Q4 2020 Kamada Ltd Earnings Call
Greetings and welcome to the comment on limited fourth quarter and fiscal year 2020 earnings call. At this time all lines 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'd now like to turn the conference over to your host Mr. Bob yet it with my style advisors. Thank you you may begin.
Thank you Melissa and welcome to everyone. Joining the call. This is Bob <unk> from <unk> advisors.
And for participating on today's call and joining me are from <unk> are Amir, London, Chief Executive Officer, and Jaime <unk> Chief Financial Officer.
Early this morning I'm on.
And now financial results for the three and 12 months.
And at December 31, and 2020.
And if you have not received the press release. Please go to the investors page of the company's website.
Before we begin I'd like to caution that comments made during this conference call by management will contain forward looking statements net.
All risks and uncertainties regarding the operations and future results of Canada.
I encourage you to review the company's filings with the Securities and Exchange Commission and quote.
And without limitation the comp.
These forms 20-F, and 6K, which identify specific factors and freight costs.
Cause actual results or events to differ materially from those described and the forward looking statements.
Furthermore, the content on this conference call contains time sensitive information and is accurate only as on the day to dislike broadcast February 10 2021 from it.
<unk> undertakes no obligation to revise or update any statements to reflect events or circumstances. After the date of this conference call.
That said, it's my pleasure to turn the call over to Amir London CEO Amir.
Thank you book Okay.
Thanks also to our investors and analysts for your interest and your comment on and participating in today's call.
Let me begin by highlighting our strong overall financial results for full year 'twenty and 'twenty.
Despite the significant headwinds caused by the global Coronavirus crisis, we overcame meaningful operational challenges and met our key financial targets.
For full year, 'twenty and 'twenty, we recorded total revenues.
And the three points to meet and Danone, which is in line with our guidance on how did the 32 million and $237 million.
And the five per cent increase over the hotter than 'twenty seven points to meet and build out and total revenue generated in 2019.
And are you, which was greatly impacted by COVID-19, we are pleased with these results and believe they indicate the fundamental strength of low business, which as I will discuss shortly and we drive comment on growth prospects.
Comment on co focus is on driving profitable growth from our current camillus and activities and manufacturing expertise.
And we intend to expand our propriety plasma derived product business, but maximizing the market potential of our existing proprietary product portfolio and broadening our distributed product portfolio enhancing or constant affecting capabilities and evolving into a vertically integrated plasma derived company.
In addition, we continue to develop a pipeline per.
Mainly focusing on the pivotal phase III clinical trial and held a T for the treatment of Alpha one antitrypsin deficiency and.
And on exploring new strategic business development opportunities funded by our strong cash position with nearly 110 million don't out as of December 31st 2020.
Mobile we plan to leverage our FDA approved I did you place on technology and the strategic business line with the ability to respond to future potential pandemic situations.
Let me now elaborate on three of our recent important achievements executing on these key initiatives.
I will start with our recently announced acquisition.
Liberty had the blood and plasma research O B N P O in Beaumont, Texas.
And the establishment, although one subsidiary comment the plasma which represents our entry into the U S plasma collection market.
And drive us towards our strategic goal of becoming a fully integrated specialty plasma company.
This facility specializes and collection of a hyper immune plasma usually comment that come and affect your and TD products, which are distributed in international markets.
By investing in B N P O facility and leveraging its FDA license to open additional centers and the U S. We plan to significantly expand on hyper immune plasma collection capacity.
This planned expansion is expected to improve <unk> competitive position and various markets.
We are extremely excited about the future opportunities. This acquisition will provide flow of business.
Secondly in regards to our COVID-19, ITG product. We believe this program clearly demonstrates our ability to quickly respond to emerging pandemic situation.
We recently initiated the supply of this investigational product to the Israeli moh for the treatment of COVID-19 patients in Israel.
And as a reminder, the initial order is sufficient to treat approximately 500 hospitalized patients and is expected to generate approximately $3 5 million rollout and revenue for Canada.
Importantly, these are the moh and initiated a multicenter clinical study.
Each of our product is being administrated.
In parallel and we are ramping up on COVID-19, IGT and affecting production utilizing plasma collected and the U S.
Partner Quechua and Biopharma.
And that's been affecting increase will support potential additional demand from the Israeli moh and possibly other international markets.
We've previously reported the completion of enrollment and positive interim results from our phase one and two open label single arm Multicenter clinical trials.
And currently assembling the final study report and we plan and we plan to publish it before the end of the common quarter.
Together with Cadbury on our partner for the development program, we continue to evaluate the best suitable plan from the U S and all the EU COVID-19, IGT clinical program and with the.
And so a development upon the conclusion of this review.
While we are of course pleased with the rollout of COVID-19 vaccines has commenced and some countries. We remain confident that there will be a continued market demand for plasma derived agg as a treatment for COVID-19 infected patients.
Thirdly, we continue to expand though Israel based distribution segment, but augmenting our existing distributed product portfolio.
Typically in the emerging area of Biosimilars.
As recently reported we entered into agreements with two international pharmaceutical companies to commercialize three biosimilar product candidates in Israel.
Subject to approval by EMA and also by the Israeli Moh. The three products are expected to be launched and Israel between 'twenty and 'twenty, two and 'twenty 'twenty four three.
<unk> products are added to the six other biosimilar products previously licensed from ultra thick and further position comment that as the leader in the emerging biosimilar market in Israel.
We estimate the potential collective Mexico and sell generated by the distribution of these nine biosimilar product achievable following regulatory approval and within several years to be in the range of $25 million to $35 million annually.
Before I summarize let me now turn to the current status, although innovate phase III clinical program for our proprietary and has a T for the treatment of Alpha one antitrypsin deficiency and.
A reminder, innovate is a randomized double blind placebo controlled pivotal phase III trial.
And two it says the same thing.
Ft of inhaled ATT and patients with Alpha one deficiency and moderate lung disease.
While we continue to recruit patients into the study the COVID-19 pandemic has limited our ability to open new study sites and it continues to slow down the rate of recruitment, which has been true for many other clinical drugs.
From a strategic standpoint, we continue to evaluate partnering opportunities for the development and commercialization of this important strategic pipeline products.
In addition to the three significant strategic initiatives described above and our new plasma collection capabilities. The rapid development and supply agreement of the COVID-19, Agg and the expansion of our Biosimilar portfolio. We're on.
Intensely focus on driving higher organic growth by one continuing to increase catch up market share and the U S. But we believe we have significant room to grow to expanding the sales of glass Yeah, you know what.
Did you portfolio in ex U S markets, including the registration and launch of the product the new territories three.
Three generating royalties from glacier and projected to be and the range of $10 million to $20 million per year commencing in 2022 and.
Full leveraging on plasma derived and affecting capabilities for the provision of contract manufacturing services, such as those of the FDA approved and commercialized specialty IGT product, which is expected to add between eight to 10 million too low.
And in annual revenue, starting in 'twenty and 'twenty three.
We continue to firmly believed and the strength of our business, which consist of multiple lines of activity, which can drive significant long term growth opportunities for cameco.
With that and now as timing to review our financial results for the fourth quarter and full year 2020 Jaime Please.
Thank you Amir and good day everyone.
We believe the core drivers of our business helped deliver solid results in 2020, and the face of the global COVID-19 pandemic in the fourth quarter total revenues were $31 $5 million compared to $32.1 billion in the fourth quarter of 2019.
For the full year ended December 31, 2020, total revenues were $133 2 million up 5% from day $127 2 million for the year ended December 31, 2019 as Amir noted. This is in line with our guidance of 132 to 100 and.
And $37 million.
Which we view as a significant accomplishment during the year with many COVID-19 related operational challenges.
From a proposal from a profitability standpoint, our gross profit for the fourth quarter of 2020 was $10 2 million and gross margins were 33%.
Down from $12 1 billion of total gross profit or 38% margin in the fourth quarter of 2019.
For the year ended December 31st 2020, our gross profit was 47 6 million and gross margins were 36% compares to $49 7 million of gross profit and 39% margin in the year ended December 31st 2019.
These results were in line with the guidance, we provided at the beginning of the year of and annual decrease of three to five percentage points and proprietary product segment gross margin primarily attributable to change in product sales mix and reduced plant utilization.
Our distribution product and segment margins were also negatively impacted in 'twenty and 'twenty by a shift in product mix from 2019.
Operating expenses, including research and development and sales and marketing G&A as well as other expenses totaled $7 $5 million and the fourth quarter of 2020 as compared to $6 6 million and the fourth quarter of 2019.
For the full year these costs totaled $28 3 million as compared to $27 million for the full year of 2019.
As the case and the second and third quarters enrollment during the fourth quarter and the company.
Pivotal phase III, innovate clinical trial, which resumed and the third quarter, but at a slow pace was impacted by the ongoing COVID-19 pandemic. This again.
Resulted in a lower than expense.
And expected increase.
And research and development expenses and the fourth quarter.
For full year, 'twenty, and 'twenty research and devote and expenses increased 4% year over year versus our guidance of 13 to 15 per cent.
Moving on.
Net income was one 6 million or four cents per share on a fully diluted basis, and the fourth quarter of 2020 and stuff.
Net income was $5 4 million on 13 cents per share in the fourth quarter 2019 net.
Net income was $17 1 million or 38 per share 38 cents per share in the year ended December 31, 2020, as compared to net income of 2020, $22 3 million or <unk> 55 per share and 2019.
Some of that continues to operate from a position of financial strength.
And is generating positive cash flow from opera and you can facilities with a total of $109 3 million and cash balances as of December 31, 2020, as compared to $73 9 million at December 31 2019.
As previously reported the transition of glossy manufacturing to Takeda and to continue the uncertainty and the operating environment created by the ongoing.
The global COVID-19, pandemic are expected to lead to results and reduced revenues and profitability in 2021.
That concludes our prepared remarks, we will now open the call for questions.
Uh huh.
Thank you and if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is and the question queue. You May press star two and if you'd like to remove your question from me Kim from <unk>.
Participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
Our first question comes from the line of rushed and why with Jefferies. Please proceed with your question.
Hi, This is Anthony for Raj and I have the.
A couple of questions on Biosimilars, and then I'll move over to plasma.
Plasma and Covid.
On the Biosimilar products from here can you maybe describe to us a little bit of detail around the approval pathway and ease of Biosimilars biosimilars have several.
Hurdles to clear PK studies P. D studies and some cases they are a comparator studies.
Proof similarity and so I'm just wondering what the specific approval pathway for these products look like and and if any of them have an abbreviated pathway that we see it should expect.
And then when we think about the 'twenty and 'twenty two to 'twenty 'twenty four window.
As it relates to timing.
And how should we expect the three products the sort of evolved in terms of catalysts and approval over those three years.
Two years.
Hi, Anthony and good morning, Thank you for the questions and so basically I would like to refer to that on all nine products.
Fix it was signed with a little tick and then the three additional products from the other two agreements signed.
A few weeks ago. So in total and we are moving forward basically with this portfolio and we are relying on approvals from a primarily EMA the European authorities.
So the company that on the product, we'll get them approved by EMA and then the file basically it goes to the Israeli Ministry of health, which needs to approve it and Israeli minister of health and typically usually approved based on email or U S. Approvals. So we do not foresee.
Significant hurdles and in <unk>.
Those approvals once it's approved.
By the European authorities, and the first product and its already been and.
Submit it to the Moh here in Israel and.
And we expect approval and launch and next year now the three products the three new products.
I expect it to be approved between 'twenty and 'twenty two in 'twenty and 'twenty four.
And believe it's going to be on one product per year, and then and we expect to be either the first or the second biosimilar product and in the Israeli market, taking significant market share when you add up all night and products. We expect the sales from this portfolio to be between.
And $25 million to $35 million I want to remind everyone that this is in addition to our existing distribution business and Israel.
And is currently around $30 million per year.
That's a significant growth engine for Canada book.
The ability of this product and it's going to be a high yield and the current profitability, which is currently still primarily tenders product, which are the plasma derived so we expect that the overall segment. Our distributions segment is going to grow significantly in terms of revenue, but also in terms on.
Book stability over the next few years.
That's helpful and again, the 25 to 30 million base I think he cut off a bit as is is the underlying and distributed.
25, and 35 minutes.
Yeah. So currently if you follow our report for example for this from 2020, you'll see approximately $30 million.
And the distribution segment and this is before without.
The new Biosimilar portfolio.
Thank you and then the follow ups I'll pivot over to plasma collection.
And and just wondering you know and.
And it seems to be indications that.
Following the boom on center and there'll be an effort to add plasma collection.
And and so maybe just a little bit more details there IME on.
Will it exclusively continue to be.
Hi, tighter collection will the focus be exclusively on high Titer Agg collection from.
For specialty products. So will the company eventually look to expand into a broader general plasma collection and.
And when we think about the pathway to adding <unk>.
Collection capacity will it be exclusively through acquisition or will the company.
At some point again to build its on plasma centers.
Thank you.
Good question so.
The beam on facility basically our plan is to invest in and maximizing the capacity.
And collection capacity and the beam on facility and to leverage its license to open additional centers, So Canada plans to open additional centers.
And turning to your the last part of your question in terms of opening centers or through acquisitions. So basically this acquisition gives us the license and the opportunity now to initiate the expansion by opening additional centers.
The immediate focus is on IP immune plasma.
Who will give us the ability to and.
Strategically.
Build a company as a vertically integrated company basically source, our own plasma for hours and high pay.
And products.
It improved our competitive profile.
And by owning the plasma and not purchasing all of it from external suppliers.
We are not ruling out the option that this will eventually evolve into also opening a regular source plasma.
Collection, but the immediate come and focus is on the IP of immune from our spin.
Specific specialty plasma needs.
That's helpful. A couple of follow ups Sheryl Pressler opinion.
And what is the annual collection capacity and Piedmont today and.
And where do you expect that to trend to in terms of liters per year.
And you know and when you when you think about building out new facilities.
Yeah, how many how large do you envision the footprint can become over time.
So we did not disclose the specific volumes of there'll be one facility and but as I said you know we plan to maximize its capacity on.
And like and.
You know regular plasma collection centers.
There are plenty of those and the U S and there is a lot of kind of a benchmark and standard surround it and everyone. In this industry knows exactly and know how much.
Such a plasma collection center can collect etcetera, etcetera, and the specialty plasma business. It's different we would like to collect a place you know over the next few years. So we will become a primarily and.
Almost self sufficient in terms of growing that business.
And and being able to supply and as I mentioned before having a better competitive profile and with.
Our high premium product.
And in the international markets.
Hum.
And and be able to a.
Growth that our collection business per.
Our specific.
Specific needs and as we grow our premium portfolio and the different markets.
And maybe one for Jaime on collection, maybe just you know can.
Can you review what the eventual.
Gross margin, our overall margin benefit.
The company can expect in hyper immune specifically.
Bringing collections in house and I'll hop back in queue. Thanks again.
Yeah.
So it's.
It's a good question, but it really depends on the different markets of course, and you know the U S and the western market, where prices are low and for the prices are higher than you know it has one aspect and the developing countries where we.
But in large tenders and highly.
Highly competitive tenders and it has its effect and we.
We did not disclose yet to know what the impact going to be on our gross margins, but as you can assume and owning the plasma book.
This buying the plasma and had a significant impact and an industry, where the cost of plasma is the number one component to the cost of goods.
Okay.
Thank you.
Thank you. Our next question comes from the line of with.
And capital markets. Please proceed with your question.
Yes, good morning.
For the phase III and held steady.
Can you give us a sense of.
When when you now think you'll be able to complete enrollment.
Yes.
Thank you Kai so originally when we put the plan together and what we have shared with the public was that we expect that enrollment will take around two years.
Because of the Covid situation.
We had to delay the opening of additional sites.
And so the actual timelines.
Full recruitment of course will take longer in terms of duration.
And once the Covid situation improves and the new sites, primarily in Europe will be open and.
We will be able to give a more accurate forecast in terms of the timelines and.
Net you know without the Covid situation. This should have taken us to use to complete recruitment.
Okay.
Uh huh.
Okay. So.
With respect to the European sites.
You know in terms of the overall.
Okay.
Percentage of.
Recruiting sites.
And the sites that are still close would represent what percentage.
And they'll go on and equipment.
Yes.
So.
As described in the past and and we were planning to open sites in Europe and the U S.
Primarily and the U S because of the landscape of countries, where there is no current IV treatment available for patients.
We've done a lot of the legwork in terms of.
Being ready to open the sites.
But in countries, where the countries are almost under lockdown and.
And.
There is no ability to effectively recruit patients we decided not to open the sites yet.
Yeah.
Once the situation improves and the Covid pandemic is in a different state and we decide to open those sites, we will be able to give the better forecast in terms of the timeline to complete recruitment.
Okay.
So.
Obviously, you bet that trial and techs R&D.
So.
And just Uh Huh finished the full year.
R&D relatively flat to 2019.
So compared to the $13 6 million you spent and the R&D in 'twenty and 'twenty.
What should we anticipate R&D spend to look like in 'twenty and 'twenty one.
We expect it to be at a similar range because we expect that the current programs that we're running and it will continue at the same rate.
And I think that's a good estimation for 2021.
And once the Covid situation improves.
We will be able to go back to the rate that we were anticipating for 2020 and.
The guidance that we've given in terms of <unk>.
R&D expense it eventually.
And was not executed because of the delay with the recruitment of the and health study.
Okay.
In terms of the <unk>.
New plasma collection facility and Beaumont.
Is there also intermediate products that you you can you bid on or.
Collected and you can sell to others.
Yes, there is and the option also to.
Sell it to third parties the main focus and the main priority is.
And to collect plasma four hour and need focusing on the high premium plasma, but the answer to your question is yes. There is also.
And different plasma products that are being sold to third party clients.
But that's on a small amount on the plasma collected or hardly character correctly correct correct and it's it's it's not going to be a significant it doesn't it doesn't have a significantly impact on our overall P&L.
Okay.
In terms of the the Covid hyper immune and you talked about plans to.
Published the results from the first study, but you.
You know when should we expect some clarity.
Hum moving that product forward and the clinic and clinical trials.
Okay. So there is a clinical trial, which basically started this is sponsored by the Israeli Ministry of health.
And that's a study that we provide the per.
Duct and the minutes theory is sponsoring.
The study synopsis is for hospitalized patients similar and inclusion criteria to our phase one two study that we reported.
The first cohort of this study is approximately 135 patients which are being randomized one to one against standard of care and congrats and plasma. It is a multi center study in Israel.
In addition to the study.
Other hospitals and Israel can treat patients.
Through our named patient procedure.
So basically the treatment is available for all hospitals and Israel.
Per the Ministry of health procedures.
And the hospital decide.
Yeah.
To treat.
Through a clinical trial.
Oh on a named patient basis.
Right and how about plans for any type of U S clinical study.
Okay. So as I mentioned on on the call.
We're still evaluating together with Cadbury on what was the best suitable plan from the U S or Europe and all Europe.
And we will advance the development once we reach the conclusion of this review.
And as is do you expect to make.
And make that decision and the first half of this year.
Most likely yes.
The data from the Israeli studies and data from other studies that are being done abroad like the one that is being done today and my age.
We'll support.
We will pause to support this decision.
Okay.
I want yeah, I want to also reemphasize, what I mentioned earlier.
That we are ramping up the production of the product and our FDA approved facility.
Using plasma collected in the U S.
And this one affecting increase.
Support the potential additional demand that we expect from the Israeli Ministry of health and possibly other international markets.
Okay, and then just in terms of.
How we think about.
Product revenue in 'twenty and 'twenty, one starting with the.
Distributed products.
And again, we just finished the year with.
And as you referenced you know just slightly north of 30 $30 million.
And our revenue from distributed products.
How should we think about that.
And 2021.
Yeah.
So as you noticed.
We did not provide specific.
Specific guidance for 2021 due to the uncertainty and with the Covid situation.
In terms of the Israeli distribution business and you should assume that the current pace it will be similar.
We are registering and launching new products.
But in parallel to that there was some stockpiling of IV <unk> product by the hospitals and nasal in 'twenty and 'twenty.
And that inventories available for them also for 2021.
And generally our overall portfolio.
For the Israeli distribution is growing it's not just that the biosimilar product that we've been emphasizing.
And we over the last few years every year, we sign additional agreements and additional.
And in licensing.
Deals.
And we are registering additional products for the Israeli market and that business is steadily growing.
Okay.
And in terms of the proprietary products.
Hum.
For.
KED drab or.
[noise] Cambria.
How should we think about their growth prospects in 'twenty and 'twenty one.
So this is I think part of the uncertain and say regarding.
The COVID-19 situation and.
And we will not give it that and this time.
Specific.
Guidance in regards to those products.
Gotcha.
Familiar with a $25 million.
And supply that we are going to supply to take care of this year.
As a reminder, we also sell the product and other markets outside of the U S.
And this has been growing over the last few years.
In regards to the other specifics we are not giving currently yet guidance for 2021.
Okay.
Alright.
That's all I have thank you.
Thank you okay.
Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. London for any final comments.
Thank you.
In summary, we are proud of the strength of our business in 2020, despite the global COVID-19 pandemic.
We believe that the fundamentals of our business is solid with multiple organic commercial growth catalyst.
After they approved plasma derived technology platform is a strategic asset and our ability to quickly respond to emerging pandemic situation and.
And we have a very strong balance sheet, which we can which can support or business development opportunities.
As such we remain highly confident and comment on future prospects.
Thank you for joining us on today's call and we look forward to providing you with further updates on our progress throughout 2021.
We hope you all stay healthy and safe. Thank you very much.
Thank you and this concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.