Today, shares of biopharmaceutical play ADMA Biologics (NASDAQ:ADMA) are on the move in a big way. Investors in ADMA stock are seeing gains of more than 17% at the time of writing on some extremely impressive volume. Currently, more than 223 million ADMA shares have traded hands, versus a daily average of only 3.5 million shares.
These sorts of volatile moves have been par for the course for ADMA this year. Like many of its penny stock peers, ADMA stock saw a rapid move earlier this year amid a speculative buying binge that took small-cap stocks on a nice tear. Since then, ADMA has settled down, though this stock has seen momentum build in recent trading sessions.
Since April 20, ADMA stock has appreciated approximately 50%. This end-to-end biopharma company has generated a lot of attention for its plasma-derived treatments for patients with compromised immune systems. However, today, the company has another catalyst investors are viewing positively.
Let’s dive into the news, and what it means for investors in ADMA.
ADMA Stock Soaring on FDA Approval
Today, ADMA announced that the U.S. Food and Drug Administration has granted approval for the company’s expanded manufacturing process. This news is meaningful, as it will allow the company to significantly ramp up its production of its Intravenous Immune Globulin (IVIG). ADMA’s expanded plasma pool manufacturing process will enable the “fractionation and purification of a 4,400-liter plasma pool for the manufacture of IVIG.”
In layman’s terms, the company will be able to produce more of its core product. This, the company hopes, will translate into substantial revenue growth.
As a result of this FDA approval, the company has committed to producing revenues of more than $300 million. Additionally, gross margin expansion is expected to take hold during the second half of 2021 as the company’s unit economics improve as a result of this increased scale.
This solid guidance is being digested very positively by the market today, as it should. These are only projections, and execution risk with stocks like ADMA remain high. However, if the company does what it says it’s going to, ADMA stock certainly looks cheap today.
At peak revenues of more than $300 million, ADMA would be trading at less than 1-times sales. The company’s market capitalization is just over $250 million, at the time of writing.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.