Artivion, Inc.

Greetings and welcome to the Artivian Second Quarter 2022 Financial Results Conference Call. At this time, all participants are on 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. It is now my pleasure to introduce your host, Mr. Brian Johnson of the Gilmartin Group. Thank you, sir. Please go ahead.

Thanks, operator. Good afternoon and thank you for joining the call today. Joining me from Artivian'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 provisions 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.

Thanks, Brian. I'm pleased to report we've delivered another strong quarter following two consecutive periods of double-digit constant currency top-line growth. Constant currency revenue growth was 9% compared to Q2 of 2021 this quarter, putting us at a 10% constant currency revenue growth in the first half of the year. Overall, we remain on track to deliver on each of the commitments we made at our investor meeting in March. Once again, our growth was driven primarily by aortic stent grafts, onyx mechanical valves, as well as tissue processing segments. More specifically, on a constant currency basis, comparing to Q2, when we compare Q2 of 2022 to Q2 of 2021, stent grafts grew 23%, onyx grew 12%, tissue processing grew 7%. As we expected, bioglut revenue in the second quarter decreased compared to the second quarter of last year, primarily due to the delay in securing our CE mark renewal, as well as tough comps in the North America market for BioGlue in the first half of 2021. To that end, we've made significant progress on the CE mark since our call last quarter. In June, our notified body completed their in-person inspection of our U.S. facility, as well as their inspection of our German facility. We now expect to have our CE renewal near the end of the third quarter. In the meantime, we've continued to make substantial progress in securing country-specific derogations, enabling us to sell product. These derogations collectively now cover approximately 80% of our buy-goo business in Europe through the third quarter. Our success on all these fronts has reinforced our confidence that we can deliver on our three key growth initiatives that we outlined at our investor day in March, in which we believe will drive double-digit constant currency revenue growth over the next three years. As a reminder, our three initiatives are as follows. First, we will drive continued growth in onyx and our aortic stent grafts. Second, we will continue to benefit from our investment in our channels and our new regulatory approvals in Asia Pacific and Latin America. And third, in 2022, we will drive growth through PMA approvals in the U.S. for perclot and the onyx proec mitral low INR indication. For Centgrass, revenues in the second quarter increased 23% on a constant currency basis compared to the second quarter last year. We saw a broad strength in this category for the quarter. For ONIX, we posted 12% constant currency revenue growth in the second quarter compared to the second quarter of last year. The feedback we were receiving from customers on each of these product lines is that the superior clinical differentiation has been extremely positive We anticipate the demand for these products will continue to build as market adoption increases and hospital staffing shortages abate. Moving to our next initiative, expanding our presence in Asia Pacific and Latin America through new regulatory approvals and commercial footprint expansion remains on track. I'm pleased to report they were continuing to execute very well on the strategy as demonstrated by second quarter constant currency revenue growth of 38 and 59 percent in Asia Pacific and Latin America respectively. We expect these regions to be important contributors of growth over the coming years as we execute on this strategy. Regarding our third initiative, we continue to make progress on achieving regulatory approvals for our low INR onyx mitral valve and for our per clot by the end of the year. With respect to the onyx mitral valve, We continue to expect to receive PMA approval 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 are continuing to do with our 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 by December 31st of 2022, we will receive a $25 million payment from Baxter which is a milestone due to us based on our divestiture agreement. And we'll begin to generate revenue from supplying per clot to Baxter 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 three key products currently in U.S. clinical trials. These three products are Prolactin A, Nexus, and AMDS. Regarding the PROACT-10A trial, we continue to make significant enrollment progress in this prospective randomized clinical trial to determine if patients with the onyx aortic valve can be maintained safely and effectively on Eliquis versus Warfarin. As of today, we've enrolled over 800 patients, and feedback from surgeons and patients participating in the trial remains very positive. We anticipate completing enrollment in the fourth quarter of 2022. Assuming the trial meets its endpoints, we expect FDA approval for this new indication by early 25. We believe the onyx aortic valve using Eliquis rather than Warfarin will become the market share leader in the aortic valve market for patients under the age of 70, given significant patient benefits using Eliquis over Warfarin. As for AMDS, I'm pleased to announce we recently enrolled our first patients in our pivotal trial called Persevere for the AMDS device. And as of today, we have four patients enrolled in that trial. Persevere is a non-randomized clinical trial in up to 25 U.S. sites of approximately 100 participants who have experienced an acute type A aortic dissection. The combined primary efficacy and safety endpoints of the trial are the reduction of all-cause mortality, new disabilitating stroke, myocardial infarction, and new onset renal dialysis, new onset renal failure requiring dialysis. as well as the re-expansion of the true lumen of the aorta. We are now anticipating completing full enrollment during the first quarter of 23. Following a one-year follow-up period, we expect or we anticipate if the trial meets its endpoints, we should receive approval for AMDS in early 2025. In addition to the progress we've made in the PROACT-10A trial and the AMDS IDE, We are pleased to report that our partner, Endospan, is also making progress on its US IDE Triumph trial for the Nexus Aortic Arch StentGraph system. In that trial, there are approximately 23 patients already treated and a total of 34 patients approved for treatment. Endospan is currently estimating trial completion in June of 2023 and PMA approval in 2025, again, assuming the trial endpoints are met. To reiterate, Each of these three PMA trials proceeded as anticipated. We anticipate FDA approval for ProAct-10A, AMDS, and Nexus in 2025. At that time, assuming we exercise our option for Endospan, these products would increase our adjustable market by an estimate of $1.3 billion. With that, I'll now turn the call over to Ashley.