Kamada Reports First Quarter Financial Results

NESS ZIONA, Israel--()--Kamada Ltd. (NASDAQ: KMDA) (TASE: KMDA), a plasma-derived protein therapeutics company focused on orphan indications, announces financial results for the three months ended March 31, 2014.

Financial highlights of the first quarter of 2014 include:

  • Total revenue increased 5% to $13.2 million from $12.6 million for the first quarter of 2013.
  • Revenue from the Proprietary Products Segment decreased to $7.4 million from $8.1 million in the prior year in anticipation of U.S. Food and Drug Administration (FDA) approval for the significantly improved infusion rate for Glassia.
  • Adjusted net loss was $2.0 million compared with an adjusted net loss of $1.8 million for the same period in 2013.

Clinical highlights of the first quarter of 2014 and recent weeks include:

  • Received FDA approval for a significantly improved infusion rate for Glassia® (Alpha-1-Proteinase Inhibitor - Human), the first and only ready-to-use liquid alpha-1-proteinase inhibitor indicated as a chronic augmentation and maintenance therapy in adults with Alpha-1 Antitrypsin Deficiency (AATD, or Inherited Emphysema), marketed in the U.S. by Baxter International Inc.
  • Announced a proof-of-concept study with Glassia to treat graft-versus-host disease (GVHD) in cooperation with Baxter to be conducted at the Fred Hutchinson Cancer Research Center.
  • Initiated a Phase 2 U.S. clinical trial of its proprietary inhaled Alpha-1 Antitrypsin (AAT-IH) therapy for the treatment of AATD.
  • Initiated a Phase 2/3 clinical trial of Glassia to treat newly diagnosed pediatric patients with type 1 diabetes.
  • Completed enrollment in a U.S. Phase 2/3 clinical trial of KamRAB® as a post-exposure prophylaxis for rabies; Kamada has a strategic agreement with Kedrion S.p.A for clinical development and marketing of KamRAB in the U.S.

Management Commentary

“These past months have been an exciting and busy time for Kamada as we continued to grow revenue and advanced multiple clinical programs,” stated David Tsur, Co-Founder and Chief Executive Officer of Kamada. “During the quarter we initiated three important clinical trials that expand and enhance our proprietary plasma-derived protein therapeutics in areas of unmet medical need. We believe our robust product pipeline is broadly distributed across several important disease states, which diversifies our risk and offers multiple opportunities for partnerships and an expanded source of revenue. We look forward to advancing our studies with a goal of bringing safe and effective therapies to patients in need.

“We will report top-line results from our Phase 2/3 clinical trial in Europe of our inhaled Alpha-1 Antitrypsin for the treatment of AAT deficiency in the coming week. While we do not know what the results will be, pending a positive trial outcome, we remain on track to file for regulatory approval with the European Medicines Agency in the second half of 2014. Such an outcome would position Kamada as the leader in the fast-growing AATD market. We have been actively engaged with Chiesi, our European marketing partner, to advance the strategic plans for commercial launch. Earlier clinical work suggests there are significant advantages to delivering the therapy directly to the lung instead of systemically via intravenous infusion. We look forward to the data from this trial and expect that further data from the open-label extension study will augment the long-term safety record we achieved thus far. This is an exciting opportunity for Kamada to bring the first inhaled therapy to patients suffering from this debilitating, life-threatening, orphan lung disease.

“We were pleased to initiate a U.S. clinical study of AAT-IH to treat AATD that will test pharmacokinetic parameters of different analytes in epithelial lining fluid and serum, as well as safety and tolerability. We intend to submit these data along with those from our European Phase 2/3 study in 2015 to the FDA to support U.S. approval of our AAT-IH product.

“We are excited about the opportunity for Kamada to bring a promising therapy to newly diagnosed pediatric patients with type 1 diabetes. Data from our earlier studies give us great optimism for continued positive outcomes with the pivotal study we recently initiated. We believe Glassia can be a groundbreaking treatment for these patients, and look for study data to demonstrate the ability to halt disease progression at its early stages and allow the pancreas to produce its own insulin.

“We announced our support of another important clinical program with the launch of the proof-of-concept study of Glassia to treat GVHD. This study is being undertaken in cooperation with Baxter, our U.S. marketing partner for Glassia, and is being conducted at the Fred Hutchinson Cancer Research Center, a prestigious National Cancer Institute Comprehensive Cancer Center. We are pleased to be advancing Glassia to treat GVHD. Glassia is expected to decrease GVHD-related symptoms including progressive tissue damage, and thereby potentially increase the survival rates of patients suffering from this complication and possibly reduce or eliminate the need for steroid therapy.

“In summary, 2014 has gotten off to a strong start with significant advances to our clinical pipeline. We look forward to making continued progress with these important programs, while growing proprietary product revenue throughout the remainder of the year,” added Mr. Tsur.

First Quarter Financial Results

Total revenue for the first quarter of 2014 increased 5% to $13.2 million from $12.6 million for the first quarter of 2013, reflecting higher revenue in the Distribution Segment.

Revenue from the Proprietary Products Segment decreased to $7.4 million from $8.1 million in the year-ago quarter due to the timing of orders from a partner as the Company awaited FDA approval for the significantly improved infusion rate for Glassia. Such timing of orders will not affect full-year 2014 total revenue from this partner. Revenue from the Distribution Segment of $5.8 million increased from $4.5 million in the first quarter of 2013.

Research and development (R&D) expenses in the first quarter of 2014 of $3.4 million decreased from $3.7 million in the first quarter of 2013, with increased activity in support of various clinical studies including the launch of three important clinical trials offset by a decrease in facility costs allocated to research and development use.

Selling, general and administrative (SG&A) expenses in the first quarter of 2014 of $2.6 million increased from $1.8 million in the first quarter of 2013, largely due to the costs of being a U.S. publicly traded company and stock-based compensation.

Gross profit for the first quarter of 2014 decreased to $3.3 million from $4.2 million in the first quarter of 2013 reflecting lower product sales, while gross margin decreased to 25% from 33% in the first quarter of 2013 due to product mix as the Distribution Segment revenues increased during this quarter.

For the first quarter of 2014, the Company reported an operating loss of $2.5 million compared with an operating loss of $1.3 million for the first quarter of 2013. Net loss for the first quarter of 2014 was $3.1 million or $0.09 per share, compared with a net loss of $2.0 million or $0.07 per share for the same period in 2013. Adjusted net loss for the first quarter of 2014 was $2.0 million compared with an adjusted net loss of $1.8 million for the same period in 2013.

Adjusted EBITDA for the first quarter of 2014 was a negative $1.0 million compared with a negative $0.3 million for the first quarter of 2013.

Balance Sheet Highlights

As of March 31, 2014, Kamada had cash, cash equivalents and short-term investments of $72.1 million, compared with $74.2 million as of December 31, 2013. During the first quarter of 2014, the Company used $1.5 million in cash to fund operations and $0.6 million for capital expenditures.

Financial Guidance

The Company expects to provide financial guidance for 2014 following the release of top-line results from the Phase 2/3 clinical trial in Europe of its AAT-IH for the treatment of AATD.

Conference Call

The Company will not hold a quarterly conference call to discuss these results given the proximity to the announcement in the coming week of top-line results from the Phase 2/3 clinical trial in Europe of its AAT-IH for the treatment of AATD. The Company plans to hold a conference in conjunction with releasing those results.

About Kamada

Kamada Ltd. is focused on plasma-derived protein therapeutics for orphan indications, and has a commercial product portfolio and a robust late-stage product pipeline. The Company uses its proprietary platform technology and know-how for the extraction and purification of proteins from human plasma to produce Alpha-1 Antitrypsin (AAT) in a highly-purified, liquid form, as well as other plasma-derived proteins. AAT is a protein derived from human plasma with known and newly-discovered therapeutic roles given its immunomodulatory, anti-inflammatory, tissue-protective and antimicrobial properties. The Company’s flagship product is Glassia®, the first and only liquid, ready-to-use, intravenous plasma-derived AAT product approved by the U.S. Food and Drug Administration. Kamada markets Glassia in the U.S. through a strategic partnership with Baxter International. In addition to Glassia, Kamada has a product line of nine other injectable pharmaceutical products that are marketed through distributors in more than 15 countries, including Israel, Russia, Brazil, India and other countries in Latin America, Eastern Europe and Asia. Kamada has five late-stage plasma-derived protein products in development, including an inhaled formulation of AAT for the treatment of AAT deficiency that completed pivotal Phase 2/3 clinical trials in Europe and entered Phase 2 clinical trials in the U.S. Kamada also leverages its expertise and presence in the plasma-derived protein therapeutics market by distributing 10 complementary products in Israel that are manufactured by third parties.

Cautionary Note Regarding Forward-Looking Statements

This release includes forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts, such as statements regarding assumptions and results related to financial results forecast, commercial results, timing and results of clinical trials and EMA and U.S. FDA authorizations. Forward-looking statements are based on Kamada’s current knowledge and its present beliefs and expectations regarding possible future events and are subject to risks, uncertainties and assumptions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors including, but not limited to, unexpected results of clinical trials, delays or denial in the U.S. FDA or the EMA approval process, additional competition in the AATD market or further regulatory delays. The forward-looking statements made herein speak only as of the date of this announcement and Kamada undertakes no obligation to update publicly such forward-looking statements to reflect subsequent events or circumstances, except as otherwise required by law.

CONSOLIDATED BALANCE SHEETS

       
As of March 31, As of December 31,
2014   2013 2013
Unaudited Audited
In thousands

Current Assets

 
Cash and cash equivalents $ 33,314 $ 22,641 $ 59,110
Short-term investments 38,811 10,395 15,067
Trade receivables 12,592 9,177 17,882
Other accounts receivables 3,284 2,860 3,694
Inventories   28,614   23,743     21,933  
 
  116,615   68,816     117,686  
 

Non-Current Assets

Long-term inventories - 238 -
Property, plant and equipment, net 21,384 19,289 21,443
Other long-term assets   262   208     250  
 
  21,646   19,735     21,693  
 
  138,261   88,551     139,379  

Current Liabilities

Short term credit and Current maturities of convertible debentures 8,678

5,494

8,718
Trade payables 16,321 12,693 14,093
Other accounts payables 3,750 3,301 4,313
Deferred revenues   5,431   9,603     5,454  
 
  34,180   31,091     32,578  
 

Non-Current Liabilities

Convertible debentures 7,686 19,503 7,498
Employee benefit liabilities, net 801 738 827
Deferred revenues   7,683   10,493     8,506  
 
  16,170   30,734     16,831  

Equity

Share capital 9,201 7,220 9,201
Share premium 157,117 97,185 157,100
Conversion option in convertible debentures 2,217 3,794 2,218
Capital reserve due to translation to presentation currency (3,490 ) (3,490 ) (3,490 )
Capital reserve from hedges 87 188 156
Capital reserve from available for sale financial assets 12 - (27 )
Capital reserve from share-based payments 6,266 4,696 5,189
Capital reserve from employee benefits (129 ) (141 ) (129 )
Accumulated deficit   (83,370 ) (82,726 )   (80,248 )
  87,911   26,726     89,970  
 
$ 138,261   $ 88,551   $ 139,379  
 
 

Consolidated Statements of Comprehensive Income (loss)

           

For the Year Ended
March 31

 

Year ended
December 31

2014     2013 2013

Unaudited

 

Audited

In thousands
 
Revenues from proprietary products $ 7,421 $ 8,060 $ 50,658
Revenues from distribution   5,766     4,536     19,965  
 
Total revenues   13,187     12,596     70,623  
 
Cost of revenues from proprietary products 5,003 4,562 27,104
Cost of revenues from distribution   4,922     3,839     17,112  
 
Total cost of revenues   9,925     8,401     44,216  
 
Gross profit 3,262 4,195 26,407
 
Research and development expenses 3,365 3,730 12,745
Selling and marketing expenses 647 513 2,100
General and administrative expenses   1,957     1,256     7,862  
Operating income (loss) (2,707 ) (1,304 ) 3,700
 
Financial income 243 86 289
Income (expense) in respect of currency exchange and translation differences and derivatives instruments, net 39 62 (369 )
Financial expense   (674 )   (855 )   (3,153 )
Income (loss) before taxes on income (3,099 ) (2,011 ) 467
Taxes on income   23     24     24  
 
Net Income (loss)   (3,122 )   (2,035 )   443  
 

Other Comprehensive Income (loss):

Items that may be reclassified to profit or loss in subsequent periods:

 

Net gain (loss) on available for sale financial assets 39 (27 )

Net gain (loss) on cash flow hedge

(69 ) (41 ) 12
Items that will not be reclassified to profit or loss in subsequent periods:
Actuarial net gain of defined benefit plans   -     -     (73 )
 
Total comprehensive income (loss) $ (3,152 ) $ (2,076 ) $ 355  
 

Income (loss) per share attributable to equity holders of the Company:

 
Basic income (loss) per share $ (0.09 ) $ (0.07 ) $ 0.01  
 
Diluted income (loss) per share $ (0.09 ) $ (0.07 ) $ 0.01  
 
 

Adjusted EBITDA

 
   

Three months period
Ended March 31

   

For the year Ended
December 31

2014     2013   2013
 
Thousands of US dollar
 
Net income (loss) $ (3,122 ) $ (2,035 ) $ 443

Income tax expense

23 24 24
 
Financial expense, net 431 769 2,864
 
Depreciation and amortization expense 663 823 3,001
 
Share-based compensation charges 1,086 213 1,327
 
Expense (Income) in respect of translation differences and derivatives instruments, net (39 ) (62 ) 369
 
One time management compensation         1,386
Adjusted EBITDA $ (958 ) $ (268 ) $ 9,414
 
 

Adjusted net income

       

Three months period
Ended March 31

For the year Ended
December 31

2014     2013 2013
 
Thousands of US dollar
 
Net income (loss) $ (3,122 ) $ (2,035 ) $ 443
 
Share-based compensation charges 1,086 213 1,327
 
One time management compensation       1,386
Adjusted EBITDA $ (2,036 ) $ (1,822 ) $ 3,156
 
 

CONSOLIDATED STATEMENTS OF CASH FLOWS

    Three months period Ended     Year Ended
March, 31 December 31,
2014     2013 2013
Unaudited Audited
In thousands
 
Cash Flows from Operating Activities
 
Net income (loss)

$

(3,122

)

$

(2,035

)

$ 443
 
Adjustments to reconcile loss to net cash used in operating activities:
 
Adjustments to the profit or loss items:
 
Depreciation and amortization 663 823 3,001
Finance expenses, net 392 707 3,233
Cost of share-based payment 1,086 213 1,327
Taxes on income 23 24 24
Loss from sale of property and equipment - - 73
Change in employee benefit liabilities, net  

(26

)

  20     121  
 
  2,138     1,787     7,779  
Changes in asset and liability items:
 
Decrease (increase) in trade receivables 5,236 4,840

(3,445

)

Increase in other accounts receivables

(240

)

(442

)

(444

)

Increase in inventories and long-term inventories

(6,681

)

(3,230

)

(1,182

)

Decrease (increase) in deferred expenses 559

(111

)

(1,231

)

Increase in trade payables 2,241 538 1,579
Increase (decrease) in other accounts payables

(563

)

(230

)

264
Decrease in deferred revenues  

(846

)

 

(134

)

 

(6,270

)

 
 

(294

)

  1,231    

(10,729

)

 
Cash paid and received during the period for:
Interest paid

(301

)

(535

)

(1,968

)

Interest received 94 83 663
Taxes paid  

(60

)

 

(31

)

 

(42

)

 
 

(267

)

 

(483

)

 

(1,347

)

 
Net cash provided by (used in) operating activities

$

(1,545

)

$ 500  

$

(3,854

)

 
 

CONSOLIDATED STATEMENTS OF CASH FLOWS

   
Three months period Ended     Year Ended
March, 31 December 31,
2014     2013 2013
Unaudited Audited
In thousands
 

Cash Flows from Investing Activities

Short-term investments

$

(23,432

)

$ 6,569 $ 1,732
Purchase of property and equipment

(616

)

(1,274

)

(5,643

)

Proceeds from sale of property and equipment   -     -     8  
 
Net cash provided by (used in) investing activities  

(24,048

)

  5,295    

(3,903

)

 

Cash Flows from Financing Activities

Exercise of warrants and options into shares - 173 562
Issuance expenses -

(521

)

-
Short term credit from bank and others, net - -

(12

)

Proceeds from issuance of ordinary shares, net - - 52,953
Repayment of convertible debentures   -      

(4,295

)

Net cash provided by (used in) financing activities
  -    

(348

)

  49,208  

Exchange differences on balances of cash and cash equivalent

(203

)

328 793
 

Increase (decrease) in cash and cash equivalents

(25,796

)

5,775 42,244
 

Cash and cash equivalents at the beginning of the year

59,110 16,866 16,866
 

Cash and cash equivalents at the end of the period

$ 33,314   $ 22,641   $ 59,110  
 

Significant non-cash transactions

 
Issuance expenses accrued in other accounts payable $ -   $ 100   $ 151  
 
Exercise of options presented as liability $ -   $ 23   $ 23  
 

Exercise of convertible debentures into shares

$ 7   $ -   $ 6,508  

 

Contacts

Kamada Ltd.
Gil Efron, CFO
ir@kamada.com
or
LHA
Anne Marie Fields
212-838-3777
afields@lhai.com

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Contacts

Kamada Ltd.
Gil Efron, CFO
ir@kamada.com
or
LHA
Anne Marie Fields
212-838-3777
afields@lhai.com