"We're very pleased by the collaboration, and we think that this deal will be good for all the parties, most of all for the patients," Kamada Ltd. (TASE: KMDA) CEO David Tsur told "Globes", after signing a strategic agreement with Baxter International Inc. (NYSE: BAX).
The agreement is for collaboration in the production and marketing of Kamada's Glassia intravenous AAT (Alpha-1 Antitrypsin) drug for congenital emphysema caused by the lack of the AAT protein.
Kamada will receive up to $45 million in milestone payments, including $20 million up front. Baxter has also undertaken to buy a minimum of $60 million worth of Glassia, although Kamada expects much greater purchases. Baxter will pay Kamada at least $5 million a year in royalties. Baxter will have exclusive commercial rights to Glassia in the US, Australia, New Zealand and Canada.
"This agreement could generate for us hundreds of millions of dollars in revenue. The agreement will also help the company become profitable, although I don’t want to say at what hour on what day that will happen," Tsur told "Globes".
In July, the US Food and Drug Administration (FDA) approved Glassia for marketing, and Kamada was due to begin distribution through AmerisourceBergen Corporation (NYSE: ABC). The agreement with Baxter will supersede that agreement.
"The agreement with Baxter is greater and more strategic," said Tsur. "AmerisourceBergen agreed to forego distribution rights without compensation, and it will be included in part of Baxter's distribution network for the drug. The agreement with Baxter includes rights to use know-how, establishment of a Baxter plant, and use of our technology, to switch all patients to our treatment."
Baxter currently offers Aralast as a treatment for AAT-1 deficiency. The company has a market cap of $26.2 billion. Tsur said, "It has a network for finding patients, marketing, and supporting the product, and through it we can reach a much larger number of patients in a shorter time."
Kamada is due to begin shipments of Glassia in September.
Tsur added, "The agreement validates Kamada's technology. We're not the only ones saying that it's the best; the world's leading plasma protein player says it. The agreement also validates that there's a market, in contrast to that idiotic article that I prefer not to honor with comments."
Tsur was referring to a paper by a Danish researcher, who claims that AAT-1 deficiency treatments are useless.
Under the agreement with Kamada, Baxter will build a plant to expand production. Tsur stresses that this facility will not come at the expense of Kamada's facility in Israel. "The product's potential is much greater than our production capacity," he said, adding that Kamada will also expand its Israeli production capacity. "We're going to hire scores more people, and set up a large logistics center."
As well as the intravenous product, Kamada is developing an inhalable version of Glassia. The inhalable version is undergoing clinical trials.
Former Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) chairman Eli Hurvitz believes in Kamada. Sources inform ''Globes'' that he has invested in the company on a scale that does not mandate a filing. He made the investment personally, not through the Pontifax Fund, which he founded.
Kamada's share price fell 2.6% today to NIS 21.81, giving a market cap of NIS 611 million, after soaring 16.2% yesterday.
Published by Globes [online], Israel business news - www.globes-online.com - on August 25, 2010
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