Good morning, everyone, and welcome to the Kamada presentation session today. It's our pleasure to have CEO Amir London to talk to us about this global diversified specialty plasma company. You know, they have solid double-digit growth, margin expansion, profitability, and it's been funding an interesting program in AAT deficiency, AATD. Let me give you the floor, and you can take about five minutes, give everyone an overview, and we can launch into questions.
Only five minutes?
10.
Okay.
Seven.
Good morning, everyone. Thank you for joining us. Thanks, Annabel. Like Annabel said, Kamada is a global publicly traded commercial stage biopharmaceutical company. We focus on specialty plasma-derived immunoglobulins. We have six FDA-approved products. Over the last few years, we've grown double-digit, both top line and bottom line. We just released our Q3 results two days ago, representing, again, another strong quarter, over 30% growth compared to last year. We have what we call our four pillars of growth, which are organic growth. Our six FDA-approved products are marketed in over 35 countries. We still have a lot of room to grow in those specialties, in those areas. In most markets where we operate, we are either the single kind of player in that specific niche, or we have maybe one, up to two competitors.
Like I said, a very kind of nice opportunity to continue growing in those markets through our marketing activities, either direct or through a network of distributors. We're creating a lot of awareness related to our products and the need to use those products in all kinds of acute life-saving kind of cases. A lot of room for growth. Secondly, we are very active in identifying and screening for M&A opportunities. We're doing some due diligence as we speak. We expect to kind of finalize a transaction over the next few months. We're looking only for commercial assets that will be added to our current portfolio. We'd like to leverage our existing commercial footprint in the US and a few other markets to add more products.
I'm optimistic that this effort will be successful and we'll be able to integrate additional commercial assets to our portfolio, which will expedite our growth starting 2026. In addition, a few months ago, late last year and beginning of this year, we opened our own plasma collection centers. In 2021, we bought a small center based in Beaumont, Texas. We opened what we call Kamada Plasma, which is a fully owned subsidiary of Kamada based in Texas. We are becoming more and more independent in plasma collection for our own needs. We are also collecting what's called normal-source plasma, which we are going to sell out to external parties, external partners. We are already in negotiations with those potential buyers. We expect to start selling plasma early next year. This will be another layer of growth for us.
We expect each one of those centers to contribute between $8-$10 million of additional revenue to Kamada upon kind of full ramp-up of the center. Last but not least, like Annabel mentioned, we are in the mid kind of mid of a phase three pivotal study for alpha-1 deficiency, a rare, chronic, severe lung disease. We are the most advanced company developing a new technology, a new potential solution for the alpha-1 population. We do have kind of the first product, which is Glassia. It's an IV alpha-1 product. We're developing it as inhaled, nebulized, non-invasive, at-home use, better quality of life, better financials because it uses only kind of one-eighth of the dose compared to the IV treatment. We're going into a very important milestone very soon, before the end of this year, which will be a futility analysis of this study.
Hopefully, with positive, good results of that interim analysis, we'll be able to continue expedite recruitment. We expect to complete recruitment by early 2027, which means completing the study in 2029. These are like the four main pillars of growth. We guided the market this year will be selling between $178-$182 million. We're definitely on track to meet this target. We guided the market will be between $40-$44 million of EBITDA. Again, we are on track to meet this target. We finished the first nine months, around $35 million of EBITDA. We're running at 25% of EBITDA from top line. We expect to continue growing both top line and bottom line, double-digit every year over the next few years.
If you add to that the M&A transaction we plan to do, we're definitely going to expedite the growth and be a significantly profitable, growing company even farther than what we have been doing over the last two or three years.
Great.
Seven minutes.
That was seven minutes.
Seven minutes, exactly.
Excellent. I want to start with the AAT, inhaled AAT program, because that's very unique, different for you. It's obviously a clinical stage program, potentially higher value, higher margin. What is unique about your program that's different than some of the development out there? It's suddenly become modestly crowded, or moderately crowded, maybe, with different mechanisms, different approaches. Maybe you can talk a little bit about the landscape there and what makes you different.
Okay, great. Just one thing to emphasize, although over the last few years, we've been very focused on being a commercial stage company, let's not forget that we have brought two products to the market. We brought GLASSIA, the alpha-1 product, and KEDRAB, the anti-herpes immunoglobulin. We've taken those products back in the day, all the way from early R&D to approval. The addition product in our portfolio, a part of an acquisition we've done in late 2021, acquiring an additional portfolio for specialty plasma products. It is kind of a very important program in our portfolio, but just we're not depending on it. Kamada has been growing and has been developing our commercial footprint in the US and growing significantly. This definitely will be a very nice addition to our portfolio.
The alpha-1 space has been very conservative, if I may use this word, over the last 35 years. I don't think there's any other disease or kind of pharmaceutical specialty that nothing has really changed since the 1990s when the first alpha-1 augmentation treatment was approved. This is a deficiency disease, meaning patients that are born with genetic disorder, their body does not produce sufficient levels of AAT. AAT is a very important protein in our system. It has many different functions, but the most important one, or the best-known one, it's like a protein—I'm really simplifying it right now. I hope there are no physicians in the crowd. It's really like a protective layer of the lungs. Patients that don't have this protein have high volumes of neutrophils, which basically remain in the lungs and create emphysema, similar to COPD, standard COPD.
Now, because the symptoms are very similar to COPD, so in many cases, it's a misdiagnosed disease. Patients being treated for the symptoms, but the physician will not test for the alpha-1 level in the blood and will not treat them for the alpha-1. Naturally, the treatment that has been in the market since the early 1990s was augmentation treatment. The patient has been diagnosed as alpha-1 deficient, will get a weekly infusion of the alpha-1 product. They need to go to the clinic or have a nurse come to the home. It's a pretty cumbersome treatment, requires a lot of attention, a lot of dedication by the patient, by the health giver, and it's very expensive. It's over $100,000 per patient per year.
Patients, luckily, after they're being diagnosed and being treated, live kind of a relatively decent life, and life expectancy has been growing significantly since alpha-1 augmentation started. A patient could be on treatment for 10, 15, 20 years. This could be like a $2 million type of cost if I take just $100,000 times 20. What we've done, having the liquid formulation of the alpha-1 as an IV product, we were the first and only until a few years ago with a liquid formulation. All the other one was a powder that needed to be reconstituted before administration. It allowed us also to develop it as a nebulizer, as an inhaled product. Basically, we go directly into the lungs. It's a much more efficient and effective mode of administration, which allows us to reduce the dose significantly.
Like I mentioned, one-eighth of the dose, again, because we are not losing a lot of AAT in the way to get into the lungs because it goes directly into the lungs. We are in a phase three study, like I mentioned earlier. Over the last few years, there's been a lot of development around other technologies, which are still in phase one, phase one-two. A recombinant AAT that was developed by Inhibrx, which was acquired by Sanofi, in a phase two study. There are a few RNA technologies and gene therapy technologies. All of them are in early stage development. We are the most advanced in terms of a new technology, a new kind of next-generation lifecycle management of the IV product. FDA requires us to do a placebo-controlled study and to show efficacy.
In the past, it was sufficient to show PK data, but now FDA wants to show efficacy data. Our endpoint is FEV1. The other players, based on their discussion with the regulators, will need to understand if there's a need for an efficacy endpoint like FEV1, which will require a long study. Maybe at some point, the FDA will accept either our product or competitors' product that PK data is sufficient, showing that you can elevate AAT levels in the blood. We're not there yet. They are not there yet. We are the most advanced one. It's a $1.4 billion market, growing around 7%-8% a year. We expect top-line data by 2029, again, assuming we pass successfully the fertility analysis by the end of this year. We are looking at a $2 billion market opportunity upon our top-line results.
Huge market, of course, in any scale, and for Kamada specifically. We are working on the FDA US path and also EMA path with Europe path with EMA. We are very grateful of the opportunities that we had so far to help this alpha-1 population, but also to really be the most advanced one in potentially new technologies that will improve their life.
Yeah. What are your expectations for futility? Either you increase powering, leave it as is, or obviously, it's futility if it doesn't work. It doesn't work. What are your, I guess, what's your confidence that you can continue with the current powering that you have? Maybe you can talk about the powering because it's a little bit unusual.
Yes. Recruitment of the study has been a challenge because FDA requires a placebo-controlled study, like I mentioned, which means that in any country like the U.S., where there is an IV treatment available, patients rightly hesitate to join a two-year placebo study and being 50% chance on the placebo while they can still get the IV. We need to recruit patients in countries where the IV is not reimbursed or not available and still go with kind of Western countries. We have opened the site in European countries where there are all kinds of limitations on reimbursement, countries like the U.K., the Netherlands, Belgium, some of the Scandinavian countries, Ireland. Again, it's an orphan disease, a rare disease. Recruitment takes time.
As part of our discussion with the FDA, after we've shown very good safety data, and FDA felt very confident about the kinds of safety of the treatment, we're able to work with the FDA on increasing the alpha from 5% to 10%, which allowed us to decrease the sample size from around 220 patients to approximately 180 patients while keeping the study power because of the change in the alpha. The futility analysis we're going to do is basically a go/no-go analysis. By the end of this year, we either, unfortunately, will need to shut down the study if we find it futile, or we will have, I think, a strong backwind to continue the study and kind of expedite recruitment. The reason that we are not going to kind of resample or resize the sample is because of the difficulty in actual recruitment.
We understand that if we need to go back to the 220, 30, 40, 50, the study duration will be prolonged significantly. Also the cost, and it's not something that we think makes reasonable sense for us. We are carefully optimistic. If you ask what does that, of course, we are blinded. We will remain blinded. There is an external DSMB that is going to be unblinded. They will get the data, analyze it. There is a predefined threshold, which will basically guide the DSMB if it's a go or no-go. Hopefully, this will be a go and we'll continue strong and fierce moving forward to the completion of the study.
Those 50% that are being analyzed, that's after how long a duration of treatment?
I think I understood your question. We have what's called a fraction of the data, which is all the patients that completed two years. We have X amount of patients completed two years, Y amount of patients that completed one year, Z amount of patients which completed six months. When you accumulate all those data points and we are focused on the FEV1, which is our primary endpoint, we get to a fraction of the data, which statistically is significant enough to drive a meaningful futility analysis.
Okay. All right. Perfect. Just going back to the setup of the P-value, that is applied to all the different programs that are in development right now.
No, this is, I think, the only case with us. Yeah, only Kamada. I have not heard any one of the other companies that are, by the way, I do not think there is anyone, which I know, there is no other company at such an advanced stage with the FDA to even discuss P-value of a pivotal phase three study. Maybe others will follow, but we were kind of the first to have this discussion with the FDA. Again, after we have done it after being in the study for a few years and being able to show meaningful, strong safety data, which of course is a key before you can move into discussing efficacy and sample size with the FDA.
Okay. All right. Great. You are also the only one that's showing actual efficacy data as opposed to any kind of PK studies.
I believe that other companies currently, because they are still in phase one, phase two, are still focused on the PK data to show that their technology is able to increase AAT levels in the blood. While we are already beyond that, we have shown this in the phase two study, which was a PK study where we showed that we bring sufficient levels of AAT not to the blood, but directly into the lungs, which is even more important. Now we are in the efficacy study, basically.
Okay. Great. So that was a lot of detail on AAT. So thank you. I think that's, we can move on to the rest of your business because you have a full commercial portfolio.
Correct.
Maybe just of these specialty products, what do you view right now as the largest growth driver? It seemingly moved from KEDRAB and CYTOGAM to maybe some of the other products right now are sort of taking more of the growth torch, let's just say.
Yeah. I think what has been very nice about our portfolio over the last two, three years is that we have a variety of products, and every quarter, we had like the star of the quarter, if I may. That's, I think, the beauty of having a rich portfolio. You're not depending on one product or one territory, but we had quarters that Pfizer in the US did very well, and there were quarters that Glassia in Latin America or CIS did very well, and then the biosimilar products that we are launching in Israel and HEPGAM and Winoy in the MENA region, and I can go on and on and on. Again, it's a matrix of six products over 35 territories.
You have a lot of opportunities to have growth in each one of those, as long, of course, as you are very proactive, like we are, in promoting the products and working with either direct or with local partners. KEDRAB is a very unique, stable, well, growing, now stable product. Last year, we signed an agreement with our local US distributor partner, Kedrion. They have basically signed for a minimum of $180 million buying the product from us over four years, which means $45 million per year. In the first year, they already ordered $50 million of the product. We believe that we are currently around 50% market share. There is only one competitor, the Grifols product. After we got the approval in 2017, kind of in parallel to launching the product in 2018, we also did a pediatric post-marketing study.
We have on-labeled that the product has been tested successfully with the pediatric population. This gave us a significant competitive advantage. Around the same time, Sanofi, which had another product in the market, because of their reasons and kind of shrinking market share, decided to exit the market. We've taken their market share, and we are continuing to grow very nicely year over year over the last few years. We are leveraging the success also in other parts of the world. We won the Canadian tender. We won the WHO tender for Latin America, Australian tender. There are only like three products in the world that actually are anti-herpes immunoglobulin. Our product, Grifols in the US, and CSL has a product in Europe.
Still room to grow, not at the rate we've grown between 2022, 2023, 2024, but again, over $50 million business in the US and very high numbers in excellence markets, less profitable because the prices are lower in other markets. CYTOGAM is a very interesting product. It's an anti-CMV immunoglobulin used as part of solid organ transplantation. This product, CMV, is the biggest kind of issue or challenge in organ transplantation, the number one cause for organ rejection, all the way leading to mortality. Physicians don't have a good solution for CMV management. They thought they had with all kinds of antivirals, which were introduced to the market over the last decade, but it doesn't give a complete solution, especially for the high-risk patients, which are patients that are CMV negative while the organ, the donor, is CMV positive.
These are patients with very low immunity against CMV, which we are introducing an infected organ basically into their body. In parallel to that, they need to get a lot of kind of immune-suppressed medicines in order to prevent the rejection. It is a very tricky infection, very tricky virus to treat, and there is not a good solution. Our previous owner of the product, the author of Putis and CSL, around the time that the antivirals were introduced, stopped doing any promotional activities or collecting new data. We bought the product understanding there is a real unmet medical need, but the data that we had was like a decade ago. We are working on generating new data from physicians and hospitals that are using CYTOGAM. We opened a very comprehensive clinical program with over 10 different studies.
We just announced first patient in maybe the most important or the biggest study of those with Southwestern in Texas and with MGH in Boston basically to test the advantages of using CYTOGAM. It's what we call late CMV, which is after the physician decides to start trimming down the antiviral. This is where there is a flare of CMV in many cases. That is kind of an opportunity to grow the usage of the product for that unmet medical need. VARIZIG, it's a product which is part of the protocol. It's when there are outbreaks of chickenpox and immune-compromised populations are being exposed to the virus. This is a life-threatening situation for those populations. Over the years, there's been very little activity in the field to remind physicians and hospitals that there is this product available to them.
Since we bought it, we've done a lot of work in the field. We developed an AI system which allows us to identify where there is where and when there are outbreaks. We have a kind of automatic way to send reminders and all kinds of awareness tools to the physicians, hospitals that VARIZIG is available for them. We have seen a significant increase in the use of the product as a result of this. Again, lifesaving product. Like you said, a rich portfolio allows us to focus on multiple products in multiple territories and continue growing the business significantly. Like I said, it's a very unique product in unique market segments with unmet medical need in many cases, not a lot of competition, and lifesaving therapeutics.
High barrier to entry.
High barrier of entry. Thank you. Because of the plasma, especially, you need to be an expert in plasma collection, specialty plasma collection. We are one of the only companies in the US that know how to collect this special plasma, how to maintain the donors that have high titer antibodies against specific virus. We do not find new plasma companies in the country. We see a lot of consolidation in the market. I think we are positioned in a very unique way as a vertically integrated company with strong capabilities, a lot of experience that we have gained over the years, strong relationship with the regulators. This is just kind of the basis for continued growth over the next few years.
Okay. Talk about your plasma collection business that you've really just started building right now. It's obviously for, I guess, confidence in supply and also for potential margin expansion and new revenue growth.
Exactly. We have taken it basically in kind of we are using it for twofold. One is that we need to be we made a strategic decision a few years ago that we would like to become more and more independent in our ability to collect plasma for our own in the specialty plasma, specifically anti-herpes, anti-D, hepatitis. Over time, I do not think we will become ever fully independent. We will continue working with external suppliers, but become more and more independent. It is for risk management, but also in terms of profitability. When we collect plasma, it is cheaper for us than to buy this plasma from external suppliers. When we did analysis, if we should open a small center that collects only specialty, or we should open a bigger center that collects normal-source plasma and specialty, we decided for the latter. We opened basically bigger centers.
The two centers we opened, San Antonio and Houston, are very large centers, over 50,000 liters per year, very modern, automated, kind of state-of-the-art type of centers. The normal-source plasmas that we're going to collect, approximately 40,000 liters a year per center, are going to be sold to external partners. The cost or the price of a liter of plasma currently is around $200. This is why I mentioned earlier between $8 million-$10 million a year of basically top-line revenue per center. Adding that to our overall growth coming from all other aspects of the business, this is between another $15 million-$20 million of additional revenue that will be coming over the next few years.
How has that improved your margins?
The normal-source plasma is not a very profitable business. When you add it with the specialty, overall, it is more profitable than not to collect normal-source plasma centers. The profitability will come from the specialty plasma, but this is not something you are going to see direct because this is an intra-company transaction between the plasma collection company to the manufacturing company at Kamada. This will be blended into many other things that we do on the gross margin of the proprietary product that we manufacture. On the normal source, I do not know, 10% maybe. It is insignificant in our overall scheme, but again, it is better than just to collect specialty plasma in those centers.
Okay. One other business is obviously the distribution business, and you've added a number of biosimilars into your portfolio and expected to have more. Can you talk about that a little bit?
Yes. In Israel, and we have also expanded it over the last year and a half to the MENA region, where we opened an office in Dubai for the region. We are also a distributor, so we represent other companies in the Israeli market. We have around 15-20 different companies we represent. The Pfizers of the world do not need us in Israel because they have their own subsidiary, but kind of smaller companies that sell, I do not know, between $5-$20 million, let's say, they usually will not open their own subsidiary, but will be using a local partner. We are one of those partners. We are unique because we are the only kind of FDA-approved biopharmaceutical vertically integrated company that also has a distribution business. It makes us unique in terms of the offering we can offer to those partners.
Over the years, it started originally only with plasma-derived products because we wanted to have the complete portfolio of plasma products, but over time, it grew into additional specialties that we have experience in. Over the last few years, we signed multiple agreements with biosimilar companies to actually represent them in Israel. We launched the first product last year. It's already selling around $2.5 million. We're going to launch two additional products over the next few weeks, two additional products in 2026. We have kind of a pipeline of additional products to be launched. Overall, we expect this to be between $15-$20 million incremental revenue to the distribution business, which is currently between $25-$30 million. Overall, we're looking at running like a $45-$50 million business.
It will also improve our gross margin because those products have higher gross margin than the ones that we're currently selling in the Israeli market.
Okay, great. I guess the last component of your growth strategy is M&A. So you have a positive cash position, positive cash flow. So can you talk about that and what kind of capacity you have for this and size for BD?
Yes. Yes. Absolutely. This is definitely something we are focused on. Like I said, I'm optimistic, carefully optimistic that this is something that will mature over the next few months. We'll already have positive contribution to our top-line profitability already in 2026. We finished the quarter with $72 million. We're looking at decent-sized transaction. When we did our previous transaction, buying the four commercial products, we paid $95 million upfront and then $50 million in additional milestones. We will put this money to work as part of a transaction. Not all of it, maybe a portion of it. If we have a bigger transaction to make, we have a good credit line. We are highly profitable, so we can pay any potential debt that we take. It looks good.
Sorry, so you said the last large transaction you did was $95 million with $50 million?
We paid $95 million upfront and $50 million in milestones that we are paying.
What size is your credit line?
We had a $40 million. We can take what we need.
Okay, great. All right. When you think about the potential BD, what is, I mean, especially plasma, obviously, is a very small type of industry, right?
We focus on specialty plasma for sure. We're looking also into transplant-related products because this is where our current US commercial team is focused on. We cover all major transplant centers in the US. We have kind of expanded the scope of the search into, I'll call it maybe specialty pharma, not just specialty plasma, again, leveraging the existing infrastructures that we've built, focus US and some ex-US opportunities when the time comes. We have a specific transaction, of course, we'll announce it. Again, I'm very optimistic that we'll be able to have such transaction over the next few months that will fuel our growth already in 2026.
The operative term is accretive?
Always.
Okay. Thank you.
Thank you. Thank you, everyone.