Artivion, Inc.

Greetings, and welcome to the Ativion Third Quarter 2024 Financial Conference Call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star then zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Lane Morgan from Gilmartin Group. Please go ahead.

Thanks, Operator. Good afternoon, and thank you for joining the call today. Joining me today from our Tribune's management team are Pat Madkin, 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 details highlighted on today's call on the investor relations section of the Artivian website. Now, I'll turn it over to Artivian CEO, Pat Mackin.

Hey, thanks, Elaine, and good afternoon, everyone. I'm pleased to report continued strong financial performance through the third quarter as we delivered robust revenue growth and further improved operating leverage. We also made breakthrough progress on several key clinical and regulatory initiatives that has collectively given us greater conviction in our ability to execute our best-in-class PMA-focused pipeline and delivered sustained double-digit revenue growth while growing EBITDA twice as fast as revenue. In the third quarter of 2024, we delivered constant currency revenue growth of 10 percent year-over-year, representing 95.8 million in revenue, and adjusted EBITDA growth of 28 percent year-over-year compared to the third quarter of 2023. Let me first cover our Q3 financial performance before addressing the significant clinical and regulatory updates for the quarter. From a financial perspective, our strong Q3 performance was enabled by continued growth across our product portfolio, as well as continued benefit from regulatory approvals and commercial footprint expansion in key international markets, especially in Latin America and Asia Pacific. From a product category perspective, ONIX revenues increased 15 percent year-over-year on a constant currency basis as we continue to take market share globally with the only mechanical aortic valve that can be maintained at a low INR of 1.5 to 2.0. Based on feedback from the field, our recent market share gains, and the proven clinical benefits of the ONIX aortic valve, we maintain our strong conviction that ONIX is the best aortic valve in the market and will continue to take market share worldwide. BioGlue grew 14 percent on a constant currency basis compared to the same period last year. This was the second straight quarter of double-digit constant currency revenue growth for BioGlue. We are pleased with the strong performance to date of BioGlue as we continue to grow this differentiated product globally. Also in Q3, our StentGraph revenues grew 13 percent on a constant currency basis in the third quarter compared to the same period last year. Our StentGraph portfolio remains a key component of our growth strategy, and we are encouraged by our strong results, which were driven by our differentiated portfolio products, focused on the more complex segments of the StentGraph market. Today, the products in our StentGraph portfolio are primarily sold in Europe, where we leverage our existing direct sales infrastructure to create significant cross-selling opportunities across our unique aortic product offering. Our pipeline consists largely of bringing these proven products to the U.S. and Japan markets, which represents a significant growth opportunity. Lastly, tissue processing grew 2% year over year on a constant currency basis compared to Q3 of last year. This slightly lower-than-expected growth is driven by lower-than-anticipated donor allograft volumes in the third quarter. While we do not report revenues on a product-by-product basis, for context, Tissue processing growth is driven primarily by our Synagraph pulmonary valves, which are used in the ROS procedure. For those unfamiliar with the ROS procedure, it's a double valve procedure in which a patient's native pulmonary valve is used to replace a patient's defective aortic valve, and then the patient's pulmonary valve is then replaced by the donor pulmonary allograft. Because of the success of this procedure, demand for our Synagraph pulmonary valves significantly exceeds our supply, and therefore, our growth is dependent on donor allograft volumes, which tend to fluctuate from quarter to quarter. Still, tissue processing revenues have grown 11% year-to-date on a year-over-year cost of currency basis. Importantly, our team has also initiated new measures to further improve donor yields beginning in Q4 and early into 2025, leaving us increasingly confident that our tissue business can be a mid-single-digit grower over the long term. However, you should expect to see some fluctuations in growth rates quarter to quarter, driven by underlying fluctuations in donation. From a geographic standpoint, we continue to see great results from our growth initiatives across Latin America and Asia Pacific, primarily through new regulatory approvals and commercial footprint expansion. Latin America and Asia Pacific delivered constant currency growth, revenue growth of 32 and 23 percent, respectively, compared to the third quarter of last year. We continue to anticipate strong revenue growth for both regions for the full year and over the coming years as we continue to leverage our industry-leading product portfolio in those regions. I will now turn to our product pipeline and regulatory developments. We're excited to announce that we recently filed the first module of the PMA application for AMDS for the FDA. We continue to anticipate FDA approval, PMA approval for AMDS in Q4 of 2025. which, as we've discussed, would open up a U.S. addressable market opportunity of approximately $150 million with no competitive alternatives. I'm also pleased to announce our recent regulatory approval from the National Medical Products Administration, also known as NPA, to commercialize BioGlu in China. We estimate that approximately 12,000 patients in China each year have an acute type A dissection, which could benefit from BioGlu each year. There are some additional administrative steps that we have to take to gain reimbursement and to get access at the hospital level. These steps are expected to take nine to 12 months, and therefore we expect to begin commercializing BioGlue in China in the second half of 2025. BioGlue has been a great product for patients for many years, and we're excited to be able to bring this technology to another large market in China. Now to discuss the two regulatory updates I would like to now update you on our pipeline and recently released clinical data. First, in October, Endospan completed enrollment in the US IDE pivotal trial called Triumph for its Nexus aortic arch stent graft system. Assuming the trial endpoints are met, Nexus remains on track for approval in the second half of 2026. As a reminder, aortic arch disease with aneurysms or dissections who receive treatment have previously had little choice before Nexus, but to undergo an open chest surgery, which is an invasive operation associated with lengthy hospitalizations and prolonged recuperation. Nexus is a highly differentiated technology that transforms a complex surgical aortic arch repair into a minimally invasive endovascular repair. Second, at EX in October, we are very pleased to see our AMDS and Aveda Open Neo technologies take center stage at the aortic-focused late-breaking science sessions at EX. Late-breaking five-year data from our AMDS-DARTS trial reported long-term clinical follow-up on the remaining 25 of 46 study participants with acute type A dissections who were treated with approximately aortic repair and AMDS. The results demonstrate 94% of patients were free from aortic re-operation compared to existing literature on hemiarctomy outcomes which report freedom from late aortic artery operation as low as 76%. Additionally, 95% of patients were free from total aortic diameter growth above five millimeters at zones two and four. This compares favorably to existing literature on hemi-arch only outcomes, which suggests a majority of patients have early aortic diameter growth in the proximal descending aorta. For context, significant growth of the aorta can lead to increased risk of rupture, dissection, and re-operation. Long-term results from DARTS trials show a large majority of the patients experience stable or decreased total aortic diameter following the treatment with AMDS, and thus are at decreased risk for further aortic dissection or re-operation, as far out as five years post-implantation, thus showing the durable effect of the therapy. regarding AMDS 30-day from the PERSEVERE trial showed a cerebral malperfusion resolution of 90% of affected subjects in the AMDS implantation group. The results also indicate a stroke occurrence of 10.8% following AMDS implant, which compares favorably to 20.9 for hemiarch alone based on the five articles in literature. Cerebral malperfusion often leading to stroke is a major complication for acute type A aortic dissection. These positive results from PERSEVERE trials show that AMDS reduces malperfusion and the rate of stroke. We're excited to see the continued positive results from both DARTS and PERSEVERE studies, further reinforcing the significant clinical benefits and life-saving nature of AMDS. Lastly, at EX, one-year data from the NEOS trials showed that the Aveda OpenNeo is safe and effective in treating aortic arch pathologies. Avita OpenNeo is our current generation frozen elephant trunk that is sold internationally and is the predecessor to our pipeline product called Arcebo LSA. Notably, the 161 patients treated with Avita OpenNeo experienced lower one-year mortality and one-year combined major adverse event rates compared to the current market-leading device. Given that, we anticipate the Arcebo USID trial will be in the range of 120 patients These results give us greater confidence in the future success of that trial. In summary, we're encouraged by our Q3 financial performance and thrilled with the progress this quarter on the regulatory and clinical fronts. Our strong financial, clinical, and regulatory performance positions us well for a remainder of 24 and beyond and increases the confidence we have in our ability to deliver sustainable double-digit revenue growth while driving EBITDA margin expansion and growing EBITDA twice as fast as sales. With that, I'll now turn the call over to Lance.