Axogen, Inc.

Greetings and welcome to the Exogen, Inc. 2024 First Quarter Financial Results Conference Call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star then zero on your telephone keypad. As a reminder, this conference call is being recorded. It's now my pleasure to introduce your host, Harold Tamayo, Vice President of Finance and Investor Relations. Thank you, Harold. You may again.

Thank you, Keith. Good morning, everyone. Joining me on today's call is Karen Zabary, Exigen's Chairman, Chief Executive Officer, and President, and Nir Naur, Chief Financial Officer. Karen will discuss the first quarter of 2024 financial results, and Nir will provide an analysis of our financial performance and guidance and discuss our outlook for the year, followed by a question and answer session. Today's call is being broadcast live via webcast, which is available on the investor sections of the Oxygen's website. Following the end of the live call, a replay will be available in the investor section of the company's website at www.oxygeninc.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 financial guidance, our expectations regarding our ability to expand our footprints and expand revenue from core accounts, anticipated growth for revenue categories, marketing opportunities with nerve applications associated with breast OMF protection and surgical treatment of pain and new products. Our expectations regarding the timing of the launch of Avive Plus, our statement regarding the timing of the complete biologics license application submission for advanced nerve graft, as well as a statement regarding the timing for approval of the BLA. Our expectations that, assuming approval of the VLA, Advanced NERF Graft will be designated as a reference product and the expected market exclusivity of such a designation. And our expectations around cash flow, including that we will continue trending towards cash flow, blade keeping, and profitability. Forward-looking statements are based on current beliefs and assumptions and are not guarantees of future performance and are subject to risk and uncertainties, including not without limitation, the risks and uncertainties reflected in the company's annual and periodic reports, such as household staffing issues, regulatory processes and approvals, 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 accept as required by applicable law. We assume no responsibility to publicly update or revise any forward-looking statements. In addition, for reconciliation of non-GAAP measures, please reference today's press release in our corporate presentation on the investor sections of the company's website. Now, I would like to turn the call over to Karen. Karen?

Thank you, Harold. And thank you all for joining us today as we discuss our 2024 first quarter financial results. We had a solid first quarter and we're pleased with both the positive trends in revenue and bottom line. Our performance underscores the progress we continue to make towards profitability and generating positive cash flow. During today's call, I'm going to highlight the progress we've made across our business, as well as some changes we've made on the disclosure and reporting side, which both Nir and I will discuss later on in the call. Revenue for the quarter increased by 12.9% to $41.4 million compared to last year. We're pleased with this quarter's top line performance, which was at a run rate above the midpoint of our annual guidance. Looking closely at the quarter, growth was broad-based across our products and applications. We saw a strong January and February, and our typical step up in volume occurred in April rather than March this year. We remain confident that we will achieve our 2024 top line guidance. As part of the disclosure and reporting changes I alluded to in my opening comments, we've made the strategic decision to remove our revenue breakdown between scheduled and emergent trauma applications. Our growth strategy continues to be focused on going deeper in high potential accounts and to build a nerve repair business in these accounts across all of our targeted nerve repair applications. We believe the performance and key metrics pertaining to sales productivity, and our progress in our core accounts provide the most clarity on the business model versus estimates of revenue by application. We will continue to talk qualitatively about the applications for nerve repair and our growth to give you color on both the opportunities in front of us and the progress we're making. As I said earlier, our growth strategy continues to be focused on going deeper in our existing core accounts where we see significant opportunity to expand our footprint in multiple clinical applications, as well as increasing the number of core accounts. Most of our core accounts have the opportunity for significant expansion across surgeon users and applications, resulting in upside in total revenue. As a reminder, core accounts are defined as those generating more than $100,000 in revenue over the trailing 12 months and represent approximately 65% of our total revenue. Today, our largest core accounts are over a million dollars annualized, and we look to continue to grow our core accounts toward their full potential. We ended the first quarter with 115 direct sales representatives, down one sequentially and compared to a year ago. We believe our revenue growth can continue to 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. As the leader in the nerve repair market, driving innovation to provide advanced solutions for surgeons and their patients is a key pillar of our growth. We've previously announced three innovations to our portfolio, which included two new products to the production space and the resensation technique for implant-based breast neurotization. We saw strong surgeon and patient interest in implant-based breast neurotization and grew the number of surgical teams trained in this new technique. We're on track to expand our education efforts with three national resensation surgeon training programs in 2024. Nerve protection continues to represent a significant growth opportunity for Axigen. As previously mentioned, we saw a need for multiple product solutions to address the diverse types of non-transsected nerve injuries. Our first portfolio expansion was the launch of AxiGuard HA Plus Nerve Protector, and we have been pleased with the surgeon acceptance of the product and the progress of the launch, including the positive impact we're seeing on surgeon activation, and new use cases in targeted applications. We're continuing to expand our offering for nerve protection with a Vive Plus soft tissue matrix, which broadens our nerve protection portfolio and targets acutely traumatized nerves. A Vive Plus soft tissue matrix is a resorbable nerve protection implant that functions as a barrier, providing temporary protection and tissue separation during the critical phase of healing. We're pleased with the initial surgeon feedback we've received in our limited market release and are on track for a full launch in June. With these additions, we believe we offer the broadest portfolio, a protection portfolio for nerve repair, and this will continue to drive growth in the nerve protection market. Moving on to updates to our growing body of clinical evidence. Over the years, we've made significant investments to develop quality clinical evidence to demonstrate the safety, performance, healthcare economics, and utility of our nerve repair solutions. Our active clinical programs are progressing as expected. As of the end of the quarter, we have 258 peer-reviewed publications, including applications in trauma, breast, OMS, and pain. This January, we announced positive top-line results from the reposed clinical study comparing standard of care anorectomy of symptomatic neuromas to neurectomy and protection of the terminated nerve end with our AxiGuard NerveCap. This post-marketing study met its primary endpoint for reduction in pain as measured by the visual analog scale. In addition, the study investigators found that over the full 12-month course of follow-up, AxiGuard NerveCap demonstrated statistical superiority for reduction in the total pain reported by the subjects compared to the standard of care neurectomy. We believe that these findings will play an important role in surgeon clinical decision making. Turning now to the BLA for advanced nerve grafts, we completed a productive pre-BLA meeting with FDA. We're encouraged by the positive interactions and have aligned with FDA on a rolling submission process and the content of the modules for submission. We believe we're on track for the BLA filing to be completed in the third quarter of 2024 And the submission timeline will allow for a potential approval in mid-2025. In addition, as required under the Pediatric Research Equity Act, we have submitted and reached agreement with the FDA of an initial pediatric study plan proposal. A final decision of the proposed plan is made by the review division at the time of approval of the biologic marketing application. Another component of our transition to a biologic was the construction and validation of our new Axigen Processing Center. At the end of 2023, we fully transitioned all advanced processing to our new center. We believe the advancements of our processing facility will provide the appropriate biologic processing environment as well as expand our processing capacity. As a reminder, A BLA approval will complete the regulatory transition of advanced nerve graft from a 361 tissue product to a 351 biological product. Importantly, we believe advanced will be designated as the reference product for potential biosimilars, providing 12 years of market exclusivity from the approval. In conclusion, we're pleased with our results from the first quarter, which reflect the execution of our growth strategy. The exceptional performance of Axigen's talented team has been pivotal in achieving these outcomes. Looking ahead, we're focused on delivering and furthering our mission to revolutionize the science in nerve repair. I'll now hand the call over to Nir, who will provide further details on our reporting changes, review our financial highlights, and provide guidance. Nir?