MiMedx Group, Inc

Ladies and gentlemen, thank you for standing by, and welcome to the MiMedx First Quarter 2021 Operating and Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. If you require any further assistance, please press star, then zero. I would now like to hand the conference over to your speaker, Mr. Jack Haworth. Please go ahead.

Jack Haworth Thank you, operator, and good morning, everyone. Welcome to the MiMedx First Quarter 2021 Operating and Financial Results Conference Call. With me on today's call are Chief Executive Officer Tim Wright, Chief Financial Officer Pete Carlson, and Executive Vice President and Chief Commercial Officer Rohit Keshe. Tim and Pete will provide a summary of the operating and financial results for the first quarter of 2021, and at the conclusion of their remarks, Tim, Pete, and Dr. Kashyap will be available for your questions. Before we begin, I would like to remind you that comments made during today's call include non-GAAP financial measures, and we provide a reconciliation to GAAP in our press release, which is available on our website at www.memetics.com. Also, Our comments today will include forward-looking statements. While we discuss some reasons why we are optimistic, actual outcomes and results are subject to risks and uncertainties and may differ materially from those anticipated due to many factors. Listeners are directed to the cautionary notes in the press release issued today, as well as the risk factors set forth in the Memetics 2020 Annual Report on Form 10-K for factors that could cause actual outcomes and results to differ materially from those reflected in the forward-looking statements. The company assumes no obligation to update or supplement any forward-looking statements, except as required by law. In particular, Tim will mention expected clinical trial, FDA submission and approval, and product launch timelines for both plantar fasciitis and knee osteoarthritis. Obviously, there can be no assurance that our clinical trials will produce favorable results, and the actual timing of trials BLA submissions to the FDA and approval will depend on a number of factors, including COVID, the results of our clinical trials, and other factors that may be outlined in our meetings with the FDA. Today's prepared remarks will be followed by our typical question and answer session, during which time you will have the opportunity to ask management about our most recent quarter. As a reminder, the purpose of the call is to discuss our financial and operating results, and we appreciate you keeping your questions focused on that topic. Please be advised that the company, its directors, and certain of its executive officers are participants in the solicitation of proxies from the company's shareholders in connection with the 2021 Annual Meeting. The company intends to file a definitive proxy statement with the SEC in connection with any such solicitation of proxies. Shareholders are strongly encouraged to read such proxy statement once available, and all other documents filed with the SEC carefully and in their entirety as they contain important information. Information regarding the identity of the company's participants and their direct or indirect interests by securities, holdings, or otherwise can be found in the company's annual report on Form 10-K for the fiscal year ended December 31, 2020, the company's definitive proxy statement for the 2020 Annual Meeting and other materials filed with the SEC, and updated information will be included in the company's definitive proxy statement for the 2021 Annual Meeting and other materials to be filed with the SEC. These materials can be obtained free through the company's website in the section titled Investors or through the SEC's website at www.sec.gov. With that, I'm now pleased to turn the call over to Tim Wright.

Tim? Tim Wright Thank you, Jack. Good morning, everyone, and thank you for joining us on today's call. Yesterday afternoon, We issued a press release reporting our first quarter 21 operating and financial results. I'd like to start today's call with a review of our commercial business and then move right into an overview of our progress to date on our promising late-stage pipeline. After I complete my opening remarks, Pete Carlson, our CFO, will take you through a full discussion of our first quarter results. Memetics reported 4% growth in adjusted net sales in the first quarter, driven by our wound care businesses. This included the positive impact from sales of a recently launched EpiCord expandable product. We further attribute the recent growth in our business to a number of strategic changes and investments we've made with our commercial organization. These fundamental changes, coupled with the addition of talented representatives, are designed to accelerate our top-line growth. Not only are we making the right changes and investments within our core business, we are retaining the right people to keep our transformation and momentum going. We continue to recruit highly skilled individuals with experience in biotechnology and tissue segments of the healthcare industry, supplementing these hires by focusing on supplying them with a refreshed training model and clinically oriented selling tools. The people we are onboarding are focused on selling our current portfolio of products and understand the fundamental science that differentiates our products and believe in our core mission, vision, and values. I'm pleased to report that our sales representative headcount stands at 284 people strong. To further supplement our sales representatives with the right tools, our market access group continues to expand the availability of memetics products to the wound care patients through increased coverage by leading payers around the country. As you recall, that in November of last year, the largest commercial payer in the United States added EpiFix to their list of covered products. As a reminder, EpiFix is the only amniotic tissue-based product to receive coverage for diabetic foot ulcers by this payer. Following this big market access win, we were pleased to announce that on April 1st, Premier awarded Memetics an amniotic tissue supplier agreement under their Surpass purchasing program. The agreement allows Surpass members to take advantage of special pricing and terms pre-negotiated by Premier for Memetics amniotic tissue products. We believe that this agreement strengthens our position as an industry leader in amniotic tissue-based products backed by the best class clinical evidence along with broad coverage and reimbursement. We're excited about these new partnerships and remain committed to increasing patient access to our amniotic tissue products to heal intractable wounds. I'm also pleased to share with you we just received notification that another large national commercial payer added coverage for EpiCord as a medically necessary option in the treatment of diabetic foot ulcers. This, in addition to the previously existing EpiFix coverage, marks another win for the memetics team. I want to shift gears now and provide some important updates on our late-stage pipeline. Last week, we announced the final patient visits for our novel therapeutic biologic amniofix injectable in the Phase III plantar fasciitis and Achilles tendonitis studies. as well as the final blinded efficacy visits for the Phase IIb knee osteoarthritis trial. The achievement of these milestones represents a pivotal advancement to bring amniotic tissue platform technology to market as a treatment option for a range of musculoskeletal conditions with substantial unmet patient need. As we previously discussed, existing treatments for knee osteoarthritis and plantar fasciitis are suboptimal. there is significant patient interest for alternative options that relieve pain and improve functionality. Today, there continues to be a lack of approved and efficacious treatment, particularly in NeoA, which is a widespread debilitating and chronic disease. The memetic studies were initially designed to prove clinical efficacy and safety of amniofix injectable in reducing pain and improving function of these chronic conditions. With the last patient visits now complete, we will lock the databases and conduct the appropriate statistical analysis and prepare for meetings with the FDA. We're anticipating announcing top line results from all three studies this summer. As you may recall, our longstanding hypothesis and the feedback from interested physicians is that amniofix injectable certainly has the potential to work in Achilles tendonitis. The original study design, including patient selection criteria, may not have been sufficiently designed or powered to demonstrate statistical significance and capture all elements of a clinical response. For these reasons, that is why we do not anticipate filing a BLA for Achilles tendonitis at this time. We continue to believe that the safety results from this study could add valuable information to the AmnioFix injectable database, and we intend to include them Turning now to amniofix injectable for plantar fasciitis. The phase three study was designed following promising results from our large phase 2B prospective trial, which was a single-blinded randomized controlled trial of 145 patients. We have previously shared that this trial demonstrated a statistically significant reduction in visual analog score, or VAS score, for pain and improvement in the foot function index score. The phase three trial enrolled 277 patients with an investigator-confirmed diagnosis of plantar fasciitis. The primary endpoints are change in VAS for pain at 90 days and an incident-related adverse events at 180 days, and serious adverse events and unanticipated events during the first 12 months post-injection. The secondary endpoints include self-reported responses to the foot function index at 90 days. In this case, the BLA filing will require gathering data from two adequate and well-controlled clinical trials. Development of these tests to demonstrate consistency and reliability of our manufacturing process along with satisfactory completion of an FDA inspection of our manufacturing facilities to comply with the agency's good manufacturing practice regulations. At this point, we believe we are on target to meet all these criteria in the coming months and remain on track to file our first BLA in the first half of 2022. Another potentially significant opportunity coming out of our pipeline is the initiation of a phase three study in knee osteoarthritis. We are currently exploring ways to accelerate the time flying for this clinical study, assuming a positive outcome from our Phase 2B results. From our announced plan to initiate Phase 3 is in the first half of 22. Osteoarthritis, or OA, is by far the most common joint disease, and millions of adults experience pain and decreased quality of life every day because of joint destruction caused by OA. According to published data, Osteoarthritis is responsible for a staggering public health and economic impact. More than 242 million people worldwide currently suffer from symptomatic OA of the knee and hip. Forty-five percent of all people have a lifetime risk of developing OA of the knee, and OA is responsible for $71 billion in lost earnings annually in the United States. Although knee replacement is an option for those with advanced knee arthritis, it carries significant risk. and current treatments including oral anti-inflammatory medications, cortisone injections, and hyaluronic acid injections are all limited in the amount of relief they can provide. Additionally, anti-inflammatories have negative cardiovascular effects and injectable steroids may cause further joint deterioration with chronic use. Current projections indicate that nearly 18 million Americans suffer from knee osteoarthritis annually. We estimate the injectable size of the market for our products to range from one to 1.5 million patients per year. And that is only based upon one injection in one knee per year. The opportunity for memetics is potentially significant. And our goal is to file a BLA in the second half of 2024 or early 2025 with an emphasis in 2021 to accelerate timelines. I'll pause here to provide a comment on our thinking with respect to the ability of our Purion-processed amniotic tissue, amniofix injectable, to slow the progression of NeoA. Based on our ongoing research, we have uncovered a novel mechanism that may indeed support our Purion-processed amniotic tissue as a candidate for disease-modifying osteoarthritic therapy. This is very early research yet very, very encouraging. In addition to these exciting therapeutic biologics, we are working towards filing two INDs for our injectable product in the treatment of chronic cutaneous ulcers and surgical incisions and an IDE or investigational device application for amniophil in the treatment of soft tissue defects. Last Friday, We received notice from the FDA that the first of our three investigational new drug applications were accepted and now in effect. This IND was filed for chronic cutaneous ulcers and will keep you apprised as to the progress towards filing the additional applications once they've been successfully accepted by the FDA as submitted. Finally, I'm pleased to announce the appointment of Dirk Stephens, Ph.D., as a Senior Vice President, Quality Assurance and Regulatory Affairs. Dr. Stevens brings more than 35 years of strategic leadership experience in quality management and regulatory compliance across multiple device and pharmaceutical companies. The addition of Dr. Stevens exemplifies our ongoing commitment to advancing the quality standards for both science and manufacturing in our industry. His extensive operational insight, relevant experience, in regulatory review and submission processes and proficiency in quality system assurances will be instrumental as we continue to advance our late stage pipeline under good manufacturing practices. Dr. Stevens joins us from Smith and Nephew where he was accountable for regulatory submissions, compliance and commercial quality assurance. Before we get into the first quarter results, I'd like to spend a minute putting into perspective our business development thinking. Consistent with our fiduciary responsibility to all shareholders, we continuously evaluate the most productive choices for investments and capital deployment. Several months ago, we stated that we would consider inorganic growth as an option with the goal of potentially adding to top-line growth in 2021 and to support other aspects of our BLA filings. As a company, we intend to adhere to a stringent criteria whenever we consider and evaluate potential business development opportunities and will continue to leverage valuable input and oversight from our highly experienced board of directors. I will underscore that in general, we employ a rigorous process in evaluating any business development opportunity and steadfastly adhere to our commitment to build shareholder value in all that we do. The evaluation of business development opportunities is no exception. In 2021, we began the year evaluating opportunities that could potentially mitigate any risk from change in our business environment, such as the end of enforcement discretion. And our thinking proved correct in this matter. We also employ a process where we look for products with low regulatory risk in the field of regenerative medicine. That can be integrated easily into our portfolio predominantly through a licensing agreement. As a general rule, we require that any transaction enhance our competitive position by expanding either our intellectual property estate, operating margins, or international footprint. Lastly, it is critical that any transaction be accretive to adjusted EBITDA within two years of acquisition. While we have a clear set of standards for inorganic growth, our focus today is is on organic growth rather than inorganic growth. We are on the verge of some very important data readouts that are likely to change the future of memetics going forward, and we look forward to providing you with those updates at the appropriate time. Now, I'd like to turn the call over to Pete to take you through our financial results in Q1.