Anika Therapeutics Inc.

Good evening, ladies and gentlemen, and welcome to ANACA's first quarter 2022 earnings conference call. As a reminder, today's call is being recorded. I will now turn the call over to Mark Namara, Vice President, Investor Relations, ESG, and Corporate Communications. Please proceed.

Thank you, Sarah. Good evening, everyone. Thank you for joining us for ANACA's first quarter conference call and 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.annika.com, as are the supplementary PowerPoint slides that will be used for the discussion today. With me on the call today are Dr. Cheryl Blanchard, President and Chief Executive Officer, and Mike Levitz, Executive Vice President, Chief Financial Officer, and Treasurer. Please take a moment to open 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 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. We make no obligation to update these statements should future financial data or events occur that differ from the forward-looking statements presented today. Please also see our most recent SEC filings for more information about risk factors that could affect our performance. In addition, during the call, we may refer to several adjusted or non-GAAP financial measures, which includes adjusted gross margin, adjusted EBITDA, adjusted net income, and adjusted earnings per share, which are used in addition to results presented in accordance with GAAP financial measures. We believe the 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 slide deck and in our first quarter 2022 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, and thanks for joining us. please turn to slide three. 2022 is a pivotal year and an exciting time for ANACA as we celebrate our 30th year in business on our journey to becoming a leading provider of early intervention joint preservation solutions. And we're off to a strong start. Since our last call, we've continued to make great progress with our product development and commercial efforts, which I'll review in more detail shortly. I'd like to start by covering our first quarter highlights, And then I'll review updates to our new product development pipeline and turn the call over to Mike for his review of our Q1 financials and guidance for 2022. We ended the quarter with revenue up 7% over the first quarter of 2021, mainly driven by OA pain management, which was up 18%, primarily on favorable order timing. Our joint preservation and restoration business was essentially flat with the first quarter of last year. We were initially hampered in January due to Omicron, but as procedures lifted in February, we saw some positive recovery through the rest of the quarter. While the downstream macroeconomic effects of staffing shortages and supply chain issues could remain as headwinds for the industry for some time, we were encouraged to see COVID-related impacts abate during the quarter and are cautiously optimistic for market improvement through the year. Our non-orthopedic business was down 34% due to a tougher comparison to last year as there were last-time buys for certain legacy products which elevated our prior year first quarter revenues. Our focus in Q1, with some in-person meetings resuming, was on ramping up our sales and marketing efforts to drive awareness of ANACA and our full joint preservation product offering. In March, we showcased our full early intervention product portfolio at the American Academy of Orthopedic Surgeons meeting with strong engagement in our booth and events, despite lower general show attendance. We were very pleased to see strong surgeon interest in Tactuset, our HA-enhanced bone hoid filler, wrist motion, our total wrist arthroplasty system, and elbow motion with inlay glenoid, our bone-preserving, anatomic, total shoulder arthroplasty system. Also during the quarter, we ramped up our medical education efforts to train surgeons on the safe and effective use of our products. Since the acquisitions of Arthur Surface and Parkis, medical education has been a growing focus area for ANACA as we've been building our organizational capabilities. Until recently, restrictions had been preventing many in-person events from taking place. I'm pleased that since the beginning of 2022, we have held a number of U.S. in-person medical education events with over 140 surgeons trained to date. This will continue to be a strategic focus area for Anika as we introduce new products to new and existing customers. Lastly, as we continue to build commercial strength, I am very pleased to announce that Rob Delp joined Anika in April as Vice President of U.S. Sales, reporting directly to me. Rob comes to Anika with over 26 years of orthopedic industry experience. He was previously with Zimmer Biomat as president of the Americas, leading their sales teams where he had responsibility for sales of biologics, regenerative solutions, sports medicine, and upper and lower extremity products, which aligns perfectly with Annika's portfolio. He also had responsibility for sales of reconstructive products. Rob has also successfully built and managed direct and hybrid sales organizations focused both in the ASC and hospital settings. and led the Zimmer Biomat US sales integration. Rob will be instrumental in executing our commercial strategy as we launch key new products in the shoulder and foot and ankle spaces within the next six to 24 months, especially with his strong surgeon and distributor relationships. In addition, Ben Joseph, who many of you have met, will continue focusing on upstream and downstream marketing, as well as business development, and working with Rob's team to grow Annika into a leader in joint preservation. I'm very excited to have Rob as part of the ANICA team. He's a great cultural fit and is excited to work with our team to build a great growth company. Please now turn to slide four so I can provide some updates to our product pipeline. Within the next six to 24 months, a number of new product launches are planned in the shoulder and foot and ankle spaces that will further give ANICA the right to win in joint preservation and will result in revenue acceleration in the 2023 to 24 timeframe. We continue to make significant progress and are on track with these product launches. While I believe many of you are familiar with this slide, we have updated it to include respective addressable markets. I'd like to provide a few progress updates on recent launches and more details on the expansion of our shoulder product offering. In the fourth quarter of last year, we launched the new indication for our regenerative product, Tacticet, for the augmentation of suture anchor fixation in sports medicine procedures. This expanded the available Tactuset market to beyond $100 million by allowing us to create a new market for hardware augmentation while continuing to expand our existing insufficiency fracture Tactuset franchise. Progress with Tactuset is going very well, capturing about four points of market share in only two years since its introduction in late 2019, and we expect continued growth throughout this year. New indications and additions to that franchise are now in development with the start of a preclinical study last quarter and another one on track to start this year. Now I'd like to give a notable update on our shoulder development efforts. We highlighted high opportunity spaces within the shoulder market, already our largest concentration of business and joint preservation, as a $1 billion market opportunity for ANACA. and we're assembling a product portfolio uniquely suited for the ASC setting. As you'll recall, we previously discussed three shoulder product imperatives that are driving our NPD focus and new products for soft tissue fixation, bone preserving implants, and rotator cuff repair. I am pleased to provide an update for the first of those three. Our shoulder fixation product in development is a family of knotless suture anchors that is planned to launch in the second half of this year enabling Anika to provide a cornerstone sports medicine product commonly used for performing double row repairs of the rotator cuff and other areas like foot and ankle procedures where the convenience of a knotless anchor is desired. The first family to launch will be peak anchors. With rotator cuff repair procedures approaching 700,000 annually in the U.S., they represent one of the highest volume soft tissue procedures in the ASE setting, allowing us to access even more of this exciting market. This new suture anchor offering, in combination with the recently launched indication for augmenting suture anchor fixation for using Cactuset, is building strength and synergy in our joint preservation portfolio, providing additional growth opportunities in the shoulder and specifically focused on the ASC call point. We also continue to make great progress on a rotator cuff repair system that includes a regenerative component for augmentation, for which we are currently performing preclinical studies and have 510K submissions planned for later this year. This system will further build and establish Anika's shoulder portfolio as an innovative and winning offering in the ASC, driving the growth we are so excited about in the 2023 to 2024 timeframe. All three pillars of our joint preservation product portfolio, including sports medicine, regenerative solutions, and bone-preserving joint solutions, have key new product releases within the next six to 24 months that will build to a very strong shoulder product portfolio designed to work well in the ASC. We also continue to be excited about our longer-term opportunities to bring to the U.S. our Hyalofast cartilage repair solution and Singol for short- and long-term joint pain relief, in line with what we have stated previously. Please turn to slide fives. 2022 is a building year for Anika as we continue to invest in our commercial capability and product portfolio to take advantage of the market shift to the ASC. We have five key areas of focus for Anika this year. First, we expect to continue our market leadership position in the HA-based OA pain management market with monovisc and orthovisc, generating cash flow for investment to grow. Next, we're focused on strengthening our commercial organization to grow our sports medicine soft tissue repair bone-preserving joint technologies, and regenerative products in the market with a focus on the ASC. With the addition of Rob Delp to lead U.S. sales and his successful track record, we believe this is an exciting next step as Rob is ready to roll up his sleeves and lead a great commercial team. Third, we'll continue to advance our pipeline with several new 510Ks to be filed in 2022 and new product introductions within the next six to 24 months, targeting Cactuset expansion, multiple shoulder solutions and implants for the foot and ankle with products launching in the second half of 2022 and 2023. We'll report out on the single pilot trial in the fall. We've been very pleased with the success of this product in the 30 plus countries outside the United States where it's sold today and look forward to next steps in the process to ultimately bring it to the U S market. Finally, We have now fully launched our in-person medical education programs to train on the safe and effective use of our products, and we look forward to training many more surgeons in hands-on labs this year. Now I'll turn the call over to Mike for a review of our first quarter, along with our outlook for 2022, and then I'll wrap things up and we'll take questions. Mike?