Earnings Call Transcript - KRMD Q3 2023

Operator, Operator

Good day. And welcome to the KORU Medical Systems Third Quarter 2023 Earnings Call. All participants will be in listen-only mode. Please note this conference is being recorded. I would like now to turn the conference over to Hannah Jeffrey of Gilmartin Group. Please go ahead, Hannah.

Hannah Jeffrey, Company Representative

Thank you, Jason. And good afternoon, everyone. Earlier today KORU Medical Systems released financial results for the third quarter ended September 30, 2023. A copy of the press release is available on the company's website. During this call, we will make certain forward-looking statements regarding our business plans and other matters. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially due to many risks and uncertainties including those mentioned in the associated press release and our most recent filings with the SEC. We assume no obligation to update any forward-looking statements. I encourage listeners to have our press release in front of you, which includes our financial results as well as commentary on the quarter. During the call management will discuss certain non-GAAP financial measures in our press release and accompanying investor presentations and our filings with the SEC, each of which are posted on our website. You will find additional disclosure regarding these non-GAAP measures including reconciliations of these measures with comparable GAAP measures in our press release and accompanying investor presentation and those filings. For the benefit of those listening to the replay, this call was held and recorded on Wednesday, November 8, 2023, at approximately 4:30 p.m. Eastern time. Since then, the company may have made additional comments related to these topics discussed. Please reference the company's most recent press release and filings with the SEC. Joining us on today's call are Linda Tharby, President and CEO of KORU Medical Systems and Tom Adams, KORU Medical's Chief Financial Officer. Linda, please go ahead.

Linda Tharby, CEO

Thank you, Hannah. Good afternoon, everyone and thank you for joining us today. During today’s call we will use slides for our commentary. I’ll begin by reviewing key financial and business highlights for the third quarter. Tom will then review our financials and updated '23 guidance. Following our prepared remarks, we will open the call up for Q&A. While a challenging quarter from a revenue perspective, I want to start today's call by emphasizing KORU’s commitment to improving the quality of life for patients and caregivers with our Freedom Subcutaneous Infusion System with a twofold strategy. This strategy includes penetration into an installed base of over 30,000 chronic global subcutaneous immunoglobulin infusion patients and by building a continuum of new drugs on our account. During the third quarter, we saw revenue decline roughly 10% versus the prior year. The majority of the decline was due to our novel therapies business which was impacted by a significant clinical trial order in the prior year and by the timing of collaborations. This is a business composed of sales of products for clinical trials and nonrecurring engineering services that are dependent on milestone completion, all of which can be subject to timing changes. The biggest value in this business is signing collaborations that lead to commercial revenue when launched. In addition, our Domestic Core business was impacted by slower than anticipated SCIg market growth. Script volumes were down year-on-year, and overall drug volume was down versus our expected growth. While a difficult quarter from a revenue standpoint, we made progress in several key initiatives and continued momentum with our growth strategy. We have a solid U.S. core business that outpaces the underlying market and includes strong recurring revenues with over 27,000 patients. We remain the broadest label for subcutaneous drug indications in the home, and with our latest 50 ml prefilled syringes, we remain the only clear device for prefilled syringes, the fastest-growing part of the market. We continue to grow our novel therapies pipeline, winning a new novel therapies innovation collaboration, and overall now have 15 close collaborations. On our pathway to breakeven, we posted an impressive 630 basis point growth in our gross margin and executed a disciplined strategic operating expense plan. We are committed to achieving 2024 year-end cash flow breakeven with a profitable core business and disciplined prioritization of investments related to innovation in our novel therapies business. We are also building capability, naming Kim Miller as our Chief Commercial Officer. Kim brings over 30 years of experience in leading high-performing teams in commercialization and marketing strategy, international expansion, and driving sustainable growth and profitability. I’m personally delighted to be working with him again. With Kim leading our global commercial operations, it will allow me more time to dedicate to our innovation agenda and our novel therapies business, which are key drivers of our longer-term success. Although a difficult quarter, we continue to lay the groundwork with strong growth catalysts ahead, including new product introductions, novel therapies collaborations, and new geographies. We made progress this quarter in advancing our three strategic growth drivers: growing our leadership position in Domestic Core SubQ IG business, expanding this leadership position into novel therapies business, and geographic expansion. We've made advancements in each of these areas during the quarter. A few key highlights. In our Domestic Core business, on an underlying basis, we continue to outperform the market. Our pump growth, a leading indicator of consumables growth, was up over 40%, and we are excited to have our prefilled syringe 510-K approval in a record 119 days from submission. In our NT business, we announced another close collaboration and we have the largest pipeline of new opportunities in our history. In our geographic expansion efforts, we are seeing wins in several markets and are excited by a recent submission to enter the Japanese market, one of the top five IG markets with expected approval in late '24. Let's now take a deeper dive into the U.S. market. This quarter, we conducted an analysis to evaluate the factors affecting the overall SCIg market. While we did not anticipate the market to be where it is today, KORU’s outperformance to the market continues. The overall SubQ IG drug volume market is up 45% year-to-date. This was lower than the recovery we anticipated in the back half, and we now expect Q4 to be up 3% to 4%. Previously, we expected a faster rebound in PID diagnosis over 80% of SubQ use due to a very strong flu season in '22 and into '23. However, it appears that the rebound to pre-pandemic levels is taking longer than anticipated. We are encouraged by the drug market being up sequentially in Q2 by over 2.5%, and this, combined with growing awareness and diagnosis of SCIg, should set up for good 2024. In the interim, we are generating above-market growth of 6% year-to-date as a result of continued account wins and prefill adoption. We are also excited by our pump performance being up 40% year-on-year and 24% from the prior quarter, which is often a leading indicator of future consumable sales. Now let's discuss prefills. A key growth driver of our U.S. businesses is continued market share growth driven by prefilled syringes. The chart on the left shows our prefilled syringe 510-K clearance for our 20 ML prefilled syringes led to an immediate uptick in the market as our pump facilitates prefilled market penetration going from about 3% to about 12% of the overall market. Last week, we received 50 ML 510-K clearance for our FREEDOM60 Infusion System for use with Hizentra 50 ML prefilled syringes. We expect a full market launch to occur in early 2024. In our recent patient market studies, we found significant preference for the use of our system with prefilled syringes due to the increased convenience of reduced drug preparation tasks and faster setup time. We estimate that over 70% of patients are on doses of greater than 50 ML, and this approval opens up the majority of the patient market. Our Freedom Infusion Systems remain the only pump with FDA clearance for use with prefilled syringes. We believe this will lead to increased share with expected growth of prefilled penetration from 12% to an expected 50% penetration by 2025. We also believe that due to the increased needs and ease of use, this could drive overall further penetration of SubQ IG therapy, which today sits at around 15% to 20%. Moving to our anti-business, we're focusing on new biopharmaceutical collaborations for clearance of our Freedom System for at-home use. This page illustrates our current close collaborations, both on our Core IG business at the top and the new therapy areas, totaling a $2.5 billion TAM with a total patient population opportunity of over 2 million. Although we know that not every one of these will make it to launch, each new signed collaboration provides the opportunity for commercial launch revenue. We continue to advance our new collaborations this quarter, signing one additional collaboration, bringing our net total to 15. We also have 18 additional open opportunities, with three new additions this quarter, making this our largest opportunity list to date. These opportunities represent pharmaceutical companies with whom we are in active discussions related to a qualified drug for our system. All of these represent future opportunities for close collaborations. More than two-thirds of our opportunities are for late-stage drugs that could be commercialized with KORU by 2026 or earlier. They span multiple therapy areas with a significant concentration in oncology. Our new collaboration in the quarter is our first for our next-generation pump optimized for delivering all SCIg products, including prefilled syringes. This collaboration includes obtaining 510-K clearance of this next-generation pump with the pharmaceutical companies’ SCIg drugs. We see these novel therapies as the biggest mid to long-term opportunity for the company. We’ve started building this business just over two years ago, so it's very much still in its infancy. We've learned a lot since its inception as we continue to build our strategy and form relationships with pharma companies, and we're excited about its trajectory. Moving to international, we continue to expand our opportunities. We ended the quarter with international growth of 12% year-to-date driven by deeper penetration into secondary immunodeficiency and growth in new countries. We believe we have plenty more runway in our international business and are excited about key milestones. One of our international growth drivers is new markets, and we have successfully completed launches in several smaller markets this year. As we look ahead to '24, we anticipate the Japanese market launch for SCIg, one of the top five IG markets in the world. We have previously discussed our ongoing electronic pump trial, which we now expect to be completed in the first half of 2024. We believe we have a great value proposition versus the electronic pumps and are excited to generate clinical evidence to prove that. This week the team is at our largest international IG show, the International Primary Immunodeficiency Conference, where KORU will present its third abstract this year, titled 'Infusing Subcutaneous Immunoglobulins: Comparison of the Constant Flow System or Electronic Pumps to the Constant Pressure System.' The abstract aims to provide valuable insights into the comparisons of two subcutaneous infusion systems, reviewing the considerations associated with both systems, highlighting the global benefits of a constant pressure system and contributing to the understanding of optimal infusion methods for improved patient outcomes. We're excited to showcase our efforts at this prestigious conference. Another key area that excites us is the use of the Freedom System in infusion clinics. The key value driving is the nursing time saving and alleviating significant dexterity challenges versus current manual push methods. The use of our broad products more broadly in infusion clinics is an area we actively pursue for future growth. International has become a vital key third growth strategy for the company. In addition to our three growth drivers, innovation is always at the forefront of our strategy. As we believe progressing new label indications and new products that solve significant unmet patient needs is a key element that will drive KORU to the next phase. We've laid out our upcoming new products and commercial label milestones that we expect over the next few years. During this quarter, we completed two milestones: one for products with the launch of the new prefilled syringe pump and one for commercial label indication with the approval of the 50 ML prefilled syringe. Looking ahead, we plan to have a new consumable 510-K submission in 2024. We remain extremely excited about our innovation pipeline with the opportunity to launch a new KORU pump and consumable platform by the end of ‘25 and with prospects for multiple new drugs on the Freedom System. I will now turn the call over to Tom to review our financials.

Tom Adams, CFO

Thank you, Linda and good afternoon, everyone. In the third quarter, we reported revenues of $7 million, a decline of 10% or $800,000 from the prior year. The majority of this decline was due to our novel therapies business, which declined by 78% or $600,000 in the quarter. This decline was driven by a large clinical trial order of about $500,000 recorded in the prior year and by the timing of our NRE milestone completion. Our Domestic Core reported revenues of $5.8 million, a 2% decrease versus the prior year, driven by lower consumable volumes as the prior year included a backorder of $300,000 for consumables that were cleared during the period. Partially offsetting the decline was a 40% increase in pump units sold that are leading indicators of future patients driving consumables revenue. Despite the year-over-year decline in the quarter, our domestic core has grown 6% year-to-date as we continue to outpace the underlying market growth driven by new account wins and prefills. The International Core decline of 3% was caused by lower volume as a result of a country-specific tender order in the period, partially offset by growth in new markets. On a year-to-date basis, International Core continues to perform well with 12% growth over the prior year. Gross margins increased by over 600 basis points in the quarter to 62%, compared to 56% in the third quarter of 2022. The increase in gross margin was primarily driven by our exit from the Chester site in Q1 of this year, as well as increased efficiencies from our outsource production initiative. With this performance, we achieved the high end of our second half gross margin guidance. As we look forward toward the end of the year, we expect to hold these levels of gross margins between 60% and 62% in Q4 and deliver a full-year margin between 50% and 60%. This is driven by lower costs of outsourced products, lower labor and overhead, and improved efficiency from the consolidation of our U.S. manufacturing from two sites to one, along with contributions from price and volume mix. During the quarter, we recorded operating expenses of $6.1 million, and we expect second-half operating expenses to come in at approximately $13 million, versus our first half run rate of $14.3 million, driven by reductions in G&A and operational headcount as well as external consulting. We will continue to flex operating expense levels with revenue projections while maintaining investments in our strategic initiatives. We'll keep expenses under $28 million to maintain planned net losses; we significantly reduced our net losses in the second half aided by improvements in gross margin and disciplined operating expense control, and we are on a runway towards cash flow breakeven in Q4 2024. Our cash balance at the end of Q3 was $10.8 million, representing $900,000 cash burn from the prior quarter. Our biggest driver of cash burn was our net loss of $900,000, excluding noncash items for stock compensation and depreciation. Adding to these cash flows were working capital changes of $300,000 driven by the timing of higher AR and lower AP during the quarter of $900,000. This was offset by $600,000 for a planned reduction of inventory, making additional progress towards our $2 million end-of-the-year reduction target. We also had a cash improvement of $300,000 driven by financing activities for our annual insurance renewal. We continue to control and plan our cash according to our revenue, gross margin, and expense guidance and are increasing our end-of-year guidance to having a cash balance greater than $10.5 million. Cash burn for the year has been $5.7 million in the first half and is estimated to be less than $1.2 million in the second half. We are updating our guidance for full-year 2023 to reflect novel therapies timing of closing collaborations, clinical trials, and milestone achievement. Additionally, we are adjusting our underlying U.S. core drug market growth assumption for Q4 from 3% to 4%, versus a prior expectation of 8% to 10% for Q4. Our full year revenue is now expected to be between $28 million to $28.5 million. This implies a flat sequential growth rate in the fourth quarter at the midpoint to reflect the changes mentioned regarding our novel therapies and core businesses. While our novel therapies pre-commercial revenue has been and will continue to be lumpy driven by timing, we remain bullish on our novel therapies business with our current backlog of collaboration and our pipeline of opportunities, adding short-term and, most importantly, long-term commercial revenue. In our assumptions, we are planning for a 3% to 4% Q4 growth rate in the underlying SCIg drug market and expect higher market growth in future quarters, as a rise in respiratory infections leads to increased diagnoses of PID, which we'll see the favorable impacts of in '24. Our gross margin guidance remains between 58% to 60% for the full year, and we expect to exit the year between 60% to 62%. With the completion of the manufacturing transition behind us and year-to-date gross margins on plan, we expect Q4 gross margins to remain at the mid-high range and above as we continue to see lower cost of goods benefits from our outsource manufacturing initiatives and improvements in average selling prices. We are raising our expected cash balance at year-end 2023 to be greater than $10.5 million. We expect our operating expenses to be lower than $28 million inclusive of stock compensation expense versus lower than $29.5 million recorded in our prior guidance. This includes approximately $2.1 million in stock comp, which is offset by continued working capital improvements of $2 million of inventory reduction, of which we are about 75% complete to date. We continue to expect to reach cash flow breakeven by Q4 2024 based on our current strategic outlook. I will now turn the call back to Linda for closing comments.

Linda Tharby, CEO

Thanks, Tom. In closing, while we always want to see significant revenue growth, I’m encouraged by our third quarter progress across all of our businesses. On the innovation side, we continue to have exciting work ahead that will evolve the company strategically as a leader in drug delivery in the home and add continued value to patients, customers, and shareholders. As we look ahead, we're excited about our upcoming milestones, including our 50 ML prefilled launch, progressing our novel therapies collaboration milestones, and signing, our innovation agenda and continued global expansion. I'm also excited to share that we'll be hosting an Analyst Day on December 5, at our headquarters in Mahwah, New Jersey. We'll be sharing additional updates and progress on our plan. Finally, I want to thank the entire KORU team for their exceptional efforts in the quarter. Operator, I will now turn it over to you for Q&A.

Operator, Operator

Our first question comes from Alex Nowak from Craig-Hallum.

Unidentified Analyst, Analyst

Hey, good afternoon. This is Connor on for Alex, thanks for taking my questions. So can I ask what is CSL saying about the 50-milliliter prefilled cartridge? I have the introduction and then maybe speak to what this could do for IV to SubQ convergence in the market, whether it's in terms of market share, just get some commentary on that, please.

Linda Tharby, CEO

So first, what CSL has said publicly is that they plan on launching the product. Of course, they announced their approval back in April. The extended delay to launch the product into the market was due to the time that it takes them to fill that overall prefill with their drug and bring it to the marketplace. So they are planning on launching that product in early 2024. They have also released some pre-market studies that indicate the overall preference for prefills. Regarding overall IV to SubQ, I don't think they've been public about that. I think what we know is what factors are the biggest drivers for subcutaneous therapy use are generally the overall convenience and ease of use for a patient in the home. Given the considerable improvements in both of those areas, we project that about 50% of the market will be prefilled over the course of the next three years, and that it will in turn drive increased penetration.

Unidentified Analyst, Analyst

And that 50% is of the subcutaneous market.

Linda Tharby, CEO

Correct.

Unidentified Analyst, Analyst

Okay, got you. And then maybe what are your views on the slump for this SubQ market? Is there any reason this isn't going to be a longer-term correction or issue?

Linda Tharby, CEO

Yes, I would say so. We've already seen; we look at one primary source of data, which is the same data that pharmaceutical IG companies use. Based on that data source and their public releases, here’s what we see. So first of all, I think two encouraging signs: quarter-on-quarter, we saw that overall drug market improved by about 2.3 percentage points versus the prior quarter. What really drives the diagnosis of immunodeficiencies and primary immunodeficiencies, which make up about 85% of the market, are increasing infection rates. People get infections, go to the hospital, then get more infections, which brings issues. Given the fact that we saw ’22 and ‘23, the big, single biggest flu season we've seen, and this flu season is off to another roaring start, we expect that 2.3% increase we saw from quarter one to quarter two to continue. We don't have the Q3 data yet, but we expect that to continue. Another driver that we're excited about is CIDP usage. That's a neurology indication, and those patients tend to use about twice as many drugs and do about twice as many injections. These patients are our prime candidates for prefills because they use so much drugs; it's just a much simpler process. We also see that being a buoyant factor for the overall market. Although we don't subscribe to the script data, I know it's out there publicly. We also saw the overall script data begin to flatten out in terms of we don't see continued negative quarter-on-quarter. So I think those are all great indicators for what we feel, where we're already beginning to see stabilization. We're certainly observing an overall drug market improvement versus where we have been.

Unidentified Analyst, Analyst

Yes. And then just one last one here. So you mentioned some new pipeline opportunities for additional collaborations. Can you provide any details on how far along the launch of some of these opportunities is? In terms of what is indiscernible.

Linda Tharby, CEO

Yes, this quarter we established a collaboration that is officially signed, which means we are actively exchanging value, whether it’s in the form of the drug or financial resources, to get our product approved for the pump. Additionally, we have 18 potential opportunities in our pipeline. Recently, there has been a significant focus on new indications being approved for subcutaneous use in clinical settings. For instance, a new drug was approved a few months ago, and since we have the largest subcutaneous product being utilized at home, nurses in infusion clinics are quite familiar with it. There is a notable demand for what I would refer to as launch market products in late Stage 3, and we're excited about this since Phase 3 is approaching the market more closely than many of our current collaborations. A lot of these opportunities seem to be concentrated in oncology clinics. Specifically, I mentioned in my statement about Europe, where our platform is gaining traction in infusion clinics. We aim to learn from our experiences in Europe and apply those insights in the U.S. It may take some time to add those to our label, but we are very enthusiastic about it.

Operator, Operator

The next question comes from Caitlin Cronin from Canaccord Genuity.

Caitlin Cronin, Analyst

Hey, thanks for taking the questions. Just a quick one on cash flow breakeven. I know you said Q4 ’24 when you are planning for this. How do you really expect to drive this towards possibility?

Linda Tharby, CEO

I’ll Adam that one.

Tom Adams, CFO

Hi, Caitlin, thanks for the question. So as Linda mentioned, the number one thing is the excitement that we see with the increased diagnosis and what we're starting to finally see in the market. Really what that means, Caitlin, is getting back to a double-digit growth rate. You have to believe that we will return to that double-digit growth rate. You have to also believe that we continue to maintain our margin expansion demonstrated in the third quarter. You have to also believe that we maintain operating expense discipline with increased leverage on our operating expenses. Finally, with that is our focused decisions in our CapEx deployment. If we can manage all those factors, we could return to cash flow breakeven by Q4 of ’24.

Linda Tharby, CEO

Maybe the only other thing to add is that certainly our outlook does not look at ’22, where we had a 19% growth level. We're not looking at those levels to reach cash flow breakeven, but we are very confident in the four areas that Tom just discussed.

Caitlin Cronin, Analyst

Got it, okay. And then just on novel therapies, I think your goal earlier in the year was for, I think, six in 2023, so two in the first half and another now. What's your confidence in really reaching this goal for the full year?

Linda Tharby, CEO

Yes, our confidence level now is four to five. Of course, there are always opportunities for us to exceed six. But we have gotten a lot smarter, Caitlin, relative to how long lawyers take to mark up a red line agreement. So we're setting our expectations in that four to five range, of course, we're excited about the new one that we just announced aftermarket today. What I would say about our novel therapies business is that it may be different now than where we were six months ago or even a year ago at this time, as we have a backlog now of revenues and of deals relative to the close collaborations we’ve already done that we're bringing into 2024.

Operator, Operator

The next question comes from Joseph Downing from Piper Sandler.

Joseph Downing, Analyst

Sorry. I was on mute there. Hey Linda and Tom. How is it going? Appreciate you taking the question. I'm picking up off the first question there. So congrats on the 510-K clearance. Can you just talk through how you're thinking about the uptick in the 50 ML once it's launched next year? Wondering if it tracks with the prefilled uptick trajectory we've seen, or does it move faster or slower for some reason?

Linda Tharby, CEO

Yes, we believe it will move much faster. Today, if I were to look at the total PID patient population, about 30% of those are on doses of 20 ML and lighter, while about 70% are on doses of 50 ML and greater. This allows the 50 ML product to open up that 70% of the market that we could not reach before. In addition, what we had in the past is patients that were between, let’s say, 20 ML and 50 ML or more than 50 ML that nurses were just reluctant to switch, because they had to use both vials and prefill. Now with this approval, they can satisfy a lot more of the market. We see this allowing for a much faster uptick than we had anticipated for 20 ML.

Joseph Downing, Analyst

Okay, thanks. And then I'm curious, are there any margin implications we should have in mind as that launch unfolds?

Linda Tharby, CEO

Yes, with being the only pump out there for use with prefills, we are certainly looking to increase prices wherever we can. But we're also conscious that the real opportunity is in consumables. Connecting a specific consumable to that prefilled product is also what we're looking to do with this launch. Therefore, we should see some appreciation in our overall ASP related to prefills.

Joseph Downing, Analyst

Great, thanks, Linda. And then just one on the U.S. market dynamics. What has changed in the last few months that has led to such a shift in the outlook here, and how does this influence revenue growth assumptions embedded in your long-term plans?

Linda Tharby, CEO

The downturn occurred because we expected that with the drug market, we saw a slight uptick between Q1 and Q2; we anticipated that to continue. We expected to see a couple of points of growth quarter-on-quarter after that, which hasn’t materialized. It has been a slower uptick than we thought. Once again, I will say that what drives diagnoses is an increase in infections. We experienced a strong flu season last year, and pneumococcal infections are at pre-pandemic levels. So although it may sound unfortunate that people are getting sick, we see more diagnoses, which is definitely a positive. Regarding the second part of your question, our revenue growth assumptions are for the fourth quarter to see growth in the range of 3% to 4% for the overall market. For next year, we're setting our overall market growth at 5% to 6%. This is not a number we have discussed for '24 yet, but we certainly hope for a strong Q4 and are beginning to see signs of recovery relative to both script, flattening out, and seeing some rise quarter-on-quarter in overall drug market growth.

Operator, Operator

The next question comes from Frank Takkinen from Lake Street Capital.

Frank Takkinen, Analyst

Great. Thanks for taking the questions. I wanted to start with one on pump growth. You guys referenced 40% in the quarter. I assume this means that the consumables were a primary advocate of the number coming up a little bit shorter, obviously, that dovetails well with where prescriptions came in and whatnot. But I was hoping you could talk a little bit more about why you think those consumables may have come in a little lower. My understanding is maybe these patients were more chronic in nature, and they would stay on SubQ. So did these patients potentially switch back to IV? Or was there something else occurring specifically related to consumables in the quarter?

Linda Tharby, CEO

Yes. First, maybe let me start, hi Frank, great to have you on the call. Our consumables revenues typically lag our pump revenues by a couple of months. We did see a bit of softer pump growth in Q2. Last year, we had a significant one-time impact, which was that we saw a greater-than-anticipated backorder that we cleared in Q3 of last year and also rebuilt the channel with inventory. So we had a difficult comparison to last year specifically related to our consumables where our volume was concerned. Regarding any switch back to IV, we do not see it. 99% of patients when they go to SubQ therapy will remain on SubQ therapy given the benefits of time savings and the associated side effects of IV versus SubQ. We see very little switch back; the IV market and any strength we see there is driven by increased diagnosis of CIDP. CIDP patients are typically IV users; only 15% of them are on SubQ therapy, primarily because of the volume of drugs. That's why we see the opportunity with prefilled products as patients that were on 400 ML would have been otherwise inaccessible with those prefills. Now there's a shorter infusion time that can be done with prefills with CIDP, so that’s a major market we believe CSL will pursue now, as they're the only company able to service those patients with the CIDP indication with prefills.

Frank Takkinen, Analyst

Got it. That’s helpful color. And then maybe one of the new collaborations announced today seems like you're looking to develop a one-size-fits-all. I assume there's a cascade of positives that come with that specifically in the financials, economies of scale, and things like that, but could we catch all of the significance of that collaboration? When we could see that progress, and what could this do to margin impact over a long period of time, and any other strategic benefits that may be missing?

Linda Tharby, CEO

Yes, so first, let me just start with the value proposition. Our pharma partner sees the increasing need as we begin to show this in very confidential discussions with some of our pharmacy partners is that the biggest dilemma right now is what we call the simplicity rules. We can supply a pump that satisfies the needs of all prefills and bio patients, which is a significant game changer for them. Three of the four major IG companies have decided to go with prefills, and they have made that public. We see considerable opportunity in this area, but without getting into further specifics relative to the total infusion experience—the intention that we have for our patients—we believe this product, both from a pump and consumables program, will provide significant convenience for patients, saving a lot of time and, importantly, providing value-added time for pharmacists and caregivers training on the product. All around, we think this will be a significant game changer for us.

Operator, Operator

There are no more questions in the queue. This concludes our question-and-answer session. I'd like to turn the conference back over to Linda Tharby for any closing remarks.

Linda Tharby, CEO

Thank you all for joining us today. I look forward to updating you at our upcoming Investor Day. We look forward to seeing you here.

Operator, Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.