Anika Therapeutics Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 8, 2023

There are 6 speakers on the call.

Operator

Good evening, ladies and gentlemen, and welcome to Anika's Second Quarter 2023 Earnings Conference Call. I will now turn the call over to Mark Namroff, Vice President, Investor Relations, ESG and Corporate Communications. Please go ahead.

Speaker 1

Thank you, and good afternoon, everyone. And thank you for joining us for Anika's Q2 conference call and webcast. Our Q2 earnings press release was issued after the close of the market today and is available on our Investor Relations website located at www.anika.com as our supplementary PowerPoint slides that will be used for the discussion today. With me on the call today are Doctor. Sean Blanchard, President and Chief Executive Officer and Mike Levitz, Executive Vice President, Chief Financial Officer and Treasurer.

Speaker 1

Please take a moment statements as defined in the Securities Exchange Act of 1934. These statements are based on our current beliefs and expectations The company's actual results could differ materially from any anticipated future results, performance or achievements. We make no obligation to update these statements should future financial data or events occur that differ from the forward looking statements presented today. Please also see our most recent SEC filings for more information about risk factors that could affect our performance. In addition, during the call, we may refer to several adjusted or non GAAP financial measures, which includes adjusted gross margin, adjusted EBITDA, adjusted net income and adjusted earnings per share, which are used in addition to results presented in accordance with GAAP financial measures.

Speaker 1

We believe that non GAAP measures provide an additional way of viewing aspects of our operational performance. But when considered with GAAP measures And now I'll turn the call over to our President and CEO, Doctor. Cheryl Blitzer. Cheryl?

Speaker 2

Thanks, Mark. Good afternoon, everyone, and thanks for joining us. Please turn to Slide 3. I'm very pleased to say that Anika delivered strong 2nd quarter results with 12% overall revenue growth, driven by our OA Pain Management business with strong gross margins and improved bottom line performance. Looking at the core parts of the business, which excludes non orthopedic, we grew 16%, which is an outstanding result as our products continue to gain traction in the markets we serve.

Speaker 2

Our OAP Management business was stronger than anticipated with 22% revenue growth led by accelerating MONOVISC growth globally, strong CINGAL growth outside the U. S. And favorable product order timing from J&J Mitek in the U. S. Now halfway through the year, based on the very good results to date, We're raising our outlook for this product family for 2023, as Mike will describe shortly.

Speaker 2

Our OAP management products have the best clinical performance of any on the market. We're pleased to see J and J's robust results as they continue to further expand our team with CINGAL together with MONOVISC and ORTHOVISC posting double digit growth in the quarter. And we're looking forward to U. S. Market approval.

Speaker 2

On that topic, our interactions with the FDA regarding Bringing CINGAL to the U. S. Have been progressing since last fall when we successfully met the primary endpoint of our latest Phase 3 pivotal trial. We are pleased to have had a Type C meeting with the FDA in the Q2 as we actively engage with them towards U. S.

Speaker 2

Approval. With respect to our ongoing processes to source and secure development and commercial partners For CINGAL in the U. S. And select Asian markets, I'm pleased with the initial interest as we engage with multiple parties. The substantial clinical and commercial derisking has been well received, and we'll update you as we have developments to share.

Speaker 2

Our joint preservation and restoration portfolio continues to strengthen and our newest products drove continued growth in the 2nd quarter, though slower than we originally expected as some of our distributors experienced the recent industry dynamic of pent up demand causing a greater focus on large joints. We are actively determining where the strengths and opportunities are within our U. S. Hybrid channel and taking action accordingly to meet our growth objectives. I'm pleased to report that our newest joint preservation product, the Revo Motion Reverse Shoulder Arthroplasty System, Which has been in limited release since earlier this year is seeing growing momentum as we continue to receive very positive clinical feedback.

Speaker 2

In fact, relative to our original plan, we've increased the number of surgeons in the limited launch and are accelerating the full market launch of Revo Motion to September in conjunction with the Orthopedic Summit for Evolving Technologies or OSAT Annual Meeting in Boston. We've initiated a full slate of training opportunities, both for our sales force and surgeons, and the full release of Revo Motion will contribute to the acceleration of our joint preservation business in the second half of this year. I'm also happy to report that we signed an agreement with Materialise, The market leader in 3 d planning solutions to offer a customized software solution called AIM or Anika Implant Management that will be used for both our total and reverse shoulder systems. AIM will be available by the end of the year and we're excited to provide this new capability to our customers, enabling them to better treat their patients with our innovative products. On the regenerative front, in cartilage repair, as we announced in May, We are thrilled to have now completed enrollment of the HYALOFAST Phase 3 clinical trial, putting us in a position to begin a modular PMA submission next The modular submission process the FDA has granted us for HYALOFAST allows us to accelerate the PMA filing process by engaging the FDA as they review each module.

Speaker 2

Lastly, we're very pleased with our progress in developing our based Regenerative rotator cuff patch system, which we have named Integrity. We call it Integrity because of the inherent structural integrity of our based scaffold compared to the current 1st generation collagen patches on the market. Additionally, the hyaluronic acid scaffold supports healing Fixation and delivery of the Integrity Patch are just as important, and we believe we've nailed the designs in conjunction with our surgeon developer team. The instrumentation delivery system and fixation methods will all contribute to a seamless, efficient and elegant rotator cuff augmentation system. Integrity is a key value driver for Anika, allowing us to serve the fast growing regenerative rotator cuff repair market with an innovative solution tailored for ease of use by surgeons.

Speaker 2

Let me now move into the pipeline and clinical updates. If you please turn to Slide 4. Over the past 3 years, we've been investing with purpose to establish Anika as a global leader addressing unmet needs in early intervention orthopedics, And Arthur Surface Joint Solutions. Our pipeline is expanding Anika's near to medium term market opportunity by over $3,000,000,000 with a cadence of We've updated a number of key items on this pipeline slide, Now reflecting more substantial opportunities in the OA pain management and regenerative spaces. First, the previous longer term opportunities with CINGAL and HYALOFAST have advanced to become more short to medium term, now with line of sight to U.

Speaker 2

S. Regulatory filings for both products. We expect the next generation OA pain market served by CINGAL adds an additional $1,000,000,000 to our already $1,000,000,000 market served by MONOVISC and ORTHOVISC and CINGAL is perfectly positioned to win. We're also very excited about our off the Shelf cartilage repair product, HYALOFAST. And we now estimate this U.

Speaker 2

S. Addressable market to be over $1,000,000,000 Hyalofas is a key value driver for Anika that now has a well defined pathway to the U. S. Market by 2026. With the pivotal Phase 3 study fully enrolled, the FDA designating HYALOFAST as a breakthrough device and with a modular PMA filing approach.

Speaker 2

Allowing surgeons to use an based woven matrix to support healing for rotator cuff tears in this over $150,000,000 market. Given the attractive market for regenerative patches with valuations averaging $250,000,000 for recent M and A transactions For 1st generation collagen technologies, we believe this arthroscopic system has expansion opportunities beyond the shoulder And will also be a key driver for growth. With all the necessary 510s now filed and 2 of the 3 already cleared, We expect to have the product ready for launch in 2024. The histology data we are seeing through 26 weeks It's quite compelling compared to the market leading collagen patch, and I can't wait to share more about this upcoming product and launch. On TactoSat, we filed our final 510 on a higher contrast version, which will enhance visualization under fluoroscopy, an important characteristic for some surgeons in certain applications.

Speaker 2

Also, we have an exciting update that will was presented at the AOSSM meeting last month by Doctor. Misty Suri, who is with Ochsner Health in New Orleans. Doctor. Suri reported 2 key findings in a study that followed 240 patients over 12 months. First, the use of Tactiset to augment suture anchors in rotator cuff repair procedures resulted in a statistically significant decrease in the incidence of suture anchor pullout compared to the same surgeries performed without Tactisat.

Speaker 2

2nd, The study demonstrated a statistically significant reduction in pain scores in the series using TactoSat. These data to be published in a peer reviewed journal represent clear evidence of the benefits of TactoSat augmenting suture anchors in rotator cuff repairs And highlight the significant market potential for TactoSat. As the clinical evidence for augmentation in rotator cuff repairs continues to build, We expect the momentum and adoption to increase as well, which is a clear win for both surgeons and their patients. Our new X Twist suture anchor system in sports medicine is gaining early traction in the market following our Q1 full market release of the peak version with ongoing very positive surgeon feedback. As we continue to expand our commercial presence and reach with this key product, Our new Revo Motion reverse shoulder arthroplasty system competing in the fast growing now $1,000,000,000 U.

Speaker 2

S. Reverse shoulder market Has had a successful limited market release and we've expanded the surgeon base beyond what we originally planned. As I noted earlier, Based on these strong results in the limited release, we are accelerating our full market release to occur in September. Together from CINGAL to Rivo Motion, we have assembled a tremendous portfolio that opens up a $3,000,000,000 market opportunity with solutions that Truly solve unmet needs across early intervention orthopedics, all in line with our mission of restoring active living around the world. This progress positions Anika better than ever to deliver meaningful value for our stakeholders.

Speaker 2

Now I'd like to turn the call over to Mike to review the Q2 results and guidance for the remainder of the year. Mike?

Speaker 3

Thank you, Cheryl. Please turn to Slide 5. I'll now walk you through our financial results for the Q2 of 2023. I'm pleased to report total revenue for the quarter grew to $44,300,000 an increase of 12% over the prior year on growth in OA pain management and joint preservation and restoration, partially offset by lower non orthopedic revenues. The lower non orthopedic revenues reduced total company growth in the quarter by approximately 4 percentage points.

Speaker 3

Revenue in our largest product family, OA Pain Management, increased 22% to $29,300,000 due to sales growth on increasing global customer demand led by MONOVISC and CINGAL and favorable ordering patterns from both J&J Mitek in the U. S. And from our international distributors. As a reminder, revenues can vary significantly on a quarterly basis based on ordering patterns by our partners in the U. S.

Speaker 3

And internationally. However, that volatility generally stabilizes on an annual basis. Our joint preservation and restoration revenue in the quarter increased 5% to $12,700,000 on early growth from our recent product launches such as X Twist and Revo Motion, the latter of which remained in limited release in the Q2, but moves to full market release in September as Cheryl highlighted. Our non orthopedic revenue declined 33% to $2,300,000 primarily reflecting unfavorable year over year order timing by our veterinary distributor as well as the continued impact from our exit from legacy product lines that do not support our growth and profitability objectives, which saw higher revenues last year from last time buys. Our gross margin in the 2nd quarter increased to 65% and includes the non cash impact of $1,600,000 of acquisition related the acquisition related amortization, increased to 69% in the quarter, up from 67% last year due to business growth, favorable product mix manufacturing efficiencies.

Speaker 3

From a spending standpoint, our operating expenses totaled $32,600,000 in the 2nd quarter, up from $28,200,000 in the same period of last year, largely due to $2,700,000 of non recurring corporate costs, of which $2,200,000 related to shareholder activism that was resolved in April. The increase in operating expenses also included This year to support compliance with expanded global regulations, namely MDR in Europe, mostly for our legacy OAP Management products, as well as development and launch readiness costs for key upcoming new products such as our Integrity based rotator cuff patch system. Our net loss for the quarter was $2,700,000 or $0.19 per share. That's down from our net loss of $2,800,000 or 0 point $1,000 this quarter or $0.06 per diluted share. That's up from an adjusted net loss of $1,600,000 or $0.12 per share in the prior year.

Speaker 3

Our adjusted EBITDA generated in the quarter was $6,300,000 up from $4,400,000 in the Q2 of last year. The increase was primarily due to revenue growth and improved gross margin, offset in part by $500,000 of certain non recurring corporate costs, largely associated with the Parkes Medical arbitration that was settled during the Q2. Lastly, with regards to our cash flow and capital structure, We had net operating cash outflows of $8,300,000 during the 2nd quarter, primarily reflecting $8,300,000 paid in the quarter for non recurring costs incurred in both the 1st and second quarters of 2023 for the settlement of the Parkus Medical Arbitration and shareholder activism as well as other non recurring corporate costs. Our capital expenditures in the quarter totaled $1,500,000 down slightly from last year related to continued investments in manufacturing capabilities, supporting growth in our OAP management product lines, as well as instruments associated with key product launches such as Revo Motion. Additionally, we spent $5,000,000 in the second quarter to repurchase stock program authorized by Amica's Board of Directors in the Q2, under which $10,000,000 would be split between an accelerated stock repurchase And an open market program and a second $10,000,000 which is subject to positive cash flows that would be through an open market program.

Speaker 3

We ended the 2nd quarter with $65,100,000 in cash and no outstanding debt. As Anika maintains a healthy balance sheet and is well positioned to continue to self fund our growth initiatives to drive shareholder value. Please turn to Slide 6. Now I would like to review our full year financial outlook for fiscal year 2023. Based on our positive progress to date, We are raising the low end of our previously announced revenue range with an updated outlook for fiscal year 2023 revenue of $159,500,000 $163,000,000 representing growth of 2% to 4% over last year.

Speaker 3

As we expect greater above market growth and accelerated growth in joint preservation and restoration to be offset by lower ancillary non orthopedic revenues. The lower non orthopedic revenues reduced total company growth this year by approximately 4 percentage points. In OIP Management, we now expect revenue of $96,000,000 to $97,500,000 that's up 4% to 6% over last year, as our market leading products continue to gain adoption globally. This outlook is up compared to our previous range of $93,500,000 to $96,000,000 on a strong progress year to date and positive momentum in the market. As you look at the second half of the year, while timing can vary on a quarterly basis due to distributor ordering patterns, we We expect OEP management revenues between the 3rd 4th quarters to be relatively level to one another.

Speaker 3

In joint preservation and restoration, We now expect revenue of $54,000,000 to $55,500,000 that's up 7% to 10% over the last year an acceleration over last year due primarily to our new products such as X Twist and Revo Motion. Our previous range was $55,500,000 to $58,000,000 And our revised growth outlook reflects a slower than expected sales ramp this year through our hybrid channel, as Cheryl mentioned. In the second half, our guidance assumes normal seasonality. We now expect non orthopedic revenue of $9,500,000 to $10,000,000 A decrease of approximately 30% from last year, primarily due to last year's last time buys of legacy products and veterinary order timing. This updated outlook is a bit higher than our previous outlook of approximately $9,000,000 We have no changes to the rest of our P and L outlook And continue to expect adjusted gross margin for the year to be roughly in line with last year and adjusted EBITDA margin to be positive for the year in the low single digits as compared to 8% last year, reflecting the cost to demonstrate compliance with expanded global regulations, primarily for our legacy OEP management products, enhanced operational capabilities to support sustainable growth, as well as the development and launch of key joint preservation products.

Speaker 3

While spending was higher in the first half of the year due to non recurring costs primarily associated with the Parkes Medical arbitration and shareholder activism, Now that both have settled in the second quarter, we expect operating expenses to decrease in the second half of twenty twenty three compared to the first half. In summary, now over halfway through the year, we are pleased to raise the low end of our revenue outlook for 2023 and be on track for our margin targets as we drive both operational execution and the development and launch of key new products. I will now turn the call back over to Sheryl.

Speaker 2

Thanks, Mike. Please turn to Slide 7. Before we open the call up for Q and A, I want to reiterate our as the progress we've made in building on Anika's historic strength in hyaluronic acid addressing OA pain already market leading visco supplements for OA pain management, the tremendous opportunities afforded by our next generation non opioid OA pain management product CINGAL, the growing strength of our based regenerative portfolio, including meaningful differentiated regenerative solutions for cartilage and rotator cuff repair and the progress we've made in further strengthening our already robust portfolio across sports medicine and minimally invasive joint solutions. And we've been able to self fund this portfolio development and to maintain a healthy balance sheet with a solid cash position and no debt. I'd like to take a moment to thank All our employees for their continued hard work and dedication to supporting our efforts.

Speaker 2

Together, we are building real momentum as we work to achieve our And with that, we'll open up the line for questions.

Operator

And our first question comes from George Shullers. Go ahead, George.

Speaker 4

Hey, good afternoon and thanks for taking the question. I apologize if I missed this detail earlier. We've been jumping a little bit partnership might look like in the U. S, if that'd be similar to the Orthovisk and MONOVISC partnership With Mitek or what that sort of commercialization process and rollout could potentially look like?

Speaker 2

Yes. Thanks, George. We appreciate the question about CINGAL. It's obviously a product that we remain Very excited about I think considering the fact that we really have What I see is just unparalleled data around osteoarthritis pain reduction with CINGAL as a next generation OA Pain product. We're going to run a fulsome process around understanding our best partnership opportunities in the United States for optimizing shareholder value.

Speaker 2

Our shareholders have obviously made significant investments in the development of that product. So we're focused on really driving the right outcome there relative to our shareholders. I'm obviously not going to get into details around discussions or potential structures, but There is significant interest in the U. S. And we've also talked about the fact that we're engaging with parties in select Asian markets And we're seeing a lot of interest there also.

Speaker 2

So more to come on that. I wouldn't want to speculate or provide any details that would get in the way of a fulsome process. But we remain really excited about the product and also on our continuing dialogue to get in the U. S. Around our conversations with FDA.

Speaker 4

Okay. That's really helpful color. Switching to Joint Preservation and Restoration, that was a really strong Q1 and then took a little bit of a step back this quarter relative to our I'm just curious what some of the drivers there were and why that outlook is a little bit lighter than Where it was exiting last quarter?

Speaker 2

Yes, great question. On our joint preservation business, first of all, we've built out a number really strong products. We continue to get very strong clinical feedback on them with X Twist and rivomotion. We are really in the first kind of finished the 1st full quarter in full market release of X Twist and we are in A limited market release of rivamotion. So I don't want to get ahead of ourselves relative to where we're at with those product launches.

Speaker 2

Another thing to consider around the fact that we've got this valuable portfolio that we've built that we're just entering these larger markets, but We are learning about where our hybrid sales force has strengths in areas that we need to strengthen. We're Really actively focusing on determining where the strengths and weaknesses are and taking action to make sure we meet those growth objectives. I will tell you that our approach around selling these products, we try to be very thoughtful about our spend. That's why we've gone with that hybrid sales force so that we don't have the full burden of the full fixed cost of a fully owned sales force. And there are ways that we are continuing to drive focus amongst those distributors.

Speaker 2

I'll tell you that The distributors that are really focused on us are growing and growing nicely. And what we are seeing is we as we launch additional products and products that are exciting to them, That's really the way that we're going to be continuing to drive focus and command attention from those distributors in that hybrid sales And I'll give you an example, Integrity. Integrity is an exciting product. Our distributors are kind of chomping at the bit to get it And we're really being thoughtful about, how we decide how we're going to sell Integrity so that we can really optimize The growth potential for that product. The other thing I'll mention in this past quarter is we really are seeing with some of our distributors, some of our distributors sell hip and knee products and that large joint business, if you've seen the report out to some of the other competitors that are in that space, which we are not, many of our distributors were focused on the large growth opportunities there in the last quarter.

Speaker 2

And so getting kind of anniversarying through the bolus of patients that are coming through the system post COVID with large joints, I think gets us to a better day and gets us refocused with those distributors on the joint preservation business that Anika has got With all the great new product launches that we're driving.

Speaker 4

Okay. That's really, really helpful. I appreciate all that detail. And maybe if I could squeeze And you touched on a little bit mentioning integrity. I'm just curious if you could give a little bit more detail on The 510 clearances you've already received for that and what's left to go?

Speaker 4

And is there potential that that could actually be launched At the end of this

Speaker 2

year. Yes, great question. Integrity is a product that we are Very excited about it really continues to build our regenerative portfolio and really allows us to continue to focus on that shoulder pathology that we've continued to be focused on with a number of our other product launches. So the Integrity rotator cuff patch system is a full system that has the regenerative patch component Based on hyaluronic acid and fixation and instrumentation for ease of delivery and For ease of surgery for the surgeons, the fixation elements include a staple that allows fixation to bone and darts that allow And so the 2 510 clearances that we received are for those fixation elements. And so we're now just waiting On our final process with the final 510 around the patch, but we've made significant progress there.

Speaker 2

The surgeon team that we've worked with to develop that is incredibly excited about this. We see incredible regenerative capacity with this product relative to the 1st generation collagen technologies out there in a head to head study that we've done and we really look forward to providing More information on this launch. Relative to the timing, we will definitely be looking to launch in 2024. And if we have good news, we'll certainly let you know.

Speaker 4

Okay, great. Well, thank you again for the time and I appreciate getting to squeeze one more there at the end.

Speaker 2

Absolutely, George. Thanks.

Operator

And our next question comes from Jim Sidoti. Go ahead, Jim.

Speaker 5

Hi, good afternoon. Thanks for taking the questions. Can you talk a little bit more about some of the options for CINGAL after your meeting with the FDA? Can you disclose if you think another trial will be necessary?

Speaker 2

Yes. Thanks, Jim. So the discussions with the FDA in that Type C meeting were Really focused around a number of conversations that we've had about making sure that we address the NDA requirements. And while we don't expect to fund another kind of full factorial clinical trial, There are other questions around like the 505(2) aspects of the steroid and around the fact that FDA is now regulating The MONOVISC in CINGAL as a drug. So they were really the discussion was really focused around that and we are We're waiting to hear back from FDA on a couple of things that we submitted to them around proposals to address some additional topics That we're waiting to hear back from them on.

Speaker 2

And I wouldn't really want to speculate on when or what we hear back, but we'll certainly update you as we learn more.

Speaker 5

And could a potential distribution partner for CINGAL fund whatever requirements are needed to get through the FDA?

Speaker 2

So again, good question. And we obviously have multiple work streams ongoing around partnerships in the U. S. And select Asian countries. And the types of structures that those deals typically have involve Some sort of an upfront, which I would expect.

Speaker 2

So there is the potential for a cash infusion to help fund some

Speaker 5

Okay. And then switching to halo fest, Enrollment is completed. And can you just remind me what's the follow-up for that trial, the follow-up to the

Speaker 2

patient? The follow-up is 2 years. So the last patient out will be in 2025. So we'll start filing our modular PMA in 2024 And then the final module that we file will be the clinical module in 2025.

Speaker 5

And will you be able to release any data in 24 give us an idea of how the product performed on the first round?

Speaker 2

Well, I'll tell you one thing about HYALOFAST that I'm not sure people in the U. S. Are as familiar with is we've been selling that product for many, many years outside the U. S. There are actually 40 plus clinical publications already out there about HYALOFAST.

Speaker 2

So, we already know how it performs and that's based It will not be until after we've unblinded the study, which will be following the last patient out in 2025.

Speaker 5

All right. And then switching over to the Q2, The joint pain revenue, I mean, up 22% just out of this world. Based on your guidance, you're looking for that to come down to average Around $23,500,000 $24,000,000 a quarter for the back half of the year. So is that strong June quarter, is that primarily timing of orders to Mitek or is it strong CINGAL or why don't you think it continues at this stage?

Speaker 3

Hi, Jim. This is Mike. I'll take that question. As you know, and you've been following Anika for quite some time, You've got a lumpy revenue stream, uneven ordering patterns that just happens largely when you're dealing with a large Something like J and J that can happen from quarter to quarter. And the majority of our revenues are transfer sales.

Speaker 3

There is a component that's royalties, Which is related to end user sales. We had just a lot of favorable timing in the second quarter And that was definitely why it's so much higher than what our normal run rate would be. And credit to our operations team for the amount of product that they got It was a tremendous effort. But the reason we raised our guidance for OA Paint Management for the year is really because of the Underlying momentum in the business. So we saw a strong Q2 and Mitek did for MONOVISC principally and outside the U.

Speaker 3

S, we saw it for CINGAL and that's been a continuing trend. And both of which were very encouraging and that's why we were able to raise our So, yes, the second half, the transfer units will be lower than in the first half, and that's what was reflected in the guide. And I tried to say it's even between Q3 and Q4 as far as we can tell from the ordering patterns at that lower level. But the underlying end user sales continue the strong momentum and that's the basis for the raise and for the strength in that business.

Speaker 5

Okay. I don't recall a $30,000,000 quarter ever before. Is this the highest quarter you've ever had for joint pain products?

Speaker 3

I have to look back to see, but this was a tremendous quarter and we're very excited about that, both operationally execution that occurred and to see that strong and growing demand is really encouraging. So yes, I was very pleased with the quarter.

Speaker 5

All right. And then just one last follow-up on the other side of business, the joint preservation down $1,000,000 the Q1, which I don't think you expected. You mentioned that there might be a backlog of patients in the large joint Category that needed surgeries and maybe you didn't have as much access as you thought. I mean, is there any other reason why you think You were down $1,000,000 from the Q1?

Speaker 2

Yes. I certainly think that the industry dynamics of The hip and knee business really just seeing a very large bolus of patients coming through the system. And A number of our distributors in our hybrid sales force also sell hips and knees. And so I I think from a focus perspective, there was definitely from an Anika There was probably a distraction there for those distributors being very focused on the hip and knee side of the business. I will say though that the distributors that are very focused on Anika are growing our business and growing it nicely.

Speaker 2

So one of the things that we're really doing is understanding how to continue to optimize that hybrid sales force And at the same time, be thoughtful about how we go about that relative to the investment that we're making. We still see a tremendous opportunity for growth in the JPR business, especially with our new product launches, and we're still very bullish on the business. But we understand based on the dynamic that happened with the hip and knee business that there's additional work to do there and we're very focused on it.

Speaker 3

And Jim, this is Mike. Just one other comment I would make. If you recall in the Q1, one of the things we called out was that there was favorable timing internationally. And so in the U. S.

Speaker 3

Where we're launching these new products and whatnot, there wasn't a decrease in the from the 1st to the second quarter. That really was timing in the international business. And we called out in the Q1, we said it was probably going to be a headwind in the Q2 and that's exactly what we saw.

Speaker 5

Okay. So is there any reason to not think that this business will be a double digit grower over the next few quarters?

Speaker 3

Yes. No, Jim, I mean, if I look at the guidance, the guidance that we have is 7% to 10%. We're 8% through the first half of the year. We accelerated in the second half of last year. We expect to accelerate in the second half of this year.

Speaker 3

And one of the things that we're excited about as we go into 2024 is the revo motion. And seeing that have it move into full market release at the end of the quarter. It's not as much of a big mover for this year just because people tend to buy it, try it out and then follow on at a later point as they see how it works. But really it's encouraging as we look at 2024. So yes, we do see an acceleration in the second half of this year.

Speaker 3

One thing I did mention though is, we do expect normal seasonality. And so that really implies a strong Q4. And that's what we expect this year just based on things seem to have returned to normal, which is encouraging.

Speaker 5

Yes. And that's what I meant with my question I didn't mean for the remainder of 'twenty three, I was talking about 'twenty four and beyond.

Speaker 3

Yes, we view that as a double digit growth business, yes.

Speaker 5

Okay. All right. Thank you.

Speaker 2

Thank you.

Powered by Quartr

Key Takeaways

  • Anika delivered 12% Q2 revenue growth (22% in OA pain management) with strong gross margins and raised its 2023 outlook for its OA Pain product family.
  • Following a Type C meeting with the FDA, Anika is advancing CINGAL toward U.S. approval and engaging multiple partners for U.S. and select Asian market commercialization.
  • The company accelerated the full U.S. launch of its Revo Motion Reverse Shoulder System to September and signed an agreement to offer the AIM 3D planning software from Materialise by year‐end.
  • Enrollment for the HYALOFAST Phase 3 cartilage repair trial is complete, positioning Anika to begin a modular PMA submission in 2024 under its Breakthrough Device designation.
  • Anika’s expanded pipeline—including CINGAL, HYALOFAST, the Integrity HA-based rotator cuff patch and enhanced joint systems—adds over $3 billion in near- to medium-term market opportunity.
AI Generated. May Contain Errors.
Earnings Conference Call
Anika Therapeutics Q2 2023
00:00 / 00:00