NexGel(NXGL) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for the first quarter of 2024 increased by 104% year-over-year to approximately $1.27 million, exceeding the guidance of$1.25 million [28] - Gross profit margin for Q1 2024 was approximately 22%, compared to a negative gross margin for the same period last year and an increase from 14.6% in Q4 2023 [29] - Net loss for Q1 2024 was $905,000, compared to a net loss of$807,000 in Q1 2023 [16] Business Line Data and Key Metrics Changes - Revenue from contract manufacturing increased by approximately 58%, while revenue from consumer branded products surged by 178% year-over-year [29] - The Kenkoderm product line contributed to revenue growth, marking the first full quarter of revenue contribution from six new products [36] Market Data and Key Metrics Changes - The company is preparing for a European market entry, with interest in Australia, the UK, and Nordic countries for its Hexagels product [18] - The company is also looking to distribute Kenkoderm in smaller Eastern European and Nordic countries [20] Company Strategy and Development Direction - The company is focused on capacity expansion in its Texas facility and is investing in state-of-the-art equipment to support increased demand [31] - Achieving MDR compliance is a priority for entering the European market, with costs associated with compliance expected to normalize in the second half of 2024 [38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the cash runway to fund operations, with a cash balance of $2.4 million as of March 31, 2024 [6] - The company anticipates a reduction in expenses and a more normalized financial situation in the latter half of 2024 as facility expansion is completed and MDR compliance is achieved [38] Other Important Information - The company completed a registered direct offering for net proceeds of just under$1 million in February 2024 [6] - The company is working on an update to its Medigel retail website to facilitate cross-promotion with Kenkoderm products [8] Q&A Session Summary Question: Can you discuss the potential European launch and strategy? - The first product for Europe will be Class 1 medical devices, with expected self-certification after passing inspection scheduled for the end of May [18] - Interest exists for Hexagels in Australia, the UK, and Nordic countries, while SilverSeal, a Class 3 device, will not be cleared until Q4 at the earliest [19] Question: What are the differences in commercializing in Europe versus the U.S.? - Understanding the market is crucial, and the company is seeking distribution partners to navigate local marketing strategies effectively [21][22] Question: Will there be an FDA inspection required after capacity expansion? - FDA inspections are sporadic and typically occur only if issues arise; however, ISO inspections are regularly scheduled [41] Question: Will partners like AbbVie conduct inspections regarding the expansion? - Regular inspections by partners are expected, similar to the company's inspections of their facilities [42]