What happened

Shares of ADMA Biologics (NASDAQ:ADMA) rose over 27% today after the company announced an important regulatory update concerning a biologics manufacturing facility acquired in June 2017. The U.S. Food and Drug Administration outlined issues with the facility in 2014 and 2016, specifically for the manufacture of the plasma drug product marketed as Bivigam. That disrupted the ability of the former owner, Biotest Pharmaceuticals, to supply the drug. 

Today, ADMA Biologics announced that is has addressed the previously identified manufacturing and compliance issues and submitted the data to the FDA. In turn, the regulator announced it will review the new data by Oct. 25. If it gives the tiny biologics company the green light, that could set the stage for commercial sales before the end of 2018. It could also remove uncertainty for drug candidates in development.

As of 1:48 p.m. EDT, the stock had settled to an 18.4% gain.

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So what

ADMA Biologics made a bold bet by acquiring certain troubled assets from Biotest Pharmaceuticals last summer. Essentially, the company gambled it could use its biomanufacturing expertise to correct problems at the manufacturing facility and regain compliance. Doing so would provide an opportunity to market two approved drugs, earn revenue from toll manufacturing services provided to third parties, and advance its lead drug candidate.

Today's news provides some optimism that the bet could actually pay off for the $260 million biopharma. ADMA Biologics could soon have three drugs on the market and the potential to manufacture biologics as a service. The potential commercial-stage portfolio includes two assets acquired from Biotest: Nabi-HB, which was approved in 1999 and restarted sales in the third quarter of 2017, and Bivigam, which was approved in 2012 but has encountered delays because of the facility.

It also includes the company's lead drug candidate, RI-002, which completed phase 3 clinical trials in 2015 but has similarly encountered delays because of the facility. Biotest was formerly the third-party manufacturer for the drug candidate for ADMA Biologics. The company now expects to submit a Biologics License Application for RI-002 later this year and to begin commercial sales by the first half of 2019.

Now what

A lot of this stock's potential hinged on ADMA Biologics' ability to fix the acquired biomanufacturing facility. While things appear to be on the right track, there's still a long ways to go before the business can prove it will reach profitable operations. Therefore, it might be better to keep this stock on your watchlist until more details about the sales and earnings potential are released.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.