KMDA: 2022 Revenue of $129 Million; Expected 2023 Revenues of $138 Million to $146 Million and Continued Positive Operating Cash Flow…
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On March 15, 2023, Kamada Ltd. (NASDAQ:KMDA) announced financial results for the fourth quarter and full year 2022 and provided a business update. Kamada reported revenues of $129.3 million, which met the company’s previously announced guidance, and was a 25% increase compared to fiscal year 2021. The increase was primarily due to sales of the four acquired IgG products in 2021. The revenues consisted of $102.6 million from proprietary products and $26.7 million from the distribution business. Gross profit margins increased to 36% in 2022 compared to $29% in 2021. Excluding depreciation in 2022 would have resulted in gross margins of 40%.
Operating expenses for 2022, which includes research and development (R&D), sales and marketing (S&M), and general and administrative (G&A) totaled $42.2 million in 2022 compared to $31.0 million for 2021. The increase was primarily attributable to an increase in S&M costs associated with the recently acquired IgG products along with increased R&D expenditures due to advancing the Phase 3 InnovAATe trial through the opening of new clinical sites and manufacturing clinical supply for the study. Net loss for 2022 was $2.3 million, or $0.05 per share, compared to a net loss of $2.2 million, or $0.05 per share, in the previous year. Excluding depreciation expenses of intangible assets generated through the recent acquisition, along with finance expense associated with the revaluation of the contingent consideration and other assumed long-term liabilities, Kamada would have recorded net income of $11.0 million, or $0.25 per share in 2022. Adjusted EBITDA, as shown in the following table, was $17.8 million in 2022 compared to $5.4 million in 2021.
For the fourth quarter of 2022, Kamada recorded revenues of $45.4 million, which was a 44% increase from the fourth quarter of 2021. The increase in revenues was driven by increased sales of the four acquired IgG products. Gross margins in the fourth quarter of 2022 were 34% compared to 21% for the fourth quarter of 2021. Operating expenses in the fourth quarter of 2022 were $11.3 million compared to $9.9 million in the fourth quarter of 2021. The increase was primarily due to increased S&M costs associated with the expansion of U.S. commercial operations. Net income for the fourth quarter of 2022 was $2.9 million, or $0.07 per share, compared to a net loss of $5.0 million, or $0.11 per share, in the fourth quarter of 2021. Adjusted EBITDA, as shown in the following table, was $7.2 million for the fourth quarter of 2022 compared to -$1.3 million for the fourth quarter of 2021.
Kamada exited 2022 with $34.3 million in cash and cash equivalents. This was due in part to the $28.6 million in operating cash flow generated during 2022. We anticipate the company remaining cash flow positive for the foreseeable future, which may be utilized by the company for business development opportunities.
For 2023, we model for the company to have total revenues of $142 million, which is at the mid-point of the company’s guidance of $138 million to $146 million. This would also be a $13 million (10%) increase over 2022 revenues. We model for EBITDA of $24 million, which is also at the mid-point of the company’s guidance of $22 million to $26 million. This would be an approximately $6 million (35%) increase over EBITDA in 2022. We view the large increase in EBITDA along with the topline revenue growth as indicative of strong business fundamentals.
Phase 3 InnovAATe Trial Continues Enrolling Patients
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.
Enrollment rates were very slow through 2021 due to the COVID-19 pandemic, however in 2022 the company opened up additional sites in Europe and there are currently 7 sites recruiting patients. By the end of February 2023, 50 patients were enrolled in the trial and 17 have completed the two-year study treatment period. Only one patient discontinued treatment prematurely due to airway irritation that started during the run-in period and there have been no drug-related serious adverse events reported. In addition, the independent data safety monitoring board (DSMB) recently recommended that the trial continue without modification. The DSMB also supported an expansion to the inclusion criteria to include subjects with severe airflow limitation (40%
Kamada’s Inhaled AAT, if approved, will be competing in a market which is expected to be approximately $1.5 billion by 2028 (EvaluatePharma).
We are glad to see that Kamada hit both the revenue and EBITDA guidance in 2022 and that sales of the four acquired IgG products are living up to expectations. The fact that the company is able to translate topline revenue growth into EBITDA growth is a very encouraging sign for the long-term health of the company and we look for that to continue in 2023. We will be interested to see what Kamada decides to do with the growing cash balance as management has indicated that they are continuing to examine various synergistic business development opportunities. With revenue and profitability numbers in line with our expectations we have not made any adjustments to our model and our valuation remains at $14.00 per share.
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