NexGel, Inc

Good evening. I will be your conference operator today. At this time, I would like to welcome everyone to the NextGel Inc.' 's fourth quarter and full year 2021 earnings conference call. Please be advised that today's call is being recorded. I will now turn the call over to Valter Pinto, Managing Director of KCSA Strategic Communications. Please go ahead.

Thank you, operator. Good evening and welcome everyone to the NextGel fourth quarter and full year 2021 earnings conference call. I'm joined today by Adam Levy, Chief Executive Officer, and Adam Drabestock, Chief Financial Officer of NextGen. Before we begin, I'm going to remind everyone that statements made during today's conference call may be deemed forward-looking statements within the meaning of the Safe Harbor of Private Securities Litigation Reform Act of 1995. And actual results may differ materially due to a variety of risks and uncertainties and other factors. For a detailed discussion of some of the ongoing risks and uncertainties in the company's business, I refer you to the press release issued today and filed with the SEC on Form 8K, as well as the company's reports filed periodically with the SEC. The company disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, unless otherwise required by law. In addition, during the course of today's call, We may refer to non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States and that may differ from non-GAAP financial measures used by other companies. Investors are encouraged to review NextGel's current report on Form 8K, first with the SEC, for NextGel's reasons for including those non-GAAP financial measures in its earnings release. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures are contained in our earnings release issued this evening, unless otherwise noted herein. With that, it's my pleasure to turn the call over to Mr. Adam Levy. Adam, please go ahead.

Thank you, Walter, and thank you, everyone, for joining NextGel's inaugural earnings call to discuss our financial and operating results for the fourth quarter and full year of 2021 period. NextGel is a leading provider of ultra-gentle, high-water content hydrogels with broad applications in the healthcare and consumer industries. 2021 was a pivotal year for our company and culminated with the closing of our initial public offering in December and trading on the NASDAQ under the symbol NXGL. The proceeds from the IPO will allow us to accelerate the growth across each of our three complementary business verticals, medical device, custom and white label manufacturing, and proprietary branded products. Our business model leverages our existing 13,500 square foot GMP ISO certified facility, our unique hydrogel manufacturing technology, and decades of experience in contract manufacturing for healthcare and consumer brands to pursue new high growth market opportunities in strategic and cost effective ways. Furthermore, Our core technology, the electron beam accelerator, eliminates the need for harmful chemicals in the cross-linking hydrogel manufacturing process, which makes our gel well-suited for a wide range of healthcare and consumer applications. Our gentle high-water content and paraben-free formulations make our patches often the only option for many medical device, dermatology, and beauty and cosmetic applications. These are very large potential market opportunities. We believe there are growth opportunities across each of our three new business verticals, as well as the potential for steady growth in our original contract manufacturing business. First, considering our history of developing and manufacturing components for medical devices for successful healthcare companies, we saw a clear opportunity to pursue creating our own medical devices. Our strategy for this vertical is to sign and develop FDA-approved 510K devices with relatively simple predicates for the hospital market. I stress that our strategy is not to build out our own sales force, but to license our proprietary technology to healthcare partners to commercialize. We will continue to remain focused on managing our expenses and staying lean. Second, we are developing our own branded products for consumer health and beauty applications, including skin care, wound care, and sports-related products, which we are currently selling on Amazon.com. This vertical allows us to capture revenue within our existing facility capabilities facility capacity at minimal cost as we have the ability to create small initial batches of these products, which can be done very inexpensively in our own plant. Lastly, our third vertical of opportunity represents the evolution of our contract manufacturing capabilities. In addition to the continued servicing of our existing contract manufacturing customers, we are partnering with companies to co-develop custom-labeled products as well as executing white-label projects in healthcare and consumer applications. Our electron beam manufacturing process allows us to offer potential clients a natural line extension to existing successful products by delivering their formulations in a suitable patch. Other patches on the market today are simply not suitable for many dermatology, healthcare, or beauty and cosmetics applications because of their chemicals and or adhesives. We believe there is considerable potential in developing products with these existing successful brands. which could translate into commercial orders for innovative healthcare and consumer products. Importantly, Nextgel bears no risk for either developmental or sales and marketing costs. This vertical presents us with stable cash flow in what is historically a very sticky business. We also intend to initiate proof of concept studies for potential opportunities to co-develop patentable drug delivery products. This is an exciting time for NextGel as we aim to deliver our uniform high water content and comforting hydrogels to a variety of healthcare and consumer product companies. As only one of two medical grade hydrogel manufacturing facilities with our unique ability, we are well positioned to attract industry leading partners for our medical devices and custom label projects. With that background, I would like to highlight our financial and operational progress for 2021. Revenue for the full year of 2021 was $1.55 million, an increase of 130% or $877,000 compared to the prior year period. For the fourth quarter of 2021, revenue was $533,000 or an increase of 428% or $432,000 compared to the fourth quarter of 2020. The year-over-year increase in revenue for both the quarterly and full year period was driven by sales generated from our new verticals custom and white label manufacturing, and our branded product sales. As of December 31st, 2021, we had $13.35 million in cash. In June of last year, we appointed Adam Drapsik as Chief Financial Officer, who is joining us on today's call. Adam brings nearly two decades of experience guiding healthcare companies to full-scale commercialization. Adam has been instrumental in developing our commercialization strategy for our medical devices, as well as establishing a best-in-class financial reporting infrastructure. In September of 2021, we appointed Miranda Teledana to our Board of Directors. Miranda is a seasoned biotech executive with a strong capital markets background. In our medical device vertical, NexStrape, our first proprietary application, is our skin-friendly solution for the surgical inside straight market. Specifically designed for patients with fragile or compromised skin, the NexStrape leaves the epidermis intact after removal from surgery, as compared to current surgical incised drapes, which can cause skin tears, removal of skin, and adverse skin reactions. Nextrape provides consistent adhesion without skin irritation, thereby decreasing the risk of infection and discomfort for patients. We have filed worldwide patents based on our two human cadaver proof of concept studies and are progressing discussions with the FDA for a 510 predicate device application. In addition, we are designing and developing other medical device opportunities within the hospital market also addressing skin integrity and overall skin condition. To remain lean and focused on profitability, we are pursuing partnerships through a licensing strategy to commercialize these medical devices. In our branded products vertical, we launched our Metagel brand, which includes OTC products for skin, burn, and wound care, as well as migraine and fever relief patches. With nine SKUs currently available on Amazon, to date we have seen strong demand for our Metagel products. which contributed significantly to the year-over-year revenue growth. Our flagship MetaGel SKUs are the SilverSeal OTC products, leveraging the silver-impregnated hydrogel-based technology of SilverSeal. In late 2021, we announced a study that demonstrated that NextGel SilverSeal wound care products are 99% effective in reducing common bacteria, fungus, and yeast. These claims differentiate our products in the market, where consumers want to limit the risk of infection. Furthermore, we are undergoing clinical studies to show the impact of silver seal on scarring. The scar market is large and growing, and the ability to claim scar reduction would be a significant long-term opportunity for NextGel. We expect to publish the results in the coming months. Going forward, we expect to launch our beauty and cosmetics brand, LumaGel, in the second half of 2022. In our custom and white-label manufacturing vertical, numerous companies have engaged us for development projects, to explore creating new healthcare and consumer products. It is important to note that these development projects are funded by the customer with no cost to Nextgel aside from the time needed to use our facilities and have the potential to lead to commercial orders in later months or quarters. In 2021, we received seven commercial orders stemming from just nine previous research projects. We are confident in our multi-pronged market approach, which provides us with multiple shots on goal while we leverage our existing capacity. Currently, we have the ability to significantly scale our facility utilization without the need for additional overhead or major changes to our employee base. This is possible through one, our high volume manufacturing facility, which can produce up to 1.4 billion square inches of product per year, two, our own converting and packaging capability, and three, our third party vendor relationships that can support the cutting and packaging for large volume orders beyond our in-house scope. Looking ahead for the remainder of 2022, we expect revenue to increase year over year and margins to improve due to our ability to limit fixed cost growth while our revenue ramps for the foreseeable future. We expect continued sales growth from our existing branded products listed on Amazon and expect to recognize initial sales from several new SKUs as well as our Lumigel launch planned for the second half of 2022. In the custom and white label manufacturing vertical, interest has been strong, and we have a robust pipeline of potential new customers. Keep in mind, however, that the timing of these development projects can significantly vary and do not always lead to commercial orders. In summary, we have seen great progress in each of our new business verticals. With the completion of our IPO, we now have the funding and extended runway to develop and grow them further. With that, I'll hand it over to our CFO, Adam Drapsik, to walk through our financial results in more detail. Adam, over to you.