Kamada Ltd. Q4 FY2024 earnings call

• 2024 was a strong year with record revenue ($161M) and adjusted EBITDA ($34.1M). Cash from operations was $47.6M, ending with $78.4B in cash. Declared a special cash dividend of $0.20 per share. • Growth strategy pillars: Organic growth, business development/M&A, plasma collection expansion, and progress on inhaled AAT pivotal trial. • Opened second plasma center in Houston, with third in San Antonio opening soon. Inhaled AAT trial had p-value adjusted, sample size reduced, and futility analysis planned for end 2025. • 2025 guidance: Revenues expected $178M-$182M, adjusted EBITDA $38M-$42M, aiming for double-digit profitable growth from diverse commercial portfolio.

Total revenue for 2024 was $161 million, a 13% increase from 2023. Adjusted EBITDA was a record $34.1 million, up 42% year-over-year. KEDRAB contributed $50 million in 2024 sales, and CYTOGAM was $23 million. In 2024, two plasma collection centers were opened, with the third in San Antonio opening this month. Each new plasma center is expected to generate $8 million to $10 million annually from normal source plasma sales. Revenue contribution: KEDRAB and CYTOGAM were key growth drivers, with KEDRAB at $50M and CYTOGAM at $23M in 2024.

• Fiscal 2025 revenue forecast $178M-$182M, adjusted EBITDA $38M-$42M. • Midpoint of 2025 guidance represents ~12% revenue increase and ~17% adjusted EBITDA increase from 2024. • Expect double-digit profitable growth driven by diverse commercial portfolio marketed in over 30 countries.

• Forward-looking statements involve risks and uncertainties. • Actual results may differ from forward-looking statements due to factors identified in SEC filings such as Forms 20-F and 6-K.

Q: Hi, everyone. Thanks for taking my questions and great quarter. I wanted to ask you about the futility analysis that you're going to be conducting for the AAT, inhaled AAT program. Can you just talk about what will be looked at? Will the information be blinded to you? Is it independent more of a statistical analysis? Or are they looking at the actual endpoints? Are you going to be reporting anything? I don't know what are the potential outcomes we can see there. And then separately, if you could talk about some of the additional growth drivers for KEDRAB and CYTOGAM? It looks like KEDRAB is more about international expansion, do you have any – and for CYTOGAM, are you planning any other clinical presentations or clinical studies to present at various medical conferences?

A: Thanks Annabel for the questions. I will start with the futility analysis question. So yes, we will be blinded. So the data will be reviewed by an external DSMB type of group that will be actually be unblinded. But while the company the sponsor remains blinded, we decided to run this analysis based on the changes that we have implemented in the statistical plan, reduction of the sample size. We are basically reaching a point second part of this year that we are going to have sufficient interim data to perform a meaningful statistical analysis. We will be looking at actual not us basically the external group will be analyzing and looking at efficacy data, conditional efficacy data in order basically to give us feedback related to the study success ratio if it may. But that's, of course, going to be as in interim futility analysis, that's going to be basically a yes, no type of question and the company will not be seeing the actual data.

Q: In terms of the efficacy data, are they looking primarily at the primary endpoints that you've laid out or additional?

A: Correct.

Q: Okay, all right.

A: Futility analysis allows you basically to post one question to the DSMB and they are looking at this data and basically giving you feedback based on this, which is kind of a yes, no type of answer – answer, sorry, yes, no type of answer.

Q: Okay, and what would be the – sorry, just on the futility analysis, do you either expect to continue as is expand – do you expect to either continue, expand or stop the program altogether, are those your three options there?

A: Correct.

Q: Okay.

A: As always in CT analysis, three options: continue, make modification based mainly on sample size or need to stop the study, because the kind of futility data.

Q: Okay, great.

A: Related to your – second question was related to 2025 prospects. That was the question.

Q: Yes. Well, the specific growth drivers for KEDRAB and CYTOGAM. So KEDRAB, that just continuation of expanding contracts globally?

A: Correct. So, when we talk about KEDRAB, we mean only U.S. So, when we say $50 million sale of KEDRAB, this is our agreement with Kedrion. We refer to the non-U.S. product is KAMRAB just as a matter of classification.

Q: Okay.

A: So as you remember, we had an agreement for $180 million of sales for the full year minimum for the 2024, 2025, 2026, 2027 for the first year, so average of $45 million, but the first year 2024, Kedrion already purchased from us $50 million of the product. So above the minimum quantity. Then it means that for the remaining of those next three years, 2025, 2026, 2027, the minimum, and I emphasize minimum commitment is $135 million.

Q: Okay.

A: Ex-U.S., we are continuing to grow the business. We announced in January winning with international tender for Latin America. We are the supplier in Canada, Australia, some European countries, Israel and the kind of international markets. So the product is growing not just in the U.S. market. Regarding CYTOGAM, yes, we are advancing clinical work with additional U.S. best KOLs in leading transplantation centers. We will announce those presentations during the year once they've basically been accepted to the different conferences and industry meetings, and we've seen a nice increase between 2023 and 2024 in terms of product sales in the U.S.

Q: Okay. And if I could just ask one more follow-up. I have to ask this question. We don't often see special dividends from development, well, you are profitable, obviously, but still development-stage companies. So what was the deciding factor there to offer a special dividend?

A: Yes. So first of all, we believe that Canada is in a mature phase that can basically be a commercial development pipeline and the company that pay dividend. The dividend that was specified by the Board, driven by the very strong financial results of 2024 and our strong outlook for 2025 believe we have sufficient funds, very solid cash position to be able to pay the dividend while we continue with our BD M&A activities according to the plan. Our goal is to execute such M&A and BD transactions already in 2025, and we have sufficient resources, while we're continuing to generate more and more cash from our operator moving forward. So we can do both.

Q: Could that be an indication that you know what kind of you're going to do and the size of the BDs that you're going to be doing?

A: We are screening multiple opportunities, and we are hopeful that things we much already in 2025. It's going to be a commercial stage assets that will help us basically to accelerate our growth.

Q: Okay. Great, thank you.

A: Thank you.

Q: Thanks and hope you are doing well. Great to see obviously the excellent results for 2024. Maybe to start with plasma collections. You have the two operating centers and the third is on the way to being open here shortly. So maybe just a little bit on the third center, the timing to reach that peak revenue target of $8 million to $10 million and then the mix of what will be collected there, how much will be specialty plasma versus stand plasma that you would go on to sell to third parties? And then I'll have a couple of follow-ups. Thanks.

A: Okay. Yes. So the third center, San Antonio is going to be opened this month based on the pace that we are seeing in Houston, we believe it's around 24 to 30 months but it takes basically two center at least based on the pace that we've seen in Houston since we opened around six months ago. So we are on track Houston, and we believe that we can also execute the same level of portfolio in San Antonio. As you mentioned, that both centers will be collecting specialty plasma for our needs and NovaSource plasma that will be sold out to external parties. Approximately 20% to 25% for each center will be specialty, maybe a little bit more, and the rest will be normal source plasma. This correlates with the $8 million to $10 million revenue per center from selling normal source plasma to external parties. So if you do the math, and I know you're familiar with the price per liter of plasma, you basically can see how we came up with this ratio.

Q: Fair enough. And I'm just wondering, as you're building or critical mass here how the plasma collections, that operation, but just factoring it against third-party sales as well as your own work in process inventory needs, how that plays out from an adjusted EBITDA margin standpoint. So just a little bit on the margin profile today of plasma collection and, let's say, a year or two years from now, where that margin profile can trend to?

A: Okay. So on the specialty plasma, this is going to be intercompany type of transaction. You're not going to see this is part of our top line. And it will have an effect on our cost of goods because every little plasma that we collect is cheaper than it plasma that we currently buy from external suppliers. So, this will be part of our overall efficiencies and kind of growing the company. And I think you've seen it also in our country port over the last few quarters and moving into 2025, our ability to grow the company in a very effective way and benefiting from the economy of scales. In terms of selling plasma to the external parties, so for me that includes the potential or was expected margins, selling plasma to external will result in anywhere between 10% to 20%, 25% gross margin.

Q: That's helpful. And then just pivoting to the BD&L side of the story. Obviously, a good collection of hyperimmune immunoglobulin products. You mentioned, again, obviously, you have a special dividend going out, but the pipeline for follow-on deals, whether in-licensing or potentially M&A is still robust. I'm just wondering when we think about just sort of the landscape out there, it feels like the play here is to continue to build in hyperimmune globulin product specifically? And maybe just give us an idea of that broader landscape, Amir and maybe which areas specifically you're taking a look at? And obviously, you have exposure to rabies, cytomegalovirus disease for kidney transplant, the two biggest products. Just wondering, as you look at that hyperimmune space, what other white areas are there that you can capitalize on? Thanks again.

A: In terms of BD and M&A opportunities, as you said, we're looking for assets which are in synergy with our current commercial footprint in the U.S. market, we are covering all key transplant centers, and we have a very strong presence in the specialty plasma space. We are working with infectious disease specialists and we have, of course, experienced in alpha-1 inhaled respiratory specialties. So these are the areas which are kind of the first areas that we have been looking at and we are screening opportunities. In general, any drug arrived assets, of course, is of great interest for us, like we've done with CYTOGAM the ability to also transfer the production to our facility create significant synergies. But we're looking a little bit broader in order to be able to actually really execute those type of transactions already this year, as I mentioned. We're looking also for distribution businesses. that will be synergistic to what we're currently doing. Reminding you that we have strong presence in the EMEA region in Israel, U.S., Canada, other sales are relevant areas for us in terms of where we are searching for any BD opportunities.

Q: Hi, good afternoon. Thanks for taking the questions. A couple of questions on gross margin. For your proprietary products, it was up about, I think, about 700 basis points. Is that due to the mix of KEDRAB in the current quarter?

A: Mostly specially two profitable products that have the biggest impact on our gross margins are KEDRAB and CYTOGAM in the U.S. market. So a favorable sales mix and improve the increased sales in the U.S. market always helps us in terms of our gross margins. So that's yes to your question.

Q: And what will be the impact when you start using more of your more of the plasma that you get from your own in-source plasma centers as opposed to buying it. What do you think the impact on that proprietary gross margin could be?

A: It will have an effect, but I just want to also caution that it will take time. It's a process that takes time to actually start replacing the plasma that you currently buy with our own collective plasma. So the overall mix, if I may, of internal plasma collection of cells plasma collection, increased sales in the used market, economy of scales and just making more in our plant all those different aspects play together in creating the efficiency that you're saying. It's difficult, definitely in such a public setting to point a specific parameter. We had a very efficient operation. The fact that we started last year to manufacture CYTOGAM in our own plant, the combination with GLASSIA is growing significantly in ex-U.S. market and we make more GLASSIA lot purchasing and in manufacturing by us, all of these plays basically together.