NEXGEL, Inc. Q1 FY2024 earnings call

• Revenue for Q1 2024 was $1.27 million, up 104% YOY, exceeding guidance. Excludes $176k nonrefundable deposit from AbbVie.
• Gross profit margin was 22% in Q1 2024, compared to negative in Q1 2023 and 14.6% in Q4 2023.
• Investments included capacity expansion in Texas converting/packaging facility with new equipment and final investments for European compliance.
• Acquired CG Converting and Packaging in 2023, expanding capacity. Completed $152k CapEx on new machinery in Texas.
• Partnership with AbbVie for gel pads, expecting device launch by end of 2024. Invoiced $176k deposit not in Q1 revenue.
• Consumer branded products have 31 health/beauty products, Kenkoderm product line contributes to Q1 growth, focusing on psoriasis treatment.
• Q4 2023 began MDR compliance process, $102k costs in Q1, expecting final fees in Q2 for European launch later summer.

For the first quarter, revenue increased by 104% year-over-year to approximately $1.27 million. The contract manufacturing segment saw revenue increase by approximately 58% year-over-year, and the consumer branded products segment by approximately 178%. Sequentially, total revenue increased by ~17%, with the Consumer Branded Products segment increasing by ~57% due to the first full quarter of revenue contribution from the acquisition of Kenkoderm. Contract manufacturing likely contributed around [calculated percentage] to total revenue, while consumer branded products contributed around [calculated percentage].

• Expect significant growth levers in 2024.
• Capacity expansion in Texas converting/packaging facility targeted for summer completion.
• Anticipate launching AbbVie's RESONIC Rapid Acoustic Pulse device by end of 2024.
• MDR compliance expected to be completed by summer, enabling European product distribution later in summer.

• Uncertainties related to European compliance and market adoption of new products.
• FDA inspections are unlikely but possible if issues arise.
• Timing uncertainties for certification and launch of certain products like Silverseal (Class III device).

Q: Could you talk more about European launch strategy, products to enter, and countries?

A: First products post-MDR compliance are Class I medical devices. Interest in Australia, U.K., Nordic countries for Hexagels. Kenkoderm has interest in smaller Eastern European and Nordic countries.

Q: Difference in commercializing Europe vs US?

A: Important to use distribution partners like STADA as they are experts in local markets. Defer to their marketing in territories.

Q: FDA inspection needed after capacity expansion?

A: Unlikely. FDA inspects sporadically for issues. Focus on ISO inspections.

Q: Kenkoderm progress under NEXGEL?

A: Positive surprises, optimization of advertising. Plan to cross-promote with sister company via updated website launching in June.

Q: Feedback from trade shows on technology?

A: Great feedback, interest from early-stage companies for medical device applications, though most are early stage.