Kamada Ltd. (KMDA)

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Kamada Ltd. (KMDA)

Q2 2013 Results - Earnings Call Transcript

August 1, 2013 10:00 AM ET


Anne Marie Fields - Investor Relations, LHA

David Tsur - Chief Executive Officer

Gil Efron - Chief Financial Officer


Adnan Butt - RBC Capital Market

David Lewis - Morgan Stanley

Raj Denhoy - Jefferies

David Ferreiro - Oppenheimer & Co.

Adnan Butt - RBC Capital Markets



Welcome to the Kamada Ltd. Second quarter earnings conference call. At this time, all participants are in a listen-only mode following management’s prepared remarks, we'll hold a Q&A session. (Operator Instructions)

As a reminder, this conference is being recorded August 1, 2013. I would now like to turn the conference over to Ann Marie Fields. Please go ahead madam.

Ann Marie Fields

Thank you, Sarah. Good morning. This is Anne Marie Fields with LHA. Thank you all for participating in today's call. Joining me from Kamada are David Tsur, Chief Executive Officer and Gil Efron, Chief Financial Officer.

Before the opening of trading on NASDAQ this morning Kamada announced financial results for the second quarter ended June 30, 2013. If you have not received this news release or if you would like to be added to the company's distribution list please call LHA in New York at 212-838-3777 and speak with Carolyn Curran.

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 U.S. Securities and Exchange Commission including without limitation the company's forms F1 and 6K which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statement.

Furthermore the content of this conference call contains time sensitive information that is accurate only as of the date of the live broadcast, August 1, 2013. Kamada undertakes no obligation to revise of update any statements to reflect events or circumstances after the date of this conference call.

With that said, I would like to turn the call over to David Tsur. David?

David Tsur

Thank you, Ann Marie and good morning and thank you for joining us. I'd like to extend a particular welcome this morning to our listeners and (inaudible) the United States. Kamada Limited achieved (inaudible) quarter is a highlights including our successful IPO on the NASDAQ, as well as the expansion of our U.S. strategic distribution agreement with Baxter.

Our U.S. IPO significantly strengthened our balance sheet and gives us the platform for (inaudible) Kamada's levels. It provides us the capital to expand and accelerate our pharmaceutical development programs and puts us in a stronger position in any potential licensing or partnership discussions or negotiations.

We also achieved 17% revenue growth and strong EBITDA of over $4 million, magnificent progress, advancing our clinical trials, fortifying our patent portfolio and receive GMP compliance certification for Israel.

But before I go in to greater detail on the business, let me turn over to Gil Efron who will provide you with more financial detail on the global. So Gil remarks, I will provide a brief business update. And we then will we call for you for questions. Gil please?

Gil Efron

Thank you, David and good morning everyone. As reported in our press release, we made solid progress in the second quarter. We are pleased with this performance and look forward to delivering ongoing topline growth and profitability while continuing to make prudent investments in our clinical development pipeline and manufacturing processes.

Let's turn to review of our results. Total revenue for the second quarter 2013 increased 17% to $16.1 million, with proprietary product revenue mainly attributed to the $4.5 million funds achieved under the agreement with Baxter, partially offset by expected declines from the distributed product.

Revenue from Proprietary Products segment increased 70% to $11.9 million and revenue from the distributed product declined 37% to $4.2 million compared to the same quarter last year. For the first half of 2013, proprietary products revenue was $20 million up slightly from $19.2 million for the same period in 2012.

Revenue in the Distribution segment declined 37% to $8.8 million. As previously reported due to the timing of orders from Baxter we expect a [steady] product revenue to be much lower in the second half of the year, which is reflected in the [guidance] we provided in April for $54 million revenues from our Proprietary Products segment for the entire year of 2013.

Given today’s financial report this implies that the $4 million in the second half of 2013 which we believe would be [worked] to the fourth quarter. Turning to the rest of the P&L, R&D expenses in the second quarter of 2013 of $2.6 million up were largely in line with the $2.7 million in the second quarter of 2012.

And were down from $3.7 million in the first quarter of this year as accepted. (inaudible) 2013 R&D expenses were $6.3 million compared to $6.2 million a year ago. SG&A expenses in the second quarter of 2013 was $3.2 million increased from $1.6 million in the prior year and included a one-time management compensation payment of $1.4 million associated with the successful US IPO.

SG&A for the first half of 2013 increased to $12.9 million from $4 million in 2012. Gross profit for the second quarter of 2013 rose to $7.4 million from $3.3 million a year ago while gross margin expanded to 46% from 24% in the second quarter of 2012. Gross margin expansion is due to milestone revenues under the technology transfer agreement with Baxter.

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