Greetings. And welcome to the Kamada Ltd. Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Further instructions will be given at that time. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to your host, Bob Yedid of LifeSci Advisors. You may begin.

Thank you. And thank you very much for joining us today. 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 third quarter ended September 30th, 2019. If you have not received this news release or if you'd like to be added to the company's distribution list, please email me at LifeSci at bob@lifesciadvisors.com. Before we begin, I'd 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, November 13, 2019. Kamada undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. With that said, I would like now turn the call over to Amir London, Chief Executive Officer. Amir? Thank you, Bob. And thanks also to all investors and analysts for your interest in Kamada and for participating in today's call. Let me begin by stating that we continue to be pleased with our strong performance in 2019. We are excited about the positive financial and operational metrics generated throughout our business during the first nine months of the year. Of course, in reviewing third quarter, year-over-year comparisons specifically, it's important to remember that our third quarter 2018 financial results were significantly impacted by the then labor strike…

Thank you, Amir. And good day, everyone. We were very pleased with our strong financial performance across the first nine months of 2019. Our profitability metrics, including adjusted EBITDA, operating income and net income each increased significantly. With that, let me discuss our specific financial results. I will begin with the three months ended September 30th, 2019. Total revenue was $33.1 million in the third quarter of 2019, an increase from the $15 million recorded in third quarter of 2018. As Amir indicated, when comparing our third quarter financial results with the prior-year period, it is important to consider the significant impact the labor strike at our manufacturing facility in Israel had on our financial results in the third quarter of 2018. Moving on, revenues from the Proprietary Products segment in the third quarter of 2019 were $24.9 million, an increase from the $9.5 million reported in the third quarter of 2018, primarily driven by increased sales of both our core products GLASSIA and KEDRAB. Revenues from the Distribution segment were $8.2 million in the third quarter of 2019, a 49% increase compared to the third quarter of 2018. Gross profit was $12.9 million in the third quarter of 2019, significantly greater than the $2.5 million reported in the third quarter of 2018. Gross margin increased to 39% from 17% in the third quarter of 2018. Again, you should consider the effects of the Q3 2018 labor strike on our results of the prior-year quarter. Net income was $5.8 million or a profit of $0.14 per diluted share in the third quarter of 2019 compared to a net loss of $2.4 million or a loss of $0.06 per diluted share in the third quarter of 2018. During the third quarter of 2019, we generated positive cash from operations of $6.1…

[Operator Instructions]. Our first question comes from the line of Raj Denhoy of Jefferies. Please proceed with your question.

Hi, guys. This is Briana on for Raj. I have a few questions. So, I'll just start with your strong Proprietary Products segment. You guys did about $25 million this quarter. I was just wondering how much was attributed to GLASSIA and how much was attributed to rabies.

We do not provide that detailed information on a quarterly basis. We do that on an annual basis when we file our annual results.

Okay. And then, was there any pull forward or stocking in the Q from Takeda?

Excuse me. Can you repeat that?

Sure. Was there any pull forward or stocking in the quarter from Takeda?

As we announced in September, our agreement with Takeda has been extended to include also 2021 and we gave a pretty precise forecast of our revenues for 2019-2020 and 2021, $65 million of revenues to Kamada in both years, 2019 and 2020, and between $25 to $50 million in 2021. In general, we should assess Kamada on an annual basis and less on a quarterly basis because our orders and demand and agreements are done on an annual basis. Talking like every year that Takeda is holding inventory, but nothing unusual or nothing different this year than in previous years.

Okay. Thank you. And then, has Takeda started to prepare for the transition and is there any chance that this gets extended again?

Takeda has been working on the plants, we believe, for quite some time. They're planning to complete the plants and have it FDA approved during 2021. Exact timing, I assume based on their progress and the FDA approval. I think that one need to assume that this will happen and that, and I just mentioned, in the previous question regarding timing and revenues to Kamada are the focus. If there any delays or change in plans, we will, of course, update the market.

Okay, thank you. And then, since the agreement has been revised, was there a change at all in the transfer pricing or contribution margin on GLASSIA sales to Takeda now that it's been revised

No. These financial terms there were not renegotiated.

Okay, thank you. And then, I have one last question. Can you provide an update on plans for business development heading into the Takeda agreement transitioning from sales to the royalty structure come 2021?

Can you repeat the question? I'm not sure I heard you. Did you ask about business development aspects of Takeda's transition?

Yeah. That's exactly what I asked.

Okay. So, yes, we are proactively working on different initiatives. And in regard specifically to the post GLASSIA transition to Takeda, we do have strong confidence in our ability both from business development as well as from manufacturing and technical aspect to be able to add new products and increase our plant utilization post GLASSIA transition to Takeda.

Okay, great. Thank you.

Our next question comes from the line of Keay Nakae of Chardan Capital Markets. Please proceed with your question.

Yes, thanks. A couple of questions. So, post the transfer of manufacturing, give us a sense of how easy or difficult it would be to have you guys make other plasma-based products at that facility?

So, we are growing our existing products [indiscernible] in other countries. We are growing KEDRAB sales in the US. Both activities and both initiatives are yielding excellent fruits, and we do see it growing. And in addition, like I just answered in the previous question, we do have strong confidence in the ability to bring in additional products. We are proactively working in the direction and we strongly believe – very strongly believe that we can increase our plant utilization post GLASSIA transition to Takeda. Once we have [indiscernible], we will, of course, update the market.

And outside the US, what do you think the growth prospects are for GLASSIA if you were to make the product at your facility and sell increasing amounts to other O-US markets?

So, traditionally, our gross profit for GLASSIA ex-US has been similar to our gross profit in the US, selling through our partner that is selling in the US. So, we have a network of distributors ex-US. As you know, we're currently not in Europe yet. So, we sell ex-US to Asia, Latin America, Russia. And the gross profit is similar to what we have been reporting in the US market.

But if you had additional product capability at your facility to fill in O-US markets, what do you think your ability to do so would be?

Considering the gap of the utilization is a combination of GLASSIA ex-US, KEDRAB in the US, our other IgGs including KamRAB, the anti-rabies IgG in international markets, and bringing in additional products to be manufactured by Kamada.

Okay. Maybe switch to the inhaled study, can you give us your latest estimate of the total cost of the study, the Phase III?

Yes. We believe that the study total cost will be between $30 million to $35 million throughout the entire duration of the study.

Okay. That's all I have. Thanks.

You're welcome.

We have reached the end of the question-and-answer session. I will now turn the call back over to Amir London for any closing remarks.

Thank you. In summary, we continue to be pleased with how all parts of our business are performing through the first nine months of 2019. We are very excited about advancing our unique Inhaled AAT program, which has a potential to be important source of value creation for our shareholders, along with the other multiple significant pipeline and business opportunities ahead of us. Our top line growth remains strong. Our profitability metrics are solid and we have a robust balance sheet. We remain highly confident in Kamada's long-term prospects of 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 coming months. Thank you very much.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.