Artivion, Inc.

Greetings and welcome to RTVN 4Q and year end 2021 financial conference call. At this time, all participants are in a lesson only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host. I will now turn the call over to Brian Johnson from the Jill Martin Group. Thank you, and you may begin.

Thanks, Operator. Good afternoon, and thank you for joining the call today. Joining me today from our Tivian's management team are Pat Mackin, CEO, and Ashley Lee, CFO. Before we begin, I'd like to make the following statements to comply with the safe harbor requirements of the Private Securities Litigation Reform Act of 1995. Comments made on this call that look forward in time involve risks and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include statements made as to the company's or management's intentions, hopes, beliefs, expectations, or predictions of the future. These forward-looking statements are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from these forward-looking statements. Additional information concerning certain risks and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings and in the press release that was issued earlier today. Now, I'll turn it over to Artivian CEO, Pat Mackin.

Hey, thanks, Brian, and good afternoon, and thanks for joining us on the call. This is our first call since rebranding as Artivion. This name was derived from the words aorta, innovation, and vision, and reflects our evolution to be a global leader providing innovative treatments for aortic disease and our vision to continually innovate to maintain our position of leadership. It was time to change our name as we significantly evolved from the CoriLife I joined seven years ago. During these past seven years, as we continued to evolve, I would come across investors and customers who are not aware of the significant transformation that was taking place in our company. Investors and customers now have a fresh look at Artivion to see what we do and to learn more about our significant transformation. Artivion now encapsulates all that we've accomplished since we acquired Onyx in 2016. Through a series of strategic acquisitions and divestitures and our new development initiatives, we've assembled a portfolio of products focused on aortic repair that we believe can compete with those of any company on the market today. We provide cardiac and vascular surgeons with innovative solutions to their most difficult challenges. We'll continue to do so in the future as our product pipeline and new regulatory approvals will open access to our innovative therapies to many more patients around the globe. My goal since becoming CEO of Cryolife was to transform into our Tivion. And our employees, by collaborating with each other and our physicians, have basically done just that. We now expect to organically grow our revenue double digits at the midpoint of our 2022 guidance. We believe our product pipeline and regulatory strategy sets us up well for continued success for years to come. Our rebrand followed on the heels of a record fourth quarter 2021 for Artivion as we posted strong quarterly revenue growth. Revenues for the fourth quarter were $79.4 million. That's up 16.9% compared to the fourth quarter of 2020 and up 18.8% on a pro forma constant currency basis. Revenues were up 13.5 on a pro forma constant currency basis compared to the fourth quarter of 19. Our growth in Q4 was driven by our stent and stent grafts as well as our onyx product segments. More specifically, on a pro forma constant currency basis comparing Q4 21 to Q4 of 20, stents and stent grafts grew 33%, onyx grew 13.5%. Here are the growth rates for the products that are in the stent and stent graft segment. AMDS up 20%, Neo up 73%, Ensight up 39%, Nexus up 233%. We also saw a return to growth in cardiac tissue as well as the relaunch of our TMR business. In all, we are pleased with our fourth quarter results despite continued and lingering headwinds from the Delta variant and Omicron variants that were associated with staffing issues and patient overflow issues in the hospitals. As I explained on our last call, our near-term plan is to accelerate revenue growth through three main initiatives. First, we plan to drive ONIX growth while commercializing AMDS, Nexus, Enside, and Neo, our new aortic stent and stent graft products. Second, we plan to further expand into Asia Pacific and Latin America by gaining regulatory approvals and expanding our commercial channels. Finally, to secure regulatory approvals for Perclot and Proact Mitral in the U.S. and BioGlu in China. I will walk you through an update on each of these three initiatives. Starting with AMDS, this is the world's first arch remodeling hybrid device for use in the treatment of acute type A dissections. We remain very optimistic on the product line given our experience to date. As noted earlier, during the fourth quarter, revenues increased 20% on a pro forma constant currency basis over the fourth quarter of 2020. Increases were driven by continued strength in Europe and the regulatory approvals in countries outside of EMA and the US. Second, Nexus posted quarterly revenues of 233% increase on a constant currency basis compared to the fourth quarter of 2020. Given the anticipated decline in COVID-19 infection rates associated with hospital staffing shortages and travel restrictions, as well as improved physician adoption, we anticipate an uptick in Nexus procedures in 2022. Third, Enside. This is our newest device in our portfolio to treat thoracal abdominal aneurysms with endovascular stent grafts. Our revenues in this product line, which include Enside and Extra Design, grew 39% on a constant currency basis when compared to Q4 2020. Fourth, Avita Open Neo. This is our newest product in the frozen elephant trunk category. This is used to treat dissections and aneurysms in the aortic arch. Revenues from this product line, which include Avito OpenPlus and NEO, grew 73% on a constant currency basis compared to Q4 2020. Regarding Enya, we've decided to make modifications to the delivery system based on customer input and anticipate re-releasing this product in early 2023. We anticipate the demand for these products will continue to build as market adoption improves. COVID-19 infection decrease or become less virulent, and hospital staffing shortages abate. Most of these products were fully launched during the COVID-19 pandemic or shortly before, and therefore have not seen their full potential in an environment not significantly hampered by the effects of the pandemic. In addition, while Nexus and AMDS both launched shortly before the pandemic, they also benefited from our larger, more experienced sales force in Europe. Given the positive feedback we received in our newly offered products, I believe our growth in these product lines would have been even greater in the absence of the pandemic. Moving on to our next initiative, international expansion in Asia Pacific and Latin America through new regulatory approvals and commercial footprint expansion. I'm pleased to report that we are executing very well on this strategy. Our quarterly revenues on a pro forma constant currency basis increased in Asia Pacific and Latin America by 29% and 34% respectively. Those are over the fourth quarter of 2020. We continue to expect these regions to be important contributors to our growth over the coming years as we continue to execute on this strategy. Regarding our third initiative, we continue to make progress on achieving three regulatory approvals in major markets. Our first is to attain U.S. a lower INR label for the onyx mitral valve. We've submitted our PMA supplement to the FDA and it is currently under review. If our new label is approved, we believe lower anticoagulation levels will be a significant clinical benefit for patients. We are in active dialogue with the FDA. We continue to expect to receive PMA approval for the lower INR label of the onyx mitral valve, like our lower INR label for aortic valve sometime during 2022. If approved, we believe we will take significant market share in the U.S. with the onyx mitral valve, just as we've done and are continuing to do with the onyx aortic valve. For per clot, as you know, we filed the PMA with the FDA last quarter, and we're working closely with the FDA. We still expect to receive approval from the FDA during the second half of 2022. If approved for approximately two years thereafter, we will supply per clot to Baxter and generate revenue. Lastly, as it relates to the regulatory approval for Viagra in China, we remain actively engaged with NMPA and expect to have more clarity about a possible approval pathway within the next couple of months. In addition to our progress in each of these initiatives, we also continue to make strides in our midterm pipeline, with key products currently in the U.S. clinical trials and others expected to start later this quarter. These three products are Proactin-A, Nexus, and AMDS. We continue to make significant progress in enrollment in our PROACT-10A trial. This is our prospective randomized clinical trial to determine if patients with the onyx aortic valve can be maintained safely and effectively on Eliquis versus warfarin. We currently have enrolled 573 patients in this trial, and feedback from surgeons and patients participating has been excellent. We anticipate completing enrollment in the trial around the end of the second quarter of 2022, In assuming the trial meets its endpoints, we believe we can achieve FDA approval for this new indication by late 24 or early 25. If approved by the FDA, we believe the Onyx aortic valve using Eloquist rather than Coumadin should become the market share leader in the aortic valve market in patients under the age of 70. As for AMDS, we recently received FDA approval to begin our pivotal clinical trial called Persevere. The PERSEVERE trial is a non-randomized clinical trial in up to 25 sites in the U.S. We expect to enroll approximately 100 participants who have experienced an acute type A dissection. The combined primary efficacy and safety endpoints of the trial are the reduction in A, all-cause mortality, B, new disabilitating stroke, C, myocardial infarction, and D, new onset renal failure requiring dialysis, as well as the re-expansion of the true lumen and aorta. We anticipate enrolling the first patient this quarter and completing full enrollment by the end of this year. With a one-year follow-up period, we anticipate we will receive FDA approval for AMDS in late 24. In addition to the progress we've made on the PROACT-10A trial, as well as the AMDS trial, we also wanted to update investors about our partner, Endospan, and how they're making progress on their USID trial for Nexus called Triumph. As you recall, we'd secured an option to potentially acquire Endospan, Due primarily to delays resulting from the pandemic, enrollment in the TRIUMPH trial has been slower than anticipated. As a result, we do not believe that enrollment in the trial will be completed until sometime in 2023. We therefore do not anticipate approval for the NEXUS system until sometime in 2025, at the earliest, given the time required for follow-up, PMA submission, and FDA review and approval. Given this delay, as well as associated challenges related to market adoption during the pandemic, We've also fully impaired the value of the option to purchase Endospan and recorded an associated charge. Accordingly, we'd push the potential capital need out at least one year if we decided to proceed. With that said, we still remain bullish on the Nexus technology, and Ashley will provide more color in his comments. If each of these three trials proceed as anticipated, we anticipate FDA approval for Proactin-A, AMDS, and Nexus by late 24 or into 25. which would increase our adjustable market opportunity by an estimated $1.5 billion. With that, I'll now turn the call over to Ashley.