Kamada Ltd. (TASE: KMDA) today confirmed a report by "Globes" on October 29 that it is considering a possible offering of shares on Wall Street. The drug development company said that no decision had yet been taken on the terms of a possible offering, or if it would be held at all.
Kamada, which reportedly has attracted considerable attention from Wall Street investment banks, is traded on the TASE at a market cap of NIS 1 billion, but it will apparently try to raise capital a higher valuation. Wall Street underwriters have been pressing Israeli life sciences companies to hold issues at lower valuations than they want in order to guarantee the offering and obtain a good yield for investors within a short time. However, it seems that Kamada will not hold an offering unless it will result in a higher valuation.
Kamada's main shareholders are Ralf Han (with a 16.7% stake) and Leon Recanati (12%), who have been with the company since it was founded in 1991. Together with CEO David Tsur, the two men led the switch by Kamada from a company producing proteins mainly sold in the Third World, to a company with value added products sold in the tens of millions of dollars in the developed world. Other shareholders are The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) (6%), Excellence Investments Ltd. (TASE: EXCE) (4.3%), and Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS). Tsur owns 2.7%.
According to figures from investment bank BMO, eight offerings by drug and biotech companies have taken place on the US market in 2012, but only three succeeded in passing the $200 million valuation mark. None of these companies, however, was at the sales stage, most of them being at the stage of phase III clinical trials or just before product launch.
Kamada, by contrast, has sales in the US of its ATT infusion product, jointly with US company Baxter. This is a niche market with competitors, but the company has succeeded in growing nicely. It reported 33% revenue growth to $51 million in January-September 2012 from $38.3 million in the corresponding period of 2011. These results, alongside full-year revenue guidance of $72 million, indicate that growth will continue in the fourth quarter. The revenue growth is driven by higher sales of its industrial products and by greater distribution. Revenue totaled $17.7 million in the third quarter, compared with $13.3 million in the corresponding quarter.
Operating profit was $455,000 in January-September, compared with an operating loss of $3.3 million in the corresponding period. Operating profit was $1.3 million in the third quarter, compared with an operating loss of $2 million in the corresponding quarter.
Kamada is waiting for a significant event in the coming year: trial results for ATT by inhalation, which is for the same niche market but is without competitors for its administration method. It is currently positioned as the company's leading product. In its pipeline is a product for treating diabetes, which is about to undergo phase II trials, and is a big dream for the company.
Published by Globes [online], Israel business news - www.globes-online.com - on December 10, 2012
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