Kamada Stock Plunges 34% on Drug Setback

Firm developing drug to treat an inherited condition that raises the risk of lung and liver disease, but 50-week trial failed to produce positive results.

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The headquarters of Baxter International in Toronto, Canada.
The headquarters of Baxter International in Toronto, Canada.Credit: Bloomberg

Nes Tziona-based drugmaker Kamada announced Friday that a lead experimental drug it is developing failed in a key trial. In response, the company’s stock plunged more than 34% on the Nasdaq exchange in heavy trading.

Kamada has been developing the drug to treat an inherited condition that raises the risk of lung and liver disease. The biotechnology company said on Friday that it planned to release detailed results of the study in the third quarter.

“I think it’s clear to say they won’t be able to file [for U.S. approval] off of these results, unless there’s something magical they’re planning to release in the third quarter,” H.C. Wainwright & Co analyst Andrew Fein said. Fein added that he would keep expectations “modest” on the possibility of European approval, saying the company needed to conduct another study with a different trial design.

The 50-week trial was testing an inhaled drug, AAT, against a placebo in 168 patients with a type of protein deficiency. Early data showed that the treatment was not more effective than the placebo.

While Kamada’s intravenous version of the drug, Glassia, is being sold by Baxter in the United States, the inhalable version could offer a more targeted form of therapy, delivering the drug directly to the lungs. Glassia, Kamada’s sole product on the market, is also in use in Israel, Brazil and Russia.

The common hereditary disorder, called Alpha-1 Antitrypsin deficiency, is characterized by low levels of alpha-1 antitrypsin – a protein released by white blood cells that digests bacteria and other foreign objects, primarily in the lungs.

Fein estimated that the European market for treatment of the condition could be worth $100 million, and at least three times as much in the United States. The disease affects 1 in 2,500 people in the United States, according to the Alpha-1 Association. The company is also evaluating the treatment for use in cystic fibrosis, bronchiectasis and diabetes.

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