Anika Therapeutics Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 8, 2024

There are 7 speakers on the call.

Operator

Good afternoon, ladies and gentlemen, and welcome to Anika's Second Quarter 2024 Earnings Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for a question. I would like to remind everyone that this call is being recorded.

Operator

I will now turn the call over to Mark Namro, Vice President, Investor Relations, ESG and Corp. Communications. Please proceed.

Speaker 1

Thank you. Good afternoon, everyone. Thank you for joining us for Anika's Q2 2024 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 anika.com. As our supplementary PowerPoint slides that will be used for the discussion today.

Speaker 1

With me on the call today are Doctor. Cheryl Blanchard, President and Chief Executive Officer and Steve Griffin, Executive Vice President, Chief Financial Officer and Treasurer. Please take a moment and open the slide presentation and refer to Slide number 2. Before we begin, please understand that certain statements made during the call today constitute forward looking statements as defined in the Securities Exchange Act of 1934. These statements are based on our current beliefs and expectations and are subject to certain risks and uncertainties.

Speaker 1

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. We believe that non GAAP measures provide an additional way of viewing aspects of our operation and performance.

Speaker 1

But when considered with GAAP Financial Measures and the reconciliation of GAAP measures, they provide an even more complete understanding of our business. A reconciliation of the adjusted non GAAP financial results to the most comparable GAAP measurements are available at the end of the presentation deck and our Q2 2024 press release. And now, I'd like to turn the call over to our President and CEO, Doctor. Cheryl Blanchard. Cheryl?

Speaker 2

Thanks, Mark. Good afternoon, everyone, and thanks for joining us. Please turn to Slide 3. Now midway through 2024, we're making great progress on the execution of our strategy to refocus the business on the areas that deliver the greatest value to our shareholders and drive results that accelerate our path to profitability. Our efforts in the first half of the year set the stage for the rest of 2024 and beyond as we announced the full market release of our newest regenerative product Integrity and have completed our cost savings initiatives to realize significant operating expense savings this year.

Speaker 2

Let me walk you through the key highlights of the quarter and then I'll turn the call over to Steve to review the financials and our guidance for 2024. Overall revenue for the Q2 was lower by 5% due to the timing of very strong U. S. Orthovisk and MONOVISC units ordered in the Q2 of 2023. I'm very pleased to say that we delivered healthy adjusted EBITDA margins of 15% during the quarter as we're making meaningful progress on our refocused business strategy and our path to profitability.

Speaker 2

In Joy Preservation and Restoration, we delivered 7% growth as we're seeing the results of our new product launches, particularly X Twist and our new regenerative hyaluronic acid or based integrity implant system, which I'll speak to more in a moment. This quarter, OA Pain Management was lower by 9% as we expected on higher U. S. Revenue last year, offset by strong international growth, which is up 17% year to date. The strong OUS growth continues to be driven by market share gains as well as new country expansion across all three brands of CINGAL, MONOVISC and ORTHOVISC.

Speaker 2

International growth across our OA pain portfolio has been a key value driver as CINGAL is becoming the treatment of choice in many countries, while ORTHOVISC and MONOVISC continue to perform very well. In our U. S. OA Pain business, we maintain our market leadership with MONOVISC and ORTHOVISC despite softer pricing dynamics as the impact of the ASP legislation begins to normalize. This business remains a key foundation for Anika and will continue to drive profitability and cash flow as our U.

Speaker 2

S. Sales and marketing partner works to improve market access, balancing both price and volume. In other key updates, we announced the full market release of Integrity in July in conjunction with the American Orthopedic Society of Sports Medicine or AOSSM Annual Meeting with tremendous surgeon interest marking an important step in the continued expansion of our regenerative portfolio. During the limited market release, we completed over 300 surgeries with over 60 surgeons across the shoulder and foot and ankle spaces, setting the foundation for our growth in the regenerative space in the second half of twenty twenty four. Customer response exceeded our expectations during the limited market release with the completion of more than double the cases than originally expected.

Speaker 2

This demonstrates the strong pull from the marketplace with about 25% of the surgeons who have used Integrity representing new customers to Anika. In fact, we saw more than 40% increase in Integrity cases from Q1 to Q2, while still in limited release, and we expect this growth trend to continue through 2024. With our ongoing focus on growing our differentiated regenerative products, we've also seen great initial success in adding new distributors who are specifically focused on and excited about Anika's regenerative solutions. As we continue to build a presence in the market for integrity, developing high quality clinical evidence is very important, both for market expansion and surgeon adoption. As such, we started the process of initiating a prospective multicenter MRI and outcomes based clinical study on integrity to assess pain, function and rotator cuff tendon healing.

Speaker 2

Investigator sites have been identified and enrollment is expected to start by the end of the year. This study will provide the clinical data needed for the MDR filing ultimately to support our plans to launch INTEGRIDY in the EU as well as reinforce our positioning strategy in the U. S. In addition, we have post market follow-up studies currently ongoing that will yield clinical papers on the results of Integrity next year. The Integrity implant system will drive significant near term growth for Anika's regenerative portfolio.

Speaker 2

With respect to HYALOFAST, we remain on track to file the 1st PMA module by the end of this year. I'm also pleased to report that we recently obtained positive feedback from FDA regarding the presentation of our clinical data. We'll work closely with them as part of the modular PMA submission process in order to best position ourselves for an effective review. Our regenerative technologies represent a key enabler for Anika's growth as we bring integrity to market and prepare for the launch of HYALOFAST by 2026. With respect to CINGAL, we continue to make progress on our regulatory strategy and are having regular communications with the FDA on the non clinical work required before we can submit the NDA.

Speaker 2

We received feedback from FDA on the data required and are planning an additional meeting to clarify their requests. We aim to provide further updates by the end of the year. CINGAL now sold in more than 40 countries outside the U. S. Remains a key driver as the next generation non opioid OA pain product of choice.

Speaker 2

We continue to see strong international growth that increases our confidence that CINGAL will truly be a game changer when it is approved in the U. S. Lastly on this slide, I'd like to reiterate our focus on delivering value to our shareholders. We continue to explore all strategic alternatives for the business to generate shareholder value, including refocusing our business strategy to accelerate profitability and deploy capital towards our highest opportunities. We've taken significant cost actions in 2024 to improve our profitability to enable investments into our highest growth areas of OA pain management and regenerative solutions, while returning capital to shareholders through a new $40,000,000 share buyback program.

Speaker 2

These actions that focus our investments combined with our continued strategic assessment of alternatives position Anika to deliver outsized shareholder value. Please turn to slide 4. Before I turn the call over to Steve to review the results of the quarter, I'd like to review our strategy to drive value with our OA pain management franchise and our based regenerative products. Is at the core of Anika's 30 plus year heritage and it's what will drive differentiated product innovation and shareholder value moving forward. And gel form is essential to our OA pain injection portfolio including Orthovisk, MONOVISC and CINGAL.

Speaker 2

With CINGAL continuing to be a strong grower OUS and representing $1,000,000,000 addressable market for a next generation OA pain therapy in the U. S. Importantly though, our proprietary technologies allow us to uniquely transform our highly regenerative into various forms that are already clinically proven. One of those forms is our HIAP technology, which is that we modify to turn it into a biopolymer. This technology allows us to develop numerous resorbable regenerative products.

Speaker 2

For example, we use high apt to create fibers that can be knit, woven and woven with other materials as we've done with integrity and even used to create products that are non woven such as HYALOFAST. Our HIAS technology is clinically proven with the success of HYALOFAST, our single stage cartilage repair product sold in over 35 countries with over 40 clinical publications and 15 year data coming soon. We recognize the unique abilities we have to create meaningful products driven by in both the OA pain and regenerative solution spaces, products that solve real unmet clinical needs for surgeons and the patients they treat. Using our proprietary technology, we have now transformed our new product pipeline of innovation that leverages what we've already done with both Integrity and HYALOFAST. We'll talk about our pipeline in more detail in the future, but I'll give you one highlight now.

Speaker 2

With the immense commercial pull we're seeing with Integrity and real time feedback we're getting from our direct engagement with surgeons, we are currently working to expand that portfolio with different shapes, sizes and configurations to address additional tenant repair unmet needs. These products will use the same high F based knitted structure as Integrity, but will be designed specifically to treat additional tender repairs all over the body. I can't wait to tell you more about how our proprietary technologies will be driving Anika forward into an exciting future. I'll wrap up by saying that I'm thrilled to have Steve now part of the Anika leadership team. He's made tremendous progress coming up to speed on the business and has brought in a fresh set of eyes on our key initiatives.

Speaker 2

Now I'll turn the call over to him to review our financial results and guidance for 2024. Deep?

Speaker 3

Thank you, Sheryl. Before I begin with an overview of the quarter, I'd like to take a moment to reflect on my early impressions after joining Anika in June. I joined Anika because of the opportunity to partner with this leadership team on developing and commercializing the next generation of regenerative solutions built on the rich history of technology that exists here at Anika. Each employee I've had the opportunity to meet with is mission oriented and passionate about unlocking the full value of these products and technologies for patients around the world. It's an exciting time to join this energized team as we refocus our attention on our highest returning programs to deliver great patient and shareholder outcomes.

Speaker 3

Please refer to Slide 5 in the online presentation, where I'll walk through the results of the Q2 of 2024. Anika generated $41,900,000 of the total revenue in the 2nd quarter, down $2,400,000 as compared to the same period in 20 23 and in line with prior expectations, driven by the timing of U. S. OA Pain Management orders. Revenue in our largest product family, OA Pain Management, decreased 9% in the 2nd quarter to $26,700,000 This was primarily due to lower U.

Speaker 3

S. Sales as a result of higher than normal shipments in the Q2 of 2023 as previously disclosed. In the quarter, international sales grew by an impressive 19%, representing growth in all three brands, MONOVISC, ORTHOVISC and CINGAL, as we continue to enter new markets and gain share with our international distributors. Joint preservation and restoration revenue increased 7% in the 2nd quarter to $13,500,000 This growth was led by our limited market release of Integrity, as well as contributions from X Twist, partially offset by lower sales of more mature products. Our regenerative solutions portfolio, including integrity, continues to be an important avenue for total revenue growth as we expect to see continued revenue growth into the second half of twenty twenty four.

Speaker 3

Lastly, our non orthopedic revenue decreased 26 percent to $1,700,000 in line with prior guidance given lower mature product sales. Gross margin in the 2nd quarter was 65%, in line with the prior year and adjusted gross margin was 66% in the quarter, down from 69% in the prior year period. Year over year, the change in gross margin was primarily driven by the mix of U. S. OA Pain Management sales in 2023.

Speaker 3

Sequentially, gross margins improved by 40 basis points versus the Q1 of 2024, driven by stabilized operations. Now moving to operating expenses. Operating expenses in the 2nd quarter totaled $27,200,000 down $5,400,000 from 2023. This lower operating expense profile includes a full quarter benefit associated with the cost restructuring actions taken in the Q1 of 2024. The company remains on track to achieve the $10,000,000 of cost savings from these initiatives.

Speaker 3

The net loss for the quarter was $100,000 compared to a net loss of $2,700,000 in the prior year. Adjusted net income was $2,500,000 in the 2nd quarter and was down from an adjusted net income of $4,500,000 primarily due to the timing of U. S. OA pain management orders in the Q2 of 2023. Anika generated adjusted EBITDA in the quarter of $6,300,000 in line with the prior year as cost savings generated from the recent restructuring activities offset the lower U.

Speaker 3

S. OA pain management sales in the quarter. Now turning to cash and liquidity. In the quarter, we used $1,100,000 in operating cash flow as an improvement versus the $8,300,000 used in the Q2 of 2023, primarily as a result of improved profitability and lower working capital. Capital expenditures were $3,400,000 up $1,900,000 as we continue to make investments in our Bedford, Massachusetts based manufacturing facilities to support growth in our OA pain management and regenerative solutions portfolio.

Speaker 3

As Cheryl referenced, we initiated a 10b5-1 stock repurchase plan in May. And in the Q2, we purchased $1,400,000 of common stock. As of this week, we have purchased approximately $3,000,000 cumulatively year to date and expect to complete the initial $15,000,000 share repurchase plan before June 2025 in line with our prior commitments. We ended the 2nd quarter with $62,800,000 in cash and no debt. Now turning to Slide 6, I'll provide a review of our full year financial outlook for 2024.

Speaker 3

We are maintaining our total revenue estimate of $168,000,000 to $173,000,000 a growth of 1% to 4% versus 2023. OA Pain Management remains on track to deliver between $102,000,000 $104,000,000 roughly flat to 2% growth versus 2023. U. S. OA Pain sales are slightly below initial expectations as a result of lower end user pricing, offset by stronger first half performance and full year expectations for international OA pain sales.

Speaker 3

Joint Preservation and Restoration remains on track to deliver between $58,000,000 $60,500,000 of revenue, up 6% to 10% versus 2023, as a result of the anticipated contributions from the full market release of Integrity, partially offset by softer legacy product sales. Non orthopedic revenue is expected to be between $8,000,000 $8,500,000 a decrease of 14% to 19%, in line with prior guidance. We now anticipate adjusted EBITDA to be towards the lower end of the $25,000,000 to $30,000,000 range previously provided. This change is driven by the mix shift of OA Pain Management revenue with modestly lower higher margin U. S.

Speaker 3

Sales offset by stronger lower margin international sales. We expect full year adjusted EBITDA margin to be approximately 15%. Please note that we have decided to remove projected adjusted gross margins from our guidance framework, as the predictability of this metric is highly dependent upon the mix of products sold between U. S. And international.

Speaker 3

We continue to focus on total company profitability as the key measurement for performance to deliver shareholder value. In summary, we had a second quarter that demonstrates the strength of the international sales for our market leading OA pain management products. The opportunity for outsized revenue growth from our regenerative solutions portfolio, including integrity, which will continue to grow in the second half of this year and the realization of cost savings as we work to improve the long term profitability and focus our investments in the highly differentiated products in our portfolio. With that, I'll now turn the call back over to Sheryl.

Speaker 2

Thanks, Steve. Please turn to Slide 7. In closing, the Q2 was strong where we demonstrated our commitment to delivering for customers, their patients and shareholders, while advancing the next generation of pain management and regenerative technology. The full market release of Integrity provides Anika with a highly differentiated product that enables us to control our market access and engage directly with surgeon customers to continue to develop new products that advance early intervention orthopedic care. Our OA pain management franchise remains a foundational pillar for Anika and our recent international growth demonstrates the value of CINGAL and opportunity set that lies ahead in the U.

Speaker 2

S. Our refocused business strategy provides clarity on our highest ROI initiatives, while we continue to strategically assess all value creation opportunities. Lastly, our progress to date wouldn't be possible without every member of the Anika team. I'm proud of their resilience and hard work and we look forward to sharing more about our progress in the coming months. With that, we'll open up the line for questions.

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from Jim Sidoti from Sidoti and Company.

Speaker 4

Good afternoon. Thanks for taking the questions. So, sounds like there's some headwinds in the U. S. On the pain management business.

Speaker 4

Is the growth internationally for those products, is that enough to offset those headwinds?

Speaker 3

Yes. Good to talk to you, Jim. The short answer is yes. We're reaffirming our total revenue guidance on the way pain. And you'll see that the outsized growth that we saw in the first half of this year, up 17%, has done really, really well and it will continue here into the second quarter, somewhat moderately lower than how it performed in the first quarter or the first half.

Speaker 3

But we do expect that that will be able to offset some of the softness that you referenced on the U. S. Side.

Speaker 4

Right. And then for some of the new products that you expect that in the next couple of years like highly fast and single, Any initial comments on how you plan to distribute those products?

Speaker 2

Hi, Jim. Thanks for the question. Yes, so for HYALOFAST, that's obviously a regenerative product and very core to the early intervention portfolio that we've put together. It's a product that we already sell that we're very excited about that has lots of clinical data, 40 publications, we'll have 15 year data this year. And we have a really strong process as you heard me talk about on the call as we're starting to engage with FDA on that product.

Speaker 2

So I think you can expect to hear more from us on HYALOFAST. Regarding CINGAL, that is a product that I think fits more into that OA pain management portfolio and we obviously haven't announced anything relative to how we would consider distributing that in the United States. But we clearly have a different model that we deploy today with our other OA pain products. I think more to come on that relative to CINGAL.

Speaker 4

All right. And it seems like the cost savings initiatives have really made a difference. Were there any one time cost savings in the quarter? Or should we expect these levels going forward?

Speaker 3

Yes. I mean, when you take a look at the press release, you'll be able to see the one time adjustments, those non recurring items. But when you back those out, you just look at on a year over year basis, I think your conclusion is right. We're seeing about $3,000,000 of real cost savings on the OpEx lines driven by the actions that were taken in the Q1. Those will continue as we move forward here driven by the actions.

Speaker 4

Okay. All right. Thank you.

Speaker 2

Thanks, Jim.

Operator

Thank you. The next question comes from Harrison Parsons from Stephens. Please go ahead.

Speaker 5

George, good afternoon and thanks for taking the questions. I wanted to just dig in a little bit about your comments around the more mature products in the Joint Preservation Restoration segment. What percentage of that segment do those products make up and are they declining or is it just slower growth that you're seeing from those?

Speaker 2

Yes. Hi, George. Thanks for the question. We have talked about this in prior quarters. There are some, I would say, legacy products in that JPR business that are either kind of flat, a couple of them to declining.

Speaker 2

It's not all the products for sure. We certainly haven't broken them out with any kind of percentages. And that's obviously largely being offset by some higher growth newer products like X Twist and Integrity as we've talked about it today. So I think you'll see us going forward continuing to focus on the new products as we really leverage the expertise that we've got here at Anika around hyaluronic acid and the new products is really where we've made a lot of our investments. So we look forward to continuing to report out on the growth of that business relative to the new products in particular.

Speaker 3

Yes. And the only thing I might add to that is, specifically the regenerative piece of the JPR business is performing quite well as you can tell and that's really where you're going to start to see the benefits of the Integrity launch come through. So in the first half of the year, we saw mid teens growth coming from that regenerative part of the portfolio. We expect that to pick up now as we head into the second half of the year.

Speaker 5

Okay, great. Yes, that's helpful. And then I just wanted to just staying on that segment, just kind of dig into any products beyond X Twist and Integrity that are driving that growth to get you to the full year guide?

Speaker 2

Sure. There are other products that are driving growth, but I think we've chosen to focus on X Twist and Integrity just because those are the newer products. We obviously just got to full market release on the BioComposite version of X Twist that allows us now to address that full $600,000,000 plus rotator cuff market on the soft tissue fixation side. And now it's early days, but we're in about a month into the full market release of Integrity. So those two products are really, I would say the higher growing portions of that JPR part of the business and why we chose to point those 2 out.

Speaker 2

We'll obviously continue to update as we go forward. I will tell you though that the regenerative portion of the business, if you want to think about it that way, which includes also HYALOFAST and TactoSat is a piece of that JPR business that is doing very well. Steve, I don't know if you've got anything to add to that.

Speaker 3

No, I think that covers it.

Speaker 1

Okay. Thanks for the color.

Operator

All right. Thank you. The next question comes from Mike Petusky from Barrington Research. Please go ahead.

Speaker 6

Hi, good evening. Cheryl, the international growth that you guys called out for OA and you sort of said new country expansion, which countries did you guys recently enter? And I guess, were any of them in the second quarter?

Speaker 2

Yes, we I'll tell you Mike, we typically don't break out specifically when we launch in a new country unless it's material to the business. But I will tell you that we've continued to expand in Europe and kind of the South America, Latin America regions going forward. And we I would say we haven't expanded into a new country that's really going to change our numbers materially. When that happens, I'll certainly let you know. I think the good news is that the bigger portion of that growth has really come from continued market share capture of the countries in which we already sell.

Speaker 2

And even when we launch in a new country, it takes a little bit of time for those distributors to kind of get their feet on the ground and get up and running. So I think we're really starting to see some of the nice impact as we launch in new countries. And they have a chance to really get grounded in the products and drive into those markets. That's really what we're seeing propel much of that significant growth number with that OUS business. It's actually very exciting for us.

Speaker 4

Okay. All right, great.

Speaker 6

On CINGAL, the regular communication with the FDA that you called out, Has the last 90 or so days, I mean, are there learnings there where you say, okay, we've pretty much got this dialed in, in terms of what we're to need to do or is there still a lot of, I guess, additional communication that needs to happen there?

Speaker 2

Yes, it's a great question. And it's a topic that we would love to have it be going faster. We're in constant communication with FDA. We reported out last quarter that they had come back to us with some feedback. We went back to them with some additional questions and the feedback they gave us from those questions was go ahead and schedule another meeting.

Speaker 2

So we're in the process of doing that and we feel like that represents good progress just because we're really starting to, I would say hone in on the topics that we want to make sure we get full clarification around before we begin any additional non clinical testing. So there is progress being made and we look forward to providing a more fulsome update by the end of the year relative to how we're thinking about that timing.

Speaker 6

Okay. And then on the study you guys, I guess, are planning to enroll for integrity. And I just want to make sure I understand. The primary reason for this is sort of to for your MDR filing and I understand also to sort of strengthen the value proposition in the U. S.

Speaker 6

But can you guys, I guess, first of all, I just want to make sure I understand what the motivation for that is and then confirm that I understand what the motivation for that is. And then what do you think that costs and over what timeframe? Thanks.

Speaker 2

Yes, absolutely. So we're excited to be able to get that study going. It's been in the planning stages as we've been in limited market release. It really is twofold. We know that we need a good set of high quality clinical data to really drive market access in the United States in the way that we know is possible with this superior technology.

Speaker 2

But in Europe now, because this is a Class III device, we have to have high quality clinical data for the MDR filing prior to marketing, which is different than it used to be. So it's really twofold in nature. And again, we're excited to get it started. I will tell you though, we have a couple of post market studies already ongoing in the United States that are going to yield some clinical publications next year. So we'll begin to have some clinical data coming out for U.

Speaker 2

S. Marketing and market access purposes before we get to the what I would consider kind of the higher quality clinical data that we're going to need for the MDR filing.

Speaker 3

Yes. And we don't necessarily share the details on the breakdown of the cost for each study. But what I'd say is, we'd expect it to start in the second half of this year and continue into next year as well. It will be a little bit of an offset to some of the cost savings that we've seen on the operating expense line. So while I mentioned this earlier, we've seen about $3,000,000 of operating expense savings in the Q2 alone.

Speaker 3

It will eat into that to some degree as we work our way into the Q4 here, as a little bit of a drag against some of those cost savings. But it will take a number of years to play out associated with the overall study expense.

Speaker 6

Okay. Any sense of patient enrollment number?

Speaker 2

I'll tell you what, once we get all the details posted on clinicaltrials.gov, I'll be in a better position to provide you with those details. It's a study that we have very clear line of sight to around excitement from the clinicians for enrollment. It doesn't have any complexities in a clinical trial design that's going to make it difficult to enroll. And as soon as we get that posted, I'm going to look forward to going through in a little bit more detail about what it looks like, number of patients and timing.

Speaker 6

Okay. Cheryl, I totally understand it's very, very, very early days for the full market release of Integrity. But I'm just curious, I mean, is there anything you can share in terms of, hey, some of these 60 surgeons that were in the limited market release, they've already done cases in the last 30 or 35 days or however long you guys have been launched. Is there anything you can share just in terms of the last 4, 5, 6 weeks, however long Integrity has been in full market?

Speaker 2

Thanks. Yes, absolutely. I'm excited to. It's something that I track multiple times a day. And I think there are some interesting factoids that I'd be happy to share.

Speaker 2

I mean, first of all, the feedback that we're getting is tremendous. We're getting videos of patients that are rapidly rehabilitating and healing that surgeons are posting on LinkedIn and other social media outlets. They're talking about it. They're excited about the fact that it's a higher strength construct even when wet that it has increased regenerative capacity that they're seeing play out clinically. They are really appreciative of the all arthroscopic instrumentation and the streamlined surgical technique and the fact that it's not using a xenograft or allograft.

Speaker 2

So that's some of the feedback we're getting. But I'll tell you the pull is real from the surgeon community. And even with some of the distributors, you heard me mention that we're signing on some new distributors that are focused on the regen products. The fact that we increased even in a limited market release where we had kind of constrained supply 40% from Q1 Q2, I think is a sign. The fact that we're getting feedback from surgeons immediately saying, boy, I'd really like to use this in this tendon.

Speaker 2

I'd like a different geometry. I'd like a different shape factor. These are all things that are terribly exciting for us and really give us a lot of confidence around our product development pipeline and our ability to make these investments in the regenerative portfolio in a way that there's a real ROI here. And again, this leverages our proprietary technology, which is really where Anika has

Speaker 6

shot though shot though. Any numbers in terms of surgeons that have actually done cases since the whole market?

Speaker 2

Yes. I mentioned it in the script. We've had over 60 surgeons in LMR. I would say that

Speaker 6

That was in a limited market, wasn't it?

Speaker 2

In the limited market release, that's right. If you think about the fact that I also mentioned that we're looking at kind of 40% quarter over quarter growth and about 25% of the surgeons are new to Anika. You can kind of think about it that way. I have seen already just this week at the beginning of the month, a good number of very new customers doing cases just at the beginning of this month. So again, it's a different type of product and a different level of pull with totally new customers to Anika.

Speaker 1

Okay. Yes.

Speaker 3

And you want to add anything? The 40% sequential growth is what we've experienced and what we expect to continue here for a short period of time. So we're excited to share more as we get to the back half of the year.

Speaker 6

And I just want to make sure I understand that's cases, correct, or surgeons?

Speaker 2

40% is cases.

Speaker 6

Okay. All right. Very good. Thank you.

Speaker 2

You're welcome. Thank

Operator

you. Thank you. There are no further questions at this time. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation.

Operator

You may now disconnect.

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Key Takeaways

  • Q2 revenue of $41.9 million was down 5% year-over-year due to timing of U.S. OA pain shipments, but the company delivered a healthy 15% adjusted EBITDA margin and realized significant cost savings from completed restructuring initiatives.
  • International OA pain management sales grew 19% in Q2 (17% year-to-date), driven by market share gains and new country expansion, which helped offset softer U.S. pricing dynamics under ASP legislation.
  • The full market release of Integrity in July generated more than 300 surgeries with over 60 surgeons in limited release, saw 40% sequential case growth, and attracted 25% new customers, with a multicenter MRI/outcomes study starting by year-end to support EU MDR filing.
  • Regulatory progress continues on key products: HYALOFAST is on track to file its first PMA module by year-end following positive FDA feedback, while CINGAL regulatory discussions are advancing toward an NDA submission in the U.S.
  • Anika is returning capital and focusing on profitability through a new $40 million share buyback program, targeted $10 million in annual cost savings, and ongoing evaluation of strategic alternatives to maximize shareholder value.
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Earnings Conference Call
Anika Therapeutics Q2 2024
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