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Biopharma's Foundation Provides for Downside Protection, Upside Realization
Research Report

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An H.C. Wainwright & Co. report described this Israeli firm's solid revenue picture and addressed the undervaluation of a key therapeutic candidate.

In a Feb. 14 research note, analyst Andrew Fein reported that Kamada Ltd.'s (KMDA:NASDAQ) "underlying revenues remain strong while the strategic value of its inhaled alpha-1 antitrypsin (AAT) asset remains underappreciated." The company develops and sells plasma-derived protein therapeutics.

Fein reviewed the company's foundation, which he describes as "solid." Kamada's total revenues for Q4/18 and full-year 2018 were $48.2 million and $114.5 million, respectively. Revenues in 2018 were up 11% over 2017. The biopharma guides to another year of double-digit growth in 2019.

Net income was $17.7 million for Q4/18 and $22.3 million, or $0.55 per diluted share, for 2018. At the end of 2018, Kamada had $50.6 million in cash, cash equivalents and short-term investments.

Further evidence of the solid commercial foundation comes from two contributors to growth, Glassia and KedRAB, which are currently positioned to grow over time but provide steady revenues near and medium term. Supporting this thesis are, in part, a long-term supply agreement in place for Glassia with Shire Plc (SHPGY:NASDAQ; SHP:LSE), increasing KedRAB sales in the United States and potential approval of KedRAB in Canada and then in additional markets.

Against that backdrop, Fein highlighted, the value of Kamada's inhaled AAT product remains underappreciated, primarily due to regulatory overhang on the stock. He noted the company is making progress in that regard with the FDA and the European Medicines Agency. Further clarity is expected, which should remove regulatory risk and open doors for partnership discussions.

Fein noted that "a strong need" for an inhaled AAT therapy exists, and interest in developing such treatments is "burgeoning." Vertex Pharmaceuticals Inc. (VRTX:NASDAQ), Applied Genetic Technologies Corp. (AGTC:NASDAQ) and Alnylam Pharmaceuticals Inc. (ALNY:NASDAQ) are a sampling of companies in the space. Compared to competitors' products, he added, "Kamada's augmentation approach of inhaled AAT (mechanistically simple and clinically validated by intravenous AAT) may resonate well with the investor base and propel additional value ascribed to the program."

Fein concluded that "the security on Kamada's commercial front should offer sufficient downside protection while leaving ample room for the upside to be derived from the progressing pipeline."

H.C. Wainwright has a Buy rating and an $11 per share price target on Kamada, whose current share price is around $5.90.


1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosures from H.C. Wainwright & Co., Kamada Ltd., Earnings Update, February 14, 2019

Investment Banking Services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its affiliates or subsidiaries within the past 12 months.

I, Andrew S. Fein, Li Wang Watsek and Alicia Yin, Ph.D., certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.

None of the research analysts or the research analyst's household has a financial interest in the securities of Kamada Ltd., Applied Genetic Technologies Corp. and Vertex Pharmaceuticals Inc. (including, without limitation, any option, right, warrant, future, long or short position).

As of January 31, 2019 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Kamada Ltd., Applied Genetic Technologies Corp. and Vertex Pharmaceuticals Inc.

Neither the research analyst nor the Firm has any material conflict of interest in of which the research analyst knows or has reason to know at the time of publication of this research report.

The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.

The Firm or its affiliates did not receive compensation from Kamada Ltd., Applied Genetic Technologies Corp. and Vertex Pharmaceuticals Inc. for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.

The Firm does not make a market in Kamada Ltd., Applied Genetic Technologies Corp. and Vertex Pharmaceuticals Inc. as of the date of this research report.

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