Good day, ladies and gentlemen, and welcome to Kamada Limited's third quarter of 2023 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded. I'll now turn the conference over to Mr. Brian Ritchie. Please go ahead, sir.
Thank you. This is Brian Ritchie with LifeSci Advisors. 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 nine months ended September 30th, 2023. If you have not received this news release, please go to the investors page of 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 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 contents of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, Monday, November 13th, 2023. Kamada undertakes no obligation to revise or update any statement 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. To begin, I'd like to indicate that the company continues to conduct its business operation in Israel with no effect on business continuity, and its global supply of product is not expected to be interrupted as a result of the recent events in Israel. With that, I'll now pivot to the strong financial and operational momentum throughout our business that has us well positioned to achieve our 2023 full year guidance, which I will discuss momentarily. I'll begin with a high-level review of our robust financial results for the first nine months of 2023.
With total revenues of $106.1 million, which represented year-over-year growth of 26% and Adjusted EBITDA of $17.7 million, an increase of 67% as compared to the first nine months of 2022, we achieved the top and bottom line growth anticipating our business in the first nine months of the year. We continue to effectively leverage the multiple growth drivers in our business, including a significant increase in KEDRAB sales to Kedrion for distribution in the U.S. market. The portfolio of four FDA-approved immunoglobulins acquired in late 2021, Cytogam, HepaGam, Varizig, and WinRho, and our Israeli distribution business. Looking ahead, we expect the momentum for the first nine months of the year to extend through the fourth quarter of 2023, with annual profitability to be increased 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 that range would represent a 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, with significant upside potential and limited downside risk. While I noted our multiple growth drivers earlier, KEDRAB, our anti-rabies immunoglobulin, has been especially impactful during the first nine months of 2023, a trend we expect to continue in the fourth quarter and beyond.
Throughout the first nine months of 2023, we experienced a significant increase in demand for the product in the U.S., and we anticipate the continuation of this momentum moving forward. The significant market share growth demonstrated by KEDRAB is being driven by Kedrion's excellent commercial activity, and thanks to the FDA approval obtained in 2021 for the label expansion for the product that has differentiated it as the first and only human rabies immunoglobulin available in the U.S. market to be clinically studied in children. Our future prospects were further enhanced in late August, when we received shareholder approval and then closed the previously announced $60 million private placement with the FIMI Opportunity Funds, the leading private equity firm in Israel and a large existing Kamada shareholder.
This strategic investment provide us with the financial flexibility, allowing us to accelerate the growth of our existing business and pursue compelling business development opportunities. While Chaime will discuss the net profits from the private placement in more detail shortly, I'd like to highlight that as a result of this transaction, we're also able to pay down the entire remaining outstanding balance of our existing bank loan, and we are now debt-free. Moving on, our U.S. team, established in 2022, continues to achieve steady progress in promoting our specialty IgG portfolio to physicians and other healthcare practitioners through our direct engagement and opportunity with medical meetings. As we have said previously, our activities promoting these important therapies, primarily Cytogam and Varizig, represent the first time in over a decade that these hyperimmunoglobulins specialty products have been supported by field-based activity in the U.S.
We are excited about the future growth potential of Cytogam and are pleased to report that Cytogam manufactured at our Israeli facility is now available for commercial sale in the U.S. This follows the pivot to receive FDA approval of the technology transfer process of Cytogam from its previous manufacturer, CSL Behring. The availability of Kamada-manufactured Cytogam in Canada is expected before the year ends. We have also recently established our first scientific advisory board, consisting of eight U.S.-based, world-renowned thought leaders in the solid organ transplantation field. The advisory board focus on our newly implemented U.S. clinical program for Cytogam, including new opportunities and future research and development possibilities.
As we said, would be the case, key U.S. physicians are beginning to proactively support the use of these products, starting with Cytogam, which was the subject of a poster presentation at the recently held ID Week 2023 in Boston. At this important medical meeting, results were presented of an investigator-initiated five-year retrospective study consisting of 325 lung transplant patients, evaluating the real-world use of Cytogam in combination with antiviral agents for the prevention of CMV disease in high-risk CMV mismatched lung transplant recipients. The presenting KOL, Dr. Fernando Torres, Clinical Chief, Division of Pulmonary and Critical Care at University of Texas Southwestern Medical Center, concluded that the use of proactive multimodality CMV prophylaxis, consisting of antivirals and immune augmentation with CMV immunoglobulin, may improve outcomes among high-risk CMV mismatched lung transplant recipients.
Moving on, looking farther ahead at future catalysts, we continue to be pleased with the progress made at Kamada Plasma, our U.S.-based plasma collection company. Our 2021 acquisition of a plasma collection center near 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 continue to successfully expand the hyperimmune plasma collection capacity at our first center and intend on opening our second collection center in Houston, Texas, early next year. On the development side, enrollment continued to ramp up in our ongoing pivotal phase III InnovAATe clinical trial for inhaled alpha-1 antitrypsin therapy for the treatment of alpha-1 deficient patients. To date, we've enrolled over 30% of the overall required enrollment of the study.
We have recently also received positive feedback from the independent Data and Safety Monitoring Board, the DSMB, which recommended study continuation without modification for the sixth time since the study was initiated, based on encouraging safety data observed in the study to date. Noting the statistically and clinically meaningful improvement in lung function, measured by FEV1, demonstrated in our previous Phase 2/3 European study. We continue to anticipate advancing our discussion with the FDA regarding study progress by end of this year. As a reminder, Kamada's investigational inhaled AAT treatment is a non-invasive at-home treatment with an expected better ease of use and quality of life for alpha-1 deficient patients as compared to the current IV standard of care.
The inhaled product is the leading new innovative alpha-1 deficiency treatment in advanced clinical stage, and it represents a substantial opportunity to be a transformational product in a market that is already over $1 billion in annual sales in the U.S. and the E.U. Finally, I'd like to formally welcome Professor Benjamin Dekel and Assaf Itshayek, who were recently appointed as Independent Directors on our board. Professor Dekel is known internationally as one of the most innovative and highly recognized researchers in the field of human renal stem cell biology and regenerative medicine. Mr. Itshayek has over 15 years of high-tech industry experience in senior management and finance executive positions. We look forward to leveraging the scientific and financial expertise of these highly accomplished individuals as we continue advancing our existing business and pipeline and evaluate potential new opportunities.
With that, I'll now turn the call over to Chaime for a detailed discussion of our financial results in the third quarter and the first nine months of 2023. Chaime, please go ahead.
Thank you, Amir, and good day, everyone. We're happy to report a significant year-over-year increase in revenues and profitability for the third quarter and first nine months of 2022.
...Total revenues for the third quarter were approximately $37.9 million, and for the nine months of 2023, total revenues were $106.1 million, an increase of 18% and 26%, respectively. The year-over-year growth was primarily driven by increased sales of KEDRAB to Kedrion, due to increased demand for the product in the U.S. market. Total gross profit for the third quarter of 2023 was $14.8 million, representing 39% margins, compared to $12.9 million or a 40% margin in the third quarter of 2022. Total gross profit for the first nine months of 2023 was $41.1 million, representing a 39% margin, compared to $31.4 million or a 37% margin in the first nine months of 2022.
As previously discussed, the company is accounting for depreciation expenses associated with intangible assets, which were generated through the late 2021 acquisition of our IgG products. The company's cost of goods sold and sales and marketing expenses includes approximately $1.3 million and $400,000, respectively, of such depreciation expenses per quarter. Operating expenses, including R&D, sales and marketing, and G&A and other expenses, totaled $10.4 million in the third quarter of 2023, compared to $10.3 million in the third quarter of 2022. Operating expenses for the first nine months of 2023 totaled $33.8 million, an increase of approximately 9% over the prior year period. The increase, as compared to 2022, is related to the advancement of 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 third quarter of 2023 was approximately $3.2 million, or $0.06 per share on a fully diluted basis, as compared to a net income of $500,000 or $0.01 per share in the prior year period. Adjusted EBITDA was $7.9 million for the third quarter of 2023, up 31% as compared to the $6 million in the third quarter of 2022. For the first nine months of 2023, Adjusted EBITDA was $17.7 million, up 67% as compared to the $10.6 million in the first nine 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. Finally, cash provided by operating activities was $900,000 in the third quarter of 2023, as compared to cash provided by operating activities of $5.5 million in the third quarter of 2022. Our total cash position as of September 30, 2023, was $52.6 million, as compared to $34.3 million on December 31st, 2022. This includes $58.2 million of net proceeds from the previously announced $60 million financing, which closed in September of 2023.
In addition, during the quarter, we paid a total of $17.4 million to close the outstanding balance of the bank loan, and $11.5 million was used for old milestone payments. These actions are reflected in our cash balance as of September 30th, 2023. Importantly, as Amir noted, we are now debt-free. Before proceeding to take your questions, I would like to also note that we filed today the notice of the company's Annual General Meeting to be held on Thursday, December 28. We will now open the call for questions. Operator?
Thank you, sir. Ladies and gentlemen, we will now be conducting a question and answer session. If you'd like to ask a question, please press star then one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two to leave the question queue. For participants making use of speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Our first question comes from Annabel Samimy of Stifel. Please go ahead.
Hi, guys. Thanks for taking my question and good quarter. So I just want to understand some of the dynamics for Kedrion. You're obviously seeing some very significant growth there. Can you tell us... It's been approved for some time, so can you tell us what do you think the key underlying drivers are? Is it primarily the label change? Is there something else that's driving that underlying growth, a refocus on the sales? And can we depend on that consistent growth and those consistent trends going into the next couple of years? Thank you.
... Hi, Annabel. Thank you for the question. We believe there are multiple dynamics in the market which positively affect the significant growth of the KEDRAB market share. It has to do with the label expansion that we have received and that we have implemented last year, end of 2021 into 2022, and then the impact of this, you know, into 2023. Of course, the end of the pandemic and the fact that, you know, the overall market has gone back to where it was prior to the pandemic, this also has a significant effect. The excellent work done by our partners, Kedrion, in the U.S. market, with a very wide coverage, reaching almost every hospital in America and being able to promote the product and its benefits.
And also, there was another product that was in the market until late last year, which exited the market, and we are able to take a significant market share from that exit of that product.
Okay. Great. And anything that you can update us on regarding some pipeline efforts that you have going on?
Pipeline efforts? What's the question?
Anything in the pipeline that you have any updates with regard to, the clinical studies that you're enrolling right now, and for the AAT indication or any selections from, you know, early-stage programs that you are willing to go take forward?
Yeah, yeah, yeah. So main effort is, of course, around the inhaled AAT, and I spoke about it on the call. So we are advancing the recruitment to the study and discussion with the regulators, and we had a very positive discussion with EMA. We expect to have a similar discussion with the FDA before year-end. We had a sixth successful DSMB meeting recently, which has kind of validated the excellent safety profile of the product and the safety data that we are accumulating from the current study. In addition, we do have three early-stage development programs of other plasma-derived products that we have discussed in previous calls. We have a product which is a plasma eye drops that is in a preclinical stage.
We have an anti-tuberculosis immunoglobulin product, which is in preclinical development, and we have a device that we are developing, we call it JetImmune, which is an automated, portable, small-scale system for extracting and purifying hyperimmune immunoglobulins from convalescent plasma. So those are the three early-stage programs which are under development. Once we make some material progress, we will update. All of them are in preclinical studies, and we hope to start clinical studies in 2025 for the three products.
Okay, great. Thank you so much.
Thank you. Ladies and gentlemen, at this stage, I'll hand you over to Brian Ritchie for questions from the webcast. Thank you.
Thank you. A couple of questions that have come in off the web. First, you know, at various points of the year, as you've already talked about, KEDRAB has been the driver. Prior to that, you talked about the four products, the four IgG products being, you know, the primary driver. Seems like there's a lot of diversity in your business, if you will. Maybe, Amir, talk a little bit about that, if you could.
Yes. Our business is very healthy, if I may use this term. I think we continue to effectively leverage multiple growth drivers in our business. So as we mentioned, KEDRAB has been growing significantly with an increase in market share. We also see a nice international growth of the four FDA-approved products acquired late 2021. We are investing in the medical, clinical, and commercial activities around Cytogam and Varizig in the U.S. market with the commercial and medical team we've established in the U.S., and we have our Israel distribution business, which is growing. So all of that, if I may, it's like a nice mix of products and territories that each one of them is contributing to overall growth.
Looking forward into 2024 and beyond, we expect this growth to continue with the multiple growth drivers that we own.
Thanks, Amir. Another question that's come in: Now that the private placement has closed, maybe talk a little bit about what you'll be looking for from a business development standpoint and potentially looking to add.
Yes. So with the additional funds, thanks to the FIMI Investment, we are proactively looking to add some business development initiatives. We are looking to leverage the commercial infrastructure that we have established in the U.S. market to bring in, to acquire or to in-license additional products. This could be either primarily in the transplantation field, where we are currently mainly focused, or specialty plasma products.
And we are, as I mentioned, we are proactively looking for opportunities, and then we are screening the different assets which are, which are brought to us, and hoping that in the future, we will be able to, to close such a transaction, which will help us to continue growing the business in addition to the organic growth I just spoke about, so also to grow through an M&A.
Terrific. Thank you, Amir. With that, I'll pass the call back over to you for any closing remarks.
Thank you, Brian. So in closing, we are pleased with our solid performance during the first nine months of the year. We are excited about the potential opportunities that lie ahead following the closing of the $60 million financing. We look forward to continuing to support clinicians and patients with the important life-saving product that we develop, manufacture, and commercialize. We thank you all, new investors, for their support and remain committed to creating long-term shareholder value. Thank you all, and we hope you all stay healthy and safe. Thank you.
Thank you, sir. Ladies and gentlemen, that concludes today's event. Thank you for joining us. You may now disconnect your lines.