KORU Medical Systems Stock

KORU Medical Systems, Inc. (KORU) develops, manufactures and markets proprietary portable and innovative medical devices primarily for the subcutaneous drug delivery market as governed by the United States Food and Drug Administration (the FDA) quality and regulatory system and international standards for quality system management.

The company’s focus is primarily concentrated on its mechanical infusion products, the FREEDOM Infusion Systems (which it refers to as the ‘FREEDOM System’ when used with one or more accessories), which include the FREEDOM60 Syringe Driver, the FreedomEdge Syringe Driver, HIgH-Flo Subcutaneous Safety Needle Sets and Precision Flow Rate Tubing.

The company’s revenues are derived from three business sources: domestic core, international core, and novel therapies. The company’s core domestic and international revenues consist of sales of its syringe drivers, tubing and needles (Product Revenue) for the delivery of subcutaneous drugs that are FDA cleared for use with the Freedom Infusion Systems, with the primary delivery for immunoglobulin to treat Primary Immunodeficiency Diseases (PIDD) and Chronic Inflammatory Demyelinating Polyneuropathy (CIDP). Novel therapies consist of Product Revenue for feasibility/clinical trials (pre-clinical studies, Phase I, Phase II, Phase III, ) of biopharmaceutical companies in the drug development process, as well as non-recurring engineering services (NRE) revenues (including testing and registration services) received from biopharmaceutical companies to ready or customize the FREEDOM System for clinical and commercial use.

Strategy

The company plans to become a leading provider of solutions for subcutaneous large-volume infusions defined as greater than 10ml.

The company intends to maintain and extend its leadership position in the SCIg market through clinical and product innovation and commercial excellence. By improving the company’s products, establishing thought leadership in subcutaneous therapy, partnering with drug manufacturers, expanding geographically, and executing commercially, the company intends to increase its overall global share position and the number of patients prescribed SCIg over intravenous Ig.

Furthermore, the company plans to expand into new therapies outside of SCIg. The company’s track record of regulatory clearance and successful patient use, combined with its channel access, position KORU to both maximize its growth in the core SCIg market and expand into new therapeutic areas.

Products

KORU’s infusion devices work together as a system to deliver life-saving therapies to patients with chronic illnesses, such as PIDD and CIDP. The FREEDOM System comprises the FREEDOM60 Syringe Driver (standard 60/50ml syringe compatible) and FreedomEdge Syringe Driver (standard 30ml and 20ml syringe and prefilled syringe compatible), HIgH-Flo Subcutaneous Safety Needle Sets and Precision Flow Rate Tubing. The systems are portable, easy to operate, maintenance free and do not require batteries or electricity. The FREEDOM System operates at a lower pressure than an electrical, volumetric pump and maintains a balance between what a patient’s subcutaneous tissues can tolerate what the system delivers.

The company’s FREEDOM System is cleared for the most on-label subcutaneous indications, including specific FDA clearance for: delivery of specific medications through subcutaneous and intravenous routes, including specific clearance for leading immune globulins Cutaquig , Cuvitru, Hizentra, Xembify, Empaveli (branded Aspaveli outside the United States), Gammagard Liquid, and a variety of antibiotics. The FREEDOM System is the only infusion system specifically cleared for SCIg delivery with a prefilled syringe, the Hizentra 20ml prefilled syringe.

Ambulatory infusion systems are most prevalent in the home care and alternate site markets. The SCIg products delivered by the FREEDOM System are indicated for a variety of conditions, including PIDD and CIDP in the United States and PIDD, CIDP and Secondary Immunodeficiency Disease (SIDD) in Europe. Empaveli is indicated for Paroxysmal Nocturnal Hemoglobinuria (PNH). The use of the FREEDOM System for SCIg drug delivery continues to increase, and it remains the market leading delivery system in the U.S. for these treatments. In recent years Hizentra has received an expanded indication for the treatment of CIDP in the United States and multiple SCIg drugs have received indications for CIDP and SID outside of the United States. It is expected that patient access to subcutaneous immunoglobulin (SCIg) will expand as new drugs are developed, existing drugs are approved and/or marketed in new countries, and existing drugs receive new indications.

HIgH-Flo Subcutaneous Safety Needle Sets are an important element of the FREEDOM System. The needle sets are available in 26- and 24-gauge sizes and feature unique design elements specific to subcutaneous self-administration. One such feature includes a back-cut needle designed for more comfort and less tissue damage with flexible wings to minimize patient discomfort over prior needle set offerings.

Precision Flow Rate Tubing is designed for repeatable flow rates without allowing unrestricted flow. The tubing regulates the flow rate and infusion time for various applications when used with the FREEDOM System. Each tubing set provides a different level of flow restriction and consistently delivers medication with low residual volume to minimize drug waste.

Sales and Distribution

The FREEDOM System is sold through both direct sales and medical device distributors to pharmaceutical companies, specialty pharmacy customers and home infusion providers. The company’s products are sold principally through a small number of distributors so its specialty pharmacy customers receive the benefit of remote inventory management and one-stop shopping. The company sells the majority of its products through three distributors in the U.S. and two distributors outside the U.S. As of December 31, 2022, these five distributors consisted approximately 72% of the company’s net revenues with one of its U.S. distributors contributing approximately 41%.

Specialty pharmacies, home infusion providers, and distributors are the company’s primary sales contacts, although it provides education and training materials to clinicians, patients and patient advocates both in the field and online.

Manufacturing and Raw Materials

The company has entered into an agreement with Command Medical Products, Inc. (Command), to manufacture and supply substantially all of the company’s subassemblies, needle sets and tubing products for supply continuity and cost savings.

Research and Development

The company spent $5.0 million on research and development for the year ended December 31, 2022.

Regulatory

The company’s medical devices and technologies, as well as its business activities, are subject to a complex set of regulations and rigorous enforcement, principally by the FDA, and numerous other federal, state, and non-U.S. governmental authorities. Thus, both before and after a product is commercially released, the company has ongoing responsibilities under the FDA.

The company’s facility and procedures and those of its applicable suppliers are also subject to periodic inspections by the FDA to determine compliance with applicable laws and regulations. The company is an FDA-registered medical device manufacturer and must demonstrate that it complies with the FDA’s quality system regulations (QSR) and Current Good Manufacturing Practices (cGMPs).

The company is subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which it conducts its business. These laws include: the federal Anti-Kickback Statute; federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; the federal Civil Monetary Penalties Law; the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), as amended by the Health Information Technology for Economic and Clinical Health Act; and the federal Physician Payment Sunshine Act.

Patents and Intellectual Property

The company has patents and other intellectual property that protect the FREEDOM System, and it continues to file patent applications in connection with its research and development activities. As of December 31, 2022, the company owned 14 U.S. Patents and 60 foreign patents. In addition, the company has 5 pending U.S. patent applications and 11 foreign patent applications. The fundamental patents protecting the company’s drug delivery systems extend until 2034 and beyond.

History

The company was founded in 1980. It was incorporated in the state of New York in 1980. The company was formerly known as Repro Med Systems, Inc. and changed its name to KORU Medical Systems, Inc. in June 2022.