NASDAQ:KMDA
READ THE FULL KMDA RESEARCH REPORT
Financial Update
On March 6, 2024, Kamada Ltd. (NASDAQ:KMDA) announced financial results for the fourth quarter and full year 2023 and provided a business update. Kamada reported revenues of $142.5 million, which met the company’s previously announced guidance, and was a 10% increase compared to fiscal year 2022. The increase was primarily due to increased sales of Kedrab to Kedrion due to increased market share and demand for the product in the U.S. The revenues consisted of $115.5 million from proprietary products and $27.1 million from the distribution business. Gross profit margins increased to 39% in 2023 compared to 36% in 2022. Cost of goods sold in 2023 included $5.4 million of amortization expenses associated with intangible assets generated through the IgG products acquisition.
Operating expenses for 2023, which includes research and development (R&D), sales and marketing (S&M), and general and administrative (G&A) totaled $45.4 million in 2023 compared to $42.2 million for 2022. The increase was primarily attributable to an increase in S&M costs associated with the acquired portfolio commercial operation along with increased R&D expenditures due to advancing the Phase 3 InnovAATe trial. Net income for 2023 was $8.3 million, or $0.15 per diluted share, compared to a net loss of $2.3 million, or $(0.05) per share, in the previous year. Adjusted EBITDA, as shown in the following table, was $24.1 million in 2023 compared to $17.8 million in 2022, which represented a 35% year-over-year increase.
For the fourth quarter of 2023, Kamada recorded revenues of $36.4 million, compared to $45.4 million in the fourth quarter of 2022. The decrease in sales was due to more balanced quarterly sales spread during 2023 compared to 2022. Gross margins in the fourth quarter of 2023 were 40% compared to 34% for the fourth quarter of 2022. Operating expenses in the fourth quarter of 2023 were $11.6 million compared to $11.3 million in the fourth quarter of 2022. S&M costs in the fourth quarters of 2023 and 2022 included $0.4 million of amortization expenses of intangible assets generated through the IgG products acquisition. Net income for the fourth quarter of 2023 was $5.1 million, or $0.09 per share, compared to $2.9 million, or $0.07 per share, in the fourth quarter of 2022. Adjusted EBITDA, as shown in the following table, was $6.4 million for the fourth quarter of 2023 compared to $7.2 million for the fourth quarter of 2022.
For 2024, we model for the company to have total revenues of $158 million, which is at the mid-point of the company’s guidance of $156 million to $160 million. This would be a $15.5 million (11%) increase over 2023 revenues. We model for adjusted EBITDA of $28 million, which is near the mid-point of the company’s guidance of $27 million to $30 million. This would be an approximately $4 million (16%) increase over adjusted EBITDA in 2023. We view the large increases in adjusted EBITDA over the past couple of years along with the topline revenue growth as indicative of strong business fundamentals.
Business Update
Update on Phase 3 InnovAATe Trial
Kamada initiated the Phase 3 InnovAATe trial of inhaled alpha-1 antitrypsin (AAT) in December 2019 (NCT04204252). It is a randomized, double blind, placebo controlled pivotal Phase 3 trial designed to assess the efficacy and safety of inhaled AAT in patients with AATD and moderate lung disease. Up to 250 patients will be randomized 1:1 to receive either 80 mg inhaled AAT or placebo daily for two years. The primary endpoint of the trial is lung function as measured by FEV1. Secondary endpoints include lung density changes as measured by CT densitometry, along with other parameters of disease severity such as pulmonary function, exacerbation rate, and six-minute walk test.
In January 2024, Kamada met with the FDA in regards to the InnovAATe trial, at which time the FDA reconfirmed the overall design of the study and endorsed the Data Safety and Monitoring Boards (DSMB) unblinded positive safety assessment of 42 patients and accepted the DSMBs recommendation to waive the need for an additional safety assessment point of 60 patients with at least six months of treatment. Kamada also presented plans for an open-label extension study, which is expected to initiate in mid-2024, and the FDA accepted that plan as well. The FDA expressed a willingness to potentially accept a P<0.1 alpha level in evaluating InnovAATe for meeting the primary efficacy endpoint, which may allow for acceleration of the program. Based on this, Kamada is planning to present a revised statistical analysis plan (SAP) and study protocol for the InnovAATe study and seek FDA feedback by mid-2024. Kamada also received feedback from the FDA in regards to anti-drug antibodies (ADAs) to inhaled AAT, thus the company will be concurrently conducting a sub-study in North America in which approximately 30 patients will be evaluated for the effect of ADA on AAT levels in plasma with inhaled AAT and IV AAT treatments. That study should initiate in 2025.
Additional Plasma Collection Center to Open in 2024
In March 2023, Kamada entered into a lease agreement for a facility in Uvalde, Texas and subsequently began construction activities to establish a new plasma collection center. The company acquired its first plasma collection center in March 2021 in Beaumont, TX. The new center is expected to commence plasma collection operations in 2024. It is planned to collect normal source plasma to be sold for manufacturing by third parties along with hyper-immune specialty plasma required for manufacturing of Kamada’s proprietary products. The company also has plans to lease a subsequent facility and initiate construction activities for a third plasma collection center during 2024. These facilities help to support the company’s plasma needs along with generating additional revenues through the sale of collected normal source plasma.
Conclusion
Kamada continues to execute at a high level with strong revenue and adjusted EBITDA growth in 2023 and expected continued double-digit growth in 2024. The positive interactions with the FDA regarding the InnovAATe trial are encouraging, and we look forward to additional information regarding the potential changes to the statistical analysis plan, which could accelerate that program. With growth in revenues and profitability in line with our expectations we have made no changes to our model and our valuation remains at $13 per share.
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