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ADMA Biologics Stock Skyrockets 262.1% YTD: How to Play the Stock?
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ADMA Biologics, Inc.’s (ADMA - Free Report) is witnessing a phenomenal run this year. Its shares have surged a whopping 262.1% in the year so far against the industry’s decline of 2.1%.
The stock has been consistently touching new highs in this timeframe, having recently hit a new 52-week high of $21.13 on Oct. 9.
The stock has also outperformed the sector and the S&P 500 during the aforementioned period.
ADMA Outperforms Industry, Sector & S&P 500
Image Source: Zacks Investment Research
The stupendous rally can be attributed to the company’s impressive performance. ADMA’s shares also rose last month after the company announced that it will join the S&P SmallCap 600.
Investors were also impressed with ADMA’s strong second-quarter results and raised outlook. Sales in the first half increased 61%. Concurrent with the second-quarter results, the company also raised its annual guidance for 2024 and 2025 revenues and net income, based on the continuous growth of its unique and proprietary immunoglobulin, Asceniv.
ADMA Biologics markets plasma-derived biologics for the treatment of immune deficiencies and the prevention of certain infectious diseases. The company’s innovative portfolio and efforts to further develop a pipeline of plasma-derived therapeutics for immune-compromised people have impressed investors.
Asceniv’s Perfomance Fuels ADMA’s Growth
ADMA Biologics markets plasma-derived biologics for the treatment of immune deficiencies and the prevention of certain infectious diseases. The company’s top line currently comprises sales of three FDA-approved products — Bivigam (an Intravenous Immune Globulin [“IVIG”] product to treat primary humoral immunodeficiency), Asceniv (to treat primary immunodeficiency disease or PIDD) and Nabi-HB (to treat and provide enhanced immunity against the hepatitis B virus).
Asceniv is a plasma-derived IVIG that contains naturally occurring polyclonal antibodies. These antibodies are proteins used by the body’s immune system to neutralize microbes, such as bacteria and viruses, and prevent infection and disease.
Asceniv is indicated for the treatment of PIDD or inborn errors of immunity in adults and adolescents. It is manufactured using ADMA’s unique, patented plasma donor screening methodology and tailored plasma pooling design, which blends normal source plasma and respiratory syncytial virus (RSV) plasma obtained from donors tested using the company’s proprietary microneutralization assay.
The product’s strong sales growth is driving the top line. Its prescriber and patient base continued to increase last year and is expected to grow further in 2024. Last year, ADMA started manufacturing Asceniv at the 4,400-liter production scale for the first time. This has not only improved the product’s margin profile but also increased plant production capacity, as fewer batches are needed to support the company’s revenue goals.
Potential Label Expansion of Asceniv
The company plans to leverage its previously conducted randomized, double-blind, placebo-controlled phase II clinical trial evaluating RI001 in immune-compromised, RSV-infected patients to explore Asceniv for the treatment of RSV or other potential respiratory viral pathogens, as well as in other patient populations.
In connection with the FDA’s approval of Asceniv in April 2019, ADMA is required to conduct a pediatric study to evaluate the safety and efficacy of Asceniv in children and adolescents. The ongoing post-marketing study for Asceniv may provide a label expansion opportunity to include pediatric-aged PI patients.
The late-stage study in 59 PIDD patients met the primary endpoint of no serious bacterial infections reported during the 12 months of treatment. Secondary efficacy endpoints further demonstrated the benefits of Asceniv in terms of the low incidence of infection, therapeutic antibiotic use, days missed from work, school, and daycare, and unscheduled medical visits and hospitalizations.
ADMA expects this clinical data, together with the FDA approval for the treatment of PIDD, to better position it to further evaluate the product in immune-compromised patients infected with or at risk of contracting RSV infection or other respiratory viral pathogens in the future.
ADMA’s Financial Targets
Along with reporting strong second-quarter results, ADMA raised its outlook for 2024 and 2025. ADMA expects to generate revenues of more than $400 million in 2024 and $445 million in 2025 (previous guidance: more than $355 million in 2024 and $410 million in 2025). Net income is projected to exceed $105 million in 2024 and $155 million in 2025 (up from the prior guidance of $85 million for 2024 and $135 million for 2025).
On Oct. 9, management stated that the auditor transition process will not impact its previously provided 2024-2025 financial guidance.
Margin Improvement
ADMA’s higher-margin product portfolio now accounts for more than 50% of its total revenues. The company is working to increase Asceniv's supply further. If successful, Asceniv will account for more than a significant majority of ADMA's total revenues over time, further advancing its potential margin expansion and earnings growth.
Valuation & Estimates
ADMA’s shares took a hit on Oct. 10 after the company announced that its auditor has resigned. Going by the price/sales ratio, ADMA’s shares currently trade at 12xsales, higher than its mean of 4.58x and the industry’s 2.19x.
Image Source: Zacks Investment Research
Estimate Movement
The Zacks Consensus Estimate for 2024 earnings per share has remained stable at 49 cents over the past 60 days.
Image Source: Zacks Investment Research
Conclusion
ADMA Biologics, which competes with Takeda (TAK - Free Report) and Grifols (GRFS - Free Report) in the market of plasma-derived products in the United States, is poised to perform well in the upcoming quarters as incremental penetration of Asceniv should accelerate near-term revenue growth.
The targeted market has significant potential. Management expects additional opportunities for ADMA to continue to grow substantially in the underserved, immune-compromised and co-morbid patient population despite the availability of standard-of-care therapy.
Large biotech companies are generally considered safe havens for investors interested in this sector. Despite the exceptional rally this year, the stock can see further growth, given the investors’ confidence in its prospects. Hence, any dip can be used as a buying opportunity.
For investors already owning the stock, staying invested would be a prudent move.
Image: Bigstock
ADMA Biologics Stock Skyrockets 262.1% YTD: How to Play the Stock?
ADMA Biologics, Inc.’s (ADMA - Free Report) is witnessing a phenomenal run this year. Its shares have surged a whopping 262.1% in the year so far against the industry’s decline of 2.1%.
The stock has been consistently touching new highs in this timeframe, having recently hit a new 52-week high of $21.13 on Oct. 9.
The stock has also outperformed the sector and the S&P 500 during the aforementioned period.
ADMA Outperforms Industry, Sector & S&P 500
Image Source: Zacks Investment Research
The stupendous rally can be attributed to the company’s impressive performance. ADMA’s shares also rose last month after the company announced that it will join the S&P SmallCap 600.
Investors were also impressed with ADMA’s strong second-quarter results and raised outlook. Sales in the first half increased 61%. Concurrent with the second-quarter results, the company also raised its annual guidance for 2024 and 2025 revenues and net income, based on the continuous growth of its unique and proprietary immunoglobulin, Asceniv.
ADMA Biologics markets plasma-derived biologics for the treatment of immune deficiencies and the prevention of certain infectious diseases. The company’s innovative portfolio and efforts to further develop a pipeline of plasma-derived therapeutics for immune-compromised people have impressed investors.
Asceniv’s Perfomance Fuels ADMA’s Growth
ADMA Biologics markets plasma-derived biologics for the treatment of immune deficiencies and the prevention of certain infectious diseases. The company’s top line currently comprises sales of three FDA-approved products — Bivigam (an Intravenous Immune Globulin [“IVIG”] product to treat primary humoral immunodeficiency), Asceniv (to treat primary immunodeficiency disease or PIDD) and Nabi-HB (to treat and provide enhanced immunity against the hepatitis B virus).
Asceniv is a plasma-derived IVIG that contains naturally occurring polyclonal antibodies. These antibodies are proteins used by the body’s immune system to neutralize microbes, such as bacteria and viruses, and prevent infection and disease.
Asceniv is indicated for the treatment of PIDD or inborn errors of immunity in adults and adolescents. It is manufactured using ADMA’s unique, patented plasma donor screening methodology and tailored plasma pooling design, which blends normal source plasma and respiratory syncytial virus (RSV) plasma obtained from donors tested using the company’s proprietary microneutralization assay.
The product’s strong sales growth is driving the top line. Its prescriber and patient base continued to increase last year and is expected to grow further in 2024. Last year, ADMA started manufacturing Asceniv at the 4,400-liter production scale for the first time. This has not only improved the product’s margin profile but also increased plant production capacity, as fewer batches are needed to support the company’s revenue goals.
Potential Label Expansion of Asceniv
The company plans to leverage its previously conducted randomized, double-blind, placebo-controlled phase II clinical trial evaluating RI001 in immune-compromised, RSV-infected patients to explore Asceniv for the treatment of RSV or other potential respiratory viral pathogens, as well as in other patient populations.
In connection with the FDA’s approval of Asceniv in April 2019, ADMA is required to conduct a pediatric study to evaluate the safety and efficacy of Asceniv in children and adolescents. The ongoing post-marketing study for Asceniv may provide a label expansion opportunity to include pediatric-aged PI patients.
The late-stage study in 59 PIDD patients met the primary endpoint of no serious bacterial infections reported during the 12 months of treatment. Secondary efficacy endpoints further demonstrated the benefits of Asceniv in terms of the low incidence of infection, therapeutic antibiotic use, days missed from work, school, and daycare, and unscheduled medical visits and hospitalizations.
ADMA expects this clinical data, together with the FDA approval for the treatment of PIDD, to better position it to further evaluate the product in immune-compromised patients infected with or at risk of contracting RSV infection or other respiratory viral pathogens in the future.
ADMA’s Financial Targets
Along with reporting strong second-quarter results, ADMA raised its outlook for 2024 and 2025. ADMA expects to generate revenues of more than $400 million in 2024 and $445 million in 2025 (previous guidance: more than $355 million in 2024 and $410 million in 2025). Net income is projected to exceed $105 million in 2024 and $155 million in 2025 (up from the prior guidance of $85 million for 2024 and $135 million for 2025).
On Oct. 9, management stated that the auditor transition process will not impact its previously provided 2024-2025 financial guidance.
Margin Improvement
ADMA’s higher-margin product portfolio now accounts for more than 50% of its total revenues. The company is working to increase Asceniv's supply further. If successful, Asceniv will account for more than a significant majority of ADMA's total revenues over time, further advancing its potential margin expansion and earnings growth.
Valuation & Estimates
ADMA’s shares took a hit on Oct. 10 after the company announced that its auditor has resigned. Going by the price/sales ratio, ADMA’s shares currently trade at 12xsales, higher than its mean of 4.58x and the industry’s 2.19x.
Image Source: Zacks Investment Research
Estimate Movement
The Zacks Consensus Estimate for 2024 earnings per share has remained stable at 49 cents over the past 60 days.
Image Source: Zacks Investment Research
Conclusion
ADMA Biologics, which competes with Takeda (TAK - Free Report) and Grifols (GRFS - Free Report) in the market of plasma-derived products in the United States, is poised to perform well in the upcoming quarters as incremental penetration of Asceniv should accelerate near-term revenue growth.
The targeted market has significant potential. Management expects additional opportunities for ADMA to continue to grow substantially in the underserved, immune-compromised and co-morbid patient population despite the availability of standard-of-care therapy.
Large biotech companies are generally considered safe havens for investors interested in this sector. Despite the exceptional rally this year, the stock can see further growth, given the investors’ confidence in its prospects. Hence, any dip can be used as a buying opportunity.
For investors already owning the stock, staying invested would be a prudent move.
ADMA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.