Israeli drug development company Kamada Ltd. (Nasdaq: KMDA); TASE: KMDA) has announced that it has obtained US Food and Drug Administration (FDA) approval for marketing its anti-rabies vaccination in the US. The company expects its vaccination, which is administered after exposure to the virus, to be significant for its business as early as next year. US company Kedrion will be responsible for distributing the new product in the US. Kamada's share price jumped 5.3% after the announcement, following a similar rise on Nasdaq on Friday, pushing the company's market cap up to NIS 651 million.
The rabies vaccine is a relatively small product in Kamada's portfolio, compared with Glassia, its leading product, designed for the treatment of hereditary emphysema. The fact that Kamada obtained approval at the planned time, without having to repeat trials or show the FDA additional data, is restoring the faith of the company's investors, after Kamada failed to obtain regulatory approval in Europe for a different significant product (a drug for treating emphysema through inhalation, rather than an IV).
Kamada is already marketing the anti-rabies vaccine in various countries, and there is consequently a great deal of information about its effectiveness and safety; in addition, a clinical trial has demonstrated the product's effectiveness and safety.
Meeting the $100 million forecasts
The US anti-rabies vaccine market amounts to $100 million a year. The market is dominated by Grifols with a 95% market share. Sanofi Pasteur, which had the next largest market share, abandoned this market several years ago because of supply problems, and is no longer active in it.
Kamada now believes that the vaccination centers in the US will want to have the two leading products (Kamada's product and that of Grifols) in stock in order to protect themselves against a defect in one of the products (not an uncommon occurrence with vaccines). It therefore predicts that it will be able to gain a substantial market share at a price similar to that charged by its competitors.
Kamada predicted that the product would already have an important impact on its business in 2018. The profit margin on the product is likely to be high, in comparison with the company's other products. Kamada also said that its $100 million revenue forecast for 2017 did not include the anti-rabies vaccine.
Kamada posted $43.6 million in revenue in the first half of 2017, so it will have to boost its revenue in the second half of the year in order to meet its forecast. The result depends on order from its partner, Shire, which markets Glassia, the source of most of Kamada's revenue, in the US.
IBI Investment House analyst Steven Tepper believes that the Israeli company's revenue from the anti-rabies vaccine will peak at $15 million. "Assuming that Kamada gets half of the market against a competitor that already dominates it, and assuming that it will have to cut the price at some stage to make its product competitive, peak revenue will be $30-40 million at most. If Kamada and Kedrion divide the profit approximately equally, Kamada's revenue will peak at $15 million," he wrote.
Published by Globes [online], Israel Business News - www.globes-online.com - on August 27, 2017
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