Good morning, everyone, and welcome to this year's Canaccord Genuity Growth Conference. My name is Caitlin Cronin, and I'm one of the medical device analysts here at Canaccord Genuity. KORU Medical Systems is joining us today, and they are a device company focused on innovative, portable solutions for the drug delivery market. We're very pleased to be joined today by Linda Tharby, President and CEO, as well as Thomas Adams, CFO. Before we begin, I want to remind everyone of any relevant disclosures which can be found on our conference and our firm website. We will begin with a brief presentation by the KORU team, followed by a fireside chat, and I'll try to leave a couple of minutes at the end for any questions from the audience. With that, I'm gonna hand it over to management.
Thank you, Caitlin. I hope everyone enjoyed the taste of Boston last night, and we're gonna dive right in. So KORU Medical Systems, our trading symbol, KRMD. Let's skip right by our forward-looking statements. We focus on leadership and subcutaneous drug delivery. So as we all know, one of the biggest trends we see today in healthcare is the movement from the hospital to the home. Our system is called the Freedom System, and we infuse subcutaneously, so just under the layer of the skin, large volumes of drugs, so anywhere between 10 and 100 milliliters. The most common drug delivery system that people would know would be diabetes drug delivery systems. So we're infusing anywhere between 10 and 100 times that volume, generally on a weekly basis for our patients.
Today, we do that, 90% of our deliveries are in the home, done by the patient themselves. As I'll talk about, we're very excited that we will be going into infusion clinics, over the course of the next year. Our trading symbol is KRMD. Our corporate headquarters are in Mahwah, New Jersey, and we have about 75 employees. We manufacture both in Mahwah and also in Central America. Our system has about 70+ global patents and 20 that we filed, on our system, and it consists of a pump and the disposables, which generate about 85% of our revenues. We are cleared today, in 36 countries. Very important. Obviously, the drugs that we deliver, for them to have global, clearances is critically important. We're cleared in about 36 countries with about 8 drugs.
In large volume drug delivery, KORU was one of the first pumps to be approved by the FDA for patient self-administration in the home. Our revenues last year, full year revenues, $28.5 million. So I'm gonna dive a step deeper, both into our platform and our commercial business model. As I said, we are focused on delivery, movement from the hospital to the home, and what we see is about a $2.7 billion total addressable market opportunity in front of us. We go to market with our Freedom Infusion System, and that system, as I said, consists of a pump and the disposables that go along with that. We did a post-market clinical surveillance study last year with over 4,000 patients in that study and found the compliance rate at 97%.
Just as a point of comparison, the average today for oral pharmaceuticals would be in the 60% range, so that 97% range shows the safety and efficacy of our system. It's simple, it's low cost, and it's reusable, very important for sustainability, and allows our pharma companies a risk-free entry to the market because of those 40,000 patients that use it. So on the left side, we have a core business today where the primary portion of our patients are chronic patients. They are infusing a drug called immunoglobulin. Today, about $500 million TAM in that space. It is about 20% penetrated in subcutaneous therapy, with 80% of patients administering via IV. So still a lot of room for upside growth. We see the overall growth in that market of somewhere between 7%-9%.
40,000 global patients on our system today, the majority of those, over 30,000 in the U.S., that generate a recurring basis of $750-$1,000 per year, per patient. We're now focused on OUS. Our OUS market, although still small, in the $5-$6 million range, grew just about 50% last quarter, and there is a sizable TAM outside the U.S. for that, and that is a major focus for us in penetrating. But for a decade, we've delivered primarily IG. So for the past 2 years, we've really been focused on getting new drugs administered with the system. That requires us to get an FDA clearance on those.
And, just for note here, 23 drugs today in development in our space, large volume, of which we are the leader. Today, we've signed 16 total pharmaceutical collaborations that amount to about a $2.2 billion TAM. The most exciting part is that over the next two and a bit years, we anticipate getting six new drugs on our label. So three of those are in that growing IG business that we talked about, so continuing to grow that core business, but three are outside of that category. Two that will allow us entry into a brand-new market, which is the infusion clinic, and one of those drugs is an oncology drug, so one of our biggest patient populations. So very excited about that.
So those drugs are all launched drugs today, which also removes any of the risk in terms of the overall ability to get those six drugs into the market. So this is our pipeline of collaborations. A couple of things to note here is that there's growth both in our IG business, which is in the bottom, so that 7%-9% TAM, continuing to grow our indications, new markets that we're entering with those. But on the top, seven new drug classes that we're entering, and of course, that one oncology we expect to file a 510(k) for use with our system early in 2025.
The rare disease biologic, we're hopeful to enter that one for a 510(k) approval by the end of this year, and then several of these will follow either later in 2025 or 2026. If you add these numbers up, and I talked, not all of these are chronic, but obviously, almost well over doubling today our total patient population count. Maybe I'll just end here with our financials. Over the last four years, doubling the size of the company from approximately $17 million to this year, we just raised our guidance with our Q2 earnings results to $32-$32.5 million. Showing our latest quarter here, strength right up and down the P&L, starting at top line with 22% growth. We've really been focused on our gross margin.
See dramatic improvements through some outsourcing initiatives that we completed last year. Our OpEx really focused on cash flow breakeven. We've made significant investments in in innovation and in building the strength of our teams. So we're now able to. We'll be, I did not mention, but filing a 510(k) for a new product this year and next year, completely turning our portfolio to new product. So dramatic improvements in our net loss, EPS, and overall cash burn. We are committed to cash flow breakeven by the end of Q4 and for full year 2025. So, Caitlin, I'll turn it back to you and just maybe leave some of the investment highlights up as we go.
Thanks, Linda. You know, maybe let's start with the Freedom platform and SCIG indications. I mean, you mentioned over 40,000 patients currently using your platform. You know, where is the SCIG market today, and has it recovered from the weakness that we saw last year?
Yeah. So maybe let me start with the weakness, and I'll end on where the market is today. So last year, we saw as we came out of COVID, our patient diagnosis generally takes multiple infections in order to be diagnosed. Of course, during COVID, everybody stayed home, so we had a bit of a lag effect. At the same time, all of the global IG manufacturers were building up their overall plasma bases, which you require to make IG. So what do we see now? We see growth 7%-9% in our overall patient diagnosis count. We see IG supply built around the globe, and we see significant investments by all of the pharma companies in their subQ franchises. On a global basis, governments are moving aggressively.
Most governments mandate that if subcutaneous therapy is available, that that is the mode of administration. Here in the U.S., there is still a split between IV and subQ. And I would say, lastly, you know, one of the big things we're excited about is, although the trend had been moving, to administering subQ as the first mode of administration for a patient, the labels on all the drugs said you had to go to IV first. This past quarter, one of the major IG manufacturers released a clinical study, was approved by the FDA for the first time, that a patient could move directly to subcutaneous therapy. We think that will be a big boost, for the market, as well as pre-fills, which are a much more convenient mode of administration.
So we see most of the IG manufacturers moving their drugs there. So overall, we see growth in subQ outperforming IV. We see a healthy market both here and ex-US for... We posted in our last earnings for the next 3 years, we see this 7%-9% growth.
Mm-hmm. And then you just touched on pre-fills. You know, you launched earlier in the year with 50-milliliter pre-fills, compatibility with CSL's 50-milliliter pre-fills, and you estimate that that covers about 70% of the market versus the under 50-milliliter sizes you only previously marketed, in compatibility with CSL. So how's uptake been of your system since the launch of the larger pre-fills? And I guess maybe just provide the audience some context for how important the larger launch is.
Sure, sure. So, maybe I'll step back for a moment and just talk about modes of administration. So to use our pump, the patient in the past has had to take a vial, which we've all been familiar with vials of if you've ever gotten an injection or infusion of any sort, you have to draw it up into a syringe and then perform the injection or infusion. Pre-fills are a mode where you basically take a syringe, and you put it directly into our pump. So the first thing it did was reduced complexity for the patient by 20%-50%, depending on your dosing ranges. So anytime you make something more convenient, patients are more apt to do it.
It also, for doctors, makes it much easier for them to provide subQ if it's easier for the patient. So overall, we see pre-fills being able to, over time, we believe, and, with all of the IG manufacturers, 75% of them are public now, that they will be moving their franchises to pre-fills. So, we think that this is another growing trend that will help move the market to subcutaneous therapy over time, and we were the first, our pump was the first to be indicated for use with pre-fills. In our innovation portfolio and part of those, investment dollars that I talked about, we have really geared our portfolio, to the pre-fill usage, and that will happen, next year, where we'll have a pump that, we feel again will.
reduce the amount of complexity, increase convenience for customers. So overall, patients prefer pre-fills 85% of the time, which is a great number, and maybe the last thing I'll add, we're very excited. We just signed a deal with SCHOTT Pharma. They are the world's largest pre-filled manufacturer. So together, we have our partnerships with the pharmaceutical companies, we have the partnership with the world's largest pre-filled manufacturer that contains the drug, and now you've got the world's largest pre-filled pump manufacturer all working together to really grow this market, share our pipelines, and ensure that the patient gets the best experience.
That's great. I think you also noted that CSL has decided not to market vials going forward. Is that, you know, a competitive advantage for you, considering, you know, your leverage to pre-fills going forward?
Yeah, we... So, certainly, we work with CSL in that platform presentation on a global basis. Again, our clearances have been ahead of our competition, so that helps us in so much as we're the only player in the market. Here in the US, we do have a competitor for that pre-fill market. So, a lot of times it's a vial to pre-fill conversion for us, but the real thing we're watching out for is, again, that new pump that we launch next year, which we feel will be a huge step up and will only be compatible. Today, our pump can be used with any consumable. That will be a platform that can only use our consumables.
So excited about that, and we feel, again, that the convenience offered for the patient will give us a tremendous advantage, with CSL and the other players that are coming into the market space.
Mm-hmm. That's great. Maybe just turning to, you know, expansion, innovation. Within your platform, you have 16 collaborations, you mentioned now in total, three signed already in, in 2024, which was your goal for the year. You know, in general, your novel therapies business serves as a pipeline to bring new drugs and indications into the core business. How does that translate to, you know, long-term expectations for your novel therapy segment, versus your core segment growth?
Yeah, great. Thank you, Caitlin. So, today, our core business is, you know, 95% of our business. Our novel therapies business is the work that we do with pharmaceutical companies in clinical trials, in customizing our product for their specific drug and patient applications, and we expect that business, overall in those clinical revenues, et cetera, to generate somewhere between $2 million and $5 million per year, let's say, over the next... It's what we did last year and what we project to do. We did about just under $2 million last year in that platform. But most importantly, as you said, it generates a launch of a drug. So I released last week, I talked about what we think with just with those signed drugs and just with those six launches.
Remind you, this is not in peak year. Usually, a drug takes five years to get to its peak year, but just with those drugs that I mentioned, those six that will launch, we expect $10-$20 million in commercialized revenue in our core business, by 2026, on a full year basis. If, you know, we look at the numbers, that's a sizable opportunity, and that's really what... It's great to see, right? We've got a healthy IG business that our core IG business last quarter grew 20%, last year grew double digits overall. So we have a healthy business.
We have that ex-US opportunity we're going after, and now you start to see the steady course of new drugs, 6 by 2026, and then we've got, you know, the other 10 collaborations. Hopefully, they're going to be successful with their clinical trials, but you have a whole pipeline of new drugs being able to launch and our innovation efforts, ensuring that we have a platform that will be able to deliver all of those drugs.
Yeah. You know, when you mentioned the oncology opportunity, and that's actually an infusion center opportunity, can you talk to why that's so important for your platform going forward, having that, you know, on label?
Yeah. So, first, obviously, oncology, unfortunately, is one of the largest growing drug classes out there today, and, this oncology candidate is a launch drug today, launched a few years ago, and, we had a very entrepreneurial distributor in Europe, working in an oncology infusion clinic where there was a major unmet need. Today, those nurses that administer that drug spend preparation time and then 10-15 minutes over a very ill patient, administering via manual push methodology. That takes, as I said, somewhere between 10-15 minutes with a lot of pounds of pressure to infuse that. Their hands were hurting. If they had to do more than their 3 or 4 a day, it was difficult. Introduced our Freedom Pump. We now have 20 hospital-wide system using that.
It's off-label usage in Denmark today, and 97% of those nurses wanted to continue to use it. So, that got the pharmaceutical company engaged, and now we're working on a global launch of that product in over 26 countries with them. And so it's exciting for us because although I talk about one drug in the infusion center, there are eight drugs that have been launched that use that same mode of manual administration. So we see this as being our beachhead drug into that market and believe that we have a major unmet need we'll solve. We'll solve it at a low-cost way in a reusable platform that we already know nurses are very excited about, and the risk of that launch is relatively low because the drug is already approved.
So, and maybe the final thing is, it gets us into a whole new market, which is the infusion clinic, which to date, all of our administrations have been in the home.
Mm-hmm. That's great. Maybe just turning to international, that's been a very strong growth driver for you. Can you discuss what happened in the Q2 with the accelerated shipments, and then what you expect, you know, going forward for the rest of the year, kind of given, given that cadence?
Yeah. I'm gonna start and then hand it over to this guy 'cause he, he's much better at those kind of things than I am. So first, I would just say internationally, we're, we're very excited. As I showed on the slide, we have, today, our market share globally is between 10% and 15%, and we have the opportunity. Why is it in that level? A, it's just been a matter of focus, so it's great to see our focused efforts over the last year and a half or so really paying off. But second, it's an electronic pump market. So the U.S. mechanical pump market, which is KORU's system, ex-U.S., is electronic. Our consumables, which are 85% of our business, work ubiquitously with electronic pumps, and those electronic pump companies today do not have a consumable.
So, we are aggressively going after those markets, and we had a great quarter. Last quarter, the exact growth number is somewhere around 50+%, but I'll let Thomas explain the variation in the quarter.
Yeah, Caitlin, we had one customer that bought about $300,000 ahead of plan, so they bought in for Q3 sales. So, with that, with pulling out that about $300,000 growth, we were about 20%. So just from an expectations perspective, we're very excited. We have expanded internationally. We have a lot of new distributors that we picked up. So we are waiting and seeing, right? They've bought their initial orders, and we're excited about what we're seeing so far, and we expect that business to be 25%-30% growth for the year.
That's great. And I think you guys got Japan clearance recently as well. You know, how large is that opportunity for you?
Yeah, we see Japan as being. First, it's our first entry into Asia- Pac. Japan will be a top 10 IG market. Today, overall, we said that we have about 40,000 patients. Japan has about 5,000 patients overall. Most of those today are in the new area of growth for us, particularly ex-US, called secondary immunodeficiency. So most of these patients are not chronic, but there's a lot of them. They are generally cancer patients whose systems are immune deficient, so they'll get doses of IG as they go undergo their therapy. So we overall have said publicly that we believe Japan will add about 5% overall to our international growth numbers next year. We're just in the process of... We've got a few more clearances to get through with the regulatory bodies.
We got one for our pump. We need one for our consumables for use with the electronic pumps, but we're very excited about Japan and, as I said, first entry into Asia for us, so that's the other big thing.
That's great.
Good. Yeah.
And then, Thomas, give you a little bit more airtime. You have significantly decreased your cash burn in recent quarters. How did you achieve this, and, you know, are these cuts sustainable, and-
Sure.
And what are your expectations for cash burn, you know, going forward?
Yeah, sure. So you have to remember that our business, we have 40,000 patients on our platform, so that's a nice recurring revenue. We made a conscious decision back in 2021 to reinvest in the innovation, the foundation, which is our company and our manufacturing footprint, as well as the novel therapies business platform. A lot of those investments are behind us now. After Q3 of this year, most of them will be behind us. So with that, we expect stabilization on our OpEx. Linda talked about our gross margin improvement, and then alongside with the revenue improvement, you put all those pieces together, and we'll be at that break even by the end of the year.
Then, looking forward with new product launches, et cetera, we expect to sustain that profitability going forward in 2025.
That's great. Any questions from the audience? Okay, you know, maybe in just the last minute, it'd be great if you guys could just summarize, you know, KORU and, you know, what you want to leave investors with.
Sure. So, you know, first, when you get to come to work every day and do what we do, which is allow patients freedom to live their lives, that's pretty exciting. We're excited about the company and what we've done over the last several years. We have a strong and healthy, growing IG market. We are blessed with partnership with all of those IG manufacturers, and so seeing our core business growing 20%, is very exciting for us. You compound that with a novel therapies business that has the opportunity to add, you know, over the next 3 years, 3 new drugs, 3 brand-new drugs and 3 new IG either global entries, that makes for a very exciting both recurring base and then many new drugs coming onto the platform.
And then, you know, that takes a team to make that happen, and I haven't spent a lot of time talking about that. But we have a phenomenal team of very dedicated individuals that work really hard every day to make that happen, and so you put all of that together, and I think you have a company that, as Thomas said, we are looking at top line double-digit growth. We're looking at gross margins over 60% and a company that will be cash flow break even and get to profitability. So we're excited.
Yeah, it's exciting. It's great. Thank you both so much, and thank you-