Amir London - Chief Executive Officer Chaime Orlev - Chief Financial Officer Bob Yedid - LifeSci Advisors

Greetings, and welcome to the Kamada Ltd., Second Quarter 2022 Earnings Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Bob Yedid. Thank you. You may begin.

Thank you all for participating in today’s call. This is Bob Yedid with LifeSci Advisors. 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 three and six months ended June 30, 2022. 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'd 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 identifies 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 17, 2022. The company undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this call. Before turning the call over to management, analysts or investors can email questions for the question-and-answer session to my email address at the end of the press release, Bob Yedid – excuse me, bob@lifesciadvisors.com Also you can prompt and ask questions live as usual on any conference call at the end here and Melissa will give those instructions. With that said, it's my pleasure to turn the call over to Amir London, CEO. Amir?

Thank you, Bob. My thanks also to our investors and analysts who have interest in Kamada and for participating in today’s call. Let me start by emphasizing the six months into 2022 and based on our positive outlook for the rest of the year, we are highly encouraged by the performance of our business in 2022. I believe it is a testament to our ability to rapidly transition from our past dependency on GLASSIA sales to Takeda to a diversified fully integrated commercial company and a global leader in the plasma-derived specialty market. Importantly, we are making critical progress leveraging each of our key growth categories, which include the commercialization of our immunoglobulin portfolio in the U.S. market, as well as in new territories, KEDRAB growth in the U.S., our distribution product in Israel, our U.S. plasma collection business, GLASSIA royalty income and the recently expanded Inhaled AAT clinical program. During the first half of 2022 we generated total revenue of $51.7 million, representing a 5% increase year-over-year. Our adjusted EBITDA was $4.6 million and excluding loss associated with the Labor Strike, the adjusted EBITDA could have been $8 million representing a 15% margin. It’s important to note that during the first six months of the year we generated $16.4 million of operating cash flow, which supported the increase of our cash position to almost $30 million as of June 30, 2022. This increase validates our effective operations being a cash generating business. The portfolio of the full FDA-approved immunoglobulins we acquired late last year continues to gain traction in multiple markets and delivered strong sales and profitability for Kamada in the second quarter. As a reminder, the acquired product generated collective revenue of approximately $42 million in 2021 with over 50% gross margin, and we anticipate to significantly grow…

Thank you, Amir, and good day everyone. In the second quarter of 2022, total revenues were $23.6 million. For the first six months of 2022 total revenues were $51.7 million, an increase of 5% year-over-year. It is a solid indication to our rapid transition from prior dependency on GLASSIA sales to Takeda, into have a more diversified operation with multiple growth drivers. The year-over-year growth during the first six months of 2022 was primarily driven by continued strong sales of our recently acquired IgG products. As Amir mentioned, we forecast a strong second half of the year, driven by multiple factors, including continued growth of the IgG product sales in the U.S., which will be driven by the ongoing marketing efforts, as well as expansion of ex-U.S. sales of these products by the VARIZIG supply agreement. Moreover, we expect continued growth of Kedrion’s, KEDRAB in the second half of the year in support of the products in market sales growth. The three months ended June 30, 2022 represents our first full quarter receiving royalty income from Takeda on their sales of GLASSIA. We recognized $3.7 million of royalty income in the second quarter, which is in line with our anticipated quarterly projections. The second half of the year is expected to include two full quarters of royalty income as compared to only four months in the first half. The gross profit for the second quarter of 2022 was $7.2 million, representing 31% margins, compared to $9.1 million or 37% margin in the second quarter of 2021. Gross profit for the first six months of 2022 was $18.5 million, an increase of 3% year-over-year and representing 36% margin. We recently resolved a Labor Strike at our manufacturing facility in Israel. As result of the strike, we incurred a loss of $3.3…

Thank you. [Operator Instructions] Our first question comes from the line of Anthony Petrone with Mizuho Group. Please proceed with your question.

Thanks and congratulations on a strong quarter here and execution with the new portfolio. Amir, I want to start with the contract on VARIZIG, $11.4 million in the second half to Latin America. Just a little bit more detail on that; was that a one-time quarter or should we expect that to continue into next year, and then I have several follow-ups. Thanks.

Hi Anthony! Thank you for the question and for participating. So the current agreement is between the fourth quarter this year and the first half of 2023. So we’re looking at $11.4 million, which is roughly half of it will be this year and the balance will be next year. Beyond that, we would need to wait and see that international organization is issuing another tender. I feel that if it happens, it will happen towards the end of 2023 and we’ll be covering 2024 and beyond. That organization is the organization that we have done some business in the past and they have other tenders for other products, which we have – which are part of our portfolio. So we believe that there’s an opportunity to grow the business with that organization beyond just VARIZIG.

That’s helpful. And then VARIZIG, I know obviously prophylactic treatment for varicella, chickenpox and you know that's certainly quite different than monkeypox. But is there any chance potentially of a reformulated version of VARIZIG to address monkeypox. If not, is there anything out there you know potentially that Kamada can participate in on that front? And then I have a couple more.

Okay. So as far as I know, there is no connection at all between the VARIZIG and the monkeypox. The increase in the demand for VARIZIG and we see it’s not only from that organization, but we have grown our sales of this product also in other territories. Its linked to COVID. There are payers coming, especially from Latin America that show a link between the prevalence of [inaudible] and COVID. So that's the main result or the main reason why we see such a significant increase in VARIZIG demand in multiple territories. We are selling the product in the U.S., Canada, some European countries, some international territories and now the significant new agreement with that international organization and we anticipate to continue seeing the growth of that product beyond just the agreement with additional clients around the world. In regards to your question, so we don’t have in our portfolio currently something which is directly for the treatment or for the prophylactic treatment or all treatment of monkeypox and very few as you may know, potential for such a product. It is not something which will be covered in our portfolio. If there will be indication that general IgG has “cocktail” of immunoglobulins is a relevant treatment for monkeypox, and I’m saying if and putting a disclaimer on this right now, then of course we have IgG for these new markets and this can drive growth of that quarter.

Okay. And then you know second half international sales of the four IgG products, CYTOGAM, HEPAGAM, as well as VARIZIG, we talked about that, and WINRHO. Are any of these products not launched at this point or did 2Q have active sales internationally from the entire portfolio. And then when you just think about the second half ramp internationally for the portfolio, you know maybe just a little bit more detail on which of the four products you expect to sort of lead the sort of uptake and which countries we should be expecting the most traction from?

Okay. So when we bought the portfolio, the business was primarily North America. I think we talked about it just after the acquisition. I believe that over 95% of sales of last year came from the U.S. and Canada. We are leveraging our international presence, our very strong international network. As we anticipated and we said like after the acquisition, which we believe that we can do better with those products and not only in the U.S. and Canada by proactively promoting the product, but also to leverage our international network to grow the business significantly in other markets. And we are very happy that we are already seeing meaningful sales growth for those products in those markets. VARIZIG is just one example. But we also – all four products are being sold in additional territories and this is of course in addition to KamRAB, our anti-rabies IgG and our legacy [inaudible] of KamRAB and GLASSIA, which is sold outside of the U.S. without our Kamada business and related to Takeda. So as I said, all four products are being sold in international markets. In some of the markets we sold the registered products, some is unregistered, but the biggest is growing and this is becoming a more and more significant component of growth and new catalyst of our business and we are very happy with that.

Thanks for that Amir. And the last one for me is on CYTOGAM specifically. One of the synergies the company spoke about at the time of the acquisition here was in the United States, maybe even North America as well more broadly, that that product specifically really did not have any sales and marketing push behind it, and so you know maybe just a little bit of an update on that initiative around CYTOGAM, on the marketing front. Thanks.

Yes, we established our core marketing and sales team in the U.S. We hired the people and we are already in the previous quarter that Jon Knight is our VP, Commercial Operations for the U.S. market. We also already hired the regional sales managers and the medical service team to support it and sales and marketing executives have been initiated. We are focused on the key transportation centers of the U.S., because CYTOGAM of course is a treatment related to consolidation. We are also leveraging the same sales and marketing team when we talk about HEPAGAM, because it’s also a full consultation centers. VARIZIG is also for immunocompromised patient, so consultation centers are relevant for that. So all those activities are synergistic and we can basically with the same team follow those three products in the relevant medical centers. That is already happening and we expect to start seeing the results of this commercial activity already in the second part of this year, and actually in reality we’re just seeing – we’ve seen an increase in demand between Q1 in Q2 and we expect to see the same type of increase also during the second part of the year.

Alright, thank you very much. I’ll hop back in.

Thank you. Ladies and gentlemen, I’ll turn the floor back to Bob Yedid for any questions that came in through email.

Yeah, we do have a couple of questions that came in through email, and Amir maybe you can help explain how you reduced your dependence on GLASSIA sales, and accomplished the sort of strategic shift that you talked about during the call, and what some of the key components are.

Yes, so and as I said during the call, we are very, very encouraged by the performance of the business in 2022, and we actually see, and it’s happening, how we are transitioning from the past dependency we had on GLASSIA® sales to Takeda to almost new Kamada. It’s a certified fully integrated company with multiple growth catalyst. So this past dependency on GLASSIA, which was until middle 2021 is gone, it’s almost a new company, and I think it’s highly encouraging as we have made this transaction in just a matter of few months. And when we are looking on the current business and looking forward, those multiple growth engines are the new portfolio of the full GLASSIA approved immunoglobulins, we just talked about it. KEDRAB growth in the U.S. market which is growing significantly since the beginning of the year, Kamada plasma our fully owned plasma collection company in the U.S. The growth we see and we expect to continue to seeing in our distribution business in the Israeli market, including the portfolio of the 11 biosimilars that we planned to launch between this year and 2028 adding $40 million to our business, the royalty payments from Takeda which started earlier this year and we had the full quarter, second quarter of $3.7 million, which is exactly according to our expectations and GLASSIA and KamRAB, the anti-rabies immunoglobulin in the international markets outside of the U.S. So all those six pillars of activity, I think created a diversified, commercial, fully integrated leader in specialty plasma space and it’s happening. So if in the past we spoke about that it will happen in the future, that once we do this and that this will happen, now few months into 2022, I can say it’s happening, it’s real. It’s a new Kamada with very strong prospect for continued growth moving forward.

Okay, that’s helpful. The other question we had is, you know now that you just talked about the U.S. sales and marketing organization you have, does that open up additional opportunities – and you have an expanded product portfolio, does that open up additional opportunities to look at other plasma derived products or other products to bring in into Kamada over time.

Absolutely! So as we continue building our U.S. presence and building our sales and marketing infrastructure, it’s our plan to either acquire or in-license additional products which will be a good fit with our commercial team, and this could be a plasma derived product or this could be product that’s geared towards or targeting transplantation centers. We will continue to focus on the business development in order to make it happen, so the answer is yes.

Okay, great. And the last question is one, just looking at the financial so far this year, you’re running at less than half of your target for the year in terms of revenue guidance, and just you know help us understand, you know you’ve expressed some confidence in hitting your full year guidance for revenues. Help us understand some of the key factors there that give you that, that give you have view point.

So yes, looking at the second part of the year, the outlook for the second part of the year, is that it’s going to be a significantly stronger six months, with few catalysts that we already know them and we are in the execution phase. One is this growth that sales of the VARIZIG, the execution of the VARIZIG agreement, this is around 50% of the $11.4 million. This is of an additional $5.5 million, approximately $5.5 million that we did not have in the first half and we are going to have in the second half of the year. The new portfolio immunoglobulins, the new immunoglobulins in the U.S. market are growing. This is an additional increase compared to the first half of the year. KEDRAB is growing significantly and we are seeing orders from KEDRAB, which we are going to supply in the second part of the year. The second part of the year includes two full quarters of GLASSIA royalty versus only four months that we had in the first six month. So when you add all of this, in addition to our distribution business in Israel, you basically see that we have strong support to our projection for the year and the second half will be stronger than the first half.

Great! Thank you. Those are the questions that we had from the analysts and investors. I’ll turn it back to Melisa Melissa.

Thank you. Ladies and gentlemen, there are no further questions at this time. I'll turn the floor back to Mr. London for any final comments.

Thank you. Thank you very much. So in closing, on behalf of the entire Kamada team, we look forward to continue to provide clinicians and patients with an expanding portfolio of important lifesaving products that we develop, manufacture and commercialize. We thank you all for your participation in today’s call and for your support and remain firmly committed to creating long-term sustainable shareholder value. Thank you for your participation in today’s call and we hope you all stay healthy and safe. Thank you very much.

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