Paul Arndt - MD, LifeSci Advisors Amir London - CEO Chaime Orlev - CFO.

Anthony Petrone - Jefferies.

Good day and welcome to the First Quarter 2018 Earnings Call. Today's conference is being recorded. At this time, I would like to turn it over to Mr. Paul Arndt, Managing Director, LifeSci Advisors. Please go ahead..

Thank you, Operator, and good morning everyone. My name is Paul Arndt with LifeSci Advisors, the Investor Relations Firm for Kamada. 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 this morning, Kamada announced financial results for their first quarter of 2018. If you have not received this news release or if you would like to be added to 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 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 this live broadcast, Tuesday, May 15, 2018. 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?.

Thank you, Paul. And thanks also to our listeners for your interest in Kamada and for participating in today's call. Let me begin by addressing our first quarter revenues. As demonstrated in previous years, our sales volume typically increases throughout the year and we expect this to occur in 2018.

With that said, total revenues in the first quarter was $17.4 million comprised of $12.2 million from our Proprietary product segment and $5.2 million from our Distribution segment which represented 50% increase over the first quarter of 2017.

You'll recall that our first quarter 2017 revenues were impacted by the delays in completing a periodic validation of our filling line, which resulted in a delay of shipping proprietary product batches.

Importantly, we continue to expect total revenues for the full-year 2018 to be in the range of $116 million to $120 million which would represent another year of strong growth versus total revenues for 2017 which were $102.8 million.

As a reminder, this expected growth is primarily results from continued GLASSIA sales growth and the launch of KEDRAB in the U.S. which is responsible for meaningful portion of our first quarter 2018 revenues. From a profitability standpoint, we reported positive operating and net income for the first quarter of 2018.

Specifically we generated operating income of $1.2 million as compared to an operating loss of $3.7 million for the first quarter of 2017. In addition, we recorded $1.3 million in net income and compared to a net loss of $4 million in 2017. Also our gross profit grew year-over-year.

This growth is primarily driven by KEDRAB which provide the highest gross margin of any of our products. However it should be noted that this level of profitability is not expected to stay at this high level throughout the rest of the year as product mix changes and sales of GLASSIA grow throughout 2018.

Finally, we continue to maintain strong cash position including $47.9 million of cash and short-term investments at the end of the first quarter which provide us with the financial resources needed to continue executing on our business trends. Moving on, let me now discuss an important drive of the near-term revenue growth of Kamada.

Our anti-rabies IgG product, which received approval from the FDA in the third quarter of 2017 and was recently launched by Kedrion, our commercial partner in the U.S. under the brand name KEDRAB. This launch was timed to meet the demand for this product as the height of the 2018 spring and summer rabies season approaches.

KEDRAB will present the second product developed by Kamada and approved by the FDA and the launch of this product is an important milestone for our company. As a reminder, rabies is a life-threatening condition which impacts approximately 30,000 people in the U.S.

each year representing an annual market opportunity of over $100 million, of which we expect KEDRAB to take a significant market share. We expect meaningful sale of the product to ramp up throughout the year.

I'm also pleased to report that we began reporting revenue in the first quarter from our supply agreement with an international organization for Rabies IgG. The three-year agreement signed in the first quarter of 2017 which extends throughout 2020 and expected to generate total revenue for Kamada of approximately $13 million.

We are focused on product standing sales of KamRAB through additional commercially attractive markets globally. As I said in our last call, from a commercial standpoint we expect both GLASSIA and KEDRAB to be the primary driver of the revenue and profitability growth over the next few years.

With that, let me now discuss the specifics of our clinical pipeline. I will begin with a clinical program for our proprietary inhaled AAT for the treatment of Alpha-1 deficiency. As you know, we recently received feedback from the FDA regarding the proposed pivotal Phase 3 protocol for this product.

As we recently announced, the FDA issued a response letter indicating that while several issues had been addressed, the agencies continued concerns and questions related to the safety profile of Inhaled AAT.

We are now focused on providing the requested information and data by the third quarter of this year as well as implementing the proposed changes in the study protocol.

We expect continued interaction with the FDA on this program with the initiation of the Phase 3 clinical study of Inhaled AAT for the treatment of Alpha-1 deficiency from the agencies satisfaction with our response and their approval of our IND.

While we cannot currently anticipate if and when the discussion with FDA will materialize in an approved IND, Kamada continues to believe this Inhaled AAT has the potential to be a safe and effective treatment for Alpha-1 deficiency.

With that said though, I should add the desired internal resources dedicated to providing the sponsor to FDA and our external advisors, we are currently not directing substantial financial resources toward this program.

Moreover we would consider all strategic options we expect to this program including potentially speaking with person, if and when we receive FDA approval to conduct the Phase 3 trial.

Also as we stated in our recent press release, in parallel with the continued discussion with FDA we had formally requested and are expecting to expand the planned Phase 3 protocol in a scientific advised meeting to the European Medicine Agency in the third quarter 2018 in order to obtain feedback and guidance in connection to the regulatory path so we held AAT in Europe.

Moving on, Kamada also has three ongoing suite of programs evaluating IV AAT in the treatment of Graft-Versus-Host Disease, lung transplant rejection in Type 1 diabetes. In regards to AAT for the treatment of acute GvHD, I'm pleased to inform that we initiated a proof-of-concept clinical trial.

This trial will assess the safety and preliminary efficacy of AAT IV and pre-emptive therapy for patients with high risk in development of steroid-refractory acute GvHD that is being conducted through an innovative collaboration with the Mount Sinai Acute GvHD International Composium or MAGIC.

As a reminder, this study will be conducted inside the U.S. centers all of which are members of MAGIC which consists 23 bone marrow consultation centers in the U.S., Europe, and Asia. This is an investigator-initiated study corresponded by Mount Sinai and Kamada.

Top-line results from this study are expected to be available in the second half of 2018 and Kamada has exclusive rights to develop and commercialize this IV AAT product for the pre-emption of GvHD using the biomarkers utilizing the study.

As this innovative biomarker-driven approach could lead to treatment directly in early intervention treatment of Acute GvHD in area of significant unmet medical need and has the potential to provide potential market opportunity for Kamada.

Let me now provide you with an update on our Phase 2 trial of IV AAT for the prevention of lung transplant rejection which has been conducted in collaboration with Shire. As you know, in the first quarter we announced interim results from the initial 16 patients following the first six months of treatment of this study.

The interim data showed that IV AAT demonstrated a favorable safety and tolerability profile consistent with previously observed results in other indications. The last of the 30 lung transplant patients participating in this study is expected to complete one-year treatment this month.

Following the treatment period, all patients will enter a one-year follow-up period. The next interim report include data from one-year of treatment for all patients is expected in the second half of 2018. Top-line data from the Phase 2 trial are anticipated in the second half of 2018. Moving on to our Type-1 Diabetes program.

Based on the previously announced top-line results from our Phase 2 trial of AAT in newly diagnosed Type-1 Diabetes patients, Kamada and our external Type-1 Diabetes key opinion leaders believe that further study in a larger population are warranted. As such, we continue to seek a partner for the further development of our Type-1 Diabetes program.

With that, I will now turn the call over to Chaime for his review of the financial results.

Chaime?.

Thank you, Amir and good day everyone. Despite the fact that the first quarter has historically been our weakest we are off to a solid start to the year. Most importantly, we have reaffirmed our full-year revenue guidance, so our outlook for 2018 remains unchanged.

Total revenues for the first quarter were $17.4 million, a 50% increase from the $11.6 million reported in the first quarter of 2017. Revenues from the Proprietary Product segment were $12.2 million, an 84% increase from $6.6 million reported in the first quarter of 2017.

Revenues from the Distributed Product segment were $5.2 million, a 4% increase from the $5 million reported in the first quarter of 2017. Gross profit is $7 million, up from the $2.3 million reported in the first quarter of 2017. Gross margin improved to 40% from 20% in the prior year due preliminarily to the increase in revenues, the U.S.

KEDRAB launch, and a favorable product mix. Net income for the quarter was $1.3 million or a profit of $0.03 per diluted share compared to a net loss of $4 million or a loss of $0.11 per diluted share in the first quarter of 2017.

Turning to the balance sheet, as of March 31, 2018, the company had cash, cash equivalents, and short-term investments of $47.9 million compared to $43 million as of December 31, 2017. Finally, we are pleased to report that we generated positive cash flow from operations of $5.4 million in the first quarter of 2018.

We expect further improvements in cash flow as the year moves along. I will now open the call for questions.

Operator?.

Thank you. [Operator Instructions]. And our first question comes from Anthony Petrone, Jefferies. Please go ahead..

Hi and good morning everyone, good afternoon.

Maybe before we get into the quarter specifically, Israel has been in the news off late and specifically within the area of bioplants close to the Ghaza ships, so just wondering is there any potential sort of logistical disruptions to the business that you foresee in the next couple of months and then I'll get into some questions on the quarter and the pipeline? Thanks..

Hi, good day, good morning. No, logistic issues and everything is still growing in our plant area and we’re highly confident in the security safety and our ability to meet our targets for the year..

Great, great and then maybe just a few on KEDRAB initially, just strikes me that it could be a seasonal product, so maybe just walk through the seasonality for KEDRAB as you see it in the orders that we're seeing here initially from Kedrion is that stocking orders and then lastly on KEDRAB, I noticed that there is a few of distributors there as well ASP, MCKESSON, and FFF, are these direct relationships with Kamada or is Kedrion sort of interfacing with those distributors?.

Okay, thank you. First to your later questions, it goes to Kedrion, so shipped the product and sell to Kedrion and they are working with the top distributors which are focused on plasma products in order to sell and deliver the products to the end users as well as they sell direct.

In regard to the first question, well it's not real seasonality like other products because every article in the U.S.

has to have anti-rabies IgG product on their shelf, but we do see a higher consumption during the summer time, spring and summer just because people are out more, so they are in greater reach of being exposed to rabies animal and the animals are of course more out there and generating the increase reach of rabies animal.

So it’s not significant seasonality but it is important to us to be in the market before the 2018 season which means to be in the market in kind of February, March timeframe in order to be able to supply the product to the hospitals maybe for April/May when spring starts..

That’s helpful.

And then switch gears to inhalable, any additional detail that you can provide just maybe specifically you mentioned a few weeks ago with the press release the FDA spoke a little bit about the product characteristics for inhalable? Is there anything you can share on that front? And then this is the first time Amir you mentioned the potential for a development partner within sort of bring the Phase 3 protocol along.

Are discussions active at this point or is that just preliminary? Thanks again..

Okay.

So we have disclosed the relevant information, we are in continuous discussion with the FDA and we've submitted the revised protocol and answer to the question is in regard to additional questions is we will be addressing in the third quarter of the year and we hope that it will satisfy the FDA concerns in a way that will allow us to get an approved IND and move forward with the study.

In result to partnering Kamada strategically, it's always possible.

So if you look at last year, if you look on being held in Europe pivotal JV when you look on the rabies with Kedrion every time we partnered our assets and we're also now proactively looking for partner for the Type-1 Diabetes program and we take it on a case-by-case basis every time, we decide what the right time to partner.

Last year we partnered after we had the FDA approval, this year we partnered during the Phase 3, with Kedrion we partnered before initiating Phase 3. So I definitely think that partnering is an option, it’s a valid option and in due time we will make the decision if and with whom to partner..

There are no other questions at this time. I will turn the call back over to Amir London for any additional or closing remarks..

Yes, thank you. In summary, Kamada remains in a strong operating position with three important growth drivers over the next several years. GLASSIA and KEDRAB, as well as a solid five times we provide multiple long-term catalyst. In addition, our business is supported by strong balance sheet as we advance toward a number of key milestones.

We remain excited about the positive momentum in our business and we look forward to the balance of 2018. Kamada is committed to growing our business and enhancing long-term shareholder value. Thank you for joining us today on the call and we look forward to providing you with further updates on our progress throughout the remainder of the year.

Thank you..

This will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect..