Our Take On Kamada Ltd (NASDAQ:KMDA)’s Upcoming Catalysts


So we just learnt that development stage biotech company Kamada Ltd (NASDAQ:KMDA) is set to put out topline from a phase II in antitrypsin deficiency before the end of this quarter, and intends to file a biologics licensing application (BLA) with the FDA any time now. It’s going to be a busy couple of months for the circa $160 million biotech, and with a couple of potential upside catalysts just around the corner, it could be an equally busy month for shareholders and their portfolios. With this in mind, let’s take a look at bot events, and try to establish what impact they might have on Kamada’s market cap moving forward.

First, then, the phase II data.

Kamada has developed an inhalation version of a currently available treatment, alpha-1 antitrypsin (A1AT). A1AT is in use as a first line therapy for patients with A1AT deficiency. When a person has a lack of the A1AT protease inhibitor, enzymes (and in particular in this instance an enzyme called neutrophil elastase) breaks down elastin in the lungs. Normally A1AT would inhibit this enzyme. The breaking down leads to respiratory issues, emphysema etc. The current SOC is an intravenous administration, but there are problems with this method as not all of the A1AT reaches the lungs. The inhalation version that Kamada is developing is targeting an improved efficacy based on an increased amount of the active compound reaching the target area (i.e. the base of the lungs).

The drug performed relatively well in a phase II/III that formed the basis of a European marketing authorization application last year, but missed the primary endpoint in the trial. The company believed that there was enough evidence of efficacy to support an application, however, and we should get a result from the EMA at some point during Q2 next year. The data in focus here, however, is from a US phase II. Enrollment completed earlier this year, and data should hit this quarter. From a target data perspective, we’d like to see an increased level of AAT recorded at the twelve-week measurement point fro baseline. If the company can hit this marker, it would likely be enough to carry the treatment forward into pivotal.

Next up, the BLA filing.

For those not familiar with the BLA process, its exactly the same as an NDA process (for all intents and purposes) but it relates to a biologic rather than a chemically synthetic drug. Biologics derive from living cells. This one is for a rabies vaccine called KamRAB. The drug hit its endpoint back in December last year, when it’s target of non-inferiority was met with a difference of -1.8% between the vaccine candidate and current SOC, with variability between -8.2% and 3.1%. At the topline release date, the company specified it would like to get a BLA with the FDA at some point mid-2016, and it just reiterated that statement, which means we should see the filing latest this quarter.

The market for this one, on approval, isn’t massive, but it could make a pretty big splash on a company the size of Kamada’s balance sheet, and is well positioned to inject some upside momentum into the company’s stock if the FDA gives it the green light. In the US, somewhere in the region of 40,000 rabies vaccines are issued each year, and the total market comes in at around $100 million. There’s only one currently available alternative, and the thinking behind taking this to market is that physicians would be happier diversifying supply than just relying on one provider. Given this theory (and it’s a valid one) Kamada is probably looking at anyweher between a $40 million and $60 million market potential all said and done. If the company can replicate authorization in Europe, and pick up an EMA approval for commercialization on the continent, there’s probably a similar market potential, weighted towards the top end of the range.

So there we go. Two big catalysts just around the corner, and plenty more to follow if things run smoothly for Kamada going forward. As mentioned, the company currently trades for a market capitalization of a little shy of $160 million, around 8% off its 52 week high.

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