Anika Therapeutics Inc.

Good evening, ladies and gentlemen, and welcome to ANACA's first quarter 2021 earnings conference call. Today's conference is being recorded. I will now turn the call over to Mark Namaroff, Executive Director of Investor Relations and Corporate Communications. Please proceed.

Thank you. Good evening or good afternoon, everyone, and thank you for joining us for ANACA's first quarter conference call webcast. Our first quarter earnings press release was issued after the close of the market today. and is available on our investor relations website located at www.anneka.com, as are the supplementary PowerPoint slides that we'll be using for the discussion today. With me on the call today is Dr. Cheryl Blanchard, our President and Chief Executive Officer, and Mike Levitz, Executive Vice President, Chief Financial Officer and Treasurer. During today's call, Cheryl and Mike will review Anneka's first quarter 2021 financial results, with key business highlights as well as discuss our view of 2021. So please take a moment and open up the slide presentation and refer to slide number two. Before we begin, please understand that certain statements made during the call today constitute forward-looking statements as defined by the Security Exchange Act of 1934. These statements are based on current beliefs and expectations, including statements with respect to the impact of COVID on ANACA and are subject to certain risks and uncertainties. The company's actual results could differ materially from any anticipated future results, performance, or achievements. We make no obligation to update these statements should future financial data or events occur that differ from our forward-looking statements presented today. Please also see our SEC filings and our most recent forms 10-K and 10-Q for more information about risk factors that could affect our performance. In addition, during the call, we may refer to a number of adjusted or non-GAAP financial measures which includes adjusted net income, adjusted EBITDA, and adjusted earnings per share, which are used in addition to results presented in accordance with GAAP or generally accepted accounting principles. We believe that non-GAAP measures provide an additional way of viewing aspects of our operations and performance, but when considered with GAAP financial measures and the reconciliation of GAAP measures, they provide an even more complete understanding of our business. A reconciliation of these adjusted non-GAAP financial results to the most comparable GAAP measurements are available at the end of the available presentation slides and in our first quarter press release. And now I'd like to turn the call over to our President and CEO, Dr. Cheryl Blanchard. Cheryl?

Thanks, Mark. Good evening, everyone. It feels good to start off 2021 with the promise that vaccines and continued safety measures will start to enable clinicians to perform elective procedures more freely, albeit with COVID restrictions. We continue to recognize there's some ongoing uncertainty as recent history has shown us that people's behavior, vaccine rates and variants will likely continue to cause COVID spikes globally. That said, now that 2020 is in the rear view mirror, I'm excited that we're positioned for high single digit to low double digit revenue growth in 2021 and are on track to achieve our longer range goal of doubling our revenue by 2024 with a mid-teens compounded growth rate. We're viewing 2021 as a year where we continue our transformational growth strategy, making investments in new products, processes and systems to support the scaling of the business as we continue to emerge from the COVID environment. Today and every day, we are focused on our vision and ultimate goal to be the leading joint preservation company helping patients restore active living. Let me start with a highlight for the first quarter, if you can turn to slide three. We began to see procedure rates improve as we progressed through the first quarter, though we did experience some headwinds in Q1 due to the post-holiday COVID surge and the series of winter storms in February that impacted the country and industry as a whole. On the joint preservation and restoration surgical side of the business, revenue increased over 50% from last year, with the addition of Arthrosurface and Parkis Medical, which along with organic growth continue to drive the transformative revenue mix shift. In fact, joint preservation and restoration represented 36% of total revenues for the quarter, increasing significantly from 22% last year. We're very excited about the progress in our joint preservation business and the integration of Arthrosurface and Parkis into ANACA. and we continue to view joint preservation and restoration as a key growth driver. We see strong global demand for our joint preservation products and believe we have a right to win as orthopedic surgeons view our minimally invasive and regenerative portfolio favorably, particularly in the ambulatory surgical center setting. Our joint pain management business was down 24% from last year's pre-COVID levels, primarily due to ongoing inventory management by our sales and marketing partner, J&J MyTech, which continued from 2020 as expected. We are pleased to have a strong partnership with J&J MyTech, with the market-leading VSCO supplement products in the U.S., and to be positioned for continued recovery through 2021. Overall, our revenues decreased 3% from last year due to the impact of COVID. On the bottom line, we delivered positive adjusted EBITDA growth for the quarter, Lower than last year due primarily to COVID's impact on volumes, the acquisitions of Parkis and Arthur Surface, and the related investments we're making to accelerate our growth and joint preservation. We continue to show a strong financial position with almost $95 million in cash and investments. Before I hand the call over to Mike to review the financial details, I'd like to walk you through how we see the remainder of 2021 shaping up. Please turn to slide four. As we look ahead, we remain focused on achieving our stated goal from our 2019 Investor Day of doubling the revenue of the company by 2024 with double-digit adjusted EBITDA growth. We're currently in the process of planning our 2021 Virtual Investor Day scheduled for June 3rd, where we plan to discuss our product portfolio, commercial strategy, R&D Pipeline and Financial Objectives in more detail and with some additional members of our management team also presenting alongside me and Mike. We'll also provide you with more specifics on how we'll achieve our 2024 goals. As a reminder, we now have an $8 billion global market opportunity that goes well beyond the legacy ANACA osteoarthritis pain management business and includes regenerative solutions, soft tissue repair for sports medicine, and Bone Preserving Joint Technologies. These joint preservation solutions position us well in the faster growing and higher opportunity areas of early intervention orthopedic care when compared with the more traditional total joint replacement orthopedic markets. We'll continue to leverage our strength with OrthoVisc and MonoVisc remaining as the number one combined choice for osteoarthritis pain management in the U.S. as these products provide strong positive cash flow that support our commercial and innovation investments to grow our business. Our worldwide commercial organization is now established to deliver our innovative, minimally invasive surgical solutions to clinicians so the patients that rely on our technologies can resume active living faster. And we'll continue to invest in developing meaningful products, including products using our differentiated HA-based regenerative platform, to further leverage our commercial organization and joint preservation surgical call point. With respect to our clinical study efforts, enrollment continues for both the Singall and Heilfest U.S. studies with COVID having an ongoing impact, especially outside the U.S. where travel restrictions prevent our clinical team from traveling to support surgeries and other aspects of the clinical trials at those sites. We will continue to give regular updates on these trials and plan to provide more details during our investor day in June. Please refer to slide five. As I previously mentioned, with the acquisitions of Arthur Surface and Parkis, our market opportunity has now expanded to over $8 billion over the course of the last 16 months. Let me provide you with some additional detail. The $1 billion market opportunity in the osteoarthritis pain management that is addressed by the legacy Anika VSCO products as the foundation of the business as we continue to sell our market-leading OrthoVisc and MonoVisc HA injectables through J&J MyTech in the United States and through distributors internationally. Syngal, our second-generation combination HA steroid OA pain management product that we sell in over 35 countries outside the U.S., will be a larger growth driver once approved for sale in the U.S. outside of the 2024 planning period. In the more than $1 billion regenerative solutions market, our portfolio is also comprised of legacy Anika products. It includes our single-stage, HA-based cartilage repair solution, Hyalafast, that is sold in over 30 countries outside the U.S. today, and our HA enhanced solution to treat insufficiency fractures, Tacticet, released in late 2019. We're very pleased with the progress we're making, both with respect to interest in and sales of Tacticet and in how it is supporting and driving our broad joint preservation portfolio with the surgeons already in our call point. Leveraging our HA technology and expertise into future joint preservation products in our R&D pipeline will be a key catalyst for growth for Annika in the coming years. This includes Hyalafast, once approved for sale in the U.S., which is also outside the 2024 planning period. The over $2 billion soft tissue repair market in sports medicine, which we entered with our acquisition of Parkis, represents a faster-growing opportunity that is focused on and leverages the ambulatory surgical center call point, as I previously mentioned. And lastly, The over $4 billion bone-preserving joint solution space, which we entered with our acquisition of Arthrosurface, an innovator in bone-sparing joint technologies for more than 20 years, includes addressing areas of unmet need where the osteoarthritic disease process is further progressed and an implant is needed. Our specialized, minimally invasive, and bone-preserving implants treat progressive arthritis at multiple joints, including the shoulder, hand, wrist and elbow, and the foot and ankle. The opportunities in this large addressable market are significant and highlight why we're focused on the early intervention joint preservation spaces within that larger orthopedic market. With that, I'd like to turn the call over to Mike to review our first quarter financials and provide some color about the remainder of 2021, and then I'll provide some closing comments. Mike?