Kamada Ltd (KMDA) 2024 Q2 法說會逐字稿

Greetings and welcome to Kamada Limited's second quarter 2024 earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Troy Williams, LifeSci Advisors. Thank you, Mr. Williams, you may begin.

(technical difficulty) 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-K, which identifies specific factors that may cause actual results to 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, August 14, 2024. Kamada 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. Amir?

(technical difficulty) a review of our growth strategy which is successfully reflected in the strong financial results we delivered in the second quarter and first half of 2024 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 Chaime 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 has reported last quarter, continued through our second quarter, supporting and validating our growth strategy we are executing on.

Kamada's growth strategy is built upon four main pillars. One, organic growth of our existing commercial portfolio of six FDA-approved products marketed in over 30 countries. Secondly, M&A transactions, which expect 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 billion market.

Through the first six months of 2024, we have achieved significant progress advancing each of this growth catalyst, as I will shortly detail, but first, I'll provide a high-level summary of the financials. Total revenue was up 13% to $42.5 million for the second quarter as compared to the second quarter of 2023.

And adjusted EBITDA for the second quarter was $9.1 million, a 51% increase compared to the prior year quarter. Total revenues were up 18% to $80.2 million for the first half of 2024 as compared to the prior year period. And first half adjusted EBITDA was $16.6 million, up 68% over the prior year period with a 21% margin of revenue. We are especially pleased with this substantial increase in profitability.

In addition, for the first half of the year, we reported $15 million of cash provided by operating activities, which demonstrate our ability to convert our reported adjusted EBITDA to operational cash flow. Based on our continued strong performance and expectation for the cadence of financial result in the second half of 2024, consistent with those achieved in the first six months of the year, we are reiterating our full year 2024 revenue guidance of between $158 million to $162 million and our adjusted EBITDA guidance of $28 million to $32 million.

We continue to benefit from the strength of our diverse commercial portfolio, including our six FDA-approved products with KEDRAB and CYTOGAM being our two key product. Of significance, both products demonstrated significant year over year growth in the first half of the year as compared to the first six months of 2023.

During the first quarter, we completed a successful launch in Israel for 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.

We anticipate that biosimilars will become an increasingly important aspect of our distribution business in Israel with peak potential annual sales between $30 million to $34 million.

Importantly, we continued to maintain a very strong balance sheet. We ended the second quarter with approximately $56.6 million 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&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 common plasma operation in the US. 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 third site located in San Antonio, which is expected to be opened in early 2025.

As a reminder, each new collection center contributes annual revenues between $8 million to $10 million. Looking further ahead at our growth pillars and catalysts, enrollment continues in our ongoing pivotal Phase 3 InnovAATe 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 billion.

With that, I will now turn the call over to Chaime for a detailed discussion of our financial results for the second quarter and first half of 2024. Chaime, please go ahead.

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 $42.5 million, a 13% increase compared to the second quarter of 2023. For the first half of the year, total revenues were $80.2 million, up 18% from the prior year period. The first half sales represented 50% of the midpoint of our annual guidance.

The year over year growth was primarily driven by increased sales of both KEDRAB and CYTOGAM due to increased demand for the two products in the US market. Approximately 70% of our revenues during the first half of 2024 were generated by sales in the US market.

Total gross profit for the second quarter of 2024 was $19 million, representing a 45% margin compared to the $14.4 million or 39% margin in the prior year period. Total gross profit for the first six months of 2024 was $35.7 million, representing a 45% margin compared to $26.3 million and margin of 39% for the first six months of 2023.

Operating expenses for the first six months of 2024 totaled $26 million, 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 activities as well as our ongoing Phase 3 InnovAATe trial.

Net income for the second quarter was $4.4 million, or $0.08 per diluted share as compared to net income of $1.8 million, or $0.04 per share recorded in the second quarter of 2023. For the first half of 2024, net income was $6.8 million or $0.12 per share versus negligible income for the same period of 2023.

Adjusted EBITDA was $9.1 billion in the second quarter of 2024 as compared to $6 million in the second quarter of 2023. Adjusted EBITDA was $16.6 million in the first six months of 2024 as compared to $9.9 million in the first six months of 2023. The adjusted EBITDA for the first half of the year represents a 21% margin of revenues at 55% of our midpoint annual guidance.

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.

(Operator Instructions) Annabel Samimy, Stifel.

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

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 the second quarter. We expect feedback before the end of the year. We hadn't yet -- we didn't receive 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. 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.

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 the -- use for prophylaxis in high-risk patients?

You mean CYTOGAM in CMV? That was the question.

Yes. Sorry, CYTOGAM in CMV.

Yeah. So we are working with multiple US KOLs on different studies and different data collections initiatives based on the kind of historical data, which is always in their systems and is being pulled out in order to see the benefit 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, it's a process which is being revised or will be discussing in 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 US 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. And we see the results in this last six months, CYTOGAM sales and CYTOGAM performance, and we are optimistic that this will continue moving into next year and the years to come.

Okay, great. Thank you.

Thank you.

(technical difficulty)

Hello Amir and Chaime. This is Richard. Thank you for results. I'm calling on the behalf of David Bautz. Just -- he's got a few questions for you. I think the first one you just answered, he was curious about how the timelines for the program for the Phase 3 InnovAATe trial would be possibly revised. 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 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? First question, I just got a few questions.

Yeah. So we're talking with potential partners it's primarily, of course, focus on the US and Europe. These are the two main markets where the business potential is, the patients and the regulatory agencies that we are working with.

It could be one partner for both territories. It could be two separate -- two different partners for the two territories. So this is our focus, US and European. And we're working with the FDA and the EMA as regulatory agencies in order to get the product approved

Got it. Okay, thank you. Next question, a 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?

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 supported by M&A the investment that was made last year by the FIMI fund was specifically targeting another M&As.

I think we and the Board happy with the transaction we've done late in '21 and the way that we've integrated the new products we acquired back then into Kamada, establishing our US commercial team. And we'd like to build on that success and to leverage that success with additional commercial product.

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

It's a question or a comment?

It's a question.

Yeah. So can you repeat the question, please?

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

So we might pay dividend in the future. Currently, we are focused on M&A and BD transaction, like you asked me on the previous question and we would like to utilize the money we are generating from the existing business to continue growing the business through M&A. In the future dividend could also be an option, this is not something currently discussed or approved by the Board.

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

You're welcome.

Troy Williams, LifeSci Advisors.

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

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

Mr. Williams, are you done with your question?

Yes, that was all. Thank you.

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.

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 2024. We are excited about the opportunities to advance the four main pillars of our growth strategy described during the presentation.

We look forward to continuing to support clinicians and patients with important life-saving products that we develop, manufacture and commercialize. We thank all of our investors for their support and remain committed to creating long-term shareholder value. We hope you all stay healthy and safe. And thank you for joining us on today's call. Good day, everyone.

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