KORU Medical Systems (KRMD) 9 Aug 232023 Q2 Earnings call transcript

Greetings and welcome to the KORU Medical Systems Second Quarter 2023 Financial Results Conference Call and Webcast. At this time, all participants are in 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 [Indiscernible] Gilmartin Group. Hannah. ahead, go Please

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

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

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

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

the call For X:XX related X, to listening the the have was most comments additional the Since topics press may Wednesday, company's made SEC. Eastern to recent filings benefit with then, on these held And time. XXXX, replay. of recorded p.m. This and release approximately reference please those August at and the discussed. company

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

joining And us everyone. Thank you, afternoon, Hannah. thank today. you Good for

by financials milestone Vision I key slides our updated commentary. a walking updates our 'XX XXXX. the review I Tom will progress will to we for close and update use then with will call, quarter. today's second through guidance. will During then business support begin against

to open be Q&A. the Following call for remarks, happy we'll our prepared

in the highlights achieved presentation. further we our important milestones will Vision key into I and to make that progress towards the with advancements on continue as quarter second today's few pleased very We're in dive quarter, A 'XX.

core growth saw which trial. double-digit the In the our or markets, in of SCIg which We collaboration growth. another First our about a past continued we in contracted of efforts drug for system another to immune-globulin subcutaneous international Freedom year schedule quarter. ahead we system, the our submitted and Freedom X%, the of therapies U.S. over XX had to Infusion for syringe our continued business, XXX(k) quarter ml outpace X prefilled progress dose. use XX novel And signed in Hizentra a of we Phase the business,

QX of Finally, deal we're market revenues. year updating therapies, in the to change SCIg reflect novel decline full a 'XX subsequent outlook the in company's timing the and signings and U.S.

the into the the his jumping our I welcome details as to to achieving Before would integral to CFO. Tom to grow to quarter, new well has of I'm been like of continue role. Tom moment as his take many company add new for a finance processes and building team our I discussed, and him systems. into as the milestones role value excited steps as he to out

moment begin to everyone a we us want taking do. to remind by what I today

be at to at making Our treatment mission KORU continues reality drug a home. subcutaneous

day. their XX,XXX homes. systems comfort of drug that Many and being Freedom the of patients new Our in more ones self-infused them than has every Infusion chronic added their

therapies XXX has regulatory customized can infusion states system Freedom approval support in X from established and multiple disease be and over XX mls, Our volumes drug and for countries. to

an to received on core Once support engineering, drug efforts approved our non-recurring it is and a business. becomes we clinic provider, of our system therapies drug with Our part companies biopharmaceutical innovation delivery launch. completed Freedom drug become towards supports a requirements novel services business clinical in their and products and regulatory their approval,

core includes pharmacies international and to commercialization and home Freedom specialty of care system our our domestic business The organizations.

than We of have in suffer XX% illnesses that our a of broad of market, valuable less the source users revenues. and patients the with recurring Majority market offering of indication penetrated. label chronic of predominantly our SCIg lifetime a system,

model recurring KORU potential has business, Our for collaborations business on the new future revenue both XX core offering system. our and business with the several total with drugs NT a revenue to-date,

with three Moving relationships to partners drug KORU first, U.S. transition a Today, XX in the the in in home. pharmacy our growing specialty to leadership patients strong the the growth drivers. deeper with our Vision strategy in and Starting SCIg. has dive to therapy our our and position XX,XXX over patient

in During than XX% fluctuation overall larger down SCIg quarter. normal the on a quarter recorded scripts we the seasonal QX saw

conversations movement high-single the continue specialty to on reimbursement industry efforts care partners, to specialists concern over they focus no quarters, home. Our digit the to with and levels supporting of digit levels, pharmaceutical of researchers growth historic coming saw growth over these the as pharmacies, returning health and low-double

Many as due year, a lower event is a immune the versus generally which rates to prior to saw preceding this an blip infection deficiency diagnosis.

confident as we can shown in have ability our outperform. We we remain

new again the by revenue, pump sales had and outpaced was The we growth recurring double underlying Our led market. growth. a growth consumables digit

continued increased core adoption trends. preference second continued penetration patient from overall in XX.X% A the quarter business syringe syringes, drive key second overall U.S. The to the and recent strength and quarter. about prefilled convenience driver for prefilled different was of to no our and is prefilled

marks syringes. KORU Medical's company for XX-ml the for the This to simplify the patients. During quarter FDA submission the use the XX to subcue Freedom therapy in permission a XXX(k) milestone our Hizentra of system, another submitted prefilled Infusion

two XX-ml April further -- additional an the available immunoglobulin of is syringe will when and in thirds approved prescribed Hizentra first and patient be that most FDA X-XX offering market. syringes, of formats the subcue satisfy XXXX. and available thirds the XXXX the XX-ml Hizentra The a in two prefilled the the currently in to satisfy XX-ml prefilled

us and we share, drives The conversion increased as believe driver to new it important overtime therapy. subcue to and prefilled conversions growth syringes is starts for an

use As a only reminder, prefilled our clearance remains FDA with for syringes. with system Freedom Edge the pump

where to we agreement NT a on of system Infusion Novel for use a new collaboration. announced our a with weeks of biologic. We with validate This endocrinology for clearance Freedom biopharmaceutical Therapy Moving collaborations ago system company another business, focused Freedom few the the at-home our use. is are signing biopharmaceutical to for novel

of new our to on The collaborations that of we new July, for in with The studies begin this genetic roughly expected drug of closing currently the pharmaceutical track by disease in X and to treatment developers XXXX. global treatment. rare remain preference for XXXX two collaboration XX,XXX of end no a has year-to-date, six we brought Phase collaborations

additional XX potential we opportunity. signed total, have have XX In and a pipeline we also collaborations, high of

finally, And ended over XX% We year-over-year. excited of our with opportunities about the quarter across growth growth growth representing we're several markets, geographically. key

in distribution, XX fueled in IG supply which drive vital strategy EU in and become from is company. the the by now positioned for patient to New countries. growth key increase International growth, has over starts well a the we're benefit continue our to third

and of today will total billion. TAM which We in into have NT doing opportunities. patients including business collaborations X of over dive our roughly potential pipeline our I a $X.X a now million further NT shows this to slide, now bit

five subcue management of source Our recurring of and an lifecycle the support IG at and top indications. drugs on work increasing growing candidates years. manufacturers additional represents of their in five revenue this the our potential categories the next six The as across label IG IG bottom penetration, drug the outside base pipeline new with nine additional launch of pipeline of to important strategies we becomes

all not to three patient double the with over to will base. for of that these these with up any combination XX,XXX, succeed, but patient its with current potential two of know We XXX,XXX likely populations has and patient bases

to bolded newest entry, launch have shot collaboration, patient I a on is excited unmet late-stage major goal we need. are the to solve as the our add pharmaceutical closer

We of adoption are by progress Novel help the excited delivery to around benefits home. patients and in to subcue continue Therapies for our business as we greater our drive knowledge the relationships

potential to brings five the show both our next growth This NT and business our coming core together, over slide years.

XX%-plus XX% subcue is Our IG, growth of with business us strong Further commercialized on multiple see an gives treatment those today, lot we than being which ahead. recurring with of today. a core less penetrated revenue drugs drugs

pipeline one to on next we over projected our timeframe. five launch based drug NT As timing, revenue plus the opportunities build year we multiple see

ongoing As updates. Therapies remainder continue our we provide the will that are of look to 'XX, are we we to making additions to excited and collaborations, confident important Novel

our to commercial the the to KORU drive next is out progress label our years. in phase. slide lays next expected also over key and products new few This addition businesses and progress innovation in products to the new milestones both In

connected. comfort, Our product is centered strategy convenience and on

Pump milestones label two completed with prefilled we extension. line expansion for Freedom quarter the XXX(k) second the XX-ml During XX for syringe submission

the For we XXX(k) anticipate another of 'XX remainder consumables. for filing our

excited the system. We're about next the ahead. for new pump Looking Freedom further generation and IG therapies on and novel drugs multiple extremely platform

of Another quarter across both progress very NT good core innovation. and strategic

to will financials. call Tom over I to review our the turn now

net saw driven challenging X% and prefilled to with quarter Linda. consumables and you, quarter adoption. increased core new everyone. in excited in X% $X.X Well, increased declining I SCIg was of a solid growth total U.S. pumps, a sales primarily afternoon, Thank report And growth good we a Domestic growth million. by of market, am accounts syringe

IG global by availability. driven strength core volume across several International EU was and growing growth markets XX%

second the gross Novel in XX.X% year of as guidance. wins. quarter revenue in by in comparable XXXX by range quarter some of declined manufacturing. completed primarily of to to the increased primarily pipeline efficiencies margins quarter compared the XXXX, with the margin year, net strong half as XXXX. increase the Therapies' driven last timing to of of first second our in the increased NRE in was the XX.X% of in We XX% margins midpoint revenues Gross related The well gross

outsourced in at look two we we of gross by products, significant the in QX completed. margin As fully full expect reported year, lower driven as improvements is half quarters, we the which second

sites efficiencies now lower from overall labor we and We our overhead one. as also costs consolidated see manufacturing US have improved two to

XX% the reduction XXX XX% and XX%. half The XXX increase increased to basis lead site and and XXX with in contributes pricing will between full project margin to margins gross the basis a to of points improvements. a back of combined year margin of exit gross basis points We about points our to gross and XX% outsourcing year manufacturing improvement

cash at a QX Our from prior end and burn $XXX,XXX XX.X, quarter. cash the of the represented balance was

burn of excluding compensation depreciation. was stock Our biggest cash cash of for loss operating non-cash our items and driver net $X.X million,

invested also CapEx for in our $XXX,XXX next generation products. equipment We for

and $X.X on our executing capital and of raw worth million cash material these million, these manufacturing of $XXX,XXX transition. driven by cash our were goods as from planned flows, down Offering $X.X working outsourced inventories improvements outflows we DSO draw reduction finished improvements of inventory

$XX We a guidance I revenue, and balance to our plan and and reaffirm according continue which will more of control expense of cash to into greater our having than cash million, guidance as our gross year guidance. end I discuss get margin

in our decline We in market, XXXX on to guidance are our the year XX% U.S. for change the QX growth U.S. range. reflect of from outlook script updating assumptions underlining digit core the full a to market mid-single resulting

updating a guidance are we in change addition, of In therapies timing reflect novel to revenues. our

in a range year year that of of expected to This the midpoint million in in half XX% first the million, delivered between implies XX%. the XX% rate Full XX% at revenue versus $XX representing to was the of is half. now XXXX to be back the growth $XX.X growth

Some get pipeline execution double-digit as and SCIg on the include growth key continued our international returns NT, there the the as future and that current Therapeutics market deals will well Novel drug growth. drivers us

year, to XX% full XX% the between between Gross year XX% remains margin exit to and guidance the for to XX%.

progressive With behind plan, improvements the our of and average we full of we initiatives in continue second gross to margin benefit manufacturing the a from to step prices. the our us see gross completion margins, transition outsource manufacturing two goods quarters as first half half lower selling and cost see expect in change the on of

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

capital be including with approximately $XX inventory during $XX.X half our quarters improve spend. equipment the will working of year. that million phasing projects We And further lowering the for operating second continue by our to expect expenses expect million we between by program innovation $X our prior a driven R&D in million reported and to invest to versus capital, we vary

burn gross cash in to It's by half see note from second net also important we driven losses lower the will stronger margin half and working second in revenue, the improvements increments. capital improvements our

are our debt anticipating equity balance not financing, the may cash raise at we we this sheet to While through look at non-dilutive or increase planning any time.

Linda turn comments. closing to will the I now back for call

XX over moment years of million. XX revenue transform to from provider series December Tom. delivery a we company months an company of leading ago, to XXXX, and the I laid about to and drug a IT In review launched a Thanks, key take Vision progress. want our milestones, $XX out This to five

milestone by now of We were Phase final five the which end of significant trials, have launch. two projected one We 'XX, X trials in Phase before first patient indication commercial drug Our we drug the a progress. phase X projected new population or over XXX,XXX. of

further year. by new further. with clearance one end core patient a projected remain We by XXXX. of and we the we XX,XXX five the [ph] one which prefilled the expected with our confident revenue this and potential of four And drive We drug of syringe population have launched XX-ml treat eight which, and for completed, candidates have products indications

Our revenue supported of strategic areas. million is now $XX key five by projections

updates. Our into to-date, innovation, and expansion. see our We're driver, approved subcue to base core the followed we being to final driven look business largest advancements and opportunity and products gains and forward back major excited and further that increased share by further our current look NT penetration OUS revenues, is by

In closing, all I'm on And the progress front. encouraged of by businesses. our quarter second innovation across our

ahead to and patients, have delivery and a exciting that to continued work evolve add value in strategically the continue a company customers leader We drug and will as home shareholders.

entire I to now another efforts for for turn KORU Q&A. over want I will exceptional on it Operator, closing, in quarter. you the great to Finally, thank team

you. Thank

Instructions] We [Operator will Craig-Hallum first with question The now ahead. Alex Nowak Please go the question-and-answer comes session. begin with Capital.

there Just sure the you I'm hearing Linda, pharmacies, this with well. afternoon, out of patients you first companies, Okay, mentioned, great. explain Good market? kind you everyone. SCIg what just are curious, slump in to half theories drug spoke as the

hearing explain are there weakness? that what you out would Just the

so And QX? then how ultimately, is far in market the evolving SCIg

question. the Hi, be Alex. that Thanks one the received. we for Figured might first it

bigger overall we typically X% as the also very started fourth then in had see two what than XX%. digits. market double in overall So market with quarter February And digits we've decline, decline to quarter know, and January we very But we was in this a And one bit high-single with then January see strong February, between strong, somewhere seen in prior. a the we the a and of of market. which XXXX growing this

one review and back, specialty our the companies, you they came driven to discussions occur. generally diagnosis we one. spoke see are disorders by different with immune People of where pharmacies, you overall reimbursements, get people So imagine on that's go pharmaceutical was that of that the can The to infections. a and infections, deficiency that diagnosis doctor lot thing this

heard. that reported encouraged than that Other we IG moving consistent infections driver Given the them saw as quarter that see of them overall reported lower we we in did think have IG lag both had of XXXX, we most subcutaneous XXXX. publicly, some forward. factor franchises, last is everybody That of them have impact the and of seen into may Takeda was both -- for Grifols. therapy as I strong to big a we growth to mentioned that,

IV what this also to And they guess the prefilled can CSLs What getting for on helpful. what are their for with share conversion, the XX-milliliter regards launch. saying how I subcue then about Very their positioned Hizentra? maybe to are business and market expand they-- here do

have obviously informed publicly our you we then I maybe it's well about conversations confidential KORU, would octapharma. more CSL about feel as think there. out because discussions, by presale you speak But unless which I'll talking at of And be is across have have we all launch now, Grifols public. their broadly is And how any as

syringes four So with is are major we're that Obviously, prefilled XX% doing now by presales. of working are IG as convenience number excited particular pretty offered as that comfort range And as the they Why XX% for reduces cases that of to XX% to much three XX% providers this? the steps the pharmaceutical a in in towards these and preference the prefills. over some the well for for XX user. and

over XX% years, is, XX% on five a So the low see prefills. what market will coming on a much out we as high the of as project converted to we the end we and as look end be

So obviously into as patients with it will that KORU and perform drive revenue we believe bring at that as therapy, the overtime easier with as see doctors kind that of will conversion, prefills. well we significant new much therapy to believe becomes share home for

next get midterm penetration by? out overall exciting short So, we're the And I the over can see A we what here rates. is penetration an subcue XX-ml exciting most then, do as what really excited we year. as to term

to one pipeline. Yes, multipart little Therapies here. absolutely. It's question the with and Last regards Novel

I think one last the during it quarter, ended quarter at quarter, was pipeline, the XX in XX. the you added

the So confirm there? details studies reformulations off just Maybe on drugs another of then any there. the the expand that And any you. XX want Phase any Thank is funnel to beyond one and drop XX. detail X either

Yeah, correct. thanks, Alex. Yes, you are

You therapy cancelled home. company. an in actual did opportunity oncology one We was the for out, oncology the the the math It which well. was program drop pharmaceutical was an at had candidate

brought down So XX was to XX. our one cancelled, which that back

all And it So in And us. overall that's why like through. XX not as those of make a we we're number know further projections, that on overtime. showing will I'm happen our to XX great to feels counting

a have that uptick in say numbers opportunities also pipeline. overall see we in and I quarter would over of our the new We have, those tremendous last seen

autoimmune many talked their about, many but in So drug those therapy in also further across who everything ones. and the existing from and I've new of disorders are oncology classes targets, drained there,

that get keep lots get signed of a we're all could do that. to faster have wish we and work us sooner hard we working to that I the So done. could inked But busy. the so work paperwork deal we

right. Appreciate update. the All

Thank you.

That's great. Thanks, Linda. Thanks, Tom.

with next The Kyle Genuity. comes with Canaccord Please Rose go question ahead.

It's Hi, how's for Kyle. on it everyone, going? Caitlin

And driven the forward? that? pump comparison then electronic was this the quarter, with trial, moving where's progress growth being about are growth OUS from? you Thanks. can strong And this surge on where So sustainable as on is think growth rate, we

Caitlin. Hi, Right.

areas. growth, OUS in from growth. the is we excited by the couple So uptick coming yes, The growth really of are a

IT if had all, recall, the -- of year, First last shortages you supply internationally. some drugs we still

we're that growth several across drug supply back, markets. is So seeing now

So it's from in the about. one excited Saudi we're to Arabia. to any which not particular UK That's market, everywhere, the quite Nordics

So subcue news the of see us. really into We for driven Governments levels potential that's lots home. we therapy opportunity markets. higher movement great see of of international in penetration healthcare of and are the

On part, we're is for. planning that the what sustainability

will Sobi a new last we was launched launch the in of we half year with which that Aspaveli the had However, drug Europe. in the product we see year, second

So we've tough we second half, got project in that a compare. the

as maybe for project the growth So not for front we the saw half quite back OUS. half on that as high the

front back some the see So XX% half given toughness us, the in the launch. for of we'll growth through half year that drug

Great and then -- just

Margin question.

No. [Multiple speakers]

you. Thank

we benefit electronic the system systems mechanical which just the our patients pump trial pump in is for trial, that on everyone's So is phone the enroll to to comparing trial, in available are Europe. continuing a KORU

December of We latter this year have in the expect reported from the that timeframe. in part the first trial outcomes to

little you caused could deal be color change you a Thanks. a then little Novel more to that guidance the signing your bit? And That'd cadence on Great. great. provide Therapy

Yeah.

works to got into once the how revenues. is that we recognize signed, in two anticipated deal the So we've to would need year-to-date, order signed complete deals get and we we we it work coming had have year,

first see into of deals So having of more half the we now a lagging are We anticipated the those year. signed the deals back half our year. in few

that revenue have us think And still not what about revenues, confident with the to So is commercial deals signed caused to the the on projection. prize in we business, some out We count which major pre-commercial in to revenues. our we comes these of concern. feel six on The the cause launch. for very again, lead overall, number overall obviously all total push goal. real with shots we but But

slippage by year. some of just So affects a our couple months,

Caitlin Thanks,

you. Thank

Bednar The ahead. next Piper with go Please Sandler. comes Jason question with

to step level Jason. will for target? and John confidence one a of backwards? market of what XXXX Tom. Linda at hit Hey, then frame This to on revenue longer does And market that is just the your need in Can order the not you U.S. the term, its company for U.S. take further grow the

John. Thanks, question. Excellent

we And if future So Right. U.S. you the number sheets, your what could is best back. projection of of I I guess, can on market the think we've do. show projected looking

history, like So happen we except have any in not that COVID. through prior seen a quarter

back, this. So see a think is COVID coming phase going think unless we I we're of don't continued to

that's I and and the saw I 'XX. in We overall significantly subcutaneous where the quarter reported saw the earlier therapy grow 'XX fourth we got, first why of that in question months of two

'XX an I So greater saw think think we overhang really that. an to overhang probably it's was really due some a QX really increased overhang I drive infections blip this Omicron from prescriptions. where

again, I which I see that given where the overall end So, I'll past will market is, comeback. the a believe definitely started,

see it July come strong. we was will Right away, month back? our Now,

we to and which quarter pharmacies and report, market precursor in end look pharmacies at coming is than user what demand our back. specialty wholesalers, And our the numbers. two RGL sales strong we a that [ph] to our So also, our demand was our outperformed very think rather overall we user to which is end demand, is that's end user

will business for longer excited it Obviously, XX% term grew script of the basically what a half with first U.S. In flat the hit numbers? our As year, our take that market. I'm pretty to

news. great that's So

the -- in. And to we a a to it X%. little see things these start we're X% depending range Obviously, around like hit XX% between on XX% a year. start come grow to prefill and to or back think to X% off going anywhere now see to market an kick numbers, need as we projecting that are We XX% overall growth we market, projected

FDA speak the And feedback Great, Hizentra? you've from received to in for the for any XX-milliliter you the then far submission thanks, thus PFS XXX(k) can Linda.

So in it in review the now, passed news first it's great formal is, the news review. substantive That's for us. good stage. It's

the have was good Substantive going I'm technical any not a reasons. any phase, rejection that clearance of had the for. be take the There to And was November accepted. questions a review we thing. which hope file as which file in to So would timeframe, no for we today, have have ready on

just and in timing CFL on is their that. not announced first project, clearance the publicly we of got this that. public launch half They but it sometime nothing's will be 'XX, of

we to 'XX the get clearance of half in a that the So we'll get our start. quarter, to the pre-ship or in put great of project able QX us to will we great late more QX, position will in of back off either which either a likely fourth be quarter

thanks, Linda. Great,

Thank you.

remarks. the Ladies session. company our go any CEO to gentlemen, over for of I concludes ahead. Linda to closing and President question-and-answer this Tharby, would turn conference back and like Please the

your the Thank for KORU you QX say thanks a rest wish team everyone I'll call. just of us for wonderful the everyone to and day. joining again

now attending conference for Thank presentation. you This concluded. is today's

disconnect You Have day. your a may now lines. good