KORU Medical Systems, Inc.

Greetings and welcome to the Corrie Medical System's second quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and then zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Louisa Smith. Thank you. You may begin.

Good afternoon, everyone. Joining me on the call today are Linda Tharby, President and CEO of Coru Medical Systems, and Tom Adams, Chief Financial Officer. Earlier today, Coru Medical Systems released financial results for the second quarter and to June 30, 2024. A copy of the press release is available on the company's website. I encourage listeners to have our press release in front of you, which includes our financial results as well as commentary on the quarter. Additionally, we will use slides to support commentary in today's call, which are also available on the investor relations section of our 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. During the call, management will also discuss certain non-GAAP financial measures. You will find additional disclosures, including reconciliations of these non-GAAP measures with comparable GAAP measures in our press release the accompanying investor presentation, and SEC filings. For the benefit of those listening to the replay, this call was held and recorded on Wednesday, August 7, 2024, at approximately 4.30 p.m. Eastern Time. Since then, the company may have made additional comments related to the topics discussed. Linda, please go ahead.

Thank you, Louisa. Good afternoon, everyone, and thank you for joining us today. I will begin with our second quarter results and key business updates followed by Tom who will review our financials and 2024 guidance before turning it back to me for closing comments. Following the prepared remarks, we will open the line for questions. In quarter two, we continued our strong momentum and delivered another quarter of record revenues as we executed on our 2024 milestones and progressed towards vision 2026. Second quarter revenues were $8.4 million, a 22% growth over the same period in 2023. Core business revenues grew 20% driven by SCIG market growth, share gains, and geographic expansion. Our novel therapies business, which serves as a business development pipeline for new drugs on our Freedom platform, also had a strong quarter as we progressed several of our collaborations closer to commercialization. This included successful feasibility results for an oncology-biologic collaboration that we announced in Q1, and the entry into a Phase III trial for an expanded nephrology indication for an existing drug. Additionally, in June, we received the long-awaited regulatory clearance for our FreedomEdge infusion system for use in Japan, an important milestone in our international core business that will further expand our global reach and growth. From an operations standpoint, we continued our focused efforts on cash flow breakeven with progress on multiple fronts. Higher revenues combined with gross margins above 60% and further improvement in our operating efficiencies and working capital led to an overall reduction in loss and brought us closer to our projected fourth quarter cash flow breakeven. Progress against all of these milestones gives us confidence to raise our 2024 full-year revenue and gross margin guidance ranges. and reaffirm our cash guidance. Before moving on to additional highlights, I'd also like to provide an update on the recent announcement about how we are refining our corporate organization structure. This past month, we announced a promotion of Chris Pasden, our SVP of operations, to the role of Chief Operating Officer. This new role brings together all of our key functions under one leader, providing the focus and alignment needed to drive delivery on our pivotal product and program growth and operational targets. In his three years with KORU, Chris has proven himself as a transformative business leader, has consistently delivered results, and I am confident he will continue to have tremendous impact on our success. Moving on to our key business results, I'll review highlights from each of our strategic growth pillars. Protecting and growing our core domestic SCIG business, expanding internationally, and broadening our relevance with the addition of new drugs on our label, our novel therapies business. Within domestic core, we saw a strong double-digit revenue growth of 14% over the prior year and continue to outpace a healthy SCIG market that's growing mid to high single digits. We accomplished this through increased penetration in new and existing accounts with both pumps and consumables. We also saw a double-digit end-user sales growth, an indication of strong customer demand for our products. The underlying IG market recorded a six-quarter of sequential growth, indicating an increase in new patient starts. We continue to see our pharma partners drive pre-filter adoption, a more convenient option for patients, and the fastest-growing segment within SEIG. We expect to continue our momentum with a new product 510K submission in Q4 aimed at improving comfort and convenience for our patient base. Moving to international, we had a very strong quarter, finishing at 46% year-over-year growth. Excluding distributor stocking, which Tom will elaborate further on during his remarks, we saw growth in the plus 20% range. Strong performance was driven by underlying IG market growth, increased penetration in current markets and new indications, and expansion into new markets. As prior mentioned, we also received regulatory clearance for Freedom Edge in Japan that will provide further upside in 2025 and beyond as we see continued subcutaneous market development. In our novel therapy business development efforts, we are focused on growing the number of drugs on our Freedom Infusion platforms. We currently have 16 pipeline collaborations to date, including three signed this year. This quarter, we successfully passed feasibility for a prior announced commercialized oncology biologic. This is exciting as we anticipate that we will file a 510K for this product in 2025. In addition, we progressed to phase three trials for a new nephrology indication for a currently marketed drug. And we have a rare disease biologic, which is in development phase and remains on track for a 510K submission by the end of the year. This will enable our first entry into infusion clinics, a prime new market for core root growth. And finally, we also announced during the quarter an agreement with Schott Pharma, the world leader in large volume pre-filled syringes, to optimize and grow the market for large volume drug deliveries. I wanted to take a few moments to dive deeper into the U.S. SCIG market, our largest market where we hold a leadership position and discuss what we see as continued future growth drivers. The graph illustrates the overall patient growth in IG, combining both IV and sub-Q, as well as the growth in SCIG. A few notes to highlight. Overall SCIG growth is projected in the mid to high single digits, and it's expected to increase in penetration with SCIG growth outpacing the overall IG market growth. We have a recurring patient base of just over 30,000 patients in the U.S. Most of these patients have a chronic disease and will be on our pump for their lifetime, creating a large recurring revenue race through the sale of consumables. In addition, there are multiple near-term catalysts that have the ability to expand our U.S. patient base. One of the primary opportunities we see is a market-wide shift towards SCIG as a preferred therapy. The IG pharmaceutical companies are making investments in their subcutaneous portfolios. A recent highlight from the quarter was the FDA approval of an expanded label for an SCIG drug, Zembify, to include treatment-naive patients with primary immunodeficiency. The significance of this is that to date, the FDA had required the start of IV therapy prior to the start of subcutaneous therapy. This approval means the healthcare provider can put the patient directly on SCIG. In addition, the CIDP market, which counts for about 10% of our overall patient base, continues to grow with new diagnosis and a new delivery option, PFS, which makes it more convenient for this high-volume, dexterity-challenged patient to move to SCIG therapy. CORA's emphasis on our key accounts and partnerships, focus on leadership and clinical practice, and innovation in SCIG devices will continue to ensure we remain a preferred partner for customers and patients. Moving on to international, we are pleased with our 40% growth this quarter. and wanted to provide some insight into what we see as a continued geographic expansion opportunity ahead of us. There's approximately $60 million of SCIG TAM in markets outside of the U.S., altogether representing a larger TAM than the U.S. market alone. We're currently marketed in 25 countries worldwide, but as you see in the graphic, our overall penetration into these markets has been relatively low. Our strategy is to continue to work with pharmaceutical companies and distribution partners on tailored device and patient programs to both increase our penetration in current markets and drive increased penetration into new SEIG markets. Our recent entry to Japan is one of these examples. We look forward to continuing our geographic expansion efforts and believe it represents an attractive opportunity for growth. The next slide represents our novel therapies pipeline. Sixteen collaborations in total, each one an opportunity to place a new drug on our label or expand existing drugs or innovations into new indications, which in total is a 2.1 million global patient population opportunity. The yellow highlights indicate the prior mentioned progress within the quarter, including the first clearance of Freedom Edge in Japan, progression of our oncology asset collaboration, and our expanded nephrology indication moving into a phase three trial. In total, we now have six opportunities for new drugs to be cleared for use with the core platform by 2026, creating a path to $10 to $20 million of annualized commercial revenue potential at the end of 2026. We are very pleased with our progress we made this quarter on multiple fronts, double-digit growth in our core business, continued progress in our novel therapies pipeline, and increased operating leverage through focused execution from our team. I will now turn the call over to Tom to review our financial results.