Q1 2022 Kamada Ltd Earnings Call
Greetings and welcome to the commodities Ltd first quarter 2022 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Anyone should require operator assistance during the conference. Please press star zero and telephone keypad. Please.
Please note. This conference is being recorded I will now turn the conference over to your host Oh.
Thanks Barak rises you may begin.
Thank you symbolic BOP, yet end of life Science advisors.
You all for participating in today's call joining me from Comdata, Our EMEA, Our London, Chief Executive Officer, and Jaime or lab, Chief Financial Officer earlier today comment I know its financial results for the three months ended March 31 2022.
If you have not received this news release. Please go to the investors page of the company's website at Www Dot com at a dotcom.
Before we begin 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 company's filings.
With the Securities and Exchange Commission, including without limitation, the company's form 20-F, and 6K, which identify specific risk factors.
Which may cause actual results or events to differ 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 live broadcast Tuesday May 17 2022.
I'm Gonna undertakes no obligation to revise or update any statements to reflect events or circumstances. After the date of this conference call.
He would like to ask questions. Please feel free to register for the Q&A session live at the end of the call or feel free to email me.
Bob yet it.
I'll be at like Si advisors dotcom.
With that it's my pleasure to turn the call over to Amir London CEO Amir.
Thank you Bob My Thanks also to our investors and analysts for your interest in Canada and for participating in today's call.
Well the business is off to a very strong start in 2022.
During the first quarter will be weird effectively executed on our corporate strategy.
They are advancing toward becoming a fully integrated global leader in the plasma derived from Tmall.
Our performance in recent months the strongest.
This demand has commented the ability to.
Concurrently execute on most people's wrong, developing and advancing our key growth catalysts.
Those casually include commercialization, although I did your portfolio in the U S market as well.
As the new territory.
Well in the U S.
The Israeli distribution activity.
Oh, well U S plasma collection business.
Lastly, our royalty income which started in March.
And then has a a T clinical program, which is expanding.
Moreover.
During the first quarter, we generated $5 5 million of operating cash flow. It's the bulk of the increase of our cash position.
Of $22 million.
Importantly, the first quarter represented the first full calendar quarter commercializing in the portfolio over the full FDA approved English globally, we acquired late last year.
I'm pleased to report this full product they leave it solid initial sales and profitability So Canada.
Meeting, our plans and expectations.
As a reminder.
Quiet product generated collective revenue exceeding 40 million going out in 2020 one.
The 50% gross margins.
We anticipate to strongly grow the new portfolio revenues year over year through proactive promotional activities in the U S with our newly established subsidiary comedy and is responsible for the commercialization and direct sales of the product.
Our recently appointed Vice President of U S. Commercial operations, John I have begun building out our team with the multiple senior staff members all of them experienced sales and marketing professionals with established relationship with rather than U S health care providers.
We intend to actively promote these compelling products to hospitals and physicians.
Al do you are mainly focusing on transplantation centers.
We also intend to leverage our existing strong international distribution network.
Product revenue in new territories.
So I'm very happy to report today it sounds like the product has already been initiated during the first quarter. In addition, our new countries mainly in the middle East.
I should also add if you continue to expect to see the SBA approval for the production of cycles on the largest of the fairly quiet product at all.
Israeli facility you're going to.
First half of 2023.
The completion of the tech transfer activities, which are currently at an advanced stage.
Now, let's turn to the performance of our overall business in the first quarter of 2022.
We generated total revenues of $28 1 million dollar level.
Granting too long.
10% growth over the first quarter of 'twenty or 'twenty one.
We also achieved gross profit of $11 3 million going out and gross margin of 40% in the first quarter as compared to 36%.
You periods.
This increase in outflow stability was mainly driven by the phone you IGT petroleum products, which generated gross margins of about 50%.
Based on our strong start to the year, we are reiterating our full year 2022 revenue guidance of between $125 million to.
135 million below what was expected EBITDA margin of 12% to 15%.
This guidance represents a 20% to 30% increase over 2021 revenue and more than 2.5 X over 2021 EBITDA.
Moreover, we continue to project revenue growth.
Double digit rate.
So stable here.
I would now like to discuss our recently established to come in the plasma.
Our U S based plasma collection company.
You will recall in early 2021 acquisition of the plasma collection Center in Texas.
Best of luck with the collection of plasma.
It was a little bit of factoring of one of our specialty products business.
These standards presented to come at the entry into the U S type of collection market and supported our strategic goal of becoming a fully integrated specialty plasma company.
We remain focused on expanding the HEICO human plasma collection capacity central and continue to advance our plans to open additional centers in the U S to further enhance our supply.
So T and regular plasma in fact, we are already in the process of selecting a site location for a second collection center to be followed by construction and startup activities later D. C U.
We are also planning to in each of the acquired activities for third centers that you're in.
Yes.
As a reminder, the planned expansion of our plasma collection capability is expected to enhance our competitive position in various markets.
Both continued revenue growth and strengthen our supply chain.
Moving on to catch up.
Anti rabies ITG.
Based on the recent moderation of the Covid pandemic in the U S. We are encouraged that the product in the market felt like catch me on during the first quarter, which had grown significantly in comparison to the pre COVID-19 pandemic sales method.
We believe the trend will continue.
We expect catch up to be an increasingly important growth driver for us over the next few years as it continues to gain market share in the $150 million U S market.
You will recall that the SBA approved a label expansion for the product late last year, which differentiated care dropped in the first and only human rabies immunoglobulin and available in the U S to be clinically studied in children and confirmed the safety and effectiveness of its use in the pediatric population.
Moreover, we are also expanding sales of the product and Additionally, both international markets, such as in Canada, Australia, and Latin America.
And probably last year March Takeda initiates its sales of the product from its own production generating royalty income to come with them.
24 miles with one 4 million below meeting our expected monthly rate.
Turning to our in house clinical program.
But the ratio of the Covid pandemic allows us to expand our ongoing pivotal phase III clinical.
Clinical trial to evaluate the safety and efficacy.
You know that you can have 80 closer to the truth.
Treatment of ADC deficiency.
Two new European sites.
Most recently patient screening and recruitment began at three new sites in three European countries in.
In the coming weeks three additional sites are expected to be initiated in three other European countries.
The independent data safety monitoring board the D. S can be recently recommended that the trial continue without modification.
Date, no patients have discontinued treatment prematurely and no drug related serious adverse events and dealing with COVID-19.
Additionally to date nine patients have already completed the full two year treatment period.
Fortunately this is a unified study the trial data are expected to qualify for regulatory submissions with both the SBA and the EMA.
It's substantial opportunity exists to inhibit T to be a transformational product in the market that is already over 1 billion rollout.
Sales in the U S and Europe and growing steadily and we're excited to further advance the strike.
Moving to other commercial activities.
Is it distribution segment, we plan to launch a portfolio of 11 Biosimilar product.
D C. A 2022 and 'twenty 'twenty eight.
Projects are expected to be launched upon receipt of the Israeli regulatory approval.
Actively this product has an annual anticipated peak sales, but she did what it was in favor the use of launch of more than $40 million.
This anticipated revenues in addition to our current distribution segment sales.
We look forward to the launch of the first of these boxes.
Nathan D C.
In closing, we continue to execute on our corporate strategy on all fronts and we believe that we have there.
Catalysts to drive double digit growth and they use our heads.
We're excited about our future prospects.
<unk> is uniquely positioned for growth.
I believe it is especially the plasma industry.
Multiple value, creating upcoming catalysts.
With that I'll now turn the call over to Jaime for his review of the first quarter of 2022 financials ebooks Jaime please.
Thank you Amir and good day everyone.
Our revenues grew by 13% in the first quarter of 2022 and totaled $28 $1 million.
These revenue levels are in line with our expectations and represents a strong a strong start for the year.
This growth was led by strong initial sales of our newly acquired ITG product. This is the first full quarter of sales of districts folio and the sales and profitability levels generated by these products are in line with our expectations.
As previously mentioned by Amir, we recognized $1 $4 million of royalty income during March on account of glossy sales by Takeda.
During the first two months of the year Takeda sold remaining less inventory supplied by Canada.
And initiated sales.
Its own production during March entitling us to royalty.
The royalty income for March 2022 is in line with our expected monthly rate and.
Annual projections.
Reminder, we will receive royalty payments from Takeda at the rate of 12% on net sales through August 2025, and there's a range of 6% thereafter until 2040.
We continue to expect to receive royalty payments from Takeda in the range of $10 million to $20 million per year, enhancing our profitability and cash position.
Total gross profit for the first quarter of 2022 was $11 $3 million up 27% from the $8 $2 million in the first quarter of 2021.
Gross margin for the quarter were 40% an increase from the 36% during the period during the prior year period.
The increase in profitability was primarily driven by the four new FDA approved commercial product, which generated gross margins of over 50%.
Cost of goods sold in our proprietary segment totaled $12 $5 million in the first quarter of 2022 and included $1 3 million of depreciation expenses associated with intangible assets generate through the recent acquisition of these products.
Gross margins, excluding such incentives will asset depreciation would have been 45%.
Research and development investments during the first quarter of 'twenty, 'twenty, two or $4.4 million increase as compared to the first quarter of 2021 is primarily driven by the expansion of our pivotal phase III innovate trial for inhaled 18th through the opening of new clinical.
Sites and the manufacturing of clinical supply for the study.
Our projections for the overall trial costs did not change.
Selling and marketing expenses for the first quarter of 2022 were $3 $3 million, an increase from $1 1 million during the prior period.
This increase is attributable to the establishment of our U S commercial operation to support the distribution and sale of the recently acquired portfolio of four FDA approved commercial products.
In addition, these costs include pre commercial activities associated with new product launches in the Israeli distribution segment, including one of the 11 Biosimilar products portfolio, which is planned to be launched this year.
There was a marketing cost for the quarter included $400000 of depreciation expenses associated with the intangible assets generated through the recent acquisition of the new products.
Our financial expenses for the quarter included a $2 million charge associated with the revaluation of contingent consideration and the other long term liabilities assumed as part of the acquisition of the four FDA approved products as detailed in our 2021 annual financial statements included in the <unk>.
Simply filed annual report on form 20-F. These liabilities include deferred consideration payments due to sellers.
To meeting certain milestones and royalty obligation to third parties on account of the cyclone garden products.
For the first quarter, we posted we posted a net loss of $1 8 million dollar or.
Four cents per share on a fully diluted basis.
However, our adjusted EBITDA, which excludes the financial expenses depreciation amortization and stock based compensation for the first quarter of 2022 was $3 $3 million compared to $3 7 million in the first three months of 2021.
During the first quarter of 2022 we generated $5 $5 million of operating cash flow.
Supported the increase of our cash position to enroll a total of $22 million comment those working capital as of March 31st 2022.
[noise] remained strong and totaled $52 million.
As for our full year guidance, we continue to expect to generate total revenue for fiscal year 2022 in the range of $125 million to $135 million and anticipate generating EBITDA at the rate of 12% to 15% on total revenue.
While the ongoing labor strike impacting our production facility in Israel is expected to negative navigate simply.
Our second quarter financial results, which we do not expect to be as strong as the first corner.
Based on the diversification of our commercial information, which includes multiple revenue generating sources, including the recently acquired portfolio for FDA approval.
Marshall products, which are manufactured by an external contract manufacturer.
It really distribution business, which operates independent of the production facility.
The royalty income on glass yourselves to Canada, as well as current sufficient inventory level of finished products.
Our positive outlook for the fiscal year remains unchanged.
Finally, I want to make investors aware that we plan to hold a virtual investor and analyst day on Tuesday June 7th at approximately 12 P. M. Eastern time to highlight the dramatic transformation of our business over the past several months details will be deep.
Details.
Of the investors date will be announced shortly.
That concludes our prepared remarks, we will now open the call for questions.
Operator.
Thank you and at this time, we'll be conducting a question and answer session.
I'd like to ask a question. Please press star one on your telephone keypad.
Confirmation tone will indicate your line is in the question queue.
You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
One moment, please where all the calls for questions.
Sure Molly this is Bob yet it from lifestyle I've gotten a few questions already emailed to me so I'll start with those.
Sure. The first one the first one is I'm asking about the sales trends with the rabies vaccine and giving me improve crude rates of travel in U S and other countries.
For I'm here in Miami.
You're starting to see a recovery.
Sales of <unk>.
KED rapid camera.
Compared to last year.
Okay.
Thank you Bob and thank you for the people asking the questions yes, absolutely.
So during the first quarter.
Saying that the academy on in market sales of the <unk>.
Product in the U S have grown significantly compared to the first quarter of 2021.
And basically it's a comparative N two.
Pre pandemic that's L. A we see a significant increase we believe that we have not yet completed our line.
Integration and winning market share of the products as a reminder.
We got the FDA approval in late 2017, we long ago maybe.
Maybe it was 2018, but we had basically only 2019 or the.
The first full year.
Oh, the setting of the Polish market and then the pandemic started right I forget for 'twenty, 2020 'twenty, one will be impacted by the pandemic, but starting 2022 the product is continuing to gain it.
Market share to grow its market share and we believe there's still a lot of room for growth, where the product can be a small kid, which is over 150 million build out and we will continue to grow the business in the U S. And we are also leveraging the growth in international market.
Well one of the few only suppliers of the anti rabies immunoglobulin products globally, we are in the pool.
The supply of the WTO supplying their Latin American tenders, and we have an equivalent in Canada and Australia.
And we have a.
Supporting local authorities with this important life saving product.
Yes.
Great very helpful.
The other question I got an email that to me is about your announcement today that you've expanded.
Or of a clinical trial site for Euro and Hal Bay, a T phase III trial.
The question is one why now in terms of making that expansion from basically one site.
Adding up to six more sites this year.
Yeah. So we're basically leveraging the popularity with the maturation of the Covid pandemic to expand the study and the study was initiated a few weeks before the pandemic started before we had the first patient in into the site and light into the Netherlands and then.
November or December of 2019, they cite.
Site continued to pay.
Patients throughout the pandemic, but it was a hard in some cases, even impossible to open inside when everyone was focused only on coffee in few countries. We can't we couldn't use it to a new study, which was not the COVID-19 related study need to amend.
But if a patient suffering from COVID-19 lung disease.
And then could you go into the hospital if it such a treatment. This topic. The study was very challenging to deal with it and then now with improvement across Europe , and we have the opportunity to leverage the work being done in preparing for that timing and we are expanding the study.
We're very encouraged with what we've seen so far we had no dropouts in the study one patient who started this study in lie then continued night of the patient already completed a two week study.
That we presented today there can be a well received no modifications that are needed.
So without any pause in college, that's what they've seen so far.
And as a business opportunity we remain highly confident.
And the significant opportunity ahead of us over the billion dollar market of all for water treatment given by infusion.
Everyone understand.
They can pair superiority in terms of quality of life for the patients who lose anything has product and.
I'd be thrilled.
Right. Okay. That's helpful.
And then the last question I have is one with regards to your sales and marketing of your new portfolio of I G. G products is that sales and marketing principally focused on transplantation centers.
Here in the U S.
So two of the products.
Our focus on transportation center at least little bit too late.
Product because the factors that might help us.
So I always big Eh is for immunocompromised patients not only transplant patients, but also pregnant women and in small in song.
It's a little bit more.
First and just what's the patient centered.
And we will always focus on the patient suffering from a rare blood disorder called ITT.
The main focus is the transportation incentives, but we're also selling to other medical institutions in the U S.
Outside of the U S. Similar of course focus and we believe there is a great opportunity in the U S promotional activities.
Florida will not proactively promoted in the last few years. So we have you an opportunity to make a big difference.
Growing this business.
Leveraging our almost 30 countries.
It could reach a natural.
For the full two two to sell those products is definitely a very big blocks and you're already seeing COVID-19 because I mentioned.
The the call.
In the Middle East, we have seen new countries, which we initiated sales of our products.
Right.
Oh, one other follow up question to that is you've talked about transferring manufacturing of these products potentially.
The first one set against your facility.
That is dependent I assume in a for next year on the receipt of the regulatory approval in Israel is that correct.
Correct.
The SEC Toronto titles from the cause and effect to our facility.
Israel is well underway and we expect to file with our land based some of facilities, but it doesn't affect you.
Later, this year and because they can improve on in 2023.
And in regards to the other three clubs or this is something we plan to do in the future.
Great.
Okay. Good that that's the call. That's the question that I have thank you. Thank you Amir.
Yeah.
And it looks like we have.
If there are no more questions. It looks like we have reached the end of the question and answer session now I'll turn the call back over to the mayor of London for closing remarks.
Thank you. Thank you very much so in closing on behalf of the entire comedy team. We look forward to continuing to provide clinicians and patients with an expanding portfolio of important lifesaving product that would be.
They'll open the factual and commercialize.
We thank all of our investors for their support and remain firmly committed to creating long term sustainable shareholder value leveraging our multiple.
Catalyst for growth.
Hope you all stay healthy and safe. Thank you very much.
And this concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
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