KORU Medical Systems (KRMD) 4 May 232023 Q1 Earnings call transcript

Greetings, and welcome to the KORU Medical Systems First Quarter 2023 Earnings Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions].

As a reminder, this conference is being recorded today, Thursday, May 4, 2023. to Group. conference like from to now Gilmartin the would turn over the Greg I

Grant, good first you, press released XX, Thank and A release financial Medical today, XXXX. the results Systems is KORU available for company's of the copy quarter on March afternoon, ended the everyone. website. Earlier

Actual other could the most and we are update well you, our based financial SEC. any comments the materially will call, the commentary release statements expectations this many release uncertainties, These of to certain forward-looking associated risks to results regarding I which including We includes in on our matters. statements. press press of predictions events listeners our encourage and recent filings due as to During those quarter. make business front as differ forward-looking obligation results as today. plans or and and have on our assume no our with in mentioned

non-GAAP our are posted management website. our SEC, which will of During investor and each filings with measures and press financial discuss on the presentation accompanying release the call, certain in our

measures will accompanying our You disclosure non-GAAP GAAP these including press of additional these those comparable with release regarding reconciliations and filings. and investor measures presentation measures, find in

Eastern most For to p.m. to with recent refer related recorded Time. those call discussed comments Since on may company's the SEC. this the made at listening topics and and additional X:XX benefit then, press of was filings and Thursday, XXXX, the held to replay, the the approximately May have the X, releases please company

Interim of ahead. Adams, KORU Linda Linda, is call Tom President Chief Medical Medical's Financial and Systems; go Officer. today's CEO and please Core on us Joining Tharby,

today. afternoon, you everyone, you, and us thank Thank Greg. joining for Good

on financials 'XX I today's walk update updates will business call, guidance. discuss quarter our then for end will through for will closing start, our innovation slides To and with and we the provide comments. progress 'XX. support Tom our thus then an first During updates to commentary. far use will I and

be the for remarks, prepared up opened call Q&A. our Following will

international penetration growth accelerate and our in led market. our expansion in of U.S. of healthcare immunoglobulin uptick quarter notably the of first SCIg to an growing achieving the our trends, business, core of one continued the progress of progress saw This continues in XXXX patient hospital to in we pump million start Vision increase strategy we focused the delivering strategy largest indicating business, subcutaneous significant of In growth to In increases in syringes. from in several for position increasing quarter, quarter new focused the In in efforts, of company growth strong our remain key availability, quarter to we is we The revenue. macro the the most In areas, saw strong marked care team growth. XX%. home. the our drug make the our the movement in business, to and starts double-digit areas, our sixth core prefilled leadership XX%, combined 'XX meaningful with $XX on made consecutive X towards as our a all business our year on to quarter, a

our we to contract And manufacturer report the Therapies Therapies significant by Novel subcutaneous focus that bringing to building Freedom passed to additional I the and Importantly, Novel infusion grew our we revenue as on quarter, dual-source our foundation, Coral total business. am business consumables to goal transition XX. quarter pump milestone pleased we collaboration, in continue for our a pharmaceutical completed our progress a drugs first adding our added our XX% another In to the of we with system.

Mawa our New Chester, completed operations in also closure of our We the facility facility. York consolidated and

management Our throughout reduction pave the great operations year. will and way team's further improvement for project inventory and the efforts margin

confident begin U.S. million focused guidance XX%. the we as of reported team the representing started in year, our the domestic $XX.X saw reaffirm I to growth revenues exceed growth. overall with build business, this Ig we our leadership $XX.X and between to which continuing on and to to today our range our momentum position growth million, U.S. our the core would XX% XX% the where expect we with in Again, With remain like year we to Subcu therapy. is with market end quarter,

consistent their drug see We IG and to in of rise focus have continue area. number reported supply to the this on suppliers efforts patients as all continue Subcu therapy

evident While IG grew monthly Volumes there and the volumes overall trends the positive. drug Based data, drug IG of are on conversations half occasional by to of in and remain QX X% is our 'XX. remain but review the in of This in months with that we reported XX% through with first resulting respectively. growth 'XX, XX% gram fell and X jumped fluctuations the flat fact second SCIg 'XX, market a first manufacturers, confident double-digit March, market scripts, XXXX. in for versus consistent

patient volumes the our first a Additionally, strength quarter XX, our by signal strong overall, XX% pharmacy KORU's and activity of in account for specialty U.S. starts. of new grew pump

as clearance cringes and due syringes business preference. is FDA their conversion to market with syringes. to prefilled with critical Freedom patient only is continue to for increasing prefilled see We use overall convenience in currently prefilled pump our the driver a Edge penetration the of The

XX amount. ml, addressable received growth, over overall are first X/X Last in early This news. will of greater clearance for their require leader syringe enable much therapy, approval as XX patients CSL to They HIZENTRA range SCIg FDA the CSL, of month, approximately and exciting XX% than The the XX-ml prefilled with market, reported XXX% in expects be broader XX. will formats market. address increasing prefilled of a prefill saw market. overall 'XX. prefilled penetration XX% the the quarter which syringes current The XX in over X, available available

drug and approval capitalize launch, to their the team market growth. XX-K great to we of start ahead U.S. well-positioned be our the will expect underlying by on Overall, a opportunity. outperforming We have

our international to business. Moving

increasing positive momentum. We year-over-year key first a markets, is the representing across growth quarter with growth internationally company. several key for driver growth. have ended Expanding XX% seen the We

into increase XX strengthened pump IG to positioned fueled New the continued and with supply all the in our distribution the our well In patient to our benefit overall in with starts are over double-digit to EU by quarter, sales contributing drive first distribution growth, in we year-over-year. international international sales Canada, we countries.

like early electronic to feedback efforts few conversion a in pump is provide The on patients electronic benefits We of on conversion have Europe, delivered updates. focus comparison begun our also XXXX. pump Freedom system. and the our of professionals I The with positive, efforts to healthcare would patients in and pump is the expected electronic trial December of completed and be appreciating our to

Therapies Moving to business. Novel our

Novel During brought our Therapies to the we collaborations quarter, first XX.

development System announced, and SCIg SCIg position years. next prefilled from builds does the SCIg we signed pharmaceutical upcoming an partner make not on market collaborations previously KORU require clinical we to and market X the trials, product. insights, As expect for X our in agreement choice prefilled use This of a leadership pharmaceutical commercially innovation. the program it that launch a demonstrates device to patient capabilities This Medical human with Freedom syringe manufacturer our to in and SCIg experience,

novel pipeline collaborations. are the increased for and New our strategy essential collaborations to therapies is fuel the MT signed

phase NT and build opportunities of pipeline progression. partners, to additional expansion, This funnel existing geographic new hard therapy XX has indication worked Our funnel team to from XX a spans opportunities. areas,

interest have from We the geographical intake including seen interest a targets. opportunities, disease, oncology and new new steady a infectious into increasing funnel, in

Taking billion, and TAM roughly collaborations. In X.X Xx a roughly look $X.X we our collaborations, now over have our original at including potential million of total, patients a XX aspirations.

of to 'XX we and one of QX feel execution commercialization current multiple our III our XX the sight line opportunities. goal We our ending collaborations. new pipeline we our of With have total Phase closer clear milestone are with XXth step with a collaboration to opportunities, of

the increase our to back now review in to XXXX. XX. deal, of call our for look financial rest of the to over the and signed expect pipeline half of to turn the the results 'XX collaborations to we start great with we guidance. I to to As Tom a a team pace Thanks will

grew a an increase million, and and with everyone. prior Linda, excited afternoon, key you, by revenue several availability XX% engineering expansion new drug, strength $X.X core toward XX% was I'm growth from in specialty driven in penetration. consumables our the prefilled innovation a for efforts SCIg $X.X led by year. pharmacy over milestone. markets. good pumps with by progression of agreement quarter supply volume accounts in a growth of increased increased with report net key million net XX%, strong that Novel supporting account revenue Therapies revenues revenues continued to service of across driven Thank of by increases international Driven and and net nonrecurring sales total Core XX% by wins growth Domestic International clinical with

margin look halves we for As in we about our progression can think margin, at X XXXX. gross

to half, to XX% from In the first margins we range expect XX%.

track gross quarter. We the reported are XX.X% with on margin the in

margin third-party CMO, our we close transition consolidated down us quarter, consolidation This new the we and into manufacturing and our New in to allowed Jersey. exit manufacturing During and, from completed manufacturing our QX, site QX a to Mala, therefore, to costs be period we will a incurred recognizing similar on expect P&L to profile QX. facility. In the see Chester the the incremental during transition

overhead, As This in quarters strong exit labor outsourced at of rate and with lead we second between to year expect year, margin efficiency plan look will in and XX% the and products, us gross X a significant Modelo. we a and gross improvements of to margins at improved achieving lower-cost margin XX%. half second-half the full lower the

for the QX of level last represented the second in at half. year, million year. from in $X.X balance beginning first cash the half a $XX.X cash higher was we Our of the a the million plan burn than decrease Similar of end and to

our $X reduced that instance, million in XXXX the might was burn recall half that half. we under and to For million, of $X in the cash about second you first

year. half. a XX-XX first between cash split We the usage pattern and expect a second this similar about We're

pattern, this year we'll the expectations want remainder on spend first-quarter the a I cash of to the burn, to slide. and on minutes Given for back guidance outlook the few and come

majority, move capital March higher at supply or transition we from higher As of million the quarter, cash bonus receivable we we and level X $X.X accruals. of coming payments of a disruption the the as avoid by in working year-end inventory form the the higher driven of major accounts to higher by driven in saw a look areas: million manufacturing of locations and revenues, $X.X level in usage

in investments driver excluding of biggest innovation which the $X.X total losses, operating research of items, primarily development. quarter the was expenses and XXXX noncash Net million, for due were million, of $X.X first to

lower a overall and plans in expect We our revenue to to XXXX goals. expenses and capital growth prioritize according continue cash burden our

our We revenue come on back slide. margin working reaffirm a than to greater will capital next balance outlook the year-end cash of guidance $XX the improvements, million, cash gross driven by and growth, expansion. We

end least Novel for one at collaborations, XXX(k) second revenue our serve million new we XX%. have in reaffirming foundation half already more and to full include And back in expect year as year million, of outlook $XX.X the XX the several our by year. the identified pipeline half as with Therapies of throughout the additional signed, growth the range for the following X key attract will expecting the that representing expanded are revenue X bringing milestones stated, XX% these in between to filings growth. be collaborations will We $XX.X the year XXXX, an and the of to These to of the total we to with previously

For market and increasing SCIg XX% prefilled of XX% drug the than range. penetration growth greater to

Key between are margin XX% XX% the and successfully XXXX in to gross margins in gross margins half our behind manufacturing second year exit closure With for our including of outsourced of QX XX% full margin. the between the increase target completed the margins were drivers and the and to and we XXXX. gross in and Kamala Chester Our consolidation the include: to contract ramp-up in completion transition, that site manufacturing. XX% year for XX% to gross of consumables XX% this, more than half first XX% the

year-end expect cash balance our million. greater to We $XX than at be XXXX

development. a of the total expect drivers of gross higher $XX and year guidance, operating see million, revenue product QX major we our R&D our inclusive next in expenses expense and level other of of as the Given include: spend for stock development phase compensation we advanced of programs several its sequential into to key margin

million to $X receiving our the inventory finally, throughout $XXX,XXX. An including and and of working XX DPO improvement in credit by keeping range of the year of balances XX days, in then ERC the lowering capital, approximately and course the DSO

With $XX ending the these than assumptions, to greater this million. gets balance cash us of

expect half execute cash our breakeven continue and enough strategic We to of a to in plan. second XXXX the with

non-dilutive While will we look increase to the I now we comments. through cash any to or are not this at debt to anticipating Linda closing growth, sheet call the raises financing back may our fund balance our turn time. for planning our on equity

Thanks, Tom.

our Given area. I wanted moments R&D, progress our in laying few investment spend a to this in out

Infusion a and support looking have preferred and that system at We customers. trusted ways patients Freedom by to we further today are product with is our and our patients, continuously

our add that both collaborations. products of the we innovation, As are we work think we new indications and we that pharmaceutical ongoing consider launching label new with about

has a label the our companies. As indications subcutaneous ex-U.S. Cs comfort, delivery with Infusion for Freedom our the label with largest XX large-volume perspective, as Coro to the system U.S. today, product new in applies and biopharmaceutical focus X and connected, System. drug From Freedom X a reminder on it convenience, drug is participation and the

filing innovation For and Freedom and a XXX(k) Flow few fourth Etch milestones, Freedom quarter. for a in XX line tubing a and needle have XXXX, the we high-flow extension Precision our exciting consumables, including new

are which working platform, we before ahead, our Looking out to next-generation we roll towards pump expect XXXX.

ml new the the innovation company. of of we look second drugs an use. further the expect important on in SCIg prefilled X and In near be improvements for years. delivery indications of in company X closing, focus new term, quarter expect company. for we as to syringes, priority second expand to In indication over XX of XXXX, the as we a the to priorities. a strategic the we drug advancing The performance as Innovation half will and the commercial new our leadership demonstrate is our system Freedom multiple for next core another course great continue our for customers patients progress drive continue and significant of to

We in Therapies U.S. to business, innovation have beginning efforts strong progress. in and development and strong fundamentals our our business, international built capabilities business our are Novel commercial yield

The future of the bright. company remains

with continued for thank to the through will I execution you great a by move In quarter. determined vision quarters, now over can turn closing, to Q&A. continued we to great As remaining it a backed I our expect and toward milestones, see strong momentum. and employees you another want Operator, for team our

[Operator Instructions].

Bednar The Sandler. first question comes from the line Piper of with Jason

with the As we year little think XQ forward here. get do of to in tougher the books, comps the balance a the bit

You have through would the business individual a cadence of we mind there or few at anything at that's the thinking think core lot have when now. looking quarters, next have in momentum right in company of Is segments? you would you growth? about around us the the the whether level How model again, a suggest revenue

to start, and Maybe Jason. question, the commentary. I'll Tom I'll turn additional for Thanks for Yes. it over

from core strong uptick continued this U.S. the back. our between SCIg and and prefilled last our about of U.S. to We all, see range penetration growth the fundamentals. you of Obviously, we year, XX%, see from XX% market core, see First of syringes. year business the coming XX%. We somewhere in the in that grew overall international recall core business looking we're range to if

we quite IG overall, start to market good, probably feel elevations expect continue we to So elevate. not growth but that would huge we until see

supply business, that half, had now in and I XX% kind relative if return different recall, we in to into to range. our of IG penetration kind would up continue and got performance several it year, of single-digit that Canada. of growth those you markets increasing outlook increases For again, above the our international given to, quarter first expect was We this countries Germany. the last strong note in we to XX%, see

good business we about feel So well. international our as

last from about an of where points international. we year think total were couple our So and core between between uptick a of domestic overall

another, the think on we basis, as growth Okay. maybe within But per one full-year rate on meaningful band forward inflections the rate quarter? growth just maybe quarter like rate a growth staying to

I'll Tom. over that Maybe one hand to

question Yes. for Thanks the

with follow, business, market in the know, a quarter. you quarter, XX% trends, as On market, the a grow and nice saw saw a this growth -- QX generally by year. market you the core past market last we market the that we as obviously, and growth lag we we We can of see, in with growth nice

quarter. in market here saw we volume that continue when And look the look mentioned, you performance, nice U.S. to at, we you first the performance watch a So as growth. at Linda when

obviously, We we projections. continue on then expect expect the trend that business increase our business, to with our to U.S. to side And our continue. in U.S.

core don't you I know, Jason, and of would you terms if So in right its business of for quarter our and is elevation, the between is would specific the XX%. guidance in I saw core about place overall, overall looking international what first for number in remainder a be. to within I year overall, growth the our you're say to say the that range us at domestic for probably

Okay. what of maybe of mean, I XQ, there for. acknowledge for. that's all little in otherwise, was I probably of was what I that's but think we'll I Yes. a there's tough kind exactly looking No, kind think it. bit looking comp But a exactly I

on We the yes, have QX, QX, cleared given it back order. we right

get our And sounds though. like I Got ml could the opportunity want here, then it large. don't Totally. pretty Hizentra, too over to skis XX that that. be with far

big. it's what like thinking how that terms year? but know So I pretty next contributions I again, if sorry first, you you're Linda. of X And And then other I one X you early, going are is? that Can to in us sounds out of filings And missed referencing there, help that's maybe about on with be the it the it call. the it's think XXX(k)

with syringes. me let So first, just prefilled start

continue growth, vials see syringes, and over you in what great really these see market growth the we see So we to performance. XXX% and versus overall, dominating in prefilled again overall

will continue. overall prefills So

on at penetration have of about That XX% we ml, end elevate which the XXXX. expect at by assumes to into XX We the to the anything year. don't that now XX% comes least the

take is that Our see with we in what have is until therapy. CSL of XX% current patients that XXXX. early there ml With we XX market expectation of that, product can won't over

be We see you driver prescribers as the loving see a comes. of patients it format. see convenience. when obviously, we So that know, continually patient it and because big the will prefilled We pushing pharmacists

So certainly, come that a lot to in area.

of one yes, clearance expect the XXX(k) ml XX back with the we the prefill in half. is on So

as is some The last business. improvements other excited about one convenience slide, in one, major consumables our comfort to noted our for that on on and expect patients. see the pretty We're both and

It similar here. And of that it like consider any margins. maybe the to question of give final that I a in you sight end there takes might question we again, side, end on Are anything or, you should as gross Is on margin, and mix or of then puts looks a lower pretty whether of revenue facility any but the kind had other other gross factors? upper margins. more be the on the milestones some line growth terms move good the on one there or operational transition, here should front everything

handle Tom that let I'll one. Yes.

depending a the higher or potential generally for could where year Yes, we facility. a in product significant unit QX, targeting with and to at the which and start facility in benefits you'll pump as half then second other our see the for certainly look go We have we're the as start some XX% way our the is efficient Certainly, we to upsides, on locally is outsourced Jason. mix our the of of recognize mix volume. one benefits script, improvement I the more versus When one consumables. mentioned

margins on much deliver forecast see our we side. mix -- on But have the those And puts could customer those the track much well in or takes margins as mentioned on I you say, script, pretty I built. I to depending earlier. are some would pretty mentioned pretty that So we're demand, generally,

because there mix and I clinical, tend always And longer-term maybe that, more If will as the would innovation, be project innovation to margins only margins thing you know, other higher, is mention NRE can't agreements on for sometimes we trade that lower we the see on are one. the commercialization we it's those if revenues opportunities.

Capital the question And of the line comes Craig-Hallum next from Group. Alex with Nowak

With saying up? here? and I May it. there, was year-over-year just expand they weakness drug market. are on what the are out in on And February April even SCIg flat there did and What to to for the March come maybe March hoping in January companies being then why expand start the regarding seeing despite in

Yes.

So the saw that would or that the and January of March. X we which everyone and for growth, continues in with I and looking February. insight be year overall, explanations say real the for we've positive for droppage first to spoken from total in months Nobody for outlook has any double-digit quarter X

So we're everything forward. in come back QX to anticipating

no no diagnosis concerns supply, rates. around patient plasma overall around concerns So

that So maybe them. that. just some nothing that not Alex, were we would side I extraordinary mean and our saw. consolidations from explain There

and a affect of bit sold our a business their last this number through certainly little If did saw and off consolidated, pharmacies year. we CBS of year that into you fourth and quarter recall, had the

that be an some of for drop-off. that explanation So could also

Okay. dynamics There with be could some that.

Okay. Understood.

anything pumps to coming that With do you milliliter really work? out, new the clarity cartridge approved that do cartridge? is device with is for the a your cartridge XX just that XXX(k) to need showing make prefill

syringes be patients. range complication adding we're pretty with anything being Yes. being don't factor in the is steps factor that And our our as overall a for got reduction perform the anything change prefilled human studies, across human as prefilled you've studies again, CSL. see we don't significant from small the now see will We entire one it is it that adapter that given device in our We and system. our to syringe. did the that There

part. job great a on their So

a walk maybe developments now it move then of the deals program? chance XX Novel or those we whether I to move And the pipeline, to those it anything some forward, Understood. again, clinical had the haven't Were the Therapies deck the either, signed? maybe be there Okay. quarter, at have in to look but of developments on that you took maybe maybe clinical help cut step of II to Phase net where from from a back got any us of some XX, III, pipeline. on Just the Phase or sort it's going be the data update or

Yes.

So thrilled of in in I drop With key first, out had right see any fallen on couple clinical a with positives. going pleased or we was everything general, that really our out. of biotech clinical was nothing trials fail. now that trials didn't I

the I probably that will III. there's say, in we're this we third, candidate having have indication. opportunities hoping have I clearly, double as one pipeline to collaborations. the number that, would IG of quarter. about Phase on excited would sorry, that Having with we pleased another in we believe say we're We're deck big is the other a signed Second, in And -- progress thing said

get us like So collaborations a year it about it to think signed. XX, XX about took those

Usually, we XX months. to close, to it start the customer until we from is X a talking time

good So collaborations We're I increases excited. And come you 'XX. can of good to back say would most in half expect progression. overall, our of in movement, the

with associated past Our development measure this they've out see of quarter. a office by that lot and the people, halves people that I or teams business R&D business are been our any and busy. I of

that's great us. So for news

list? to considered additional That's fourth do to those you about already classify a they'd and second, Just does like good it? top that, Maybe how a that? names that signed include the that to drug the regards think company, hear. on have you funnel, add are deal where of third, with when on Or with you

So could with. we already be companies they're current business do both. They

new from base. So best current businesses your customer get place to

several that collaboration be but those So we additional indications. or at drugs with, are of companies they're additional adding already may

are, of XX% And are that So expand. then doing with they're today. them them we that's to some what working of many new work say, I are geographically would or brand-new what to of companies we're

And the there presentation are will this now to time. questions I back turn further the no at hosts.

saying call. KORU Thank I'll thank we'll to you. you close the and just the Systems investors, that, to our you entire team. And Again, by thank close with Medical

does That line. and your please today's conference. that ask you conclude your you We participation thank for disconnect