Artivion, Inc.

...2024 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 Lane Martin of the Gilmartin Group. Thank you. You may begin.

Thanks, operator. Good afternoon, and thank you for joining the call today. Joining me today from our Triviance Management team are Pat Mackin, CEO, and Lance Barry, 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. You can also find a brief presentation with the details highlighted on today's call on the investor relations section of the Artivion website. Now, I'll turn it over to Artivion CEO, Pat Mackin.

Hey, thanks, Lane, and good afternoon, everyone. Q1 was a strong quarter for Artivion as we maintained top-line growth momentum and executed on key operational priorities. I'm pleased to report that in the first quarter of 2024, we achieved constant currency revenue growth of 16% year-over-year, representing $97.4 million in revenue and adjusted EBITDA growth of 60% year-over-year compared to the first quarter of 2023. More recently, in April, new clinical data from our ONIX Low INR Post-Market Study and AMDS Persevere Trial were presented at the AATS Annual Meeting in Toronto. The five-year results from our ONIX Aortic Heart Valve Low INR Post-Approval Study showed that the onyx aortic valve has an even more durable safety and efficacy profile for patients receiving low-dose warfarin than predicted by the results of the original PMA trial. Meanwhile, the late-breaking 30-day data from Persevere demonstrates positive aortic remodeling in over 80% of patients after treatment with AMDS. These two milestones demonstrate the continued success in our clinical and regulatory programs, as well as the continued expansion of our market-leading aortic portfolio. Our investment in these two products and related clinical trials reinforce that we are committed to remaining the leader in aortic health. From a financial perspective, as anticipated, our strong Q1 performance was led by tissue processing, which grew 26%, followed by stent grafts at 19%, onyx at 11%, and bio-glue at 1% growth. each when compared to the first quarter of 2023 and all on a constant currency basis. In the first quarter, we also continued to benefit from our footprint expansion through regulatory approvals in key international markets. As a whole, our first quarter results in recent regulatory and clinical achievements further validate our growth strategy. From a product category perspective, as I just mentioned, tissue processing grew 26% year-over-year on a constant currency basis in Q1. We expect our tissue business will continue to grow double digits throughout the balance of 2024 as we further leverage our increased supply of our proprietary Synagraph pulmonary valve and continue to benefit from higher Ross procedure volumes. Benefits from last year's tissue pricing initiative positively impacted Q1, but will begin to annualize in the second quarter of this year. As I also indicated earlier, our StentGraph revenues grew 19% on a constant currency basis in the first quarter compared to the first quarter of last year. Our StentGraph supply is now healthy and stable, which is producing strong growth across the StentGraph portfolio. Lastly, I also previously mentioned Onyx revenues increased 11% year-over-year on a constant currency basis as you continue to take market share globally with the only mechanical aortic valve that can be maintained at an INR of 1.5 to 2.0. Based on feedback from the field, these market share gains and proven clinical outcomes that were reinforced by the results of the post-market study recently presented at AATS, we will maintain our strong conviction that the Onyx is the best aortic mechanical valve in the market and will continue to take market share worldwide. Revenues in the first quarter were also driven by continued progress and growth initiatives in APAC and Latin America, primarily through new regulatory approvals and commercial footprint expansion. Latin America delivered constant currency revenue growth of 22%, while APAC saw a 3% decline compared to the first quarter of last year. The decline in APAC this quarter was primarily driven by timing of distributor orders, which adversely impacted BioGlue revenue growth. Fluctuations in growth rates in APAC and Latin America are to be expected, as those regions have the highest percentage of stocking distributor sales. We still anticipate strong revenue growth for both regions for the full year, and over the coming years as we expect to leverage our industry-leading product portfolio in those regions. Let me turn now to the clinical data presented at AETS in April that I mentioned previously. We were very pleased to see positive results from the onyx aortic heart valve low INR real-world post-market study presented at AETS in Toronto. The abstract reported long-term clinical outcomes of 229 study participants with a target INR of 1.8 out to five years. The results show a significantly lower composite primary endpoint for thromboembolism, valve thrombosis, and major bleeding combined at 1.83% compared to the predefined historic control of 5.39%. This was driven by an 87% reduction in major bleeding and no increase in thromboembolism. Notably, the data compares favorably to the results of the onyx aortic heart valve low-on-ire trial the one-year post-market study results presented last year, as well as the onyx aortic low INR IDE study that was first published in 2014. The fact the device performed as well or better in the real-world setting than it did in the original clinical trial provides strong additional validation that the onyx aortic valve is the best aortic mechanical heart valve market in the market for patients, thus increasing our confidence in our ability to obtain even greater onyx aortic valve market share globally. We believe the longevity of the onyx aortic valve, combined with a significantly lower risk of bleeding over the other mechanical heart valves, make the onyx aortic valve a compelling option for patients under the age of 65. Also at AETS, late-breaking 30-day data from our AMDS PERSEVERE trial demonstrated positive aortic remodeling in over 80% of patients, as well as no occurrence of Dane tears. These positive results follow the 30-day IDE data from the same trial that was presented at STS in January of 2024, which demonstrated a statistically significant 72% reduction of all-cause mortality and a 52% reduction in primary major adverse events when compared to the current standard of care hemiarch procedure. We're excited to see the continued positive results of the PERSEVERE study, further reinforcing an unrivaled clinical benefit in the lifesaving nature of AMDS. We continue to anticipate PMA approval for AMDS in 2025, which would open the U.S. adjustable market opportunity of about $150 million with no competitive alternatives. In addition, our partner Endospan is continuing to make progress on its U.S. IDE trial called Triumph for its Nexus Aortic Arts Stent System. As of today, there have been 44 of the 60 primary endpoint patients enrolled. Assuming the trial endpoints are met, Nexus remains on track for approval in the back half of 2026. In summary, we're excited about our great progress early in 2024 and look forward to sustaining our momentum throughout 2024 and beyond by driving continued growth of our Onyx portfolio, StentGraft, CineGraft pulmonary valve, and further expanding our footprint at APAC in Latin America.