Axogen, Inc. (NASDAQ: AXGN), a global leader in developing and
marketing innovative surgical solutions for peripheral nerve
injuries, today reported financial results and business highlights
for the first quarter ended March 31, 2022.
First Quarter 2022 and Business
Highlights
- Net revenue was $31.0 million during
the first quarter, matching the first quarter of 2021.
- Excluding Avive® revenue of $1.7
million in the first quarter of 2021, revenue in the first quarter
of 2022 increased 6%. The company voluntarily suspended market
availability of Avive Soft Tissue Membrane on June 1, 2021.
- Gross margin was 82.1% for the quarter
compared to 83.3% in the first quarter of 2021.
- First quarter adjusted net loss was
$8.5 million, or $0.20 per share, compared with an adjusted net
loss of $3.1 million, or $0.08 per share, in the first quarter of
2021.
- Adjusted EBITDA loss was $7.4 million
for the quarter, compared to an adjusted EBITDA loss of $1.9
million in the first quarter of 2021.
- The balance of all cash and cash
equivalents and investments on March 31, 2022 was $73.7
million, compared to a balance of $90.3 million on
December 31, 2021. The net change includes capital
expenditures of $5.0 million related to the construction of our new
processing facility in Dayton, OH, and $7.6 million related to
items which typically occur in the first quarter, including
bonuses, sales meeting and awards, and insurance premiums.
- Core Accounts as of March 31,
2022 were 288, a 5% increase compared to 274 as of March 31,
2021. Revenue from Core Accounts continued to represent
approximately 60% of total revenue.
- Active Accounts as of March 31,
2022 were 926, a 1% increase from 919 as of March 31, 2021.
Revenue from the top 10% of Active Accounts continued to represent
approximately 35% of total revenue.
“We are pleased with our progress and execution as
procedure trends improved during the quarter. Our outlook for the
year remains on track, and we expect continued growth as surgeons
adopt the Axogen nerve repair algorithm,” commented Karen Zaderej,
chairman, CEO, and president of Axogen, Inc. “We are also pleased
to announce today that our RECONSM study achieved its primary
endpoint representing a critical milestone towards transitioning
Avance® Nerve Graft to a licensed biologic and further supporting
the expanded adoption of Avance.”
Additional Operational and Business
Highlights
- Separately announced today, RECON
Phase 3 Study of Avance met its primary endpoint. This study will
provide the first ever Level 1 clinical evidence in support of
Avance Nerve Graft for peripheral nerve repairs.
- REPOSESM Pilot Study results using
Axoguard Nerve Cap® for protecting and preserving terminated nerve
ends were published in Foot and Ankle Surgery: Techniques, Reports
& Case.
- Initiated REPOSE-XLSM, a clinical
study of large-diameter Axoguard Nerve Cap.
- Ended the quarter with 188
peer-reviewed clinical publications featuring Axogen’s nerve repair
product portfolio.
- Published inaugural Environmental,
Social, and Governance (ESG) report highlighting the company’s
corporate responsibility and sustainability initiatives.
- Ended the quarter with 116 direct
sales representatives, compared to 115 at year end and 106 one year
ago.
2022 Financial Guidance The
Company continues to expect 2022 revenue will be in the range of
$135.0 million to $142.0 million. This represents approximately 10%
to 15% growth over 2021 revenue excluding the impact of $4.1
million of Avive revenue in 2021. Full-year 2022 gross margin is
expected to be above 80%.
Conference CallThe Company will
host a conference call and webcast for the investment community
today at 4:30 p.m. ET. Investors interested in participating by
phone are invited to call toll free at 1-866-682-6100 or use the
direct dial-in number at (862) 298-0702. Those interested in
listening to the conference call live via the Internet may do so by
visiting the Investors page of the company's website at
www.axogeninc.com and clicking on the webcast link.
Following the conference call, a replay will be
available in the Investors section of the company's website at
www.axogeninc.com under Investors.
About RECON RECON is a multicenter, prospective,
randomized, subject and evaluator blinded comparative clinical
study of nerve cuffs (manufactured conduits) and Avance Nerve
Graft, evaluating recovery outcomes for the repair of nerve
discontinuities. The phase 3 pivotal study is designed to test for
non-inferiority between the static two-point discrimination
outcomes for Avance Nerve Graft and manufactured conduit. The study
design also allows for a sequential test for superiority of Avance
Nerve Graft, following the non-inferiority analysis.
About REPOSEA Multicenter,
Prospective, Randomized and Subject Blinded Comparative Study of
Axoguard Nerve Cap and Neurectomy for the Treatment of Symptomatic
Neuroma and Prevention of Recurrent End-Neuroma Pain (REPOSE) is
the company’s post-market study comparing placement of Axoguard
Nerve Cap to standard neurectomy alone for subjects with
symptomatic neuroma pain. The study design includes a 15-subject
open label pilot phase and up to 86 subjects in a randomized
comparative phase. The study requires a one year follow-up period
for all subjects and is designed to assess changes in pain scores
as measured by Visual Analog Scale, quality of life outcomes,
medication usage, and subject satisfaction.About
REPOSE-XLThe 15-subject, multicenter, prospective, single
arm pilot safety and feasibility study is intended to evaluate the
use of Axoguard Nerve Cap in large-diameter sizes to protect and
preserve terminated nerve ends after limb trauma or amputation to
optimize subsequent reconstructive procedures. The diameters of the
Nerve Cap under investigation range from 5 to 7 millimeters,
compared to the current commercially available Axoguard Nerve Cap,
which ranges from 2 to 4 millimeters. The aim of the study is to
demonstrate the reduction or mitigation of nerve pain with use of
the Nerve Cap and its effect on limb function. Patient follow-up is
up to 15 months with functional assessments at shorter intervals.
This study is supported, in part, with funding by a grant from the
United States Department of Defense Peer Reviewed Orthopedic
Research Program.
About AxogenAxogen (AXGN) is the
leading company focused specifically on the science, development,
and commercialization of technologies for peripheral nerve
regeneration and repair. Axogen employees are passionate about
helping to restore peripheral nerve function and quality of life to
patients with physical damage or transection to peripheral nerves
by providing innovative, clinically proven, and economically
effective repair solutions for surgeons and health care providers.
Peripheral nerves provide the pathways for both motor and sensory
signals throughout the body. Every day, people suffer traumatic
injuries or undergo surgical procedures that impact the function of
their peripheral nerves. Physical damage to a peripheral
nerve, or the inability to properly reconnect peripheral nerves,
can result in the loss of muscle or organ function, the loss of
sensory feeling, or the initiation of pain.
Axogen's platform for peripheral nerve repair
features a comprehensive portfolio of products, including Avance
Nerve Graft, a biologically active off-the-shelf processed human
nerve allograft for bridging severed peripheral nerves without the
comorbidities associated with a second surgical site; Axoguard
Nerve Connector®, a porcine submucosa extracellular matrix (ECM)
coaptation aid for tensionless repair of severed peripheral nerves;
Axoguard Nerve Protector®, a porcine submucosa ECM product used to
wrap and protect damaged peripheral nerves and reinforce the nerve
reconstruction while preventing soft tissue attachments; and
Axoguard Nerve Cap®, a porcine submucosa ECM product used to
protect a peripheral nerve end and separate the nerve from the
surrounding environment to reduce the development of symptomatic or
painful neuroma. The Axogen portfolio of products is available in
the United States, Canada, Germany, the United Kingdom, Spain,
South Korea, and several other countries.
Cautionary Statements Concerning
Forward-Looking StatementsThis press release contains
“forward-looking” statements as defined in the Private Securities
Litigation Reform Act of 1995. These statements are based on
management's current expectations or predictions of future
conditions, events, or results based on various assumptions and
management's estimates of trends and economic factors in the
markets in which we are active, as well as our business plans.
Words such as “expects,” “anticipates,” “intends,” “plans,”
“believes,” “seeks,” “estimates,” “projects,” “forecasts,”
“continue,” “may,” “should,” “will,” “goals,” and variations of
such words and similar expressions are intended to identify such
forward-looking statements. The forward-looking statements may
include, without limitation, statements related to the impact of
COVID-19 on our business, including but not limited to global
supply chain issues, hospital staffing challenges and its impact on
our business, statements regarding our growth, our financial
guidance and performance, product development, product potential,
regulatory process and approvals, APC renovation timing and
expense, sales growth, product adoption, market awareness of our
products, anticipated capital requirements, including the potential
of future financings, data validation, expected clinical study
enrollment, timing and outcomes, our assessment of our internal
controls over financial reporting, our visibility at and
sponsorship of conferences and our educational events, regulatory
process and approvals and other factors, including legislative,
regulatory, political, geopolitical, and economic developments,
including global business disruption caused by Russia’s invasion of
Ukraine and related sanctions, not within our control. The
forward-looking statements are and will be subject to risks and
uncertainties, which may cause actual results to differ materially
from those expressed or implied in such forward-looking statements.
Forward-looking statements contained in this press release should
be evaluated together with the many uncertainties that affect our
business and our market, particularly those risk factors described
under Part I, Item 1A., “Risk Factors,” of our Annual Report on
Form 10-K for the most recently ended fiscal year, as well as other
risks and cautionary statements set forth in our filings with the
U.S. Securities and Exchange Commission. Forward-looking statements
are not a guarantee of future performance, and actual results may
differ materially from those projected. The forward-looking
statements are representative only as of the date they are made
and, except as required by applicable law, we assume no
responsibility to publicly update or revise any forward-looking
statements, whether as a result of new information, future events,
changed circumstances, or otherwise.
Contact:Axogen, Inc.Ed Joyce, Director, Investor
Relationsejoyce@axogeninc.comInvestorRelations@axogeninc.com
Axogen, Inc.Condensed Consolidated
Balance Sheets(unaudited)(In
Thousands, Except Share and Per Share Amounts)
|
|
|
|
|
March 31,2022 |
|
December 31,2021 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
14,559 |
|
|
$ |
32,756 |
|
Restricted cash |
|
6,251 |
|
|
|
6,251 |
|
Investments |
|
52,859 |
|
|
|
51,330 |
|
Accounts receivable, net of allowance for doubtful accounts of $366
and $276, respectively |
|
18,590 |
|
|
|
18,158 |
|
Inventory |
|
17,400 |
|
|
|
16,693 |
|
Prepaid expenses and other |
|
2,816 |
|
|
|
1,861 |
|
Total current assets |
|
112,475 |
|
|
|
127,049 |
|
Property and equipment, net |
|
66,954 |
|
|
|
62,923 |
|
Operating lease right-of-use assets |
|
15,406 |
|
|
|
15,193 |
|
Intangible assets, net |
|
3,190 |
|
|
|
2,859 |
|
Total assets |
$ |
198,025 |
|
|
$ |
208,024 |
|
|
|
|
|
Liabilities and shareholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable and accrued expenses |
$ |
20,872 |
|
|
$ |
22,459 |
|
Current maturities of long-term lease obligations |
|
2,073 |
|
|
|
1,834 |
|
Total current liabilities |
|
22,945 |
|
|
|
24,293 |
|
|
|
|
|
Long-term debt, net of debt discount and financing
fees |
|
45,041 |
|
|
|
44,821 |
|
Long-term lease obligations |
|
20,878 |
|
|
|
20,798 |
|
Debt derivative liabilities |
|
5,310 |
|
|
|
5,562 |
|
Total liabilities |
|
94,174 |
|
|
|
95,474 |
|
|
|
|
|
Commitments and contingencies - see Note 12 |
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
Common stock, $0.01 par value per share; 100,000,000 shares
authorized; 41,972,987 and 41,736,950 shares issued and
outstanding |
|
420 |
|
|
|
417 |
|
Additional paid-in capital |
|
345,538 |
|
|
|
342,765 |
|
Accumulated deficit |
|
(242,107 |
) |
|
|
(230,632 |
) |
Total shareholders’ equity |
|
103,851 |
|
|
|
112,550 |
|
Total liabilities and shareholders’ equity |
$ |
198,025 |
|
|
$ |
208,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Axogen, Inc.Condensed Consolidated
Statements of
Operations(unaudited)(In
Thousands, Except Per Share Amounts)
|
|
|
Three Months Ended |
|
March 31,2022 |
|
March 31,2021 |
|
|
|
|
Revenues |
$ |
31,007 |
|
|
$ |
31,037 |
|
Cost of goods sold |
|
5,546 |
|
|
|
5,172 |
|
Gross profit |
|
25,461 |
|
|
|
25,865 |
|
Costs and expenses: |
|
|
|
Sales and marketing |
|
20,888 |
|
|
|
17,973 |
|
Research and development |
|
6,275 |
|
|
|
5,748 |
|
General and administrative |
|
9,618 |
|
|
|
8,364 |
|
Total costs and expenses |
|
36,781 |
|
|
|
32,085 |
|
Loss from operations |
|
(11,320 |
) |
|
|
(6,220 |
) |
Other (expense) income: |
|
|
|
Investment income |
|
(46 |
) |
|
|
34 |
|
Interest expense |
|
(354 |
) |
|
|
(444 |
) |
Change in fair value of derivatives |
|
252 |
|
|
|
(22 |
) |
Other expense |
|
(7 |
) |
|
|
(8 |
) |
Total other (expense) income, net |
|
(155 |
) |
|
|
(440 |
) |
Net loss |
$ |
(11,475 |
) |
|
$ |
(6,660 |
) |
|
|
|
|
Weighted average common shares outstanding — basic and diluted |
|
41,804,330 |
|
|
|
40,705,840 |
|
Loss per common share — basic and diluted |
$ |
(0.27 |
) |
|
$ |
(0.16 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Axogen, Inc.RECONCILIATION OF GAAP
FINANCIAL MEASURES TO NON-GAAP FINANCIAL
MEASURESThree Months ended March 31, 2022 and
2021(unaudited)(In Thousands,
Except Per Share Amounts)
|
|
|
Three months ended |
|
March 31,2022 |
|
March 31,2021 |
|
|
|
|
Net loss |
$ |
(11,475 |
) |
|
$ |
(6,660 |
) |
Depreciation and amortization expense |
|
773 |
|
|
|
819 |
|
Investment income |
|
46 |
|
|
|
(34 |
) |
Income tax expense |
|
— |
|
|
|
(5 |
) |
Interest expense |
|
354 |
|
|
|
444 |
|
EBITDA - non GAAP |
$ |
(10,302 |
) |
|
$ |
(5,436 |
) |
|
|
|
|
Non cash stock-based compensation expense |
|
2,678 |
|
|
|
2,694 |
|
Litigation and related costs |
|
267 |
|
|
|
836 |
|
Adjusted EBITDA - non GAAP |
$ |
(7,357 |
) |
|
$ |
(1,906 |
) |
|
|
|
|
Net loss |
$ |
(11,475 |
) |
|
$ |
(6,660 |
) |
Non cash stock-based compensation expense |
|
2,678 |
|
|
|
2,694 |
|
Litigation and related costs |
|
267 |
|
|
|
836 |
|
Adjusted net loss - non GAAP |
$ |
(8,530 |
) |
|
$ |
(3,130 |
) |
|
|
|
|
Weighted average common shares outstanding - basic and
diluted |
$ |
(0.27 |
) |
|
$ |
(0.16 |
) |
Non cash stock-based compensation expense |
|
0.06 |
|
|
|
0.07 |
|
Litigation and related costs |
|
0.01 |
|
|
|
0.02 |
|
Adjusted net loss per common share - basic and diluted -
non GAAP |
$ |
(0.20 |
) |
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
Note: In the Press Release dated February 22, 2022,
the Company presented a revised calculation of EBITDA and Adjusted
EBITDA which included an adjustment for the amortization of the
right of use assets. The Company has since reverted to its former
presentation which allows investors to more readily assess
operating performance among peer companies.
Axogen, Inc.Condensed Consolidated
Statements of Changes in Shareholders’
Equity(unaudited)(In Thousands,
Except Share Amounts)
|
|
|
|
|
|
|
|
|
Common Stock |
|
Additional Paid-inCapital |
|
AccumulatedDeficit |
|
Total Shareholders'Equity |
|
Shares |
|
Amount |
|
|
|
Three Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
Balance at December 31, 2021 |
41,736,950 |
|
$ |
417 |
|
$ |
342,765 |
|
|
$ |
(230,632 |
) |
|
$ |
112,550 |
|
Net loss |
— |
|
|
— |
|
|
— |
|
|
|
(11,475 |
) |
|
|
(11,475 |
) |
Stock-based compensation |
— |
|
|
— |
|
|
2,678 |
|
|
|
— |
|
|
|
2,678 |
|
Issuance of restricted and performance stock units |
215,287 |
|
|
2 |
|
|
(2 |
) |
|
|
— |
|
|
|
— |
|
Exercise of stock options and employee stock purchase plan |
20,750 |
|
|
1 |
|
|
97 |
|
|
|
— |
|
|
|
98 |
|
Balance at March 31, 2022 |
41,972,987 |
|
$ |
420 |
|
$ |
345,538 |
|
|
$ |
(242,107 |
) |
|
$ |
103,851 |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2021 |
|
|
|
|
|
|
|
|
|
Balance at December 31, 2020 |
40,618,766 |
|
$ |
406 |
|
$ |
326,390 |
|
|
$ |
(203,647 |
) |
|
$ |
123,149 |
|
Net loss |
— |
|
|
— |
|
|
— |
|
|
|
(6,660 |
) |
|
|
(6,660 |
) |
Stock-based compensation |
— |
|
|
— |
|
|
2,694 |
|
|
|
— |
|
|
|
2,694 |
|
Issuance of restricted and performance stock units |
94,533 |
|
|
1 |
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
Exercise of stock options and employee stock purchase plan |
129,418 |
|
|
1 |
|
|
520 |
|
|
|
— |
|
|
|
521 |
|
Balance at March 31, 2021 |
40,842,717 |
|
$ |
408 |
|
$ |
329,603 |
|
|
$ |
(210,307 |
) |
|
$ |
119,704 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Axogen, Inc.Condensed Consolidated
Statements of Cash
Flows(unaudited)(In
Thousands)
|
|
|
Three Months Ended |
|
March 31,2022 |
|
March 31,2021 |
Cash flows from operating activities: |
|
|
|
Net loss |
$ |
(11,475 |
) |
|
$ |
(6,660 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Depreciation and amortization |
|
704 |
|
|
|
772 |
|
Amortization of right-of-use assets |
|
427 |
|
|
|
500 |
|
Amortization of intangible assets |
|
69 |
|
|
|
47 |
|
Amortization of debt discount and deferred financing fees |
|
220 |
|
|
|
112 |
|
Provision for bad debt |
|
267 |
|
|
|
(26 |
) |
Provision for inventory write-down |
|
459 |
|
|
|
783 |
|
Change in fair value of derivatives |
|
(252 |
) |
|
|
22 |
|
Investment losses |
|
96 |
|
|
|
15 |
|
Stock-based compensation |
|
2,678 |
|
|
|
2,694 |
|
Change in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(624 |
) |
|
|
(2,181 |
) |
Inventory |
|
(1,166 |
) |
|
|
(1,642 |
) |
Prepaid expenses and other |
|
(1,030 |
) |
|
|
(313 |
) |
Accounts payable and accrued expenses |
|
(1,104 |
) |
|
|
(5,061 |
) |
Operating lease obligations |
|
(320 |
) |
|
|
119 |
|
Cash paid for interest portion of finance leases |
|
— |
|
|
|
— |
|
Contract and other liabilities |
|
— |
|
|
|
(1 |
) |
Net cash used in operating activities |
|
(11,051 |
) |
|
|
(10,820 |
) |
|
|
|
|
Cash flows from investing activities: |
|
|
|
Purchase of property and equipment |
|
(5,037 |
) |
|
|
(3,095 |
) |
Purchase of investments |
|
(6,024 |
) |
|
|
(15,279 |
) |
Proceeds from sale of investments |
|
4,400 |
|
|
|
19,400 |
|
Cash payments for intangible assets |
|
(580 |
) |
|
|
(156 |
) |
Net cash (used in) provided by investing
activities |
|
(7,241 |
) |
|
|
870 |
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
Cash paid for debt portion of finance leases |
|
(2 |
) |
|
|
(4 |
) |
Proceeds from exercise of stock options and ESPP stock
purchases |
|
97 |
|
|
|
521 |
|
Net cash provided by financing activities |
|
95 |
|
|
|
517 |
|
Net decrease in cash, cash equivalents, and restricted
cash |
|
(18,197 |
) |
|
|
(9,433 |
) |
Cash, cash equivalents, and restricted cash, beginning of
period |
|
39,007 |
|
|
|
55,609 |
|
Cash, cash equivalents, and restricted cash, end of
period |
$ |
20,810 |
|
|
$ |
46,176 |
|
|
|
|
|
Supplemental disclosures of cash flow
activity: |
|
|
|
Cash paid for interest, net of capitalized interest |
$ |
— |
|
|
$ |
312 |
|
Supplemental disclosure of non-cash investing and financing
activities: |
|
|
|
Acquisition of fixed assets in accounts payable and accrued
expenses |
$ |
1,119 |
|
|
$ |
4,836 |
|
Obtaining a right-of-use asset in exchange for a lease
liability |
$ |
641 |
|
|
$ |
321 |
|
Acquisition of intangible assets in accounts payable and accrued
expenses |
$ |
239 |
|
|
$ |
166 |
|
Axogen (NASDAQ:AXGN)
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Axogen (NASDAQ:AXGN)
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