Anika Therapeutics Inc.

Good evening, ladies and gentlemen, and welcome to ANICA's first quarter 2024 earnings conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for a question. If anyone has any difficulties hearing the conference, please press star zero for the operator assistance at any time. I would like to remind everyone that this call is being recorded. I will now turn the call over to Mark Nameroff, Vice President, Investor Relations, ESG, and Corporate Communications. Please proceed.

Thank you. Good afternoon, everyone. Thank you for joining us for ANACA's first quarter 2024 conference call and webcast. Our Q1 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 the supplementary PowerPoint sites 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 the 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 measures and the reconciliation of GAAP measures, They provide an even more complete understanding of our business. A reconciliation of adjusted non-GAAP financial results to the most comparable GAAP measurements are available at the end of the presentation slide deck and our first quarter 2024 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. Last quarter, we outlined the actions we're taking to focus our business, optimize performance, and drive even stronger results as we accelerate our path to profitability. With continued strength in our market-leading OAP management platform and expanding and highly differentiated HA-based regenerative solutions pipeline and continued cost discipline, we delivered a good start to the year and are on track to achieve our 2024 guidance. And we are confident that the core elements of our strategy position as well to maximize value creation in an orderly fashion in 2024 and beyond. In the first quarter, our overall revenue was up 7% compared to Q1 last year, driven by another strong quarter in OA pain management. We also completed the cost reduction initiatives that we spoke about last quarter, including significant headcount reductions, putting ANACA on the path to realize $10 million in annualized cost savings. These cost savings will enable ANACA to deliver 75% growth in adjusted EBITDA in 2024, accelerating our profitability for the year. Let me now review our key achievements from the quarter. First, OAP management had another great quarter with revenue of $24.3 million, representing a 7% increase year-over-year on growing market demand and some favorable order timing. And we're pleased to announce that we've extended the exclusive distribution agreement with our established Canadian commercial partner, Penda Farm, to sell Singhal, Monovisk, Orthovisk through 2030, building on the existing market leadership position in Canada. Singhal remains a key driver as the next generation non-opioid OA pain product of choice in now over 40 countries outside the United States. We continue to see strong growth and are exploring partnership opportunities in select Asian markets, and we remain confident that Singhal will truly be a game changer when it is approved in the U.S. To that end, as we continue to interact with the FDA on a regular basis, we recently received feedback from the agency in response to our proposals that were requested by FDA during the Type C meeting in April of last year. While the FDA feedback provided some clarity, there's additional information ANACA needs regarding what FDA will require for nonclinical data. We have reverted back to the FDA with questions. As we've said previously, we will begin the remaining non-clinical testing once we have received additional clarity from the FDA. Moving to joint preservation and restoration, we had revenues of $13.8 million, up 3%. We are seeing good progress following the recent launches of several new innovative solutions. These early results have energized our teams as we work diligently to increase the adoption of our new products, which offset headwinds from some of our more mature products during the quarter. Let me first describe the progress we are making on the regenerative side. We have now completed more than 200 cases with over 40 surgeons using our HA-based integrity implant system since its limited market release at the end of last November, which is double the number since our last update. We continue to receive incredibly positive clinical feedback as it becomes increasingly adopted by surgeons, not only for rotator cuff repair, but also in other tendon repair applications, such as in the foot and ankle. The full market release remains on track for the middle of this year and is expected to increase growth in our regenerative business in the back half of 2024. Hyalofast continues to do very well outside the US, now selling in over 35 countries. As a reminder, Hyalofast, our HA single stage cartilage repair system, was granted breakthrough device designation by the FDA. We expect to begin filing the modular TMA this year with a target product launch by 2026, creating a highly differentiated entrance into the $1 billion-plus U.S. cartilage repair market opportunity. With great clinical feedback on integrity and 15-year data, likely publishing this year on Hyalafast, ANICA now has two highly differentiated regenerative platforms to leverage as the basis for additional near-term regenerative products. We continue to build out our exciting regenerative pipeline, and we look forward to providing additional details about it in the future. We also remain encouraged by the performance of our X-Twist fixation system, which has been a standout product for us. More than 10,000 X-Twist anchors have now been implanted globally since the limited release of the peak version early last year. which is a real milestone for us. Between the biocomposite version, now fully launched this month, and X-Twist Peak, we are addressing the entire $600 million US rotator cuff market. Lastly, regarding our RevoMotion reverse shoulder system, we regularly engage with our distributors to improve our channel and commercial execution, and we're actively training surgeons on the safe and effective use of the system. The pace of adoption remains slower than anticipated due to a more complex sales cycle including obtaining facility approvals. That said, we are encouraged by the recent CMS decision to now reimburse shoulder arthroplasty procedures in the AFC and that surgeons are taking RevaMotion to their surgery centers due to our efficient two-instrument tray system design. I'm proud of the work we've done to build on our momentum and enhance execution across our business. We are later focused on maximizing value for our shareholders I remain open to paths that will help us achieve this objective while continuing to invest in our greatest opportunities. On a separate note, we announced earlier today that Mike made a personal decision to step down as CFO effective June 3rd. On behalf of all of us at ANACA, I'd like to thank Mike for his leadership over the past four years. Mike joined ANACA in mid-2020 following our two acquisitions. His strategic and operational insights have helped Anika navigate this period of significant change while positioning the company for an exciting future. I appreciate everything Mike has done for Anika, and we all wish him the best. We're excited to welcome Steve Griffin as our new CFO on June 3rd. Steve comes to Anika with more than 15 years of experience in public company CFO and other senior finance leadership roles. and a proven track record of value creation at both large and small public companies. We are confident that Steve will help us build on our momentum to achieve the meaningful growth and profitability potential across the business. Mike will remain with Anika through the end of the year and will work closely with Steve and me to ensure a smooth transition of responsibilities. We're glad to continue benefiting from his expertise during that time and in the near term, looking forward to introducing you all to Steve. Mike, I'll now turn it over to you for a few words and our financial results.