MiMedx Group, Inc

Ladies and gentlemen, thank you for standing by, and welcome to MiMedx Second Quarter 2021 Operating and Financial Results Conference Call. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then 1 on your telephone. If you require any further assistance, please press star then 0. I would now like to hand the conference over to your speaker today, Mr. Jack Howard, please go ahead, sir.

Thank you, operator, and good morning, everyone. Welcome to the Medics Second 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, Executive Vice President Research and Development Dr. Robert Stein, and Executive Vice President and Chief Commercial Officer, Dr. Rohit Keshav. Tim and Pete will provide a summary of our operating and financial results for the second quarter of 2021, and at the conclusion of their remarks, Tim, Pete, and Drs. Stein and Keshav will be available for your questions. Before we begin, I'd like to remind you that our comments today will include forward-looking statements, including anticipated timelines for our ongoing clinical trials and FDA submissions and approvals, and expected market size for these products. These expectations are subject to risks and uncertainties, and actual results may differ materially from those anticipated due to many factors. Actual timing and FDA approval will depend on a number of factors, including the results of our clinical trials, the impact of COVID, actions by others that affect our timeline, and other factors that the FDA deems important. We list additional factors in the press release issued yesterday afternoon as well as the risk factors section of our annual report on Form 10-K. Also, our comments today include non-GAAP financial measures, and we provide a reconciliation to GAAP in our press release, which is available on our website at www.mymedics.com. With that, I'm now pleased to turn the call over to Tim Wright. Tim?

Thank you, Jack. Good morning, everyone, and thank you for joining us on the call today. Yesterday, After the markets closed, we issued a press release reporting our second quarter 2021 operating and financial results. I'd like to start today's call with a brief review of our commercial business and recent operating highlights, and then move right into an overview of the progress to date we're making on our promising late-stage pipeline. Afterwards, Pete will take you through a discussion of our strong second quarter financial results. Starting with an overview of our performance, second quarter net sales grew 27% year over year to $68.2 million, driven primarily by our advanced wound care business, reflecting solid execution by our expanded commercial sales team. Adjusted net sales, which excludes the impact of change in our company's methods for recognizing revenue, grew 31%. This increase was primarily driven by EpiCord Expandable and the EpiSheet portfolio in our advanced wound care business, along with sales of our micronized injectable products prior to the end of enforcement discretion that occurred on May 31st. I will touch on enforcement discretion in more detail shortly, but remind you that this was a category-wide guidance that applied to all HTTP manufacturers and for memetics we believe the impact is limited to our micronized and particulate products only. Our most prescribed flagship brands, EpiFix and AmnioFix, are not impacted and continue to see strong demand across the market. In the second quarter, we reached our 2021 goal of increasing our Salesforce size by 10% and currently stand at 289 customer-facing sales professionals, complemented by a strong network of sales agents to expand our reach, frequency, and impact of our products into additional surgical procedures and deepen our penetration into targeted accounts. Broadly speaking, over the past year, the easing of COVID restrictions at healthcare facilities minimized the disruption for our sales personnel and allowed us to conduct meaningful medical education programs. As the only data-driven amniotic tissue allograft to have complete national commercial coverage for the treatment of diabetic foot ulcers. We continue to leverage our extensive reimbursement coverage to reinforce the differential advantage of our products and to convey the clinical and economic value of our brands. We are also closely monitoring recent reports of possible COVID spikes in certain parts of the country. Our sales team is well positioned to adjust and adapt to any changes and facility protocols. We remain committed to keeping our employees safe, ensuring continuity of care for patients, and continuing to ensure providers have access to our flagship brands. Overall, we are extremely pleased with the commercial progress that we've made in the second quarter. We realize that we must continue to execute, and I believe we are well positioned going into the second half of the year. Now moving on to some recent highlights. In May, we announced the important collaboration with the Wake Forest University Institute for Regenerative Medicine to develop and advance scientific evidence in support of safe and effective clinical therapies. Led by Dr. Tony Atala, the Wake Forest Institute for Regenerative Medicine is recognized as an international leader in translating scientific discovery into clinical therapies. and was the first in the world to engineer laboratory-grown organs that were successfully implanted into humans. Our collaboration will involve research into the specific mechanism of action and basic pharmacology involved in the host responses to treatment with our amniotic tissue-based platform and other regenerative tissues. Our partnership reflects a shared vision to advance regenerative science and innovative biologics that restore quality of life for patients and further our understanding of the potential therapeutic targets. We look forward to updating you on the efforts of this important collaboration with Wake Forest in the future. Now in June, we announced regulatory approval by the Japanese Ministry of Health, Labor and Welfare, to market Epifix in Japan. Our current efforts are focused on establishing reimbursement pricing, which may take until mid-2022 to finalize, based on the ministry's calendar. Following the successful approval of reimbursement pricing policy and subsequent listing of the reimbursement rate, the medics can begin offering Epifix to physicians and their patients in Japan. And when reimbursement is approved, we believe EpiFix has the potential to reach as many as 100,000 patients each year for this market. I look forward to updating you on the progress to help more patients achieve better outcomes across the globe. As an industry leader in advanced wound care, Memetics continues to build a solid foundation of scientific data to support our products. We recently announced the publication of a peer reviewed study in the Journal of Investigative Dermatology Innovations, highlighting the potential benefit of memetics, purion process dehydrated human amnion-chorion membrane, also known as DHACM, to combat complications stemming from excessive fibrosis, a pathological process central to a number of serious unmet medical needs. Emetic's Purion Process amniotic tissue has been used extensively for the treatment of multiple acute and chronic conditions, ranging from diabetic foot ulcers and significant burn injuries to musculoskeletal applications like plantar fasciitis and knee osteoarthritis, and other sports medicine applications. This important work can help enhance our potential to address the needs of patients suffering from pathological scar formation, numbering as many as 100,000 patients worldwide, including those with minor cosmetic defects, significantly compromised tissue architecture, and impaired function across a number of conditions. Purion process amniotic tissue has demonstrated remarkable results in safety in a multitude of uses, and we are focused on investments that further uncover its tremendous potential. That also increases our scientific understanding of not only its capabilities but also its limitations as we continue to gain insights into the complexity of this tissue. We're building an existing library of peer-reviewed literature as we believe that this provides memetics with a critical advantage for the further development of novel therapeutics. Now let me turn to enforcement discretion. As you may recall, we addressed the FDA's communication regarding the category-wide end-of-enforcement discretion on our first quarter call and confirmed our plans to discontinue marketing of our micronized and particulate product at the end of May. Unfortunately, both providers and ultimately patients, there was significant marketplace confusion across the industry, and in particular, for companies unprepared for the May 31st deadline. At Nomadics, we were prepared. We planned for and executed on an enhanced communications program with our customers to address and ease some of the confusion. And our commercial team exercised strong leadership to support our customers as they provide much needed patient care. The need for scientific rigor and quality is paramount. And our continued open dialogue with the FDA is focused on exploring ways that enable continued access for patients to innovative therapies. Pete will discuss the impact of enforcement discretion in our final financial results in a few minutes. Shifting gears now to some updates on our rapidly progressing pipeline, I'm excited to report that we have achieved our 2021 goal of filing three additional investigational new drug applications for our micronized and particulate products in the first half of the year. On our last quarterly call, we announced acceptance as filed by the FDA for the first of these IND applications for chronic cutaneous ulcers. And I'm pleased to report acceptance as filed by the FDA for a second IND to support the use of micronized DeHackam in surgical incisions. In addition, our third application for soft tissue defects has been filed. and the FDA is currently reviewing this submission. We are still in the very early stages of planning study protocols for all three of these important programs, and we'll update you upon initiation of patient enrollment. Finally, and most importantly, we are approaching some key milestones with our musculoskeletal pipeline, including the late summer release of top-line data for our plantar fasciitis and knee osteoarthritis clinical trials. Depending on the data, subsequent next step meetings are to be scheduled and agreed upon with the FDA. We will also plan a future R&D day to discuss the PF and the OA study results in more detail with our financial community. First, let's talk about where we are with the phase three PF study. The study design included 277 patients with endpoints that measured a pain score on the visual analog score and the modified function index. The clinical field monitoring teams have cleaned, verified, and validated source documents and recently achieved database log. The next step is final data analysis and generation of a full data set to be reviewed at a meeting with the FDA with a goal to agree upon a path forward to an eventual BLA filing. Of course, the timing of any such meeting will depend on the results of both the Phase 2B trial and the Phase 3 trial after the FDA's review. And eventual BLA filing will depend on those and other factors, which I'll discuss with you in a minute. I would remind you that a BLA filing is a significant effort, and if we are successful, this would be the first for an amniotic tissue product aspiring for large-scale production under a drug biologic pathway. Moving now to the Phase 2B study in the EOA, which involved 447 subjects. The study was designed with co-primary endpoints of pain, as measured by visual analog score and WOMAC. We are approaching final analysis and database lock by the clinical monitoring team and the 12-month safety visit follow-up as requested by the FDA is scheduled to be complete October 2021. Similar to the PF study, the next steps include generation of a full data set to be reviewed at the end of phase two meeting with the FDA with the goal of designing a phase three study. With respect to the timing of communicating top line results for both studies by late summer, the company now believes that it would be appropriate to discuss top line data to investors while simultaneously requesting meetings with the FDA to discuss the overall PF and the OA study results. Once the meetings have been held with the agency, Nomadic plans to review the full study results with investors at a future company R&D day. These are very exciting times for our science, our technology, and our employees, and yet the BLA filing and review process is exceptionally rigorous. The typical steps for obtaining FDA approval of a BLA to market a biological product in the United States include performance of two adequate and well-controlled clinical trials in accordance with good clinical practices to establish the safety and efficacy of the products for each indication, along with the development of purity, potency, and identity tests to demonstrate consistency and reliability of the manufacturing process through rigorous chemistry manufacturing and controls. Submission to the FDA of a BLA for marketing the product includes, among other things, reports of the outcomes and the full data sets of clinical trials, and proposed labeling and packaging for the product. In addition, the satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced is required to assess compliance with FDA's current good manufacturing practice regulations to assure that the facility's methods and controls are adequate. We are thoughtfully and aggressively moving these efforts forward, including the preparations for labeling and packaging insert development. each of which would allow us to more accurately project and refine the total addressable market for our injectable technologies. We are in the early stages of planning for pricing decisions, third-party payer discussions, and product launch preparations, and believe that the commercial ramp-up for AMEO fixed injectable may benefit from its prior clinical use in the market, along with its excellent track record of safety. Finally, on behalf of the memetics team, we'd like to congratulate one of our distinguished board members, Dr. Cato T. Lorenzen, on being awarded the Spingarn Medal, the NAACP's most prestigious honor. Honoring his accomplishments in the fields of tissue regeneration, biomaterial science, nanotechnology, and regenerative engineering, a field he founded, Dr. Lorenzen received the Spingarn Medal at the NAACP's 112th annual convention last month. Established in 1914 by the late Joel E. Spingarn, the NAACP awards the medal annually for the highest or noblest achievement by a living African American during the preceding year or years in any honorable field. As a pioneer in the field of regenerative engineering, Dr. Lawrenson's discoveries and achievements have pushed the boundaries of science in the service of human health and inspired countless other researchers to do the same. His addition to the board of directors at Emetic last fall has been invaluable and speaks to our shared mission, advancing science to improve patients' lives. We are fortunate to have the opportunity to learn from learn from, and build on his truly unique insights. Congratulations to Dr. Lorenzen. I will now turn the call over to Pete, who will take you through all of our financial results.