Kamada Ltd. Price & Performance (KMDA)

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 5, 2025. Kamada undertakes no obligation to revise or update any statements to or circumstances after the date of this conference call. With that said, is my pleasure to turn the call over to Amir London, [indiscernible] [indiscernible] Thank you, Brian.

My thanks also to our investors and analysts for your interest in Kamada.

And for participating in today's call. I'm pleased to report that our performance was excellent over the course of 2020 leading to record top and bottom line financial results. Total revenue for 2024 were $161,000,000 coming in at the top end of our guidance range and representing a 13% increase over 2023 revenues. Adjusted EBITDA was a record $34,100,000 also at the top end of our expected range representing 42% year over year growth. These outstanding results were driven by strength across our entire portfolio, improvement the overall sales mix and increased sales of our two most profitable gross drivers Kadrub and Cytugan. [indiscernible] 2024, we generated $47,600,000 in cash from operations, resulting in a year end strong balance sheet of $78,400,000,000 Based on a very strong financial results and solid cash position, we were pleased to announce earlier today that our Board of Directors declared a special cash dividend of $0.2 per share to be paid out in April. Importantly, we are well positioned to continue our growth with ample liquidity to execute on the advancement of our main growth pillars. The declaration of a dividend of shareholders reinforces our confidence in the company's business prospects and demonstrates our commitment to generating shareholder value.

Based on our robust operational and financial performance, we entered 2025 from a position of significant strength and with a highly favorable outlook. Fiscal twenty twenty five, we expect to continue delivering double digit profitable growth driven by our diverse commercial portfolio marketed in over 30 countries, and we are forecasting 2025 annual revenues of $178,000,000 to $182,000,000 and $38,000,000 to $42,000,000 of adjusted EBITDA. The midpoint of our 2025 guidance represent increase of approximately 12% in revenues and approximately 17% in adjusted EBITDA, respectively, over our 2024 results. I will now proceed to briefly review our strategy and operational priorities for 2025 and beyond. I will then turn the call over to Jaime to discuss our 2024 financial results in greater details. On trial calls, I've out organic growth from our existing commercial portfolio, business development and M and A transactions to support and expedite our growth expansion of our plasma collection operation and our ongoing Phase three pivotal trial for inhaled AAT product that is targeting an over $2,000,000,000 market.

Throughout 2024, we made significant progress advancing each of these value driving catalysts. And in 2025, they remain the key focus of our growth strategy. I will begin with our commercial portfolio. Of six FDA approved products marketed in over 30 countries. Our two main growth catalysts in 2024 were KADOB and CytoGram, resulting from increased demand in The U. S. Markets.

We also experienced a meaningful increase in glassier sales in multiple international markets. Where we partner with strong local distributors. Specializing in rare respiratory diseases. During the year, we also continue to successfully build our presence and future prospects in the MENA region. Participating and winning local tenders. In January 2025, we announced the world of a three year contract with international organization for the supply of CAMRAB and VAVIZZIG in Latin America. We are pleased with the significant three year supply agreement which we believe validates the global strength of our leading specialty in the global portfolio. We expect total revenue for both products throughout the three years to be to be approximately $25,000,000 Winning this tender is indicative of such of our broad product portfolio in the international markets beyond The U. S. And Canada, and we intend to continue to pursue additional commercial contracts in key strategic territories. Moreover, in 2024, we successfully launched our first biosimilar product in Israel expect to launch two additional biosimilars in 2025. We have several other biosimilar products in the pipeline to be launched in the coming years. We expect that this portfolio will become an increasingly important portion of our distribution business with annual sales of between $15,000,000 to $20,000,000 within the next five years.

During 2024, we continue to demonstrate our ability to convert adjusted EBITDA into operational cash. To this end, in 2025, expect to secure compelling new business development in licensing collaboration and or M and A transactions. Such agreements generate operational and or commercial synergies with our current commercial portfolio. Turning now to our plasma collection centers. In 2024, we opened our second plasma collection center in Houston, Texas. The new center in Houston is expected to be one of the largest sites for specialty plasma collection in The U. S. And will also collect normal source plasma to be sold to third parties. In addition to the new Houston center, construction of our third plasma collection site in San Antonio, Texas is now complete and the site will be open this month. This 12,000 square foot San Antonio center support over 50 donor beds, an estimated total collection capacity of approximately 50,000 liters annually. As a reminder, each of our two new plasma collection centers is expected to contribute annual revenues of between $8,000,000 to $10,000,000 in sales of normal sourced plasma once at its full capacity. Turning now to in health AAT therapy. As we recently announced, the U. S. FDA confirmed this agreement with our previously proposed relaxed two sided Type one error rate control modified from 5% to 10%.

Which maintains value of 0.1. Based on the accepted change in the P value, well as additional revision to the statistical analysis plan, we are reducing the study sample size from two twenty patients approximately 180 patients. While maintaining the statistical power of the trial. We've also announced that we tried to conduct a futility analysis by the end of twenty twenty five. With that, I'll now turn the call over to Jaime a detailed discussion of our financial results for the fourth quarter and the full year 2024. Jaime, please go ahead. Thank you, Amir. As Amir stated, the top of the call, our results were excellent for both the fourth quarter and full year of 2024. Other revenues for full year 2024 were a record $161,000,000 up 13% compared to the 01/2020 The reported revenues met our 2024 annual guidance. The increase in revenues was primarily attributable for increased sales of Kedrep. Which contributed $50,000,000 of total sales during 2024. As a reminder, in late twenty twenty three, we announced an eight year extension of the distribution agreement with Kedrion which included their commitment to acquire minimum quantities of Kedrab totaling $180,000,000 for the first four years of the amended terms, 2024 through 2027, Adriana's minimum commitment for the remaining three years of 2025 through 2027 now stands at $135,000,000 The increase in annual revenue was also attributable to three sales of Cytogen, which were $23,000,000,000 up 31% compared to the 2023 sales.

Were 39,000,000 up 7% Over the corresponding quarter in 2023.

Gross profit and gross margins for 2024 were $70,000,000 and 43% compared to $55,500,000 and 39%. In 2023, the increase in profitability was attributable to increase in sales as well as an improvement in our overall product sales mix.

Gross profit and gross margins for the fourth quarter of twenty twenty four were $17,000,000 and 44% compared to $14,400,000 and 40% in the fourth quarter of twenty twenty three. Representing a four basis point Operating expenses including research and development, sales and marketing, and general and administrative expenses totaled $49,900,000 in 2024 as compared to 45.4 in 2023. The increase in operating expenses were in line with our expectations and primarily attributable an increase in sales and marketing costs associated with marketing activities in The U. S. As well as increased R and D costs primarily due to advancing the inhaled AT clinical trial.

Net income was $14,500,000 or $25 per diluted share for the full year 2024 as compared to $8,300,000 or $0.15 per diluted share for full year 2023.

Representing a 75% increase year over year. The reduction in net income in the fourth quarter of twenty twenty four as compared to 2023 was attributable to increased finance expenses associated with revaluations contingent consideration which represents our higher future sales forecast resulting in increased future earn out payments on account of the 2021 product acquisition.

Adjusted EBITDA was for 2024 was an all time record 34,100,000.0 up 42% from the 2023 adjusted EBITDA of $24,100,000 2024 reported adjusted EBITDA meets our 2024 annual financial guidance. Cash provided by operating activities was 10,400,000.0 For the fourth quarter of twenty twenty four, demonstrating the company's ability to convert its earning into significant positive cash flow. As Amir previously indicated, retained strong financial position as demonstrated by our year end solid balance sheet.

Which will support our future continued growth and ability to execute on our strategic four growth pillars. That concludes our prepared remarks. We'll now open the call for questions. Thank you. [indiscernible] Our first question comes from Annabel Samimy with Stifel. Please proceed with your question. Hi, everyone. Thanks for taking my questions and great quarter. I wanted to ask you about the futility analysis you're going to be conducting for for the AAT inhaled AAT program. Can you just talk about what be looked at? Will the information be blinded to you? Is it independent More of a statistical analysis? Are they looking at the actual endpoints? Are you going to be reporting anything out? And what are the potential outcomes we can see there? And then separately, if you could talk about some of the growth drivers for KEDRAB and Cytogen. It looks like KEDRAB is more about international expansion. Do you have any for Cytogam, are you planning any other clinical presentations or clinical studies to present at various medical conferences?

Thanks, Annabel for the questions. I'll start with the futility analysis question. So yes, we will be blinded So the data will be reviewed by an external DSMB type of group that will be actually be unblinded but while the company sponsor remains blinded, we decided to run this analysis based on the changes that we have implemented in the statistical plan reduction of the sample size We're basically reaching a point second part of this year that we are going to have sufficient interim data to perform a meaningful statistical analysis We will be looking at actual not us, basically the external group will be analyzing and looking at efficacy data conditional efficacy data in order basically to give us feedback related to the study success ratio, F and A, but that's of course going to be as in every futility analysis, that's going to be basically a yes no type of question The company will not be testing the actual data.

In terms of the efficacy data, are they looking primarily at the primary endpoints that laid out or additional? Correct. Correct. Okay. [indiscernible] You see the analysis allows you basically to post one question to the DSMB and they're looking at this data and that's giving you feedback based on this, which is kind of yes no type of question. Answer, so here's no type of answer.

Okay. And what would be the sorry, just on the futility analysis, do you either expect to continue as is expand Do you expect to either continue expand or stop the program altogether? Or those are your three options there?

Correct.

Okay. [indiscernible] make modification based mainly on the sample size or need to stop the study because of the kind of futility data.

Okay, great.

Related to your QUEST second question was related to 2024 prospects. That's all the question. Yes.

Well, the specific growth drivers for KedRAB inside again. So KedRAB KedRAB, is that just continuation of expanding contracts globally? Correct. So when we talk about KedRAB, we mean only U. S. So when we invest $50,000,000 sales of KedRAB, is our agreement with Kedrion. We refer to the non U. S. Product as CAMROB.

Just as a matter of classification. So as you remember, we had an agreement for CAD180 million of sales for the four years minimum for the four years twenty twenty 'twenty five, 'twenty six, 'twenty seven. So the first year, so average of $45,000,000 But the first year 2024, Adrian already purchased from us $50,000,000 of the product. So above the minimum quantity. Then it means that for the remaining of those next three years, '25, '26, '27, The minimum and I emphasize minimum commitment is $135,000,000 ex U. S, we're continuing to grow the business. We announced in January winning with international tender for Latin America. We are the supplier in Canada, Australia, some European countries, Israel and kind of international markets. So product is growing not just in The U. S. Markets. Regarding Cytogram, yes, we are advancing clinical work with additional U. S.-based KOLs in leading from we will announce those presentations during the year once they've basically been accepted to the different conferences. And industry meetings. And we've seen a nice increase between twenty three and twenty four in terms of product sales in The U. S. Okay. And if I could just ask one more follow-up.

I have to ask this question. We don't often see special dividends from Development, well, you're profitable obviously, but still development stage companies. So what was the deciding factor there to offer a special [indiscernible] Yes.

First of all, we believe that Canada is in a mature phase that can basically be [indiscernible] and the company that pays dividend. The dividend that was decided by the Board is driven by the very strong financial result of 2024. Our strong outlook for 2025 We believe we have sufficient funds, very solid cash position. To be able to pay the dividend while we continue with our BD, M and A activities according to the plan. Our goal is to execute such M and A and DD transactions all within 2025. And we have sufficient resources while we're continuing to generate more and more cash from our operation moving forward. So we can do both.

Would that be an indication that you know what kind of BD you're going to do in the We are screening multiple opportunities and we are hopeful that things will mature already in 2025. These are going to be a commercial stage assets that will help us basically to accelerate our growth.

Okay.

Sure. Our next question comes from Anthony Petrone with Mizuho Group.

Please proceed with your question. Thanks and hope you're doing well, Amir and Amy.

And great to see obviously the excellent results four.

I need to start with plasma [indiscernible] You have the two operating centers and the third is on the way to being open here shortly. So So maybe just a little bit on the third and then the mix what will be collected there, how much will be specialty plasma versus standard plasma that you would go on to sell to third parties And then I'll have a couple of follow ups.

Okay. Yes. So the third center San Antonio, going to be opened this month.

Based on the pace that we're seeing in Yellowstone, we believe it's around twenty four to thirty months that it takes basically to ramp up a sense at least based on the pace that we've seen in Houston since we opened around six months ago. So we are on track near term and we believe that we can also execute the same level of performance in San Antonio. As you mentioned, both centers will be collecting specialty plasma for our needs and normal source plasma that will be sold out external parties. Approximately 20% to 25% for each center will be specialty. Maybe a little bit more and the rest will be normal source plasma. This correlates with the $8,000,000 to $10,000,000 Revenue per center from selling normal cells plasma to external power. So if you do the math and I know you're familiar with the price perito plasma, you basically can see how we came up with these ratios.

No, fair enough. And I'm just wondering, as you're building toward critical mass here, How the plasma collections that operation, but just factoring it against third party sales as well as your own work in process inventory needs, how that plays out from an adjusted EBITDA margin standpoint? So a little bit on the margin profile today, of plasma collection and let's say a year or two years from now where that March Okay. So on specialty plasma, this is going to be an intra company type of transaction. You are not going to [indiscernible] this is part of our top line. And it will have an effect on our cost of goods is cheaper than plasma that we currently buy from external suppliers. So this will be part of our overall efficiencies and kind of growing the company and I think you've seen it also in our country port over the last few quarters and moving into 2025. Our ability to grow the company in a very effective way in benefiting from the economy of scales. In terms of selling plasma to the external parties, So we're familiar, I think, with the the potential or what's expected margins selling plasma to external will result in anywhere between 10% to 20%, 25% gross margin.

That's helpful. And then just pivoting to the BD and L side of the story, obviously a good collection of hyperimmune Flobigen products you mentioned again, obviously, you have a special dividend going out, but the pipeline for follow on deals whether in licensing or potentially M and A is still robust. I'm just wondering when we think about just sort of the landscape out there, it feels like the the play here is to continue to build in hyperimmune globulin products specifically And maybe just give us an idea of that broader landscape, Amir, and maybe which areas specifically you're taking a look at? Obviously, you have exposure to rabies, cytomegalovirus disease, for kidney transplant, the two biggest products. Just wondering as you look at that hyperimmune space, what other white areas are there that you can capitalize on?

In terms of B2B and M and A opportunities, as you said, we're looking for assets which are in synergy with our current commercial footprint in The U. S. Market, We are covering all key transplant centers We have very strong presence in the specialty plasma space We're working with infectious disease specialists and we have of course experience in the alpha-one inhaled respiratory specialties. These are the areas which are kind of the first areas that we have been looking at and we are screening opportunities. In general, any plasma derived asset, of course, is of great interest for us, like we've done in Cytogram, the ability to also transfer the production to our facility and create significant synergies. But looking a little bit broader in order to be able to actually really execute type of transactions already this year, as I mentioned. Looking also for distribution businesses. That will be synergistic to what we're currently doing reminding you that we have strong presence in the MENA region in Israel The U. S, Canada, all those areas are relevant areas for us in terms of where we are searching for a BD opportunities.

Thank you very Thank you very much.

Our next question comes from James Sidoti with Sidoti and Co. Please proceed with your question.

Hi, good afternoon. Thanks for taking the questions. Couple of questions on gross margin for your proprietary product. It was up about I think about 700 basis points. Is that due to the mix of KedRAB in the current quarter? [indiscernible] specialty two profitable products have the biggest impact on our gross margins are KedRAB and Cytochrome in The U. S. Market. So favorable sales mix improved the increased sales in The U. S. Market Always helps us in terms of our gross margins. So that's with yes to your question. And What will be the impact when you start using more of your more of the plasma that you get from your own in source plasma centers as opposed to buying it What do you think the impact on that proprietary gross margin could be?

It could be it would have an impact but I just want to also caution that it it will take time. It's a process that takes time to actually start replacing the plasma that we currently buy with our own collected plasma. So the overall mix, if I may, of Internal plasma collection or self plasma collection increased sales in The U. S. Market, economy of scales, and just making more in our plant all those different aspects play together in creating the the efficiency that you're saying? It's difficult. That's what you know in [indiscernible] public setting, point a specific barometer. We have a very efficient operation The fact that we started last year to manufacture [indiscernible] is growing significantly. In ex U. S. Market and we make more glass here [indiscernible] All of this plays basically to weather.

Okay. All right. Thank you.

Are no further questions at this time. I would now like to turn the floor back over to Amir London for closing comments.

Thank you. So in closing, the successful execution of our profitable growth strategy is where we selected in our records top and bottom line 2024 financial results. As well as with the declaration of special cash dividend We're excited about our opportunities to advance our four strategic growth pillars. We look forward to continuing to support clinicians and patients with important life saving products that we develop, manufacture and commercialize worldwide. We thank you, our investors, for their support and remain committed to creating long term shareholder value. We hope you all stay healthy and safe. Thank you for joining us today.

This concludes today's teleconference. You may disconnect your lines at this