Q4 2022 Kamada Ltd Earnings Call
Speaker 1: The that.
Speaker 2: Greetings, welcome to Commodit Limited 4th quarter and full year 2022 earnings conference call.
Speaker 2: At this time, all participants are in listen-only mode.
Speaker 2: The question and answer session will follow the formal presentation.
Speaker 2: If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded.
Speaker 2: With this time, I'll turn the conference over to Troy Williams, the LifeSci Advisor. Troy, you may now begin.
Speaker 3: Thank you, Rob. This is Troy Williams with LifeSci Advisors, and thank you all for participating in today's call.
Speaker 3: Joining me from Kamata are Amir London, Chief Executive Officer and Jaime Orlev, Chief Financial Officer.
Speaker 3: Earlier today, Kamata announced its financial results for the 3 and 12 months ended December 31, 2022.
Speaker 3: If you have not received this news release, please go to the investors page of the company's website at www.comata.com.
Speaker 3: Before we begin, I would like to caution that comments made during this conference called by management will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of tomorrow.
Speaker 3: I encourage you to review the company's filings with the Securities and Exchange Commission, including without limitation the company's forms 20F and 6K, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.
Speaker 3: Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, Wednesday, March 15, 2023.
Speaker 3: Comada undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. With that said, it is my pleasure to turn the call over to Amir London, CEO . Amir? Amir?
Speaker 4: Thank you, Troy. My thanks also to our investors and analysts for your interest in Kamada and for participating in today's call.
Speaker 4: The recently completed 2022 year was a transformational period for Comida as we embark on a new and exciting chapter in the company's evolution.
Speaker 4: Most importantly, we have now completed our rapid transition.
Speaker 4: from our historical dependence on glass yourself to the cada.
Speaker 4: to a diversified fully integrated specialty plasma company with six FDA approved proprietary products and strong commercial capabilities in the U.S. market as well as global sales footprint in over 30 countries.
Speaker 4: The success of this strategic shift is supported by our impressive fully 2022 financial results, which met our annual guidance.
Speaker 4: Specifically, we achieved total revenue of $129 million and an EBITDA of approximately $18 million representing margins of 14%.
Speaker 4: Our strong performance in 2022 represented revenue growth of over 25% as compared to 2021 and a 3X increase in EBITDA. Moreover, we generated a record operating cash flow of $28.6 million during 2022.
Speaker 4: supporting the increase in our cash position to $34 million as of December 31, 2022, which is nearly double what it was at UN 2021.
Speaker 4: Looking ahead, we expect the momentum from 2022 to extend throughout 2023, with profitability to further meaningfully enhance as compared to last year. As such, we are introducing full year 2023 revenue guidance of $138 million.
Speaker 4: to 146 million dollars and EBITDA of 22 million dollars to 26 million dollars.
Speaker 4: The midpoint of that range would represent profitability growth of approximately 35% over 2022.
Speaker 4: Our impressive results in 2022 and positive outlook for this year are the consequence of our ability to leverage multiple growth rivals, including the portfolio of four FDA-approved IDGs that we acquired in late 2021.
Speaker 4: KEDOP sells in the U.S. The Glaxo Royalty is received from Takeda. Other property products sell in international markets. And our thriving Israeli distribution business.
Speaker 4: This significant catalyst, which I will discuss further momentarily, are driving our annual double digit revenue growth with significant upside potential and limited downside risk.
Speaker 4: Most importantly, the acquisition completed in November 21 of the four FDA approved IgGs consisting of Cytogram, Hepagram, Vavizid and Winro.
Speaker 4: Following a thorough search for the ideal asset for Commodore, was a critical strategic and synergetic advancement for the company.
Speaker 4: I'm thrilled to report that the full year 2022 revenue of the acquired product increased by 24% as compared to full year 2021 and are generating growth margins of over 50%.
Speaker 4: During 2022, as part of the establishment of a direct presence in the U.S. market,
Speaker 4: We deployed a team of U.S.-based experienced sales and medical affairs professionals who have rapidly established operations in these key markets.
Speaker 4: The US Health team is making good progress in promoting our portfolio of specialty plasma products to physicians and other healthcare practitioners.
Speaker 4: to direct engagement and opportunities at medical conventions.
Speaker 4: The medical affairs team is working to educate physicians while addressing the scientific and clinical inquiries including participating in major medical conferences in the US.
Speaker 4: As a reminder, our activities promoting these important therapies represent the first time in over a decade that these hyper-immune specialty products have been supported by field-based activity in the US market.
Speaker 4: We are encouraged that the continuous positive feedback we have seen from key U.S. physicians who are seeking to publish new clinical data related to our portfolio while conducting educational symposiums that we believe will have a positive impact on the understanding of this product contributing to continued growth in demand. We expect to begin seeing the impact of activity later this year.
Speaker 4: agreement for Varizig from an international organization operating principally in Latin America in securing a 22 million dollar extension of a Canadian supply tender.
Speaker 4: Both of these agreements will contribute to our results this year.
Speaker 4: Of course, we are continuing to pursue additional commercial contracts in key strategic territories.
Speaker 4: And I'll highly encourage the significant opportunities ahead of us in 2023 and beyond. This supply agreement and our proactive selling effort through our long-standing distribution relationships underscores Canada's extreme commitment to leveraging the new strategic transport.
Speaker 4: Of the four acquired products, the largest is Cytogam, indicated for the prophylaxis of CMV disease associated with solid organ transplantation.
Speaker 4: This proprietary and unique therapy is the only FDA-approved IgG product for its indication.
Speaker 4: We recently submitted notification to the FDA to manufacture Cytogram at our plant in Israel and expect to receive regular approval by mid-year.
Speaker 4: The anticipated FDA approval will mark the successful conclusion of the technology transfer process for Cycogam from the previous manufacturer, CSL Bearing.
Speaker 4: The ability to manufacture this flow that the power of proximity will positively impact our plant utilization and efficiency.
Speaker 4: Let's move on to CADRAP, our Revit in the global.
Speaker 4: In the past year, Cadrop marketed in the US by Cadreon, continued to gain significant market share in the US market, which is estimated to be $150 million annually. Cadrop's commercial team successfully leveraged the SBA Prove on obtaining 2021 for the level expansion for the product.
Speaker 4: that helped differentiate it as the first and only human rabies globally available in the US to be clinically studied in children.
Speaker 4: We anticipate that some of the products will continue to grow significantly over the next few years.
Speaker 4: Also, to reiterate what we have said previously, I should highlight this product also generates more than 50% growth margin for Canada.
Speaker 4: Moving on, during 2022 as planned, we began receiving lots of road repayments from paid our mother.
Speaker 4: For fully 2022, we generated a growth income of $12.2 million.
Speaker 4: And we expect to receive payments in the range of 10 million dollars to 20 million dollars annually through 2040.
Speaker 4: which will help us.
Speaker 4: growth of stability and cash position. In addition, we continue to grow sales of the product in international markets to our local partners.
Speaker 4: Now let's look a little farther ahead at future catalysts.
Speaker 4: I will begin with Kamada Plasma, our youth based plasma collection company.
Speaker 4: Our early 2021 acquisition of the Plasma Collection Center in East Texas represented the entry into the U.S. plasma collection market and supported our strategic goal of becoming a fully integrated specialty plasma product company. Last year we expanded the high premium plasma collection capacity to the U.S. plasma collection market.
Speaker 4: at our first center and are currently advancing our plan to open additional centers in the U.S. to further enhance our supply of specialty and regular plasma.
Speaker 4: Let's now turn to our ongoing pivotal phase III innovative clinical trial that is evaluating the safety and efficacy of our innovative in-health AAT products for the treatment of AAT deficiency.
Speaker 4: We remain very excited about the potential of this promising product candidate.
Speaker 4: It's shown to be highly effective in delivering AAT directly into the patient's lung.
Speaker 4: A substantial opportunity exists in the LGBT to be a transformational product in a market that is already over $1 billion in annual sales in the US and the EU.
Speaker 4: We are currently conducting the innovative clinical trial around domain double glide, placebo control, pivotal phase 3 studies. During 2022, we began to accelerate trial recruitment with seven clinical sites in our often and involving patients.
Speaker 4: In addition, the independent Data Safety Monitoring Board, the DSMB, recommended in November 2022 that the study continue without modification for the first time since the trial was initiated.
Speaker 4: To date, 50 patients have been enrolled for treatment.
Speaker 4: including 19 patients who have already completed the two-year study treatment period at the first trial site in Leiden, The Netherlands.
Speaker 4: Importantly, no drug related to adverse events were reported to date, and the high-level patient adherence to the treatment is encouraging.
Speaker 4: Moreover, based on encouraging safety observed to date, the study inclusion criteria was revised to also include patients with severe airflow limitation. Throughout 2023, we intend to continue expediting trial recruitment.
Speaker 4: and to meet with the FDA and the European Medicine Agency, EMA, to discuss study progress and potential opportunities to show in the regulatory pathway.
Speaker 4: In our Israel distribution segment, we are leveraging our expertise and strong presence in the Israeli market to register, market, and distribute more than 25 products that are developed and manufactured by our international partners. In recent years, we have significantly grown our pipeline of distributed products. In 2020, we anticipate that the
Speaker 4: continue to launch new therapies across multiple medical specialties. An area of strategic focus in this business is the planned distribution of a portfolio of 11 biosimilar products expected to be launched upon receipt of Israeli regulatory approval through 2028, with overall annual anticipated peak sales.
Speaker 4: within several years of launch of more than $40 million.
Speaker 4: included this portfolio of eight products to a distribution agreement with Algozic, a global leader in development and manufacturing of biosimilar drugs.
We suited this portfolio of eight products to a distribution agreement with Algozic, a global leader in development and manufacturing of biosimilar drugs. Thanks for listening!
2022 was a year of significant progress for Comida, during which we achieved rapid financial improvement by leveraging multiple robust value creating catalysts.
and we are well positioned to further substantial revenue and profitability growth in 2023 and the years beyond.
with limited downside risk and substantial upside potential as a global leader in the specialty plasma industry.
Importantly, looking past 2023, based on our multiple catalysts, we continue to project annual double-digit growth in revenues and profitability in the foreseeable years ahead of us.
With that, I now turn the call over to Jaime. Jaime, please.
Thank you Amir. As previously highlighted, our business performed extremely well in 2022.
Total revenues for the full year were approximately $129 million, a 25% increase from the $104 million recorded in fiscal year 2021.
For the fourth quarter of 2022, total revenues were approximately $45 million.
increase of 44% year-over-year.
These results are indicative of the successful strategic transformation we achieved through the key product acquisition secured during 2021 that resulted in a vertically integrated global commercial biopharmaceutical company with multiple growth rivals. They really are over your growth.
during the fourth quarter and throughout the duration of 2022 was primarily driven by continued strong sales of our previously acquired IgG products.
which was fueled by strong sales in the US resulting from our ongoing marketing efforts.
as well as the expansion of XUS sales of these products.
Additional catalysts in 2022 included the continued growth of Kedra and 10 months of royalty income from Blasia.
During this 10 months period, we recognized $12.2 million of royalty income from Takeda based on their sales, which was in line with our anticipated projections.
Total gross profit for the fourth quarter of 2022 was $15.3 million, representing 34% margin compared to $6.6 million, or 21% margin, in the fourth quarter of 2021.
gross profit for the full year 2022 was 46.7, representing 36% margins up from.
30% the prior year.
Let's now turn to explanation of our depreciation expenses.
As previously discussed, the company is accounting for depreciation expenses associated with intangible assets, which were generated through the late 2021 acquisition of the four IGG products.
In the fourth quarter and 12 months and the December 31st, 2022, cost of goods sold in our proprietary segment included $1.3 million and $5.4 million, respectively, of depreciation expenses associated with these intangible assets.
Research and development investments during fiscal year 2022 increased to $13.2 million as compared to $11.4 million in the prior year period.
during Cisco year 2022 increased to 13.2 million as compared to 11.4 million in the prior year period. Primarily,
Due to the expansion of our ongoing pivotal Face Tree Innovate trial for inhaled ADT.
Selling and marketing expenses for the first quarter and full year 2022 increased to $4.8 million and $15.3 million respectively.
These increases were attributable to the establishment of our U.S. commercial operation to support the distribution and sale of the acquired portfolio of our four FDA-approved commercial products.
In addition, these costs included pre-commercial activities associated with new product launches in Israel, in Israeli distribution segments.
We expect our overall operation expenses, including R&D sales and marketing and G&A, to increase between 15 to 20% during 2023 compared to 2022, as we continue to advance our commercial activities as well as our Phase III Innovate trial. As we have since the first quarter of 2022, we have been able to increase our commercial activities by about 15 to 20% during 2022.
We continue to account for financing expenses with respect to revaluation of contingent consideration and long-term assumed liability, all of which are related to the acquisition completed in 2021. For full year 2022, these finance charges total $6.3 million. As we did in the third quarter.
We again achieve profitability in the fourth quarter, recording net income of approximately $2.9 million or 7 cents per share on a fully diluted basis.
For fiscal year 2022, we recorded a net loss of $2.3 million, or loss of 5 cents per share on a fully diluted basic. Adjusted EVDA was $7.2 million for the fourth quarter of 2022. Adjusted EVDA for fiscal year 2022 was $17.8 million.
representing 14% margin which was in line with our annual financial guidance and represents a substantial increase over the 5.4 million of adjusted EBITDA or 5% margins recorded in 2021.
To reiterate the guidance provided by Amir earlier, based on our expectations of significant revenue growth and enhanced profitability in fiscal year 2023,
We expect revenues to be in a range of $138 million.
to $146 million and anticipate generating adjusted EBITDA of $22 million to $26 million.
and anticipate generating adjusted EBITDA of 22 million to 26 million.
The midpoint of such range represents approximately 35% growth as compared to fiscal year 2022.
Finally, for the fourth insectiv quarter,
Finally, for the fourth consecutive quarter of all fiscal year 2020,
we generated positive operating cash flow demonstrating the consistent ability of the company's commercial operation to generate cash.
generated positive operating cash flow, demonstrating the consistent ability of the company's commercial operations to generate cash. During the fourth quarter, the company's
We generated $6.7 million of operating cash flow and a record $28.6 million in total during fiscal year 2022.
generated $6.7 million of operating cash flow and a record $28.6 million in total during fiscal year 2022. Our total cash position is $2.5 million.
As of December 31, 2022, with $34.3 million, a robust increase from the $18.6 million at December 31, 2021. That concludes our preparing remarks. We will now open the call for questions.
Operator. Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question today, please press star 1 from your telephone keypad, and the confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue.
For instance, using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Once again, that's star one to ask a question. We'll pause a moment to poll for questions. Thank you. Thank you, and our first question comes from the line of David Botts with Zacks Small Cap Research. Please proceed with your question.
Hey, good morning guys. Thanks for the update this morning. So I've got a few questions this morning. I want to start with, we'll be talking about the cash flow that you guys are generating. One, do you foresee the company remaining cash flow positive for the foreseeable future? And if so, what are the company's plans to do with the cash and would there be the potential to pay us?
line and bottom line and as you can see from our 2022 results not only the IDA was strong but also we could.
translate that strongly design into very strong cash cooperation and cash cooperation.
So, AOI Bida is well correlated with generation of cash.
In regards to our plan, how to use the cash, we will be looking to...
move forward with some additional bid opportunities, looking for the right in licensing or acquisition. We are very happy and I'm sure that also shareholders is very happy with the success of the acquisition we've done in 2021. I think it's well represented.
in our 2022 results and 2023 forecast. So with that successful acquisition integration, I think that over time we'll be ready for next BD move. This coupled with some additional investments that we would like to make in our pipeline will further enhance our pipeline.
our outlook in terms of growth in the mid and long term.
Okay, and now in regards to the four products that you acquired in 2021, the sales you reported today were up 24% I believe you said in 2022. What would you say was the biggest driver behind that growth and then what do you think is going to be the biggest driver or drivers in the years ahead for those products?
So we had significant growth basically in the portfolio and this I can attribute to all four products both US, Canada and North America.
As you know, and we reported it, we won an $11.4 million contract for Varizig. We have extended our agreement with Canada for another three to five years. We are growing Cytogram in the US and Canadian market.
We have strong markets for Hepagam and Winro out of the US, primarily in the MENA region. So it comes from all 4 products. And in total having 6 FDA-filled products, Kedrab, Camrab, Glacia, and 4 products from the new portfolio.
We have a lot of opportunities. This significant network of six products.
spread over 30 countries, basically created a very strong metrics, if I may, of opportunities to grow the business significantly. And we're very happy with the 2022 results. You know, with 2023 projection, we're very happy with the results.
there is another significant growth of those products. And moving forward, we will continue to really take a full potential look at those products and grow them significantly over the next few years.
Okay, and as a follow-up, I guess you mentioned that the Verisit contract, is the company working on additional supply contracts like that?
Absolutely. We have a very proactive Southern Marketing approach as well as a description of our portfolio in your territories throughout the entire supply chain from regulatory submissions through supply chain aspects.
We are growing the business and we are proactively participating in vision international tenders.
Okay, and my last question is about gross margins that reported at 36% for 2022. Do you foresee those being similar in future quarters for this year ahead? If you look at our projection for 2020 and
profitable products in our portfolio.
So this will generate over time better GP, better growth of stability.
So this will generate over time better GP, better growth profitability. We are able to translate.
a significant portion of the top line increase next year, also into a bottom line EBITDA increase.
So I think this talks for itself, ability to become a more profitable company with a strong product mix in multiple territories.
All right, sounds good. Appreciate you taking questions this morning.
Thank you very much.
much.
Hey Rob, so while we wait for some additional questions to queue up, I've been emailed a few throughout the call, so could we just address those right now. This first question is for you, Amir. Why do we believe that the inhaled AAT is uniquely positioned in the current AATD?
development language.
So the current standard of care, well, the standard of care for the last...
like 30 years almost. For all phone deficiency, there has been a weekly infusion, which means the patient need to go to the clinic or have a nurse come to the home.
And this is, of course, an invasive type of treatment. What we are developing, what we are proposing, is a non-invasive at-home treatment.
So the ease of use and the quality of life of those patients.
will improve significantly if and when in-health IT will be approved.
So we also get this feedback from any survey that we're doing with the patients. They all prefer to have the option, or the majority of them prefer to have the option of having the treatment by nebulizing health AET instead of the IV treatment.
Secondly, we have shown in previous studies that inhaled AET is the most effective mode of treatment for delivering sufficient levels of AET into the deep lungs, directly into the lungs. This allows us to...
dose the patients with one eighth of the quantity compared to the IV. So this also provides lower cost of goods per treatment, which could translate into attractive competitive reimbursement costs for the patients. A product has been studied for quite some time with multiple...
game changer in over a billion dollar market.
that hopefully will be proven in the current study to be safe and effective and allow us to register the product both in the US and the EU.
Good, appreciate the color, Amir. And then just onto our final submitted question, can you please frame out the opportunity with the plasma collection centers? And in addition to that, can you provide us with some timing of when they may begin to contribute to top line?
Yes, so as I described through the call, we've expanded in 2022 our collection in the existing center in Beaumont, Texas. So moving forward with the opening of additional centers.
So we have a team working on identifying locations for additional centers and advancing lease agreements so we can move into the construction of those centers. In general it's fully loaded if I may, a mature center.
It usually collects between 40,000 to 50,000 liters a year. This translates into a top-line contribution of...
40 to 50 thousand liters a year and this translates into a top line contribution of close to 10 million dollar.
So that will be the contribution of a mature center. You should expect to see the first impact of the first center in that regard starting basically to ramp up in the second part of next year. In the second part of 2024, the first center should be up and running.
and starting to expand in its collection capacity. Okay, great. Thank you, Amir. Thank you to all those that submitted the questions. Operator, I'll turn it back to you.
Thank you. There are no additional phone questions at this time. I will hand the floor over to Amir Lunder for any closing remarks.
Thank you, operator. In closing, we look forward to continuing to support clinicians and patients with important life-saving products that we develop, manufacture, and commercialize.
We thank all of our investors for their support and we remain committed to creating long-term shareholder value. Thank you everyone and we hope you all stay healthy and safe.
Goodbye. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.