Anika Therapeutics Inc.

Good evening, ladies and gentlemen, and welcome to ANACA's second quarter 2022 earnings conference call. If you would like to ask a question on today's call, you may do so by pressing star 1 on your touchtone telephone. Star 1 for questions. I will now turn the call over to Mark Namaroff, Vice President of Investor Relations, ESG, and Corporate Communications. Please proceed. Thank you.

Thank you, and good evening, everyone. Thank you for joining us for Anika's second quarter conference call and webcast. Our Q2 earnings press release was issued after the close of the market today and is available on our investor relations website located at www.anika.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 and 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 that non-GAAP measures provide an additional way of viewing aspects of our operation and performance, but when considered with GAAP financial results 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 presentation slide deck and our second 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. We're halfway through the year now, and we're making strong progress to meet our financial objectives for the full year as we execute on our transformational strategy. even in the face of the continued macroeconomic challenges that the industry is working through. The second quarter top line was solid, with 4% revenue growth driven by 6% growth in OAP management, while our joint preservation and restoration business grew 2% as staffing shortages remained a headwind on certain elective orthopedic procedures across our industry. We continue to be laser focused on execution to accelerate growth in our joint preservation business. During the quarter, we experienced some distributor disruption, as can happen with a hybrid sales model that uses independent distributors. At the same time, we generated great excitement when we held our first in-person U.S. national sales meeting in Nashville just a few weeks ago with Anika's commercial team and our distributors. The combined hybrid sales organization is energized about the opportunities that our robust and growing product portfolio brings to our customers, and they feel we have the product mix we need, to give us the right to win in both the ASC and hospital settings. Lastly, our new VP of US sales, Rob Delp, has been on board for a quarter now and has already led great work with the team to streamline our regions and bring the right mix to our hybrid sales force as we look to increase focus on the One Anika portfolio of joint preservation products. I'm pleased to say that during Q2, we continue to execute our strategy to expand our product portfolio in joint preservation which along with commercial execution positions Anika for accelerated growth as we enter 2023. X-Twist, our new fixation system, received 510 clearance during the quarter, and we're on track for a limited market release in the second half of this year. The X-Twist fixation system is a platform of sports medicine soft tissue suture anchors designed to be strong, easy to use, and support healing for a broad range of soft tissue repair procedures. The system affords surgeons a variety of knotless and knotted soft tissue fixation options in a single anchor platform with the ability to support the surgeon's preferred combination of multiple sliding suture or tape configurations. The X-twist system also deploys Anika's unique X-spline drive technology, which provides for much easier anchor insertion relative to competitive systems. X-twist will be a cornerstone product in our sports medicine portfolio, further establishing our presence in the ASC and hospital settings, where procedures including rotator cuff repair in the shoulder and Achilles tendon repair in the foot and ankle are performed. During the quarter, we also continued to increase exposure to the ANACA story and product portfolio within the orthopedic surgeon community at industry congresses and meetings, and as our medical education activities increased. We have now trained 270 surgeons year to date in person on the safe and effective use of our products. This will continue to be a strategic focus area for Annika as we introduce new products to new and existing customers. Lastly, in joint preservation, I'm excited to say that Tactuset, our HA-enhanced bone void filler for insufficiency fractures and hardware augmentation, received the coveted ACE Award for cutting edge innovation from the American Orthopedic Society of Sports Medicine or the AOSSM last month. This award from such a prestigious sports medicine society provides independent external validation and underscores the innovation and value of using Tacticet for augmentation and our innovation regenerative platform more broadly. When augmented with Tacticet, the pullout strength of suture anchors was shown to increase twofold in an osteoporotic bone model compared to suture anchor alone. Where there's often inferior bone quality that may complicate, for example, a rotator cuff repair procedure and negatively impact outcomes, a higher suture anchor pull-out strength can help surgeons feel more confident in their soft tissue repairs. Also during the quarter, we achieved a significant clinical trial milestone, with the last patient in the Singdahl pilot trial completing their final follow-up. As a reminder, Syngal is our combination visco-supplement and steroid injectable for both short- and long-term OA pain relief, sold in over 30 countries outside the U.S. today. Annika embarked on this pilot study to help provide the necessary information to adequately design a Phase III pivotal trial. Our clinical team is analyzing the data, and we plan to do a data readout in the fall. Now please turn to slide four for an update on our new product pipeline. Our differentiated product portfolio continues to expand with new product launches planned for the remainder of the year and exciting products in development that include expansion of our regenerative platform that builds on ANACA's established technology and which gives ANACA the right to win in joint preservation that will result in revenue acceleration that has significant value creation runway. I've already highlighted the progress we're making with Tactuset in the regenerative space on past calls, but I'd like to mention that the continued expansion of the Tactuset franchise will enable us to increase the addressable market to well beyond $100 million by creating a new market for hardware augmentation and expanding our existing insufficiency fracture Tactuset franchise with new products. New indications and additions to the Tactuset portfolio are now in development. For our growing shoulder portfolio, you'll recall we previously discussed three shoulder product imperatives that are driving our NPD focus with new products for sports medicine soft tissue fixation, bone preserving implants, and regenerative rotator cuff repair. In sports medicine, the X-Twist fixation system received 510K clearance in Q2, as I mentioned earlier, and we're on track for a limited market release this year. Our regenerative rotator cuff repair system is also on track for 510K submissions later this year. This system will further build and establish Anika's shoulder portfolio, which as an innovative and winning offering in the ASC, will drive the growth we are so excited about into next year and beyond. Rotator cuff repair procedures represent one of the highest volume soft tissue procedures in the ASC setting, allowing us to access even more of this exciting market. The X-Twist suture anchor offering, in combination with the recently launched Tactuset indication for augmenting suture anchor fixation, new shoulder implants, and the rotator cuff repair system are all positioned to build strength and synergy in our joint preservation portfolio, providing additional growth opportunities in the over $1 billion shoulder market in the U.S. We also continue to be excited about our longer-term opportunities to bring our Hyalafast single-stage cartilage repair solution, and Syngal for short and long-term knee OA pain relief to the U.S. with the timeline consistent with what we've stated previously. This quarter, we made progress on both of these clinical development projects, completing the last patient follow-up in the Syngal trial and with continued enrollment in the HyloFast trial. Please turn to slide five. We're executing on our strategy to accelerate growth beyond 2022. We have five key areas of focus for ANICA this year, and I'm pleased to say that we're hitting our key 2022 milestones. First, we continue our U.S. market leadership position in the HA-based OA pain management market with Monovisc and OrthoVisc generating cash flow for investment to grow. We've made significant progress to strengthen our commercial organization to grow our sports medicine, soft tissue repair, bone-preserving joint technologies, and regenerative products on the market with an increasing focus on the ASC setting. Recently, we streamlined our U.S. territories as we continue to develop a deeper understanding of strengths and opportunities with our hybrid U.S. sales organization and to drive focus. We continue to advance our product portfolio this year with additional 510 s to be filed, new product introductions, and enhancements of our existing products targeting pack-to-set expansion and shoulder solutions. We have accelerated our in-person medical education programs to train on the safe and effective use of our products and are increasing ANACA's presence in the orthopedic community. Lastly, we'll report out on the SINGAL pilot trial in the fall. Now I'll turn the call over to Mike for a review of our second quarter results along with our outlook for 2022, and then I'll wrap things up and we'll take questions. Mike?