Artivion, Inc.

Greetings and welcome to the Arcadian First Quarter 2022 Financial Conference Call. At this time, all participants are in a 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 zero on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the call over to Brian Johnson from the Gilmartin Group. Thank you. You may begin.

Thanks, operator. Good afternoon and thank you for joining the call today. Joining me today from Artivian's management team are Pat Mackin, CEO, and Ashley, 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 that 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.

I'm pleased to report after an exceptional performance in the fourth quarter of last year, we followed up with a very strong first quarter this year. Constant currency revenue growth was 11.2% compared to Q1 of 2021, despite substantial COVID headwinds in the first half of the quarter. This is our second consecutive quarter of double-digit constant currency revenue growth. Our growth in Q1 was driven by our aortic stent grafts, onyx mechanical valves, and tissue processing. More specifically, on a constant currency basis comparing Q1 of 22 to Q1 of 21, stent graphs grew 34%, and onyx and tissue processing both grew 11%. As many of you know, we held an analyst and investor day on March 23rd in New York City. If you're not able to attend, I would encourage you to listen to the webcast replay. We provided a detailed overview of our goals and our strategy for the next three years, We also had KOL share their experience using our products and had members of our leadership team provide you with a review of our products and pipeline. It was an excellent event and a great way to understand why we were so excited about the future of the company. We announced three key growth initiatives that we will focus on over the next three years to drive double-digit constant currency revenue growth. They are as follows. First, we will continue to drive growth in onyx and aortic stent grafts. Second, we will generate further upside from our investments in our channels and our new regulatory approvals in Asia Pacific and Latin America. And third, in 2022, we will drive further growth through our PMA approvals in the U.S. for per-clot and the ONIX Proact Mitral low INR indication. This quarter, we made solid progress in each of these initiatives, so let me take a few minutes to review them. Starting with our stent graph offerings. Revenue in the first quarter increased 34% on a constant currency basis compared to the first quarter of last year, building on our performance in Q4 where we posted 33% year-over-year growth in stent grafts. We had particular strength in our Aveda OpenNeo frozen elephant trunk product as well as AMDS. For ONIX, we posted 11% constant currency revenue growth in the first quarter of 22 compared to the first quarter of last year. And the fourth quarter of 2021 where we posted 13% year-over-year growth compared to the fourth quarter of 2020. We anticipate demand for these products will continue to build as adoption improves and hospital staffing shortage abates. We believe that we are at only the beginning to see the full potential of our portfolio in an environment not significantly hampered by the effects 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 the strategy as demonstrated by first quarter constant currency revenue growth of 39 percent in Asia Pacific and 93 percent in Latin America. 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 regulatory approvals for onyx mitral and perclaw. First is our application in the U.S. for a lower INR label for the onyx mitral valve, which we believe will be a significant clinical benefit for patients. We are in active dialogue with the FDA, continue to expect to receive PMA approval for the lower INR label for the onyx mitral valve, just like our lower INR label for the onyx aortic valve sometime in 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 continue to do so with the onyx aortic valve. For per-clot, we continue to work closely with the FDA and expect to receive approval during the second half of 2022. If approved, we will receive a $25 million milestone payment due to us under the divestiture agreement we have with Baxter, and we'll begin to supply per-clot to Baxter and generate revenue for approximately two years thereafter. In addition to our progress on each of these three initiatives, we also continue to make strides on our midterm pipeline, with key products currently in U.S. clinical trials and others about to start later this year. These three products are PROACT-10A, Nexus, and AMDS. We continue to make significant enrollment progress in PROACT-10A, which is our prospective randomized clinical trial to determine if patients with the onyx aortic valves can be maintained safely and effectively on Eliquis versus Warfarin. We currently have enrolled 698 patients so far in the study, and feedback from surgeons and patients participating in the trial remain very positive. We anticipate completing the enrollment in this trial around the end of the third quarter of 2022, and assuming the trial meets its endpoints, we believe we can achieve FDA approval for this new indication by early 2025. If approved by the FDA, we believe the onyx aortic valve using Eliquis rather than warfarin should become the market-leading aortic valve in the market for patients under the age of 70, given the significant benefits to patients of using Eliquis rather than Warfarin. 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 at up to 25 sites in the U.S., in which we expect to enroll around 100 patients. These patients will experience acute type A aortic dissections. The combined primary efficacy and safety endpoints of the trial are as follows. Reduction in all-cause mortality, new disabilitating stroke, myocardial infarction, and new onset renal failure requiring dialysis, as well as the expansion of the true lumen of the aorta. We anticipate enrolling the first patient this month and completing full enrollment by the end of the year. Following a one-year follow-up period, we anticipate we would receive FDA approval for AMDS in early 2025. In addition to the progress we've made on Project 10A and AMDS, we are also pleased to report that our partner, Endospan, is making progress on its USID trial for nexus known as Triumph. There are approximately 19 patients that have currently been treated, as well as up to 24 who have been approved for treatment. Endospan is currently estimating the completion of the trial in September of 2023. and likely leading to a PME approval in Q2 of 2025. If each of these three trials proceed as we anticipate and we get FDA approval for ProAct-10A, AMDS, and NEXUS in 2025, this would increase our adjustable market opportunity by an estimate of $1.3 billion. With that, I'll now turn the call over to Ashley.