Checking Back In On Kamada
Apr. 01, 2021 10:48 AM ET Kamada Ltd. (KMDA)
Summary
It has been several years since we last did an in-depth piece on Israeli-based biotech concern Kamada.
Early Wednesday, the company disclosed trial results on a candidate being evaluated as a potential treatment for COVID-19.
Given that, it seems a good time to revisit this 'off the radar' small-cap name. A full analysis follows in the paragraphs below.
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It has been many years since we last checked back in on small cap concern Kamada (KMDA). The company recently disclosed some trial data and I have gotten a few inquiries on this name so far in 2021. Given that, it is time to revisit this small developmental company. A full analysis is provided below.
Company Overview:
Kamada is based in Israel. The stock currently trades just over $6.00 a share and sports an approximate market capitalization of $275 million. The company develops and markets specialty plasma-derived protein therapeutics. Kamada has two divisions: Proprietary and Distribution. Under the first category are four products, all described from its website. Proprietary products accounted for just over 75% of total sales in FY2020.
KamRAB: Indicated for passive, transient post-exposure prevention of rabies infection when given immediately to individuals in cases of contact with rabid or possibly rabid animal. The product launched in 2018 and did some $30 million in sales in FY2019 for an approximate 20% market share. Kamada has opportunity to expand market share in the years ahead.
KAM - RHO D I.V: Suppression of Rh immunization in non-sensitized Rho [D] negative women delivering an Rh positive baby, or when the baby's Rh type is unknown.
KAM - RHO D I.M: Suppression of Rh immunization after spontaneous or induced abortions threatened abortion associated with maternal bleeding amniocentesis chorionic villus sampling ruptured tubal pregnancy and significant abdominal trauma. Kam Rh0 -D IM should be given within 72 hours of the event.
GLASSIA: An Alpha1 -Proteinase Inhibitor (Human), indicated for chronic augmentation and maintenance therapy in individuals with clinically evident emphysema due to severe hereditary deficiency of Alpha1 -PI, also known as alpha1 -antitrypsin [AAT] deficiency. This manufacturing agreement with Takeda (TAK) has been extended where it will generate royalties for Kamada in the range of $10 million to $20 million per year commencing in 2022. An article late last year went into more details on that arrangement.
The company also distributes for than a dozen products for other manufacturers. Click here to see list.
In addition, the company has several products in its developmental pipeline. These include an inhaled formulation of AAT for the treatment of AAT deficiency and an intravenous AAT is in development for other indications, such as GvHD, prevention of lung transplant rejection and type-1 diabetes.
The company also is pursuing a plasma-derived COVID-19 IgG investigational product to help treat Covid19. The company just reported encouraging results from Phase 1/2 open-label trial in Israel yesterday. Kamada has a deal with the Israeli Ministry of Health (IMOH) for the treatment of an estimated 500 hospitalized patients that is expected to generate approximately $3.4 million in revenue to Kamada.
The company reported fourth quarter earnings in the second week of February. For the year, revenues came in at $133.2 million which despite the impacts of the pandemic throughout 2020, was up five percent from FY2019. Cash provided by operating activities was $19.1 million for FY2020 and net income for the year was $17.1 million.
The company has some efforts that could add significantly to its top line in coming years including:
An inhaled formulation of AAT provided late stage trials succeed. Kamada is currently recruiting patients for pivotal Phase 3 trial, the pace of enrollment continues to impacted by the pandemic.
The potential launch of nine biosimilar products in the Israeli-based Distribution segment between 2022 and 2025, pending regulatory approval. These could generate estimated maximum sales in the range of $25 million to $35 million annually. It inked a deal for couple of these in January of this year.
The company is also looking to leverage its manufacturing facility capacity via addition of contract manufacturing which could bring in $8 million to $10 million annually.
Analyst Commentary & Balance Sheet:
Being based overseas and possessing a small market cap, Kamada gets sparse attention from Wall Street analyst firms. Both H.C. Wainwright and Chardan Capital reiterated Buy ratings and identical $11 price targets on KMDA the day after fourth quarter results were posted on February 10th. Prior to that, the last analyst commentary on this stock was on May 18th of last year. This is when Jefferies maintained its Buy rating on Kamada but lifted its price target two bucks a share to $10.
The company ended FY2020 with nearly $110 million in cash and marketable securities on its balance sheet after operations provided cash of $12.7 million in the fourth quarter. Kamada has a negligible amount of debt
Verdict:
I can understand why Kamada receives little coverage. There is a lot of moving parts here and the company is sparsely covered on Wall Street. The company seems to have several avenues to expand revenues in coming years and the stock seems a bit undervalued on a net income and cash flow basis, especially if you account for the cash on the balance sheet. Given that, I continue to hold a small position in KMDA within my personal portfolio.
Bret Jensen is the Founder of and authors articles for the Biotech Forum, Busted IPO Forum, and Insiders Forum
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