Greetings, and welcome to Kamada Ltd.'s Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Troy Williams, LifeSci Advisors. Thank you, Mr. Williams. You may begin.
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 identifies specific factors that may cause actual results to 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 14th, 2024. 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 is my pleasure to turn the call over to Amir London, CEO. Amir?
High-level review of our growth strategy, which is successfully reflected in the strong financial results we delivered in the second quarter and first half of 2024, and provide a summary of the drivers we are focused on for the balance of this year and into 2025. Then I'll turn the call over to Chaime for a more detailed review of our financial results. Following this, we'll open the call for your questions. So let's begin. I'm pleased to report that the strong financial and operational start to 2024, as reported last quarter, continued through our second quarter, supporting and validating our growth strategy we are executing on. Kamada's growth strategy is built upon four main pillars. One, organic growth of our existing commercial portfolio of six FDA-approved products marketed in over 30 countries. Secondly, M&A transactions, which are expected to support and expedite our growth.
Thirdly, the plasma collection centers we are opening. Lastly, the ongoing phase 3 pivotal trial of our inhaled AAT product that is targeting an over $2 billion market. During the first 6 months of 2024, we have achieved significant progress advancing each of these growth catalysts, as I will shortly detail. But first, I'll provide a high-level summary of the financials. Total revenue were up 13% to $42.5 million for the second quarter as compared to the second quarter of 2023. Our adjusted EBITDA for the second quarter was $9.1 million, a 51% increase compared to the prior year quarter.
Total revenues were up 18% to $80.2 million for the first half of 2024, as compared to the prior year period, and first half Adjusted EBITDA was $16.6 million, up 68% over the prior year period, with a 21% margin of revenue. We are especially pleased with this substantial increase in profitability. In addition, for the first half of the year, we reported $15 million of cash provided by operating activities, which demonstrates our ability to convert our reported Adjusted EBITDA to operational cash flow.
Based on our continued strong performance and expectation for a cadence of financial results in the second half of 2024, consistent with those achieved in the first six months of the year, we are reiterating our full year 2024 revenue guidance of between $158 million-$162 million, and our Adjusted EBITDA guidance of $28 million-$32 million. We continue to benefit from the strength of our diverse commercial portfolio, including our six FDA-approved products, with KEDRAB and CYTOGAM being our two key products. Of significance, both products demonstrated significant year-over-year growth in the first half of the year as compared to the first six months of 2023. During the first quarter, we completed a successful launch in Israel for our first biosimilar product.
We expect to launch our next biosimilar product by the end of this year, and we have several other in the pipeline to be launched in the coming years. We anticipate that biosimilars will become an increasingly important aspect of our distribution business in Israel, with peak potential annual sales between $30 million-$34 million. Importantly, we continue to maintain a very strong balance sheet. We ended the second quarter with approximately $56.6 million in cash, and we have the financial strength to both accelerate the growth of our existing business as well as pursue compelling business development and M&A opportunities. A process we remain actively engaged in and which could expand our commercial portfolio. These opportunities are expected to support our continued double-digit growth beyond 2024. As for our plasma collection centers, we continue to progress Kamada's plasma operation in the U.S.
We are successfully expanding the specialty plasma collection capacity at our first center in Beaumont, Texas, focused on the collection of anti-rabies and anti-D plasma types, and are planning to open our new center in Houston, Texas, by end of next month, while advancing the construction of a third site located in San Antonio, which is expected to be open in early 2025. As a reminder, each new collection center contributes annual revenues between $8 million-$10 million. Looking farther ahead at our growth pillars and catalysts, enrollment continues in our ongoing pivotal phase 3 InnovAATe clinical trial for Inhaled AAT therapy. As a reminder, earlier this year, we filed an IND amendment with the FDA that consisted of a revised statistical analysis plan and study protocol, which, if approved, may allow for the acceleration of the program.
We continue to anticipate further FDA feedback before the end of this year. As we have said previously, in parallel to the clinical and regulatory progress achieved here, we also continue to have discussion related to the potential partnering of this promising investigational late-stage product candidate, which targets a market of over $2 billion. With that, I will now turn the call over to Chaime for a detailed discussion of our financial results for the second quarter and first half of 2024. Chaime, please go ahead.
Thank you, Amir. As Amir stated at the top of the call, our performance continues to be excellent through the midpoint of 2024. Total revenues for the quarter were approximately $42.5 million, a 13% increase compared to the second quarter of 2023. For the first half of the year, total revenues were $80.2 million, up 18% from the prior year period. The first half sales represented 50% of the midpoint of our annual guidance. The year-over-year growth was primarily driven by increased sales of both KEDRAB and CYTOGAM, due to increased demand for the two products in the US market. Approximately 70% of our revenues during the first half of 2024 were generated by sales in the US market.
Total gross profit for the second quarter of 2024 was $19 million, representing a 45% margin, compared to the $14.4 million or 39% margin in the prior year period. Total gross profit for the first six months of 2024 was $35.7 million, representing a 45% margin, compared to $26.3 million and margin of 39% for the first six months of 2023. Operating expenses for the first six months of 2024 totaled $26 million, an increase of 11% over the prior year period, which was in line with our expectations. The planned increase was in support of our expanded commercial activities, as well as our ongoing phase 3 InnovAATe trial.
Net income for the second quarter was $4.4 million, or 8 cents per diluted share, as compared to net income of $1.8 million, or 4 cents per share, recorded in the second quarter of 2023. For the first half of 2024, net income was $6.8 million, or 12 cents per share, versus negligible income for the same period of 2023. Adjusted EBITDA was $9.1 million in the second quarter of 2024, as compared to $6 million in the second quarter of 2023. Adjusted EBITDA was $16.6 million in the first six months of 2024, as compared to $9.9 million in the first six months of 2023.
The adjusted EBITDA for the first half of the year represents a 21% margin of revenues and 55% of our midpoint annual guidance. Finally, our financial position remains strong and provides us the strength and flexibility to accelerate the growth and profitability of our existing business and pursue compelling new business development opportunities, which collectively will continue to support double-digit top and bottom line growth rates beyond 2024. That concludes our prepared remarks. We will now open the call to questions.
Thank you. We will now be taking a question and answer session. If you would like to ask a question, please press star one on your keyboard. Confirmation will indicate your line is in the question queue. You press star two if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please, while we pull for questions. The first question comes from the line of Annabel Samimy with Stifel. Please go ahead.
Hi, everyone. Thanks for taking my questions and great quarter. So I had a few here. First, on the Inhaled AAT, I'm just was curious. I know you're saying that you expect a response from FDA before the end of the year. But is there any dialogue during this period, and do you have any sense of where this might land? Is there any kind of pushback that you expect? And if they do, in fact, accept the new statistical plan, how could that impact the timing of the trial? How does it change the sizing? And you know, maybe you can just help us understand what kind of impact that would have. So that's my first question.
And then, the second is, if you could help us understand where enrollment is at this point. Has the enrollment become more competitive as we see a couple other players in the market, and just trying to understand, how you are in terms of timing there?
Okay. Hi, Annabel. Thank you for your question. So, as described during the call, we did submit the revised statistical plan to the FDA during the second quarter. We expect feedback before the end of the year. We didn't receive a feedback yet, so we're just waiting now to get, you know, the initial feedback, and if needed, there's going to be additional discussion between us and the FDA in order to have a clear roadmap in regards to that previous discussion about potentially changing the p-value for efficacy. Enrollment continues. We are around 40%-45% into the study enrollment. In general, being a rare disease and being a placebo-controlled study, recruitment is always a challenge in those type of studies, but we are making progress.
We opened additional sites recently, and we expect to complete enrollment to the study by end of next year. The impact of potentially reducing number of patients, number of subjects will be reflected in a matter of a few months' difference in terms of recruitment into the study.
Okay, great. And if I can, have a follow-up on CMV, when can we expect the next data releases and any movement on the guidelines yet, with regards to its use for prophylaxis in high-risk patients? Thanks.
You mean CYTOGAM and CMV? That was the question?
Yes. Sorry, CYTOGAM and CMV. Yes.
Yeah. So we are working with multiple U.S. KOLs on different studies and different data collections initiatives based on either kind of historical data, which is already in their systems and is being pulled out in order to see the benefits of CYTOGAM versus the standard of care, primarily focused on the high-risk patient population. Working on, you know, the consensus document is something that the KOLs are doing. It's a process which is being revised or being discussed, you know, every few months, every few years, sorry. So we expect, we believe that this is going to be part of the next discussion of that forum.
In general, I can say that the work that we've been doing since 2023, since last year, related to almost relaunching the product in the U.S. market in terms of new clinical and medical data, having people on the ground, you know, talking to the physicians and presenting the data, is being fruitful. We see the results in this last six months, CYTOGAM sales and CYTOGAM performance, and we are optimistic that this will continue moving into next year and the years to come.
Okay, great. Thank you.
Thank you.
Hello, Amir and Chaime. This is Richard Hankin with Zacks. I'm calling on behalf of David Bautz. Just, he's got a few questions for you, and I think the first one you just answered. He was curious about how the timelines for the program, for the phase 3 InnovAATe trial would be possibly revised. And I think you know, you stated, you gave an answer on that or, you know, where things stand. So I guess his next question is the AAT program. Are you focused on finding a global commercialization partner or possibly smaller regional partnerships? Could you talk about that a little bit? Number one, first question. I just got a few questions.
Yeah. So we're talking with potential partners. It's primarily, of course, focused on the U.S. and Europe. These are the two main markets where the business potentially, the patients are, and the regulatory agencies that we're working with. It could be one partner for both territories, or it could be, you know, two separate, two different partners for the two territories. So this is our focus, U.S. and Europe, and we're working with the FDA-
Got it.
- and the EMA as regulatory agencies in order to get the product approved.
Got it. Okay, thank you. Next question. Business development opportunities. Are you guys open to in-licensing earlier-stage assets, or is the focus gonna simply be on commercial-stage products?
The focus is on commercial stage or near commercialization stage. So, we'd like to support the growth of the company, the commercial growth of the company. In addition to our strong organic growth, we'd like to support it by M&As, the investment that was made last year by the FIMI Fund was specifically targeting another M&As. I think we, the board, happy with the transaction we've done late 2021, and the way that we've integrated the new products we acquired back then into Kamada, establishing our U.S. commercial team, and we would like to build on that success and to leverage that success with additional commercial products.
Got it. All right. Thank you, Amir. Final question. This is, you know, positive cash flow is starting to ramp up, which is fantastic. So keeping your retail ownership in mind and keeping our retail investor network in mind, any thought to potentially paying a dividend in the future?
It's a question or a comment?
It's a question.
Yeah. So can you repeat the question, please?
Yeah. Your positive cash flow is starting to ramp up. So now you guys have, you know, between your retail ownership and our retail investor network, you know, that are interested in the story, is there any thought about potentially paying a dividend in the future?
Ah, so-
Have you thought about that? Have you talked about it?
So we might pay dividend in the future. Currently, we are focused on M&As and BD transaction, like you asked me on the previous question.
Right.
We would like to utilize the money we are generating from the existing business to continue growing the business through M&As. In the future, dividend could also be an option. This is not something currently discussed or approved by the board.
Got it. Okay. That was it. Thank you very much, Amir.
You're welcome.
Thank you. Next question comes from the line of Troy Williams from LifeSci Advisors. Please go ahead.
Thanks. Just wanted to see if you kind of expand on what's your current market share of KEDRAB, and your expectations there for the future. Thanks.
So we believe that, in the US market, KEDRAB is, anywhere between 40%-50% market share. We continue growing the product, we continue taking market share, we believe the product has still room to grow, above the 50%, that we have been discussing, in the past. You know, we have the $180 million guaranteed revenues for this, coming four years, and this is like a minimum, commitment by Kedrion, and we believe that, it can grow even further.
Mr. Williams, are you done with the question?
Yes, that was all. Thank you.
Thank you. Ladies and gentlemen, we have reached the end of question and answer session. I would now like to turn the floor over to Amir London for closing comments.
Thank you very much. So in closing, the successful execution of our growth strategy is reflected in the strong financial results we delivered in the second quarter and the first half of 2024. We are excited about our opportunities to advance the four main pillars of our growth strategy described during the presentation. We look forward to continuing to support clinicians and patients with the important life-saving products that we develop, manufacture, and commercialize. We thank all of our investors for their support and remain committed to creating long-term shareholder value. We hope you all stay healthy and safe, and thank you for joining us on today's call. Good day, everyone.
Thank you. This concludes our today's teleconference. You may disconnect your lines at this time. Thank you for your participation.