Kamada Q3 2023 Earnings Call Transcript

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Provided by Quartr
November 13, 2023

There are 5 speakers on the call.

Operator

Good day, ladies and gentlemen, and welcome to Kamada Limited's Third Quarter of 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded. I would now turn the conference over to Mr.

Operator

Brian Ritchie. Please go ahead, sir.

Speaker 1

Thank you. This is Brian Ritchie with LifeSci Advisors. Thank you all for participating in today's call. Joining me from Kamada are Amir London, Chief Executive Officer and Jaime Orlaff, Chief Financial Officer. Earlier today, Kamada announced financial results for the 3 9 months ended September 30, 2023.

Speaker 1

If you have not received this news release, Please go to the Investors page of the company's website at www.kamada.com. Before we begin, I would like to caution that comments made during this conference call by management will contain forward looking statements that involve risks and uncertainties regarding the operations and future results of Kamada. I encourage you to review the company's filings with the Securities and Exchange Commission, including, without limitation, the company's Forms 20 F and 6 ks, which identifies specific factors that may cause actual results or events to differ materially from those described in the forward looking statements. Furthermore, the content of this conference call contains time sensitive information that is accurate only as of the date of the live broadcast, Monday, November 13, 2023. MADA undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

Speaker 1

With that said, It's my pleasure to turn the call over to Amir London, CEO. Amir?

Speaker 2

Thank you, Brian. My thanks also to our investors and analysts for your interest in Kamada and for participating in today's call. To begin, I'd like to indicate that the company continues to conduct its business operation in Israel with no effect on business continuity, and Global Superpower of Product is not expected to be interrupted as a result of the recent events in Israel. With that, I'll now pivot to the strong financial and operational momentum throughout our business that has us well positioned to achieve our 2023 full year guidance, which I will discuss momentarily. I'll begin with a high level review of our robust Financial results for the 1st 9 months of 2023.

Speaker 2

The total revenues of $106,100,000 which represented year over year growth of 26% and adjusted EBITDA of $17,700,000 an increase of 67% as compared to the 1st 9 months of 2022. We achieved the top and bottom line growth anticipated in our business in the 1st 9 months of the year. We continue to effectively leverage the multiple growth drivers in The portfolio of 4 FDA approved immunoglobulins acquired in late 2021, Cytogam, Hepagam, Varizig and WinROW and our Israeli distribution business. Looking ahead, we expect the momentum from the 1st 9 months of the year to extend through the Q4 of 2023 with annual profitability to be increased as compared to last year. As such, we are reiterating our full year 2023 revenue guidance of $138,000,000 to $146,000,000 and adjusted EBITDA of $22,000,000 to $26,000,000 The midpoint of that range would represent profitability growth of approximately 35% over 2022.

Speaker 2

To reiterate what we have said previously, beyond 2023, we continue to anticipate While I noted our multiple growth drivers earlier, KedRAB, our anti rabies immunoglobulin, has been especially impactful during the 1st 9 months of 2023, a trend we expect to continue in the Q4 and beyond. Throughout the 1st 9 months of 2023, we experienced a significant increase in demand for the products in the U. S, and we anticipate the continuation of this momentum Moving forward, the significant market share growth demonstrated by KedRAB is being driven by Kedrion's excellent commercial activity And thanks to the FDA approval obtained in 2021 for the label expansion for the product that has differentiated it as the first and only human rabies immunoglobulin available in the U. S. Market to be clinically studied in children.

Speaker 2

Our future prospects were further enhanced in late August when we received shareholder approval and then closed the previously announced $60,000,000 private placement with the Fini Opportunity Fund, the leading private equity team in Israel and a large existing Kamada shareholder. This strategic investment provide us with the financial flexibility, allowing us to accelerate the growth of our existing business and pursue compelling business development opportunities. While Jaime will discuss the net profit from the private placement in more detail shortly, I would like to highlight that as we solve this transaction, we are also able to pay down the entire remaining outstanding balance of our existing bank loan and we are now debt free. Moving on, our U. S.

Speaker 2

Team established during 2022 Continues to achieve steady progress in promoting our specialty IgG portfolio to physicians and other healthcare practitioners through our direct engagement and opportunities at medical meetings. As we have said previously, our activities promoting these important therapies, Primarily Cytogam and Varizig represent the first time in over a decade that these hyper immunoglobulins Specialty products have been supported by field based activity in the U. S. We are excited about the future growth potential of Cytogarm and are pleased to report that Cytogarm manufactured at our Evolut facility is now available for commercial sale in the U. S.

Speaker 2

Please follow the privilege to receive FDA approval of the technology transfer process of Cytogarm from its previous manufacturer, CSL Behring. The availability of common manufactured Cytogarm in Canada is expected before the year end. We have also recently established our 1st Scientific Advisory Board consisting of 8 U. S.-based, world renowned 4th leaders in the solid organ transportation field. The advisory board focused on our newly implemented U.

Speaker 2

S. Clinical program for Cytokam, including new opportunities and future research and development possibilities. As we said will be the case, Key U. S. Physicians are beginning to proactively support the use of this product starting with SYKOGAM, which was the subject of a poster presentation at the recently held ID Week 2023 in Boston.

Speaker 2

At this important medical meeting, results were presented of an investigator initiated 5 year in combination with antiviral agents for the prevention of CMV disease in high risk CMV mismatched lung transplant recipients. Presenting KOL, Doctor. Fernando Torres, Clinical Chief, Division of Pulmonary and Critical Care at University of Texas Southwestern Medical Center concluded that the use of proactive multimodality CMV prophylaxis This is consisting of antivirals and immune augmentation with CMV inoglobin may improve outcomes among high risk CMV mismatched lung transplant recipients. Moving on, looking further ahead at future catalysts, We continue to be pleased with the progress made at Kamada Plasma, our U. S.-based plasma collection company.

Speaker 2

Our 2021 acquisition of a plasma collection center in Houston, Texas represented Kamada's entry into the U. S. Plasma collection market and supported our strategic goal of becoming a fully integrated specialty plasma product company. We continue to successfully expand The hyperimmune plasma collection capacity to our first center and return on opening of a second collection center in Houston, Texas early next year. On the development side, enrollment continues to ramp up in our ongoing pivotal Phase 3 INNOVERATE clinical trial for inhaled alpha-one antitrypsin To date, we've enrolled over 30% of the overall required enrollment of the study.

Speaker 2

We have recently also received positive feedback from the independent data and safety monitoring board, the DSMB, which recommended study continuation without modification for the 6 times in the study was initiated based on encouraging safety data Observed in the study to date acknowledge the statistically and clinically meaningful improvement in lung function measured by FEV1 demonstrated in our previous Phase twothree European study. We continue to anticipate advancing our discussion with the FDA regarding study progress by end of this year. As a reminder, Kamada's investigational inhaled AAT treatment is a non invasive at home treatment with an expected better ease of use and quality of life for alpha-one deficient patients as compared to the current IV standard of care. The inhaled product is the leading new innovative Alpha deficiency treatment in advanced clinical stage and it represents a substantial opportunity to be a transformational product in the market It is already over $1,000,000,000 in annual sales in the U. S.

Speaker 2

And the EU. Finally, I'd like to formally welcome Professor Benjamin Deckel and Asaf Itchayek, who were recently appointed as independent directors on our Board. Professor Bekel is known internationally as one of the most innovative and highly recognized researchers in the field of human renal stem cell biology and regenerative medicine. At Mr. Itzhayek We have over 15 years of high-tech industry experience in senior management and finance executive positions.

Speaker 2

We look forward to leveraging the scientific and financial and evaluate potential new opportunities. With that, I'll now turn the call over to Jaime for a detailed discussion of our financial results for the Q3 and the 1st 9 months of 2023. Jaime, please go ahead.

Speaker 3

Thank you, Amir, and good day, everyone. We're happy to report a significant year over year increase in revenues and profitability for the Q3 and 1st 9 months of 2023. Total revenues for the Q3 were Approximately $37,900,000 And for the 9 months of 2023, total revenues were 10 $6,100,000 an increase of 18% 26%, respectively. The year over year growth was primarily driven by increased sales of KedRA to KedRA due to increased demand for the product in the U. S.

Speaker 3

Market. Total gross profit for the Q3 of 2023 was $14,800,000 representing 39% margins compared to $12,900,000 or a 40% margin in the Q3 of 2022. Total gross profit for the 1st 9 months of 2023 was $41,100,000 representing a 39% margin compared to $31,400,000 or a 37% margin in the 1st 9 months of 2022. As previously discussed, the company is accounting for depreciation expenses associated with intangible assets, which were generated through the late 2021 acquisition of our IGG products. The company's cost of goods sold and sales and marketing expenses includes approximately $1,300,000 $400,000 respectively of such Depreciation expenses per quarter.

Speaker 3

Operating expenses, including R and D, sales and marketing, G and A and other expenses totaled $10,400,000 in the Q3 of 2023 compared to $10,300,000 in the Q3 of Operating expenses for the 1st 9 months of 2023 totaled 33,800,000 an increase of approximately 9% over the prior year period. The increase as compared to 2022 is related to the advancement of our commercial activities, as well as our Phase 3 INNOVATE trial. As we did throughout 2022, we continue to account for financing expenses with respect to the revaluation of contingent consideration and the long term assumed liability, all of which are related to the acquisition completed in 2021. Net income for the Q3 of 2023 was approximately $3,200,000 or $0.06 per share on a fully diluted basis, as compared to a net income of $500,000 or $0.01 per share in the prior year period. Adjusted EBITDA was $7,900,000 for the Q3 of 2023, up 31% as compared to the $6,000,000 in the Q3 of 2022.

Speaker 3

For the 1st 9 months of 2023, adjusted EBITDA was 17,700,000 up 67% as compared to the $10,600,000 in the 1st 9 months of 2022. As Amir highlighted earlier, We are reiterating our full year 2023 revenue guidance of $138,000,000 to 146,000,000 and adjusted EBITDA guidance of $22,000,000 to $26,000,000 The midpoint of such range represents approximately 35% growth as compared to fiscal year 2022. Finally, cash provided by operating activities was $900,000 in the Q3 of 2023 as compared to cash provided by operating activities of $5,500,000 in the Q3 of 2022. Our total cash position as of September 30, 2023 was $52,600,000 as compared to $34,300,000 on December 31, 2022. This includes $58,200,000 of net proceeds from the previously announced $60,000,000 financing, which closed in September of 2023.

Speaker 3

In addition, during the quarter, we paid a total of $17,400,000 to close the outstanding balance of the bank loan. And $11,500,000 was used for old milestone payments. These actions are reflected in our cash balance as of September 30, 2023. Importantly, as Amir noted, We are now debt free. Before proceeding to take your questions, I would like to also note that we filed today Operator?

Operator

Thank you, sir. Ladies and gentlemen, we will now be conducting a question and answer session. Our first question comes from Annabel Samimy of Stifel. Please go ahead.

Speaker 4

Hi, guys. Thanks for taking my question and good quarter. So I just wanted to understand some of the dynamics For Kedron, you're obviously seeing some very significant growth there. Could you tell us it's been approved for some time, so can you tell us what do you think the Key underlying drivers are, is it primarily the label change? Is there something else that's driving that underlying growth A refocus on the sales, can we depend on that consistent growth and those consistent trends going into the next Thank you.

Speaker 2

Hi, Annabel. Thank you for the question. We believe there are multiple dynamics in the market, which Positively affect the significant growth of the KedRAB market share. It has to do with the level mentioned that we have received and that we have implemented Last year, end of 2021 into 2022 and then the impact of this into 2023, Of course, the end of the pandemic and the fact that the overall market has gone back to where it was prior to the pandemic, this also has A significant effect, the excellent work done by our partners, Cadrion in the U. S.

Speaker 2

Market with a very wide coverage Reaching almost every hospital in America and being able to promote the product and its benefits. And also there was another product that was in the market until late last year, which exited the market and we are able to take Significant market share from that exit of that product.

Speaker 4

Okay. Great. And anything that you can update us on regarding some pipeline efforts that you have going on?

Speaker 2

Pipeline efforts, that's the question.

Speaker 4

Anything in the pipeline that you have any updates with regard The clinical studies that you're enrolling right now for The AAT indication or any selection from early stage programs that you are willing to go take forward?

Speaker 2

Yes, yes, yes. So, main effort is, of course, around inhaled 18, and I spoke about it on the call. So, we are advancing The recruitment to the study and discussion with the regulators and we had a very positive discussion with EMA. We expect to have a similar Discussion with the FDA before year end, we had the 6 successful DSMB meeting recently, which It's kind of validated the excellent safety profile of the product and the safety data that accumulating from the current study. In addition, we do have 3 early stage development programs Of other plasma derived products that we have discussed in previous calls, we have a product which is a plasma eyedrops That is a preclinical stage.

Speaker 2

We have an anti tuberculosis immunoglobulin product, which is in preclinical development. And we have a device that we are developing, we call it Jet Immune, which is an automated portable small scale system for extracting and purifying Hi, Piremia, nimoglobulin from convalescent plasma. So these are the 3 early stage programs which are under development. Once we make some material progress, we will update all of them are in preclinical studies and we hope to start clinical studies In 2025 for the 3 products.

Speaker 4

Okay, great. Thank you so much.

Operator

Thank you. Ladies and gentlemen, at this stage, I'm handing over to Brian Ritchie for questions from the webcast. Thank you.

Speaker 1

Thank you. A couple of questions that have come in off the web. First, at various points of the year, as you've already talked about, KedRAB has been the driver. Prior to that, you talked about The 4 products, the 4 IgG products being the primary driver, seems like there's a lot of diversity in your business, if you will. Maybe, Amir, talk a little bit

Speaker 2

Yes. Canada's business is very healthy, if I may use This is Teram. I think we continue to effectively leverage multiple growth drivers in our business. So as we mentioned, KedRAB has been growing With an increase in market share, we also see a nice international growth of the 4 FDA approved products required late 'twenty one. We are investing in the medical, clinical and commercial activities around cytogram and Varizig in the U.

Speaker 2

S. Market with a commercial and medical team Established in the U. S. And we have our Israel distribution business, which is growing. So all of that, If I may, it's like a nice metrics of products and territories that each one of them is contributing to overall

Speaker 1

Thanks, Amir. Another question that's come in, now that the private placement has closed, maybe talk a little bit about What you'll be looking for from a business development standpoint and potentially looking to add?

Speaker 2

Yes. So with the additional funds, thanks to the Fimi investment, we are proactively To add some business development initiatives, we are looking to leverage The commercial infrastructure that we have established in the U. S. Market To bring in to acquire auto in license additional products, this could be either primarily in the transportation field, We are currently mainly focused on specialty plasma products. And we are as I mentioned, we are proactively looking And then we are screening the different assets which are brought to us.

Speaker 2

And we're hoping that In the future, we will be able to close such a transaction, which will help us to continue growing the business In addition to the organic growth I just spoke about, so also to grow SIR and M and A.

Speaker 1

Terrific. Thank you, Amir. And with that, I'll pass the call back over to you for any closing remarks.

Speaker 2

Thank you, Brian. So in closing, we are pleased with our solid performance during the 1st 9 months of the year. We are excited about the potential opportunities that Lai had following the closing of the $50,000,000 financing. We look forward to continuing to support Clinicians and patients with the important life saving product that we develop, manufacture and commercialize. And we thank you all new investors for their support And we remain committed to creating long term shareholder value.

Speaker 2

Thank you all, and we hope you all stay healthy and safe. Thank you.

Operator

Thank you, sir. Ladies and gentlemen, that concludes today's event. Thank you for joining us. And you may now disconnect your line.

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Key Takeaways

  • Robust financial results: 9M 2023 revenues reached $106.1 million (up 26% YoY) and adjusted EBITDA was $17.7 million (up 67%), reflecting top- and bottom-line growth across its immunoglobulin portfolio and Israeli distribution business.
  • Reiterated full-year guidance: Kamada expects 2023 revenues of $138–146 million and adjusted EBITDA of $22–26 million, with the midpoint representing approximately 35% profitability growth over 2022.
  • KedRAB as a growth driver: Demand for the anti-rabies immunoglobulin surged in the U.S. due to the 2021 label expansion, strong commercial efforts by Kedrion, pandemic normalization and the exit of a competitor, leading to significant market share gains.
  • $60 million strategic investment: The private placement led by FIMI Opportunity Fund provided financial flexibility to accelerate organic growth and business development, enabled full repayment of the bank loan and left Kamada debt-free.
  • Operational and pipeline progress: U.S. commercialization of Cytogam and Varizig is underway with in-house Cytogam manufacturing live, new plasma collection centers in Houston are expanding capacity, and the Phase 3 trial for inhaled alpha-1 antitrypsin is over 30% enrolled with positive DSMB feedback ahead of planned FDA discussions.
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Earnings Conference Call
Kamada Q3 2023
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