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spk03: Ladies and gentlemen, thank you for your patience. Please remain on the line. Your conference will begin momentarily. Again, we do appreciate your patience. Please remain on the line. Your conference will begin shortly. Thank you. Good day, ladies and gentlemen, and welcome to the Oxygen Incorporated Report's first quarter 2023 financial results. All lines have been placed on a listen-only mode, and the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero on your telephone keypad to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, Ed Joyce, Director of Investor Relations. Sir, the floor is yours.
spk01: Thank you, Kat, and good morning, everyone. Joining me on today's call is Karen Zadare, Axiogen's Chairman, Chief Executive Officer and President, and Pete Mariani, Executive Vice President and Chief Financial Officer. Karen will discuss the quarter and our outlook for the year, and Pete will provide an analysis on our financial performance, followed by a question and answer session. Today's call is being broadcast live via webcast, which is available on the investor section of the Axiogen website. Following the end of the live call, a replay will be available in the investor section of the company's website at www.axigeninc.com. Before we get started, I'd like to remind you that during this conference call, the company will make projections and forward-looking statements, including our 2023 financial outlook, timing of our BLA submission, penetration of core accounts, marketing opportunities with nerve repair applications associated with breast, OMF, and the surgical treatment of pain and new products, timing of our APC renovations and balance sheet positions. Forward-looking statements are based on current beliefs and assumptions and are not guarantees of future performance and are subject to risks and uncertainties, including, without limitation, the risks and uncertainties reflected in the company's annual and periodic reports, such as hospital staffing issues, regulatory process and approvals, APC renovation timing and expense, surgeon and product adoption, and market awareness of our products. The forward-looking statements are representative only as of the date they are made, and except as required by applicable law, we assume no responsibility to publicly update or revise any forward-looking statements. In addition, for a reconciliation of the non-GAAP measures, including adjusted core and active account numbers, excluding the impact of Avive purchases, please reference today's press release and our corporate presentation on the investor section of the company's website. And with that, I'd like to turn the call over to Karen. Karen?
spk02: Thank you, Ed. And thanks, everyone, for joining us this morning on the call. We're delighted to announce the first quarter revenue of $36.7 million, representing an 18% increase from the first quarter of the previous year. This marks the third consecutive quarter of solid commercial execution and revenue growth, continuing on the momentum we established in the second half of last year. We believe the steady progress is due to our ability to execute in an improved environment of hospital staffing and surgical capacity. We had a solid start to the year in terms of our focus in gaining deeper adoption in our core and active accounts. As a reminder, active accounts are those that have ordered at least six times in the last 12 months and may still be in the early stages of adoption. Core accounts represent more penetrated accounts, defined as those with greater than $100,000 in revenue in the trailing 12 months. Core accounts have increased to 350 this quarter, an increase of 23% year-over-year and 5% sequentially. Approximately 60% of our revenue is derived from core accounts, which usually consists of at least one surgeon who's adopted the oxygen nerve repair algorithm for a significant portion of their nerve injury patients. Our focus is on leveraging the success of these early surgeon adopters with our products to gain more cases within that account. and to encourage additional surgeons to adopt our products. We believe that our greatest opportunity for growth lies with deepening our penetration in our core accounts for the treatment of traumatic injuries and additional planned nerve repair applications, including breast, OMF, and the surgical treatment of pain. The number of our active accounts increased to 994 in the quarter, representing growth of 9% year-over-year and 3% sequentially. Active accounts represent about 85% of our total revenue, with the top 10% contributing about 35% of revenue. We ended the first quarter with 116 direct sales representatives, up one from the end of the fourth quarter and in line with 116 a year ago. We believe our revenue growth can be driven primarily by increased productivity of our sales force. and we will evaluate and add additional sales reps as their territories approach targeted levels. Our direct sales force is supplemented by independent sales agencies that represent approximately 10% of our total revenue. Product and procedure innovation is a key strategic pillar for our long-term growth, and we look to provide leading innovative treatments for patients with peripheral nerve injuries. Last quarter, we announced an expansion of our resensation technique for breast reconstruction neurotization to include a new technique that can be applied for some patients who choose an implant-based reconstruction. As a reminder, our original resensation program was developed to provide sensation for patients receiving an autologous flap reconstruction, which represents roughly 20% of breast reconstruction procedures. The remaining 80% of breast reconstruction procedures are implant-based, We believe that this new neurotization technique, developed in collaboration with pioneering breast reconstruction surgeons, can currently be applied to an incremental 10 to 15% of breast reconstruction patients. We've seen strong surgeon interest in learning this technique and are well on our way towards our goal of training at least 20 surgical teams this year. Today, we're also pleased to announce new innovation in our nerve protection portfolio. The category of nerve protection covers a wide range of nerve injuries, including compression, crush, and complex traumatic injuries where the nerve remains intact. It also involves protecting the coaptation sites with nerve transections. We believe that the diversity of these injury types and their anatomical locations present some unique challenges. Optimizing outcomes for these patients requires targeted solutions to adequately address specific aspects of the injury and healing process. Guided by feedback from surgeon experts, we've identified certain unmet needs in nerve protection and are developing new technologies to address them. The first of these advances is AxiGuard HA Plus Nerve Protector. We're happy to announce that we received 510 clearance in April of this year. AxiGuard HA Plus builds upon the success of our existing AxiGuard protector and adds new proprietary design features. This new protector features a hyaluronate alginate gel on an ECM-based material. In the short-term healing process, the gel layer enhances nerve gliding and aids in minimizing soft tissue attachment. The base material is remodeled to form a new long-term protective tissue layer. In addition to these benefits, the configuration and handling characteristics of AxiGuard HA Plus were optimized based on surgeon feedback to address challenging nerve protection applications such as cubital tunnel revisions and nerve trauma near major joints where nerve mobility is critical. We believe this addition to the AxiGuard portfolio improves our access to this nerve protection category. Additionally, we continue to see the need and strong surge in interest for a resorbable nerve protection product that provides temporary protection and tissue separation during the critical phase of healing for non-transsected nerve injuries. This application was previously addressed by a VIVE soft tissue membrane. We're currently developing a replacement solution to address this important market opportunity and expect that this will further strengthen our position in nerve protection. We look forward to updating you on this new innovation in the coming quarters. Turning to our new production facility, I'm happy to report that we're on track with our transition plans to the APC in Dayton, Ohio this summer. This state-of-the-art facility will provide capacity to meet our expected sales growth and support the BLA for advanced nerve graft. This new facility will be included in our submission of the BLA for advanced, which is also proceeding on schedule and we expect to submit it by the end of 2023. Following that, we anticipate receiving approval in 2024. A BLA approval will complete the regulatory transition of Avance Neurograph from a 361-based product to a 351 biological product. And importantly, we believe Avance would be designated as the reference product, which would, in turn, provide 12 years of data exclusivity with regard to potential biosimilars. We continue to build market awareness of nerve repair with healthcare providers and through our direct-to-patient initiatives, particularly for breast and pain applications. Our marketing initiatives are designed to engage patients and direct them to our Resensation and Rethink Pain websites. These websites are aimed at educating patients and raising awareness about the potential benefits of nerve repair procedures. Patient resources are available for locating surgeons skilled in these advanced techniques, particularly for those undergoing mastectomy and reconstruction and for individuals suffering from chronic neuropathic pain. Our surgeon education programs on nerve repair remain a top priority for Axigen and continue to generate interest in the surgical community. Our education initiatives encompass a wide range of learning events, including hands-on best practices trainings, educational conferences, and presentations aimed at surgical residents. At the end of Q1, we surpassed our goal of training at least 75% of this year's class of hand and microsurgery fellows. Moving on to updates in our growing body of clinical evidence. We remain devoted to developing quality clinical evidence to demonstrate the safety, performance, and utility of our nerve repair solutions. At the end of the quarter, we've reached a total of 220 peer-reviewed publications across extremity trauma, breast, OMS, and pain. Our focus on providing high-quality data to support the benefits of allograft over alternative peripheral nerve repair techniques remains a top priority. As we've discussed in the previous quarter, a recently published comparative effectiveness meta-analysis study has been generating significant interest from our customers. To summarize, this paper analyzed 35 peer-reviewed studies and compared the meaningful recovery rates between allograft, autograft, and conduits. The authors found that allograft had comparable efficacy to autograft in both sensory and motor nerve types for both short and long gaps up to 70 millimeters without the well-documented morbidities associated with harvesting an autograft nerve. Additionally, the study compared Medicare procedure costs and found that allograft and autograft operative costs were comparable in both the outpatient and inpatient setting. In the early part of second quarter, we were delighted to see the publication of an additional peer-reviewed paper comparing all-payer facility procedure costs for both allograft and autograft repairs. This comprehensive retrospective study included over 1,300 nerve repairs, from the PREMIER database between 2018 and 2020. The authors' findings were consistent with the conclusions of the meta-analysis, where they noted that there were no significant difference in procedure costs when comparing autograft and allograft repair in either the outpatient or inpatient setting. Additionally, and importantly for resource-constrained hospitals, the authors concluded that OR time was significantly shorter for allograft repairs in both out and inpatient settings. Turning now to our outlook. In today's press release, we reiterated our full year guidance with 2023 revenue in the range of $154 to $159 million. We're pleased with the start of the year and look forward to continuing to execute on our plan. We continue to expect that gross margin will be reduced with the transition to the company's new processing facility and expect gross margins will return to approximately 80% by the fourth quarter of 2023. Now I'll turn the call over to Pete for a review of financial highlights. Pete?
spk05: Thank you, Karen. Revenue this quarter was $36.7 million, an 18% increase over the first quarter of 2022. Growth was driven by increases in unit volume of 10%, as well as 4% increases in both price and changes in product mix. Gross profit for the quarter was $30 million as compared to $25.5 million for the first quarter of 2022. Gross margin was 81.7% for the first quarter compared to 82.1% in last year's first quarter. Total operating expenses in the first quarter increased 1% to $37.3 million compared to $36.8 million in the prior year. The increase in total operating expenses was primarily the result of increased compensation costs. Sales and marketing expense in the first quarter increased 3% to 21.6 million compared to 20.9 million in the prior year. The increase was primarily due to other service costs. As a percentage of total revenue, sales and marketing expense was 59% compared to 67% in the first quarter of 2022. Research and development expense increased 6% to $6.7 million compared to $6.3 million in the prior year. Product development expenses represented approximately 56% of total R&D in both the current and prior year and include spending in a number of specific programs including the BLA for Advanced NerveGraph and innovation across our product portfolio. Clinical expenses represented approximately 44% of total R&D in both the current and prior year and includes spending in support of our various clinical programs. As a percent of total revenue, research and development expense was 18% in Q1 compared to 20% in the prior year. General and administrative expense decreased 6% to $9 million in the first quarter. as compared to $9.6 million in the prior year. The decrease was primarily due to lower professional services and bad debt expenses and partially offset by an increase in net compensation. G&A as a percent of revenue was 25% in the quarter compared to 31% in the prior year. Net loss for the quarter was $7.1 million or 17 cents per share compared to net loss of 11.5 million or 27 cents per share in the first quarter of 22. Adjusted net loss was $4.1 million or approximately 10 cents per share in the first quarter compared to a loss of 8.5 million or 20 cents per share last year. Adjusted EBITDA loss in the quarter was $3.8 million compared to an adjusted EBITDA loss of $7.4 million in the prior year. The balance of all cash, cash equivalents, and investments on March 31, 2023 was $44.1 million compared to a balance of $55 million at the end of Q4. The net change includes capital expenditures of $3.3 million related to the construction of the company's new processing facility in Dayton, Ohio, and $7.6 million of other cash burned, including $7.2 million of items that typically occur in the first quarter, including bonuses, sales meetings and awards, and insurance premiums. Excluding these first quarter payments, we had less than $1 million of other operating burn in the quarter. We anticipate spending $1.7 to $2.7 million to complete the APC facility, primarily in the second quarter. We also expect our operating cash flow to continue trending towards breakeven, driven by leverage over our fixed cost infrastructure and our focus on thoughtful operating expense management. We believe this trend, combined with normalized capital expenditures, will allow us to maintain our strong balance sheet position, providing ample support as we continue our path to profitability. Lastly, today we reiterated our full year revenue guidance in the range of $154 to $159 million. We also continue to anticipate that gross margins will be reduced with the transition to the company's new processing facility and expect gross margins will return to approximately 80% in the fourth quarter of 2023. We are pleased with the momentum and continued strength of our execution this quarter, including strong top line growth and solid gross margins. We believe we have built a solid foundation based on innovation and clinical evidence that will drive our long-term sustainable growth. At this point, I'd like to open the line for questions. Kat?
spk03: Thank you. The floor is now open for questions. If you do have a question, please press star 1 on your telephone keypad at this time. If your question has been answered, you can remove yourself from the queue by pressing 1. Again, ladies and gentlemen, it's star 1 to ask a question. Please hold while we poll for questions. And our first question comes from Chris Pascal from Nefron. Go ahead, Chris.
spk09: Thanks, and congrats on the nice quarter, guys. Thank you. Peter, I wanted to follow up on the guidance. So you've delivered high teens growth now three-quarters in a row, adjusted for a five. You know, the midpoint of the guidance range implies about 11% growth over the balance of the year. Just walk through the thought process there. Is there any reason we shouldn't expect revenue growth to stay at that higher level? Was there anything you felt was unusual about the strength here in 1Q?
spk05: Nothing unusual. We're really pleased with the progress that we've made. Look, this is the first quarter. I think we've had good execution. We'll continue to see how things move. We typically have a seasonal uptick in the second quarter. We expect that we'll continue to see that. But let's get another quarter under our belt before we think about adjusting guidance.
spk09: Okay, fair enough. And then, Karen, we'd love to hear some more about the new HA Plus product, how you size that opportunity, how those injuries are being treated today, the extent to which this is cannibalistic of the existing portfolio or something you think is a new opportunity. Okay.
spk02: Yeah, we're really excited about the Act-VR and HA Plus product, and this really comes out of the deep knowledge that we have about the problems that surgeons face. And so while it's not an expansion of our total addressable market, as we started to continue to work with surgeons, we just recognized that there are ways that we can provide some enhanced support for some of the more challenging cases Especially if you think about in trauma where you have a fracture adjacent to a joint and it's really a major joint, if you're bending or moving an extremity, you need that nerve to glide freely while it's going through the healing process and post that healing process. And if it doesn't glide and gets tethered or sort of locked down in a spot, that can impact mobility, it can impact pain, and it can impact the functioning of the nerve itself with compression, reducing the signaling of that nerve. And so we set out to solve that problem, and in consultation with a number of leading surgeons, really think that the HTA Plus provides an ideal option for those surgeons. Today, does it cannibalize our products? They could use Axigard in those applications, so there is some use of Axigard in those applications, but what we found was that they were more likely to use a fat pad or, again, a surgical technique to try and protect that nerve because they were so concerned about gliding. So this helps to continue our penetration. It doesn't expand the total addressable market, but helps us continue to expand our penetration into those procedures.
spk09: Great. Thank you.
spk03: Thank you. And our next question comes from Mike Sarcone from Jefferies. Go ahead, Mike.
spk08: Thanks. Good morning, Karen, Pete, and Ed, and thanks for taking my questions. Good morning. Good morning. So just to follow up on Chris's AxiGuard question, can you talk about how you're thinking about, you know, for the HA Plus, the financial contribution from this product? And can you touch on any changes you might have in economics? Like, you know, do you get an ASP lift for this?
spk02: There is a modest ASP lift. It is a premium to our current AxiGuard product. So it also provides some larger sheets so that there's a higher ASP product that provides a larger area where they might have in the past had to have used two or felt it wasn't just quite big enough. So we've expanded the range of the product, and also there's a slight price premium.
spk08: Got it. Thank you. That's helpful. And then can you just touch on how things are trending so far through 2Q, just with the operating environment and customer demand? And then just separately, you had pretty impressive core account growth in 1Q. Can you talk about what you're seeing or any benefits from the meta-analysis that was published late last year? And you've got an increasing amount of data coming out that shows costs for Allograft are comparable. So maybe just touch on, you know, how that's factoring into rep conversations and demand.
spk02: Yeah, I'll start with the meta-analysis. We have been – first of all, we were really pleased with that data, felt it was a very both high-quality paper and impactful paper in terms of the report showing that allograft and autographed clinically – the same and yet without the downside morbidities of what an autograph can cause and it was frankly surprising for many surgeons that an allograft performed in these very long gaps the same as an autograph and in some of the mixed and motor some of the more challenging cases and so this has been a very influential tool to help reps as they are working with surgeons and they're in their adoption process to help them move along the curve to start to expand into, again, long gaps and mixed and motor nerve. And so we've seen some nice uptick in both of those categories that contributed somewhat to our mix as well as surgeons are starting to move into Again, expanding their algorithm. That helps us to continue to drive penetration into our core accounts. Again, our first priority is go deeper in the accounts we're in, working with our reps to go both deeper with our trauma surgeons, but also expand those planned cases of breast, OMF, and the surgical treatment of pain. All of those we think will contribute ultimately to rep productivity. So, you know, bottom line, I would say that's been our plan. We're working the plan, and it's having the impact we want to see. So we're going to keep doing that. We think the meta-analysis, while super impactful, there's still a lot of surgeons who haven't read it or know about it yet. So that's part of the work that our reps will continue doing through the summer here.
spk08: Okay. Thank you.
spk03: Thank you. And our next question comes from Ryan Zimmerman from PTIG. Go ahead, Ryan.
spk07: Good morning. Thanks for taking my questions, Karen and Pete. Congrats on the quarter. Just a couple questions for me. You know, just to touch back on some of the guidance and the seasonality, I mean, if I look at sequential growth, and Pete helped me understand, I mean, Street's kind of looking for about 7% increase in the second quarter. Historically, we've seen in kind of more normalized market environments more of a double-digit increase in second quarter. And so I just want to understand, is there any seasonal dynamics that you want us to be aware of, or should we expect a more normalized market environment as we move through the balance of the year?
spk05: Yeah, I think we're moving into a more normalized environment. I think the pace of that is still open for question. I think we're, and that's why we're just going to continue to be measured. We're pleased with what we ended up doing in the first quarter. Let's continue to see how that goes. You know, we're entering, or we have entered the spring and summer phase. trauma season where we typically see an increase in trauma procedures. We think that hospitals, like we've talked about and you've probably seen from other hospital reports, are dealing with their staffing issues, but they're still at a place where not all ERs are at full capacity, not all ORs are able to be opened. And so for that reason, We just continue to be measured in how we think the pace of this might go. But that's the only thing that causes us to cause some measurement in our outlook. The rest of it, all the data that we're seeing and the progress that we're making across the business, I think is really positive for us. And I think we're just really well positioned to continue to execute as things continue to improve in hospitals.
spk07: Understood. Thanks for that, Pete. And then just, you know, Karen, I heard you say that independent agents are now 10% of sales. That's kind of ticked down through the years. I think before it was maybe 12% and maybe before it was a little bit higher. So as that comes down, you know, help us understand kind of what you're thinking in terms of that contribution for independent sales agents, maybe over a longer term period. And in conjunction with that, how to think about the rise and growth of productivity within your direct sales force. Thanks for taking the questions.
spk02: Sure. So we've been at about 10% for several years on the independent agents. But you're right, in our original layout of our sales team, we had a higher reliance on independence. we made a strategic choice that we wanted to make sure that we had the highest trained reps in operating rooms working with surgeons to help them address their nerve challenges and really understand the applications of the technology. And so we made some moves where we've moved to predominantly direct reps in all key metropolitan areas. But we have increased our number of very small agencies to help our rep productivity. So we have independent agencies in more distant locations where there might be a trauma, because trauma is geographically everywhere. It's very diffused. It's not concentrated. So we have independent agencies in those more distant sites of care to make sure that there is still some support for trauma in those locations. And so if I do a forward-looking projection, I think the 10% really puts us in a good spot. Our independent agencies actually are growing in terms of their revenue, but their footprint is still pretty much smaller than what our direct team is. But they do aid in our productivity of our direct sales team. So we have several things that we're doing to continue to increase productivity. We do expect productivity to grow on our reps with our direct reps. One thing is looking at those territory structures and making sure that they're not spending time on things that are not productive to our sales process, including driving to distant sites. That's one component. Another component is looking at going deeper in those core accounts. That inherently improves our rep productivity. And in doing that, we also bring in more planned cases. So planned cases improve rep productivity. Emergent procedures, it's very hard for a rep to be, and if you look at other sales teams, trauma reps tend to be a little lower on the productivity side because they can't plan out multiple weeks. and work with developing a surgeon because they don't know the trauma that's going to happen, you know, two days from now. They only know the trauma that's going to happen tomorrow or the trauma repair that's going to happen tomorrow. So by mixing in both planned cases with our trauma and focusing on the core accounts, we see a path in continuing to improve our productivity over time.
spk07: Thank you.
spk03: Again, ladies and gentlemen, it's star one to ask a question. Our next question comes from Kyle Ross from Canaccord. Go ahead, Kyle.
spk04: Great. Thank you for taking the question. So a lot's been asked, but the one thing I want to talk about is just overall price mix trends that you're seeing. I mean, it's been a while since you've really probably level set, I guess, expectations or revenue mix. Pete, I heard the comment in the prepared remarks about, you know, price and mix were a 4% driver of price. upside in the quarter. So how should we think about, one, the sustainability of price trends, at least as we move through this year? And then, two, can you maybe kind of walk through what the difference in mix is and the benefit you're seeing there? Thank you.
spk05: Sure. And to clarify, we had 4% in both price and mix. And so price We always think about this as sort of low to mid single digits, and I would be more measured as I think about price in the future quarters. I think 4% was a good price impact for the quarter, but I think we come up on an annualized price increase here soon, so that could moderate a bit. On the mix, I think the thing to understand is a year ago, a lot of the scheduled cases or planned cases that Karen were talking about, the more elective cases in breast, OMF, were being deferred in the early part of the first quarter. And those kind of came back in the late first quarter and through the rest of 2022. So we're seeing a mixed impact, not only from the breast and OMF being deferred, back in a more normalized trend line. But we're also seeing a trend towards longer advanced graphs in trauma, so mixed and motor usage. And some of that is, obviously all of that is supported by the meta-analysis. And so we're seeing a trend towards the longer advanced graphs, both in trauma and breast and OMF.
spk04: Okay. And then just to be clear, it is, when you say mix, it's, you know, primarily longer lengths of advance. You're not seeing different utilization trends amongst like AxiGuard Nerve Protector and the NerveWrap or some of the other products there.
spk05: No, it's really about Avance, you know, more Avance units. You know, Avance used to be more around 50% of our revenue, and AxiGuard was the remaining 50. That's been trending up, right? So Avance is getting closer to that 60% range in our mix. And, again, that's supported by longer Avance units used in trauma as well as breast and OMF.
spk04: Okay, great. Thank you very much for taking the questions.
spk05: And just to finish that, when I think about the expectation, I don't expect that same mixed impact for the remaining quarters of the year. I do think that normalizes because those planned cases were beginning to normalize Q2 through Q4 of last year.
spk03: Okay. Thank you. And the next Thank you. Sorry. And the next question comes from Dave Terkelay from JMP Securities. Go ahead, Dave.
spk06: Thank you, and good morning. Pete, I think I heard you say that the facility in Dayton has 1.7 to 2.7 left to be complete. I wanted to confirm that that ends the capital expenditures on that facility. And then what is a normalized CapEx range? for Exogen post those expenses?
spk05: Yeah, first of all, you're right. It's something less than $3 million to get it done primarily here in the second quarter. There could be a few things trail off in the Q3, but we're coming to the end of that with about $3 million or less than $3 million to go. And then I think about normal CapEx on an annualized basis of sort of $3 to $5 million for us, and that would be for a full annualized year. This year, our CapEx is more focused, obviously, on the Dayton facility without a lot of additional CapEx in the plan. But think about it as three to five in any annualized year.
spk06: Thank you for that. And then maybe just to follow up on the new product, I think people are trying to sort of get their hands around you know, the size of sort of the AxiGuard, you know, protector, you know, what these products are doing. Karen, I don't know if there's any way to sort of ballpark us in terms of what percent of the mix is protector or, you know, how often are you using in advance with that product? Just trying to, again, get some understanding of what this could mean for you guys.
spk02: Yeah, so obviously, advance is the biggest portion of our revenue. There are cases where an advance is used either with a connector or protection, both sometimes as a protection for the injury site, sometimes as a co-optation protection. And then it's also used actually frequently alone for these non-transsected nerves in In the market for trauma, there's a sizable number of non-transsected nerves where they don't end up being able to, there's no need for an advance at all, yet there's still a damage, a contusion, a crush to the nerve, and they need to do something to protect that nerve. So when we look at the overall, we've talked about there are 700,000 traumatic nerve injuries that are repaired. Almost 300,000 of those are non-transsected nerves where there needs to be some sort of protection. And as I mentioned before, while we play in that with our AxiGuard, what we found is that there are places that they really need something with this gliding layer. And so we think it really helps to continue to expand our penetration into those areas where they need to protect a non-transsected nerve near a major joint. If you ask about characterizing our existing sales, of course, Avance is the majority of our sales. AxiGuard, Protector, and Connector are the majority of the split of the rest. NERFCAP is still much smaller. I'll let you do some math to figure that out, but it does allow us to continue to expand our protection business, which we think has a lot of application for these traumatic injuries.
spk06: Great. Thank you.
spk03: Thank you. And our next question comes from Ross Osborne from Kanta Fitzgerald. Go ahead. Ross, are you on mute?
spk09: All right. Okay.
spk07: Not sure.
spk03: Ross?
spk05: All right, let's move on.
spk03: Okay, that seems to be our last question. I'd like to now turn it back to Karen Saturday for any closing remarks.
spk02: Thanks, Kat. I want to thank the Axigen team who remain very committed to our mission of improving nerve function and quality of life for patients with peripheral nerve injuries. We're very happy with our current progress. We remain focused on ensuring our long-term success. And I want to thank everyone for joining us this morning and have a great day.
spk03: Thank you. This does conclude today's conference. We thank you for your participation. You may disconnect your lines at this time and have a wonderful day.
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