20-F: Kamada Ltd. Reports FY2023 Results, Provides 2024 Guidance and Updates on Strategic Initiatives

Kamada Ltd. announces its FY2023 financial results, projecting double-digit growth for 2024 and highlighting key strategic advancements.

Summary

• Kamada Ltd. reported its financial results for the fiscal year ended December 31, 2023.
• The company anticipates total revenues for fiscal year 2024 to be in the range of $156 million to $160 million.
• Adjusted EBITDA for 2024 is projected to be between $27 million and $30 million, representing double-digit growth over 2023.
• Key growth catalysts include commercialization of KEDRAB and CYTOGAM in the U.S. market, expansion of hyper-immune portfolios, and leveraging its FDA-approved IgG platform.
• The company is also advancing its Inhaled Alpha-1 antitrypsin (AAT) product candidate and exploring strategic business development opportunities.
• Kamada is expanding its plasma collection capabilities, expecting to commence operations at a new center in Uvalde, Texas, in 2024 and initiate construction for a third center.
• The company has extended its distribution agreement with Kedrion until December 31, 2031, with potential for further extension.
• Kedrion is expected to purchase annual minimum quantities of KEDRAB from 2024 through 2027, generating approximately $180 million in revenue for Kamada.
• Kamada expects to launch eleven biosimilar products in Israel through 2028, with potential peak revenues of approximately $30 million to $34 million annually.
• The company is also pursuing a pivotal Phase 3 clinical trial of Inhaled AAT for the treatment of Alpha-1 Deficiency (AATD).

Sentiment

Score: 7

Explanation: The sentiment is positive due to the projected growth in revenue and EBITDA, secured long-term agreements, and expansion into new markets. However, the presence of legal proceedings and reliance on key partnerships temper the overall outlook.

Positives

• Projected double-digit revenue and adjusted EBITDA growth for FY2024.
• Long-term royalty income stream from Takeda's GLASSIA sales.
• Extended distribution agreement with Kedrion secures significant KEDRAB revenue.
• Expansion into the biosimilars market in Israel offers a new growth catalyst.
• Expansion of plasma collection capabilities reduces reliance on third-party suppliers.
• FDA expressed willingness to potentially accept a P<0.1 alpha level in evaluating InnovAATe for meeting the efficacy primary endpoint for registration, which may allow for the acceleration of the program.

Negatives

• The company is subject to a lawsuit seeking $6.7 million in alleged damages related to the termination of a distribution agreement in Russia and Ukraine.
• The company is dependent on Kedrion for the sales of its KEDRAB product in the United States.
• The company relies in large part on third parties for the sale, distribution and delivery of its products.
• The company has excess manufacturing plant capacity in its manufacturing facility, which may result in reduction in operating profits, if not effectively managed.

Risks

• The company's business is concentrated on KEDRAB, CYTOGAM, and royalty income from GLASSIA sales.
• Failure to maintain and expand sales of commercial products in the U.S. and ex-U.S. markets could impact profitability.
• Disruptions in relationships with Kedrion or third-party distributors could adversely affect results.
• Inability to obtain adequate quantities of source plasma or plasma derivatives could constrain supply.
• Political, economic, and military instability in Israel and its region could affect the business.
• The company may be exposed to tax reporting requirements and tax expense in multiple jurisdictions in which its products are being distributed.

Future Outlook

Kamada expects double-digit growth in revenue and adjusted EBITDA for FY2024, driven by key growth catalysts and strategic initiatives. The company is focused on expanding its commercial presence, advancing its product pipeline, and leveraging its manufacturing expertise.

Industry Context

The announcement reflects Kamada's strategic focus on the specialty plasma-derived market, aligning with industry trends of consolidation and increasing demand for specialized therapies. The company's expansion into biosimilars and its focus on innovative delivery methods like inhaled AAT position it to compete effectively in a changing pharmaceutical landscape.

Comparison to Industry Standards

• Kamada competes with major players in the plasma-derived protein therapeutics market, including CSL Behring, Grifols, Takeda, Octapharma, and ADMA Biologics.
• Grifols' Prolastin A1PI holds a significant market share in the AAT market, estimated at over 50% in the U.S. and over 70% worldwide.
• CSL Behring's Zemaira and Respreeza are also key competitors in the AAT market.
• The company faces competition from antiviral drugs for CYTOGAM, including Letermovir (Prevymis) by Merck & Co. and Maribavir (Livtencity) by Takeda.
• In the Rh(D) immunoglobulin market, Kamada competes with RhoGAM (Kedrion), Hyper RHO (Grifols), and Rhophylac (CSL Behring).

Management Changes

Legal Proceedings

• The company is subject to a lawsuit seeking $6.7 million in alleged damages related to the termination of a distribution agreement in Russia and Ukraine.

Related Party Transactions

• Sales to Kedrion, a strategic partner, accounted for approximately 23% of total revenues in 2023.
• The FIMI Opportunity Funds collectively own 22,084,287 of the company's outstanding ordinary shares (representing an ownership percentage of 38.4% of the outstanding shares and 38.3% on a fully diluted basis as of March 1, 2024).
• The company has entered into a collective bargaining agreement with the employees committee and the Histadrut (General Federation of Labor in Israel).

Stakeholder Impact

• Shareholders may benefit from the projected growth and strategic initiatives.
• Employees may be affected by potential staff reductions to adjust to lower plant utilization.
• Patients may benefit from the development and commercialization of new therapies.
• Suppliers may be affected by changes in sourcing strategies and expansion of plasma collection operations.
• Customers may benefit from the continued availability and potential expansion of the product portfolio.

Next Steps

• Commence operations at the new plasma collection center in Uvalde, Texas, during 2024.
• Lease a subsequent facility and initiate construction activities to establish a third plasma collection center during early 2024.
• Present a revised statistical analysis plan (SAP) and study protocol for the InnovAATe study and to seek the FDAs feedback by mid-2024.
• Initiate an open label extension study mid-2024.
• Initiate a sub-study in North America during 2025 to evaluate the effect of ADA on AAT levels in plasma with Inhaled AAT and IV AAT treatments.
• Enter into discussions with the IMOH regarding the potential extension of the supply agreement for the snake bite antiserums prior to its expiration.

Key Dates

Keywords

Kamada, KEDRAB, CYTOGAM, GLASSIA, AATD, Biosimilars, Plasma, Hyper-immune, Distribution, Financial Results