Company Update February 7, 2018 Kamada (KMDA)
Kamada Exceeds 2017 Revenue Guidance of $100M and Becomes Cash Flow Positive On February 7th,
Kamada (NasdaqGM: KMDA) announced financial results from the fourth quarter and full year of 2017, and provided a corporate update. The Company reported total revenue of $102.8 million in 2017 (annual record for Kamada), up 33% from $77.5 million in 2016. This result exceeded expectations, as Kamada previously provided full year revenue guidance of $100 million. In addition, Kamada generated $3.9 million in cash flow from operating activities in 2017. Revenues were driven by a strong fourth quarter, with $35.7 million in revenues, representing a 47% increase compared to the fourth quarter of 2016. This was attributed to the proprietary products segment, which includes lead asset Glassia. This is an alpha-1 antitrypsin (AAT) replacement therapy used to treat AAT deficiency, and Kamada currently has a supply and distribution agreement with Shire (NasdaqGS: SHPG) that guarantees minimum revenues of $177 million from 2018 through 2020. Going forward, we look for growth to be driven by 1) increasing revenues related to Glassia, and 2) revenues derived from KEDRAB, which was recently approved in the US for post-exposure rabies prophylaxis. Kamada reiterated an estimate for full year 2018 revenues of $116-$120 million.
■ KedRAB Launch May Support Meaningful Growth in 2018. On August 25th, Kamada (NasdaqGM: KMDA) announced the FDA approval of KedRAB for the post-exposure prophylactic treatment of rabies infection. This milestone was achieved in collaboration with Kedrion Biopharma (private), who holds exclusive commercialization rights for this product in the US. The collaboration will yield Kamada revenue through a product purchasing agreement lasting six years post-FDA approval, and Kendrion has the option to extend this agreement by two years. Furthermore, Kedrion is obligated to purchase a minimum amount of KEDRAB during this agreement. The companies have guided for a US launch in early 2018, and Kamada has guided for meaningful sales to ramp up throughout the year.
■ Kamada is Experienced in HRIG Production. KedRAB is a plasma-derived human rabies immune globulin (HRIG) product that the Company has been selling under the brand name KamRAB since 2006 in various ex-US territories. With more than 1.4 million vials sold to date, this reflects extensive experience in manufacturing KEDRAB. Furthermore, Kamada recently signed a 3-year agreement (2018 through 2020) with an international organization for KamRab, yielding $13 million. Expected Upcoming Milestones
■ Early 2018 – Expected US launch of KEDRAB for rabies prophylaxis.
■ Mid-2018 – Anticipate IND approval to conduct a pivotal Phase III trial for inhaled AAT in the US.
■ H2 2018 – Interim results of the Phase II trial with intravenous AAT for LT.
■ H2 2018 – Initiation of a pivotal Phase III trial for inhaled AAT in AAT deficiency in the US.
■ H2 2019 – Top-line results of the Phase II trial with intravenous AAT for LT.
■ H2 2019 – Top-line results from PoC Study with G1-AAT in the prevention of SRaGvHD. Analysts Patrick Dolezal, M.S. (AC) (212) 915-2579 firstname.lastname@example.org Market Data Price $4.75 Market Cap (M) $191 EV (M) $148 Shares Outstanding (M) 40.3 Fully Diluted Shares (M) 40.3 Avg Daily Vol 46,392 52-week Range: $3.75 – $8.61 Cash (M) $43.0 Net Cash/Share $1.07 Annualized Cash Burn (M) – Years of Cash Left NA Debt (M) $0.0 Short Interest (M) 0.10 Short Interest (% of Float) 0.5% Financials FY Dec 2015A 2016A 2017A EPS Q1 (0.15)A (0.06)A (0.11)A Q2 (0.06)A (0.04)A 0.02A Q3 (0.13)A (0.03)A (0.01)A Q4 0.03A (0.05)A 0.16A FY (0.31)A (0.18)A 0.18A For analyst certification and disclosures please see page 4 Page 1
■ Management Indicates Favorable Margins for KedRAB/KamRAB Product Line. On today’s earnings call, management indicated that KedRAB represents a highly profitable product for the Company without giving specific guidance. While this therapy has been available ex-US as KamRAB for many years, Kamada indicated that prices obtained in the US are 5 times greater. Furthermore, the Company noted that similar margins apply to their 3-year contract with an undisclosed international organization.
■ KedRAB to Compete with Existing HRIG Products for Market Share. There are currently two approved HRIG products in the US, Sanofi’s (NYSE: SNY) Imogam and Grifols (NasdaqGS: GRFS) HyperRAB. While sales data for these products are not available in the public domain, the CDC estimates the annual number of people in the US receiving post-exposure prophylaxis for rabies is between 40,000 and 50,000. The wholesale acquisition costs (WAC) for a dose of Imogam and HyperRAB for an average sized American (dosing is weight-based) is approximately $3,600 and $3,200, respectively. We note that the WAC dose not account for discounts, but assuming total concessions of 25%, the rabies prophylaxis market represents an approximate $100 million opportunity.
■ Key Pipeline Updates in 2017, and Plans Moving Forward. While we view growth of approved products as the most obvious nearterm revenue drivers, the Company also provided updates on their pipeline and guided on next steps. These include the following: ◦ Inhaled AAT for AAT Deficiency – Expected IND approval for a Phase III study in mid-2018, with trial initiation in the second half of the year. ◦ AAT for Acute Graft-Versus-Host Disease – Earlier this year, the Company entered into a collaboration with the Mount Sinai Acute GvHD International Consotrium (MAGIC) to conduct a proof-of-concept trial assessing safety and preliminary efficacy of G1-AAT as a preemptive therapy for patients at high risk for the development of steroid refractory aGvHD (discussed here). Trial initiation is anticipated in the first quarter of 2018, with top-line results in the second half of 2019. ◦ AAT for Lung Transplant Rejection – Kamada also recently reported results from a Phase II study with AAT for the prevention of lung transplant (LT) rejection. Safety data are acceptable at this point, as no adverse events (AEs) or serious adverse events (SAEs) have been found to be related to AAT therapy (discussed here). Another interim read-out with treatment through 12 months is anticipated in the second half of 2018, and top-line results in the second half of 2019. ◦ AAT for Type-1 Diabetes – Phase II results were announced (discussed here), and indicate that patients between the ages of 12-18 years old who received 120 mg/kg ATAT showed numeric improvements in biomarkers for beta-cell preservation and glycemic control, as well as lower average total daily insulin usage. Kamada is currently seeking a partner for the further development of this program.
■ Fourth Quarter Financial Results. Kamada reported revenues of $35.7 million in the fourth quarter of 2017, up 47% from $24.3 million for the same period of 2016. These revenues were composed of $28.9 million from the proprietary products segment and $6.7 million from the distributed products segment, as compared to approximately $17.7 million and $6.6 million in the fourth quarter of 2016, respectively. Gross profit for the fourth quarter of 2017 was $11.6 million, up 148% as compared to $4.7 million in the same period of 2016. The Company’s gross margin increased to 33% during this period, as compared to 19% in the same period of 2016, due to a significant increase in Glassia sales. The Company reported a net income of $6.3 million or $0.16 per diluted share in the fourth quarter of 2017, as compared to net loss of $1.8 million or $0.05 per diluted share in 2016.
■ Full Year Financial Results. Kamada reported full year revenue of $102.8 million in 2017, up 33% from $77.5 million in 2016. The proprietary products segment (which includes Glassia) accounted for $79.5 million of full year 2016 revenue, up 42% from $56 million in 2016. Gross profit for full year 2017 was up 50% to $32.1 million, as compared to $21.3 million in the same period of 2016. Gross margins were 31% for 2017, as compared to 28% a year prior. Research and development expenses were $11.9 million for full year 2017, a 26% decrease from $16.2 million in 2016. Kamada reported a net income of $6.9 million or $0.18 per diluted share for full year 2017, as compared to a net loss of $6.7 million or $0.18 per diluted share in 2016. As of December 31st, 2017, Kamada had cash of $43 million. February 7, 2018 Page 2