Good day, everyone, and welcome to the iAccess Alpha Buy Side Best Ideas Spring Conference 2024. The next presenting company is NEXGEL Incorporated. If you would like to ask a question during the webcast, you may do so at any point during the presentation by clicking on the Ask Question button on the left side of your screen. Type your question into the box and hit the Send button to submit your questions. I'd now like to turn the floor over to today's host, Adam Levy, CEO of NEXGEL Incorporated. Adam, the floor is yours.
Thank you very much, and welcome, everybody, to the NEXGEL presentation. After two decades of creating custom hydrogel solutions for large medical device companies, NEXGEL has expanded its scope of business to include the development of our own patented medical devices, drug delivery systems, over-the-counter healthcare consumer products, beauty and cosmetic, and nutritional supplements. Additionally, we've invested in in-house converting and packaging to ensure a comprehensive approach to meeting the evolving needs of our customers. What makes NEXGEL unique is the way we manufacture our hydrogels using an electron beam accelerator. This accelerator means that we do not need and this is a little bit about the facility: we do not need the use of chemicals in order to cross-link the water and polymer. Why is this important?
Because in order to create a patch, particularly an adhesive patch, generally your options were the readily available hydrogels, which use chemicals and UV light, and/or acrylic adhesive. We don't need that. We have a 16,500 sq ft facility that is ISO certified, FDA registered, and cGMP. The use of the electron beam accelerator allows us to make what are effectively sheets of water, very gentle to the skin. We protect things like deterioration of skin integrity, skin allergies, skin irritation, discomfort. We can make biocompatible solutions for adhesive and transdermal delivery mechanisms. This allows us to address markets like beauty and cosmetics, dermatology, medical device applications, wherever a medical device interfaces with the skin, as well as a host of others that we have a very, very unique competitive advantage. When I first got to the company, it was a very sleepy business serving very specific medical device needs.
They never had a business development person. They never made an outbound sales call. My job as CEO when I arrived in very late 2019 was to try to grow the business. We identified three verticals for which we thought we could do this. One was creating our own medical devices and aspirational programs, thereby moving up the food chain. The second, which I thought was the largest opportunity for us, was custom and white label. So imagine a company with a successful product line, a lotion, a cream, or a gel. They were addressing some indication: acne, eczema, wrinkles, whatever it may be. Now we could actually offer a true line extension into a patch, again, because we are able to make an adhesive patch that does not have any of the downsides that we talked about earlier. The third vertical was our own branded products.
Quite frankly, that was not in my immediate plans. Many of you know that brands are difficult to build. It can be expensive to build, and the consumer is notoriously fickle. That was not part of the original strategy, but the pandemic sort of pushed us in a different direction, and I'll get into that a little bit more as we move into that. First, let's address our multiple aspirational medical device opportunities. The reason we call these aspirational is we are very realistic in our ability to sell and market any of these devices. These are programs that we try to do on a limited budget so we don't blow through all of our cash, but create enough data so that we can attract strong partners in the market.
To that end, instead of trying to build it and think we're going to launch it ourselves, we've simply approached those potential partners well in advance of our development so that we kind of have an idea: if we build it, will they come? The very first of these was the NEXDrape. Many of you have seen this presentation before. We've done two cadaver and one animal study showing that compared to the standard of care, in this case, the leading brand, if you notice when they are removed, because they use acrylic adhesives and very aggressive acrylic adhesives, they can cause skin tears. For those of you not familiar with what a surgical incise drape is, it is essentially the adhesive layer that is put down by a surgeon prior to surgery. They will cut right through it, and it is an infection preventer, hopefully.
So obviously, on removal, if you're tearing the skin, if you're removing multiple layers of epidermis, that is counterintuitive to that. Our gel goes down in the side-by-side. We performed very similarly to the leading brand, but on removal, there was a very big difference, as you can see in the slide. The skin is rich. It is not damaged, and there are no layers of dermis removed or relatively minor layers. There's a lot of offshoots to that. Again, where we shine is anywhere where the medical device spends a long time on the skin. So NEXDerm, which will be to hold IVs and such in place, we can deliver various antibacterial and antibiotics in our different products. So this, to us, is an area of great opportunity. Another product along that same theme is our amblyopia patch.
Unlike the others, this is one that we are going to market ourselves. We are currently in about 35 different pediatric ophthalmology offices, and that is expanding. We will soon be making that patch available on Amazon for their patients to buy it directly. Generally, what we're doing is amblyopia is better known and often referred to as lazy eye. There are three ways you can patch an eye with lazy eye or deal with a condition. One is the traditional pirate patch. The issue with that is kids will cheat. They're playing a video game. They'll pick the patch up, and that undermines best treatment. There are patches that go on glasses, but they can't block out all the light. The light comes in from the side, which is also less than optimal. The most optimal and most compliant is putting a patch directly on the skin.
Of course, when you're using acrylic adhesive to hold a patch on the skin and you're removing it from a sensitive skin that a 5- or 6- or 3-year-old might have, and you're doing that repeatedly day after day after two or three or four hours of wear, the children can develop very, very irritated skin, breaches in the skin, red marks that go around. We've had numerous doctors tell us stories about them using milk of magnesia to try to calm that down. As a result, what we've created is a patch that goes on and comes off completely pain-free. It maintains moisture in the skin, and it really has been a major differentiator for these patients and has received a lot of acclaim. One more thing on our aspirational programs before I move on: I didn't mention that we have some pilot programs in drug delivery.
So our technology is also an excellent topical and transdermal skin delivery mechanism. We're working with several APIs, and those products and projects are currently in development. So moving on to consumer health and beauty, this is sort of where we're using our custom and white label strategy. The program is developmental sometimes in stage. Sometimes it's an off-the-shelf. But normally, we don't bear any risk here. So a company will approach us and say, "Listen, we have a particular issue. Can you make a patch that delivers this or does that?" We charge them a development fee. We then provide them with samples, and then they become a customer once they approve the samples and they like it. It's a very sticky business. We have a very high hit rate from development into an actual first commercial order.
Again, for commercial products, what really matters after that is how successful the product is in the marketplace because it's not a business to do one-off orders. But some of them are starting to pick up and do very well in the marketplace. And so we're seeing this project as probably being or this program as being our single greatest potential source of revenue. So again, these companies and these are some of the companies that we have done deals with and have signed manufacturing and production deals with, they're looking at the same attractiveness that we generally sell as to why our products are better than the standard of care. So one such project that has obviously been large news for us is our supply agreement with AbbVie. AbbVie purchased a company called Soliton that makes a device for cellulite removal called the Resonic.
They paid $550 million for this machine. As it turns out, the machine requires a very specific gel pad that is transparent, has high water content. Apparently, the water content is appropriate for the frequency at which the sonics of the machine deliver. It is necessary for the treatment. So in effect, we have become one of the small razor blades to this very, very large launched machine. We're very excited, and we expect that AbbVie will be launching that product this year, and we think it will provide significant revenue for the company. We also have a partnership we recently announced with STADA. STADA is a consumer products company based in Germany. They are a $3.8 billion a year in sales business.
They have given us for distribution here - and we'll talk about that a little more when we get to our branded products - a product line that is a well-established product line already in Europe, and we will be the North American distributors for that product line here in the U.S. We hope that's the beginning of many such opportunities with them. We will be getting ready to announce what that product is as we get closer to launch, and we are anticipating a midsummer launch of that product. We also have a joint venture that we started last March. It's been about one year now with C.G. Laboratories. So as some of these larger customers come on board, oftentimes I would get the question of, "Where's your bottleneck? What's your capacity like?" In our gel manufacturing plant in Langhorne, when I got there, we were at 4% capacity.
We're probably only at about 9-12 now. So we have lots of capacity and lots of room for growth. Where we did have a bottleneck, however, was as these larger customers and anticipation of them coming on board was in converting and packaging. In our Langhorne facility, we only have a small white room. We do have some mechanized equipment in there, but we're still too labor-intensive. So we knew we had to grow. Any order above 25,000 units presented a time challenge for us. So as a result, we partnered with an existing customer who is expert in converting and packaging our gels, and we started a joint venture with C.G. Laboratories in Granbury, Texas.
So we contributed $500,000 in cash to be used to modernize the facility, and that has worked out very, very well and allows us to now vertically integrate all the profit in a large customer such as AbbVie. So very quickly, moving into our proprietary brands, as I mentioned, that was not part of our original strategy. Our original strategy was the custom and white label. We had gone to a couple of conferences like ECRM and Smegma and gotten a really great response because folks would come in, and they'd test our gel and go, "Wow, this stuff is amazing." And we thought that that custom and white label was going to explode and had a lot of interest. And then in the last meeting at Smegma was in February of 2020. I don't have to tell everybody what happened after that.
The pandemic hit, and a lot of that went away. At that time, we were a private company. We did apply for some EIDL loans and PPP money, but we were sitting around going, "Well, what do we do now? Because we can't really get anybody on the phone or move this program forward." We said, "Well, let's take a couple of our products and put them up on Amazon and see what happens and see if the customers and consumers actually like what we're doing and whether the applications that we've currently thinking of actually resonate with the customer." To that end, we put our first product at the end of 2020 up on Amazon. That was our Medagel Hexagels.
Since that time, we now have a seven-figure business in Amazon, and we are now moving those products into retail, which is the next step for us. But they seem to have resonated very well, and that side of it has grown actually a little bit faster than we even imagined that it would. So we're very, very pleased with where we are with all of our consumer products. They continue to grow. We continue to have year-over-year and quarter-over-quarter sales growth in our Amazon products. One of the products that we really feel strongly about is our leader now. It is the number one selling product we have, which is SilverSeal. SilverSeal was and still is an FDA-cleared 510(k) wound care device. It was used in hospitals for about 15-16 years before we got over-the-counter approval on it.
Our thought process was, and the message that has resonated with our customers is hospital-grade, hospital quality, now available to you over-the-counter and online. SilverSeal very quickly has become the number one burn pad on Amazon, and we believe that we're only scratching the surface into the different markets. SilverSeal, we've done studies showing that we kill Staph MRSA and Strep. That has spawned the spinoff product of Turf Guard, where those sorts of infections for athletes who get turf burns playing on fields is a real issue. We now are in about 35 Division I training rooms. We were recently included in the Collins catalog, which we think that catalog is coming out this month. We think that will greatly expand our reach into that training room market for TurfGuard .
But it also just adds to some of the claims of what makes SilverSeal such a great consumer product. The other data that we think is really significant on SilverSeal is a study that we did, a 40-patient double-blinded peer-reviewed study showing a reduction in the formation and appearance of scars as well as a reduction of pain. On the scar side, we think this opens up a huge market for us as scarring is a very, very big market. And as well as we're going to be targeting cosmetic surgeons because think about it, any cosmetic procedure, obviously, the formations of scars would want to be kept to a minimum. We used a POSAS score. We showed statistical significance in scar length, scar formation, scar appearance, scar width, as well as a reduction in pain.
Pain is one of the reasons why we're so widely used in the burn area. It's a very simple mechanism of action. It doesn't use any analgesics or anything like that. If you've ever burned your finger very badly and it's throbbing, and you put it in a glass of water, the pain goes away. You pull it out of the water, and as the water evaporates, the throbbing returns. Our product is 94% water, a percentage unmatched by any other method of making hydrogels. It's kind of like putting your finger in the water and never taking it out. Customers love this product, and we see a lot of opportunity for it. Of course, the next steps for us are going to be retail distribution as well as moving into other markets, particularly Europe. We have just begun the process of becoming MDR compliant.
We've had our first audit. We have our final audit coming up in about 45 days. At that point, we will be ready to get CE mark on a lot of our products and begin expanding into other markets and territories. The other thing we want to look at, because while our technology is amazing, it is not the solution to every problem. And if you're going to and as our consumer products segment grows, we want to become more of a skincare and wellness company. To that extent, we want to kind of search the globe and find the best technologies we can. And recently, we acquired the Kenkoderm skincare line. This was a great fit for us because psoriasis is clearly a skin issue, and this sort of gentle-to-the-skin, gentle product line fits our ethos and tucks in nicely.
But it has a lot of other synergies as well. So Kenkoderm was started by a dermatologist whose husband had psoriasis. Her practice also shut down during the pandemic. He was the manager of that practice. They started this sort of as a side business on Amazon. It took off and did very well. But as she's now going back to work and it's time to take these products also into retail and to foreign markets, it was something they really weren't prepared to do given their other obligations. And so we were able to acquire this line. We're very happy we did.
Not only is it a great line for us to have based on its current sales, but because we are also now going out to retail, because we are now also expanding distribution, there's an opportunity for us to have more things in our bag as we do that. So that could be great growth within that line. Additionally, Kenkoderm had a very robust following with almost 35,000 individual customer emails as well as 9,000 Facebook followers whom we can now market to in the future and introduce them to our MedaGel products. So cross-pollination is a big part of the strategy as to why we bought that. So the capacity expansion, we had to start to fulfill expected growth. As I mentioned, we already had purchased started the joint venture with C.G. Labs converting and packaging.
But we realized very quickly that with the demand that we expect from the new customers that we talked about, that we were very quickly going to run out of space. And also the logistics of bringing in that much material, turning it around, shipping it out, also being able to provide picking, packing, and fulfillment services for customers. We started an expansion of 12,000 sq ft in our Granbury facility. That expansion and construction is going very well. We anticipate completion of the structure by the end of April, and we expect to then rack it, stack it, build a clean room, all of that sometime in May, putting us in a good position to handle the increased volumes that we expect. So quickly touching on the financial overview, we have revenue growth and scalable infrastructure.
We generated $2.3 million in Q3 and Q2 of 2023, which exceeded the full year of 2022. We continue to see that as what's going to happen. We don't really go up in a straight line, so it's not so much quarter-over-quarter. It's more like a step. So we have this is a business where we're onboarding some very, very large key customers. So you'll see a big jump in sales, and then you might see a quarter or two that kind of goes sideways a little bit or has modest growth, 20%, and then another big jump up as we bring in another one of these customers that we have in our pipeline. But we do see year-over-year revenue as continuing for the foreseeable future. And our growth pattern and rate, we don't see that slowing down.
In fact, we see that accelerating as some of these large customers come on board. Just quickly a touch on the balance sheet. We had $3.3 million in cash as of September 30th. We've always said we had sufficient working capital to execute our operating and business plan. That is true. I also had told the market that we probably would not need to go into the market unless it was to buy something creative. We did do a raise recently of $1,025,000, slightly over the million-dollar target we have. We did that to bolster our balance sheet because we do have some outlays in terms of updating our facilities. And really, all we did was put the Kenkoderm purchase price, which we paid cash for, back on our balance sheet. So we're very pleased with the way that turned out.
Our stock was considerably lower when we did the Kenkoderm acquisition. So not using stock there seemed to be the right decision. And now we're kind of back to where we were in terms of our schedule and achieving our goal of being cash flow positive. So here you can just kind of see the growth trends. You kind of see the big jumps and spikes whenever we bring on a new customer or a new area or line of business. Again, that will continue to grow in Q1 and beyond. And as you can see, shrinking our net loss, turning the company profitable is of the highest priority. I've said this multiple times, and many of you have heard it, that if you're a public company and you're losing money, you're playing defense every day.
While there are some continued investments that we have to make in anticipation for our growth so again, the reduction may not be a straight line, but getting ourselves to profitability when we switch over to offense is of the highest priority, and we are moving rapidly in that direction. So we have multiple paths for growth. Just to recap, making a deal in some of our medical devices, we don't really build that into our strategy in terms of when we'll be profitable because it relies on third parties and because it's a licensing model. But we still think that there's great value to be untapped there. So we're not going to abandon for the sake of profitability those programs. They are relatively inexpensive. We're talking about $10,000s and $20,000s, not $100,000s or $1,000,000s. So we're going to continue to move those forward.
Proprietary branded products, the markets continue to grow. The big impetus now will be bringing about five or six new products online this year, but also getting into retail, getting our products into other venues for distribution here in North America, as well as expanding into Europe and beyond in terms of expanding into other markets. White label and custom label, I mean, obviously, those are the really big fish in certain instances. We have ranges of customers here from small Amazon marketers who had us design products for them that are ordering 2,000-5,000 units at a time all the way to AbbVie, which is obviously a very large customer. On contract manufacturing, we continue to see growth in the general contract manufacturing business. We don't really have any competition anymore. There's only one other facility in the world that can make hydrogels the way we do.
They do not do contract manufacturing. They do not compete with us. And in fact, they are our customer. So we make smaller runs of products for them. So they completely have left the marketplace to us. And just by working and talking and addressing our customers' needs, we've been able to grow the contract manufacturing side of the business to basically be more than a double from where it was when I took over in 2020. So that is the presentation. I'd like to open it up now to questions. I'm sure there are some, so happy to take those questions now. Okay. So the first question asked by Thomas Smith is, "What are margins in the three different segments, and as mixed changes, where will gross margins go?" So that's a great question and a complicated answer, but I'll try to address it as best I can.
So in the three different segments, contract manufacturing generally has a gross margin or a target gross margin, which would be where we would be if we were at a higher capacity, right? So the constraint on the margin at NEXGEL has always been we were at such a low operating capacity that the fixed costs really skewed us where in a lot of times, we had negative margin historically. But we'd like to see that margin in the 45%-55%, averaging about 50%. At C.G. Labs, which is a converting and packaging operation, it's more like 25%-40%, depending on whether it's medical device and/or consumer product. And in our own branded consumer products, it's more like 70%-75%. Again, that's before the marketing costs, etc., but that's just based on cost of goods and our Amazon selling price.
So I hope that answered that question. Next question, also by Thomas, is, "You have quite a few growth areas across all your segments. What will have the biggest revenue impact in 2023, 2024, and 2025?" Well, the answer about short term, we believe, is clearly going to be the white label, mostly because of the 800-pound gorilla that we think is the AbbVie RESONIC machine. But really, it's kind of hard to tell. As we expand our consumer products, as you guys know, consumer products can have explosive growth if you get lucky with one product or do very well in one market. We'll be releasing products here in the U.S., particularly the STADA products that have a lot of potential. We don't really build a lot into our numbers for new products just because of the fickle nature of that business.
But we're also seeing down at C.G., converting and packaging, we've been approached by several customers that not onboarded yet. Could be very, very large opportunities there as well. So which one will be the biggest? Not sure. But we do see strong potential growth in all three segments. Okay. I don't currently see any other questions in queue. I'm happy to take any if there are any, but otherwise, I think that's it.
That concludes the NEXGEL presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.