Maxim upgrades ADMA Biologics to buy

Maxim Group upgraded ADMA Biologics (NASDAQ:ADMA) to ‘buy” from “hold” and established a price target of $13 after the company agreed to acquire Biotest Pharmaceuticals’ immunoglobulin manufacturing facility in Florida. The stock was quoted at $5.54 in afternoon trading on Jan. 24.

Biotest’s plant manufactures ADMA’s lead product candidate, RI-002, as well as two FDA-approved immunoglobulin assets, BIVIGAM and Nabi-HB.

When the deal closes in April or May, ADMA will become a fully integrated plasma products company. “Most important though is the fact that ADMA will now be in control of correcting the inspection issues related to a complete response letter [from the FDA],” writes analyst Jason Kolbert.

“Our understanding is that two of three [issues] are well on their way to being ready to respond to regulators. With this acquisition, ADMA is now in a position to fix the most complex issues, which we believe relate to manufacturing compliance,” he added.

Mr. Kolbert also noted that the elimination of third party manufacturing should ultimately translate into higher margins. “In our view, this is a good deal for ADMA and gives more clarity.”