KORU Medical Systems, Inc.

Good day and welcome to the Coru Medical System's third quarter 2021 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Greg Hodacek, Managing Director. Please go ahead, sir.

Thank you, Chuck, and good afternoon, everyone. Earlier today, Kourou Medical Systems released financial results for the third quarter of 2021. A copy of the press release is available on the company's website. During this call, we will make certain forward-looking statements regarding our business plans and other matters. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially due to many risks and uncertainties, including those mentioned in the associated press release and our most recent filings with the SEC. We assume no obligation to update any forward-looking statements. I encourage listeners to have our press release in front of you, which includes our financial results as well as commentary on the quarter. During the call, management will discuss certain non-GAAP financial measures in our press release and our filings with the SEC, each of which are posted on our website. You will find additional disclosures regarding non-GAAP measures, including reconciliations of these measures with comparable GAAP measures in our press release and those filings. For the benefit of those listening to the replay, this call was held and recorded on Wednesday, November 10, 2021, at approximately 4.30 p.m. Eastern Time. Since then, the company may have made additional comments related to the topics discussed. And please reference the company's most recent press releases and filings with the SEC. Joining us on the call today is Linda Tharby, President and CEO of KORU Medical Systems, and Karen Fisher, KORU's Chief Financial Officer. Linda, please go ahead.

Thanks, Greg. Good afternoon, everyone, and thanks for joining us today. I want to kick off today's call by welcoming three new members of the Coral Medical Leadership Team. Chris Pasden, joining as a VP Quality and Regulatory, Rob Cannon as a VP of Sales, and Brian Herzog as VP of Biopharma Business Development. Chris has been on board for two months and has already begun to make a great contribution to building a world-class quality and regulatory function, including our recent 510K announcement today. Rob and Brian, who joined in October, each bring an impressive set of experiences. Rob brings deep expertise in specialty pharmacy, alternate site, and the plasma and biologics industry with over 30 years dealing with our customer base, and will be responsible for accelerating growth in our core domestic business. Brian brings over 15 years of relevant experience in drug delivery, and will be responsible for increasing the number of new biopharmaceutical drugs on the Freedom platform. Both will be integral to our growth strategy. Welcome to the team. During today's call, I will report on the highlights of our third quarter results and the continued progress on our near-term strategic objectives. Then I will turn the call over to Karen to discuss the quarterly financials in more depth before ending with a few closing remarks. After our prepared remarks, Karen and I will open the call up for Q&A. Now let's jump into our results and key highlights for Q3. Beginning with our results for the third quarter, we were very pleased with our revenues of $6 million. On a sequential basis, we grew by 9% over Q2 2021, marking our third consecutive quarter of positive sequential growth. Our adjusted quarterly year-over-year growth was also 9%. Our strong top line results reflect continued momentum in all areas of our business. Driven by our domestic core net sales with solid demand for our pumps, in addition, our early stage novel therapy revenues grew as we continued to progress our pipeline, and our international sales were up year over year. As reported, our gross margin was down compared to the third quarter of 2020. We have begun the transition of our production to a third-party manufacturing services company, and we have had delays in implementation, resulting in increased costs. We remain confident in our outsourced manufacturing strategy and anticipate improving our gross margin to the low 60% range in 2022. I now want to take some time to discuss the progress we have made in executing on our strategic objectives. As healthcare continues to transition to home settings, we believe Coru Medical can make a significant difference in enabling that transition, with our leadership position in large volume home infusion being extended to new drug therapies. We highlighted three key areas of focus and investment that we believe are essential in driving near and long-term impact and revenue growth during our previous call. As a reminder, the three areas of focus include increasing penetration and growth in our core sub-QIG therapy business via targeted plan to improve the caregiver and patient experiences at all stages of the therapy process. Second, extending our leadership position in sub-QIG into a targeted pipeline of new large volume drug candidates addressing a significant unmet need in this area. and investing in building our foundation to support our growing core and novel therapies business through increasing our capabilities in innovation and quality and regulatory expertise to support growth while executing on our operational excellence initiatives to generate a stronger gross margin profile. Regarding our first objective, our primary focus throughout the third quarter has been increasing our market penetration and share across the sub-Q IG at home infusion therapy market within our core business. The key area of focus in this area is improving the patient and caregiver initiation of therapy process, with a key driver being the movement to pre-filled syringes. As part of this strategy, we filed a 510 with the FDA to expand the label for the Freedom Edge pump to include CSL bearings Hyzentra 20ml pre-filled syringe. I'm excited to announce that received FDA clearance for this indication earlier this week. As a matter of fact, yesterday. And KORU is now the only product specifically 510K cleared for use with an SCIG pre-filled syringe. Pre-filled syringes simplify the infusion process by eliminating steps of the challenging drug transfer process and is the fastest growing segment in the IG therapy market. As the market continues to fluctuate, in part due to ways of the pandemic, we remain focused on executing strategies that will also increase the number of new patients on SCIG therapy. To increase the number of new patients on SCIG therapy, we have stepped up our progress in Q3 in several areas. First, we expanded our collaborations with our IG pharma partners who focus on the physician channel and the initial route of administration. Second, we held an advisory board with our specialty pharmacy channel partners. They do the initial transition to patient self-administration of IG, and this generated multiple opportunities. These leading pharmacies further confirm the opportunities to switch patients who have initiated therapy and are aligned that sub-Q therapy is under-penetrated and will continue to grow. And finally, we have started our initial pilots of value-added new patient start kits intended to educate users and make onboarding to the Freedom Infusion System easier. We have witnessed some early success and will broaden this offering. We also completed a market review by Specialty Pharmacy to define a targeted commercial plan to drive initial pump placements with the Coro Medical brand and to understand where to employ resources to increase SCIG penetration and market share. We've also targeted continued international expansion efforts, in general, supporting the planned geographic expansion of our pharmaceutical partners, and in Germany, where our efforts are progressing well. As a measure of success in our core SCRG business, a key performance indicator of new patient starts is new pump placements, where we experienced a double-digit increase in pump volumes outperforming the market. Our second near-term focus is our pipeline, which represents a total opportunity that we reported on our last call of approximately $1 billion. We have identified over 70 new large volume drug candidates above 10 milliliters, the space where Coro Medical is a domestic market leader. We are pleased with our progress in the quarter in securing new collaborations to build our funnel. We signed three new agreements during the quarter, and expanded our pipeline of opportunities by 50%, with the majority of these in new drug therapies. Biopharma has expressed strong interest in using our FDA and EU-cleared Freedom System to expand opportunities in our core SCIG market and for new drugs. Our funnel of core SCIG opportunities is primarily for Phase III trials, as our partners grow geographically, pursue new indications, and develop product enhancements. Our new drug opportunities span the entire development cycle, ranging from early feasibility work phase one, two, and three studies, including new to market drugs and IV to sub-Q reformulations. The third area of near-term focus is investing and building on the company's foundation to support our growth strategy. These initiatives include building our innovation capabilities to bring new products to market faster, building a world-class quality and regulatory system, and continuing the work we have started on operational excellence. We have made innovation a core near-term focus, and we are excited to have kicked off our collaboration with Valero as we look to continue evolving our at-home infusion products and portfolio. We are increasing our innovation efforts and Galera will be a valued partner in this process. Additionally, we began the next phase of our implementation with our outsourced manufacturing partner, Command. While we experienced some delay in the rollout of this next phase, we remain confident in the plan to increase our long-term gross margins. Both of these relationships will be a vital part of our foundation moving forward. We're excited about the progress we have made this quarter in all areas of our strategy, as we continue to build momentum. I will now turn the call over to Karen for a more detailed financial review.