Greetings. Welcome to Kamada Ltd.'s second quarter 2023 earnings conference call. At this time, all participants are in 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 0 from your telephone keypad. Please note this conference is being recorded. At this time, I'll turn the conference over to Brian Ritchie, of LifeSci Advisors. Brian, you may now begin.
Thank you. Thank you all for participating in today's call. Joining me from Kamada are Amir London, Chief Executive Officer, and Chaime Orlev, Chief Financial Officer. Earlier today, Kamada announced its financial results for the three and six months ended June 30th, 2023. If you have not received this news release, please go to the investors page at the company's website at www.kamada.com. Before we begin, I would 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 Kamada. I encourage you to review the company's filings with the Securities and Exchange Commission, including, without limitation, the company's Forms 20-F and Form 6-K, which identify specific factors that 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 date of the live broadcast, Wednesday, August 16, 2023. Kamada 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's my pleasure to turn the call over to Amir London, CEO. Amir?
Thank you, Brian. My thanks also to our investors and analysts for your interest in Kamada and for participating in today's call. I'm pleased to report our strong start to 2023 continued in the second quarter, both financially and operationally. We are well positioned to achieve our 2023 full year guidance, which I will discuss momentarily. I will begin with a high-level review of our strong financial results for the first six months of 2023. The total revenues of $68.2 million, which represented year-over-year growth of 32%, and Adjusted EBITDA of $9.5 million, an increase of 24% as compared to the first half of 2022. We achieved the top and bottom line growth anticipated in our business in the first six months of the year.
Importantly, we continued to effectively leverage our multiple growth drivers, including a significant increase in KEDRAB sales to Kedrion for further distribution in the US, the portfolio of four FDA-approved immunoglobulins acquired in late 2021, CYTOGAM, HepaGam, VARIZIG, and WINRHO SDF, and our Israeli distribution business. Looking ahead, we expect the momentum from the first half of the year to extend through the remainder of 2023, with annual profitability to be further meaningfully enhanced as compared to last year. As such, we are reiterating our full-year 2023 revenue guidance of $138 million-$146 million, and Adjusted EBITDA of $22 million-$26 million. The midpoint of the range would represent substantial growth of approximately 35% over 2022.
To reiterate what we have said previously, beyond 2023, we continue to anticipate annual double-digit revenue and profitability growth in the foreseeable years ahead of us, with significant upside potential and limited downside risk. As previously reported, in May, we entered into a securities purchase agreement with the FIMI, the leading private equity firm in Israel and a large existing shareholder of Kamada, under which FIMI will purchase an additional $60 million of our ordinary shares in a private placement. An extraordinary general meeting of the shareholders of the company to approve the private placement will be held later this month on August 29th, 2023.
As a reminder, under the terms of the purchase agreement, Kamada will issue an aggregate of approximately 12.6 million ordinary shares to FIMI at a price of $4.75 per share, which represents the average closing price of the company's shares on Nasdaq during the 20 trading days prior to the date of the purchase agreement. Upon the closing of the transaction, FIMI is expected to beneficially own approximately 38% of Kamada's outstanding ordinary shares and will become a controlling shareholder of the company within the meaning of the Israeli Companies Law. This strategic investment, if approved, will provide us with financial flexibility, allowing us to accelerate the growth of our existing business and pursue compelling business development opportunities. The process that we have initiated is expected to be further ramped up upon receipt of the shareholder approval and closing of the private placement.
With respect to our existing business, let's begin with KEDRAB, our anti-rabies immunoglobulin. We were pleased to announce last month that Kedrion has exercised its option to extend our distribution agreement for KEDRAB in the U.S. through March 2026. Moreover, we remain in active discussion with Kedrion to potentially further expand the scope of our collaboration. During 2022, we generated approximately $16 million in revenue from sales of KEDRAB to Kedrion for further distribution in the U.S. market, which is estimated to be a total of $150 million annually. During the first six months of this year, we experienced a significant increase in demand for the product in the U.S., and we anticipate even further momentum in the second half of the year, that include the summer months.
As a reminder, this product continues to generate more than 50% growth margins for Kamada. Additionally, our U.S. team, established during 2022, continues to achieve good progress in promoting our specialty immunoglobulin portfolio to physicians and other healthcare practitioners through direct engagement and opportunities at medical meetings. As we have said previously, our activities promoting this important therapy, primarily CYTOGAM and VARIZIG, represent the first time in over a decade that this hyperimmune specialty product has been supported by field-based activity in the US market. We remain encouraged by the positive feedback received from key US physicians who are seeking to publish new clinical data related to our products, while conducting educational symposiums that we believe will have a positive impact on the understanding of this medicine, contributing to continued growth in demand.
Importantly, in May of this year, we announced FDA approval for application to manufacture CYTOGAM at our Israeli facility after completing the technology transfer of the product manufacturing from its prime manufacturer, CSL Behring. I'm happy to report today that we recently obtained a similar approval from Health Canada, thereby successfully completing the tech transfer of this product. This approval ensure continued supply of CYTOGAM to the US and the Canadian markets with no interruption, and we expect to initiate sale of the product manufactured in our Israel facility early in the first quarter of this year. Moving on, looking further ahead with future catalysts, we continue to be pleased with the progress made at Kamada Plasma, our US-based plasma collection company.
Our 2021 acquisition of a plasma collection center in Houston, Texas, represented Kamada's entry into the U.S. plasma collection market and supported our strategic goal of becoming a fully integrated specialty plasma product company. We are successfully expanding the hyperimmune plasma collection capacity at our first center and we plan on opening our second collection center in Houston, Texas, in early 2024. On the development side, enrollment is ramping in our ongoing pivotal phase III InnovAATe clinical trial for the inhaled Alpha-1 antitrypsin therapy for the treatment of Alpha-1 deficiency. As the study has enrolled 62 patients through the end of July, which is approximately 30% of the over required enrollment to the study.
I'm happy to update today that we've recently received positive scientific advice from the European Medicines Agency, the EMA, which reconfirms the overall design of the ongoing study and acknowledge the statistically and clinically meaningful improvement in lung function, measured by FEV1, demonstrated in our previous phase II/III European study. As a reminder, the results of the previous study served as a basis for the design and the selection of the primary endpoint of our current pivotal phase III study. We are planning to complete our discussion with the FDA regarding the study progress by end of this year. As a reminder, Kamada's investigation in inhaled AAT treatment is a non-invasive, at-home treatment with an expected better ease of use and quality of life for Alpha-1 patients as compared to the current IV standard of care.
The inhaled product is the leading new innovative Alpha-1 treatment in advanced clinical stage. It represents a substantial opportunity to be a transformational product in the market that is already over $1 billion in the annual sales in the U.S. and Europe. With that, I'll now turn the call over to Chaime for a detailed discussion of our second quarter and first half 2023 financial results. Chaime, please go ahead.
Thank you, Amir. Good day, everyone. Total revenues for the second quarter were approximately $37.4 million, and for the six months of 2023, total revenues were $68.2 million, an increase of 59% and 32% respectively. The year-over-year growth during the first quarter and half was primarily driven by increased sales of KEDRAB to Kedrion, due to increased demand for the product in the US market. As a reminder, second quarter of 2022, a portion of the sales were delayed due to a labor strike at the company's manufacturing facility in Israel. Total gross profits for the second quarter of 2023 was $14.4 million, representing 39% margins, compared to $7.2 million, or 31% margin in the second quarter of 2022.
Total gross profits for the six months of 2023 were $26.3 million, representing 39% margin, compared to $18.5 million, or 36% margin in the first half of 2022. As a reminder, gross profit and gross margins for the second quarter of 2022 were affected by a $3.3 million loss as a result of the labor strike. As previously discussed, the company is accounting for depreciation expenses associated with intangible assets, which were generated through the late 2022 acquisition of our IgG product. The company's COGS and sales and marketing include approximately $1.3 million and $400,000, respectively, of such depreciation expenses per quarter.
Operating expenses, including R&D, sales and marketing, G&A, and other expenses, total $11.8 million in the second quarter of 2023, compared to $9.5 million in the second quarter of 2022. Operating expenses for the first half of the year total $23.4 million, an increase of approximately 14% over the first half of 2022. As we previously mentioned, we expect our overall operating expenditure to increase between 15%-20% during 2023 as compared to 2022. This is as we continue to invest our commercial activities as well as our phase III InnovAATe trial. As we did throughout 2022, we continue to account for financing expenses with respect to the revaluation of contingent consideration and the long-term assumed liability, all of which are related to the acquisition completed in 2021.
Net income for the second quarter of 2023 was approximately $1.8 million, or $0.04 per share on a fully diluted basis, as compared to a net loss of $3.9 million, or a loss of $0.09 per share in the prior year period. Adjusted EBITDA was $6 million for the second quarter of 2023, as compared to $1.3 million in the second quarter of 2022. For the first half of the year, Adjusted EBITDA was $9.9 million as compared to $4.6 million in the first six months of 2022. As a reminder, Adjusted EBITDA for the six months of 2022 were affected by $3.3 million loss as a result of the labor strike.
The Adjusted EBITDA for the first six months of 2023 represents a 24% increase compared to the Adjusted EBITDA, excluding labor strike-related loss for the first six months of 2022. As Amir highlighted earlier, we are reiterating our full year 2023 revenue guidance of $138 million-$146 million, and Adjusted EBITDA guidance of $22 million-$26 million. The midpoint of such range represents approximately 35% growth as compared to fiscal year 2022. In the second half of the year, we anticipate continued growth of sales of KEDRAB to Kedrion in support of the product in-market sales growth. Continued growth of the new IgG product sales in the U.S., fueled by the ongoing marketing efforts, as well as the expansion of ex-US sales of these products.
In addition, we expect enhanced profitability in the second half of the year as compared to the first half. Finally, cash provided by operating activities was $1.8 million in the second quarter of 2023, as compared to cash provided by operating activities of $10.9 million in the second quarter of 2022. Our total cash position as of June 30th, 2023, was $28.1 million. This figure does not include the expected net proceeds from the recently announced $60 million financing, which is expected to close later this quarter. That concludes our prepared remarks. We will now open the call for questions. Bob?
Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question at this time, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants who are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you. Thank you, our first question comes from the line of Annabel Samimy with Stifel. Please proceed with your questions.
Hi, everyone. Thanks for taking my call. I have a couple questions here. InnovAATe program, clearly it's initiated in the EU and it's progressing, that's, I guess, good enrollment traction now. I want to ask, I, I guess I want to understand what the biggest sticking points are with the FDA that you still need to discuss with them to, to sort of move this program forward in the U.S. Have you arrived at, at an endpoint, and you can tell us about which areas you're trying to navigate around? Thanks.
Annabelle, I'm not sure, that I heard you well enough. Operator, can you repeat the question, maybe?
Miss Samimy, could you repeat your questions, please?
Sure. Can you hear me? Hello?
Breaking up. Try, let's try again.
Okay, so I was, I was asking about the InnovAATe program that's initiated in EU. Obviously, they have, have sort of given you news that they continue to support the, the, the endpoint that they've, they've chosen, that you've chosen, and the EMA is good with this, and they've accepted this as, as an endpoint. Can you just help us understand the sticking points that you still have with the FDA and, and what you're still trying to navigate around in terms of the design of the study?
Great. Thank you for the question. We don't have any challenges or issues with the FDA regarding the design of the study. The study was designed in a harmonized fashion between the EMA and the FDA. It's under an FDA IND. That's based on the sequence of the meetings that we plan to do today and generating ongoing data. We started with a meeting with the EMA, and we had a scientific advice discussion with them, and we plan on submitting the data to the FDA and kind of reporting the progress to date by end of this year, including getting the feedback. Both agencies, EMA and FDA, are supportive of the FEV1 endpoint as our primary endpoint of the study.
What we reiterated in today's release is that we were very highly encouraged by the positive feedback received from the EMA. That included reconfirmation of the overall design of the study and acknowledging the statistically and clinically meaningful improvement in the FEV1 data demonstrated in the previous European study. We expect to receive similar feedback from the FDA upon providing the data and the progress update later this year.
Okay, great. Learnings, around the enrollment, this is obviously a rare disease and, and difficult to enroll. Is there anything that you're learning from your experience in Europe that could facilitate enrollment in the U.S.?
Yeah. Basically, everything we do currently, it's the same study, harmonized study, that will meet requirements for both submission of a BLA and MAA, of course, upon successful completion of the study. Enrollment is primarily done in countries where there are naive Alpha-1 patients, which are not currently treated with the standard of care, with the IV standard of care, because it's a placebo-controlled study. It's easier to recruit patients, especially for an orphan disease with limited number of patients, generally, in places where the IV is not available or not reimbursed. This is primarily in European countries, and that's why we are focused currently on recruitment in Europe. Again, I want to reemphasize, this is under a US FDA IND, fully acceptable by the FDA.
It's not a European study. It's a European and an FDA unified study that, if successful, will be submitted for both agencies for marketing authorization.
Okay, great. If I can just ask one last program question. Congratulations on the $60 million that you're gonna be closing soon. Maybe you can talk about, I guess, your allocated potentially to business development, but can you talk about any of the potential preclinical programs that you might be moving forward or priorities that you're focused on?
Yes. First, I would like to answer a kind of question related to the potential usage of the proceeds. We, we are very satisfied with the result of the strategic position that we've done in 2021 of the full FDA approval of globulin and establishment of our US commercial infrastructure as a result of this. We believe that this could be leveraged as a basis for significant additional growth, and that's our business development focus. We are proactively looking for additional BD opportunities within our areas of expertise, specifically plasma-derived products or transplant focused therapeutics. With regards to the, to the BD efforts and being very proactive in searching and looking for the right asset to be added to our portfolio, especially in the US market.
In regards to the preclinical activities, of course, our, the main efforts are around immune Alpha-1, being in a pivotal phase III study with a significant market opportunity. In addition to that, we, I think, announced in pre discussions that we have three early-stage, kind of, preclinical programs, which are ongoing. One is around plasma eye drops development. The second around the [immunoglobulins for PD], and the third one is a very unique, innovative approach for a fast production of the hyperimmune immunoglobulin in time of need, especially during pandemic.
We're better leveraging experience that we've gained during COVID, being the first company globally to develop plasma-derived anti-COVID immunoglobulin. We'd like to be prepared for potential future similar requirements, as well as kind of underserved areas that currently do not have sufficient immunoglobulin for a rare disease. That's the main focus. Three preclinical programs. All of them are progressing nicely by our R&D department.
Okay, great. Thank you so much.
Thank you, Anna.
Thank you. At this time, I'll turn the floor back to management, so we may take additional questions from the web.
Thank you. We've got a couple of additional questions from the web here, Amir. First, based on your discussions with the EMA, is there an opportunity to shorten the regulatory pathway in Europe for inhaled AAT?
Good question. As part of a scientific advice discussion with the EMA, we did inquire regarding potential acceleration of the study timelines through a potential reduction in sample size. The EMA feedback was that they confirm, and they support the current plan, while they do not encourage or do not support such acceleration through a reduction of the sample size. The feedback we received is that the current sample size meets the study power requirements. We are staying with the 220 patients that we plan to enroll. When earlier I mentioned that we have over 60 patients already in study, and this accounts for 30% of enrollment. That's the feedback, and that acceleration will not come from a smaller sample size.
Thank you, Amir. The final question from the web: Can you describe the market dynamics that are driving increased demand in the US for KEDRAB?
Yes, excellent question. First one, as, as we mentioned during the call, we do experience a significant increase in demand, a significant increase in our supply to Kedrion for further sales in the US market. We expect that those dynamics and that trend to continue moving forward for the rest of this year and into 2024, 2025. We are taking significant market share in this $150 million market. When we analyze, you know, the dynamics and what's, what's leading to this significant expansion, significant increase. First, I'd like to emphasize that we're very happy with the strong collaboration with the Kedrion team in the further marketing of the product in the US market. We, we, we believe, and we actually see that the teams are doing very well.
You know, our marketing efforts are very effective in reaching clinicians and healthcare providers, increasing awareness in regard to the need of using anti-rabies immunoglobulin in case of a suspected exposure to a rabid animal. Secondly, our product has some clear advantages, including its own label pediatric indication, which represents a clear differentiation compared to the competing products. With very effective further marketing efforts, very strong collaboration between the Kamada and the Kedrion team, and a very good differentiated product, which leads to the significant market share expansion and the growth that we are experiencing, the positive growth we're experiencing in the US market.
Terrific. Thanks, Amir. No further questions from the web. With that, I'll turn the call back over to you for any closing remarks.
In closing, thank you for the good questions that were posted on the web and by the listeners. We are pleased with our solid performance in the first half of the year. We're excited about the potential opportunities that lie ahead following the potential approval of the $60 million financing. We look forward to continuing to support clinicians and patients with the important life-saving products that we develop, manufacture, and commercialize. We thank you all for your interest and your support, and we remain committed to creating long-term shareholder value. Thank you again, and we hope all of you stay healthy and safe.
This will conclude today's conference. You may now disconnect your lines at this time. Thank you for your participation.