Anika Therapeutics Inc.

Gentlemen, and welcome to ANACA's third quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, today's event is being recorded. I'd now like to introduce Mark Nemiroff, Vice President, Investor Relations, ESG, and Corporate Communications. Please proceed.

Thank you. Good afternoon, everyone. And thank you for joining us for ANACA's third quarter conference call and webcast. Our Q3 earnings press release was issued after the close of the market today and is available on our Investor Relations website located at anaca.com as are 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 political 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 include adjusted gross margin, adjusted EBITDA, adjusted 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 operational 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 measures to the most comparable GAAP measurements are available at the end of the presentation slide deck and in our third quarter 2023 press release. And now, I'd like to turn the call over to our President and CEO, Dr. Cheryl Blanchard. Cheryl?

Thanks, Mark. Good afternoon everyone and thanks for joining us. Please turn to slide three. We are pleased with our third quarter results, which underscore the strength of our strategy and reinforce our confidence in the powerful growth engine we've created. Following a period of purposeful investments to enable our transformation into the largest and highest opportunity areas of the joint preservation market, we are beginning to see the accelerated growth and momentum building across the business we've been working toward for some time. We delivered 14% growth in joint preservation and restoration in the quarter and higher than expected growth in OA pain management, which has now grown 11% year to date. The acceleration in joint preservation and restoration is being led by our newest products, X-Twist and RebaMotion, which are gaining traction and generating a lot of interest in the markets we serve. The double-digit growth in the quarter positions us well for Q4 and as we head into 2024. The continued growth in our OA pain business follows a strong second quarter, led by monovis growth globally and double-digit single growth outside the U.S. Given the strong performance across our business, we are raising our revenue and EBITDA margin guidance for the year, which Mike will go into in a minute. Our expanding joint preservation and restoration portfolio has been key to our continued growth, and we achieved a number of important milestones in the third quarter. Our REBA Motion Reverse Shoulder Arthroplasty System had a very successful full market release in September at the OSEP Annual Meeting in Boston, attracting strong interest from surgeons. We also received the final 510 clearance from the FDA for our Integrity Implant System and we're on track for full launch in the first quarter of 2024. As a reminder, Integrity is our truly differentiated, regenerative, HA-based patch system for the augmentation of rotator cuff and other tendon repairs. Our X2S fixation system also achieved a significant milestone this quarter, receiving 510 clearance for the biocomposite version, complementing the PEEP version that was released earlier this year. The clearance of X2S biocomposite now allows ANACA to address the full $600 million US rotator cuff market. We are on track to launch the biocomposite version in Q1 of 2024. We also reached a milestone in medical education, training over 500 surgeons this year across our full joint preservation and restoration portfolio. We're pleased to see that OA pain management continues to outperform. This includes J&J's above market growth and share capture as they continue to expand their number one market position in the US OA pain management segment. Outside the U.S., Singal has consistently delivered double-digit growth and is the next generation non-opioid osteoarthritis pain product of choice in over 35 countries. Singal's highly differentiated clinical profile and its demonstrated real-world benefits have underpinned its international growth. We continue to explore Singal partnership opportunities in the U.S. and select Asian countries with significant interest from several parties. We're also continuing to engage with the FDA to advance Syngal towards US regulatory approval. As a reminder, we had a Type C meeting with the FDA earlier this year, and we are awaiting feedback on our proposal to them on next steps to complete non-clinical work so that we can file an NDA as quickly as possible. We will continue to keep everyone updated on this process. Our Syngal market adoption and double-digit growth outside the US reinforces that this next-generation product would be a meaningful addition to U.S. clinicians' arsenals to treat OA pain with a non-opioid product. On slide four, I'd like to spend a few minutes reviewing our Integrity system, which will be a key value driver for Annika and a game changer in how surgeons augment their rotator cuff and other tendon repairs. Integrity's key differentiating feature is the inherent structural integrity of the hyaluronic acid-based scaffold compared to the current collagen patches on the market. The strength comes from its HA-based hybrid structure, resulting in a patch that is over 50% stronger than the leading collagen patch in tensile strength, suture retention, and tear resistance, even when hydrated. That provides for the ability to confidently manipulate the patch interoperatively and strongly affix it with staples, tacks, or suture during the repair. Another key value driver for Integrity is in its regenerative capacity. The hyaluronic acid scaffold supports healing through improved cell infiltration, tissue remodeling, and tendon thickening. In a head-to-head animal study, the integrity patch demonstrated about three times the regenerative capacity compared to the leading collagen patch. This data is important to both the surgeon and the patient. The combination of integrity strength, increased regenerative capacity, and an efficient reproducible delivery system is what is getting surgeons really excited. We are feeling a pull from surgeons excited for Integrity to launch. We're confident that it will become the standard of care in rotator cuff augmentation, and along with our recently launched RevaMotion and X-Twist, position us to drive growth for years to come. Please turn to slide five. We've been investing with purpose to establish ANICA as a global leader addressing unmet needs in early intervention orthopedics. We are leveraging our core expertise in hyaluronic acid and portfolio across OAP management, regenerative, sports medicine, and arthrosurface joint solutions. The investments we've made over the past three years are now beginning to bear fruit. In fact, most of the products on this slide are either launched or are launching in the first quarter of 2024 into larger markets than Annika has entered before in our direct business. setting up 2024 as an exciting year. In addition to those products, our value-driving Singal and Hylafast products have now advanced and are closer than they have ever been, with line-of-sight to U.S. regulatory filings for both products. We expect the next-generation OA pain market served by Singal adds an additional $1 billion-plus to our existing $1 billion market opportunity served by Monovisk and OrthoVisk, and Syngal is perfectly positioned to win. HyalFast addresses the $1 billion plus cartilage repair market with a single stage off-the-shelf regenerative product. Now that we are fully enrolled in our pivotal trial, this breakthrough device has a well-defined pathway to launch in the U.S. market by 2026. In short, our highly differentiated new product pipeline is being realized. On slide six, I'll discuss our focus on commercial execution and profitability. ANACA has a long history of generating strong profitability and cash flows. We've used these cash flows in recent years to significantly expand ANACA's market and growth opportunities with key new products and critical internal investments to support sustainable long-term growth and our commitment to growing profitability. With the 2023 full market launches of RegoMotion and Xtwist Peak, and the 2024 launch of Integrity and Xtwist Biocomposite, we're expecting sustained double-digit growth in joint preservation in 2024 and beyond. We are also confident in the continued above-market growth of our core OAP management products, led by Monavis globally and Singall outside the US. With the investments we've made in R&D, scaling the business, and addressing MDR, We're now focused on actively managing our OPEX while still supporting the significant growth and profitability acceleration in the coming years. As spending stabilizes, we are shifting the investments we do make toward commercial execution as we begin to establish a very targeted direct sales force going into 2024. These hires will be focused on regenerative solutions and sports medicine products, to augment our hybrid sales channel and penetrate underperforming accounts and geographies. The hybrid channel is a cost-effective model and works very well where distributors are focused on our products. The direct reps will strengthen the areas where we can drive better focus and commercial execution to deliver on the significant growth opportunity in front of us. These investments to augment our hybrid sales force with targeted direct sales reps are thoughtfully timed with the launch of our newest products such as Integrity, Xtwist, and TactiSET expansion. At the same time, and to be clear, we are committed to keeping total company costs stable as we leverage the investments we've already made to develop and launch these exciting new products. In summary, we continue to have a strong balance sheet with a healthy cash position and no debt. and with our meaningful accomplishments this year, are confident as we move forward to realize the significant opportunity in front of us. Now I'd like to turn the call over to Mike to review the third quarter results and our outlook for the remainder of the year. Mike?