ADMA Biologics to Acquire Certain Assets from Biotest Pharmaceuticals Corporation

ADMA Biologics, Inc., a late-stage biopharmaceutical company based in Ramsey that develops, manufactures, and intends to commercialize specialty plasma-based biologics for the proposed treatment of immune deficiencies and prevention of certain infectious diseases, today announced it signed a definitive agreement to acquire certain manufacturing and therapy-related assets from Biotest Pharmaceuticals Corporation (BPC), a wholly-owned subsidiary of Biotest AG.  The transaction, subject to customary closing conditions, including shareholder approval, is expected to close during the first half of 2017.

ADMA’s lead product candidate, RI-002, is manufactured at BPC’s facility in Boca Raton, Florida.  ADMA  has been working closely with BPC on resolving certain issues at this facility in connection with deficiencies identified by the U.S. Food and Drug Administration (FDA) in ADMA’s Complete Response Letter (CRL) for RI-002 (July 2016).  RI-002 is a specialty plasma-derived, polyclonal, intravenous immune globulin (IGIV).  ADMA is pursuing an indication for the use of this specialty IGIV product for treatment of patients diagnosed with Primary Immune Deficiency Disease (PIDD).

“Upon the completion of this transaction, ADMA believes it will be uniquely positioned to offer a fully vertically integrated plasma products and immune globulin platform in the U.S.  This transaction will allow ADMA to work directly with the FDA in efforts to obtain U.S. regulatory approval for RI-002 and remediate the outstanding Warning Letter at the manufacturing facility,” stated Adam Grossman, President and Chief Executive Officer, Director and Founder of ADMA Biologics.

“Through this transformative transaction, we believe that combining these acquired assets with our innovative immune globulin intellectual property will afford ADMA an expedited and less costly pathway for exploring additional hyperimmune globulin product candidates, as well as other potential plasma derived products.  We believe the plasma industry and market are poised for growth in the coming years, as such, ADMA believes that it has secured a prime place for it and its stockholders to reap the rewards associated with marketing novel plasma derived therapies. Additionally, as evidenced by recent transactional activity in the plasma products industry, this transaction should enhance our Company’s competitive positioning and will accelerate ADMA’s growth and ultimately benefit its stockholders,” Mr. Grossman concluded.

Dr. James Mond, Chief Medical and Scientific Officer of ADMA Biologics, stated, “Since the receipt of the CRL for RI-002 this past July, ADMA has been working to find a solution to the issues which would result in the most expeditious way to obtain FDA regulatory approval for RI-002.  With the experience of our management team and Board of Directors in the plasma products industry, BPC and Biotest AG have conveyed their belief that ADMA is the ideal company to lead the efforts for the resolution of the Warning Letter at the plant as well as harnessing the potential of the assets and championing the BPC product portfolio.”

“With operational control and the ability to employ ADMA’s strict fiscal management policies and oversight to the operations of these acquired assets, we believe ADMA will generate a positive impact on future gross margins for the company as well as for RI-002, once it’s approved by the FDA,” stated Mr. Brian Lenz, Chief Financial Officer of ADMA Biologics.

“Biotest AG, BPC and ADMA look forward to the closing of this promising and transformative transaction, which is anticipated to occur during the first half of 2017,” said Dr. Bernhard Ehmer, Chief Executive Officer and Chairman of the Board of Management of Biotest AG. “We believe that ADMA’s management team and Board are equipped with the operational expertise required to effectively leverage the acquired manufacturing facilities, and ultimately achieve FDA licensure of RI-002.  We are confident that ADMA is ideally suited to maximize the commercial potential of the acquired assets,” Mr. Ehmer concluded.

The core assets ADMA will be acquiring upon consummation of the proposed transaction include:

  • Property, facilities, laboratories, equipment and certain employees located at 5800 and 5900 Park of Commerce Blvd, Boca Raton, FL, which properties are comprised of two commercial buildings totaling ~126,000 square feet on ~15 acres of land.  The buildings house a fully equipped plasma fractionation and purification plant of FDA licensed biologics, testing laboratories, office space, ambient and cold storage warehouses, as well as a commercial scale monoclonal antibody production facility.
  • FDA licensed products including Nabi-HB™ (Hepatitis B Immune Globulin, Human) and BIVIGAM™ (Immune Globulin Intravenous, Human).
  • Contract manufacturing and services agreement for a third party’s licensed hyperimmune globulin product.
  • Biotest will provide ADMA with cash consideration totaling up to $40 million, consisting of a $12.5 million in cash upon closing, a $15 million unsecured subordinated loan at a six (6%) percent per annum interest rate, and interest only through the life of the loan and final principal payment due in full at the end of the five year loan period, along with a firm equity commitment to invest an additional $12.5 million in future equity financings of ADMA.  Although there can be no assurances, it is presently anticipated that with ADMA’s cash on hand forecasted at the time of the anticipated closing, plus the contractual capital commitments from Biotest AG, ADMA is expected to have sufficient cash for operations into the second half of 2018, if not longer.

The consideration for the above listed assets, cash and financing commitments to be given by ADMA upon the closing of the proposed transaction includes the following:

  • Fifty percent of ADMA’s capital stock, less one share (calculated as of immediately following the closing and on a post-closing issuance basis), consisting of (a) voting common stock equal to 25% of the issued and outstanding common stock of ADMA, and (b) non-voting common stock representing the balance of such 50% equity interest, less one share.
  • The right for BPC to designate one director and one observer to ADMA’s Board of Directors.
  • ADMA will transfer ownership to BPC of its two wholly-owned plasma centers in Norcross, Georgia and Marietta, Georgia, effective January 1, 2019.
  • Biotest AG to maintain its existing distribution rights granted for RI-002 in Europe, Near and Middle East and selected other territories and a right of first offer to BPC for the distribution of potential future ADMA developed plasma based products in the territories.

BPC will be entering into a standstill with ADMA, which will limit BPC’s ability to control the company.  BPC will also agree to a six (6) month lock up of the sale of ADMA securities.

The proposed transaction will be further described in more detail in a current report on Form 8-K and also in a proxy statement on Schedule 14A to be filed by ADMA with the United States Securities and Exchange Commission.

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