ADMA Biologics (ADMA) has learned how to bottle a healthy immune system — literally. And, after years of toiling as a dollar stock, ADMA shares have nearly quintupled this year.
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The company is an expert in manufacturing human-derived immunoglobulin. Its products treat people whose bodies don’t make enough antibodies — either via exposure to a virus or from a vaccination — to ward off illnesses like respiratory syncytial virus, or RSV. So, instead of risking a debilitating illness, people with primary immunodeficiency receive regular infusions of products like ADMA’s.
Its homegrown product, Asceniv, is a cocktail created from super donors whose plasma contains a high level of antibodies capable of handling RSV. RSV is a seasonal virus that can be serious or even deadly in people with insufficient immune systems, including newborns and older adults. Demand for Asceniv has skyrocketed, thanks to its strong effectiveness.
ADMA stock has also skyrocketed. It has topped the IBD 50 list of elite growth stocks for weeks. But on Thursday, shares tumbled after the company’s auditor unexpectedly resigned. The firm, CohnReznick LLP, wasn’t required to obtain, and didn’t seek, the company’s consent to resign.
Still, in a filing with the Securities and Exchange Commission ADMA Biologics said it’s retaining its outlook for this year and next.
“Not all immunodeficient patients are created equal,” Chief Executive Adam Grossman said during a recent health-care conference. “We’re looking at this really — this very focused subset of refractive, co-morbid, very, very sick patients who have exhausted all alternatives. And then they turn to Asceniv, and the real-world evidence and the real-world data is demonstrating benefit.”
ADMA Stock: A ‘Superstar Product’
ADMA Biologics sells three products. Its acquired products include Bivigam and Nabi-HB. Bivigam provides an array of antibodies found in a healthy immune system. Nabi-HB is a decades-old drug that provides protection to people who’ve been exposed to hepatitis B.
But Asceniv is the company’s “original homegrown superstar product,” Grossman said. It’s also the driving force behind ADMA stock’s 350%-plus jump this year.
Like its other products, Asceniv is created from plasma collected at 10 centers in the Southeastern part of the U.S. Using a patent-protected process, Asceniv can screen plasma donors for high levels of antibodies capable of dealing with RSV. Their plasma is eventually processed into Asceniv. In the U.S., people age 12 and older with primary immunodeficiency can receive Asceniv.
Asceniv now accounts for more than half of ADMA’s sales. During the second quarter, ADMA came in with adjusted earnings of 14 cents per share and $107.2 million in sales, according to FactSet. Both measures tromped expectations and ADMA stock soared nearly 31% on Aug. 9, the day after the company reported its June-ended quarter earnings.
“Given a string of beats and raises for the last several quarters, expectations were higher into the second quarter,” Raymond James analyst Gary Nachman said in a report to clients. “But ADMA still surpassed it.”
High Expectations For 2024 And Beyond
The company also raised its sales forecast for 2024 to $400 million and for 2025 to $445 million.
Further, the company expects manufacturing changes to improve yields by about 20%, starting in the fourth quarter of 2025. That hasn’t been factored into the company’s outlook, Raymond James’ Nachman said.
The Street projects adjusted earnings of 48 cents per share on $405.6 million in sales this year. For 2025, analysts call for ADMA to earn 68 cents a share and report $458.3 million in sales. In both cases, Wall Street expects Asceniv to account for the lion’s share of sales — 75% and 77%, respectively.
“Management is very confident in the outlook post-2025, and we will get further updates on that in due course,” Nachman said. “In the meantime, the goal is to increase the raw material plasma for Asceniv and shift production as much as possible to meet the rising demand for it.”
He raised his price target to 18 from 16. Nachman also reiterated a strong buy for ADMA stock following the second-quarter report. Shares closed at 15.96 on Aug. 9. Today, they trade north of 20.
Changing The ‘Bubble Boy’ Narrative
ADMA also is expanding its pipeline.
“I just think that we’ve really cracked the code and I think that there are other opportunities that we have in our pipeline,” Grossman, the CEO, said during the health-care conference. “Our (research and development) engine is not expensive to fund.”
But today, investors remain hyper-focused on Asceniv. In a yearlong study, none of the patients who received the RSV-focused immunoglobulin ended up hospitalized for infections, according to a recent presentation from ADMA.
There’s also the potential ADMA could seek approval for Asceniv in different patient populations, Raymond James’ Nachman said.
What’s important is payers aren’t pushing back on reimbursing for the cost of Asceniv. And patients, once they’ve started on treatment, aren’t switching to other forms of immunoglobulin, said CEO Grossman.
Before Asceniv, patients weren’t thriving. They were merely surviving, he said. He referenced the 2021 movie “Bubble Boy,” which depicts a young man born without immunities. He lives in a literal bubble to protect him from contracting viruses.
“But essentially, the healthy immune system in a bottle, that is IVIG (intravenous immunoglobulin), should allow you to live outside of the bubble and be just like a regular person,” he said. “That is the purpose of IVIG. If you’re not experiencing that, there’s a problem.”
ADMA Stock’s High Ratings
All four analysts tracking ADMA stock on FactSet have buy ratings.
Shares also have perfect Composite and Relative Strength ratings of 99 from Investor’s Business Daily. The scores measure technical and fundamental strength, as well as 12-month performance, respectively. It means that shares outrank 99% of all stocks, regardless of industry group.
Notably, ADMA shares also rank first on the IBD 50 and on the Tech Leaders list.
With Thursday’s drop, investors should be on the lookout for the company to possibly build a new base.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
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