KORU Medical Systems, Inc.

Greetings and welcome to Coru Medical System's fourth quarter and full year 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. It is now my pleasure to introduce your host, Hannah Jeffrey of the Gilmartin Group. Thank you. You may begin.

Thank you, Doug, and good afternoon, everyone. Earlier today, Cobra Medical Systems released financial results for the fourth quarter and full year ended December 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, financial guidance, 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 and year and financial guidance for 2023. 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 the 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, March 8, 2023, at approximately 4.30 p.m. Eastern Time. Since then, the company may have made additional comments related to 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, and Tom Adams, Cobra Medical's Interim Chief Financial Officer.

Linda, please go ahead. Thank you, Hannah. Good afternoon, everyone, and thank you for joining us today. During today's call, we will use slides to support our commentary. I will begin with a business update of the fourth quarter and full year 22, focusing on the company's progress towards our Vision 26 business strategy. I will then turn the call over to Tom to discuss the quarterly financials before ending with our 23 guidance. After concluding our prepared remarks, Tom and I will then be happy to open the call up for Q&A. In December of 21, we communicated a five-year strategy that we called Vision 26. This vision, which we've made significant progress on in 22, is driven by a three-pillar growth strategy that will remain our focus in 2023. The first pillar is increasing our leadership position in a growing subcutaneous immunoglobulin, or SCIG, market. through a focus on expanding our label indications, new patient starts, and driving pre-fill adoption. Second is expanding our current leadership position in large volume drug delivery in the home to new drugs, the business we call novel therapies. Finally, expanding both of these businesses into international markets. Supporting our three growth pillars is a foundation rooted in innovation, quality and regulatory expertise, and operational excellence. 2022 has been a tremendous year as we advance several key milestones in our vision 26 strategy and strengthen our position as a leader in drug delivery solutions in the home. Vision 26 focuses on growth and TAM expansion with specific commitments to accelerate revenues to a 20% revenue cragar reaching approximately 60 million by 26. This will be accomplished through a strategy to grow our core business revenue by double digits and through transforming the business from an IG player to a broad drug delivery partner with an investment in our novel therapies business. Within this novel therapies business, we committed to signing multiple new drug delivery collaborations that would lead to five phase three trials and one commercialized new drug indication. In addition, we committed to eight new 510K products and or indications and a $1.3 billion TAM. Lastly, we committed to doing this with a disciplined investment strategy aimed at innovation, commercial investments, and strengthening our foundation. I am very proud of our progress in 2022, our first year against these key milestones. We posted year-over-year revenue growth of 19%, marking our fifth consecutive quarter of double-digit growth, We saw strength across the portfolio, including double-digit growth in our U.S. core, outperforming the market, and our international core business. We saw double-digit growth in the back half as we increased our focus there. The more transformational part of our growth has been the increase in our novel therapies pipeline and associated total addressable market. Novel therapies was a key driver of our year-over-year revenues. We ended 22 with 14 total collaborations across seven drug categories, supporting a broader movement to sub-Q drug delivery in the home. This included one collaboration that progressed through the pipeline to a commercial launch, Apellis' Mpavelli or Aspavelli outside the U.S. Most importantly, these 14 total collaborations give us confidence in our target of five phase three trials by 26 and in exceeding our target of one new commercial drug indication. The total of our collaborations to date has doubled the potential of our total addressable market to $2.5 billion, well in excess of the $1.3 billion target. We also committed to doing this with a disciplined investment strategy. This year, we focused the majority of our investments in three areas, expanding our innovation capabilities, increasing our business development and commercialization efforts, and building a stronger foundation with the move to new facilities. We did all of this while keeping an eye on cash and ending the year with $17.4 million, an increase from the third quarter and ahead of our guidance of $16 million. We executed with diligent cash management while investing where needed to support growth. We have made significant strides towards Vision 26, overperforming in the first year of our plan with clear progress towards our 26 milestones. In our U.S. business, we focused on growing our leadership position in the SCIG drug market. We outperformed the underlying market growth, growing 11% despite a supply interruption in the second and third quarters. We have used the underlying drug market growth as a marker of our success and a target for which we strive to outperform. For the full year 22, the SCI drug market grew 8% up from 2% growth in 21. We are excited by the positive momentum in the overall market to end the year. including fourth quarter reported script growth of 17% and SCIG drug market growth of roughly 12%. As we have communicated, we generally see a one-quarter lag from the script timing to our revenues, accounting for the timing it takes to get the patient operational with the quarter of freedom system in the home. We are excited by the fourth quarter drug and script market growth, and we anticipate a strong start to 23. At the end of 22, 16% of total patients are now on sub-Q drug therapy in the home, representing a growing trend as SCIG therapy is outpacing IVIG therapy. New patients continue to be a primary focus for the company, and we remain uniquely positioned to capitalize on new patient starts with the broadest on-label indications in the market. To date, Cora Medical has nine on-label indications with five different partners. In the past 18 months, we have added four new labels, two with OctoPharma and Gryffles for IG, one for pre-filled syringes with CSL, and one for a non-IG label this year, Apellasis and Paveli. Increasing our on-label indications and new patient starts will remain a core part of our strategy. And finally, since receiving our FDA clearance of our FreedomEdge system for use with pre-filled syringes in November of 21, we have seen the pre-fill market grow from approximately 3% penetration to 10% of the total market in 22, ending the fourth quarter with roughly 12% penetration. We also tracked this growth with doubling of our freedom edge pumps. Although still in its early stages and with current pre-filled syringe sizes supporting about a third of the market, we continue to see an opportunity to grow our share and drive increased conversion to sub-Q therapy through ease of use and patient preference for pre-built syringes. We anticipate additional PFS indications to come to the market in the near future, and we remain well positioned to capitalize on this growth. In our geographic expansion efforts, we have seen positive momentum with 8% year-over-year growth in our international core business, driven by an impressive second-half growth of 15%. as we accelerated and focused our efforts internationally. We currently have distribution in over 25 countries, providing immediate leverage as our pharma partners expand their XUS indications. As plasma shortages alleviate in 22, we also see a growing IG drug supply, XUS, in 23. New patient starts is an essential driver of both our core and international business. We continue to increase efforts to deepen relationships with our global pharma partners and to work together to capture the various opportunities across countries. Notably, in 22, we saw one new drug launch, Aspavelli, in multiple international markets, and we anticipate further geographic launches in 23. Our second focus area is to strengthen our distribution partnerships. We have identified several key markets representing meaningful growth opportunities Our initial efforts have seen our EU pump sales double year over year, indicating growth in new patient capture. We also see an additional opportunity to penetrate the existing base of electronic pumps and are in the process of building new clinical evidence for the benefits of the freedom system, including patient comfort, device reliability, and economic advantages. Moving to our novel therapies business, 2022 has marked a year of exciting progress. We've created a solid pipeline that has significantly contributed to company growth in the short term. Most importantly, it creates the opportunity for future drug indications that when commercialized will grow our business substantially. Our NT business consists of revenues generated in non-recurring engineering revenues and products and services in support of clinical trials prior to a drug's commercial launch. When the drug launches, this revenue becomes part of our core business revenues. Over the past few quarters, we have shared our pipeline and provided a more detailed view of this opportunity, including this quarter providing more transparency on projected launch dates. In total, we now have 14 collaborations, which include over 2.8 million potential patients and a TAM of roughly 2.5 billion, roughly two times our original aspirations. The new collaborations we established in 22 created the majority of this new market opportunity, including in our core immunology business and across multiple new drug therapy areas. We are pleased with the execution on our collaborations and the increased engagement from the biopharma companies that have trusted us to help deliver their drugs. Our novel therapies team is increasing NRE revenues as they execute on innovation milestones in our agreements and increasing clinical product sales for feasibility and trials for phase two and three research. We look forward to continuing to build our momentum in 23. Based upon the company's capabilities, we have become a clear leader for consideration in every large volume opportunity. Due to the nature of novel therapies, drug opportunities may be canceled, the drugs may fail, and timelines will shift. However, we believe our pace of new deals will remain relatively stable And we anticipate ending the year with an additional six collaborations, bringing our total number of collaborations to approximately 20. This pipeline, along with multiple new opportunities we're working on, includes multiple candidates in phase three and a clear line of sight to our 26 commercialization goals. We have a strong start to 23 with another pre-filled string deal announcement in quarter one. A successful first year of execution on our vision 26 growth strategy. I will now turn the call over to Tom to review our financial results.