KORU Medical Systems, Inc.

Greetings and welcome to the Coral Medical System second quarter 2023 financial results conference call and webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would like now to turn the conference over to your host, Hannah of the Gilmartin Group. Please go ahead, Hannah.

Thank you and good afternoon everyone. Earlier today, Cobra Medical Systems released financial results for the second quarter and in June 30th, 2023. 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 accompanying investor presentation and our filings with the SEC, each of which are posted on our website. You will find additional disclosure regarding these non-GAAP measures, including reconciliations 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, August 9, 2023, at approximately 4.30 p.m. Eastern Time. Since then, the company may have made additional comments related to these 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 Thurby, President and CEO of Cobra Medical Systems, and Tom Adams, Cobra Medical's 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 by walking through key business updates for the second quarter. Tom will then review our financials and updated 23 guidance. I will then close with the milestone progress update against Vision 2026. Following our prepared remarks, we'll be happy to open the call for Q&A. We are very pleased with the progress and milestones achieved in our second quarter as we continue to make important advancements towards Vision 26. A few key highlights on the quarter that I will dive into further in today's presentation. First, in our core business, we saw growth of about 8%, which continued to outpace the U.S. subcutaneous immunoglobulin or SCIG script market, which contracted in the quarter. In our international business, our efforts over the past year continued to progress as we had another quarter of double-digit growth. We signed another novel therapies collaboration for use of our Freedom system in a phase three trial, and we submitted ahead of schedule a 510K for the Freedom 60 infusion system with Isentra 50ml pre-filled syringes. Finally, we're updating the company's full year 23 outlook. to reflect the QT decline in the U.S. SCIG market and a change in timing of novel therapies deal signing and subsequent revenue. Before jumping into the details of the quarter, I would like to take a moment to welcome Tom to his new role as our CFO. Tom has been integral to the company, achieving many of the milestones I discussed, as well as building out our finance team, processes, and systems. I'm excited for him to continue to grow and add value as he steps into his new role. I want us to begin today by taking a moment to remind everyone what we do. Our mission at KORU continues to be making subcutaneous drug treatment a reality at home. Our freedom infusion system has more than 35,000 patients and new ones being added every day, many of them chronic that self-infuse their drug in the comfort of their homes. Our freedom system can be customized for drug and infusion volumes from 5 to 100 mLs supports multiple therapies in disease states, and has established regulatory approval in over 25 countries. Our novel therapies business supports biopharmaceutical companies with products and non-recurring engineering, innovation, and services on our freedom system to support their clinical efforts towards their drug launch. Once a drug has completed clinical requirements and receives regulatory approval, we become an approved drug delivery provider, and it becomes a part of our core business. The core business includes our domestic and international commercialization of our freedom system to specialty pharmacies and home care organizations. We have a broad label of indication predominantly in the SEIG market with less than 20% of that market penetrated. The majority of our patients suffer chronic illnesses and are lifetime users of the system, offering a valuable source of recurring revenue. Our business model has both a recurring revenue core business and future revenue with our NT business with 15 total collaborations to date, offering the potential for several new drugs on the CORU system. Moving to a deeper dive in our Vision 26 strategy and our three growth drivers. Starting with the first, growing our leadership position in SCIG. Today, CORU has over 35,000 patients in the U.S. and strong relationships with our specialty pharmacy partners who transition the patient to drug therapy in the home. During the quarter, we saw a larger-than-normal Q2 seasonal fluctuation in overall SCIG reported scripts, down 13% on the quarter. Our conversations with specialty pharmacies, pharmaceutical partners, industry researchers, and reimbursement specialists saw no concern over these growth levels, returning to historic levels of high single-digit and low double-digit growth over the coming quarters as they continue to focus efforts on supporting the movement of healthcare to the home. Many saw this as a blip due to lower infection rates versus the prior year, which is generally a proceeding event to an immune deficiency diagnosis. We remain confident in our ability as we have shown we can outperform. Our growth again outpaced the underlying market. The growth was led by a recurring consumer's revenue, and we had double-digit new pump sales growth. A key driver of our U.S. core business is continued strength in prefilled syringes. and the second quarter was no different from recent trends. The overall convenience and patient preference continued to drive pre-filled adoption, and overall pre-filled syringe penetration increased to about 12.5% for the second quarter. During the quarter, the company submitted a 510K to the FDA for the use of our Freedom 60 infusion system with Hyzentra 50ml pre-filled syringes. This submission marks another milestone in Coro Medical's mission to simplify sub-Q therapy for patients. The FDA approved the 50mL Hyzentra pre-filled syringe in April of 2023. Hyzentra is the most prescribed sub-Q immunoglobulin and the first to be available in pre-filled syringes, currently offering 5, 10, and 20mL formats that satisfy a further two-thirds And the 50 ml when available in 2024 will satisfy an additional two-thirds of the patient market. The conversion to pre-filled syringes is an important growth driver for us as it drives share and we believe over time increased new starts and conversions to sub-Q therapy. As a reminder, our Freedom Edge system remains the only pump with FDA clearance for use with pre-filled syringes. Moving to our NT business, where we are focused on new biopharmaceutical collaborations for clearance of our freedom system for at-home use. We announced a few weeks ago the signing of another novel therapies collaboration. This agreement is with a biopharmaceutical company to validate the freedom infusion system for use with a novel endocrinology biologic. The drug developer is expected to begin phase three studies by the end of 2023, for treatment of a rare genetic disease with global preference of roughly 10,000 that currently has no pharmaceutical treatment. The closing of this collaboration in July, we brought our year-to-date new collaborations to two and remain on track for six new collaborations in 2023. In total, we have 15 signed collaborations and we also have a pipeline of 15 additional high potential opportunities. And finally, we're excited about our growth opportunities geographically. We ended the quarter with growth across several key markets, representing growth of over 17% year over year. New patient starts fueled by the increase in IG supply in the EU continue to drive growth, and we're well positioned to benefit from our distribution, which is now in over 18 countries. International has become a vital key third growth strategy for the company. I will now dive a bit further into our NT business and this slide, which shows our total pipeline of NT opportunities. We now have 15 collaborations to date, including over 2 million potential patients and a TAM of roughly 2.5 billion. Our IG base at the top of our pipeline becomes an important source of recurring revenue as we support the work of the IG manufacturers in increasing sub-Q penetration, lifecycle management strategies, and on growing their label indications. The bottom of this pipeline represents nine additional candidates outside of IG across six additional drug categories with potential to launch five new drugs in the next five years. We know that not all of these will likely succeed, but with two of these with patient populations over 100,000 and three with patient bases up to 50,000, any combination has the potential to double Quora's current patient base. I have bolded our newest entry. We are excited to add late-stage pharmaceutical collaboration as it's a shot-on goal closer to launch that solves a major unmet patient need. We are excited by our novel therapies business as we continue to progress our relationships to help drive greater knowledge and adoption around the benefits of sub-Q delivery for patients in the home. This next slide brings both our core and NT business together to show you our growth potential over the coming five years. Our core business with multiple commercialized drugs gives us strong recurring revenue today. Further, with 90 plus percent of those drugs being in IG, which is less than 20% penetrated on sub-Q treatment today, we see a lot of growth ahead. As we build our NT pipeline based on projected drug launch timing, we see multiple revenue opportunities over the next one to five plus year timeframe. As we look to the remainder of 23, we are confident that we will continue making important additions to our novel therapies collaboration and are excited to provide ongoing updates. In addition to the progress in our businesses, progressing new products and innovation is also key to drive quarter to the next phase. This slide lays out both our product and expected new commercial label milestones over the next few years. Our product strategy is centered on comfort, convenience, and . During the second quarter, we completed two milestones with our 510K submission for a 50 ml prefilled syringe label expansion with a Freedom 60 pump line extension. For the remainder of 23, we anticipate another 510K filing for our consumables. Looking further ahead, we're extremely excited about a next generation pump platform for IG and novel therapy and multiple new drugs on the freedom system. Another very good quarter of strategic progress across both core, NT, and innovation. I will now turn the call over to Tom to review our financials.