Kamada Ltd.

Greetings and welcome to the Kamada Limited second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Ritchie, Managing Director of LifeSci Advisors. Thank you. You may begin.

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 Jaime Orlov, Chief Financial Officer. Earlier today, Kamada announced its financial results for the three months and six months ended June 30th, 2025. If you have not received this news release, please go to the investor's page of the company's website at www.camada.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 Camada. I encourage you to review the company's filings with the Securities and Exchange Commission, including, without limitation, the company's forms 20F and 6K, 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, Wednesday, August 13th, 2025. Hamada 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 is my pleasure to turn the call over to Amir London, CEO.

Amir?

Thank you, Brian. My thanks also to our investors and analysts for your interest in Commodore and for participating in today's call. I'm pleased to report that our results for the second quarter and the first half of 2025 were strong. and that will continue to generate significant profitable growth. Total revenues for the first half of the year were $88.8 million, representing an 11% year-over-year increase. An adjusted EBITDA was $22.5 million, up 35% year-over-year, and representing a 25% margin of revenues. For the second quarter, revenues were $44.8 million, up 5% over the prior year quarter, and adjusted EBITDA was $10.9 million, up 20% year over year. These impressive results were driven by the diversity of our product portfolio and disciplined management of operational expenses. We expect to continue generating profitable growth through the remainder of 2025, and based on a positive outlook, we are increasing our adjusted EBITDA guidance to between $40 million to $44 million and reiterating our annual revenue guidance of $178 million to $182 million. The midpoints of our updated 2025 guidance represent increase of approximately 12% in revenues and approximately 23% in adjusted EBITDA, respectively, over our last year, 2024 results. We're excited for growth prospects in our business over both the near and longer term, guided by our four-pillar growth strategy of organic commercial growth, business development and M&A transactions, our private collection operation, and the advancement of our pivotal Phase III in Health AAT program. As you may recall, last quarter 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 CMV disease. Although CMV disease 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 benefits of CytoGAM were published. To address this, we developed this program in collaboration with leading key opinion leaders to explore advancement of novel CMV disease management. The research studies supported by this program will focus on late-onset CMV prevention and mitigation of active CMV disease, exploring alternative dosing strategies, and investigating potential new applications of cytograms. We believe that the data generated by this program will support further product utilization for Cytogram, leading to additional organic growth. Our revenue growth for the first half of the year compared to the first six months of 2024 was primarily due to increased sales of Glacier in ex-US markets and various excels in the US, as well as Glacier royalty payments. This positive trend is indicative of the diversity of our portfolio and our successful marketing activities across different territories and medical specialties. Also, as part of our 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 anticipate launching two additional biosimilars later this year, 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 a distribution business with annual sales of between $15 million to $20 million within the next five years. Moving to business development and M&A. We're currently conducting active due diligence over several potential commercial targets. During the balance of 2025 and into 2026, we expect to secure comparing in-licensing, collaboration, and or M&A transactions, which will enrich our portfolio of marketed products and complement our existing commercial operations. We anticipate that such transactions will generate operational and or commercial synergies with our current commercial portfolio and support future profitable growth. In addition, we continue to ramp up plasma collection at our three Texas-based plasma centers, and we're happy to announce earlier this week the U.S. FDA approval of a state-of-the-art center in Houston, Texas. We're especially appreciative of the work of a dedicated team of plasma collection experts who achieved inspection and licensure of this facility on schedule. As previously stated, this center's annual collection capacity of approximately 50,000 liters of plasma, and each of our two centers in Houston and San Antonio is expected to generate annual revenues of between $8 million to $10 million in sales of normal source plasma at full capacity. Turning now to our ongoing Pivotal Phase III innervite 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 conduct an interim futility analysis by the end of this year, 2025. With that, and I turn the call over to Jaime for a little discussion of our financial results for the first quarter, for the second quarter of 2025 and first six months of the year. Please go ahead, Jaime. Thank you.

Thank you, Amir.

As Amir stated at the top of the call, our results for the second quarter and six months into June 30th, 2025 were strong. Total revenues were 44.8 million in the first quarter of 2025, up 5% compared to the 42.5 million in the second quarter of 2024. Total revenues for the six months of 2025 were 88.8 million, an 11% increase from the 80.2 million generated in the first six months of 2024. As Amir indicated earlier, the increase in revenue was driven by the diversity of the company's portfolio. Gross profit and gross margins were 18.9 million and 42 percent in the second quarter of 2025 compared to 19 million and 45 percent in the second quarter of 2024. Gross profit and gross margins for the first six months of 2025 were 39.7 million and 45%, compared to 35.7 million and 45% in the first half of 2024. The decrease in gross profitability in the second quarter of 2025 is attributable to change in product and territory sales mix, whereas during this quarter, the increase in revenue was generated by ex-U.S. sales as compared to sales mix in the equivalent quarter last year. Operating expenses, including R&D, sales and marketing, and G&A, and other expenses, total $11.9 million in the second quarter of 2024 as compared to $13.3 million in the second quarter of 2024. The decrease in operating expenses, which was also demonstrated in the first quarter of the year, is indicative of our ability to adequately manage our operational expenditure while continuing to generate meaningful revenue growth. Net income was 7.4 million or 13 cents per diluted share in the second quarter of 2025 as compared to 4.4 million or 8 cents per diluted share in the second quarter of 24. Net income for the six months of 2025 was 11.3 million or 19 cents per diluted share as compared to net income of 6.8 million, or 12 cents per diluted share in the first six months of 24. The increase in net income is attributable to increase in operating profits, which increased by 54% for the first half of the year and 25% for the second quarter, as well as changes in the financial and tax expenses between the periods. Adjusted EBITDA was 10.9 million in the second quarter of 2025, up 20% from the 9.1 million achieved in the second quarter of 2024. Adjusted EBITDA was 22.5 million in the first six months of 2025, a 35% increase compared to the 16.6 for the first six months of 2024. As Amir indicated, we're increasing our adjusted EBITDA guidance for the year to between $40 million and $44 million. Cash provided by operating activities was $8 million in the second quarter of 2025, and we continue to maintain a strong cash position even after the special dividend payment, and we ended the first half of with a cash balance of $66 million that is planned to be used to fund new business development initiatives. Before turning the call over to questions, I would like to indicate that we are continuing to monitor the evolving tariff situation closely. Based on presently available information, our assessment is that the recently imposed tariffs are not applicable to direct products. to date, we have not experienced impact or interruptions of our operations or ability to maintain cost and pricing as a result of the tariffs. With that, we will open the call to questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. The first question is from Annabel Samimi from Stiefel. Please go ahead.

Hi everyone. Thanks for taking my question and congratulations on a good quarter. So just a couple for me. It seems like for the last two quarters, Glossy and Verizig have been the growth drivers, I guess for reasons you've stated, especially Verizig. But can you give us an idea about dynamics behind Kedrab and Cytogam, which I guess had been the growth drivers? Is it more difficult year-over-year comps? Are they performing as expected? Or maybe are physicians just slowing down on adoption of Cytogam until the next batch of data, just any color there would be great. And then I'll just follow up after that.

Hi, Annabel. Yes, we mentioned specifically Glacier, XOS, and Royalties, and Varizig, because these are the products which have a significant contribution to our year-over-year growth. KEDRAB and Cytogram are performing according to our expectations. As you know, the CADREB contract with CADREON is like a four-year, it's an eight-year with a four-year committed volumes. CADREON buys the product, we supply them according to the inventory management. We continue to see in-market growth, but in general, the numbers are similar to 2024 numbers. CytoGAM is going according to the plan. We expect that the growth will come once we have the additional clinical and medical data, which we are currently collecting. But I think in general, it's an opportunity to emphasize the strengths and diversity of the portfolio. You know, with six FDA-approved products, marketing in over 35 countries, over 25 products in our region, distribution business, the soon-to-be plasma sales. We have a very strong organic growth that's coming from multiple products. And this year, it's been mainly glass and varizine. Previous years, it's been cytogram and CADRAB. But all in all, it's a very strong, diverse portfolio that allows us to continue maintaining the growth year after year.

Yeah, definitely noted. And then, You have a solid cash position for a profitable company, but is it sufficient for impactful BD given its decline in the last couple of quarters? How should we think about the balance of your internal investments that you're obviously making quite a few and then the external BD and how that might be funded?

So we plan to utilize our existing cash if needed. We have additional sources for additional funding and multiple vehicles of funding that we can put to work. We are looking and screening for commercial stage assets. I think the fact that we're looking for commercial assets gives us a lot of bandwidth in terms of the ability to fund those transactions. We are mainly focused on plasma-derived products, as well as specialty pharma, and within the specialty pharma, the transportation field. And as I mentioned during the call, we would like to leverage our supply chain, commercial infrastructure, take advantage of the synergies, and we are actively screening and doing the diligence on some multiple targets, and hopeful that it will be mature over the next few months into 2026 and have meaningful impact on our 2026 performance. Funding, you know, to the scale of the transaction we're looking to do, we will have sufficient funding to execute those transactions.

Okay. If I can just squeeze in one more on the inhaled AAT program. Obviously, we're just waiting for the interim analysis right now, but can you sort of describe the competitive landscape? There have been, I guess, some more developments, whether it's gene therapy, other programs, anything that we should be watching for that might change the potential market opportunity there?

Yes, good question. So yes, there is a lot of activity in the Alpha One space in general. Our in-health program is the most advanced one in terms of an efficacy study in a pivotal stage. So there's no other phase three pivotal studies that are structured around, you know, efficacy endpoints. You know, we are making progress and the other companies are also making progress. I think you and other And people following this space know that there are maybe two or three additional technologies which are currently being developed. The market is growing, growing. We see the growth through our royalties from Takeda. So the 6%, 7%, 8% annual growth is actually happening. What used to be in a half a billion dollar market is like 1.3, 1.4 billion dollar market. We believe that by the time that we are going to have the results from our study, this is going to be like a $2 billion market. So we believe that there is enough business and enough opportunity for multiple new technologies and multiple new players. We believe that our technology being like a second generation augmentation therapy with better ease of use and quality of life with hopefully, if we are successful in the study, efficacy data will be a very strong competitor and player in the iPhone space in general.

Great. Thank you for taking my questions.

Of course.

As a reminder, to ask a question, please press star one. The next question is from James Sidoti from Sidoti and Company. Please go ahead.

Hi. Good afternoon. Thanks for taking the question. So, you know, as you said, the quarter really demonstrated how diverse your different revenue streams are. You know, the one that grew this quarter in particular was the distributed revenue. revenue segment, I guess, with the launch of the new product, the new biosimilar product. You know, were there one-time sales in the quarter or, you know, how should we view this distribution channel going forward?

No, this is not one-time sales. You know, the launch of the biosimilar product and the future launches, we expect two more by the end of this year. is going to build on an existing infrastructure of our commercial activity in the Israeli market. And this is something that we will continue growing. You also have seen that, you know, we had a better gross margin this quarter. The more we launch biosimilars and based on our innovative portfolio in Israel, you know, will help us also improve our margins. So this is a process that has started and will continue over the next few years.

Okay, so there was no, you know, stocking or channel filling in the quarter. These were, you think, these types of numbers you think will be going forward? Correct. Okay, and then a similar question on the SG&A expense. I mean, down pretty significantly from a year over, down significantly year over year. You know, were there one-time things there that helped that, or do you think you'll stay around these levels?

So we're very conscious about our expenses. I think we've been very disciplined in the way that we deploy investment and ongoing expenses. There's been a slight and say, you know, kind of a fluctuation between quarters and between the first six months of the year and the second six months of the year. So, you know, the second six months of the year might be a little bit higher, again, insignificant, a little bit higher in general. But I think what's very highly promising, and I think all analysts and investors need to look at this, our ability to generate, you know, a good and improved rate of EBITDA from top line. And we said in the past, when we were under 20% EBITDA of top line, that we were targeting, you know, 25% and above. I think we've been able to demonstrate this over the last, you know, few quarters. And this is our goal to continue to be profitable. And from every dollar we make, that we will have a bigger portion all the way to the bottom line EBITDA.

Okay, and then last question for me, something I asked three months ago. You said the tax rate would continue to be a little bit lumpy in 2025. What was responsible for the tax credit in the June quarter, and where do you think the tax rate will be in September and December?

I'll refer this question to Howard Kleinert.

I'll take this question. So we anticipate the Israeli entity or the parent company is reporting in Israeli shekels. Over the course of the last quarter, there's been fluctuations in the currency exchange between the shekel, the Israeli shekel and U.S. dollars that affected our results for tax purposes and made the change. Overall, we still have the opinion that By the end of 2025, the company will be utilizing all of its tax losses carried forward, and we will be moving into tax payments. Right now, the changes that you see are mostly in deferred tax, either assets or liabilities, which are causing the bumpiness, as you alluded to.

Okay, so when those NOLs are used up, you know, as you look into 2026 and beyond, what do you think will be an effective tax rate?

Well, we're looking at anywhere between 20 or 25%. All right, thank you.

There are no further questions at this time. I would like to turn the floor back over to Amir London for closing comments.

Thank you very much. In closing, we continue to invest in the four-pillar growth strategy with continued progress made in organic growth of existing commercial portfolio, business development, and M&A transaction to support and expedite our growth, expansion of our platform collection operation, and the progression of our AEP therapy program. We look forward to continuing to support clinicians and patients with those important life-saving products that we develop and manufacture and commercialize. We thank you all for your interest in Kamada, and we are committed to creating long-term shareholder value. We hope you all stay healthy and safe. Thank you for participating in today's call.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.