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Operator: Greetings. Welcome to the Kamada Ltd. Fourth Quarter and Full Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. At this time, I will turn the conference over to Troy Williams of LifeSci Advisors. Troy, you may now begin.

Troy Williams: Thank you, Rob. This is Troy Williams of LifeSci Advisors and thank you all for participating in today’s call. 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 12 months ended December 31st, 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 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 Securities and Exchange Commission, including without limitation the company’s Forms 20-F and 6-K, which identifies specific risk factors which 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 this live broadcast, Wednesday, March 15th, 2023. Kamada 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?

Amir London: Thank you, Troy. My thanks also to our investors and analysts for your interest in Kamada and for participating in today’s call. The recently completed 2022 year was a transformational period for Kamada as we embarked on a new and exciting chapter in the company’s evolution. Most importantly, we have now completed our rapid transition from our historical dependence on GLASSIA sales to Takeda, to a diversified fully integrated specialty plasma company with fixed assay approved proprietary product and strong commercial capabilities in the US market, as well as global sales footprint in over 30 countries. The success of this strategic shift is supported by our impressive full year 2022 financial results, which met our annual guidance.

Specifically, we achieved total revenue of $129 million and EBITDA of approximately $18 million, representing margins of 14%. Our strong performance in 2022 represented revenue growth of over 25% as compared to 2021 and a 3x increase in EBITDA. Moreover, we generated record operating cash flow of $28.6 million during 2022, supporting the increase in our cash position to $34 million as of December 31st, 2022, which is nearly double what it was at year end 2021. Looking ahead, we expect the momentum from 2022 to extend throughout 2023 with profitability to further meaningfully enhance as compared to last year. As such, we are introducing full year 2023 revenue guidance of $138 million to $146 million and EBITDA of $22 million to $26 million. The midpoint of that range would represent profitability growth of approximately 35% over 2022.

Our impressive results in 2022 and positive outlook for this year has been consequence of our ability to leverage multiple growth drivers, including the portfolio of full FDA approved IgGs that we acquired in late 2021, KEDRAB sales observed in the US, GLASSIA royalties received from the Takeda, other proprietary product sales in international markets, and our thriving Israeli distribution business. This significant catalyst, which I will discuss further momentarily, are driving our annual double-digit revenue growth with significant upside potential and limited downside risk. Most importantly, the acquisition completed in November 2021 on the full FDA approved IgG consisting of CYTOGAM, HEPAGAM, VARIZIG and WINRHOSDF following a thorough search for the ideal assets for Kamada was a critical strategic and synergistic advancement for the company.

I’m thrilled to report that the full year 2022 revenues of acquired products increased by 24% as compared to full year 2021 and are generating gross margins of over 50% During 2022, as part of the establishment of our direct presence in the US markets, we deployed a team of US-based experienced sales and medical affairs professionals who have rapidly established operation in these key markets. The US sales team is making good progress in promoting our portfolio of specialty plasma products to physicians and other healthcare practitioners through direct engagement and opportunities at medical conventions. The medical affairs team is working to advocate physicians, while addressing the scientific and clinical inquiries, including participating in major medical conferences in the US.

As a reminder, our activities promoting these important therapies represent the first time in over decades that these hyperimmune specialty products have been supported by field-based activity in the US market. We are encouraged by the continued positive feedback received from key US physicians who are seeking to publish new clinical data related to our portfolio, while conducting educational symposium that we believe will have a positive impact on the understanding of this product contributing to continued growth in demand. We expect to begin seeing the impact of activity later this year. We are also leveraging our existing strong international distribution network to grow product revenues in new territories, primarily in Latin America and the Middle East.

Our achievements with these key products in 2022 including winning a new $11.4 million procurement agreement for VARIZIG for an international organization operating principally in Latin America and securing a $22 million expansion of a Canadian supply tender. Both of these agreements will contribute our result this year. Of course, we are continuing to pursue additional commercial contracts in key strategic territories and are highly encouraged with the significant opportunities ahead of us in 2023 and beyond. This supply agreement and our proactive selling effort to our long standing distribution relationships, underscore Kamada’s assumed commitment to leveraging these new strategic assets. Of the four acquired product, the largest is CYTOGAM, indicated for the prophylaxis of CMV disease associated with solid organ transplantation.

This proprietary and unique therapy is the only FDA-approved IgG product for its indication. We recently submit a notification to the FDA to manufacture CYTOGAM at our plant in Israel and expect to receive whether to approval by midyear. The anticipated FDA approval will mark the successful conclusion of the technology transfer process for CYTOGAM from the previous manufacturer, CSL Behring. The ability to manufacture this product at our facility will positively impact our plant utilization and efficiency. Let’s move on to KEDRAB, our rabies immunoglobulin. In the past year, KEDRAB marketed in the US by Kedrion, continued to gain significant market share in the US market which is estimated to be $150 million annually. KEDRAB’s commercial team successfully leveraged the FDA approval obtained in 2021 for the level expansion for the product that helped differentiate it as the first and only human rabies in the globally embedded in the US will be clinically studied in children.

We anticipate that some of the products will continue to grow significantly over the next few years. Also to reiterate what we have said previously, I should highlight this product also generates more than 50% gross margin for Kamada. Moving on, during 2022 as planned, we began receiving GLASSIA royalty payments from Takeda. For full year 2022, we generated royalty income of $12.2 million and we expect to receive payments in the range of $10 million to $20 million annually through 2040, which will help us grow our profitability and cash position. In addition, we continue to grow sales of the product in the international market to our local partner. Now, let’s look a little farther ahead at future catalysts. I will begin with Kamada Plasma, our US-based plasma collection company.

Our early 2021 acquisition of the Plasma Collection Center in Houston, Texas represented Kamada entry into the US plasma correction market and supported our strategic goal of becoming a fully-integrated specialty plasma product company. Last year, we expanded the Hyperimmune plasma collection capacity to our first panel and are currently advancing our plan to open additional centers in the US to further enhance our supply of specialty and regular plasma. Let’s now turn to our ongoing pivotal Phase 3 InnovAATe clinical trial that is evaluating the safety and efficacy of our InnovAATe Inhaled AAT product for the treatment of AAT deficiency. We remain very excited about the potential of this promising product candidate that’s shown to be highly effective in delivering AAT directly into the patient’s lung.

A substantial opportunity exists for Inhaled AAT to be a transformational product in the market that is already over $1 billion in annual sales in the US and the EU. We’re currently conducting the InnovAATe clinical trial, a randomized double-blind placebo-controlled pivotal Phase 3 study. During 2022, we began to accelerate trial recruitment with seven clinical sites now offering and enrolling patients. In addition, the Independent Data Safety Monitoring Board, the DSMB recommended in November 2022, the study continued without modification for the fourth time since the trial was initiated. To-date, 50 patients have been enrolled for treatment, including 19 patients who have already completed the two-year study treatment period for the first trial site in Leiden, The Netherlands.

Importantly, no drug-related to adverse events reported to-date and the high level patient adherence to the treatment is encouraging. Moreover, based on accounting safety observed to-date, the study inclusion criteria would result to also include patients with severe air flow limitation. Throughout 2023, we intend to continue expediting trial recruitment and to meet with the FDA and the European Medicines Agency, EMA, to discuss study progress and potential opportunities to shorten the regulatory pathway. In our Israel Distribution segment, we are leveraging our expertise and strong presence in Israeli markets to register market and distribute more than 25 products that are developed and manufactured by our international partners. In recent years, we’ve significantly grown our pipeline of distributed products and in 2023, we anticipate continuing to launch new therapies across multiple medical specialties.

An area of strategic focus in this business is the planned distribution of portfolio of 11 biosimilar products expected to be launched upon receipt of Israeli regulatory approval through 2028 with overall annual anticipated peak sales within several years of launch of more than $40 million. Included this portfolio of eight products to a distribution agreement with Alvotech, a global leader in development and manufacturing of biosimilar drugs. To summarize, 2022 was the year of significant progress for Kamada during which we achieved rapid financial improvement, by leveraging multiple robust value-creating catalyst. And we are well-positioned to further substantial revenue and profitability growth in 2023 and beyond. We’ve limited downside risk and substantial upside potential as the global leader in the specialty plasma industry.

Importantly, looking past 2023, based on our multiple catalysts, we continue to project annual double-digit growth in revenues and profitability in the foreseeable years ahead of us. With that, I’ll now turn the call over to Chaime. Chaime, please.

Chaime Orlev: Thank you, Amir. As previously highlighted, our business performed extremely well in 2022. Total revenues for the full year were approximately $129 million, a 25% increase from the $104 million recorded in fiscal year 2021. For the fourth quarter of 2022, total revenues were approximately $45 million, an increase of 44% year-over-year. These results are indicative of the successful strategic transformation we achieved through the key product acquisition secured during 2021 that resulted in a vertically-integrated global commercial biopharmaceutical company with multiple growth drivers. The year-over-year growth during the fourth quarter and throughout the duration of 2022 was primarily driven by continued strong sales of our previously acquired IgG products, which was fueled by strong sales in the US, resulting from our ongoing marketing efforts as well as the expansion of ex-US sales of these products.

Additional catalysts in 2022 included the continued growth of KEDRAB and 10 months of royalty income from GLASSIA. During this 10 months’ period, we recognized $12.2 million of royalty income from Takeda based on their sales, which was in line with our anticipated projections. Total gross profit for the fourth quarter of 2022 was $15.3 million, representing 34% margin compared to $6.6 million or 21% margin in the fourth quarter of 2021. Gross profit for the full year 2022 was $46.7 million, representing 36% margin, up from 30% the prior year. Let’s now turn to explanation of our depreciation expenses. As previously discussed, the company is accounting for depreciation expenses associated with intangible assets, which were generated through the late 2021 acquisition of the four IgG products.

In the fourth quarter and 12 months ended December 31st, 2022, cost of goods sold in our Proprietary segment included $1.3 million and $5.4 million respectively of depreciation expenses associated with these intangible assets. Research and development investments during fiscal year 2022 increased to $13.2 million as compared to $11.4 million in the prior year period, primarily due to the expansion of our ongoing pivotal Phase 3 InnovAATe trial for Inhaled AAT. Selling and marketing expenses for the first quarter and full year 2022 increased to $4.8 million and $15.3 million respectively. These increases were attributable to the establishment of our US commercial operation to support the distribution and sale of the acquired portfolio of our four FDA-approved commercial products.

In addition, these costs included pre-commercial activities associated with new product launches in Israel — in Israeli Distribution segment. We expect our overall expenses including R&D, sales and marketing, and G&A to increase between 15% to 20% during 2023 compared to 2022 as we continue to advance our commercial activities as well as our Phase 3 InnovAATe trial. As we have since the first quarter of 2022, we continue to account for financing expenses, which we back to revaluation of contingent consideration and long-term assumed liability, all of which are related to the acquisition completed in 2021. For full year 2022, these finance charges totaled $6.3 million. As we did in the third quarter, we again achieved profitability in the fourth quarter, recording net income of approximately $2.9 million or $0.07 per share on a fully diluted basis.

For fiscal year 2022, we recorded a net loss of $2.3 million or loss of $0.05 dollars per share on a fully diluted basis. Adjusted EBITDA was $7.2 million 00000. 0 dollars for the fourth quarter of 2022. Adjusted EBITDA for the fiscal year 2022 was $17.8 million, representing 14% margin, which was in line with our annual financial guidance and represents a substantial increase over the $5.4 million of adjusted EBITDA or 5% margins recorded in 2021. To reiterate the guidance provided by Amir earlier, based on our expectations of significant revenue growth and enhanced profitability in fiscal year 2023, we expect revenues to be in the range of $138 million to $146 million and anticipate generating adjusted EBITDA of $220 million to $26 million.

The midpoint of such range represents approximately 35% growth as compared to fiscal year 2022. Finally, for the fourth consecutive quarter, or all fiscal year 2022, we generated positive operating cash flow, demonstrating the consistent ability of the company’s commercial operations to generate cash. During the fourth quarter, we generated $6.7 million of operating cash flow and a record $28.6 million in total during fiscal year 2022. Our total cash position as of December 31st, 2022 was $34.3 million, a robust increase from the $18.6 million at December 31st, 2021. That concludes our prepared remarks. We will now open the call for questions. Operator?

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Operator: Thank you. At this time, we’ll be conducting a question-and-answer session. Thank you. Thank you. And our first question comes from the line of David Bautz with Zacks Small Cap Research. Please proceed with your question.

David Bautz: Hey, good morning guys. Thanks for the update this morning. So, I’ve got a few questions this morning. I want to start with maybe talking about the cash flow that you guys are generating. One, do you foresee the company remaining cash flow positive for the foreseeable future? And if so, what are the company’s plans to do with the cash and would there be the potential to pay out a dividend at some point?

Amir London: Hi, David. Thank you for the question and for participating in the call. The answer is absolutely yes. The company will continue to be cash-positive to be profitable. We expect continued significant growth topline and bottom-line and as you can see from our 2022 results, not only the EBITDA was strong, but also we could translate that strong EBITDA into very strong cash flow operation and cash position. So, our EBITDA is well-correlated with generation of cash. In regards to our plan, how to use the cash. So, we will be looking to move forward with some additional BD opportunities looking for the right in licensing or acquisition. We are very happy and ensure that also shareholders is very happy with the success of the acquisition we’ve done in 2021.

I think it’s well-represented in our 2022 results and 2023 forecasts. So, with that successful acquisition integration, I think that over time we’ll be ready for next BD move. This, coupled with some additional investments that we would like to make in our pipeline will further enhance our outlook in terms of growth in the mid and long-term.

David Bautz: Okay. And now with regards to the four products that you acquired in 2021, the sales you reported today were up 24%, I believe, you said in 2022. What would you say, was the biggest driver behind that growth? And then what do you think is going to be the biggest driver or drivers in the years ahead for those products?

Amir London: So we had significant growth basically in the portfolio, and this I can attribute to all four products, both US, Canada and North America. As you know, and we reported it, we won an $11.4 million contract for VARIZIG. We have extended our agreement with Canada for another three to five years. We are growing CYTOGAM in the US in the Canadian market. We have strong markets for HEPAGAM and WINRHOSDF of the US, primarily in the MENA region. So it comes from all four products and in total, having six FDA approved products, KEDRAB, KAMRAB, GLASSIA, and products from the new portfolio, we have a lot of opportunities. This significant network of six products spread over 30 countries basically created a very strong metrics, if I may, of opportunities to grow the business significantly.

And we are very happy with the 2022 results. Our 2023 projection, there is another significant growth of those products. And moving forward, we will continue to really take a full potential of those products and grow them significantly over the next few years.

David Bautz: Okay. And as a follow-up, I guess, you mentioned that the VARIZIG contract. Is the company working on additional supply contracts like that?

Amir London: Absolutely, we have a very proactive further marketing approach as well as registration of our portfolio in new territories through throughout the entire supply chain, some regulatory submissions through supply chain aspects. And for the marketing, we are growing the business and we are proactively participating in additional international tenders.

David Bautz: Okay. And my last question is about gross margins that reported 36% for 2022. Do you foresee those being similar in future quarters and for this year ahead?

Amir London: If you look at our projection for 2023, and you compare the growth of the top line versus the better growth or the enhanced growth of the bottom line, you see that our overall mix of products is continuing to transition into the more profitable products in our portfolio. So, this will generate, over time, better GP, better gross profitability. We are able to translate a significant portion of the top line increase next year also into a bottom line EBITDA increase. So I think these — for itself in our ability to become a more profitable company with a strong product mix in multiple territories.

David Bautz: All right. Sounds good. Appreciate your taking the questions this morning.

Amir London: Thank you very much.

Troy Williams: Hey, Ross, so, while we wait for some additional questions to queue up, been e-mailed a few throughout the call. So could we just address those right now, this first question is for you, Amir. Why do we believe that the inhaled AAT is uniquely positioned in the current AATD development land?

Amir London: So the current standard-of-care — were the standard-of-care for the last 30 years almost. So, Alpha-1 deficiency has been a weekly infusion, which means that patients need to go to the clinic or have a nurse come to the home. And this is, of course, an invasive type of treatment. What we are developing, what we are proposing is a noninvasive at-home treatment. So, the ease of use and the quality of life for those patients will improve significantly if and when and how AAT will be approved. So, we also get this feedback from any survey that we are doing with the patients. They all prefer to have the option — or majority of them prefer to have the option of having the treatment by nebulizing Inhaled AAT instead of IV treatment.

Secondly, we have shown people studies that inhaled AAT is the most effective motor treatment for delivering sufficient levels of AAT into the deep lungs, directly into the lungs. This allows us to dose the patients with one-eighth quantity compared to the IV. So this also provides lower cost of goods per treatment, which could translate into attractive competitive reimbursement costs for the payers. Product has been studied for quite some time with multiple patients around 250 patients to-date. And we have seen a very strong safety data. This has been demonstrated in the current study that we are doing. I spoke about it throughout the call. So we believe we are developing a game changer in over $1 billion market that hopefully will be proven in the current study to be effective and allow us to register the product, both in the US and the EU.

Troy Williams: Great. Appreciate the color, Amir. And then just on to our final submitted question. Can you please bring out the opportunity with the plasma collection centers? And in addition to that, can you provide us with some timing of when they may be going to contribute to the top line?

Amir London: Yes. So, as I described in the call, we have expanded in 2022 our collection in the existing center in Beaumont, Texas. We are moving forward with the opening of additional centers. So we have a team working on identifying locations for additional centers and advancing lease agreements so we can move into the construction of those centers. In general, if fully loaded, if I may, a center, a mature center usually collects between 40,000 to 50,000 liters a year, and this translates into top line contribution of close to $10 million. So that will be contribution of the mature centers is to expect to see the first impact, of the first center in that regard, starting basically to ramp up in the second part of next year or second part of 2024, first center should be up and running and starting to expand in its collection capacity.

Troy Williams: Okay. Great. Thank you, Amir. Thank you to all those who submitted the questions. Operator, I’ll turn it back to you.

Operator: Thank you. There are no additional phone questions at this time. I will hand the floor over to Amir London for any closing remarks.

Amir London: Thank you, Operator. So in closing, we look forward to continuing to support clinicians and patients with important lifesaving products that we develop, manufacture and commercialize. We thank all of our investors for their support, and we remain committed to creating long-term shareholder value. Thank you, everyone, and we hope you all stay healthy and safe. Goodbye.

Operator: This will conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation.