Aziyo Biologics, Inc.

Good day, ladies and gentlemen, and welcome to the Azalea Biologics fourth quarter and full year 2022 financial results call. At this time, all participants are in a listen-only mode. A question and answer session will follow a formal presentation. To ask a question, press star 1 on your telephone keypad. If anyone should require operator assistance during the conference, press star 0 on your telephone keypad. Please be advised that today's conference is being recorded. I would now like to hand the conference call over to Matt Steinberg, FinPartners.

Thank you, Operator, and thank you all for participating in today's call. Earlier today, Azio released financial results for the quarter and full year ended December 31st, 2022. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws which are pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that do not relate to matters of historical facts or relate to expectations or predictions of future events, results, or performance are forward-looking statements. All forward-looking statements including without limitation those relating to our operating trends and future financial performance are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our public filings with the SEC, including ASEO's annual report on Form 10-K for the year ended December 31, 2022, to be filed with the SEC, accessible on the SEC's website at www.sec.gov. Such factors may be updated from time to time in ASEO's other filings with the SEC. The conference call contains time-sensitive information and is accurate only as of the live broadcast today March 22, 2023. ASEO Biologics disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. Also, during this presentation, we refer to gross margin excluding intangible asset amortization, which is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure The most directly comparable GAAP financial measures is available in the company's financial results released for the fourth quarter ended December 31st, 2022, which is accessible on the SEC's website and posted on the investor page of the ASEO website at www.aseo.com. And with that, I will turn the call over to ASEO CEO, Randy Mills.

Good afternoon, and thank you for joining the call. Today, we will provide an overview of our business, including recent achievements, and lay out our key goals and objectives for 2023. We concluded 2022 on a very strong note, posting record annual revenues of $49.2 million, led by robust sales growth of our Simpliderm and Kangaroo product lines. Matt will provide additional details on these and other financial results later on in the call. But first, I would like to address the announcement we made on Monday regarding the receipt of a non-substantially equivalent, or NFC, determination from the Food and Drug Administration for our Kangaroo RM antibacterial envelope. As a reminder, Kangaroo RM is the latest advancement of our Kangaroo product line and contains the antibiotics rifampin and minocycline, which have been shown in preclinical testing to prevent bacterial colonization. As noted in Monday's announcements, The items in the NSE relate to drug testing and centrally a request by FDA to modify an in vitro drug release assay employed as a manufacturing control that is used primarily to assess batch-to-batch variation and support manufacturing process changes. We believe that the most expeditious path forward is to work with FDA to provide the additional data requested in a timely manner. While we cannot provide a firm timeline of how long this will take right now, we do know that the request does not involve the generation of any additional human or animal data. Our team is already hard at work, and we will provide updates on our progress. While we work diligently to resolve the FDA's outstanding questions around Kangaroo RM, we continue to expand the opportunities for our other product lines. As announced earlier today, we have entered into a distribution agreement with Sientra for our Simpliderm Acellularized Dermal Matrix. This partnership allows us to further accelerate the rapid growth of Simpliderm, It also supports our overall growth strategy of profitably expanding our proprietary biologic platforms to improve patient outcomes. Now let me provide a quick overview of our company. Everyone at Azio is focused on our mission of humanizing medical devices for better patient outcomes. Our marketed products and pipeline programs are designed to mitigate the key mechanisms of failure that commonly occur with implantable medical devices. These failures include migration, fibrosis, erosion, and infection. Kangaroo and Simpliderm are indicated for use in over 700,000 surgical procedures each year and address a staggering $7.5 billion in added cost associated with surgical complications. Our Kangaroo RM technology is designed to address key mechanisms of device failure, namely infection, and we are confident that we are strongly positioned to capture a significant portion of the $600 million pacemaker protection market. it is important to reiterate that FDA's completed review did not raise any additional questions surrounding the appropriateness of the pathway or the majority of the data submitted to support the filing. Consequently, we do not expect to appeal the decision, and we believe that the most expeditious path forward is to work with the FDA to provide the additional data requested. Regarding our SimpliDerm product lines, Breast reconstruction is a $500 million market, providing us with significant growth potential in an evolving competitive landscape. The market leader in this space was acquired by a major pharma company, creating an opportunity for us to take market share, and we have already witnessed rapid uptake of simploderm among surgeons who perform breast reconstruction surgeries. and we are not the only ones excited about the benefits that Simpliderm has to offer. As announced earlier today, we have entered into a sales agreement with Cientra for Simpliderm. Cientra is a medical aesthetics company focused on progressing the art of plastic surgery and is a leading manufacturer and distributor of silicone breast implants. They have an extensive network with 55 dedicated sales professionals and a trusted surgeon relationship across the United States. We believe this partnership will accelerate the already impressive sales trajectory of Simpliderm. I'll now turn the call over to Matt for a review of our financial results.