Hi, good morning or good afternoon, depending on where you are. Welcome to the Sidoti & Company August Virtual Investor Conference. The next company to present is Kamada Ltd. Representing the company is the CEO, Amir London. As always, this will be a 30-minute presentation. There should be some time at the end for the presentation for questions, so if you do have a question, you can type them into the Q&A tab at the bottom of your screen. With that out of the way, it's all yours, Amir.
Thank you, Jim, and thank you everyone for joining us today. So it's great privilege to present Kamada. Kamada is a profitable, growth, company through specialty plasma therapies. So I'll take you today through the next few slides with the journey of Kamada. So we are a leader in the specialty plasma space. The company has been growing significantly over the last few years. We guided the market that this year we'll be selling between $158 million-$162 million, with $28 million-$32 million EBITDA. Yesterday, we published our first six months results, and we are on track to meet this guidance. We've been growing around 16% on average over the last four years, and I'll show the chart showing our impressive growth. And we are generating cash.
We have over $56 million in the bank. And the company has developed, over the last few years, a very solid roadmap of growth. It's combined of organic growth from existing products with six FDA-approved products sold in over 30 countries. We have the capacity, the bandwidth, the product, the resources to continue growing the business significantly. We're also proactively searching for the right opportunities for an M&A transaction. We would like to accelerate our growth through acquiring or in- licensing additional products. We're looking at commercial stage products that will have a positive impact already in 2025. We're in the process of opening plasma collection centers for our own needs as our main raw material, but also as a source for additional revenue, selling to external parties.
We have an exciting phase III pivotal study in AAT in a $2 billion market, which I'm going to talk about throughout my presentation. The company is known for its innovation and for being agile, moving fast, being vertically integrated. Over the last few years, we've been the first to develop many things. First to develop a liquid Alpha-1 product, first to develop Alpha-1 therapy and bring it all the way to a pivotal phase III study. First to treat COVID patients with anti-COVID immunoglobulin. First to demonstrate efficiency and efficacy, sorry, of KEDRAB, of anti-rabies immunoglobulin in pediatric population.
So these examples are just a subset of areas that we've been able to really be innovative, agile, with a lot of creative, with a lot of passion to be pioneers in the area of specialty plasma products. We're active in over 30 countries. We sell direct in the U.S., in Canada. We have an office in Dubai, responsible for the MENA region, and we have an office in Israel, responsible for distribution and sales of our product in the Israeli market. In addition, we are active in over 30 countries through a strong network of local partners and distributors. Management team has been running together for quite some time. Most of the people here have been with the company for six, seven, eight years. Individuals with proven track record, working well together and developing the company.
We are known for our, for execution, meeting our commitments. I don't remember, a time that we gave the market a guidance which we have missed on. And this is also true for this year, and looking forward, also, for the next few years with our, guidance, it will be growing double digits every year. So this is, I think, one of the, the major advantages of, of, working with Kamada, investing in Kamada. You know, you, you can trust that we will deliver upon our, commitments. This chart shows our, progress over the last four years. So if you look on the left, you see our revenues. In 2021, we sold $104 million. This year, we are, around $160 million. So this represent around 16% annual, growth on average.
On the EBITDA side, 2021, we were $6 million, and this year, we are targeting between $28 million-$32 million, so that's significant growth. And as I mentioned, when we will be presenting here our 2025 guidance, it will also include our double-digit projection, and same for the next few years on an annual basis. Looking at our first six months' performance, so revenues, we had $80.2 million. It's exactly kind of the midway to meet our annual target, representing 18% growth compared to last year. Gross profit, $35.7 million, representing 36% increase year-over-year. Net income, we become profitable with $6.8 million, and the EBITDA, $16.6 million, representing 68% growth compared to last year.
Importantly, we also generated $15 million of cash from operations in the first six months of the year, and this high correlation between the adjusted EBITDA and the cash, I think it's a good testament to our ability to convert EBITDA into cash. This is why we keep emphasizing adjusted EBITDA. This is a real number converted into real cash the company is able to generate... So looking at our four pillars I mentioned earlier, so we're looking at organic growth, M&A transactions, the plasma collection centers, and the phase III pivotal inhaled AAT study. Looking at this over a roadmap of timelines, so we are growing double-digit, as I mentioned. So organic growth is already happening and will continue to be part of our growth over the next few years.
M&As, we are looking for commercial stage assets that will have positive impact already in 2025. Plasma collection centers are going to be open. The first one is going to be open next month. The other one going to be open beginning of 2025, and those centers will become with positive financial impact upon reaching some ramp-up phase, and we expect it to happen already in 2026. And in Inhaled AAT, the study in the pivotal phase expected to reach a result in 2028. If successful, this will be in the market in the 2029 timeframe. Looking a little bit deeper into the main drivers, growth drivers, so KEDRAB, our anti-rabies immunoglobulin, has been our lead product over the last few years. There are only two products in the U.S. market. We are one of two FDA-approved products.
It's the leading human rabies immunoglobulin in other territories like Canada, Australia, Israel, and WHO. We've been registering and winning the local national tenders in those countries. We have a guaranteed agreement with our partner for the U.S. market, Kedrion, that they are required to buy from us a minimum quantity equal to $180 million of the product over the last four years, and this is a minimum. We're already seeing higher numbers for the 2024, so we expect this to be a bigger number over the next few years. We have the only product that has been proven to be effective and safe in children in a clinical study, which is like a label expansion we've done a few years ago, and this gives us a major competitive advantage. The market in total is $150 million.
We believe we are currently between 40%-50% market share, and that we are continuing to grow. We see it quarter after quarter. The second leading product is CYTOGAM. This is an anti-CMV immunoglobulin used after solid organ transplantation. CMV is the leading cause for organ rejection post-transplant, and we have the only product of its type approved by the FDA and Health Canada. Organ transplantation is growing in general, around 9% annually in the U.S., and of course, the more transplant, the more procedure, the more need for our products. We are growing through that. But also, we are doing a lot of work in the field, working with the U.S. KOLs to generate new clinical and medical data and present it to the medical community. With that, we expect to see continued growth over the next few years.
In 2023, we sold $17 million of the product. We expect this year to be already above $20 million, and we expect to continue growing double digit every year over the next few years, bringing the product to around $35 million-$40 million sales in the U.S. and Canadian market over the next few years. In Israel, in addition to our own proprietary products, we also act as a distributor, representing around 15 different companies with 25 different products sold in Israeli market. This is around a $25 million business. The main growth driver currently is the portfolio of biosimilar products based on three agreements that we've signed with international companies. The leading one is Alvotech. The first biosimilar was already launched earlier this year.
The second one will be launched toward the end of this year, and we expect continuing launching the entire portfolio over the next four to five years, with estimated peak annual sales over $30 million. So this will more than double our Israeli distribution business. As I mentioned, we are proactively looking for the next acquisition, next M&A, based on the successful acquisition we've done in late 2021. So we are-- we know how to buy, to acquire, to merge, and to integrate products and capabilities into the company. So we are looking specifically at areas of our current activities. We're looking at products which will be synergetic to, you know, existing commercial or production activities.
Main focus is on specialty plasma-derived products and/or products that are being used in the transplantation field. In the plasma collection space, as I mentioned, we made an acquisition in 2021, acquired our first center based in Beaumont, Texas, and then based on that license, FDA license for plasma collection, we are currently opening two additional center. The first is going to be open next month in Houston, and the next one going to be open in San Antonio in the first part of 2025. Each one of those centers is going to collect hyperimmune specialty plasma for our own needs, as well as normal source plasma, which will be sold to external clients. Each center, upon maturity, is going to contribute between $8 million-$10 million to Kamada's business. Moving on to our phase III clinical study.
So we are a major player in the Alpha-1 deficiency space. Alpha-1 deficiency is a genetic chronic disease, people that are born with lack of self-production of the protein called Alpha-1. Most of those people develop a severe lung disease, and the treatment, the standard of care, is to give them a weekly augmentation treatment, a weekly infusion, intravascular treatment of the missing protein. This has been the standard of care for many years. The market has been growing significantly, around 7% a year, and currently, it's around $1.4-$1.5 billion, as you can see on the chart on the left. Kamada developed a nebulized inhaled version of the treatment. This is really potential game changer in this Alpha-1 market. The lungs are the target organ.
When you give it by IV, only a very small portion actually gets into the lungs, but you give it by inhalation, as you see here on the lady on the right, she's basically nebulizing our product, our drug. When you give it by inhalation, it goes directly into the lungs, so it's a much more effective mode of administration. We're in a phase III pivotal study. Currently, there are around nine active sites. We recruited around 40%-45% of the patients already in the study. We also recently started an open-label extension. The patients taking once daily inhalation session that takes between 10-12 minutes, and the endpoint of the study is lung function measured by FEV1, with secondary endpoints, like lung density, measured by CT scan. This is a non-invasive at-home treatment, so much better than a weekly infusion.
Expected better ease of use and quality of life. We're getting very good feedback from the patients, and a very good tolerance for the treatment, and adherence to the daily administration. As I mentioned, it's a much more effective mode of treatment compared to the IV because it goes directly into the lungs, which allows us to give only one-eighth of the dose compared to the current standard of care. So a phase III pivotal study in a $2 billion market with significant potential advantages. That's the outlook for this product. Timelines, 2028 to 2029 opportunity. So this is a major opportunity for Kamada, built upon the experience that we've gained over the last 15 years in the Alpha-1 deficiency space. So in general, to summarize, Kamada has significant potential.
Kamada is a growing biopharmaceutical product with unique, special capabilities in the specialty plasma-derived field. Current guidance for 2024, around $160 million, with approximately $28-$32 million EBITDA, $56 million cash, company generating cash, significant, robust, roadmap of growth, combined of organic growth, six FDA-approved products sold in over thirty countries, M&A transaction, proactively looking for the next, acquisition or in-licensing. Plasma collection centers, which are being opened, and a promising phase III inhaled AAT program, that, if successful, can be a significant, player in a $2 billion market. So that's the story, and I'm happy to open this now for questions.
Great. Thank you for the concise presentation. Seems like there's several things going on at Kamada. Can we talk about distribution first? And I assume the bulk of your sales are in the U.S. How do you distribute in the U.S.?
Okay. So in the US, we are... I thought you were asking about the distribution in Israel. So in the U.S., we are basically, we have our own commercial, medical, trade team that is responsible basically for promotional activities, for the medical affairs activities, pharmacovigilance. Basically, all is needed. We are working through multiple wholesalers that are actually the one buying the product from us and then selling it to the end user, to the hospitals. Working through basically, you know, some of the big guys, Cardinal and McKesson and the like, and some of the more specialty plasma players that are actually buying plasma-derived product and selling it to the end users.
And what-
The physical distribution currently is mainly done by Cardinal.
What percentage of your revenue is in the U.S.?
Around 70% in the last few quarters. Yeah.
How big is the team here that's working with Cardinal?
Excuse me?
How many folks do you have working with Cardinal in the US?
Look, Cardinal is just a third-party logistics partner. In terms of our commercial team, we have a few dozens people responsible basically for growing our U.S. business.
Are you adding to that, that number now, or, or has that been steady?
We're adding. We're basically, you know, recruiting more people for our kind of sales and medical activities. Also opening the plasma collection centers in Texas, meaning that we are recruiting people for those centers. Yeah.
Okay. All right, now, the anti-rabies treatment, I assume that's primarily a U.S. business? Or is that what-
Not all. U.S. is our biggest market, in terms of revenues, not necessarily in terms of the actual number of units being sold. We are a big supplier to the WHO. We are the. We won the tenders in Canada, Australia, some European countries, Israel, so it's a global presence. U.S. is the biggest market in sales.
And the $180 million that you have committed over the four years, is that $65 million a year, or does that ramp up, you know, in year two, three, and four of the agreement?
So you meant to say $45 million because it's 180-
I'm sorry.
divided by four.
$45 million.
Yeah.
Yeah, I'm sorry, $45 million.
Yeah, but it's growing. And as I said, you know, this is a minimum, and in 2024, our partner already ordered above the minimum commitment for 2024, so we expect it to continue growing beyond four.
... Right. Now, if we move on to the plasma centers, how will that impact margins? Because I assume you're buying your raw material now. When you switch over to collecting it yourself, you know, what would be the near-term impact on margins? How much does it cost to get the center, and when will they be profitable?
Okay. So the cost per center is between $3 million-$4 million. That's the investment in opening a new center. It takes around two to three years for a center to become profitable. We can expedite this timeline by the fact that we have the advantage that we, in each center, we collect specialty plasma for our own needs, anti-rabies, anti-D, anti-hepatitis, as example, but we also collect normal source plasma, which is being sold to external partners. So the plasma we collect ourselves, the specialty, goes into our cost of goods, and the fact that we are collecting versus buying gives us some better efficiencies. The normal source plasma is being sold to external parties, and this affects our top-line performance.
So, the $8 million-$9 million impact on the top line, that's primarily the source plasma?
Correct. If you go with 40,000 liters of plasma, times around 200+ dollars per liter, this is how you get to the $8 million-$10 million.
I would assume that that's probably not at the same margin as your other revenue, or?
Of course.
Right.
You know, collecting plasma and selling it to external, collecting normal source plasma and selling that is at lower margins, but that's a strategic development that Kamada made, is making, in order basically to support our vertical integration.
Okay. Could you see the company opening more centers, you know, in—
Yeah.
Yeah.
Yes. Yeah, based on... So we are just starting, and based on the progress we make, we'll decide how many additional centers we would like to open.
All right. On the M&A topic, you know, what therapeutic areas are you looking at when you consider acquisitions?
So we're looking specifically at plasma-derived assets. There are a few opportunities that we are searching, we are screening. We're looking also at transplantation in general. Our current commercial, medical, clinical team in the U.S. market is covering all U.S. transplant centers, all key U.S. transplant centers. CYTOGAM, WinRho SDF, VARIZIG, and HEPAGAM are being used in the transplantation settings, so we have very good coverage. We are working very closely with the KOLs around transplantation, working very closely with the different patient or industry foundations, including American Society of Transplantation and other. So we are building strong presence in that specialty, and we would like to leverage this in order to be able to bring in, license, or acquire additional assets and product in that field.
How would you fund the acquisitions?
We have $56 million that we can use for this. We are generating cash quarter after quarter. We have strong investors. If we need more cash, we have a credit line if needed, we can take some debt. I think we are well-positioned financially to support such acquisitions.
If a deal isn't imminent, you know, in the near term, you know, what are your other uses for the cash?
We will make a deal imminent. No, the idea-
Right
... is to actually use the proceeds. You know, we had a $60 million investment by our lead investor last year, FIMI the FIMI Fund, and this money is, was, was targeted in order to make acquisitions. We are in the process of screening some opportunities, and we will make, with very high likelihood, we'll try to make an acquisition already that will have positive effect on our 2025 financials.
So are, are there targets out there? Are there targets available right now? How would you describe the environment?
We are screening multiple opportunities.
Would you consider a deal that was dilutive in the near term, or are you only looking at deals that you think will be accretive near term?
We're looking at a deal that will have positive financial impact already in 2025.
All right. All right, now, if we can move on to the AATD, the trial. You know, how many patients have that condition?
That's a good question because it's still a highly undiagnosed, misdiagnosed disease, because the symptoms are identical to COPD. So in many cases, patients are suffering from the symptoms, being treated for the symptoms, but they've never been diagnosed with Alpha-1 deficiency being the underlying reason for their COPD-like symptoms. Currently, there are around 13,000 patients being treated, around 10,000 of them in the U.S. and 3,000 in Europe. We are also treating patients in other parts of the world, many Latin America, Israel, some CIS countries, but majority is U.S. and Western Europe. It's a genetic disorder that has, like, Caucasian history, so this is why there are areas, territories, that it's more prevalent, other that are less prevalent, and we don't find it in Asia at all.
That's basically the current population, with around $100,000 per year cost or reimbursement level. It brings you to this $1.4 billion-$1.5 billion market currently.
How do you diagnose this and differentiate it from the COPD patients?
So it usually starts with a simple blood test that patient need to go through just to, basically measure, identify, test the level of AAT in the serum. It's a simple test, but majority of the people now go through a genetic test. It's important to understand the specific mutation, because there are multiple mutations of Alpha-1 deficiency. Now it's available test. There's centralized labs used by the different, companies that are active in the Alpha-1 space, and there are kits that are available in the physician office for the patient to take this blood test and send it to the centralized lab in order to be tested for Alpha-1 deficiency.
And-
We are encouraging almost all pulmonologists in America or other territories we operate, to test all their COPD patients, and statistics shows that around 1%-2% of every COPD patient is an Alpha-1 deficiency patient, basically.
Would you ever use the treatment on a COPD patient?
No
... or is it not effective on those?
Not effective. We are treating the deficiency.
Mm-hmm.
If you give it to a non-deficient patient that is suffering from COPD because of smoking, for example, it will not have the same effect. The indication is only for Alpha-1 deficient patients.
And the CYTOGAM product for organ rejection, can you use that prophylactically, or is that only used after you've diagnosed that the organ is being rejected?
Excellent question. If the organ has already been rejected, it might be too late. The, the indication is for prophylactic treatment, so the idea is to identify primarily the high risk patients. These are the one, what we call positive/negative. It's meaning that the organ itself is CMV positive, and the patient is CMV negative, has no immunity, no antibodies-
Mm
... against CMV. These are the highest risk patients. So those are the ones that usually get this prophylactically. Some other patient, lower risk, will also get it, depending on the protocol at the specific transplant center, and that's a current basic indication. We know that in the industry, in the actual life, there are also patients that receive it as part of treatment if they were infected by CMV. But the indication, if you read with me this slide, Cytogam is the only plasma-derived immunoglobulin approved in the U.S. and Canada for prophylaxis of CMV disease after solid organ transplantation. So that's the indication. This is what we are promoting with the medical community in the U.S.
And, I assume it's primarily kidneys, but is it also for livers and other organs as well?
Currently, it's primarily used for lungs and heart, and lung and heart. These are the most rejected organs.
Okay.
It can also be used with liver and kidney.
Got it. Got it. All right, well, we are just about out of time. Do you want to take a minute to just sum the story up and make some closing remarks?
Yes. I think that this slide that I'm not going to show, that's a story.
Okay.
I am encouraging, inviting, you know, existing investors or potential investors to really look closely at Kamada and look at Kamada potential, look at Kamada growth, look at Kamada's results, including yesterday result, looking at our projection for the next few years, and to appreciate the transformation we've done with the company, to appreciate our ability to execute according to the plan. We've built a strategic growth roadmap, and we are executing upon this.
So we're looking at a company that is a leader in the plasma specialty field, growing on all aspects, profitable, generating cash, 6 FDA approved product, organic growth, planning to do another M&A transaction or transactions, in plural, over the next few years, plasma collection capabilities that are going to impact our bottom line and top line results, and the wild card, which is Inhaled Alpha-1 product , which could be a game changer in a $2 billion market. If you combine all of this and look at current Kamada, opportunity and risks, low risk, high potential upside, I think that it's a very valuable potential investment for the investment community.
Okay. All right, well, thank you for summarizing and, and thank you for presenting today. We, we look forward to you coming back to a future conference and, and giving us an update. Thank you.
Thanks, Jim. Thank you for the audience. Bye-bye.