Q1 2021 Kamada Ltd Earnings Call
[music].
Greetings and welcome to the Comdata and limited first quarter 2021 earnings Conference 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.
Please note. This conference is being recorded and I'll now turn the conference over to your host Bob yet and you may begin.
Thank you operator, and thank you everyone for joining today's call. This is Bob you Dean with Wifi advisors.
With Jordan and me today from Comdata are Amir, London, Chief Executive Officer, and Jaime or low Chief Financial Officer.
Earlier this morning.
And now its financial results for the three months ended March 31 2021.
And you had not received this news release. Please go to the investors page of the company's web site at Www.
E W.
Oh and by the Dot com.
Before we begin and 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 and I encourage you to review the company's filings with the Securities Exchange Commission, including without limitation.
Company's forms 20-F, and 6K, which identify specific factors that may cause actual results or about to differ materially from those described in the port.
Yes.
Furthermore, the content of this conference call contains time sensitive information and is accurate only as of day of a date of this live broadcast Wednesday may 12 2021.
And it takes undertakes no obligation to revise or update any statements to reflect events or circumstances. After the date of this conference call.
It goes from Marci, It's my pleasure to turn the call over to Amir London CEO Amir.
Thank you book and I think also to our investors and analysts for your interest and commander and participating in today's call.
Well the global pandemic continues to create commercial challenges always sales and financial results for the first quarter of 2021 well in line with our expectations.
And he will provide all the key details of August 3rd quarter financial results, shortly but I'd like to begin by highlighting the recently announced and man demands with the Alaska license agreement and used the caito, whereby upon completion of the transitional and lots of them and affecting to Takeda.
And as expected by the end of 2021 we would transfer the Takeda the Gloucestershire and U S BLE and exchange for the day. They transfer we don't see the $2 million payment from Takeda expected by the end of the year. In addition, the channel. The final sales based milestone of 5 million and build out due to cash.
Under the license agreement was amended and resulted in recognition of the income and the first quarter.
Based on defense and decent glass from the furniture to Takeda later this year and it.
Peanuts and distribution of the product and the U S. The transfer of the BLA to the Kid that well the sound strategic next step for both sides.
So in connection with the transition of glaucoma and affected the Takeda and later this year, we are planning to implement and work force downsizing and the early part of the third quartile, which is expected to result in an annualized reduction in labor cost of approximately 10%.
These cost saving and in line with the plan to align all of the work force to the lower plant utilization and maintaining a profitable and effective operations meeting market demands.
With that I would like now to turn to our product pipeline and discuss our phase.
Phase three clinical program for propriety and held or U T for the treatment of Alpha one antitrypsin deficiency.
As a reminder, you know phase the randomized double blind placebo controlled pivotal phase III trial performed on doing S. T E. I N D and a European CPA designed to assess the efficacy and safety well being held or U T.
And patients with Alpha one deficiency and moderate lung disease.
This program continues to be a high priority for come and go and we continue to evaluate strategic opportunities for engaging and commercialization partner for this important product candidates and the market, which is currently estimated at over 1 billion dollar and growing 6% to 8% annually.
Moving on I would like to discuss important progress from continued to achieve because of all the development of our plasma derived globally and product as a potential therapy for COVID-19 disease.
We were pleased to announce top line results from our phase one and two open label single arm will be center clinical trial, although IGT reported in Israel.
To briefly reiterate the results 11 patients recovered following who ceased of the treatment.
Seven patients were discharged from the hospital at all before day five post treatment and the remaining four patients will be challenged by day and guidance.
Following the future of the product or did you learn from and the plasma of all patients increased and preliminary results demonstrated that the I T. G E.
The increase was associated with enhanced utilization and activity.
In addition, we were encouraged to observe and total IGT product demonstrated a favorable safety profile and there were no infusion related reactions all adverse events.
EBITDA related to the study drug.
Under our existing agreement and continue to supply the product to the Israeli Ministry other house Moh and for the treatment of COVID-19 patients and Israel.
As a reminder, the initial order from the minimum wage for the products and sufficient to treat approximately 500.
Patients and is expected to generate approximately $3 $4 million in revenue from Colorado.
And the therapy is available nationwide and Israel and patients are being treated and its policy of the moh clinical study on and named patient basis.
During the first quarter, we also finalized the ramp up and was affecting other products, but utilizing plasma collected and the U S like catriona.
This scaled up and effect shrink on a commercial scale production line.
From a debt possible demand from additional international markets.
We're currently in discussions with several countries regarding the potential supply of IGT product.
In general and we believe that even after a global deployment of COVID-19 and vaccination.
And I'll be specific populations, it will continue to need and <unk>.
D G product, mainly immuno compromised patients, which are expected to continue to be at risk due to their condition.
Lastly, we believe with our activity due to the COVID-19, pandemic clearly demonstrated our ability to quickly and professionally respond to such an emergent situation.
Moving on to the formation of comment the plasma our new subsidiary and the U S.
We are extremely excited about the future opportunities provided by our recent acquisition of.
The plasma collection center and in Beaumont, Texas and discuss.
And she meant although one collection capabilities.
Acquisition represents our entry into the U S plasma collection market and drive us toward our strategic goal of <unk>.
Coming a fully integrated specialty plasma company.
I'm pleased to report today with integration and expansion activities.
Proceeding as planned and this facility.
By leveraging our SBA license, we plan to open additional centers and the U S.
And <unk>, which we intend to significantly expand our IP immune plasma collection capacity.
It's been expansion is expected to improve other IPG competitive position and a very small.
We look forward to sharing additional details with you regarding these potential growth opportunity in the coming quarters.
Lastly, we continue to proactively explore new strategic business development opportunities.
And expand our core plasma derived development and the fab.
<unk> and commercialization expertise.
As a reminder, we will focus on identifying plasma derived product.
We can acquire them.
Vitamin affecting services for.
Our team is fully engaged and we are currently in active discussions.
We hope will lead to realizing these opportunities, which will be funded and it was a strong cash position over near the legal and other than 10 million DAU level as of March 31st 2021.
Our strategy is focused on driving profitable growth from our current commercial activities as well as other plasma derived product development and manufacturing expertise.
And we intend to continue evolving into a vertically integrated specialty plasma derived company.
And the development and all of the acquisition of cash.
From a collection and product distribution capabilities.
In summary, we continue to extremely belief and the strength of our overall business, which consist of multiple lines of activity that can each drive significant long term growth opportunities full come with them.
With that and now it's time me to review our financials.
Results for the third quarter of 2021 Jaime.
Thank you Amir and good day everyone.
And as Amir noted our business performed as anticipated and the first quarter.
As we said would be the case on prior calls the traditional glass and manufacturing to Takeda and the continued uncertainty and the operating environment created by the ongoing global COVID-19 pandemic.
As noted and reduced revenues.
And profitability and the first quarter of 2021 and.
And we expect this will continue throughout the year.
And this quarter total revenues were $24 $9 million compared with just $33 3 million for the first quarter of 2020, representing a 25 per cent decrease total revenues in the first quarter included the recognition of the accelerated $5 million.
And final sales based milestone payment from Takeda under the amendment.
Glossy and license agreement with media companies do.
During the quarter, we sold approximately $7 million of glossy Takeda, which are part of our overall expected $25 million and product revenues from the supply to Takeda and 2021 and.
Importantly.
Upon the initiation of sales of Glasgow manufactured by Takeda, we will receive royalty payments from Takeda and the rate of 12% on net sales through August 2025, and other rate of 6% thereafter until 2040.
With a minimum of 5 million.
And you'll leave for each of the years 2020 two 'twenty 40.
Although the transition of the agreement to its royalty sales results.
Significant reduction of comment those revenue from Takeda.
And based on the current Blasia sales and the U S and the forecasted future growth kind of other projects receiving royalties from Takeda and the range of $10 million to $20 million per year through 'twenty four.
From a profitability standpoint gross profit for the first quarter of 2021 was $8 $9 million down from $11 5 million and the first quarter of 2020 gross margins were 36% from the first quarter of 2021 and.
And increase from 34% gross margins and the first quarter of 2020.
The reduction in gross profitability is associated with a decrease and the overall revenues as well as a one time inventory write off from approximately $1 $5 million.
Moving on net income was $2 7 billion or six cents per share on a fully diluted basis, and the first quarter and for 2021 as compared to net income of $5 $2 million or 12 cents per share in the first quarter of 2020.
Some other continues to operate from a position of financial strength as.
As of March 31st 2021, the company had cash cash equivalents and short term investments of $109 $5 million as Amir indicated previously we intend to utilize these cash resources for the expansion of our plasma collection activity and strategic business development opportunities.
That concludes our prepared remarks, we will now open the call for questions.
Alrighty.
And at this time and will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Information tone will indicate your line is and no question queue you.
You May press star two if you'd like to remove your question from and Hugh.
For participants using speaker equipment and may be necessary to pick up your handset before Christmas started please.
One moment, please while we poll for questions.
Our first question is from Anthony Petrone with Jefferies.
And proceed with your question.
Hi, Thank you and good morning, good afternoon, I hope everyone's doing well I guess to me or maybe first.
Question on geopolitical front, just given the events over the past 48 hours, maybe just to to address just manufacturing supply chains. How are you thinking about potential.
Potential impacts from the events over the last 48 hours or lack thereof, and then we could go into other questions and of course, I hope everyone's family is doing well.
And it sounds to me.
We are all well and safe and we have no concerns regarding supply and the continuation of our operations at the plant.
And each one has been on to.
And this type of situations for the past 20 years, and we didnt pay to store power production and even for one day as a result of this very strong good security very strong.
And pathology and around the island and Dom system, and we are all safe and secure.
Thank you very much.
Best wishes to everyone hopefully its a speedy resolution so and in terms of.
A few comments referencing the prepared remarks and <unk>.
Some of the items and the pressure really Samir, maybe a little bit on the outlook for establishing a partnership for the inhaled Alpha one antitrypsin product.
And where the discussions at the moment and and if you look ahead, what sort of partnership should we be thinking about will it be regional.
And a regional commercialization effort or will it be a single partner that has access to multiple geographies across the world and then maybe to follow up on a T. D would be just timings on the next clinical.
The updates that we should be thinking about and all of a couple of more.
Okay.
So as.
And we mentioned on the call and we all and active.
Discussions with potential partners and we are evaluating different opportunities ahead of us.
And we are looking at commercialization Pablo.
And we'll be investing and the clinical development and in return and we'll have commercial rights for future.
Commercialization and say license for future commercialization of the product and.
And different territories.
In terms of your really the one partner voluntary Tories window and when people partners all the alternatives open.
And we are.
And evaluating the different.
Options and the different partners that are showing interest in such collaboration.
And in due time, and we will update on the progress that we will potentially be making.
And at a few follow ups would be when we look toward the transition.
And the manufacturing the BLA transition to Takeda on glue.
Last year I V is there a way to sort of estimate how much.
Passive he is actually freed up and at the plants and and.
And and subsequently would be available for future C. D M O agreements.
And then you mentioned also amir leveraging the balance sheet, how should we be thinking about investments.
Investments allocated toward hyper immune supply as opposed to potentially in licensing agreements or even potential acquisitions of hyper immune globulin products.
Okay, So and tell them capacity and we do not disclose the exact number but basically you can look at the revenue.
That is basically mctague.
Transferred into royalties and from that you can.
And kind of.
And I calculate the capacity.
And in general and we.
We are going to have sufficient.
Capacity to take additional.
C D M O M.
Contracts like the one that we've signed and over 2019 and and we currently and the Tech transfer sales of this product and you may remember we've been now and so if we signed an agreement for 12 years.
The expectation that it will contribute between eight to 10 million DAU another year to Commodore awful close to like $120 million over the 12 years and contract starting in 2023.
So we have the capacity to take additional similar contracts, but also remember that we are growing our CAD drug and.
The facts change and we have one additional day.
Travel commerce and contracts like the W Show Oh, Canada.
We are supplying the product the products and it's all sorts of administration and other territories glass sales growing ex U S and classical chocolate registration in some territories, primarily Latin America. So we are growing organically our current products and this of course will fill some of the Qatar.
Lastly, the two book to be available after completion of the transition from Takeda.
And there to see them, all services and adding to that additional potential products.
All of these does not.
Recover.
And Anthony and all of this does not fully recover all of the available capacity and this is why we are downsizing the plant and in terms of number of employees and.
As we said the resolve of downsizing and which is going to happen at the beginning of the third quarter and he's here, we resolved and 10% cost reduction in terms of oil and labor cost.
And and.
Two quick follow ups there one on the 10% overall cost reduction is that just total cash.
Costs.
Throughout the P&L as Europe, mostly cogs or operating expenses or how is it mix between.
And operating and expenses and then and then the last one would be just on the plasma.
Applied Newmont, Texas you mentioned.
Yeah Yeah.
You mentioned additional plasma collection centers should we be expecting this year that you will continue to bolster price.
And the collection efforts and you know throughout the remainder of the year and into next year. Thanks again.
Yeah, So I'm not sure I fully heard your question, but if you don't answer it completely please ask another question and.
In terms of the plasma collection capabilities, so for the fear and greed.
And two objectives, one is to expand the capacity of the current center and.
Try to maximize its potential and this is already in the work and in parallel to that we have initiated the planning of expanding into opening additional centers.
Expect to complete the planning of the soup kitchen and centers.
And later this year and wants are basically the plan is finalized we will move into the execution phase of opening additional centers cause actual open interest incentives is something planned most likely for next year.
In terms of the the labor cost. So we have been basically downsized and we're planning to downsize.
Claus.
And the entire company, if I may say, but primarily of calls on the label, which is working directly on the production and seafood.
And well due to the transition of glacier to Takeda and we.
And I have the lower utilization and.
The plant and we all and lining the capacity and if Tuesday, and Hey, this demand so majority of that.
10% is related directly to the Cogs.
Okay, well, thank you very much and I'll hop back in thank you.
Yeah.
And our next question is from King and I can't with charter and capital markets. Please proceed with your question.
Okay.
Thanks wondering if you can give us an update on the status of enrollment and the inhale clinical studies.
Yeah. Thanks, So we did not provide the exact numbers, but I can definitely say that hey, we as you know we initiated the study and the 2019 was first pension team. Besides the total open hubs and kept open soothing time COVID-19 situation.
And Europe, the societies and the Netherlands.
Additional sites are ready to be open.
And now as the COVID-19 situation improves and across Europe, and the U S. We will be looking into opening additional sites.
That's part of our plan and.
And in.
In parallel to that we're walking on the business development side of the program concurrently.
And look.
And to engage with policy.
As a commercial partner.
Yeah.
Okay.
With respect to the hi.
Hi, Permian plasma for COVID-19 that you're selling and Israel can you tell us how much wood.
That 5 million or I'm sorry.
500 patient revenue was recognized in Q.
Q1.
So a significant part of the $3 4 million Donuts has been so the other day in Q1 and remaining is going to be supply is being supplied to the minister and this quarter. So by the end of this quarter the entire $3 4 million will be.
And I recognized the treatment and Israel over 100 patients have been enrolled into the Israeli study that is true.
That's in concert and me and supervised cathedral and needs to health and.
And generally the COVID-19 situation is and has been improving significantly and you may know with global and vaccination.
The other day and nationwide. So let's collection program. So current recruitment into the study slow because there aren't as many new patients being diagnosed with all and discussion with other government. The other countries in terms of a supply agreement and that's.
And during the call we have same scaled up the production and we have sufficient plasma and sufficient production capacity and total commercial line to be able to supply and greater quantities of the product too.
Two other governments and other ministries of health.
Okay.
For the rabies hyper immune.
And the last year, obviously impacted by lockdown situations.
And what are you seeing there is the outlook for that product.
Things begin to open up globally.
Yeah, So as we mentioned in previous calls and.
And during 2020, the actual in market sales.
And the anti rabies immunoglobulin, where of course and lower than the original expectation because of the low because people.
And it did not spend much time out and you know and the parks from India.
And the nature and.
And as a result of this the inventory levels with cadre on carried beginning of the year.
High inventories and this has its effect on other 2021 sales to catch me on per say needs to consume the high inventory beginning of the U S and the U S starts to reopen and people want to spend a little time, especially now towards the summer.
We expect this high inventories to be consumed and that the rate of usage and our rate of sales to catch me and will catch up and again as it was prior to the pin.
Danny.
And you May remember, we already had over 20% market share in the 'twenty and 19, which was the first full year.
Selling and scheduled to close them from the U S market.
Back to this market share to continue growing we believe that it can reach and up to 45% to 60% of the overall market, which is over $150 million.
And starting late 2020, one into 2020. Two we expect this market share to continue growing and the overall sales of the product has to catch you on and casual and in market sales too.
Expand significantly.
Okay, and then just a.
Final question about the plasma centers.
I assume that.
Most of the product will be used.
Internally, but.
How much intermediates do you see.
And being collected that you would sell to other parties.
So far the fusin future for the next few years as you said, it's going to be for internal use.
Mike to be independent.
A close to independent.
And all of the hyperemia and the plasma and collection capabilities.
And lower our cost of goods and <unk>.
Give us a competitive advantage when we compete in.
Mainly and countries well this is based on tenders.
Price is the main parliament a full product selection.
C C.
Our ability to collect plasma them internally or independently.
Mexicans and.
And a competitive advantage in our world.
And also all of us, becoming a fully vertical specialty plasma company.
Yes.
Okay. That's all I have thanks.
And again as a quick reminder, if anyone has any questions you May press star one on your telephone keypad.
And it looks like we have reached and our question and answer session and I will now turn the call over to amusement and for closing remarks.
Thank you very much so and clothing, we remain confident and the strength of the fundamentals of our business and look forward to multiple organic commercial growth catalyst.
And as well further leveraging last day approved plasma because that technology platform to quickly respond to emerging and dynamic situations.
We will leverage our core expertise and the development from the fracturing and commercialization of plasma derived therapeutics to become a vertically integrated company and expanding our plasma collection capabilities and evolution that has already started with the acquisition of the Texas State plasma collection Center.
Our team remains focused on pursuing compelling business development opportunities by utilizing our solid balance sheet.
Thank you for joining us today for the call and we look forward to providing you with other updates and our progress throughout the year. We hope you all stay healthy and safe. Thank you very much.
And this concludes today's conference and you may disconnect. Your line at this time and thank you for your participation.
[music].