Q3 2023 KORU Medical Systems Inc Earnings Call
Good day and welcome to the courtroom medical systems third quarter 2023 earnings call.
All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation there'll be an opportunity to ask questions. Please note. This event is being recorded I would now.
I'd like to turn the conference over to Hanna Jeffrey of the Gilmartin Group. Please go ahead.
Thank you, Jason and good afternoon, everyone earlier today cooler medical system was released financial results for the third quarter ended September 32023.
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 presentation, 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 with these measures with comparable GAAP measures.
In our press release, and accompanying investor presentation, and our filings.
For the benefit of those listening to the replay. This call was held and recorded on Wednesday November eight 2023, and approximately 430 P M.
Since then the company May have made additional comments related to the topics discussed. So please reference the company's most recent press releases and filings with the SEC.
Joining us on today's call are Linda RB President and CEO of cooler medical system in China.
Medical's Chief Financial Officer, Linda Please go ahead.
Hannah good afternoon, everyone and thank you for joining us for that.
During today's call, we will use slides to support our commentary.
I will begin by reviewing key financial and business highlights for the third quarter.
Rob 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 core 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 30000, chronic global parts cutaneous immunoglobulin infusion patients and.
And by building them continue of new drugs on a pump.
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 large clinical trial order in the prior year and by timing of collaborations.
This is a business as well.
Cost of sales of product 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 the signing of the collaborations which lead to commercial revenues when launched.
In addition, our domestic core business was impacted by slower than anticipated <unk> market.
Market growth.
Script volumes were down year on year, and overall dropped volume.
Was down versus our expected growth.
Well its 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, which continues to outpace the underlying market and includes strong recurring revenue with over 27000 patients.
We remain the broadest label for subcutaneous drug indications them in the home and with our latest 50 ml presale Clarence remain the only cleared device for pre filled syringe is 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 'twenty 'twenty four yearend cash flow breakeven.
Profitable core business and disciplined prioritization of investments related to innovation and our novel therapies business.
We also continued to build capability, namely Tim Miller, as our Chief commercial Officer Tim.
Kevin brings over 30 years of experience in leading high performing teams and commercialization and marketing strategy international expansion and driving sustainable growth and profitability.
I'm personally delighted to be working with him again.
With 10, leading our global commercial operations and will allow me.
More time to dedicate to our innovation agenda, and our novel therapy business 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.
A lot of progress this quarter in advancing our three strategic growth drivers. As a reminder, these include growing our leadership position in domestic core sub two <unk> business, expanding this leadership position and you're expanding novel therapies business and geographic expansion we.
We have made advancements in each of these areas during the quarter.
A few key highlights.
In our domestic core business on an underlying basis on the quarter and on a year to date basis, we continue to outperform the market.
Our pump growth a leading indicator of consumable growth was up over 40% and we are excited to have our pre sell trend five 10-K approval in a record 119 days for submission.
And our anti business, we announced another close collaboration and we have the largest pipeline of new opportunities in our history.
And our geographic expansion efforts, we are seeing wins in several markets and are excited by our recent submission to enter the Japanese market one of the top five <unk> markets with expected approval in late 'twenty four.
Let's now take a deeper dive into the U S market.
Okay.
This quarter, we have done an analysis to evaluate the factors impacting the overall <unk> market.
Well, we did not anticipate the market to be where it is today horrors outperformance as the market continues.
The overall sub Q I G drive volume market is that 4% to 5%.
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%.
Sub to us given a very strong flu season in 'twenty two.
And into 'twenty three.
Theres not rebound to pre pandemic levels is taking longer than we anticipated.
We are encouraged by the drug market being up sequentially in Q2 by over two 5% and this combined with growing awareness and diagnosis and CIBC should set up for a good 2024.
In the interim we are generating above market growth of 6% year to date as a result of continued account wins and pretty full adoption. We're also excited by our pump performance up 40% year on year and 24% from prior quarter.
This is often a leading indicators consumable cells, who have multiple doctors or future.
In the coming year.
And now let's discuss free cells, a key growth driver of our U S businesses continued market share.
Growth driven by pre filled syringes.
And the last shows her pre filled syringe five 10-K clearance for a 20 ml prefilled syringes led to an immediate uptick in the market as our pump facilitated pre sell market penetration going from about 3% to about 12% of the overall market.
Last week, we received.
50 ml five 10-K clearance for our freedom 60 infusion system for use with high Center, a 50 ml Prefilled syringes we.
We expect a full market launch to ensure in early 2024.
And our recent patient market studies, we found significant preference for use of our system with Prefilled syringes due to the increased convenience of reduced drug preparation tasks and faster setup times we.
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 freedoms infusion systems remain the only pump with FDA clearance for use with pre filled syringes.
We believe this will lead to increased share with expected growth of peripheral penetration from 12% to an expected 50% penetration by 2025.
We also believe that due to the increase the ease of use and it could drive overall further penetration of <unk> therapy, which today sits at around 15% to 20%.
Okay.
Moving to our IMT business, we are focused 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 business at the top and the new therapy areas and totaled $2 5 billion dollar town over 2 million total patient population opportunity.
Although we know that not every one of these will make it to launch each new sign collaboration provides the opportunity for commercial launch revenue.
We continue to advance with our new look collaborations this quarter signing one additional collaborations with our net total remaining at 15 with a reduction of one phase II Neurology program that was terminated by the pharmaceutical company in the quarter.
We also have 18 additional open opportunities.
We added three new this quarter, making this our largest opportunity much debate. These opportunities represent pharmaceutical companies, where 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 core ROE by 2026 or earlier they span multiple third therapy area with a significant concentration in oncology.
Our new collaboration signed in the quarter as our first for our next generation Pompe optimized for delivering all of <unk> products, including Prefilled syringes.
This collaboration includes obtaining five tank like clearance of this next generation pump with the pharmaceutical companies as the IV drugs.
We think it's novel therapies is the biggest mid to long term opportunity for the company.
We have started building this business just over two years ago, so very much still in its infancy. It had many learnings since its inception as we continue to build our strategy and form relationships with pharma companies and we are excited by 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 of new countries. We believe we have plenty more runway in our international business and are excited about key milestones.
One of our international growth drive versus new markets and we have successfully completed launches in several smaller markets. This year as we look ahead to 'twenty four we anticipated a Japanese market launch breast DRG one of the top five 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 have a great value proposition versus electronic pumps, and we are excited to generate clinical evidence to prove that.
This week the team is that our largest international show AIPAC International primary immunodeficiency Com, Chris Corr.
Coral will present its third abstract this year titled Infusing subcutaneous semi born immunoglobulins comparison of the constant close system, our electronic pumps to the constant pressure system the corner of a mechanical system.
The abstract aims to provide valuable insights into the comparisons of two subcutaneous infusion systems reviewing the considerations associated with bus system, highlighting the gogo global benefits of the constant pressure system and contributing to the understanding of the optimal infusion method for improved patient outcomes were.
To showcase our efforts at this prestigious conference.
Another key area that is exciting for us because they use a freedom system and infusion clinics.
Key value driving the nursing time savings and alleviating significant dexterity challenges versus current manual push methods.
Use of our broad product more broadly and infusion clinics is an area, we will be actively pursuing for future growth.
International has become a vital Keith 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 as the key elements that will drive quotes in the next phase.
We've laid out our upcoming new products and commercial label milestones that we expect over the next few years. This quarter. We have completed two milestones one for products with the launch of the new Prefilled syringe pump and one for our commercial label indications with the approval of that from what <unk> 50 ml Prefilled syringe looking.
Looking ahead, we plan to have a new consumable five 10-K submission in 2024.
We remain extremely excited about our innovation pipeline with the opportunity to launch both the new coral pump and consumable platform by the end of 'twenty, five and with prospects for multiple new drugs on the freedom system.
I will now turn the call over to Tom to review our financials.
Thank you Linda and good afternoon, everyone.
In the third quarter, we reported total revenues of 7 million a decline of 10% or 800000 from prior year. The majority of this decline was due to our novel therapies business, which declined by 78% or $600000 in the quarter.
This decline was driven by a large clinical trial order of about 500000 recorded in the prior year and by the timing of our NRT milestone completion.
Our domestic core reported revenues of $5 8, million% to 2% decrease versus prior year, driven by lower consumable volumes.
As the prior year included a back order of 300000 or 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 peripherals.
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 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 initiatives.
With this performance we achieved the high end of our second half gross margin guidance.
As we look forward to.
At the end of the year, we expect to hold these levels of gross margins between 60 and 62% in.
In Q4, and deliver our full year margin between 50, 860% driven by lower cost of outsourced products, lower labor and overhead and improved efficiency from a consolidation of our U S manufacturing from two sites to one along with contribution from price and volume mix.
During the quarter, we reported operation 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 of G&A and operational head count as well as external consulting.
We will continue to flex operating expenses level.
Levels with revenue projections, while maintaining investments in our strategic initiatives and will keep expenses under $28 million in order to maintain when 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 of 2024.
Our cash balance at the end of Q3 was $10 8 million and represented $900000 cash burn.
From the prior quarter our.
Our biggest driver of cash burn was there a net loss of 900000, excluding noncash items for stock compensation and depreciation.
Adding to these cash flows were working capital changes of 300000, driven by the timing of higher or lower during the quarter of 900000.
This was offset by 600000 for a planned reduction of inventory, making additional progress towards our 2 million.
And of your reduction target.
We also had $300000 cash improvement driven by financing financing activities were annual insurance renewal, we continue to control and plan on 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.
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.
Yeah.
We are updating our guidance for full year 2000, 2023 to reflect novel therapies timing of closing collaborations clinical trials and milestone achievements.
In addition, we are adjusting our underlying U S core.
Drug market growth assumptions of 3% to 4% in Q4 versus our prior expectation of 8% to 10% for Q4.
Our full year revenue is now expected to be between 28 million $28 5 million. This implies a flat sequential growth rate in the fourth quarter at the midpoint to reflect the changes that I, just mentioned and 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 in our novel therapies business with our current backlog of signed collaboration and our pipeline of opportunities.
Adding short term and most importantly long term commercial revenue.
And our assumptions, we are planning 3% to 4%.
Q4 growth rate in the underlying <unk> drug market, and we expect higher market growth in future quarters as a rise in respiratory infections lead to increased diagnosis of PID, which will see the favorable impacts of which we will see the favorable impacts of <unk>.
24.
Gross margin guidance remains between 58% to 60% for the full year and to exit the year between 60% to 62% with.
With the completion of the manufacturing transition behind us and year to date gross margins on plan. We expect to continue to see our Q4 gross margins to remain at the mid to high end of our range as we continue to see lower costs. Some goods benefited from our outsource manufacturing initiatives and improvements in average selling prices.
We are raising our expected cash balance at year end 2020 in 'twenty three 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 reported in our prior guidance.
This is inclusive of approximately $3 1 million in Stockholm, which is offset by continued working capital improvements of $2 million of inventory reduction.
We are about 75% complete today, we continue to expect to reach cash flow breakeven by Q4 of 2024 based on our current strategic outlook.
I will now turn the call back to limit for closing comments.
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 and on the innovation side.
Continued to have exciting work ahead that will resolve the company strategically as a leader in drug delivery in the home and I've continued value to patients customers and shareholders.
As we look ahead, we are excited about our upcoming milestones, including our 50 ml presale launch progressing or novel therapies collaboration milestones and finding our innovation agenda and continued global expansion.
I'm also excited to share that we will be hosting an analyst day on December five at our headquarters in Mahwah, New Jersey, well be sharing additional updates and progress through our plan.
And finally in closing I want to thank the entire corporate team for their exceptional efforts on the quarter.
Operator, I will now turn it over to you for Q&A.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
This time, we will pause momentarily to assemble our roster.
Our first question comes from Alex Nowak from Craig Hallum. Please go ahead.
Hey, good afternoon. This is connor on for Alex Thanks for taking my questions. So.
Can I ask what do you see yourselves, saying about 50 milliliters Prefilled cartridge I have the introduction then maybe speak to what this could do for IBD sub Q convergence in the market, whether it's in terms of market share and just give some commentary on that please.
Yeah.
Yeah. 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.
The extended delay to launch the product into the market was due to the time that it takes them to bill not overall pre sale with their drug and bring it to the marketplace. So they are planning on launching that product in.
In early 2024.
And.
They have also released some.
Pre market studies that indicate the overall preference for pre sells.
Regarding overall IV to sub Q.
I have been public about that I think what we know is what factors are the biggest drivers to subcutaneous therapy use are generally the.
Overall convenience and ease of use for a patient in the home and given the considerable improvement in both of those areas. We project that about 50% of the market will be pre sales over the course of the next three.
Three years.
And that it will in turn drive increased penetration.
And that 50% ish of the subcutaneous market.
Correct correct, Okay got you.
And then maybe what are your views on the slump for this sub key market is there any reason this isn't going to be a longer term correction or issue.
Yeah, I would say so we we've already seen we look at one primary source of data, which is the same data that department critical companies use.
And with that data source and looking through all of their public are.
Releases here, here's what we see so first of all I think to encouraging signs a quarter on quarter. We saw that overall drug market improved by about two three percentage points versus the prior quarter.
And what really drives.
Diagnosis.
Immuno deficiencies in primary immune deficiencies words are about 85% of the market.
Our increasing infection rates, so people get infections. They go to the hospital or they get more infections and and you get recurring infections, which brings you there. So given the fact that we saw a.
'twenty two 'twenty three was the big the single biggest flu season, we've seen in this flu season is off to another roaring start we expect that that.
Two 3% increase we saw from quarter one to quarter. Two we expect that to continue we don't have the quarter three data yet, but we expect that to continue another driver that we're excited about is see IDP usage. So that's a neurology ah indication and those patients tend to use about twice as much drug they tend to.
You do about twice as many injections and these patients are are prime candidates for pre cells because they use so much drug. It's just a much simpler process. So we also see that being a buoyant factor for the overall market and then although we don't subscribe to the script data I know it's out there publicly we also.
So Saudi overall script data begin to flatten out in terms of we don't see it.
The continued negative quarter on quarter. So so I think those are all great indicators for what we feel where we're already beginning to see stabilization and certainly in the overall drug market improvement.
Versus where we have been.
Got it got it and then just one last one here.
So you mentioned some new pipeline opportunities for additional collaborations can you give any maybe color on how far along in some of these opportunities are.
And in terms of what yeah.
Okay. So the 15 five collaborations we are we did this quarter you'll see that.
Define collaborations which means we have a signed deal we are actively exchanging elements of value whether that be the drought whether that'd be dollars are in order to get their product approved on our pump. In addition to that we had 18 open opportunities that we have are in our funnel.
The biggest focus that we've seen of late is that a number of new indications are being approved for subcutaneous use in the clinic.
There.
Those usages for us and there was one such drug that was just approved a few months back a drug called <unk> Refugio and given the fact that we are the largest subcutaneous Ah <unk>.
Product being used in the home nurses are very familiar that also work on those infusion clinic. So we're seeing a lot of demand for what I would call launched market products in late stage, three which is what we're very excited about because obviously a phase III is much closer to market and some of the fine collaborations we have there did that and.
Many of them that we see are concentrated in the oncology clinics, specifically I spoke briefly in my script about Europe.
In Europe, we're seeing a lot of adoption of our platform in infusion clinics. So looking to learn from our experience in Europe and bring some of those into the U S.
We're a little bit of time it takes some time to get those on our labels and very excited.
Got you that's great to hear well that's all I have thank you.
Thank you.
The next question comes from Caitlin Cronin from Canaccord Genuity. Please go ahead.
Okay.
Hey, thanks for taking the questions.
Just a quick one on cash flow break even may I know you said that Q4 'twenty. Four is when you are are you now planning to this how do you really expect to drive you know this towards profitability.
Yeah, I'll take that one hi, Kevin Thanks for the question. So as I was wonder mentioned so the number one thing is the excitement that we see with you know the increased diagnosis and what we're starting to finally, starting to see in the market and really what that means Caitlin. This is getting back to a dull.
Visit growth right. So so you have to believe that we get back to that double digit growth rate. You have to also believe that we continue to maintain our margin expansion that we've demonstrated here.
In the third quarter.
And you have to also believe that we continue with our with our operating expense discipline with increased leverage and operating leverage.
On our on our Opex and then finally with that as our choice for decisions that our capex deployment. So if we if we can manage all of those things. We can certainly get back to that cash flow breakeven by Q4 of 'twenty four.
And then maybe the only other thing that I would say is that certainly our outlook does not look at 'twenty. Two we had a 19% growth level, we're not looking at those levels to get to that cash flow breakeven level, but are very confident in those four areas that that Tom just talked through.
Got it Okay and then just on novel therapies, I think Karen go earlier in the year before I think six in 2023 to two in the first half and another now what's your confidence in really reaching this goal for the full year.
Yeah. So so we have said that our confidence level on now is four to five of course, there's always opportunities to us for us to exceed the six but we've gotten a lot smarter Caitlin relative to how long lawyers take two mark.
The Red line agreement.
So we're setting our expectations in that four to five level of course, we're excited by the new one that we just announced our aftermarket today and.
What I would say about our novel therapies business, maybe different than where we were six months ago or even a year ago. At this time is that we have a backlog now.
Our revenues end up deals relative to the close collaboration we've already done that we're taking into 'twenty.
2024, so so that's that's also good news.
Awesome, Thanks for taking the questions.
Thanks Caitlin.
The next question comes from Joseph Downing from Piper Sandler. Please go ahead.
Sorry, I was on mute there inland and Tom How's it going I appreciate you taking the question.
Picking up off the first question there so congrats on the slide.
Can you just talk through how you're thinking about the uptake of the 50 ml once its launched next year.
I'm wondering doesn't track with the presale uptick trajectory, we've seen or at least move faster or slower for some reason.
Yeah. So we think it will move much faster today, if I were to look at the total.
D or the total patient population out there about 30% of those are on doses of 20 ml.
And lighter and about 70% are on doses of.
50 ml and greater.
So what that allows for is obviously with the 50 ml. It opens 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, and 50 M. L. R.
More than 50 ml that nurses were just reluctant because they had to use both vials and prefill to switch a patient so a patient might have to use a prefilled syringe and vial in the past now with this approval. They can satisfy a lot more of the market. So they're more able to switch patients. So we see.
Where where we saw the market basically get to about 12% penetration and then kind of stabilize there we see the 50 ml really being able to go after 70% of that market itself are much faster object than what we saw with plenty of them out.
Okay. Thanks, and then I'm curious any margin implications, we should have in mind is that long shirts unfold.
Yeah. So the Oh of course with <unk> being the only pump out there for for use with pre cells. We are certainly looking to take price wherever we can but we're also conscious that the real game is consumables and so connecting them.
Consumable to that pre salt product is also what we're looking to do with this launch so we should see some appreciation.
In our overall E S P as well related to pre build.
Okay.
Great. Thanks, Linda and then just one on the U S market dynamics. So curious whats changed in the last few months has flipped the switch or shift in outlook here and how does this influence revenue growth assumptions embedded in your long term plans.
Yeah, So I.
I would say why did we come down we really expected that with the drug market.
We saw a little bit of an uptick between.
Q1, and Q2 are we expected that a continued uptick and we thought we'd see a couple of points to grow quarter on quarter on quarter and that just has not happened it's been a little bit of a slower uptake than what we've bought and again I'll come back to we're seeing.
What gets diagnosis going as increased infections were seeing a we saw a very strong flu season last year pneumococcal infections are at pre pandemic levels. So although I hate to say it when people get sick, we see more of diagnosis, which is fantastic.
And I'm sorry, the second part of your question.
Yes, just how that outlook.
Just about the revenue growth assumptions embedded in your longer term plans for 2024.
26.
So so as I said, our revenue or sorry, our market growth assumptions are in that 3% to 4% range in the fourth quarter of this year. We would expect next year, we're setting the overall market growth somewhere in that 5% to 6% growth range for the overall market.
We're not yet discussing our 24 guidance numbers.
But obviously, let's let's hope for a strong Q4 and the overall underlying market. We're beginning to as I said earlier from one of the earlier questions to see signs of that recovery relative to both script a script.
Declines flattening out and also seeing some rise quarter on quarter in overall drug market growth.
Great. Thanks, a lot I appreciate it.
The next question comes from Frank <unk> from Lake Street Capital. Please go ahead.
Great. Thanks for taking the questions I wanted to start with one on the pump growth you guys referenced the 40% in the quarter I assume this means that the consumables were.
Our primary advocate of the number coming up a little bit shorter and obviously that dovetails, well with where our prescriptions came in and whatnot, but I was hoping you could talk a little bit more about why you think those consumables may have came in a little lower my understanding is maybe these patients were more chronic in nature and they would stay on.
Q. So do these patients potentially switched back to IV or was there something else that was occurring specifically related to consumables in the quarter.
Yeah. So first maybe let me start hi, Frank Great Great to have you on the call.
So our consumables revenues tend to lag our pump revenues by a couple of months. So we did see a bit of softer pump growth in Q2, and then last year, we had a significant onetime impact which was a we saw a greater than.
Backorder that we basically cleared the back ordering or Q3 of last year and also rebuild the channel with inventory. So we had a difficult compare to last year, specifically on our consumables, because that's where our volume was.
Regarding any switch back to I E. We do not see.
99% of patients when they go to sub acute therapy will stay on top to pet therapy, given the benefits both in their time savings.
In the associated side effects of IV versus pop kids, So we see very little Switchbacks.
The the IV market and any strength that we would've seen there is being driven by increased diagnosis C. I D. P. They are typically IV patients are only 15% of <unk> patients are on sub acute therapy.
And they are typically IV users, mostly because of the volume of drug that's why we see the opportunity with pre sells.
Given now patients that were say on 400 MLS would've been inaccessible with with a pre sell now it's a it's actually a shorter infusion time that can be done with pre films with CIB piece. So that is a major market that we believe see CSL will go after now as they're the only.
The only company able to service those patients with the CIB TP indication with pre sells.
Got it that's helpful color and then maybe one on the new collaborations you guys announced today. It seems like you're looking to develop a one size fits all and I assume theres, a cascade of positives that come with that specifically in the financials and the economies of scale and things like that but maybe just kind of do a.
Catch all of the significance of that collaboration.
We could see that progress so what this could do to margin impact over a long period of time and any other strategic benefits I may be missing.
Yeah. So so first let me just start with the value prop right that debt that we obviously the pharma partners saw an.
And increasingly as we begin to show this.
In very confidential discussions with some of our pharmaceutical pharmacy partners.
The biggest dilemma right now is as you call it simplicity rules.
We can supply a pump that is able to satisfy the needs of all presale and mild patients that's a big game changer for them.
So obviously with our partner that we're working with they saw the advantage of that and I would also say that you.
Three of the four major <unk> companies have made the decision about our pre sells and they've been public about that so.
We see a lot of leg room in this area and without getting into any further specifics relative to the total infusion experience, we intend to have for our patients I would say that.
We believe this product both from a pump and consumables our program will be.
Add significant convenience for patients a save a lot of time.
Save a lot of it really importantly value added time for our pharmacists and for caregivers that trained on the product. So all the way around we think it will be a significant game changer for us.
Okay. That's helpful I'll stop there.
There are no more questions in the queue. This concludes our question and answer session I would like to turn the conference back over to Linda Irving for any closing remarks.
Thank you all for joining us today I look forward to updating you at our upcoming Investor day, and we look forward to seeing you here.
Yeah.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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