Exhibit 99.2
KAMADA LTD.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2021
(Unaudited)
TABLE OF CONTENTS
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KAMADA LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As of September 30, | As of December 31, | |||||||||||
2021 | 2020 | 2020 | ||||||||||
Unaudited | Audited | |||||||||||
U.S Dollars in thousands | ||||||||||||
Current Assets | ||||||||||||
Cash and cash equivalents | $ | 99,840 | $ | 52,487 | $ | 70,197 | ||||||
Short-term investments | - | 47,230 | 39,069 | |||||||||
Trade receivables, net | 26,548 | 28,643 | 22,108 | |||||||||
Other accounts receivables | 4,392 | 3,533 | 4,524 | |||||||||
Inventories | 48,163 | 42,618 | 42,016 | |||||||||
Total Current Assets | 178,943 | 174,511 | 177,914 | |||||||||
Non-Current Assets | ||||||||||||
Property, plant and equipment, net | 25,856 | 25,323 | 25,679 | |||||||||
Right-of-use-assets | 3,361 | 3,694 | 3,440 | |||||||||
Other long term assets | 3,380 | 1,081 | 1,573 | |||||||||
Contract assets | 4,987 | 1,438 | 2,059 | |||||||||
Deferred taxes | - | 298 | - | |||||||||
Total Non-Current Assets | 37,584 | 31,834 | 32,751 | |||||||||
Total Assets | $ | 216,527 | $ | 206,345 | $ | 210,665 | ||||||
Current Liabilities | ||||||||||||
Current maturities of bank loans | $ | 52 | $ | 322 | $ | 238 | ||||||
Current maturities of lease liabilities | 1,181 | 1,038 | 1,072 | |||||||||
Trade payables | 19,010 | 15,110 | 16,110 | |||||||||
Other accounts payables | 6,346 | 6,236 | 7,547 | |||||||||
Deferred revenues | - | 486 | - | |||||||||
Total Current Liabilities | 26,589 | 23,192 | 24,967 | |||||||||
Non-Current Liabilities | ||||||||||||
Bank loans | - | 48 | 36 | |||||||||
Lease liabilities | 3,283 | 3,589 | 3,593 | |||||||||
Deferred revenues | 3,575 | 1,525 | 2,025 | |||||||||
Employee benefit liabilities, net | 1,467 | 1,262 | 1,406 | |||||||||
Total Non-Current Liabilities | 8,325 | 6,424 | 7,060 | |||||||||
Shareholder’s Equity | ||||||||||||
Ordinary shares | 11,720 | 11,703 | 11,706 | |||||||||
Additional paid in capital | 210,005 | 209,650 | 209,760 | |||||||||
Capital reserve due to translation to presentation currency | (3,490 | ) | (3,490 | ) | (3,490 | ) | ||||||
Capital reserve from hedges | 35 | 234 | 357 | |||||||||
Capital reserve from share-based payments | 4,817 | 4,550 | 4,558 | |||||||||
Capital reserve from employee benefits | (320 | ) | (356 | ) | (320 | ) | ||||||
Accumulated deficit | (41,154 | ) | (45,562 | ) | (43,933 | ) | ||||||
Total Shareholder’s Equity | 181,613 | 176,729 | 178,638 | |||||||||
Total Liabilities and Shareholder’s Equity | $ | 216,527 | $ | 206,345 | $ | 210,665 |
The accompanying Notes are an integral part of the Consolidated Financial Statements.
2
KAMADA LTD.
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Nine months period ended | Three months period ended | Year ended | ||||||||||||||||||
September 30, | September 30, | December 31, | ||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2020 | ||||||||||||||||
Unaudited | Unaudited | Audited | ||||||||||||||||||
U.S Dollars In thousands | ||||||||||||||||||||
Revenues from proprietary products | $ | 57,316 | $ | 77,633 | $ | 17,123 | $ | 29,691 | $ | 100,916 | ||||||||||
Revenues from distribution | 14,857 | 24,071 | 5,911 | 5,634 | 32,330 | |||||||||||||||
Total revenues | 72,173 | 101,704 | 23,034 | 35,325 | 133,246 | |||||||||||||||
Cost of revenues from proprietary products | 35,605 | 43,817 | 12,078 | 15,936 | 57,750 | |||||||||||||||
Cost of revenues from distribution | 12,835 | 20,500 | 5,226 | 4,568 | 27,944 | |||||||||||||||
Total cost of revenues | 48,440 | 64,317 | 17,304 | 20,504 | 85,694 | |||||||||||||||
Gross profit | 23,733 | 37,387 | 5,730 | 14,821 | 47,552 | |||||||||||||||
Research and development expenses | 7,909 | 10,335 | 2,545 | 3,365 | 13,609 | |||||||||||||||
Selling and marketing expenses | 3,803 | 3,297 | 1,256 | 1,179 | 4,518 | |||||||||||||||
General and administrative expenses | 8,803 | 7,133 | 2,691 | 2,514 | 10,139 | |||||||||||||||
Other expenses | 612 | 34 | 42 | - | 49 | |||||||||||||||
Operating income | 2,606 | 16,588 | (804 | ) | 7,763 | 19,237 | ||||||||||||||
Financial income | 277 | 865 | 68 | 250 | 1,027 | |||||||||||||||
Income (expense) in respect of securities measured at fair value, net * | - | 102 | - | - | 102 | |||||||||||||||
Income (expenses) in respect of currency exchange differences and derivatives instruments, net | 74 | (696 | ) | (48 | ) | (761 | ) | (1,535 | ) | |||||||||||
Financial expenses | (178 | ) | (204 | ) | (61 | ) | (69 | ) | (266 | ) | ||||||||||
Income before tax on income | 2,779 | 16,655 | (845 | ) | 7,183 | 18,565 | ||||||||||||||
Taxes on income | - | 1,144 | - | 348 | 1,425 | |||||||||||||||
Net Income | $ | 2,779 | $ | 15,511 | $ | (845 | ) | $ | 6,835 | $ | 17,140 | |||||||||
Other Comprehensive Income (loss) : | ||||||||||||||||||||
Amounts that will be or that have been reclassified to profit or loss when specific conditions are met | ||||||||||||||||||||
Gain (loss) from securities measured at fair value through other comprehensive income | - | (188 | ) | - | - | (188 | ) | |||||||||||||
Gain (loss) on cash flow hedges | 25 | 516 | 68 | 75 | 876 | |||||||||||||||
Net amounts transferred to the statement of profit or loss for cash flow hedges | (347 | ) | (273 | ) | (91 | ) | (266 | ) | (528 | ) | ||||||||||
Items that will not be reclassified to profit or loss in subsequent periods: | ||||||||||||||||||||
Remeasurement gain (loss) from defined benefit plan | - | - | - | - | 64 | |||||||||||||||
Tax effect | - | 29 | - | 14 | 19 | |||||||||||||||
Total comprehensive income | $ | 2,457 | $ | 15,595 | $ | (868 | ) | $ | 6,658 | $ | 17,383 | |||||||||
Earnings per share attributable to equity holders of the Company: | ||||||||||||||||||||
Basic net earnings per share | $ | 0.06 | $ | 0.35 | $ | (0.02 | ) | $ | 0.15 | $ | 0.39 | |||||||||
Diluted net earnings per share | $ | 0.06 | $ | 0.35 | $ | (0.02 | ) | $ | 0.15 | $ | 0.38 |
The accompanying Notes are an integral part of the Consolidated Financial Statements.
3
KAMADA LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share capital | Additional paid in capital | Capital reserve due to translation to presentation currency | Capital reserve from hedges | Capital reserve from sharebased payments | Capital reserve from employee benefits | Accumulated deficit | Total equity | |||||||||||||||||||||||||
Balance as of January 1, 2021 (audited) | $ | 11,706 | $ | 209,760 | $ | (3,490 | ) | $ | 357 | $ | 4,558 | $ | (320 | ) | $ | (43,933 | ) | $ | 178,638 | |||||||||||||
Net income | - | - | - | - | - | - | 2,779 | 2,779 | ||||||||||||||||||||||||
Other comprehensive income (loss) | - | - | - | (322 | ) | - | - | - | (322 | ) | ||||||||||||||||||||||
Tax effect | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Total comprehensive income (loss) | - | - | - | (322 | ) | - | - | 2,779 | 2,457 | |||||||||||||||||||||||
Exercise and forfeiture of share-based payment into shares | 14 | 245 | - | - | (245 | ) | - | - | 14 | |||||||||||||||||||||||
Cost of share-based payment | - | - | - | - | 504 | - | - | 504 | ||||||||||||||||||||||||
Balance as of September 30, 2021 | $ | 11,720 | $ | 210,005 | $ | (3,490 | ) | $ | 35 | $ | 4,817 | $ | (320 | ) | $ | (41,154 | ) | $ | 181,613 |
The accompanying Notes are an integral part of the Consolidated Financial Statements.
4
KAMADA LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share capital | Additional paid in Capital | Capital reserve from securities measured at fair value through other comprehensive income | Capital reserve due to translation to presentation currency | Capital reserve from hedges | Capital reserve from sharebased payments | Capital reserve from employee benefits | Accumulated deficit | Total equity | ||||||||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||||||||||||||||
U.S Dollars in thousands | ||||||||||||||||||||||||||||||||||||
Balance as of January 1, 2020 (audited) | $ | 10,425 | $ | 180,819 | $ | 145 | $ | (3,490 | ) | $ | 8 | $ | 8,844 | $ | (359 | ) | $ | (61,073 | ) | $ | 135,319 | |||||||||||||||
Net income | - | - | - | - | - | - | - | 15,511 | 15,511 | |||||||||||||||||||||||||||
Other comprehensive income (loss) | - | - | (188 | ) | - | 243 | - | - | - | 55 | ||||||||||||||||||||||||||
Taxes effect | - | - | 43 | - | (17 | ) | - | 3 | - | 29 | ||||||||||||||||||||||||||
Total comprehensive income (loss) | - | - | (145 | ) | - | 226 | - | 3 | 15,511 | 15,595 | ||||||||||||||||||||||||||
Issuance of ordinary shares | 1,217 | 23,684 | - | - | - | - | - | - | 24,901 | |||||||||||||||||||||||||||
Exercise and forfeiture of share-based payment into shares | 61 | 5,147 | - | - | - | (5,147 | ) | - | - | 61 | ||||||||||||||||||||||||||
Cost of share-based payment | - | - | - | - | - | 853 | - | - | 853 | |||||||||||||||||||||||||||
Balance as of September 30, 2020 | $ | 11,703 | $ | 209,650 | $ | - | $ | (3,490 | ) | $ | 234 | $ | 4,550 | $ | (356 | ) | $ | (45,562 | ) | $ | 176,729 |
The accompanying Notes are an integral part of the Consolidated Financial Statements.
5
KAMADA LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Capital reserve | Capital | Capital | ||||||||||||||||||||||||||||||
Additional | due to translation | Capital reserve | reserve from | reserve from | ||||||||||||||||||||||||||||
Share | paid in | to presentation | from | sharebased | employee | Accumulated | Total | |||||||||||||||||||||||||
capital | capital | currency | hedges | payments | benefits | deficit | equity | |||||||||||||||||||||||||
Balance as of July 1, 2021 (audited) | $ | 11,716 | $ | 209,942 | $ | (3,490 | ) | $ | 58 | $ | 4,746 | $ | (320 | ) | $ | (40,309 | ) | $ | 182,343 | |||||||||||||
Net income | - | - | - | - | - | - | (845 | ) | (845 | ) | ||||||||||||||||||||||
Other comprehensive income (loss) | - | - | - | (23 | ) | - | - | - | (23 | ) | ||||||||||||||||||||||
Taxes effect | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Total comprehensive income (loss) | - | - | - | (23 | ) | - | - | (845 | ) | (868 | ) | |||||||||||||||||||||
Exercise and forfeiture of share-based payment into shares | 4 | 63 | - | - | (63 | ) | - | - | 4 | |||||||||||||||||||||||
Cost of share-based payment | - | - | - | - | 134 | - | - | 134 | ||||||||||||||||||||||||
Balance as of September 30, 2021 | $ | 11,720 | $ | 210,005 | $ | (3,490 | ) | $ | 35 | $ | 4,817 | $ | (320 | ) | $ | (41,154 | ) | $ | 181,613 |
Capital reserve | ||||||||||||||||||||||||||||||||||||
from | ||||||||||||||||||||||||||||||||||||
securities measured | Capital reserve | Capital | Capital | |||||||||||||||||||||||||||||||||
Additional | at fair value through other | due to translation | Capital reserve | reserve from | reserve from | |||||||||||||||||||||||||||||||
Share | paid in | comprehensive | to presentation | from | sharebased | employee | Accumulated | Total | ||||||||||||||||||||||||||||
capital | capital | income | currency | hedges | payments | benefits | deficit | equity | ||||||||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||||||||||||||||
U.S Dollars In thousands | ||||||||||||||||||||||||||||||||||||
Balance as of July 1, 2020 | $ | 11,662 | $ | 207,731 | $ | - | $ | (3,490 | ) | 411 | $ | 6,204 | $ | (356 | ) | $ | (52,397 | ) | $ | 169,765 | ||||||||||||||||
Net income | - | - | - | - | - | - | - | 6,835 | 6,835 | |||||||||||||||||||||||||||
Other comprehensive income | - | - | - | - | (191 | ) | - | - | - | (191 | ) | |||||||||||||||||||||||||
Taxes effect | - | - | - | - | 14 | - | - | - | 14 | |||||||||||||||||||||||||||
Total comprehensive income (loss) | - | - | - | - | (177 | ) | - | - | 6,835 | 6,658 | ||||||||||||||||||||||||||
Exercise into shares and forfeiture of share-based payment | 41 | 1,919 | - | - | - | (1,919 | ) | - | 41 | |||||||||||||||||||||||||||
Cost of share-based payment | - | - | - | - | - | 265 | - | - | 265 | |||||||||||||||||||||||||||
Balance as of September 30, 2020 | $ | 11,703 | $ | 209,650 | $ | - | $ | (3,490 | ) | $ | 234 | $ | 4,550 | $ | (356 | ) | $ | (45,562 | ) | $ | 176,729 |
6
KAMADA LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Capital reserve from securities measured at fair value | Capital reserve due to translation | Capital | Capital reserve | Capital reserve | ||||||||||||||||||||||||||||||||
Additional | through other | to | reserve | from | from | |||||||||||||||||||||||||||||||
Share capital | paid in capital | comprehensive income | presentation currency | from hedges | sharebased payments | employee benefits | Accumulated deficit | Total equity | ||||||||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||||||||||||||||
In thousands | ||||||||||||||||||||||||||||||||||||
Balance as of January 1, 2020 (audited) | $ | 10,425 | $ | 180,819 | $ | 145 | $ | (3,490 | ) | $ | 8 | $ | 8,844 | $ | (359 | ) | $ | (61,073 | ) | $ | 135,319 | |||||||||||||||
Net income | - | - | - | - | - | - | - | 17,140 | 17,140 | |||||||||||||||||||||||||||
Other comprehensive income (loss) | - | - | (188 | ) | - | 348 | - | 64 | - | 224 | ||||||||||||||||||||||||||
Tax effect | - | - | 43 | - | 1 | - | (25 | ) | - | 19 | ||||||||||||||||||||||||||
Total comprehensive income (loss) | - | - | (145 | ) | - | 349 | - | 39 | 17,140 | 17,383 | ||||||||||||||||||||||||||
Issuance of ordinary shares | 1,217 | 23,678 | - | - | - | - | - | - | 24,895 | |||||||||||||||||||||||||||
Exercise and forfeiture of share-based payment into shares | 64 | 5,263 | - | - | - | (5,263 | ) | - | - | 64 | ||||||||||||||||||||||||||
Cost of share-based payment | - | - | - | - | - | 977 | - | - | 977 | |||||||||||||||||||||||||||
Balance as of December 31, 2020 | $ | 11,706 | $ | 209,760 | $ | - | $ | (3,490 | ) | $ | 357 | $ | 4,558 | $ | (320 | ) | $ | (43,933 | ) | $ | 178,638 |
The accompanying Notes are an integral part of the Consolidated Financial Statements.
7
KAMADA LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months period Ended | Three months period Ended | Year Ended | ||||||||||||||||||
September, 30 | September, 30 | December 31, | ||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2020 | ||||||||||||||||
Unaudited | Audited | |||||||||||||||||||
U.S Dollars In thousands | ||||||||||||||||||||
Cash Flows from Operating Activities | ||||||||||||||||||||
Net income | $ | 2,779 | $ | 15,511 | $ | (845 | ) | $ | 6,835 | $ | 17,140 | |||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Adjustments to the profit or loss items: | ||||||||||||||||||||
Depreciation and impairment | 3,612 | 3,632 | 1,240 | 1,252 | 4,897 | |||||||||||||||
Financial expenses (income), net | (173 | ) | (67 | ) | 41 | 580 | 672 | |||||||||||||
Cost of share-based payment | 504 | 853 | 134 | 265 | 977 | |||||||||||||||
Taxes on income | - | 1,144 | - | 348 | 1,425 | |||||||||||||||
Loss (gain) from sale of property and equipment | - | (7 | ) | - | (1 | ) | (7 | ) | ||||||||||||
Change in employee benefit liabilities, net | 61 | (7 | ) | 38 | (5 | ) | 201 | |||||||||||||
4,004 | 5,548 | 1,453 | 2,439 | 8,165 | ||||||||||||||||
Changes in asset and liability items: | ||||||||||||||||||||
Decrease (increase) in trade receivables, net | (4,446 | ) | (5,540 | ) | 1,200 | (8,956 | ) | 1,332 | ||||||||||||
Decrease (increase) in other accounts receivables | 1,556 | 972 | (73 | ) | 231 | 115 | ||||||||||||||
Decrease (Increase) in inventories | (5,963 | ) | 555 | (3,562 | ) | 5,028 | 1,157 | |||||||||||||
Increase in deferred expenses | (4,759 | ) | (2,464 | ) | (2,397 | ) | (1,553 | ) | (3,085 | ) | ||||||||||
Increase (decrease) in trade payables | 2,725 | (10,488 | ) | 1,586 | (7,769 | ) | (9,560 | ) | ||||||||||||
Increase (decrease) in other accounts payables | (1,482 | ) | 426 | (683 | ) | 740 | 1,736 | |||||||||||||
Decrease in deferred revenues | 1,550 | 1,190 | 550 | 397 | 1,204 | |||||||||||||||
(10,819 | ) | (15,349 | ) | (3,379 | ) | (11,882 | ) | (7,101 | ) | |||||||||||
Cash received (paid) during the period for: | ||||||||||||||||||||
Interest paid | (139 | ) | (158 | ) | (32 | ) | (51 | ) | (209 | ) | ||||||||||
Interest received | 357 | 891 | 140 | 290 | 1,211 | |||||||||||||||
Taxes paid | (32 | ) | (87 | ) | (9 | ) | (13 | ) | (101 | ) | ||||||||||
186 | 646 | 99 | 226 | 901 | ||||||||||||||||
Net cash provided by (used in) operating activities | $ | (3,850 | ) | $ | 6,356 | $ | (2,672 | ) | $ | 2,382 | $ | 19,105 |
The accompanying Notes are an integral part of the Consolidated Financial Statements.
8
KAMADA LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months period Ended | Three months period Ended | Year Ended | ||||||||||||||||||
September, 30 | September, 30 | December 31, | ||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2020 | ||||||||||||||||
Unaudited | Audited | |||||||||||||||||||
U.S Dollars In thousands | ||||||||||||||||||||
Cash Flows from Investing Activities | ||||||||||||||||||||
Proceeds of investment in short term investments, net | $ | 39,083 | $ | (15,646 | ) | $ | 36,116 | $ | - | $ | (7,646 | ) | ||||||||
Purchase of property and equipment and intangible assets | (2,986 | ) | (3,372 | ) | (1,523 | ) | (1,471 | ) | (5,488 | ) | ||||||||||
Proceeds from sale of property and equipment | - | 7 | - | 1 | 7 | |||||||||||||||
Acquisition of subsidiary (LLC), net (1) | (1,404 | ) | - | - | - | |||||||||||||||
Net cash provided by (used in) investing activities | 34,693 | $ | (19,011 | ) | 34,593 | (1,470 | ) | (13,127 | ) | |||||||||||
Cash Flows from Financing Activities | ||||||||||||||||||||
Proceeds from exercise of share base payments | 14 | 61 | 4 | 41 | 64 | |||||||||||||||
Repayment of lease liabilities | (903 | ) | (815 | ) | (308 | ) | (275 | ) | (1,103 | ) | ||||||||||
Repayment of long-term loans | (221 | ) | (373 | ) | (15 | ) | (127 | ) | (492 | ) | ||||||||||
Proceeds from issuance of ordinary shares, net | - | 24,894 | - | - | 24,895 | |||||||||||||||
Net cash provided by (used in) financing activities | (1,110 | ) | 23,767 | (319 | ) | (361 | ) | 23,364 | ||||||||||||
Exchange differences on balances of cash and cash equivalent | (90 | ) | (1,287 | ) | (178 | ) | (699 | ) | (1,807 | ) | ||||||||||
Increase (decrease) in cash and cash equivalents | 29,643 | 9,825 | 31,424 | (4,912 | ) | 27,535 | ||||||||||||||
Cash and cash equivalents at the beginning of the period | 70,197 | 42,662 | 68,416 | 57,399 | 42,662 | |||||||||||||||
Cash and cash equivalents at the end of the period | $ | 99,840 | $ | 52,487 | $ | 99,840 | $ | 52,487 | $ | 70,197 | ||||||||||
Significant non-cash transactions | ||||||||||||||||||||
Right-of-use asset recognized with corresponding lease liability | $ | 769 | $ | 539 | $ | 181 | $ | 194 | $ | 539 | ||||||||||
Purchase of property and equipment | $ | 352 | $ | 973 | $ | 352 | $ | 973 | $ | 722 |
Appendix A (1) | Nine months period Ended September, 30 2021 | |||
Acquisition of a subsidiary that was first consolidated | ||||
Current Assets (exclusive of cash and cash equivalents) | (184 | ) | ||
Non Current Assets | (1,460 | ) | ||
Current Liabilities | 240 | |||
(1,404 | ) |
The accompanying Notes are an integral part of the Consolidated Financial Statements.
9
KAMADA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: General
Kamada Ltd. (the “Company”) is a global specialty plasma-derived biopharmaceutical company with a diverse portfolio of marketed products, a robust development pipeline and industry-leading manufacturing capabilities. The Company’s strategy is focused on driving profitable growth from its current commercial products, its plasma-derived development pipeline and its manufacturing expertise, while evolving into a vertically integrated plasma-derived company. The Company’s two leading commercial products are GLASSIA® and KEDRRAB®. GLASSIA was the first liquid, ready-to-use, intravenous plasma-derived AAT product approved by the FDA. The Company markets GLASSIA in the U.S. through a strategic partnership with Takeda Pharmaceuticals Company Limited (“Takeda”) and in other countries through local distributors. Pursuant to an agreement with Takeda, the Company, as of September 2021, completed the production and the supply of GLASSIA to Takeda, and Takeda has initiated its own production of GLASSIA for the U.S. market. The Company is entitled for royalty payments from Takeda on sales of GLASSIA produced by Takeda until 2040. KEDRAB is an FDA approved anti-rabies immune globulin (Human) for post-exposure prophylaxis treatment. KEDRAB is being marketed in the U.S. through a strategic partnership with Kedrion S.p.A. The Company has additional four plasma-derived products administered by injection or infusion, that are marketed through distributors in more than 15 countries, including Israel, Russia, Brazil, Argentina, India and other countries in Latin America and Asia. The Company has two leading development programs; an inhaled AAT for the treatment of AAT deficiency for which the Company is currently conducting the InnovAATe clinical trial, a randomized, double-blind, placebo-controlled, pivotal Phase 3 trial and a plasma-derived hyperimmune immunoglobulin (IgG) product as a potential treatment for coronavirus disease (COVID-19). The Company leverages its expertise and presence in the Israeli pharmaceutical market to distribute in Israel more than 20 products that are manufactured by third parties and have recently added nine biosimilar products to its Israeli distribution portfolio, which, subject to EMA and the Israeli MOH approvals, are expected to be launched in Israel between the years 2022 and 2025.
Pursuant to the agreement with Takeda (as detailed on Note 17 of the Company’s annual financial statements as of December 31, 2020) the Company, as of September 2021, completed the production and the supply of GLASSIA to Takeda. Takeda obtained FDA approval for Glassia production and will initiate its own production of Glassia for the U.S. market in 2021. Accordingly, the Company terminated the manufacturing and sale of Glassia to Takeda resulting in a significant reduction in revenues. Pursuant to the agreement, upon initiation of sales of Glassia manufactured by Takeda, Takeda will pay royalties to the Company at a rate of 12% on net sales through August 2025, and at a rate of 6% thereafter until 2040, with a minimum of $5 million annually, for each of the years from 2022 to 2040. See note 3c below regarding a recent amendment to the agreement with Takeda.
These financial statements have been prepared in a condensed format as of September 30, 2021, and for the nine and three months then ended (“interim consolidated financial statements”).
These financial statements should be read in conjunction with the Company’s annual financial statements as of December 31, 2020, and for the year then ended and the accompanying notes (“annual consolidated financial statements”).
10
KAMADA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2: Significant Accounting Policies
a.. | Basis of preparation of the interim consolidated financial statements: |
The interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for the preparation of financial statements for interim periods, as prescribed in IAS 34, “Interim Financial Reporting”.
b. | Implementation of new accounting standards: |
The accounting policy applied in the preparation of the interim consolidated financial statements is consistent with that applied in the preparation of the annual consolidated financial statements, except for the following:
i. | Amendments to IFRS 9, IFRS 7, IFRS 16, IFRS 4 and IAS 39 regarding the IBOR reform: |
In August 2020, the IASB issued amendments to IFRS 9, “Financial Instruments”, IFRS 7, “Financial Instruments: Disclosures”, IAS 39, “Financial Instruments: Recognition and Measurement”, IFRS 4, “Insurance Contracts”, and IFRS 16, “Leases” (“IBOR Amendments”).
The IBOR Amendments provide practical expedients when accounting for the effects of the replacement of benchmark InterBank Offered Rates (IBORs) by alternative Risk-Free Interest Rates (RFRs).
Pursuant to one of the practical expedients, an entity will treat contractual changes or changes to cash flows that are directly required by the reform as changes to a floating interest rate. That is, an entity recognizes the changes in interest rates as an adjustment of the effective interest rate without adjusting the carrying amount of the financial instrument. The use of this practical expedient is subject to the condition that the transition from IBOR to RFR takes place on an economically equivalent basis.
In addition, the IBOR Amendments permit changes required by the IBOR reform to be made to hedge designations and hedge documentation without the hedging relationship being discontinued, provided certain conditions are met. The IBOR Amendments also provide temporary relief from having to meet the “separately identifiable” requirement according to which a risk component must also be separately identifiable to be eligible for hedge accounting.
The IBOR Amendments include new disclosure requirements in connection with the expected effect of the reform on an entity’s financial statements, such as how the entity is managing the process to transition to the interest rate reform, the risks to which it is exposed due to the reform and quantitative information about IBOR-referenced financial instruments that are expected to change.
The IBOR Amendments are effective for annual periods beginning on or after January 1, 2021. The IBOR Amendments are to be applied retrospectively. However, restatement of comparative periods is not required. Early application is permitted.
The adoption of the IBOR Amendment does not have an effect on the Company’s financial statements.
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KAMADA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2: Significant Accounting Policies (continued)
b. | Implementation of new accounting standards (continued): |
ii. | Amendment to IAS 1, Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current |
In January 2020, the IASB issued an amendment to IAS 1, “Presentation of Financial Statements” (“IAS 1 Amendment “) regarding the criteria for determining the classification of liabilities as current or non-current. The IAS 1 Amendment replaces certain requirements for classifying liabilities as current or non-current. Thus for example, according to the IAS 1 Amendment, a liability will be classified as non-current when the entity has the right to defer settlement for at least 12 months after the reporting period, and it “has substance” and is in existence at the end of the reporting period, this instead of the requirement that there be an “unconditional” right. According to the IAS1 Amendment, a right is in existence at the reporting date only if the entity complies with conditions for deferring settlement at that date. Furthermore, the IAS 1 Amendment clarifies that the conversion option of a liability will affect its classification as current or non-current, other than when the conversion option is recognized as equity.
The IAS 1 Amendment is effective for reporting periods beginning on or after January 1, 2023, with earlier application being permitted. The IAS1 Amendment is applicable retrospectively, including an amendment to comparative data.
The Company has not yet commenced examining the effects of applying the IAS 1 Amendment on the financial statements.
iii. | Amendment to IAS 37, Provisions, Contingent Liabilities and Contingent Assets |
In May 2020, the IASB issued an amendment to IAS 37, regarding which costs a company should include when assessing whether a contract is onerous (“IAS 37 Amendment”). According to the IAS 37 Amendment, when assessing whether a contract is onerous, the costs of fulfilling a contract that should be taken into consideration are costs that relate directly to the contract, which include as follows:
- | Incremental costs; and |
- | An allocation of other costs that relate directly to fulfilling a contract (such as depreciation expenses for fixed assets used in fulfilling that contract and other contracts). |
The IAS 37 Amendment is effective retrospectively for annual periods beginning on or after January 1, 2022, in respect of contracts where the entity has not yet fulfilled all its obligations. Early application is permitted. Upon application of the Amendment, the entity will not restate comparative data, but will adjust the opening balance of retained earnings at the date of initial application, by the amount of the cumulative effect of the Amendment.
The Company has not yet commenced examining the effects of the IAS 37 Amendment on the financial statements.
iv. | Amendment to IAS 16, Property, Plant and Equipment |
In May 2020, the IASB issued an amendment to IAS 16, “Property, Plant and Equipment” (“IAS 16 Amendment”) The Amendment annuls the requirement by which in the calculation of costs directly attributable to fixed assets, the net proceeds from selling certain items that were produced while the Company tested the functioning of the asset should be deducted (such as samples that were produced when testing the equipment). Instead, such proceeds shall be recognized in profit or loss according to the relevant standards and the cost of the sold items will be measured according to the measurement requirements of IAS 2, Inventories.
The IAS 16 Amendment is effective for annual periods beginning on or after January 1, 2022. Early application is permitted. The IAS 16 Amendment shall be applied on a retrospective basis, including an amendment of comparative data, only with respect to fixed asset items that have been brought to the location and condition required for them to operate in the manner intended by management subsequent to the earliest reporting period presented at the date of initial application of the IAS 16 Amendment. The cumulative effect of the Amendment will adjust the opening balance of retained earnings for the earliest reporting period presented.
The Company has not yet commenced examining the effects of the Amendment on the financial statements.
12
KAMADA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3: Significant events in the reportimg period
a. | Effects of the COVID-19 Pandemic Outbreak: |
Following the global COVID-19 outbreak, there has been a decrease in economic activity worldwide, including Israel. The spread of the COVID-19 pandemic led, inter alia, to a disruption in the global supply chain, a decrease in global transportation, restrictions on travel and work that were announced by the State of Israel and other countries worldwide as well as a decrease in the value of financial assets and commodities across all markets in Israel and the world.
The Company’s business activity and commercial operation were affected by these factors, and the Company has taken several actions to ensure its manufacturing plant remains operational with limited disruption to its business continuity. The Company continues to maintain higher inventory levels of raw materials through its suppliers and service providers to appropriately manage any potential supply disruptions and secure continued manufacturing. In addition, the Company is actively engaging its freight carriers to ensure inbound and outbound international delivery routes remain operational and identify alternative routes, if needed.
The Company is complying with the State of Israel mandates and recommendations with respect to its work-force management and has taken several precautionary health and safety measures to safeguard its employees and continues to monitor and assess orders issued by the State of Israel and other applicable governments to ensure compliance with evolving COVID-19 guidelines.
While COVID-19 related disruption continues to have various effect on the Company’s business activities, commercial operation, revenues and operational expenses, as a results of the actions taken by the Company to date, its overall results of operations were not materially affected however, a number of factors, including but not limited to, continued effect of the factors mentioned above as well as, continued demand for the Company’s products, including GLASSIA and KEDRAB, in the U.S. market and its distributed products in Israel, financial conditions of the Company’s customer, suppliers and services providers, the Company’s ability to manage operating expenses, additional competition in the markets that the Company competes, regulatory delays, prevailing market conditions and the impact of general economic, industry or political conditions in the U.S., Israel or otherwise, may have an effect on the Company’s future financial position and results of operations.
The financial impact of these factors cannot be reasonably estimated at this time due to substantial uncertainty but may materially affect our business, financial condition, and results of operations. The Company assess the impact of the COVID-19 pandemic in a number of possible scenarios and concluded that there are no uncertainties that may cast significant doubt on its ability to continue as a going concern or affect significantly on the Company liquidity.
13
KAMADA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3: Significant events in the reportimg period (continued)
b. | Acquisition of an FDA-Licensed Plasma Collection Center: |
On March 31, 2021, the Company acquired the plasma collection center and certain related rights and assets from the privately held B&PR of Beaumont, TX, USA. The plasma collection facility primarily specializes in the collection of hyper-immune plasma used for the Anti-D immunoglobulin, which is manufactured by the Company and distributed in international markets. The acquisition was consummated through Kamada Plasma LLC, a newly formed wholly owned subsidiary of the Company, which will operate the Company’s plasma collection activity in the U.S.
In consideration for the assets acquired, the Company committed to a pay a total amount of $1,654 thousands, of which $1,404 thousands were paid at the closing of the acquisition, and the balance in the amount of $250 thousands will be paid on March 31, 2022.
The Company incurred acquisition-related costs of $140 thousand related mainly to legal and other consulting fees. These costs were recorded in general and administrative expenses in the statement of profit and loss during 2020 and the first quarter of 2021.
Identifiable assets acquired and liabilities assumed:
U.S Dollars in thousands | ||||
Inventories | $ | 184 | ||
Intangible assets (1) | 1,378 | |||
Property, plant and equipment, net | 82 | |||
Total acquired assets | 1,644 | |||
Assumed liabilities | (240 | ) | ||
Net identifiable assets | $ | 1,404 |
(1) | The fair value of intangible assets (FDA-License for plasma collection and goodwill) has been determined provisionally pending completion of an independent valuation. If new information is obtained within one year from the acquisition date about facts and circumstances that existed at the acquisition date, the Company will retrospectively adjust the relevant amounts that were recognized at the time of the acquisition. |
c. | Amendment to GLASSIA License Agreement with Takeda: |
On March 31, 2021, the Company entered into an amendment to the Technology License Agreement with Takeda with respect to GLASSIA. Pursuant to the amendment, upon completion of the transition of GLASSIA manufacturing to Takeda, expected by the end of 2021, the Company will transfer to Takeda the GLASSIA U.S. Biologics License Application (BLA). In consideration for the BLA transfer, the Company will receive a $2,000 thousand payment from Takeda. In addition, the terms of the final sales-based milestone of $5,000 thousand due to the Company under the license agreement were amended. As a result of such amendment the Company recognized the $5,000 thousand milestone as a revenue during the first quarter of 2021.
d. | Workforce Downsizing: |
As a result of the transition of GLASSIA manufacturing to Takeda, the Company initiated during the second quarter of 2021 a workforce downsizing program which was completed by the beginning of the third quarter of 2021. During the nine months ended September 30, 2021 the Company accounted for $561 thousands of costs associated with termination benefits which were recorded as a one-time expenses in the other operating expenses.
14
KAMADA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4: Operating Segments
a. | General: |
The company has two operating segments, as follows:
Proprietary Products | - | Development, manufacturing, sales, and distribution of plasma-derived protein therapeutics. | |
Distribution | - | Distribute imported drug products in Israel, which are manufactured by third parties. |
b. | Reporting on operating segments: |
Nine months period ended September 30, 2021 | ||||||||||||
Proprietary Products | Distribution | Total | ||||||||||
U.S Dollars in thousands | ||||||||||||
Unaudited | ||||||||||||
Revenues | $ | 57,316 | $ | 14,857 | $ | 72,173 | ||||||
Gross profit | $ | 21,711 | $ | 2,022 | $ | 23,733 | ||||||
Unallocated corporate expenses | (21,127 | ) | ||||||||||
Finance income, net | 173 | |||||||||||
Income before taxes on income | $ | 2,779 |
15
KAMADA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4: Operating Segments (continued)
b. | Reporting on operating segments (continued): |
Nine months period ended | ||||||||||||
Proprietary Products | Distribution | Total | ||||||||||
U.S Dollars in thousands | ||||||||||||
Unaudited | ||||||||||||
Revenues | $ | 77,633 | $ | 24,071 | $ | 101,704 | ||||||
Gross profit | $ | 33,816 | $ | 3,571 | $ | 37,387 | ||||||
Unallocated corporate expenses | (20,799 | ) | ||||||||||
Finance income, net | 67 | |||||||||||
Income before taxes on income | $ | 16,655 |
Three months period ended | ||||||||||||
Proprietary Products | Distribution | Total | ||||||||||
U.S Dollars in thousands | ||||||||||||
Unaudited | ||||||||||||
Revenues | $ | 17,123 | $ | 5,911 | $ | 23,034 | ||||||
Gross profit | $ | 5,045 | $ | 685 | $ | 5,730 | ||||||
Unallocated corporate expenses | (6,534 | ) | ||||||||||
Finance expenses, net | (41 | ) | ||||||||||
Income before taxes on income | $ | (845 | ) |
16
KAMADA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4: Operating Segments (continued)
b. | Reporting on operating segments (continued): |
Three months period ended September 30, 2020 | ||||||||||||
Proprietary Products | Distribution | Total | ||||||||||
U.S Dollars in thousands | ||||||||||||
Unaudited | ||||||||||||
Revenues | $ | 29,691 | $ | 5,634 | $ | 35,325 | ||||||
Gross profit | $ | 13,755 | $ | 1,066 | $ | 14,821 | ||||||
Unallocated corporate expenses | (7,058 | ) | ||||||||||
Finance expenses, net | (580 | ) | ||||||||||
Income before taxes on income | $ | 7,183 |
Year Ended December 31, 2020 | ||||||||||||
Proprietary Products | Distribution | Total | ||||||||||
U.S Dollars in thousands | ||||||||||||
Audited | ||||||||||||
Revenues | $ | 100,916 | $ | 32,330 | $ | 133,246 | ||||||
Gross profit | $ | 43,166 | $ | 4,386 | $ | 47,552 | ||||||
Unallocated corporate expenses | (28,315 | ) | ||||||||||
Finance expenses, net | (672 | ) | ||||||||||
Income before taxes on income | $ | 18,565 |
17
KAMADA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4: Operating Segments (continued)
c. | Reporting on operating segments by geographic region: |
Nine months period ended September 30, 2021 | ||||||||||||
Proprietary Products | Distribution | Total | ||||||||||
U.S Dollars in thousands | ||||||||||||
Unaudited | ||||||||||||
Geographical markets | ||||||||||||
U.S.A and North America | $ | 39,265 | - | $ | 39,265 | |||||||
Israel | 6,437 | 14,857 | 21,294 | |||||||||
Europe | 4,491 | - | 4,491 | |||||||||
Latin America | 5,255 | - | 5,255 | |||||||||
Asia | 1,753 | - | 1,753 | |||||||||
Others | 115 | - | 115 | |||||||||
$ | 57,316 | $ | 14,857 | $ | 72,173 |
Nine months period ended September 30, 2020 | ||||||||||||
Proprietary Products | Distribution | Total | ||||||||||
U.S Dollars in thousands | ||||||||||||
Unaudited | ||||||||||||
Geographical markets | ||||||||||||
U.S.A and North America | $ | 66,339 | $ | - | $ | 66,339 | ||||||
Israel | 3,132 | 24,071 | 27,203 | |||||||||
Europe | 3,690 | - | 3,690 | |||||||||
Latin America | 3,976 | - | 3,976 | |||||||||
Asia | 444 | - | 444 | |||||||||
Others | 52 | - | 52 | |||||||||
$ | 77,633 | $ | 24,071 | $ | 101,704 |
Three months period ended September 30, 2021 | ||||||||||||
Proprietary Products | Distribution | Total | ||||||||||
U.S Dollars in thousands | ||||||||||||
Unaudited | ||||||||||||
Geographical markets | ||||||||||||
U.S.A and North America. | $ | 12,710 | $ | 12,710 | ||||||||
Israel | 849 | 5,911 | 6,760 | |||||||||
Europe | 1,097 | 1,097 | ||||||||||
Latin America | 1,652 | 1,652 | ||||||||||
Asia | 734 | 734 | ||||||||||
Others | 81 | 82 | ||||||||||
$ | 17,123 | $ | 5,911 | $ | 23,034 |
18
KAMADA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4: Operating Segments (continued)
c. | Reporting on operating segments by geographic region (continued): |
Three months period ended September 30, 2020 | ||||||||||||
Proprietary Products | Distribution | Total | ||||||||||
U.S Dollars in thousands | ||||||||||||
Unaudited | ||||||||||||
Geographical markets | ||||||||||||
U.S.A and North America | $ | 25,879 | $ | - | $ | 25,879 | ||||||
Israel | 1,126 | 5,634 | 6,760 | |||||||||
Europe | 403 | - | 403 | |||||||||
Latin America | 2,104 | - | 2,104 | |||||||||
Asia | 158 | - | 158 | |||||||||
Others | 21 | - | 21 | |||||||||
$ | 29,691 | $ | 5,634 | $ | 35,325 |
Year ended December 31, 2020 | ||||||||||||
Proprietary Products | Distribution | Total | ||||||||||
U.S Dollars in thousands | ||||||||||||
Audited | ||||||||||||
Geographical markets | ||||||||||||
U.S.A and North America | $ | 84,949 | $ | - | $ | 84,949 | ||||||
Israel | 3,814 | 32,330 | 36,144 | |||||||||
Europe | 4,461 | - | 4,461 | |||||||||
Latin America | 6,867 | - | 6,867 | |||||||||
Asia | 766 | - | 766 | |||||||||
Others | 59 | - | 59 | |||||||||
$ | 100,916 | $ | 32,330 | $ | 133,246 |
19
KAMADA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5: Financial Instruments
a. | Classification of financial instruments by fair value hierarchy: |
Financial assets (liabilities) measured at fair value
Level 1 | Level 2 | |||||||
U.S Dollars in thousands | ||||||||
September 30, 2021 | ||||||||
Derivatives instruments | $ | - | $ | (40 | ) | |||
September 30, 2020 | ||||||||
Derivatives instruments | $ | - | $ | 329 | ||||
December 31, 2020 | ||||||||
Derivatives instruments | $ | - | $ | 448 |
During the three months ended on September 30, 2021, there were no transfers due to the fair value measurement of any financial instrument from Level 1 to Level 2, and furthermore, there were no transfers to or from Level 3 due to the fair value measurement of any financial instrument.
Note 6: Subsequent events
a. | Extension of exercise terms of stock option |
On October 12, 2021, the Company’s Board of Directors approved an extension of the exercise term of 88,900 outstanding options for one year period from October 27, 2021 till October 2022. The fair value of such term extension estimated based on the Binomial Model, is $47 thousands.
b. | Acquisition of a portfolio of four FDA-approved plasma-derived hyperimmune commercial products |
On November 22, 2021, the Company entered into an Assets Purchase Agreement (the “APA”) with Saol Therapeutics (“Saol”) for the acquisition of a portfolio of four FDA-approved plasma-derived hyperimmune commercial products. Pursuant to the APA, the Company will pay Saol a $95 million upfront payment, and up to an additional $50 million in sales milestones during 2022-2034. In addition, the Company will acquire from Saol existing inventory at an estimated value of approximately $15 million, which will be paid over 10 equal quarterly instalments. In addition, the Company entered into a Transition Services Agreement (the “TSA”) with Saol, pursuant to which Saol will provide multiple services to the Company during the term of the TSA in order to ensure adequate transition of all commercial operation associated with the acquired portfolio.
To partially fund the acquisition costs, on November 15, 2021, the Company secured a $40 million credit facility from Bank Hapoalim, Israel’s leading commercial bank. The credit facility is comprised of a $20 million 5-year term loan baring an interest at a rate of SOFR (Secured Overnight Financing Rate) +2.18%, and a $20 million short-term revolving credit facility baring an interest at a rate of SOFR +1.75%, or a commitment fee of 0.2% calculated over the unutilized balance of the short-term revolving credit facility.
- - -
20