Kamada Q2 2024 Earnings Call Transcript

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Provided by Quartr
August 14, 2024

There are 7 speakers on the call.

Operator

Greetings, and welcome to Kamada Limited's Second Quarter 20 24 Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr.

Operator

Troy Williams, LifeSci Advisor. Thank you, Mr. Williams. You may begin.

Speaker 1

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 contents of this conference call contains time sensitive information that is accurate only as of the date of the live broadcast, Wednesday, August 14, 2024. Armada undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. With that said, it is my pleasure to turn the call over to Amir London, CEO.

Speaker 1

Amir?

Speaker 2

Level review of our growth strategy, which is successfully reflected in the strong financial results we delivered in the Q2 and first half of twenty twenty four and provide a summary of the drivers we are focused on for the balance of this year and into 2025. Then I'll turn the call over to Jaime for a more detailed review of our financial results. Following this, we'll open the call for your questions. So let's begin. I'm pleased to report that the strong financial and operational start to 2024 as reported last quarter continued through our second quarter, supporting and validating our growth strategy we are executing on.

Speaker 2

Camelot's growth strategy is built upon 4 main pillars: One, organic growth of our existing commercial portfolio of 6 FDA approved products marketed in over 30 countries. Secondly, M and A transactions, which are expected to support and expedite our growth. Thirdly, the plasma collection centers we are opening. And lastly, the ongoing Phase 3 pivotal trial of our inhaled AAT product that is targeting an over $2,000,000,000 market. During the 1st 6 months of 2024, we have achieved significant progress advancing each of these growth catalysts as I will shortly detail.

Speaker 2

But first, I'll provide a high level summary of the financials. Total revenue were up 13% to $42,500,000 for the Q2 as compared to the Q2 of 2023. And adjusted EBITDA for the Q2 was $9,100,000 a 51% increase compared to the prior year quarter. Total revenues were up 18% to 80.2 $1,000,000 for the first half of twenty twenty four as compared to the prior year period and first half adjusted EBITDA was $16,600,000 up 68% over the prior year period with a 21% margin of revenue. We are especially pleased with this substantial increase in profitability.

Speaker 2

In addition, for the first half of the year, we reported $15,000,000 of cash provided by operating activities, which demonstrates our ability to convert our reported adjusted EBITDA to operational cash flow. Based on our continued strong performance and expectation for a cadence of financial results in the second half of twenty 24 consistent with those achieved in the 1st 6 months of the year, we are reiterating our full year 2024 revenue guidance of between $158,000,000 to $162,000,000 and our adjusted EBITDA guidance of $28,000,000 to 32,000,000 dollars We continue to benefit from the strength of our diverse commercial portfolio, including our 6 FDA approved products with Kedum and Cytogarm being our 2 key products. Of significance, both products demonstrated significant year over year growth in the first half of the year as compared to the 1st months of 2023. During the Q1, we completed a successful launch in Israel for our first biosimilar product. We expect to launch our next biosimilar product by the end of this year and we have several other in the pipeline to be launched in the coming years.

Speaker 2

We anticipate that biosimilars will become an increasingly important aspect of our distribution business in Israel with peak potential annual sales between $30,000,000 to $34,000,000 Importantly, we continue to maintain a very strong balance sheet. We ended the Q2 with approximately $56,600,000 in cash and we have the financial strength to both accelerate the growth of our existing business as well as pursue compelling business development and M and A opportunities, a process we remain actively engaged in and which could expand our commercial portfolio. These opportunities are expected to support our continued double digit growth beyond 2024. As for our plasma collection centers, we continue to progress Kamada's plasma operation in the U. S.

Speaker 2

We are successfully expanding the specialty plasma collection capacity at our first center in Beaumont, Texas, focused on the collection of anti rabies and anti d plasma types and are planning to open our new center in Houston, Texas by end of next month, while advancing the construction of a 3rd site located in San Antonio, which is expected to be open in early 2025. As a reminder, each new collection center contributes annual revenues between $8,000,000 to $10,000,000 Looking further ahead at our growth pillars and catalyst, enrollment continues in our ongoing pivotal Phase 3 INNO2ATE clinical trial for inhaled AAT therapy. As a reminder, earlier this year we filed an IND amendment with the FDA that consisted of a revised statistical analysis plan and study protocol, which if approved may allow for the acceleration of the program. We continue to anticipate further FDA feedback before the end of this year. As we have said previously, in parallel to the clinical and regulatory progress achieved here, we also continue to have discussion related to the potential partnering of this promising investigational late stage product candidate, which targets a market of over $2,000,000,000 With that, I will now turn the call over to Jaime for a detailed discussion of our financial results for the Q2 and first of 2024.

Speaker 2

Jaime, please go ahead.

Speaker 3

Thank you, Amir. As Amir stated at the top of the call, our performance continues to be excellent through the midpoint of 2024. Total revenues for the quarter were approximately $42,500,000 a 13% increase compared to the Q2 of 2023. For the first half of the year, total revenues were $80,200,000 up 18% from the prior year period. The first half sales represented 50% of the midpoint of our annual guidance.

Speaker 3

The year over year growth was primarily driven by increased sales of both KedRAB and Cytogam due to increased demand for the 2 products in the U. S. Market. Approximately 70% of our revenues during the first half of twenty twenty four were generated by sales in the U. S.

Speaker 3

Market. Total gross profit for the Q2 of 2024 was $19,000,000 representing a 45 percent margin compared to the $14,400,000 or 39 percent margin in the prior year period. Total gross profit for the 1st 6 months of 2024 was $35,700,000 representing a 45% margin compared to $26,300,000 and margin of 39% for the 1st 6 months of 2023. Operating expenses for the 1st 6 months of 2024 totaled $26,000,000 an increase of 11% over the prior year period, which was in line with our expectations. The planned increase was in support of our expanded commercial activity as well as our ongoing Phase 3 INNO2VATE trial.

Speaker 3

Net income for the Q2 was $4,400,000 or $0.08 per diluted share as compared to net income of $1,800,000 or $0.04 per share recorded in the Q2 of 2023. For the first half of twenty twenty four, net income was $6,800,000 or $0.12 per share versus negligible income for the same period of 2023. Adjusted EBITDA was $9,100,000 in the Q2 of 2024 as compared to $6,000,000 in the Q2 of 2023. Adjusted EBITDA was $16,600,000 in the 1st 6 months of 2024 as compared to $9,900,000 in the 1st 6 months of 2023. The adjusted EBITDA for the first half of the year represents a 21 percent margin of revenues and 55 percent of our midpoint annual guidance.

Speaker 3

Finally, our financial position remains strong and provides us the strength and flexibility to accelerate the growth and profitability of our existing business and pursue compelling new business development opportunities, which collectively will continue to support double digit top and bottom line growth rates beyond 2024. That concludes our prepared remarks. We will now open the call to questions.

Speaker 4

Thank you. The first question comes from the line of Annabel Sami with Stifel. Please go ahead.

Speaker 5

Hi, everyone. Thanks for taking my questions and great quarter. So I had a few here. First on the inhaled ADT, I'm just curious, I know you're saying that you expect a response from FDA before the end of the year. But is there any dialogue during this period?

Speaker 5

And do you have any sense of where this might land? Is there any kind of pushback that you expect? And if they do in fact accept the new statistical plan, how could that impact the timing of the trial? How does it change the sizing? And maybe you can just help us understand what kind of impact that would have?

Speaker 5

So that's my first question. And then the second is if you could help us understand where enrollment is at this point. Has the enrollment become more competitive as we see a couple of other players in the market? And just trying to understand how you are in terms of timing there?

Speaker 2

Okay. Hi, Annabel. Thank you for your questions. So as described during the call, we did submit the revised statistical plan to the FDA during Q2. We expect feedback before the end of the year.

Speaker 2

We hadn't get we didn't receive a feedback yet. So we're just waiting now to get the initial feedback. And if needed, there's going to be additional discussion between us and the FDA in order to have a clear road map in regards to that previous discussion about potentially changing the p value for efficacy. Enrollment continues. We are around 40% to 45% into the study enrollment.

Speaker 2

In general, being a rare disease and being a placebo controlled study, recruitment is always a challenge in those type of studies, but we are making progress. We opened additional sites recently and we expect to complete enrollment to the study by end of next year. The impact of reducing potentially reducing number of patient, number of subjects will be reflected in a matter of a few months difference in terms of recruitment into the study.

Speaker 5

Okay, great. And if I can have a follow-up on CMV, when can we expect the next data releases and any movement on the guidelines yet with regards to its use for prophylaxis in high risk patients? Thanks.

Speaker 2

You mean Cytogam and CMV, that was the question?

Speaker 5

Yes. Sorry, Cytogam and CMV, yes.

Speaker 2

Yes. So we are working with multiple U. S. KOLs on different studies and different data collections initiatives based on either kind of historical data, which is already in their systems and is being pulled out in order to see the benefits of Cytogam versus the standard of care, primarily focused on the high risk patient population. Working on the consensus document is something that the KOLs are doing.

Speaker 2

It's a process which is being revised or being discussed every few months every few years, sorry. So we expect, we believe that this is going to be part of the next discussion of that forum. In general, I can say that the work that we've been doing since 2023, since last year, related to almost relaunching the product in the U. S. Market in terms of new clinical and medical data, having people on the ground, talking to the physicians and presenting the data is being fruitful.

Speaker 2

And we see the results in this last 6 months cytogram sales and cytogram performance and we are optimistic that this will continue moving into next year and the years to come.

Speaker 5

Okay, great. Thank you.

Speaker 2

Thank you.

Speaker 6

Hello, Amir and Jaime. This is Richard Pennington with Zacks. I'm calling on behalf of David Bautz. Just he's got a few questions for you. And I think the first one you just answered, he was curious about how the timelines for the program for the Phase 3 INNOVATE trial would be possibly revised.

Speaker 6

And I think you stated you gave an answer on that or where things stand. So I guess his next question is the what is it the AAT program. Are you focused on finding a global commercialization partner or possibly smaller regional partnerships? Could you talk about that a little bit? Number 1st question, I just got a few questions.

Speaker 2

Yes. So we are talking with potential partners. It's primarily of course focused on the U. S. And Europe.

Speaker 2

These are the 2 main markets where the business potentially, the patients are and the regulatory agencies that we're working with. It could be one partner for both territories. It could be 2 separate 2 different partners for the 2 territories. So this is our focus, U. S.

Speaker 2

And European. And we're working with the FDA and the EMEA as regulatory agencies in order to get the product approved.

Speaker 6

Got it. Okay. Thank you. Next question, business development opportunities. Are you guys open to in licensing earlier stage assets or is the focus going to simply be on commercial stage products?

Speaker 2

The focus is on commercial stage or near commercialization stage. So we'd like to support the growth of the company, the commercial growth of the company in addition to our strong organic growth. We'd like to support it by M and As, The investment that was made last year by the Fimi Fund was specifically targeting another M and As. I think we, the Board, happy with the transaction we've done late 2021 and the way that we've integrated the new products we acquired back then into Kamada establishing our U. S.

Speaker 2

Commercial team and we would like to build on that success and to leverage that success with additional commercial products.

Speaker 6

Got it. All right. Thank you, Amir. Final question. This is a positive cash flow starting to ramp up, which is fantastic.

Speaker 6

So keeping your retail ownership in mind and keeping our retail investor network in mind, any thought to potentially paying the dividend in the future?

Speaker 2

It's a question or a comment?

Speaker 6

It's a question.

Speaker 2

Yes. So can you repeat the question please?

Speaker 6

Yes. You guys are starting to get your positive cash flow is starting to ramp up. So now you guys have with your retail ownership and our retail investor network that we were that are interested in the story, is there any thought about potentially paying a dividend in the future? Have you thought about that? Have you thought about it?

Speaker 2

So we might pay dividend in the future.

Speaker 6

And we

Speaker 2

would like to utilize the money we are generating from the existing business to continue growing the business through M and As. In the future, dividend could also be an option. This is not something currently discussed or approved by the Board.

Speaker 6

Got it. Okay. That was it. Thank you very much, Amir.

Speaker 2

You're welcome.

Speaker 4

Thank you. Next question comes from the line of Troy Williams from LifeSci Advisors. Please go ahead.

Speaker 1

Thanks. Just wanted to see if you kind of could expand on what's current market share of KedRAB and your expectations there for the future? Thanks.

Speaker 2

So we believe that in the U. S. Market, KedRAB is anywhere between 40% to 50% market share. We continue growing the product. We continue taking market share.

Speaker 2

We believe that product has still room to grow above the 50% that we have been discussing in the past. We have the $180,000,000 guaranteed revenues for this coming 4 years. And this is like a minimum commitment by Kedrion and we believe that it can grow even further.

Speaker 4

Mr. Williams, are you done with the question?

Speaker 1

Yes, that was all. Thank you.

Speaker 4

Thank you. Ladies and gentlemen, we have reached the end of question and answer session. I would now like to turn the floor over to Amir London for closing comments.

Speaker 2

Thank you very much. So in closing, the successful execution of our growth strategy is reflected in the strong financial results we delivered in the second quarter and the first half of twenty twenty four. We are excited about the opportunities to advance the 4 main pillars of our growth strategy described during the presentation. We look forward to continuing to support clinicians and patients with the important life saving product that we develop, manufacture and commercialize. Thank all of our investors for their support and remain committed to creating long term shareholder value.

Speaker 2

We hope you all stay healthy and safe and thank you for joining us on today's call. Good day everyone.

Speaker 4

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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Key Takeaways

  • Revenue and profitability surge: Q2 total revenues rose 13% to $42.5 M and adjusted EBITDA jumped 51% to $9.1 M, prompting management to reiterate full-year 2024 guidance.
  • Commercial portfolio expansion: Six FDA-approved products sold in over 30 countries, with a successful biosimilar launch in Israel and another slated by year-end targeting $30–34 M peak annual sales.
  • Plasma center growth: Beaumont, TX capacity is being expanded and new centers in Houston (opening next month) and San Antonio (early 2025) are each forecast to add $8–10 M in annual revenues.
  • Phase 3 inhaled AAT trial progress: Enrollment is ~40–45% complete with FDA feedback on the revised statistical plan expected by year-end; full enrollment projected by end of 2025.
  • Strong balance sheet and M&A pipeline: $56.6 M in cash and $15 M H1 operating cash flow support ongoing pursuit of commercial-stage acquisitions to drive double-digit growth beyond 2024.
AI Generated. May Contain Errors.
Earnings Conference Call
Kamada Q2 2024
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