Kamada Q4 2023 Earnings Call Transcript

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Provided by Quartr
March 6, 2024

There are 5 speakers on the call.

Operator

Greetings. Welcome to Comenas Limited's 4th Quarter and Full Year 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. Please note this conference is being recorded.

Operator

At this time, I'll turn the conference over to Brian Ritchie with LifeSci Advisors. Mr. Ritchie, you may now begin.

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 Orlev, Chief Financial Officer. Earlier today, Kamada announced its financial results for the 3 12 months ended December 31, 2023.

Speaker 1

If you have not received this news release, please go to the Investors page of the company's website at www.pamana.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 identify 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, Wednesday, March 6, 2024. Hamada undertakes no obligation to revise or update any of the statements to reflect events or circumstances after the date of this conference call.

Speaker 1

With that said, it is 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. We are extremely pleased with the strong financial and operational momentum we experienced throughout our business during 2023, which allowed us to achieve our full year guidance. Importantly, we are well positioned for further top and bottom line growth this year. I will begin with a high level review of our robust financial results for full year 2023.

Speaker 2

With total revenues of $142,500,000 which represented year over year growth of 10% and EBITDA of $24,100,000 an increase of 35% as compared to the 12 months ended December 31, 2022, we achieved the top and the bottom line growth anticipated in our business during 2023. We continue to effectively leverage the growth drivers in our business, focusing on a significant increase in KedRAB U. S. Market share and the promotion of Cytogarm in the U. S.

Speaker 2

Market. Looking ahead, we expect the momentum generated last year to extend through 2024 with full year revenue and profitability to be meaningfully increased as compared to 2023. As such, we are introducing full year 2024 revenue guidance of $156,000,000 to $160,000,000 and adjusted EBITDA guidance of $27,000,000 to $30,000,000 The midpoint of these ranges would represent top line and profitability growth of approximately 11% 18%, respectively, over 2023. To reiterate what we have said previously, we anticipate annual double digit revenue and profitability growth in the foreseeable years beyond 20 24 with significant upside potential and limited downside risk. Additionally, I would like to highlight our strong balance sheet.

Speaker 2

We ended the year with over $55,000,000 in cash, and we continue to have the financial flexibility to both accelerate the growth of our existing business and pursue compelling business development opportunities, a process we are actively engaged in. In 2023, KedRAB, our anti rabies immunoglobulin was especially impactful. And throughout the year, we experienced a significant increase in demand for the product in the U. S. Following the recent amendment and extension of our distribution agreement with Kedrion, we fully expect this trend to continue in 2024 and beyond.

Speaker 2

The substantial market share growth demonstrated by Kedrab is being driven by Kedrion's extensive market coverage and robust commercial activity as well as the FDA approval for a label expansion for the product obtained in 2021 that has differentiated it as the 1st and only human ribosinoglobulin available in the U. S. To be clinically studied in children. In 2023, Kamada generated approximately $32,800,000 in revenues from sales of Kedrok to Kedrion for distribution in the U. S.

Speaker 2

Market, which more than doubled our sales compared to 2022. Based on the new distribution agreement, further growth is expected in 2024. Looking ahead with KedRAB, the amendment the amended and extended distribution agreement is a tremendous milestone for Kamada. In fact, this strategic agreement with Kedrion represents the largest commercial agreement since Kamada's inception, Specifically, within the 1st 4 years of the 8 year term, which began this past January, Kedron will purchase minimum quantities of KedRAB with revenues to Kamada of approximately $180,000,000 The revised financial terms reflect KedRAB's significant U. S.

Speaker 2

Market share and forecasted continued growth throughout the 8 year term as well as the potential expansion of KedRAB distribution by Kedrion to other territories beyond the U. S. We believe the continuation of this partnership maximizing the future growth and value potential of this important product. Moreover, this agreement most effectively exploit the U. S.

Speaker 2

Business by allowing us to focus our own internal sales effort on the commercialization of our other specialized FDA approved immunoglobulin products, primarily in transplant centers, while Kedrion continues to promote care drug in numerous hospitals and medical centers across the U. S. Moving on, our U. S. Team established during 2022 continues to achieve steady progress in promoting our specialty IgG portfolio to physician and other healthcare practitioners through direct engagement and opportunities at medical meetings.

Speaker 2

As we've said previously, our activities promoting these important therapies, primarily Cytogam and Varizid, represent the first time in over a decade that this hyperimmune specialty product are being supported by field based activity in the U. S. Each of these products made important contribution to our financial results in 2023, and we expect further impact this year. Importantly, in October 2023, results from an investigator initiated 5 year retrospective study consisting of 325 lung transplant patients evaluating the real world use of Cytogam in combination with antiviral agents for the prevention of CMV disease in high risk CMV mismatch lung transfer recipients were published by Doctor. Fernando Torres, the Clinical Chief, Division of Pulmonary Critical Care at the University of Texas Southwestern Medical Center.

Speaker 2

And the results were also presented at ID Week 2023 in Boston, Massachusetts. The high risk mismatched patients are CMV seronegative patients receiving a lung from a seropositive donor. Doctor. Torres concluded that the use of proactive multimodality CMV prophylactic consisting of antivirus and immune augmentation with CMV inoglobin may improve outcomes among high risk CMV mismatch lung transplant recipients. We are in the process of sharing these results with physicians and transportation experts promoting the advantages of Cytogam.

Speaker 2

We have already been notified that 2 additional studies related to the benefit of Cytogam conducted by U. S. Leading transplantation KOLs were accepted for presentation at transplantation related medical meetings during this year. Of note, our Cytogam Scientific Advisory Board, which was established last year and consists of 8 U. S.-based, world renowned thought leaders in the solid organ transportation field, continues to evaluate new opportunities and future research and development possibilities for this important product.

Speaker 2

Moving on, looking further ahead at future catalysts, enrollment continues in the ongoing pivotal Phase 3 INNO2ATE clinical trial for inhaled alpha-one antitrypsin therapy for the treatment of alpha-one deficiency. Of significance, we recently received positive feedback from the FDA in a meeting conducted with the agency. The FDA reconceived over design of our ongoing clinical program and endorsed the Data and Safety Monitoring Board unblinded positive safety assessment. The FDA also accepted our plan to conduct an open label extension study, which is expected to be initiated in mid-twenty 24. The agency also expressed its willingness to potentially accept a p value smaller than 0.1 alpha level in evaluating INNOVERATE for meeting the study efficacy primary endpoint for registration, which may allow for the acceleration of the program.

Speaker 2

As a result, we plan to present a revised statistical analysis plan, SARP, and study protocol for the INNOVERATE study and seek FDA feedback by mid-twenty 24. As a reminder, the European Medicine Agency, the EMA, previously also reconfirmed the overall design of the ongoing INNOVERATE study and acknowledge the statistically and clinically meaningful improvement in lung function measured by FEV1 demonstrated in our prior Phase twothree European study. In parallel to the clinical and regulatory progress recently achieved, we also continue to have active discussions related to potential partnering of this promising late stage product candidate. To reiterate what we have said previously, 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 ALFAAN patients as compared to current IV start out of care. The inhaled product is a leading new innovative alpha-one treatment in advanced clinical stage, and it represents a substantial opportunity to be a transformational product in a market that is already over $1,000,000,000 in annual sales in the U.

Speaker 2

S. And the EU. We also continue to be pleased with the progress achieved at Kamada Plasma, our U. S.-based plasma collection company. Our 2021 acquisition of the Plasma Collection Center in Houston, Texas represented Kamala's entry into the U.

Speaker 2

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 at our first center and construction is nearly completed at our 2nd plasma collection center located in Houston, Texas, expected to be opened during the second half of this year. Finally, I would like to note our new logo launched few weeks ago, which if you're currently viewing the webcast, you've hopefully noticed by now. This new logo represent the transformation Kamada is going through as a leading innovative vertically integrated profitable specialty plasma company.

Speaker 2

With that, I'll now turn the call over to Jaime for a detailed discussion of our financial results for the Q4 and the full year 2023. Jaime, please go ahead.

Speaker 3

Thank you, Amir. As previously highlighted, our business performed extremely well in 2023. Total revenues for the full year were approximately $142,500,000 a 10% increase from the $129,300,000 recorded in fiscal year 2022. The year over year growth was primarily driven by increased sales of KedRAB to Kedrion due to increased demand for the product in the U. S.

Speaker 3

Markets. While our Cytogam sales during 2023 were temporary impacted by the short dated inventory we initially purchased as part of the product acquisition in 2021, the technology transfer approval and fresh product batches available since October 2023 ensure continuous long term supply of the product to the U. S. And Canadian markets without interruption. We believe that our promotion of the product will support revenue growth during 2024.

Speaker 3

Total gross profit for 2023 was $55,500,000 representing a 39% margin, up 19% compared to the 46 point $7,000,000 or a 36% margin in 2022. As previously discussed, the company is accounting for amortization expenses associated with intangible assets, which were generated through the late 2021 acquisition of our IGG product. The company's COGS and sales and marketing included approximately $5,400,000 $1,700,000 respectively, of such amortization expenses for full year 2023. Operating expenses, including R and D, sales and marketing, G and A and other expenses, totaled $45,400,000 an increase of approximately 8% over the prior year. The increase as compared to 2022 was below our original anticipation and was related to the advancement of our commercial activity as well as our ongoing Phase III INNO2VATE trial.

Speaker 3

We expect our overall operating expenses, including R and D, sales and marketing and G and A to increase between 10% to 15% during 2024 compared to 2023. As we continue to advance our commercial activities as well as our Phase 3 INNO2VATE trial. As we did throughout 2020 3 2022, we continue to account for financing expenses with respect to revaluation of contingent consideration and long term assumed liability, all of which are related to the acquisition completed in 2021. Revaluation of contingent consideration and the long term assumed liability totaled $1,000,000 during 2023, significantly lower than in 2022. Such decrease was associated with a temporary reduction of Cytogam sales during 2020 3.

Speaker 3

Net income for the fiscal year 2023 was $8,300,000 or $0.15 per diluted share as compared to the net loss of $2,300,000 or loss of $0.05 per share recorded in 2022. Adjusted EBITDA for the 12 months ended December 31, 2023 was $24,100,000 up 35 percent compared to the $17,800,000 in the prior year. As Amir highlighted earlier, we anticipate continued momentum through 2024 with double digit top and bottom line growth. Specifically, we're introducing full year 2024 revenue guidance of between $156,000,000 to $160,000,000 and adjusted EBITDA guidance of $27,000,000 to 30,000,000 dollars Finally, cash provided by operating activities was $4,300,000 for the full year 2023, with total cash and cash equivalent of $55,600,000 by the end of 2023, we maintain the financial strength and flexibility to accelerate the growth and profitability of our existing business beyond 2024 at double digit rates and pursue compelling new business development opportunities. That concludes our prepared remarks, and we will now open the call for questions.

Operator

Thank you. And our first question is from the line of Annabel Samimy with Stifel. Please proceed with your questions.

Speaker 4

Hi, thanks for taking my questions. I have a few actually. So first on Cytogam, what would the normalized growth rate have been for Cytogam without the interruption? And what type of Cytogam studies do you expect will be presented? If you can just give a little clarity on that.

Speaker 4

And then the second, I was wondering if we could dig a little deeper on the potential changes to the AAT program to accelerate it. What are some of the changes you propose to ensure that P value? And would this also hold with the EU authorities? And then while we're on that topic, I'd love your thoughts on Sanofi's acquisition of ensivarix and its implications for the AAT program in the market. And I'll probably get back in queue after those questions.

Speaker 4

Thanks.

Speaker 2

Thanks, Annabel. I'm not sure I understood the last question. Let me start with the first two and then you can just repeat it. So in regards to Cytogarm, if it wasn't for the short dated inventory, if I'm looking at end user sales, end user usage, 2023 numbers were similar to 2022, meaning that there is around $5,000,000 gap between the 2 years in terms of our sales to the channel, to the wholesalers. So this is approximately the difference, the gap between the years.

Speaker 2

Moving into 2024, of course, with the fresh batches now available, we expect this to go back to at least where it was in 2022 and even beyond because we do a lot of kind of medical affairs and promotional activities in the market to expect the in market sales and in market usage to start increasing. So that's I hope this answers your question regarding if we try to kind of isolate the impact of the short dated inventory on our sales.

Speaker 4

Okay. And then and what type of studies are the investigators proposing? And how do they plan on expanding this market or the SAB, how do they think that they can expand the market?

Speaker 2

The 2 studies have already been accepted for presentation in 2024 in 2 different transportation related medical conferences. Those conference agendas were, I believe, were not yet disclosed. So I cannot give the exact details of those two abstracts, but they have to do with the benefits of using Cytogam in addition to standard of care in the reduction of the viral load of the patients and improve their transportation outcome.

Speaker 4

Okay, great. And if we can move over to the AAT program.

Speaker 2

Yes.

Speaker 4

I guess, what are some of the changes you propose to satisfy or accelerate the program? And is that going to be accepted by the EU as well?

Speaker 2

Okay, great. So in general, I just want to start saying that we were very pleased with the positive feedback from the FDA. As mentioned during the call, the agency that reconfirmed the overall study design, endorsed the safety data, which was reviewed by the DSMB and found it to be robust. So we presented the DSMB data up to date in terms of number of patients in the study, which have completed a significant treatment duration. And we have a very robust safety data, which really satisfied the agency and waived additional requirements for safety evaluation.

Speaker 2

And they also accepted our open label extension study, which is about to start middle of the year. We approached both agencies, the EMA and the FDA with discussion questions related to potential ways to shorten the study duration, accelerate the program. We found the FDA team highly supportive and cooperative and the direction we're evaluating and the agency is willing to potentially accept is agreeing that the key value will be 0.1 will be sufficient to prove efficacy of FEV1 instead of the traditional 0.05. We're preparing the revised statistical plan, which may show that we need less 220 patients to be recruited to the study. This will indeed will be the case and then if we believe it will be the case, then we'll be able to shorten the study duration due to quicker recruitment.

Speaker 2

With that information, we will go back to the EU to the EMA, sorry, that we get their consent to basically have the same path forward.

Speaker 4

Okay, great. And then, I just want to know if you had any comments about the Sanofi acquisition of Inhibrix and their AAT program, what are your any thoughts around that?

Speaker 2

Yes, absolutely. So the Sanofi acquisition of the Inebriq's program, which is a recombinant AAT, we think it's a very important trend, a very important transaction. It puts a lot of focus on our fund efficiency in general. We believe that if the products will make it to the market Sanofi with a significant marketing and promotional power will create better awareness and greater awareness to ALPHONE deficiency. As you may know, majority of the ALPHONE patients are still misdiagnosed or undiagnosed.

Speaker 2

So like a powerhouse like Sanofi being active in the Alpha-one space will definitely going to significantly increase the market in general by better diagnostics and better coverage. So this is a very positive sign. In terms of inhaled, we believe inhaled has significant advantages in general. It's a non invasive at home treatment with a different mechanism of action. And we believe that if it makes it to the market, it's going to be a transformational product that is going to compete very well in the market.

Speaker 2

The INEBRID Sanofi product, although has advantages, it's still an IV treatment when we come with inhaled noninvasive and we come with an efficacy study. So we believe we have sufficient advantages, significant advantages that we see next to the market is going to be highly competitive product. Also being held product because we go directly into the lungs versus IV treatment. We give 1 eighth of the dose compared to the current standard of care and approximately 1 5th of the dose compared to the NIBRIX treatment. So in terms of cost of goods and potential competitiveness, we also have a significant advantage.

Speaker 4

Thank you. I'll get back in the queue.

Operator

Thank you. At this time, I'll turn the call over to Brian Ritchie to see if we have any questions from the web.

Speaker 1

Thanks. Just a couple here, Amir and Jaime. First, what could a potential partnership for inhaled AAT look like?

Speaker 2

Yes. So thank you, Brian. So building on what I just answered, Annabel, on the previous question, we believe that inhaled alpha-1 has significant advantages. We believe that in order to compete well in the market, especially with the powerhouse exonofi, it will be a good move for Kamada to part of the program with a strategic partner that has significant marketing and commercial capabilities and resources. And we're looking for such type of partnership that will allow us to bring the product to the market in the fastest way and to compete well with a superior product.

Speaker 1

Great. And then what maybe an update on sort of BD product acquisition opportunities and what might be available?

Speaker 2

Yes. So we are proactively looking for products in the plasma space as well as in transportation. This is especially recovering to be very highly synergetic with our expertise and staff. Our BD team is working proactively evaluating some opportunities. Once we have news to update the market, we'll be happily do so.

Speaker 1

Great. Thank you. That's all the questions that have come in over the web. I'd ask you to maybe make some closing comments.

Speaker 2

Yes. So in closing, we're very pleased with our exceptional performance during 2023 and excited about the potential opportunity that lie ahead based on the amendment amended care job agreement, existing ongoing late stage inhaled alpha and clinical program and the strength of our commercial portfolio and balance sheet. We look forward to continuing to support clinicians and patients with the important life saving products that we develop, manufacture and commercialize. We thank you all for your support and remain committed in creating long term shareholder value. We hope you all stay safe and healthy.

Speaker 2

Thank you very much.

Operator

Thank you. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day.

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Key Takeaways

  • Kamada reported $142.5 million in full-year revenues (up 10%) and $24.1 million EBITDA (up 35%) in 2023, and issued 2024 guidance of $156–160 million in revenues and $27–30 million adjusted EBITDA, implying double-digit growth.
  • The U.S. anti-rabies immunoglobulin KedRAB more than doubled sales to $32.8 million in 2023 and secured an amended eight-year distribution agreement with Kedrion guaranteeing roughly $180 million in minimum revenues in the first four years.
  • Kamada’s U.S. commercialization team is actively promoting specialty IgG products like Cytogam and Varizid, supported by published real-world data and two additional transplant-focused studies slated for presentation in 2024 to drive product uptake.
  • The Phase 3 INNOverate inhaled alpha-one antitrypsin trial received positive FDA feedback—endorsement of safety data, acceptance of an open-label extension study, and openness to a p-value threshold of 0.1—potentially accelerating the path to approval.
  • Kamada Plasma is nearing completion of its second Houston plasma collection center and expanding hyperimmune plasma capacity, underpinning the company’s goal of a vertically integrated specialty plasma business.
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Earnings Conference Call
Kamada Q4 2023
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