s the truth. We are producing as fast as we can. We’re working on strategies for identifying additional RSV plasma donors. We’re working with other third-party collectors to augment our internal supply to collect as much plasma as we possibly can. I can tell you that, the peak guidance that we’re giving for next year, we raised it to $380, am I correct?

Yeah.

So, we are not factoring in any yield enhancement from there. We’re not factoring in any contribution for BIVIGAM and ASCENIV with respect for yield enhancement. Our peak revenues don’t factor in anything for the potential in the back half of the decade, say, for the strep pneumonia hypothermia. Hypothetically, I mean, if you could do the math, we have a 400-liter, 500,000-liter plant, 600,000-liter plant here. If you make it all ASCENIV, what does that yield you? If you’re fractionating 0.5 million liters of plasma at 4 grams per liter, that’s a lot of product. Will the payers pay for that much? Will the market absorb that much? I don’t have the answers. But what I do know is that where we are today, we’ve got patients waiting for therapy. We’ve got patients who are waiting for us to release drugs to start therapy. We’ve got patients who have approvals from their payer to switch from whatever IG they’re on to ASCENIV. We are making the product as fast as we can. We cannot change how fast it takes to make these products. It takes, as we’ve said publicly, six months to nine months, seven months to 12 months, depending upon how good our team is. We’re working as fast as we can, Kristen. And I stick to what I said on previous calls. We give conservative guidance. We contemplate this range. If everything as we’re operating remains intact, obviously, we’re going to continue to beat and raise and beat and raise. That’s our MO. If something changes, we’re going to meet guidance and we’re going to hit it and we’re going to feel great about what we’re doing. And if trends continue and we’re able to accelerate certain programs here at the company, I think, that there’s an opportunity for us to truly smash these numbers. It’s the same approach every year and I just feel really proud of our team, proud of the drug ASCENIV that we’ve brought to market and persevered through all these challenges. But it’s really the way the patients are responding to the drug. These are sick people. These are people who have had PI for years and who don’t respond well on their current therapy. They have complex comorbidities that are, to the point of being unmanageable in certain instances and they switch to ASCENIV and the patients thrive. And that’s what we’re most proud of here at ADMA. When you can change and impact and improve a patient’s life the way that we see that we’re doing it with ASCENIV. That’s why we say it’s in the early innings. I don’t know what else to say but that, Kristen, but the drug is changing lives. It’s changing the treatment regimens out there in the market and I think our medical education, marketing, market access, sales strategies, I think, all of these things coming together are really meshing. From my perspective, there are very few companies our size that really launch products and stay independent. I think what the market is seeing is they’re seeing a real success story unfold right in front of their eyes. They’re seeing a company that is going at it alone, playing in a market of very, very big players and we’re differentiating ourselves, and we’ve done it in a way that has documented itself with 14 calendar quarterly beats and it’s because the products we make are good. It’s because the people who come to work here every day really care about what they do. And I like to take a little credit. I care about what we do. It’s not just about this is where I get in trouble and the stock puts stuff that my son reads to me. Yes, it’s about the financials, but first and foremost, you got to take care of the FDA, got to take care of the SEC. You got to be able to operate. Then you got to make a good, safe product. You got to give the doctors what they need. You got to help the patients and the rest falls into place. And I think that you’re seeing our financials truly improve and the acceleration in the financial improvement has been dramatic. Our expenses are down. We’re controlling costs in the beginning of last year with our realignment of resources. I mean, we’ve continued on that track and we’re going to continue to deliver for shareholders. We’re hyper focused on shareholder return here now. And look, I think the stock is truly undervalued. I think the cash generation that we’re going to develop from the -- I think the cash generation that we’re going to see starting in Q1 of this year is going to be robust and it’s going to allow us to do a lot of great things.

Awesome. Thanks for that response. And just the last question for me is, if you could talk about the metrics you’re seeing from a prescriber basis, specifically, is it more levered towards certain prescribers adding more patients versus getting new prescribers entirely on board or is it a blend of the two?

The answer is it’s both. It’s yes and it’s yes. Obviously, the doctors who have seen results, they’re very, very quick to be able to identify new patients and get those patients on. The number of prescribers grows every month, every quarter. We’re smashing all of our internal estimates and our numbers, Kristen. The prescribers are pretty much strictly immunologists. The majority of our sales are in the outpatient setting. I can tell you that existing prescribers on a buy and build basis, once those physicians take title to the product and know that they’re going to get reimbursed, they feel comfortable about adding patients. Certainly, there is a cost outlay for any IG that a doctor with an infusion practice in his office -- in their office. They do take some risks there, but I think that folks are truly comfortable now at this point and we’ve done a lot of great education out there, both on the market access side and on the medical side. So, I think, you’re going to see that prescriber base continue to increase. I think you’re going to see same-store sales increase and it’s the drug. I mean, I like to think that it’s our great marketing strategy and medical education stuff. It is, but the drug also does a lot of the talking.

Thank you.

Thanks, Kristen, so much.

Thank you. One moment for our next question, please. And it comes from the line of Gary Nachman with Raymond James. Please proceed.

Great. Good afternoon, guys, and congrats on all the progress and good luck to you, Brian. We will definitely miss you. So, Adam, maybe just talk more about your plans to explore developing a hyperimmune product to treat pneumonia. What led to that decision and why do you think it could be a $300 million to $500 million opportunity? How you get there? And just reiterating that there’s no impact to profitability. So, just explain how that’s going to happen. And then also just, what are other hyperimmune products that you could potentially pursue? When could we hear about those? So, oh, and also just getting a sense of your capacity as you potentially expand into these other products while you’re still trying to obviously grow ASCENIV.

All great questions. Thank you, Gary, very much. So, strep pneumonia, we’ve -- I actually checked this before we got on the call, because I figured someone was going to ask me, but we’ve been publishing data about strep pneumonia since 2020, 2021. As we said, I believe in our press release earlier this year where we announced that we were going to embark on this program. It’s in the top 10 leading causes of death. It’s the leading cause of community acquired pneumonia. We look at the world very practically, Gary. We look at this as there are vaccines for people who can receive vaccines. And when you look at immune compromised patients, they do not respond well, or they do not respond at all to vaccination. So, one of the leading issues in primary immune deficiency, in cancer patients, in post-surgical patients, in the elderly that are hospitalized is strep pneumonia and we feel that there’s an opportunity here to sort of bridge this gap. And again, we don’t know if it’s going to be treatment or if it’s going to be a prevention. There is still work that we have to do. Again, it’s very early. I think that we’ve got, look, we built our plasma center network, Gary, so that and I think that this touches on your second part of the question too. We built this plasma center network, not only to secure our supply chain, but also because it allows us to evaluate novel things with plasma donors. That’s where everything we do starts from. So we have evaluated and we’ve established a method to stimulate antibody using commercially available vaccine in our plasma donors and we’ve measured these antibody titers and we see that they’re developing protective opsonic titers. That’s the first step to ensure the control of the raw material and we make raw material. Once you can make raw material, then the rest, I don’t want to say is the easy part, but we’ll put the product into animals earlier at some point this year and we’ve got IP out there and we’re going to evaluate and see. Roughly based on the data that I recall, it takes roughly 10 days for an immune competent person to develop seroprotection when they’re vaccinated with the commercially available vaccines. I think I’m right. If I’m wrong, shoot me. But I think it takes about 10 days to seroconvert. So, just on a very practical basis, if you’re a vaccine naïve elderly patient who is immune compromised just because they’re elderly and you’re hospitalized in the cardiac unit or you just had surgery, because you fell and broke your hip and you’re hospitalized, for those reasons. And many institutions, their protocol is to provide a vaccine. Well, you’re not doing anything to protect the patient, because it takes 10 days if you’re immune competent to develop seroprotective antibodies to all the different serotypes. So if you look at the way rabies is treated, tetanus is treated, hepatitis B is treated post-exposure. You provide a globulin and a vaccine to protect that seroconversion period. So we think that that could be an opportunity. It could be another opportunity to follow what we’ve done with ASCENIV. When you think about it, if you make a tighter IG for the primary immune deficiency population, that’s easier to manufacture, let’s just say, because the plasma supply is a lot easier to obtain. You’re not looking for these naturally occurring high-titer RSV donors, which is what we do for ASCENIV. But if you’re able to just stimulate your plasma donor with a vaccine against strep pneumonia, it’s a lot easier to control the raw material supply there. So we think that these hyperimmunes could have ASCENIV-like penetration. We think that these hyperimmunes could have utility even outside of the PI population. And with respect to your question about capacity, I mean, look, I love BIVIGAM. I love Nabi. I love ASCENIV. I love every product that generates revenue and has the gross margin that we’re seeing. I mean, we have the best gross margin profile of any plasma fractionator globally to the best of my knowledge. It can only improve, Gary, and I don’t want to say, I want to stop making BIVIGAM, but look, ADMA Biologics founding principles were to make the products that nobody else wants to make. To make hyperimmunes targeted at specific infectious diseases. So you asked -- I think you asked, what other pathogens? Well, what’s your favorite infectious disease of the day? If we can generate antibody through vaccination, if we can generate antibody through, we’re being able to detect that naturally occurring antibody using special testing methods, we can make anything. And then if you dig deeper into our IP, we also have IP around, but we can make hyperimmunes by making a, call it a BIVIGAM plasma pool, a normal IG and then spiking it with monoclonal antibodies. We’ve got IP around that as well. So I think the sky’s the limit for us. Our small plant here that can produce, call it, 2 million grams of IG annually. If it’s all hyperimmune globulin, I mean, the sky’s the limit. To Kristen’s earlier question, how much revenue can you generate? I mean, in theory, it could be billions. Are we there yet? No. Are we ready and prepared to give guidance in that arena? No. But the reason why I think that this could be a $300-plus-million product is you just look at where ASCENIV is today. It’s easier for me to get the plasma and the market is a lot broader for a strep pneumonia type hyperimmune. I mean, there’s billions of dollars of vaccine being sold. If you just take that sub-segment of how much vaccine is being used for patients that are going for surgery or entering the hospital, and if you give a globulin on top of that, we’re picking up the crumbs and these are 60%, 70%, 80% gross margin products, maybe even more.

Okay. Great. That was very helpful. Thank you. And then just to follow up, I don’t think you mentioned this before, but could you give us a better sense of what is implied in the revenue guidance in terms of the mix between ASCENIV and BIVIGAM this year and next? And how aggressive can you be at paying down the debt? I’m curious how much that’s factored into the net income guidance for this year and next year.

These are all great questions. I mean, look, Gary, we reiterate that mix. I’m trying to stay away from where this is. We always said in the beginning 80-20 and then 70-30, and we do say that we’re going to get to this 50-50 split. The timing of which, it -- we’re doing really well, Gary. What can I tell you? We’re doing very, very well. Because we are seeing -- and it’s not just from ASCENIV. I mean, BIVIGAM is doing well also. The fact that plasma collections are up and the fact that plasma supply and the supply chain has opened up post-COVID, I mean, we’re just seeing lots of efficiencies and we’re realizing lots of efficiencies within our own operating organization here. So, BIVIGAM is contributing nicely as well. We look at this as -- the guidance that we’re giving this year, I think is pretty straightforward and clear. I think it’s what, it’s $330 million or more now and we’re saying $70 million or so in net income. I mean, that’s nice. My task is to beat it and my request of all my ADMA employees and team members here listening is we need to beat it. I mean, again, we’re hyper-focused on shareholder returns here. You saw us use cash on our balance sheet to pay down some of the debt and to reduce the interest expense and we were opportunistic. With respect to your question about, our guidance does not contemplate us paying down the debt. Certainly, if we hit the forecast that we are presenting today, or if we exceed it, I mean, look, we have the ability at least with the revolver portion of the loan where there’s only a 50% minimum draw there. So, we have some optionality as cash builds on the balance sheet that we can pay this down without any prepayment penalties. Obviously, reducing the interest expense and improving that income. So, I’m not looking to onboard assets right now. We’re really confident in our ability to manage the R&D spend and we’re confident in our ability to effectively deliver on our internal R&D engine. But I can tell you that, we’re going to do the right things here. I’m a substantial stockholder. As you know, my family’s substantial stockholders. We want to see this stock really achieve the value that we believe. Again, I think I said it earlier, I think the stock is truly undervalued. Based on what I’ve seen in the back half of 2023 and what I see in the beginning part of 2024 here, we’re on the right path and we’re going to continue to generate cash and we’re going to be as opportunistic as possible to maximize shareholder value.

Great. Thanks so much.

Thank you.

Thank you, Gary.

And ladies and gentlemen, this will conclude our question-and-answer portion of the call. I’d like to turn it back to Adam for additional closing remarks.

Thank you, everybody. Thank you to the analysts for the good questions. Donate plasma, help save lives again and stay safe. And thank you for your interest in ADMA Biologics and the products that we make to help save lives.