KORU Medical Systems, Inc.

Greetings and welcome to CORU Medical Systems third 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, Hannah Jeffrey from Gilmartin Group. Thank you, and over to you.

Thank you, Ezekiel, and good afternoon, everyone. Earlier today, COVID Medical Systems released financial results for the third quarter ended September 30th, 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 the 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 accompanying investor presentation and our filings with the SEC, each of which are posted on our website. You will find additional disclosure regarding those non-GAAP measures including reconciliations of these measures with comparable gap 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, November 9, 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 release and filings with the SEC. Joining us on today's call is Linda Tharby, President and CEO of Cobra Medical Systems, Tom Adams, Cobra Medical's Interim Chief Financial Officer, and Josh Bennett, VP of Strategy and Business Development. Linda, please go ahead.

Thank you, Hannah. Good afternoon, everyone, and thank you for joining us today. We are very pleased with our results this quarter as we continue to make progress against our strategic objectives across all three of our businesses. We are making impactful strides as a leader in large-volume subcutaneous drug delivery, and we are very excited by our advancements to enhance the quality of life for our patients while improving therapeutic benefits and overall health care system costs. All of this is not possible without the efforts of our Coro Medical Systems team. I want to begin by thanking them and our shareholders for their continued support. During today's call, we will use slides to support our commentary. I will begin with the business update of the third quarter. I will then turn the call over to Tom to discuss the quarterly financials before ending with updates to our 2022 guidance. After concluding our prepared remarks, Tom, Josh, and I will then be happy to open the call up for Q&A. The third quarter marked another period of growth for the company. with strong performance across several key milestones. Q3 22 revenues of 7.8 million and 28.5% growth marked our fourth consecutive double-digit growth quarter, and we saw strength across all of our businesses. We continued to see great progress and momentum in our novel therapies business. During the quarter, we entered four new clinical drug collaborations in phase two. including two announced yesterday with Kira Pharmaceuticals. And we had one of our drugs progress to phase three. We now have 23 total commercialized and collaboration deals. This includes 14 novel therapy collaborations and nine on-label drug indications. In our U.S. core business, our growth of 16% outpaced the underlying subcutaneous immunoglobulin, or SCIG market, as we executed on strong sales and marketing programs and were also aided by the backorder clearance. Our international business saw 46.8% growth off a relatively small base with growth in several countries. On gross margin, we ended the quarter at 55.7%, up from 51.1% in quarter two, driven by great efforts from our operations team and improving supply chain, and improvements in manufacturing efficiency. We also continue to build our executive team, hiring a new Vice President of Medical Affairs, Brent Rutland. Brent's experience base is well aligned with our strategy, and his expertise will advance clinical evidence generation in support of our product pipeline, provide valuable insight to our drug therapy candidates, and help develop important key opinion leader relationships. And finally, Driven by the confidence of our novel therapies business and a growing core business, we are raising our guidance range to 27.5 to 28 million. Before providing more detail on the quarter, I want to spend a few moments on our strategy and capability to enable the growing shift from the hospital to the home. Our freedom system is the market leader in large volume subcutaneous or sub-Q drug delivery. which we classify as above 10 ml. With the use of our system and our value-added services, we empower patients to manage their weekly, biweekly, or monthly therapies independently from their homes versus a nurse-assisted visit to a hospital or infusion center. The Freedom system is attractive to pharmaceutical companies as it is a market-proven system that offers them a clear pathway to the clinic and commercialization. We have FDA clearance and regulatory approval in over 25 countries, commercial readiness with nine on-label SC drug indications, and a simple, fully mechanical system that can be customized for rapid deployment. Our core SC business comes from our FDA cleared drug therapies for use with our pump. The majority of this business comes from the growing SCIG market where patients receive our reusable pump at the start of their therapy, and the disposable consumables are delivered to their home once per month, generating approximately $750 per year in recurring revenue per patient. As a market leader, we support over 30,000 patients globally who require SC therapy infusions at least once per week. This segment is currently the largest part of our revenue, and represents a $480 million global opportunity with over 600,000 patients with PIDD, CIDP, or PNH, the majority of which are on IV therapy. The secondary of our business is our novel therapies business where we work with pharmaceutical companies to provide services, innovation, and product for their clinical trial process as they are moving their IV drugs to a sub-Q formulation or are working to introduce new SC drugs to the market. We have identified a significant pipeline of opportunities within novel therapies across multiple drug classes and phases, currently estimated at over a $2 billion total addressable market or TAM. The company has closed 14 pharmaceutical collaborations, including an FDA approval for one new novel therapy drug, and has six new drug therapy areas represented in our pipeline. This progress diversifies our portfolio and demonstrates the viability of large volume drug delivery in the home across multiple therapies. We are excited by the growth and momentum in both our core SEIG business and by our novel therapies pipeline, and by the opportunity it presents, a $2.5 billion TAM, as the market for at-home sub-Q delivery continues to expand. We see the market for sub-Q delivery continue to grow for a number of reasons that are supported with an increasing number of studies. First is the therapeutic benefit of sub-Q versus IV therapy, which has been well studied in the IG space, and we are seeing further studies of this in other drug classes. The proven therapeutic benefits include the delivery of a consistent IG levels over time, leading to fewer adverse reactions and infections. The second is a preference for SC over IV therapy. This one from a recent oncology study showing 85% patient preference. And finally are the cost savings of 33 to 52% associated with multiple drug therapies being administered outside of the hospital, supported by a United Health Group study. We believe that the therapeutic benefits combined with patient preference and associated cost savings will continue to drive increasing numbers of pharmaceutical companies and patients towards SC therapy. Turning back to our third quarter, we saw significant progress in execution of our strategic initiatives. Within our commercial SCIG market, we are working to ensure we win new patient starts, win pre-filled syringes, and expand geographically. For new patient starts, we continue to see the company's growth outpacing the growth of the underlying U.S. SCIG market. Our domestic core growth for the third quarter was 16.2% and 12.8% year-to-date, outpacing an SCIG market that is growing just over 6% year-to-date. This growth is driven by execution on our sales and marketing programs, including value-added services and label expansions. Second, the prefilled market remains the fastest-growing part of the SEIG market, and courtroom remains uniquely qualified to capitalize on this growing market, with our Freedom Infusion System the only pump with FDA 510 clearance for a prefilled syringe indication. For the third quarter of 2022, the prefilled market has grown 244% year-over-year, and now accounts for 11.5% of the overall SEIG market. Lastly, our ex-US business grew 46.8% this quarter as we saw growth across several European markets in both our pumps and consumables as we continue to increase our focus in this area. Given the growth being driven by prefilled syringes, or PFS, I want to dive deeper into the progress made during the quarter. As I mentioned above, the pre-filled syringe market is currently the fastest growing segment within the FCIG market. While still considered early stage, we believe pre-filled syringes offer significant opportunity. Since receiving the only FDA clearance with a pump specifically for pre-filled syringe indication in Q4 2021, the market penetration has nearly tripled. Ending the third quarter of 2022, with an 11.5% pre-filled syringe penetration. We believe PFS will continue to be the preferred format over vial administration as from the patient's perspective, a pre-filled syringe eliminates approximately 25% of the steps from the process. In a recent study, 97% of patients reported satisfaction with pre-fills for their convenience and ease of administration. While offering significant patient value due to the elimination of the vial transfer step, pre-filled syringes today satisfy only about one-third of the total market opportunity according to patient dosing requirements. Pre-filled syringes today are offered in a 5, 10, and 20 ml format. Thus, we continue to work with our pharma partners to pursue additional indications and innovation opportunities related to pre-fills to serve a greater part of the Moving to our novel therapies business, we have made strong progress executing our strategy to extend our leadership position in SCIG to broader novel therapy drugs. This business works with pharmaceutical companies to use our freedom system in clinical trials required for drug approval and launch. And the system is often customized to the requirements of each drug. Revenue in this business includes devices sold for use in trials and non-recurring engineering and technical services to customize and validate our platform for use with each drug. We expanded our collaborations in the quarter, winning four new indications in neurology, nephrology, hematology, and respiratory, all in phase two. This includes the two agreements with Kira Pharmaceuticals we announced yesterday. Additionally, a previous program advanced from phase two to phase three. This brings our total collaborations to 14, including one novel therapy drug, which was approved in the first quarter of this year, Apellis' Ampavelli. We have expanded our total portfolio to seven drug classes. We also have 10 to 15 additional opportunities we are pursuing in our pipeline that span from phase two to phase three, and are both reformulations and new indications and new molecules. Each of these collaborations represents a drug for a specific indication banning IG and non-IG drugs. We're making progress because of the value we provide to pharmaceutical companies. Drug companies want a device that has an approved regulatory pathway, is patient friendly with consistent training support, able to be marketed globally, and can get them into the clinic quickly. Our ability to meet these needs, as evidenced by the 30,000 plus global patients using the Freedom System, successfully creates confidence that KORU can deliver. And the flexible design of our system, adaptable to volume and needs of each medication, allows us to enter the clinic quickly, a key priority in the drug development process. Now I would like to take a closer look at those close collaborations and lay out additional details about their potential. Before turning to the specific metrics, I want to remind everyone that these drugs are either in development or seeking new indications, and each indication will have an individualized path through the clinic, regulatory, and commercialization processes. In total, our nine on-label SC indications and 14 active collaborations include over 2.8 million potential patients and a TAM of roughly 2.5 billion. The total addressable market of each collaboration is based on many factors. The one we consider in our TAM model include each drug's potential patient population, expected treatment frequency or how often they dose, and an average shelling price of our Freedom Pump and consumables. As an example, the oncology drug in phase two has a patient population of 800,000, but a less frequent dosing expectancy and a higher ASP. We have not discounted our TAM for clinical risk, but have provided the phase of each of our drug collaborations. Our strategic plan does not rely on every collaboration to make it through to commercialization. However, each indication represents an additional patient opportunity for the company. We remain confident that novel therapies will accelerate our growth and will continue to expand. We plan to update this pipeline quarterly to show the novel therapies progression and are extremely excited about the potential. We remain on track to achieve our strategic goals based on continued positive engagement by pharma and ongoing collaborations in our pipeline. I will now turn the call over to Tom for a discussion of our Q3 financials.