Anika Therapeutics Inc.

Good evening, ladies and gentlemen, and welcome to Anika Therapeutics' fourth quarter and full year 2019 earnings conference call. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star, then 1 on your telephone keypad. Please be advised that today's conference may be recorded. If you require any further assistance, please press star, then 0 to reach an operator. I will now turn the call over to Sylvia Chung, Chief Financial Officer. Please proceed.

Thank you, Liz. Good evening, everyone, and thank you for joining us. With me on the call today is Dr. Cheryl Blanchard, Interim Chief Executive Officer, and Jim Lurup, Executive Vice President of Business Development and Strategic Planning. During today's call, Cheryl, Jim, and I will review our fourth quarter and full year 2019 financial results and key business highlights, which were summarized in our earnings release issued today. A copy of the earnings release is available on our investor relations section of our website at annacatherapeutics.com. In addition, a slide presentation is posted on our website in the investor relations section under the events and presentations tab. We invite you to take a moment now to open a file and follow the presentation along with us. Please turn to slide two. Before we begin, please remember that certain statements made during this conference call constitute forward-looking statements as defined in the Securities Exchange Act of 1934. These statements are based on our current beliefs and expectations and are subject to certain risks and uncertainties. The company's actual results could differ materially from any anticipated future results, performance, or achievements. Please see our SEC filings for more information about factors that could affect our results. Certain financial measures we will discuss on this call are non-GAAP financial measures. We believe that these measures help investors gain a more complete understanding of our results. and is consistent with how management views our financial performance. A reconciliation of these non-GAAP financial results to the most comparable GAAP measurement calculated and presented in accordance with U.S. GAAP is available in the Investor Relations section of our website. I will now turn the call over to our Interim CEO, Dr. Cheryl Blanchard. Cheryl.

Thank you, Sylvia, and good evening, everyone. Before we discuss our financial results and outlook for the year ahead, I'd like to start by remembering Anika's president and CEO, Joe Darling, who passed away unexpectedly on January 29th. When I interviewed to join Anika's board, Joe talked about Anika and the people who make up Anika with a passion you hope every leader exhibits about his or her company. Joe was a wonderful leader and a trusted colleague who led the beginning of our transformation into a global commercial company. Over the last two and a half years, he set Anika on its current path, reinforcing its strong foundation, leveraging its strengths, and embracing innovation. Most recently, he led the development of our five-year strategic plan, which will continue to guide our growth over the next several years. Joe is a great man with a well-deserved reputation in our industry for being a strong leader who is passionate about healthcare. Though certainly we'll miss his leadership, we'll miss his character, humor and friendship even more. Our thoughts and sympathies go out to his wife Maureen and children John and Jordan. We are grateful to Joe for all that he did for Annika and we will continue to work to honor and build on his legacy. Some of you have asked about Joe's passing. While we will continue to respect his family's wish for privacy, I can share that in early 2019, Joe informed the board that he was experiencing some health issues. Following that communication, the Board and Joe were in regular contact regarding his health. He continued to perform his responsibilities well throughout 2019 and into 2020, and over-delivered progress against our strategic goals. Based on an ongoing dialogue and Joe's exemplary performance record, the Board remained confident in his ability to lead, and the Board respected Joe's wishes to keep his health condition private. The board designed an interim office of the president in the event Joe might need to take a short leave of absence, which he never needed. His unexpected passing was a shock to all of us here at ANACA, and we are deeply saddened by his loss. Upon learning of Joe's passing, the board activated the interim office of the president to provide immediate ongoing leadership and oversight of ANACA's day-to-day operations while we began the search process to identify ANACA's next CEO. After that time, the Board had an opportunity to consider what would be best for ANACA in light of all the circumstances, and in particular, to consider the impact on the Interim Office of the President structure for the time it would take to conduct the CEO search. With the support of the Interim Office of the President, the Board decided to appoint an Interim CEO. I am honored to assume that role and look forward to working alongside the ANACA team to continue delivering for our shareholders and other stakeholders. I have a long history in the biotech and medtech worlds in orthopedics and specifically with joint preservation and regenerative medicine businesses. Given my experience and passion for the field, I was impressed with the company's achievements and excited by its potential. I am confident in the strength of the company's market position and growth prospects. As I step into the role of interim CEO, I am optimistic about the future of the company. During my time on the board, I have gained unique insight into the business, strategy, and operations and have seen firsthand the growth and development of the organization. ANACA is well positioned both strategically and financially with a talented team that has deep expertise and an innovative product pipeline. I look forward to working with the board and the management team to capitalize upon the opportunities ahead. Please turn to slide number three. I'd like to now discuss the significant progress that Anika continued to deliver in 2019. Last year, we took significant steps to transform Anika into a global commercial company focused on joint preservation and restoration by executing on our five-year strategic plan. We redeployed resources and added world-class talent to our leadership team, successfully completed the build-out of our small internal hybrid commercial sales force in the U.S., launched our first surgical orthopedic product, Tactuset, under our hybrid commercial model and continue to expand internationally. We also recently completed the acquisitions of Parkes Medical and Arthur Surface, which expanded our joint preservation and restoration product portfolio, expanded our commercial capabilities and infrastructure, enhanced our innovative product pipeline, and diversified our revenue base from our successful legacy commercial partners and distributors. These acquisitions accomplished these strategic goals, and more importantly, they strengthened Annika's unique position in the $7 billion sports and regenerative medicine market. They improved our ability to address significant unmet medical needs, which will deliver better patient outcomes and drive sustained revenue growth that will ultimately enhance value for shareholders. Please turn to slide number four. Joe often said that our growth strategy is driven by our focus on the three P's, people, products, and performance. And in many ways, our 2019 results and accomplishments are a testament to that continued focus. Let's start with the people. Last year, we added several seasoned executives to our leadership team to enhance our ability to achieve our growth objectives, including Jim Lora, Executive Vice President of Business Development and Strategic Planning, Dr. Bob Richard, Vice President of Research and Development, Steve Goldie, Vice President of U.S. Sales, and Mira Leiwant, Vice President of Regulatory, Quality, and Clinical Affairs. Additionally, we successfully onboarded four highly skilled regional sales directors in the U.S. under our hybrid commercial model. These sales directors are currently focused on the full launch of Tacticet. Please turn now to slide five. The recent acquisitions of Parkes Medical and Arthur Surface brought a wealth of talent into our organization and further enhanced our commercial capabilities and infrastructure. Combined, they added approximately 40 sales reps and more than 150 distributors in the U.S. to our hybrid commercial model and over 70 international distributors. These acquisitions enabled us to achieve a level of commercial scale far more efficiently and quickly than greenfielding a commercial team. We are excited to fully deploy our hybrid commercial model, which will provide ANACA with a direct line of sight to the market and deliver more favorable economic results. Turning to slide six, in December, we commenced the full-scale commercial launch of Tacticet in the US at the 2019 Orthopedic Summit and Evolving Techniques Conference, or OSET. Nearly 100 procedures have been completed to date and we continue to receive positive feedback from the physician community regarding the therapy's ease of use and procedural efficiency. In 2019, we surpassed our initial goals of onboarding five distributors with product availability in 10 surgical centers. To date, we have onboarded 17 new distributors and we plan to grow and leverage the distribution networks at Arthur Surface and Parkis. For 2020, We expect revenue from Tacticet to be approximately $3 million. Product development for our rotator cuff repair therapy is progressing according to plan. We continue to anticipate that we will submit a 510K application to the FDA in the early 2021 timeframe. This therapy is highly synergistic with many product offerings at Parkes Medical and Arthur Surface. Please turn to slide number seven. Singhal, our novel third-generation visco-supplementation therapy combining HA and steroid, continued to deliver strong performance in Canada and across Europe. International revenue from Singhal grew close to 30% year-over-year in 2019. The continued growth of Singhal, coupled with the strong feedback from both doctors and patients, has reinforced our confidence as we advance Singhal towards regulatory approval in the U.S. market. We remain on track to initiate the Singdahl pilot study in the first half of 2020. We are in the process of preparing for U.S. site initiation and patient enrollment. We expect this study to confirm our trial design, increase our probability of success in a Phase III trial, and generate data that ultimately will be needed to support FDA approval. There are three key differentiators in this revised protocol compared to the prior Phase III 1602 study. The first is the inclusion of a placebo arm. The second is the addition of a much larger steroid arm. And the third is the modification of the patient enrollment selection criteria for targeting our ideal patient profile. We continue to expect that the pilot study will take approximately one year to complete. We remain confident in Syngal's U.S. market opportunity, which we estimate to be approximately $1 billion annually. Please turn to slide eight. On the regenerative medicine front, we've advanced the clinical development for our cartilage repair therapy, Hylafast. During the fourth quarter, we continued work on adding new sites, especially internationally, and we expect to initiate 10 new sites in the first half of 2020. The trial is currently close to 70% enrolled, and we continue to expect to complete patient enrollment by the end of 2020. I am excited about Annika's momentum confident in our market position and the opportunities ahead, and look forward to the continued execution of our plan. With that, I will now turn the call over to Jim Laurup to discuss our integration plans for the Parkes Medical and Arthur Surface businesses. Jim?