NEXGEL, INC. Q3 FY2024 earnings call

• Third quarter 2024 was a record quarter with revenue growth across key metrics. - Silly George brand, acquired in May 2024, has seen significant growth to a $5 million run rate. - Contract manufacturing facility in Texas expanded in Q2, with Q3 revenue normalizing. - Partnership with STADA progressed with the release of Histasolv, a top-selling diamine oxidase enzyme supplement in Europe. - Supply agreement with Cintas Corporation for distributing SilverSeal, with first orders in Q4 2024. - Initiated an IRB study on laser hair removal with Vanalay, expecting top-line data in Q4 2024. - Appointed Kip Crecca to Scientific Advisory Board with medical device sales experience. - Completed a $2 million financing with insiders participating, for working capital and marketing support.

For the third quarter of 2024, revenue totaled $2.94 million, an increase of 141% year-over-year and 104% sequentially. Branded consumer revenue increased 99% sequentially, with the Silly George brand, a beauty and cosmetics company focused on eyeliner, fake eyelashes, lash growth serum and mascara, contributing significantly. Silly George was acquired in May 2024 with a revenue run rate of approximately $2 million and is now on a $5 million run rate heading into the holidays. Kenkoderm and Medigel brands also saw year-over-year growth. Contract manufacturing revenue increased from $425,000 in Q2 to $864,000 in Q3, an increase of approximately 103%, normalizing after the impact of facility expansion in Q2. Revenue contribution percentages aren't explicitly stated but the growth in each segment is highlighted.

• Expect continued growth across all revenue lines in Q4 2024, with revenue expected to exceed $3 million and operating cash flow to approach positive. - Revenue from partnership with AbbVie for gel pads for sonic rapid acoustic pulse device to start in Q1 2025. - Proceeds from $2 million financing to be used for working capital, inventory, and marketing to meet demand for Silly George products.

• Actual results may differ materially due to a variety of risks, uncertainties and other factors as mentioned in the SEC filings. Risks include market risks, regulatory risks, and uncertainties related to new product launches and partnerships.

Q: Strategically, what happens when becoming cash flow positive?

A: Becoming cash flow positive allows switching to offense, including potential acquisitions, expansion, and continuing to develop products with large customers.

Q: On laser hair removal study, what are the regulatory steps and timeline for commercialization?

A: The study is to show plume suppression, etc. Study results will be announced in Q4 2024, with regulatory steps and timeline for commercialization depending on results, but early 2025 possible.

Q: On laser hair removal market size and other aspirational projects?

A: Laser hair removal market is large and growing but exact size unknown; Kip Crecca joined to push forward surgical drape projects with gel, early stage with more news to come.

Q: On contract manufacturing gross margins in 2025?

A: Contract manufacturing gross margins for Texas facility range between 35% - 45%, and for Langhorne plant between 40% - 50%, with higher contribution to reducing losses in 2025 due to already covering facility and personnel costs.

Q: On Cintas rollout cadence?

A: Cintas distributes to over 1 million businesses, SilverSeal expected in stores in US in 2025, and close to selling in Canada soon