Paul Arndt - Investor Relations-LifeSci Advisors Amir London - Chief Executive Officer Gil Efron - Deputy Chief Executive Officer and Chief Financial Officer.

Raj Denhoy - Jefferies Patrick Dolezal - LifeSci Capital.

Welcome to the Kamada’s Third Quarter 2017 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Paul Arndt with LifeSci Investors. Please go ahead..

Thank you, Tracy and good morning everyone. This is Paul Arndt with LifeSci Advisors. Thank you all for participating in today’s call. Joining me from Kamada are Amir London, Chief Executive Officer; and Gil Efron, Deputy CEO and Chief Financial Officer. Earlier this morning, Kamada announced financial results for the 2017 third quarter.

If you have not received this news release or if you would like to be added into the Company’s distribution list, please call Bob Yedid from LifeSci Advisors at area code 646-597-6989.

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 identify 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 this live broadcast, Monday November 13, 2017. 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, I would now like to turn the call over Amir London. Amir, please go ahead..

Thank you, Paul. And thanks also to our listeners for your interest in Kamada and for participating in today's call. I'm pleased to report Kamada's strong financial performance continued in the third quarter and contributed to our achievement of revenue growth of 26% over the first nine months of 2017.

Our revenue growth continued to be driven with the growing sales of GLASSIA in the U.S. with a treatment of Alpha-1 Antitrypsin Deficiency or AATD followed by Shire as part of the strategic agreement between our companies.

Gil will provide further details on our financial performance shortly but I would like to highlight a few key metrics, third, total revenues I the third quarter were $23 million comprised of $17 million from our proprietary product segments and $6 million from our distribution segment and were presented solid increase of 18% over the third quarter of 2016.

On a year-to-date basis sales were up 26% to $67.1 million driven by very strong revenue growth in our proprietary product segment which include GLASSIA.

From a profitability standpoint we generated positive operating and net income over the first nine months of the year specifically we generated in operating income of $1 million over the first nine months of 2017 as compared to an operating loss of 3.6 million in the corresponding period of 2016 a substantial improvement in operating income of $4.6 million.

In addition we generated $0.6 million in net income over the first nine months of 2017 as compared to a net loss of $4.9 million in the corresponding period of 2016.

Following our strong performance for the first nine months of 2017, we remain confident in our ability to obtain our previously stated objective of reaching $100 million in total revenue in 2017 of which $76 million to $78 million will come from proprietary product segment representing at least 36% growth compared to 2016, a robust rate of growth.

Additionally as we stated on our Q2 call we also expect to be profitable and to generate positive cash flow from operation for the full year 2017. From a balance sheet standpoint we ended the quarter with $40.1 million of cash and cash equivalents. This includes a $15.6 million of net proceeds from an equity offering closed early in the third quarter.

This proceeds from the sourcing will be used primarily to support a complex clinical development program and in-licensing of marketed product or technologies. Gil will elaborate further shortly but we're in extremely strong financial positive as we have into the end of the year.

With that let me now leave you our clinical and operational highlights since our last call in August. Let's begin with our anti-rabies IgG KEDRAB which received the SBA approval in the third quarter. Rabies is a life-threatening condition with impact approximately 40,000 people in the U.S.

each year representing an annual market opportunity of over $1 million of which we expect KEDRAB to take a significant market share. Prior to SBA approval of KEDRAB U.S. healthcare professionals had only two human rabies immune globulin or HRIG therapy options from which to choose.

KEDRAB is entering rabies market which has experience in consistent product supply in recent years which will incentivize customer to seek another supplier with reputation over ability. As a reminder Kamada has sold over 1.4 million viles of rabies vaccine in numerous markets outside of the U.S. for over a decade.

So this is a product with which we have had significant experience. The purity of our anti-rabies IgG product when compared with two competing [indiscernible] was recently demonstrated and presented at the 28th International Rabies in the Americas or RITA conference in late October in Calgary, Canada.

We believe the [indiscernible] of our product maybe attributed to the mix production process. The removal of impurities is paramount for the reduction of certain risks which maybe associated with the use of HRIG. KEDRAB will be launched in the U.S. in early 2018 and meaningful sales of the product are expected to ramp up throughout the year.

Moving on we recently announced top-line results for our Phase 2 trial of AAT in newly diagnosed type-1 diabetes patients.

While no significant recent effect was observed in the overall study pollution in the predetermined sub-group of patients between the age of 12 and 18 years old a trend towards better efficacy was demonstrated in the high-dose arm of 120 mg per kg AAT.

This double blind placebo controlled multi-center Phase 2 clinical trial was designed to evaluate the efficacy and safety of AAT IV [ph] in helping with this progress into the paediatric and young adult patients newly diagnosed with type-1 diabetes that was not powered to show sufficient significant efficacy.

Study endpoints included better cell-function assessment is measured by change in [indiscernible] is presented by HDA1 levels. In the 12 to 18 year old patients subgroup better preservation of better cell-function a lower average HBA1C were observed.

In addition in the prop stock analysis of insulin daily dose intake a beneficial effect trend was found in the AAT high-dose treatment group versus the placebo. Based on the top line result of this study, Kamada in our external key opinion leaders believe that further studies in larger pollution are warranted.

We believe the results further validate the strong signal with assuming our previous Phase 1-2 study in each extension and that our IV AAT has the potential to be an innovative breakthrough treatment from newly diagnosed type-1 diabetes patients.

The full data from this study are available we will evaluate the collective results in order to determine the company's next step forward. We're proactively seeking a partner to further development of our type-1 diabetes program. With that let's review the clinical program for our proprietary held AAT for the treatment of Alpha-1 Deficiency.

As discussed in our last call we submitted to the FDA for review a proposed pivotal Phase 3 protocol. We expect the response from the FDA shortly in regard to the proposed protocol.

These approval of the FDA our intention remains to proceed with IND for Phase 3 pivotal clinical trial in the first half of 2018 and initiate the study in the second half of the year.

As previously discussed we intend to utilize the data to be obtained from this planned pivotal Phase 3 clinical trial if the study is successful to resubmit the marketing authorization application to the European Medicine Agency, EMA.

Before I move on let me say that the clinical profile of our held AAT continues to provide us confidence and it's potential to be a safe and effective treatment for Alpha-1 Deficiency and we look forward to preceding with a Phase 3 program for the potential benefit of the global Alpha-1 Deficiency patient population.

Next let's discuss our Alpha-1 Antitrypsin Deficiency for the treatment of acute Graft-Versus-Host Disease, GVHD. Since Shire's decision few months ago to halt the Phase 2-3 study that has been leading [ph] in the U.S.

with thoroughly learn and analyse the reasons for the slow recruitment rate they experienced and we're in the final stage of finalizing our trend to move forward with our GVHD program. We plan on initiating the next study in early 2018 and we will update you on its scope and details soon.

Lastly in regard to a clinical development program in our IV-AAT for lung transplantation we concluded that we will have the interim report from our ongoing Phase 3 trial before the end of this year.

It's important to note that all of this product and indication are already in late stage clinical development and they represent a combined market potential of over $2 billion. We also continued our efforts to further advance our understanding of the mechanism of action of AAT in order to enhance future product development.

To this end we announced the collaboration in the third quarter for advanced research of AAC with the focus on mechanism of actions with BGN technologies, the business arm of the Ben-Gurion University (BGU).

Professor Eli Lewis, Department of Clinical Biochemistry and Pharmacology at BGU in one -- for most AAT investigators is leading the collaboration. Professor Lewis will provide various services to Kamada and will involve thorough evaluation of AAT attributes.

From a financial perspective to reiterate my earlier comments we continue to expect that we will reach $100 million in total revenues and generate positive cash flow from operations in 2017.

Looking ahead to 2018 Kamada is expecting total revenues to be in the range of $116 million to $120 million implying strong 16% to 20% growth rate versus expected revenues for 2017. A significant expected growth is mainly resulting from continued GLASSIA sales growth in the launch of KEDRAB in the U.S.

With that let me now provide some further color on our recently announced management and Board related matters. First, as we announced in the third quarter Gil Efron, our Deputy CEO and Chief Financial Officer has informed the company of his plan to leave Kamada at the end of the year.

Gil has served as Kamada's CFO since September 2011 and assumed additional responsibility of Deputy CEO in July 2015. He has been instrumental in multiple [indiscernible] in the organization including the development of the company's strategy, managing key processes and supporting critical corporate initiatives.

We wish Gil all the best in his future endeavours. We out listed Chaime Orlev, a Senior Finance Professional in the life science industry has been successful effective January 1st, 2018. Chaime had served in Senior Finance roles for nearly 20 years with approximately 12 years spend in the life science industry.

Most recently your CFO and Vice President and Finance Administration at Bioblast Pharma. Prior to that from 2010 Mr. Orlev has served as Vice President of Finance and Administration at Chiasma.

In this role he helped lead the company 2015, $100 million initial public offering on the NASDAQ stock exchange as well as participated in the negotiation and closing of the licensing agreement for the company's leaked product to Hoffmann-La Roche. We look forward to leveraging Chaime's deep life science industry expertise.

Last week we announced a nomination of three new directors to join the company's Board of Directors. Dr. Itzhak Krinsky, and Mr. Shmuel (Milky) Rubinstein, Executive with decade of pharma industry and business development experience as prominent global pharmaceutical companies and Asaf Frumerman, a partner with Brosh Capital. Mr.

Frumerman nomination is pursuant to a corporation agreement signed between Kamada and Brosh Capital Partners which is one of Kamada's largest shareholders. The new nominees will stand for election with Kamada 2017 annual general meeting of shareholders on November 30, this year.

We look forward to welcoming each of this individuals to our Board, will add extensive experience in the key areas of biopharma operations, business development and finance. With that I will now turn the call over to Gil for his review of the financials.

Gil?.

Thank you, Amir and good day everyone. To reiterate what Amir said, we continue to expect that we would generate revenues of $100 million in 2017 and we also have good visibility into 2018 revenues allowing us to guide the $160 million to $120 million of revenue in 2018. With that, let me begin my review of the third quarter financials.

Total revenues was $22.9 million, an 18% increase from the $19.4 million reported in the third quarter of 2016. Revenues from the Proprietary Products segment was $17.1 million, a 13% increase from the $15 million reported in the third quarter of 2016 mainly driven from increase in GLASSIA sale.

Revenues from the distributed product segment were $5.9 million, an 35% increase from the $4.3 million reported in the third quarter of 2016 mainly driven from timing of August from our customers. Gross profit was $6.4 million, up more 3% from the $6.3 million in the second quarter of 2016. Gross margins was 28% versus 32% on the prior year period.

Gross profit margins were adversely affected by an increase of [indiscernible] in production in the proprietary product segment in the third quarter of 2017 compared to Q3 of 2016.

Turning now to the rest of the P&L, R&D expenses in the third quarter of 2017 were $3.4 million, down 23% or $1 million on the third quarter of 2016 in which we have still ongoing studies and regulatory work for enhanced AAT in the U.S. and EU, [indiscernible].

Selling, general and administrative expenses were $3.3 million up 16% from $2.9 million in the same period of 2016. For the third quarter of 2017, we recorded an operating loss of $0.3 million compared to the $1 million operating loss recorded in the same period of 2016.

Net loss was $0.2 million or a loss of $0.01 per diluted share compared to a net loss of $1 million or a loss of $0.03 per diluted share in the third quarter of 2016. Adjusted net loss was less than $0.1 million compared to adjusted net loss of $0.7 million in the third quarter of 2016.

Adjusted EBITDA for the third quarter of 2017 was $0.8 million compared to adjusted EBITDA for the third quarter of 2016 of $0.2 million. Now I will discuss the results of the nine months ended September 30, 2017. Total revenues were $67.1 million, a 26% increase from the $53.2 million reported in the nine months period of 2016.

Revenues from the proprietary product segment was $50.6 million, a robust 32% increase from the $38.3 million reported in the nine months period of 2016 again driven by increased sales of GLASSIA mainly [indiscernible].

Revenues from the distributed product segment was $16.5 million, an 11% increase from the $15 million reported in the nine months of 2016. Gross profit was $20.5 million, a significant 23% increase from the $16.7 million in the nine months period of 2016, primarily as a result of the increased of sales of GLASSIA mentioned before.

Gross margin decreased slightly to 30% from 31% in the nine months period of 2016. Turning now to the rest of the P&L, R&D expenses were $10.1 million, a decrease of 16% as compared to $12 million in the same period of 2016. Selling, general and administrative expenses were $9.4 million, an increase of 14% and $38.2 million in the same period of 2016.

For the nine months ended September 30, 2017 we reported operating income of $1 million compared with an operating loss of $3.6 million in the same period of 2016. Net income was $0.6 million or $0.02 per diluted share compared to a net loss of $4.9 million or $0.14 per diluted share in the nine months period of 2016.

Adjusted net income was $1.3 million compared to an adjusted net loss of $3.9 million in the nine months period of 2016, adjusted EBITDA was $4.3 million compared with an adjusted EBITDA of $0.1 million for the same period of 2016 exchange of $4.2 million.

In the balance sheet as of September 30, 2017 the company had cash and cash equivalents and short term investments of $40.1 million compared with $28.6 million as of December 31, 2016.

During the first nine months of 2017 we used $0.1 million in cash for operations and used $3.4 million for capital expenditure and $15.5 million was provided by financing activities including the $15.6 million we raised in the recent follow-on offering. I will now open up the call to questions. Operator please..

[Operator Instructions]. We will go to Raj Denhoy with Jefferies..

I wonder if I could start with the guidance for the year, you know again endorsed a $100 million for 2017, and just by the model it requires a very significant step up in the fourth quarter and I guess the question is really around your visibility into that big step up you know to something around $33 million about 35% growth to the fourth quarter, is that mostly coming from orders from Shire, is there anything being pulled forward from 2018 to the fourth quarter, maybe if you just could give us a little bit of detail around that..

We are highly confident in meeting the $100 million. If you look at the three years, typically you know the third quarter and the fourth quarter was stronger and we have those orders from Shire and we plan to supplying it.

So this is our 2017 and we're not cooling from 2018, 2018 we have given our projection and this is based on the continued growth of last year and launching the rabies product in the U.S. So bottom line we're highly confident that we will be meeting the $100 million for the year..

And then you mentioned rabies in 2018, you talked about generating some revenues in that year, is there anything you can tell us in terms of what your expectations are and maybe also just along those lines I mean I think there is an expectation or an assumption that the market in United States for rabies is about a $100 million, you and Kedrion maybe overtime could capture half of that, is that still the assumption on how we should think about that market?.

Correct. So the growth from 2017 $100 million to the projection we have given to 2018 is coming from continued growth of GLASSIA and the launch of KEDRAB in the U.S. So this $16 million to $20 million increase is a combination of both.

We didn’t guide specifically the KEDRAB contribution but it's going to grow throughout the year, I can say that its already the orders for the product and the product will be launched beginning of the year.

So based on what we're seeing and what we have told so it looks good, it looks very good and the assumption that you've made you know although in a course of few years we will be able to take a significant market share up to potentially 50%, we think it’s a good assumption..

And you're relationship with Kedrion there, are you splitting? You know how does that arrangement work in terms if you do get the $50 million say in end market sales in the United States, how will you and Kedrion split the revenues?.

We did not disclose the exact details of it but what I can say is that its kind of a revenue sharing type of agreement and we will be -- both companies will be benefitting from those sales..

Okay, fair enough.

And then just two last one I'm sorry on GLASSIA, so I don’t know if there is any more you can provide us in terms of your discussions with the FDA around starting the trial in the United States, you seemed so confident that you know latter part of 2018 you can begin that trial but is there anything you can share in terms of what the FDA is looking for, are they comfortable with the end points you selected now for that trial? I mean anything you can help us out with?.

So we have finished discussing with the FDA, we have submitted a protocol we received the comments and questions we are working through those comments.

We recently had further discussion with them and we're expecting the R&D to be approved in the first part of 2018 by mid-year and that we will be able to initiate the study in the second part of the year.

So once we completed the discuss with the FDA we will be happy to update of course on the scope of the study and the details as you may remember when we submitted the protocol we spoke about it that we are going to put a lung function as a primary endpoint, we talked about two years study.

So [indiscernible] release I believe that we have submitted in July where we highlighted the main component of the protocol we submitted we are now working through the comments received from the FDA..

Okay, fair enough and just one last one sorry -- there was another liquid AAT product approved in September, [indiscernible] had a product approved, I'm curious that you think that we will have an impact on the market having a second liquid product available in the United States and really how to think about that competitive launch?.

The product has been approved, as far as we know it hasn’t been launched yet, but you know one should expect it will be launched in the next few months.

As far as we know their approval does not include yet, a self-infusion well we have it on label so the competitive advantage of having self-infusion approved by the FDA still remains with GLASSIA and with the market growing over 10% a year as total we believe that we have significant growth ahead of us even with tougher competition because there is going to be two liquid product on the market..

We will go next to Patrick Dolezal with LifeSci Capital..

I just had a couple of quick questions here.

I'm curious I see AAT deficiency market and if you could provide a little addition granularity there, is it fair assumption that it is still growing at about 10%?.

Yes, correct. So based on the information that we have and what has been published your assumption is correct. The market has been growing 10% a year and is growing 10% a year in total..

Okay, great. And then in terms of business development I was just curious if you've any updates on that front for you all at that moment in terms of in-licensing of products things like that? Yes is there any update in terms of business development for you guys, in terms of in-licensing any new products..

Not yet. When we will have update to report we will happily do it..

And I think I will ask one more just with regard to AAT and type-1 diabetes.

I know that you guys kind of had made the decision in late December that you all were going to kind of stop the trial short and that obviously contributed to the powering, can you just remind us of kind of the rationale behind making that decision?.

So as we announced in December 2015 two years ago we decided to turn the -- what was then planned as interim report to turn it into the final report, make it a Phase 2 study and basically to be able to expedite the result of the study so we can move forward quicker with the results so it was a business decision based on clinical information that we wanted to have it earlier and now with the data which is available to us we are happy with the decision we have made over two years ago..

And then just the timing of the full data set and kind of plans for future steps for that program?.

Yes, so we will have the full data set in the first quarter of the year and as mentioned during the call we're proactively looking for partners that would like to work with us on further development of that indication based on the results of the Phase 2 study..

And it appears that there are no further questions at this time. So I would like to turn the conference back to Mr. London for any additional or closing remarks..

Thank you. In summary Kamada remains in strong operating position with multiple potential value enhancing milestones upcoming based on our financial outlook we continue to expect that we will achieve revenue and financial goals for 2017 which will present strong growth versus 2016.

We expect to continue growing significantly in 2018 and we are excited about the positive momentum in our business as we look forward into the fourth quarter of 2017 and into 2018. Kamada remains committed to growing our business and enhancing long term shareholder value.

Thank you for joining us on today's call and we look forward to providing you with further update in our progress throughout the remainder of the year. Enjoy the rest of your day. Thank you..

This does conclude today's conference. We thank you for your participation. You may now disconnect..