Kamada Ltd

NASDAQ:KMDA

Q3-2025 Earnings Call

[Operator]

Good morning. Welcome to Kamada Limited Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded.

At this time, I'll turn the conference over to Brian Ritchie with LifeSci Advisors. Thank you, Brian. You may now begin.

[Brian Ritchie]

Thank you. This is Brian Ritchie with LifeSci Advisors. Thank you all for participating in today's call. Joining me from Kamada are Amir London, Chief Executive Officer; and Chaime Orlev, Chief Financial Officer. Earlier today, Kamada announced its financial results for the 3 months and 9 months ended September 30, 2025. If you have not received this news release please go to the Investors page of the company's website at www.kamada.com.

Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of Kamada. I encourage you to review the company's filings with the Securities and Exchange Commission, including, without limitation, the company's Forms 20-F and 6-K, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.

Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast Monday, November 10, 2025. Kamada undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

With that said, it's my pleasure to turn the call over to Amir London, CEO. Amir?

[Amir London, executive]

Thank you, Brian. My thanks also to our investors and analysts for your interest in Kamada and for participating in today's call. I'm pleased to report that our results for the third quarter and first 9 months of 2025 were strong, and that we continue to generate significant profitable growth.

Total revenues for the first 9 months of the year were $135.8 million, representing an 11% year-over-year increase and adjusted EBITDA was $34.2 million, up 35% year-over-year representing a 25% margin of revenues. We expect to continue generating profitable growth through the remainder of 2025. And based on our positive outlook, we are reiterating our annual revenue guidance of $178 million to $182 million and adjusted EBITDA guidance of between $40 million and $44 million, representing double-digit growth over our 2024 results.

We are excited for the growth prospects in our business, over both the near and longer term, guided by our 4-pillar growth strategy, including organic commercial growth, with development and M&A transactions, for plasma collection operation and the advancement of our pivotal Phase III inhaled AAT program. Our lead product continues to be our anti-rabieglobuline cadre which is being distributed in the U.S. through our collaboration with Kedrion from which we have a firm commitment to minimum orders for 2025 through 2027 and where the supply agreement with them further extends through 2031.

In addition to our significant market share in the U.S., we continue to grow sales of the product in leading international markets such as Canada, Latin American countries and a few Asian markets. Revenue growth for the first 9 months of the year compared with the first 9 months of 2024 was primarily attributable to the increased sales of Glassia, our AAT IV product in ex U.S. markets, mainly Latin America and the CIS region. In addition to our sales in those countries, the product continues to generate royalty income on sales by Takeda in the U.S. and Canadian markets. Our ability to generate significant profitable growth is indicative of the diversity of our portfolio and our successful marketing activities across different territories and medical specialties.

Moving on to our anti-CMV immunoglobulin CYTOGAM. As you may recall, earlier this year, we announced the initiation of a comprehensive post-marketing research program for CYTOGAM which we believe will help demonstrate the advantages of the product in the prevention and management of the CMV disease. Although CMV continues to be a significant risk factor for organ rejection and mortality in transplantation for years, no new up-to-date clinical data regarding the benefit of CYTOGAM were published.

To address this, we developed this program in collaboration with leading key opinion leaders to expel advancement of novel CMV disease management. In October, we announced enrollment of the first patient in an investigator-initiated trial included in this program. The trial called Strategic Health with Immoglobalin to enhance protection against late CMV disease or SHIELD is a prospective, randomized, controlled multicenter investing initiate study in CMV high-risk kidney transplant recipients.

The SHIELD study, we investigate the benefits of Cytogam administrated at the conclusion of the antiviral prophylaxis to reduce the risk of clinically significant late CMV in kidney transport to CPNs who are CMV negative and have a CMV seropositive donor. Those patients are at the highest risk of developing late onset CMV infection which is associated with worst transplant to CPN health and outcomes. We are very pleased to be working with notable experts in this fisoand we believe that the data generated by this study and others plans for this program will support increased product utilization for cytogram, leading to organic growth.

Also, as part of activities to advance organic growth, following our first biosimilar product launch in Israel last year, which is expected to generate approximately $2.5 million in revenues in 2025, we will be launching 2 additional biosimilars in the coming months and have several others in the pipeline to be launched in the coming years. We believe that this portfolio will become an increasingly important portion of our distribution business with annual sales of between $15 million to $20 million within the next 5 years.

Moving to business development and M&A. We continue to conduct active due diligence over several potential commercial targets. During early part of 2026, we expect to secure compelling in-licensing, collaboration and/or M&A transactions, which will enrich our portfolio of marketed products and complement our existing commercial operations. We anticipated such transactions will generate synergies with our current commercial portfolio and support our long-term profitable growth.

In addition, we are ramping up plasma collection at our Houston and San Antonio plasma centers. post facilities support 50 donor beds with a planned peak capacity of approximately 50,000 liters per year each and are anticipated to be 2 of the largest collection centers for specialty plasma in the U.S. A few weeks ago, we announced that the Houston facility already received FDA approval, and we expect the San Antonio site to follow in early 2026.

We intend to seek subsequent inspection and approvals from the European Medicine Agency in the EMA of both sites. We are currently engaged in discussion with potential customers to secure long-term sales agreements for normal source [indiscernible]. As previously stated, each of those 2 centers is expected to generate annual revenues of $8 million to $10 million in sales of normal source plasma at full capacity.

Turning now to our ongoing pivotal Phase III InnovAATe clinical trial for inhaled Alpha-1 Antitrypsin therapy. We continue to advance this program with its revised enrollment goal of approximately 180 subjects and we are on track to complete an interim futility analysis and announced its results by the end of this quarter.

With that, I'll now turn the call over to Chaime for a detailed discussion of our financial results for the third quarter and 9 months of 2025. Chaime, please go ahead.

[Chaime Orlev, executive]

Thank you, Amir. As Amir stated at the top of the call, we reported strong results for the quarter and 9 months ended September 30, 2025. Total revenues were $47 million in the third quarter of '25, up 13% compared to $41.7 million in the third quarter of '24. Total revenues for the first 9 months of 2025 were $135.8 million, an 11% increase from the $121.9 million generated in the first 9 months of 2024. The increase in revenues was driven by the diversity of our product portfolio primarily attributed to increased sales of glass in ex U.S. markets, increased sales driven by our Distribution segment and VARIZIG sales in the U.S. market.

It is important to note that we continue to achieve double-digit growth even through the expected decline in glass and royalty income as a result of the reduction in the royalty rate that went into effect during the third quarter. Gross profit and gross margins were $19.8 million and 42% in the third quarter of '25 compared to $17.2 million and 41% in the third quarter of '24. For the first 9 months of 2025, gross profits were $59.4 million and 44% compared to 52.9% and 43% in the first 9 months of 2024. The increase in both matrices is in line with the continued improvement of product sales mix and the overall increase in our commercial scale.

Operating expenses including R&D, sales and marketing and G&A and other expenses totaled $11.9 million in the third quarter of 2025 similar to the level reported in the third quarter of 2024. Operating expenses totaled $36.8 million in the first 9 months of 2025 as compared to $38 million in the first 9 months of 2024. The decrease is mainly related to a reduction in R&D expenses, which was related to development project timing changes.

Net income was $5.3 million or $0.09 per diluted share in the third quarter of 2025, up 37% as compared to the third quarter of 2024. Net income for the first 9 months of 2025 was $16.6 million or $0.29 per diluted share up 56% compared to the first 9 months of 2024. Adjusted EBITDA was $11.7 million in the third quarter of 2025, up 34% over the third quarter of 2024. For the first 9 months of 2025, adjusted EBITDA was $34.2 million, a 35% increase compared to the first 9 months of 2024. It should also be noted that the adjusted EBITDA for the first 9 months of 2025 was equal to the reported -- to that reported for the full year of 2024.

For the first 9 months of 2025, cash provided by operations was approximately $17.9 million that contributed to the strong cash position of $72 million at the end of the quarter.

That concludes our prepared remarks. Operator, we're ready to open the call for questions.

[Operator]

[Operator Instructions] And our first question comes from the line of Annabel Samimy with Stifel.

[Annabel Samimy, analyst]

Great progress on operations. I want to know a little bit more about the CYTOGAM study and how this differs from the clinical data that's already been -- that you've been using for clinical education so far what this adds to the package. And I guess maybe you can sort of talk about the population that does have this late onset CMV, do you now have enough information to cover the totality of the transplant population with the prior, I guess, studies that were conducted.

[Amir London, executive]

Annabel, thank you for the question. So the main difference between the current treatment population of CYTOGRAM and this SHIELD study is it currently CYTOGAM is primarily used either prophylactically at the time of the transplantation as part especially for high-risk patients. which are donor-positive recipients negative. Or as part of treatment, if there is actual active disease of patients a few days or weeks into the cost transplantation, while the SHIELD study is going to test using CYTOGAM as part of late CMV after patients have been treated for a few months with antivirus that point, the physicians start streaming down the antiviral usage, and that's a risk for a flare of CMV disease for the patient.

So this is basically kind of a prophylactic usage at late stage after transplantation as part of trimming down the antiviral usage. What percentage? I don't remember the top of my head. I would like to say on 20% but I will check this and get back to you.

[Annabel Samimy, analyst]

Okay. Great. That was helpful color. Then I guess I'm also curious about ATD where you are with enrollment, clearly, there's a lot -- there's an increasing number of programs right now that are under development. aside from gene therapy, there's some RNA editing options as well. So how is that impacting your enrollment? And are you still -- I mean, I know you're on target for the interim study, for interim analysis, how is the enrollment completion time line looking and top line data.

[Amir London, executive]

Okay. Good. So enrollment is continuing. As you say, that's an orphan disease and because we are the studies with the placebo arm. So recruitment has been a challenge since the study started and continues to be a challenge. We are at around 60%, 65% enrollment currently compared to the reduced sample size for the study. We do see some competition from other studies, but the sites where we are working with active sites are highly committed to the [indiscernible] study.

As you said, we will have the futility and [indiscernible] resolved before the end of the year. expect those results if they are positives in terms of continuing the study to give kind of strong backwind to the study and allow us to expedite recruitment. We expect to complete recruitment by early '27 which mean top line results, H1 '29 because it's a 2-year treatment.

[Operator]

[Operator Instructions] The next question is from the line of Jim Sidoti with Sidoti & Company.

[James Sidoti, analyst]

Your distribution business, the last 2 quarters has really shot up. I think it was 80% growth in the second quarter, 60% growth this quarter. I assume that's because of the addition of some of the new products to that business. Are these stocking orders? Or are these actual usage? Are these the kind of numbers we should expect going forward?

[Amir London, executive]

This is [indiscernible]. We have kind of a regional portfolio. We have launched additional new products over the last 12 months. in total market. So a very rich portfolio currently of distributed products. Biosimilars is just 1 of those products, as I mentioned on the call, it has a $2.5 million contribution this year. And we're going to launch 2 additional products over the next few weeks. So you should expect that this level of distribution business to continue and continue growing over the next few years.

[James Sidoti, analyst]

All right. And with the plasma collection centers in Texas, I assume you're collecting some specialty plasma now. Can you just give us a sense how much you're collecting relative to what you acquire? Are you collecting the bulk of what you need now for your proprietary products? And when do you think that -- or if not now, when do you think it will be selecting enough plasma in Texas to supply your proprietary products?

[Amir London, executive]

So good question. We are ramping up the specialty over collection to collect the bulk of the collection now in Houston and San Antonio is still normal source plasma because when you open a new site, you first need to approve your normal source plasma collection before you can move into the specialty collection.

The specialty comes primarily from the Beaumont side, which was our first site and that's a site which is dedicated only to specialty plasma. So we are not yet at a point that majority of our needs come from our own collection, but we're still working with external suppliers, partners that we've been working for many years.

Over time, we will gradually increase our own self-collection which will allow us to become more and more kind of vertically integrated and self-sufficient in terms of specialty plasma. In any case, we don't expect to be fully independent. We'd like to have also kind of second and third suppliers for each one of the plasma types in order to have kind of a backup plan if needed as part of our risk management. So this is something which is going to grow over time and over the next few years.

[James Sidoti, analyst]

Okay. And then last question for me. I know you've said you plan to release some interim data from the clinical trial for the AATD treatment sometime, I would assume, in December. How will you do that? Will it be a press release? We have a conference call? How are you going to let -- the Street know how that trial is going?

[Amir London, executive]

Yes. So just to maybe give a little bit more color around this futility analysis. So it will be conducted by end of the year. Results will be publicly shared through a press release. The analysis is being performed by an unblinded external using data available to date. We are analyzing probability of success of the study, efficacy end points based on a predefined success threshold. This is going to be a go-no-go futility analysis and results, as I mentioned, will be published through a PR before the end of this year.

[Operator]

At this time, I'll turn the floor to Brian Ritchie for any questions that come in from the web.

[Brian Ritchie]

First question, so can you talk about the performance of CYTOGAM to date this year, Amir? And related to that, what are the significant growth drivers year-to-date in the business.

[Amir London, executive]

Yes. So as described in my presentation, we are generating significant profitable growth this year as a result of the diversity of the portfolio. So [indiscernible] is generated through multiple products, GLASSIA sales in Axis markets, mainly Latin America and the CIS countries where we focus on AATD disease awareness and diagnosis, and we are market leaders as well as growing sales of the product in Switzerland and Israel.

Advising at strong 3 quarters in the U.S. market, our medical and commercial teams are making significant successful efforts in increasing awareness of the importance of using arising during chicken pox outbreaks to treat immunocompromised population, which are at risks that were exposed to the chicken pox. And as I answered the previous question, the Israel distribution business is growing, and this include our platform-derived product, respiratory therapies and the biosimilars. And this, in addition to the [indiscernible], solid, strong sales, [indiscernible], especially in the U.S. market in the MENA region, GLASSIA Royalties from Takeda and CYTOGAM, specifically regarding CYTOGRAM.

So as I answered Annabel on the first question, to significantly expand the use of the product. There's a need for up-to-date medical and think information. And this was not available when we began marketing the product in late 2021. So we are working thoroughly to generate and later on to publish such medical data and collaboration with leading KOLs. And to this end, we've launched the extensive clinical program, including the SHIELD study which I described earlier.

The growth during this period during this clinical program will be gradual. Specifically this year, CYTOGAM calls been below our plan, partly due to inventory management in the channels, the time it takes to add the product to hospital formularies as well as fewer transplants performed during H1 in some of the hospitals or the product is used. We are addressing, we have addressed and we are addressing these issues and expect resumed growth during the next few months.

[Brian Ritchie]

Thanks, Amir. With respect to GLASSIA royalties, now that those have declined to 6%, can you elaborate on where they'll go next year?

[Amir London, executive]

Yes. So as I think everyone knows, starting mid-August, meaning like 1.5 months into the third quarter we just ended, the royalties agreement with Takeda reached its second phase, which includes 6% royalties on the net market sales in the U.S. and Canada. This agreement is going to continue until 2040 meaning that we have a very long tail of additional 15 years of royalties, and we expect the royalties to be above $10 million in 2026 and continue to grow at single-digit rate annually thereafter.

Important to say that we are planning for this event. This is not a surprise for us. And as demonstrated in our Q3 results and Chaime mentioned it and our full year 2025 guidance, we have alternative revenues and profitability sources, and that results in a diversity of the portfolio and is compensating for the reduction of the royalties moving into 2026 and beyond.

Just an example -- one example, GLASSIA growth in the international markets, doubled between '23 and '24 and expect it to continue growing this year and beyond. And this is just one of the product in our portfolio. which allows us to compensate on the reduction of the royalties and to continue growing the business in a very profitable way.

[Brian Ritchie]

Thanks, Amir. Final question. Maybe you can comment on your current BD activities and the similarly lengthy time line to execute a transaction?

[Amir London, executive]

Yes, of course. So as I mentioned during the call, we continue to conduct active due diligence activities over several potential commercial targets. We expect to secure such a transaction at the early stage of 2026. The time for execution a little bit longer than what we expected, but this is because we are basically doing a third due diligence, looking for the right transaction for Canada which will best fit our capabilities, commercial and operational synergies and available resources.

And I'm confident that similar to the transaction we've done in the past, would also be successful in selecting and integrating the right assets for Canada in the current phase of our EBITDA activities.

[Brian Ritchie]

Thanks, Amir. I'll let you give your closing remarks now.

[Amir London, executive]

Okay. Thanks, Brian. So in closing, we continue to invest in our 4-pillar growth strategy with continued progress made in organic growth of our existing commercial portfolio, the business development and M&A transaction to support and expedite our growth, expansion of our plasma collection programs and progression of our AAT therapy program.

We look forward to continue to support clinicians and patients with important life-saving products that we develop [indiscernible] and commercialize. And we thank you all for your interest and support, and we remain committed to creating long-term shareholder value. We [indiscernible] all safe and healthy. Thank you very much.

[Operator]

Ladies and gentlemen, thank you for your participation. This concludes today's teleconference. You may now disconnect your lines, and have a wonderful day.