Q3 2020 Kamada Ltd Earnings Call
A lot of limited third quarter 2020 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded I.
I would now like to turn the conference over to your host Mr., Bob Yedid Lifesize advisers thinking you may begin.
Thank you. Good morning. This is Bob Yedid with Lifesize advisors. Thank you all for participating in todays call joining me from comedy or Amir, London, Chief Executive Officer, and Jaime <unk> Chief Financial Officer.
Earlier this morning comedy <unk> announced financial results for the three and nine months ended September Thirtyth 2020, if you've not received this press release. Please go to the investors page of the company's web site.
Before it begins I'd 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 Canada.
We encourage you to review the Companys filings with Securities and Exchange Commission, including without limitation. The company's forms 20-F, and 6K, which identifies specific factors that may cause actual results or events.
For 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 this live broadcast November 11 20.
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[noise] before it begins I'd 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 comedy I encourage you to review the Companys filings with the FCC, including without limitation. The company's forms 20-F, and 6K, which identifies specific factors that may cause actual results or events to differ materially from those just.
Right 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 this why broadcast November 11 2020 comedy.
<unk> undertakes no obligation to revise or update any statements to reflect events or circumstances. After the date This conference call.
Sorry for the delay here and getting started with that said, it's my pleasure to turn the call over to Amir London CEO Amir.
Thank you both.
Thanks also to our investors and analysts for your interest in Kamada in full participating in today's call hi.
I hope you, all keeping safe and Nancy in these challenging times.
Let me begin by highlighting what was solid overall financial results to fill the quota of 2020.
Although the global cooling of Ivas crisis continues to affect everyone's life I'm pleased to report that during the third quarter.
I've been to successfully maintain our business continuity and we delivered robust financial and operational results because we'd be de tour bus Hi me later in this call.
I'd like to discuss the important progress we continue to achieve involves the development of our plasma derived hemoglobin in hygiene products the potential therapy for COVID-19 disease.
Most recently, we were pleased to execute an agreement with either the ministry of health to supply what plasma direct I did do product for the treatment of COVID-19 patients in isn't too.
Well the knowledge this agreement the first of its kind globally.
Denise old they plan to be supplied you're doing at the beginning of Twentytwenty. One is sufficient to treat approximately 500 hospitalized patients.
They finish the supply is expected to generate approximately $3.4 million in revenue for common stock during the first quarter of 2021.
Based on what we've been discussing with these really we still have the treatments utilizing our product would be provided is both of them would be sent a clinical study led by the Ministry of health and we plan to use these studies dogs [laughter].
<unk> father development of the product.
We continue to ramp up our COVID-19, I did you have in effect in capacity and expect to be in a position to increase our supply capabilities doing 2020 one to meet potential additional demand from the ministry of health as well as from other potential international markets.
As a reminder, during the third quarter will be completed enrollment I mean, no positive initial interim results from our ongoing phase one two open label thinking Oh multi center clinical trial in Israel.
The trial is designed to assess the safety selmo cooking that peaks and pharmacodynamics, although plasma derived I did you product in hospital I don't fancy they did COVID-19 patients with pneumonia.
A total of 12 eligible patients were enrolled in the trial and we see that product. It's a single dose for Ron I'd UGI, we've even five to 10 days of initial symptoms.
Symptoms improvement was observed in 11 of the 12 patients within 24 to 48 hours of treatment well.
Well over 11 patients well succinctly charged from the hospital within a median four and a half day from treatment.
Topline results from this study are expected, but generally 2021.
I was hoping 19 I did you development program is conducted in collaboration with Kedrion Biopharma.
She wants to that agreement Cadreon responsibility among other things it's called the collection of COVID-19 contracts in plasma from U.S., we covered the patient care.
Scheduling is collecting the dogma two weeks I'm a business unit Kedplasma, It's 23, I forget who centers across the United States.
We recently received the Afghan sponsor for people to submit the pre R&D information package.
Together with catching onto a county, they do I think it was supposed to be targeted patient population for U.S. clinical program and will submit than I am deeply catching upon conclusion of such evaluation and successful completion of additional required activities.
We make comments he was gonna development product after acceptance, but that's yeah, although I M D application.
Well its affording the progress made in the recently initiated inpatient treatment with anti Cohen advised hemoglobin in phase three clinical trials sponsored by the National Institute of allergy and infectious disease, not yet, which will evaluate the plasma derived hemoglobin I did he medicine for treating cost it does it does.
We see the complication of COVID-19 disease.
We believe the progress made by NIAD may also contribute to our development.
[noise] in regard to the recent good news, we elected to the progress made by multiple companies for the development of a vaccine for corn as well.
Well, we as everyone else. So hopefully that's such a vaccine will be then about the new future for global news, we strongly believe that the place in the market what plasma Dubai COVID-19, I do you even when the vaccine would be available.
The long term need for the IGBT bookcases hospitalization would not be vaccinated. Okay second the vaccine would not provide the needed protection, it's rather difficult convention such as you know if a person and immune deficiency patients.
We at Chapada feel a COVID-19 I did you program is a clear demonstration although capacity to quickly respond to emerging endemic situation since.
Since the beginning of the spend down in February of this year, we leveraged <unk> FDA approved I do do platform technology as.
It's weather, though expertise and resources into.
The basketball knowledge, we were the first company globally to complete them in effect doing well because if the guests not plasma derived COVID-19, I D. G Defense company to initiate the clinical study in part of these favorable results and the fast company signed a supply agreement we have authorities.
We plan to leverage will be unique in that they didn't experience and the strategic business line for the company quickly responding to other potential seeming to future pandemic situations.
Moving on I would like to be to aid that previous announcement related to our expectations for Glassia next to you.
Glenn transitioned to lock them in affecting the kicked up trend is advancing as anticipated we expected we see the proximity $25 million in revenue was poor.
The supply of Glassia Takeda 2021.
We will make the necessary adjustments to a planned cost doing 2021 to align with own affecting plan and future needs.
As a reminder, based on agreements with the case, if all the initiation of the field locked him in effect to bite the Kid comment.
Comment that we received royalty payments, it's very clear what percent on make sales through August 2025, and.
And it could make up 6% I still think twentyfold.
With a minimum of $5 million annually for each of the units from 2022 to 20 difficulty.
Well build it wouldn't be saying, it's what you say will result in reduction of commodity revenue from the Kid, though.
Based on current lots is something to U.S. and focus to future growth. Some of the projects was sitting watching from Canada in the range of 10 million to $20 million every year for 2022 to 24.
As we move into Twentytwenty, one and in anticipation well the reduction in revenue due to the plan for this in a block in effect you took it up we are exploring strategic business development opportunities to utilize and expand Commodore called plasma derived therapeutics development.
Factoring and commercialization expertise.
We plan to fund these opportunities well strong cash position.
These strategic opportunities I wouldn't be disappointed to add to our expected organic commercial growth all the existing product portfolio, including catch up in the U.S.
Lifting propriety I G for the portfolio, that's when it's glassia he'd be tunison markets outside of the U.S.
I would just say with that product it needs and then.
We anticipate the future what the parent from Canada.
And the cost of an effect in going after the approval <unk> specialty I did you approach.
And to remind you that.
Want to sell these products he's looked when do you anticipate isn't affecting this product will add approximately $8 million to $10 million annual revenue stopping 2023.
In addition, you know Israeli distribution segment, we plan to launch six Biosimilar product license from us.
The first of which is expected to be launched in 2022 and the remaining products are expected to be launched in Israel do you 2023 to 2025.
The total expected peak revenue from the distribution of all six products, how estimated at $25 million to $35 million annually.
Turning on to catch up a human rabies immunoglobulin atrium.
Through the third quarter, we know the positive results of the U.S. bookmark. It think the graphic side of this product stuff.
The study, which was conducted in 30 pediatric patients ages two to 17 years old the present, the first and only clinker tried all the commentary and then to Ben H. we.
Conducted in choosing the U.S. today no.
No serious adverse events were observed in the study no incidence of revenue disease, that's really cool.
The result was submitted that's definitely view, an inclusion and the put pediatric data in the catch up full prescribing information.
And then one set it to launch the product in the U.S. in early 2018, we continue to believe that catch up has the potential to capture significant share I would estimate it anyway, I Didnt 50 million U.S.H. we welcome.
Let's now turn to the constitutes about innovate phase three clinical program or vote for part D. <unk> de <unk> for the treatment of Alpha one Antitrypsin deficiency 80.
As a reminder, innovate these randomized double blind placebo controlled pivotal phase three study designed to assess it because in 60 <unk> de <unk> in patients with ATP and moderate lung disease.
Although we recently you could commence to this study the COVID-19 pandemic has slowed down the rate of recruitment into calling pandemic situation, mainly across Europe effective ability to calling to open new studies such as well.
Well its going separate topic, the coaches to address the expected continuation of the pandemic and its effect on the study.
Lastly, I would like to provide a brief update on the status of or do you see a deep pipeline development programs.
We have concluded phase two proof of concept studies.
As a reminder, well I'd be a T for the treatment of acute graft versus host disease or Gvhd was conducted through a collaboration with the Mount Sinai acute Gvhd International consortium.
He's tried with assessing the safety and preliminary secrecy of Ivy a ti as pre emptive therapy for patients at high risk of development well stay would be factory acute gvhd.
The study included 30 patients and the primary endpoint with the incidence of still de facto gvhd by day 100 after transplantation.
The results of the study showed that treatment with Ivy 80 was well tolerated, but the patients and six cases of Cerro de stocked with gvhd well observed.
This rate of disease incidence was within the predetermined range defined by the investigate tool that if achieved will dwell and father clinical evaluation of the 80 treatment.
The study of the I.V.A.D. for the prevention of lung function to injection conducted in Israel evaluated the safety and secrecy, Oh, I see a D to prevent lung transplant rejection and assessed the impact on pulmonary function measured by EFI won compared to standard of care treatments and then.
So that 30 patients.
Yes, that's one of the study were previously published demonstrated a trend towards improvement in multiple clinical outcomes.
Why do we all in college with a result of Ivy 80 in both the Gvhd and the Leviathan sufficient studies we.
We do not intend to further advance. This program. This time, mainly as a result of the limited over potential benefit to Commodore specifically due to local muscle arrangements with the cadence and the plane to take over the last time in the factoring in 2021.
As indicated earlier, we are currently focused on more when you jump we always do.
Clothing strategic business development opportunities in our COVID-19, I did you'd be better off and program.
With that I'll now ask high me to review our financial results for the third quarter and for the first nine months of Twentytwenty Jaime Please.
Thank you Amir and good day everyone.
We're pleased with our ability.
Gross profit 19 pandemic related challenges.
And meet our expected results during the third quarter and first nine months of Twentytwenty.
In the third quarter total revenues were $35.3 million compared to $33.1 million for the third quarter of 2090, representing a 7% increase there.
These results were driven by 19% year over year increase in sales of our proprietary product, which is attributable to increase in sales of glassia and catch up to our partners Takeda in Cadreon.
For the first nine months of Twentytwenty total revenues were $101.7 million up 7% from the $95.1 million in the similar period of 2090.
Based on.
On meeting or expected performance during the first three quarters of the year and our positive outlook for the fourth quarter. We are reiterating our full year Twentytwenty total revenue guidance of $132 million $237 million.
From fulfill profitability standpoint, our total gross profit for the third quarter of Twentytwenty was 14.8 million and gross margins were 42% up.
Up from $12.9 million.
Total gross profit and 39% margins in the third quarter of 2019.
Proprietary gross margins in the third quarter of Twentytwenty were 46% down one percentage point from the third quarter of 29 team.
Distribution gross margins in the third quarter of Twentytwenty were positively impacted by favorable exchange rates, mainly between the U.S. dollars into <unk>.
For the first nine months of the year, our total gross profit was 37.
Point $4 million and gross margins were 37% this compared to 37.6 million of total gross profit and 40% margins in the first nine months of 290 as you recall, we guided the market regarding an expected annual decrease of three to five percentage points in.
Proprietary product segments gross gross margins, primarily attributable to a change in product sales mix and reduced plant utilization we.
We are reiterating this guidance.
Operating expenses, including research and development sales and marketing Ginny as well as other expenses totaled $7.1 million in the third quarter 2020 as compared to $7.2 million in the third quarter of 2090.
For the nine months period, these costs totaled $20.8 million as compared to 20.3 million in the same period of 2090.
As we reported last quarter the delay in enrollment in the Companys pivotal phase three innovate clinical study.
Which is simply subsequently resumed has resulted in lower than expected increase in research and development expenses.
Given this continued delay we are updating our annual research and development expense guide.
We currently expect that.
13% to 15% increase in research and development expenses for full year 2020 as compared to 2090.
Moving on net income was $6.8 million or 15 cents per share in the third quarter Twentytwenty as compared to net income of $5.8 million or 14 cents per share in the third quarter of 2090.
For the first nine months of Twentytwenty net income was $15.5 million or 35 cents per share as compared to net income of 16.9 million or 42 per cent per share for the first nine months of 2019.
We continue to maintain a strong balance sheet with a total of $99.7 million of cash balances as of September Thirtyth Twentytwenty. The decrease in cash balances as compared to June Thirtyth Twentytwenty is attributable to timing difference in collections from customers and payment to suppliers.
Service providers overall, working capital, including cash accounts receivable inventories.
And net of accounts payable balances continue to increase during the three months ending September Thirtyth 2020.
That concludes our prepared remarks, we will now open the call for questions.
Operator.
Thank you at this time well be conducting a question and answer session if.
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Our first question comes from the line of Raj Denhoy with Jefferies. Please proceed with your question.
Hi, good morning, I'm wondering.
Maybe I could ask a little bit about the the hyper product yeah UGI product you know you mentioned the initial sale to.
The Israeli government to $3.4 million sale for 500 doses and I guess I'm curious the potential for ongoing sales you know has there been any discussions about additional orders from Israel and how do you how do we really think about that on an ongoing basis.
Hi, Raj was moaning yeah. Good question. So ive with announced this is an initial order that was agreed with the Israeli Ministry, we're ramping up our capacity, we have a convalescent plasma supply.
From Israel and from the U.S.. So we are well equipped to continue supplying the product throughout the year.
Based on demand and an increase in the agreement.
Okay. That's helpful and then.
Just wanted to confirm some of the thoughts around 2021, you know you've given us some some kind of guide posts right. So you talked about $25 million and sales to Decatur.
Got you and be a the rabies product will still be running kind of in that 30 $31 million range. You have your other products. Your distributed products and then as you know this a payment from Israel. So is it something around $90 million kind of the way to think about where you'll settle out for next year.
[noise]. So in addition to what you mentioned, though this other revenue streams, you know, we sell glassia outside of the U.S. and and when people markets and that business is growing by us either identifying additional patients.
And applying for reimbursement and.
Submission energy situation and just some countries. So this is also.
Future growth engine for comment, though we are leveraging on two babies.
Success, and we are registering the product in additional markets.
We are selling in Canada, we are selling to the W. chill. So this is additional markets, which we expect to continue growing and we have additional I did you product, which is sold outside of the U.S. markets. So this is just to complete the full picture of old you know they defend say commercial avenues.
That that we have.
In regards to specific projection little bit too early right now to give the number we wouldn't give it you know as we complete the low budget planning a full and for 20 to 21 is so bear with US you know yes. They.
I think it's more time and like we've done in previous years, you know we would give the projection.
And if you trace back to the last few years, we've always been very accurate in our projection commitments.
Great. Thank you.
Thank you, ladies and gentlemen, once again, if you'd like to join the question.
Star one.
Well pause a moment to allow for any other questions.
Thank you ladies and gentlemen, this concludes our question and answer session I'll turn the floor back to Mr., London for any final comments.
Thank you. Thank you very much in summary, we're pleased with how our business performed in the first nine months of Twentytwenty.
We believe the fundamentals of the business is solid we have multiple organic commercial growth catalyst, who FD approved talking about technology platform is a strategic asset no ability to quickly respond to emerging pandemic situation, because we have a strong balance sheet, which can be capitalized to fund the business development opportunities. It's.
As such we remain highly confident in commodity future prospects thing.
Thank you all for joining us on today's call and we look forward to providing you with further updates on our progress in the coming months. We hope you all stay healthy and safe. Thank you.
Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.