KORU Medical Systems, Inc.

Greetings and welcome to Coru Medical System's first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Greg Horacek, Managing Director. Please go ahead, sir.

Thank you, Peter, and good afternoon, everyone. Earlier today, KORU Medical Systems released financial results for the first quarter ended March 31st, 2022. 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 our commentary on the quarter. During the call, management will discuss certain non-GAAP financial measures in our press release and accompanying investor presentation, and our filings with the SEC, each of which are posted on the website. You will find additional disclosure regarding these non-GAAP measures, including reconciliation of these measures with comparable GAAP measures in our press release and accompanying investor presentation and those filings. For the benefit of those listening to the replay, this call was held and recorded on Wednesday, May 4th, 2022 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 Chief Executive Officer of Kover Medical Systems, and Karen Fisher, Kover Medical's Chief Financial Officer. Linda, please go ahead.

Thank you, Greg. Good afternoon, everyone, and thank you for joining us today. Before we begin, I want to express a heartfelt thank you to the CORO team for their dedication and passion in delivering another strong quarter in our mission to improve the quality of life for patients self-administering infusion therapy in the home. During today's call, we will use slides to support our commentary. I will begin with a brief overview of financial results before turning to a business update. I will then turn the call over to Karen to discuss the quarterly financials before ending with updates to our 2022 guidance. Karen and I will then be happy to open the call up for Q&A. Before jumping into Q1 highlights, a few comments on our progress and vision as a leading drug delivery provider. Our Freedom Infusion System is being used today by over 25,000 patients to subcutaneously infuse large volume drugs in a home setting, supporting a growing trend to healthcare delivery in the home. With our label expansions, we continue to increase our penetration into the sub-QIG total addressable market population of over 300 million. We continue to expand our pharmaceutical partnerships with our on-label indications now totaling 12, with our announcement of another new label addition this week. As a market leader and provider, we deliver our pumps and disposables into the home through our specialty pharmacy partners as we continue to strengthen our relationships with them. And as the overall market for sub-Q development continues to expand, we are extending our leadership position into new drug categories. With further agreements and pipeline expansion that I will discuss today, we are driving closer to the $1.3 billion total addressable market. Turning to our first quarter results, we reported net revenues of $6.2 million for the first quarter of 2022. This represents a 15% increase year over year and marks the company's second consecutive quarter of double-digit growth. Our domestic core business led our growth with a 13.2% increase. The strong quarter in our U.S. business is indicative of our continued implementation of our strategic plan to outpace the underlying market growth. The overall SCIG drug market also saw an uptick in growth from 1% in Q4 to 7% in Q1. We believe these trends signal market recovery as patients return to their regular cadence of therapy, and we see increases in patient diagnosis as concerns over the pandemic subside. Net revenues were down 8.6% year-over-year for International Core due to ordering patterns at a few of our smaller distributors. Novel therapies revenues increased to over $350,000 for the first quarter as we began to recognize pre-commercialization revenues from our pharmaceutical pipeline deal expansion. We are very pleased with our solid start to the year. In December of 21, we rolled out a strategic plan, and I will now turn our focus to providing a Q1 update. The five-year plan strategic initiatives include increasing core SCIG penetration, extending to novel therapies, and continuing to build our foundation to support growth. In our efforts to increase penetration in our core business, the U.S. business nearly doubled the pace of the overall SCIG drug market growth, driven by a 40% increase in our pumps as an indicator of new patient starts. One of the biggest areas of progress has been the expansion of our label with four new drug device additions over the last five months, and in particular, the pre-fill syringe clearance in November. This has assisted an expansion of pre-fills in the market in Q4 of 3.4% to 5% penetration in Q1. In support of expansion in our international business, we are also pleased to announce the signing of a distributor agreement with DIA Expert, a leading provider in the German market of products and services for patients administering therapy in the home. In our novel therapies business, we continue to see an uptick in our pipeline with one new non-IG deal signed this quarter and five total deals in the last two quarters. We are also pleased to announce a scope expansion of an innovation development agreement signed last quarter and for which we have begun to recognize revenues for milestone completion this quarter. In support of all of these initiatives, we continue to build a stronger foundation for growth at CORU. We are on track to move our new building location to Marlowe, New Jersey on June the 1st. We have built out our executive team with the hiring of a new Chief Technology Officer Brian Case, who brings us 20-plus years of experience in technology and product development. And finally, the final phase of our outsourced manufacturing is on track for Q3 implementation in support of expanding our core business margin to the 60% plus range. I'm now going to dive a little deeper into our expanded label indications. Our label expansion is critical as it does two things. First, it enables us to work pre-launch with our pharmaceutical partners in ensuring a safe and effective drug delivery device experience for patients. Second, with a broad label, we make it easier for our specialty pharmacy accounts to service patients with an FDA-cleared platform. So two key highlights on this slide. First is the pace of label expansion. We have seen four new indications in the past five months indicating an uptick in both new drugs and sub-Q delivery and our efforts. Second, the two new clearances we announced this week expand our use of the KORU Freedom Edge infusion system outside of IG. The pump is now clear to deliver Empaveli, marketed by Apellis in the United States, and branded as Aspaveli and marketed by Sobe outside the United States. Mpavelli and Aspavelli are prescription drugs used to treat PNH, a rare blood disease. The total U.S. addressable market population is approximately 1,500 patients with about 150 new diagnoses each year. With their treatment occurring twice per week, this could expand Quora's total addressable market by approximately 2 to 3 million. The most critical part of this new indication is that we establish our platform outside of IG as a proof point as we look toward the future and further solidifying Koro Medical as a leader in high volume subcutaneous drug delivery. Turning towards a pre-filled syringe market, this represents a significant opportunity in an early stage fast growing market. Pre-filled syringes are rapidly capturing market share and represent 5% of the total FCIG grams infused today, up from 3.4% in the prior quarter, and driven by expanded efforts from our label expansion for pre-filled syringes in November. Pre-filled syringes offer a distinct advantage to patients by removing five steps from the infusion process. 20 ml format, this provides us an excellent opportunity to capitalize on this growth. We have focused on commercialization with a specific effort on new patient adoption and conversion. We also have coordinated efforts with our partners as they roll out their marketing strategies. We look forward to continued work with our pharmaceutical and specialty pharmacy partners to increase pre-filled penetration and simplify the lives of our patients. To date, we have focused our strategic efforts on our U.S. core and novel therapies businesses. However, having just returned from a multi-country European tour, I'm excited to announce progress on our strategy to expand geographically in our international business. Germany is one of the largest SCIG markets where we did not participate. It has a large population, high utilization of SCIG, and double-digit growth. After a thorough search, we have signed an exclusive distribution agreement with DIAXPERT. We chose DIAXPERT based on several key capabilities. First is the scale to serve the German market. Second is their track record of success. And third is a best-in-class capability to deliver clinical training and patient care owned over many years serving diabetes patients in the home. We expect commercial activities to begin in Q2. This geographic expansion is also relevant to our novel therapies business as CORU's broad regulatory approval and distribution is a differentiated offering to pharmaceutical companies. Moving to our novel therapies business, during the first quarter, novel therapies was driven by revenue associated with the support of feasibility work for the aforementioned innovation agreement. We encouraged that novel therapies continues to play a more prominent role in our strategy and believe there is room for broad application beyond immunology as evidenced by our recent successes. We continue to expand our pipeline and we are currently pursuing over 18 opportunities for new drug candidates for our pump. This quarter we are pleased to announce that we have signed one additional deal outside of IG in the hematology area and have expanded the scope of a prior signed innovation deal with an IG manufacturer. We have dedicated significant time to expand our engagement regarding novel therapies pipeline, and we are beginning to see the results, both in signed deals and pre-commercialization revenues. In conjunction with the progress on the initiatives discussed above, we are continually building out our team, including a strengthened executive team. I'm pleased to highlight another addition. In late April, we announced that we hired Brian Case, an R&D veteran with over 20 years of experience as Coru Medical's new Chief Technology Officer. As previously discussed, investing in innovation is a significant strategic growth area for Coru as we build out our novel therapies pipeline. Brian will lead technology and product development and innovation as the company defines and executes its innovation strategy. Near-term innovation goals include line extensions, new product introductions, and a next-generation system. And Brian will be instrumental to our long-term business success. I will now turn the call over to Karen for a discussion of our Q1 financials.