Greetings and welcome to Kamada Ltd. second quarter 2019 earnings call. At this time, all participants are in a listen-only mode. A questions-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Paul Arndt, Managing Director, LifeSci Advisors. Please go ahead, sir.

Thank you operator and thank you everyone. Good morning. This is Paul Arndt with LifeSci Advisors. Thank you all for participating in today's call. Joining me from Kamada are Amir London, Chief Executive Officer and Chaime Orlev, Chief Financial Officer. Earlier this morning, Kamada announced financial results for the second quarter ended June 30, 2019. If you have not received this news release or if you would like to be added to the company's distribution list, please e-mail Bob Yedid from LifeSci at bob@lifesciadvisors.com. Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of Kamada. I encourage you to review the company's filings with the Securities and Exchange Commission, including, without limitation, the company's forms 20-F and 6-K, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, Tuesday, August 6, 2019. Kamada undertakes no obligation to revise or update any statements to reflect certain events or circumstances after the date of this conference call. With that said, I would now like to turn the call over to Amir London, Chief Executive Officer. Amir?

Thank you Paul. My thanks also for our listeners who are interested in Kamada and for participating in today's call. Let me begin by saying that we are quite pleased with our continued strong performance in 2019. We have generated significant momentum in all aspects of our business in the first two quarters of the year. In the second quarter, total revenue was $35.3 million, which represented a 4% increase compared to the second quarter of 2018. For the first six months of 2019, total revenues were $69.1 million [sic - see press release, $62.1 million], which represented a 21% increase over the first six months of 2018. This result was primarily driven by sales of GLASSIA and KamRAB, our anti-rabies IgG product. From a profitability standpoint, our total gross profit for the first six months ended on June 30, 2019 was $24.8 million and gross margins were at 40%. In addition, our net income during the six months ended June 30, 2019 was $6.1 million. We continue to maintain a solid cash position, which increased to $62 million of cash, cash equivalents and short term investments at the end of the second quarter, which provide us with the financial resources needed to continue executing on our business plan. Based on our continued strong performance in the second quarter and our positive outlook for the remainder of the year, we are reiterating our previously provided full year 2019 total revenue guidance of $125 million to $130 million which, if achieved, would represent another strong year of double digit percentage growth over the full year 2018 total revenue. As a reminder, our GLASSIA supply agreement with Takeda currently extends through the end of 2020. While the possible transition of GLASSIA manufacturing to Takeda will result in significant reduction of Kamada's revenues,…

Thank you Amir and good day everyone. We are very pleased with our strong financial performance across the first six months of 2019. During the first half of 2019, we delivered double-digit percentage revenue growth and our profitability metrics, including adjusted EBITDA, operating income and net income, were all solid. With that, let me discuss our specific financial results. I will begin with the three months ended June 30, 2019. Total revenue was $35.3 million in the second quarter of 2019, a 4% increase from the $33.8 million recorded in the second quarter of 2018. Revenues from the proprietary products segment in the second quarter of 2019 were $27.3 million, a 5% increase from the $26 million reported in the second quarter of 2018, primarily driven by increased sales of both our core products, GLASSIA and KEDRAB. Revenues from the distributed products segment were $8 million in the second quarter of 2019, a 1% increase compared to the second quarter of 2018. Gross profit was $13.6 million in the second quarter of 2019, a 27% increase from the $10.7 million reported in the second quarter of 2018. Gross margin increased to 39% from 32% in the second quarter of 2018. Such increase is primarily driven by improved manufacturing efficiencies and favorable product sales mix. Net income was $6.1 million or a profit of $0.15 per diluted share in the second quarter of 2019 compared to net income of $5.7 million or a profit of $0.14 per diluted share in the second quarter of 2018. During the second quarter of 2019, we generated positive cash flow from operations of $6.8 million. With that, I will now review the six months period ended June 30, 2019. Total revenue for that period was $62.1 million, a 21% increase from the $51.3 million reported…

[Operator Instructions]. Our first question comes from the line of Keay Nakae with Chardan Capital Markets. Please proceed with your question.

Hi. Yes. Thanks. So first question has to do with your business development efforts. If you are looking to add existing commercial products into the mix, can you tell us what type of metrics you might be looking at in terms of either the dollar amount of annual sales and does it have to be currently profitable? Or can you give us an idea of some of the parameters that such an acquisition would have to meet in order for you to seriously consider it?

Thank you Keay. Thank you for the question. So we are looking in terms of business development for opportunities that are in our specialty fields, AAT deficiency, also on pulmonary GvHD and transplant as well as plasma-derived proteins. We have not announced specifically that this has to be commercial-stage product or an advanced clinical-stage product. And we will announce after due diligence a transaction, then we will provide all the details about it. We are currently not restricting ourselves to either the commercial stage or clinical stage. So this is open and under evaluation.

Okay. In terms of the comment about the product mix in the second half of the year, should we assume that that's due to lower sales of KEDRAB in the back half of the year?

I think in general, our sales should be primarily assessed on an annual basis. We have orders and forecast from Takeda for the AAT products, GLASSIA and for KEDRAB from Kedrion and the mix will kind of even out throughout the year. The first six months had a specific mix and over the course of the year, we expect to have higher AAT compared to KEDRAB which will lower a little bit our average gross profitability for the entire year. As we have announced in the past, KEDRAB is the product with highest gross profit with variance in specific quarter or specific six months, where we sell no KEDRAB to Kedrion then it increases our average GP for that quarter or two quarters. But then it will level down or level out throughout the rest of the year.

Okay. And then finally, with respect to Inhaled AAT, with respect to the Human Factor Study, do you anticipate that that will be relatively straightforward to complete that study? And when do you expect to submit the IND to the FDA?

Thank you. Yes. So HFS is progressing according to our plan, both in terms of the schedule as well as what we expect the results to be. We are planning to submit the IND over the next few weeks. So that's the aim. We are close to the conclusion and submission and then the FDA will have its review and hopefully, things will be approved and we can get started also with the U.S. site. As for the European site, we are moving forward. And as we mentioned, we expect to recruit the first patients definitely before the end of this year into the study.

Do you have a target number of sites in the U.S. that you are looking at?

So number of sites and the distribution of sites between the U.S. and Europe is still being determined by our team. We will open sites in both territories. The first few sites are already engaged. And we will conclude the decision in terms of how many sites and which sites from a list of potential sites over the next few months.

Okay. That's all I had. Thanks.

Ladies and gentlemen, we have reached the end of the question-and-answer session and I would like to turn the call back to Amir London for closing remarks.

Thank you. In summary, we continue to be pleased with how our business is performing across all facets through the first half of 2019. Our revenue growth remains strong. Our profitability metrics are improving. And we have a strong balance sheet. We are very excited about our advancing Inhaled AAT program, which has the potential to be an important source of value creation for our shareholders, along with other multiple significant pipeline of opportunities ahead of us. We remain highly confident in Kamada's long term prospects for success. Thank you for joining us on today's call. And we look forward to providing you with further updates on our progress in the second half of the year. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.