NexGel, Inc

Welcome to the NextGel 2022 Third Quarter Financial Results Conference. Today's conference is being recorded. At this time, I'd like to turn the call over to Walter Pinto, Managing Director at KCSA Strategic Communications. Please go ahead.

Thank you, Operator. Good evening and welcome, everyone, to the NextGel Third Quarter 2022 Financial Results Conference call. I'm joined today by Adam Levy, Chief Executive Officer and Adam Drabczyk, Chief Financial Officer. 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 the Private Security Litigation Reform Act of 1995, and actual results may differ materially due to a variety of risks, 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 this evening 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 statements, whether as a result of new information, future events, or otherwise, unless required by law. 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 us to discuss our financial and operating results for the third quarter ended September 30, 2022. During the third quarter, we continued to make progress across the key areas of our business. First, from a financial and operational point of view, as I have mentioned historically, we are focused on driving year-over-year quarterly revenue growth. Third quarter revenue totaled $568,000, an increase of approximately 70% as compared to $335,000 for the third quarter last year. Year-to-date revenue has totaled a little over $1.5 million, 50% growth as compared to $1 million for the same period last year. This steady growth year-over-year has been driven by an increase in contract manufacturing and branded consumer product sales. interest in our custom and white label manufacturing remains strong this business segment is complementary to our business model because it allows us to create relationships with various companies for development projects and to explore and jointly create new health care and consumer products as we continue to grow our revenue year over year our gross profits continue to improve as a high percentage of our cogs are fixed costs associated with operating our 16 500 square foot facility that Combined with our ability to scale with larger production runs of our commercially proven products has allowed us to yield a 26% gross profit margin in the third quarter as compared to a loss in the third quarter of last year and improved gross profit margin sequentially from 18% in the most recent second quarter. I expect us to continue to grow revenue in 2023 and in doing so, margins should naturally continue to improve as well. Next, We are investing strategically to drive our future growth. While we expect continued growth in both contract manufacturing and brand and consumer products, R&D is also a critical aspect of our growth strategy. Last year, we had no spending on R&D. This third quarter, we invested $193,000 in R&D and have done so methodically the last few quarters towards progressing drug delivery proof of concept studies. We believe there is a significant opportunity utilizing our technology for drug delivery as well as other medical device applications. We have developed a new proprietary hydrogel eye patch to treat amblyopia, a type of poor vision that typically occurs in one or both eyes, often referred to as lazy eye, and the most common cause of visual impairment in children. This condition affects two and a half to three and a half percent of children, And we estimate in the U.S. alone there are between 250,000 and 400,000 patients. The current standard of care is an eye patch. There are basically three types of eye patches. The traditional pirate patch, a patch that is attached to glasses, or a patch placed directly over the eye. The issue with the first two is that children can cheat by either lifting a pirate patch or looking out the side of a glasses patch. The highest level of compliance is generally with a patch directly affixed to the skin, completely covering the eye. However, the use of potentially painful and irritating adhesives can cause children a great deal of distress. We have recently filed worldwide patents on our unique solution, tentatively called the Hydra Patch, which is placed directly on the eye without the associated pain and irritation of traditional patches. Our plan is to distribute this product directly to ophthalmologists to be sold in office. The HydraPatch was developed in conjunction with Dr. Leonard Nelson of the Wills Eye Hospital in Philadelphia and was presented at the Dr. Joseph H. Calhoun, MD, Pediatric Ophthalmology Forum this past Friday. The reception and feedback were both very positive. We expect this product to be available in the first half of 2023. Amblyopia represents a very large opportunity for us, and we believe our product can make a real difference for the children affected. Furthermore, we are proud of our SilverSeal study, which was published in the Sage Journal's Scars, Burns, and Healing publication. SilverSeal was used post-surgery as an antimicrobial dressing to evaluate its ability to aid in the healing process in 40 foot and ankle patients in a double-blind randomized study. Post-operatively, the treatment group was given a SilverSeal hydrogel dressing, and the control group was treated with a standard petroleum-based dressing. The results indicated that SilverSeal demonstrated statistically significant improvement of skin functionality, fewer negative symptoms, and a reduction of scar appearance relative to the standard petroleum-based dressing. The scar treatment market is very large, and the SilverSeal data represents an opportunity to grow this product significantly. In Q3, we also completed a proof-of-concept study with positive results for the delivery of diclofenac using our hydrogel patches. The results of this study highlight the efficiency of our hydrogel patch as a delivery mechanism that is also gentle to the skin. With only two months of the calendar year remaining, I am encouraged by our team's accomplishments and execution efforts amidst the challenging macroeconomic backdrop. We will remain focused on executing a thoughtful, multi-pronged business strategy. The company is well financed and has ample runway through 2024 to accomplish our objectives. 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.