Axogen, Inc.

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.

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?

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?