Axogen, Inc. · NASDAQ:AXGN
Axogen — Investor Presentation (January 2020)
39 slides from Axogen's investor presentation, Jan 13, 2020
Slide 1: Corporate presentation
As of December 31, 2019 nasdaq: axgn Corporate presentation
Slide 2: Safe harbor statement
2 This presentation 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 estimate
Slide 3: The Axogen platform for nerve repair
3 The Axogen platform for nerve repair revolutionizing the science of nerve repair™
Slide 4: The function of nerves
4 The function of nerves Nerves are like wires • Transfer signals across a network • If cut, data cannot be transferred • If crushed, short circuits and data corruption may occur The peripheral nervous system is a vast network from every organ to and from the brain • Sensory • Motor • Autonomic revo
Slide 5: Axogen is the preeminent nerve repair company with a foundation for long-term sustainable growth
Axogen is the preeminent nerve repair company with a foundation for long-term sustainable growth 5 ✓ Exclusively focused in peripheral nerve repair across an expanding set of applications addressing large market opportunity ✓ Differentiated platform for nerve repair, anchored with Avance® Nerve Graf
Slide 6: Delivering strong consistent revenue growth & gross margins
6 84.2% Gross Margin for the quarter ended September 30, 2019 $23.4 $28.1 Q4 2018 Q4 2019 Q4 Revenue (a) 20% Growth U.S. $ in millions Delivering strong consistent revenue growth & gross margins revolutionizing the science of nerve repair™ a) Unaudited estimate of 2019 year-end and fourth quarter re
Slide 7: Guidance Update January 12, 2020
Guidance Update January 12, 2020 revolutionizing the science of nerve repair™ 7 2019 • Revenue at least $106.6m • Gross margin above 80% 2020 • Revenue approximately $124m - $128m • Direct sales rep increase to approximately 126 - 131 • Gross margin above 80% • Operating margin will see modest impro
Slide 8: How are nerves injured?
8 How are nerves injured? Transections Motor vehicle accidents, power tool accidents, battle field injuries, gunshot wounds, surgical injuries, natural/other disasters Compression Carpal, cubital, tarsal tunnel revision, blunt trauma, previous surgery Repair Protect revolutionizing the science of ne
Slide 9: Current targeted nerve markets (U.S.)
Current targeted nerve markets (U.S.) 9 Trauma $1.9B Breast $250M OMF $300M Carpal & Cubital Tunnel $270M U.S. potential procedural estimates >900,000** • Trauma: > 700,000(1,2,3,4) • Carpal Tunnel Revisions & Cubital Tunnel: 130,000(5,6,7,8) • OMF: > 55,000(9,10,11,12,13,14,15,16,17) • Breast Neuro
Slide 10: Estimated $2.7B value of market opportunity in existing applications
Annual Incidence(a) Weighted Average Procedure Value Total Addressable Market Trauma 700,000(b) $2,725(C) $1,900M Carpal and Cubital Tunnel 130,000 $2,100 $270M Oral and Maxillo-Facial (OMF) 56,000 $5,400 $300M Breast Reconstruction Neurotization 24,500 flaps (15,000 patients) $10,200 $250M Totals >
Slide 11: Trauma total addressable market
11 Trauma total addressable market revolutionizing the science of nerve repair™
Slide 12: Trauma total addressable market (continued)
Trauma total addressable market (continued) 12 revolutionizing the science of nerve repair™
Slide 13: Traditional transection repair options are suboptimal
Traditional TRANSECTION repair options are suboptimal 13 SUTURE Direct suture repair of no-gap injuries • Common repair method • May result in tension to the repair leading to ischemia • Concentrates sutures at the coaptation site AUTOGRAFT Traditional method despite several disadvantages • Secondar
Slide 14: Processed human nerve allograft for bridging nerve gaps
14 25 µm Processed human nerve allograft for bridging nerve gaps Clinically studied off-the-shelf alternative • A biologically active nerve therapy with more than ten years of comprehensive clinical evidence • 84% meaningful recovery in sensory, mixed and motor nerve gaps in multi-center study22 • E
Slide 15: Traditional compression repair options are suboptimal
Traditional COMPRESSION repair options are suboptimal 15 VEIN WRAPPING Autologous vein • Barrier to attachment to surrounding tissue • Requires extra time and skill to perform spiral wrapping technique • Second surgery site HYPOTHENAR FAT PAD Autologous vascularization flap • Barrier to attachment t
Slide 16: Axogen solution for compression repair
16 Axogen solution for COMPRESSION repair Minimally processed porcine extracellular matrix for wrapping and protecting injured peripheral nerve Protects repair site from surrounding tissue • Processing results in an implant that works with the body’s natural healing process32 • Minimizes soft tissue
Slide 17: Processed human umbilical cord as resorbable soft tissue barrier
17 Processed human umbilical cord intended for surgical use as a resorbable soft tissue barrier Smart processing to preserve the natural properties of the umbilical cord amniotic membrane Designed with the surgeon in mind • Easy to handle, suture, or secure during a surgical procedure • Up to 8x thi
Slide 18: Axogen platform for nerve repair
Axogen platform for nerve repair 18 Repair peripheral nerve discontinuities. Transected nerve (5mm-70mm) Repair transected or severed peripheral nerves. Transected nerve (< 5mm) revolutionizing the science of nerve repair™ Connection Protection Protect injured nerves and reinforce nerve reconstructi
Slide 19: Avance IP and regulatory barriers to competitive entry
19 Avance IP and regulatory barriers to competitive entry Avance Nerve Graft is processed and distributed in accordance with US FDA requirements for Human Cellular and Tissue-based Products (HCT/P) Avance Nerve Graft Issued U.S. Patents 6,696,575 9,572,911 6,972,168 9,597,429 7,402,319 9,690,975 7,7
Slide 20: Unique Avance technology creates barriers to competitive entry
Unique Avance technology creates barriers to competitive entry revolutionizing the science of nerve repair™ 20 January 12, 2020 Progress toward Biologic License Application (BLA) for Avance Nerve Graft • Received Regenerative Medicine Advanced Therapy (RMAT) designation for Avance Nerve Graft in Sep
Slide 21: Market development strategy
21 Market development strategy Build Market Awareness Educate Surgeons, Develop Advocates Grow Body of Clinical Evidence Execute Sales Plan Expand Product Pipeline + Applications revolutionizing the science of nerve repair™
Slide 22: Focus on building awareness among surgeons, patients, and investors
22 Focus on building awareness among surgeons, patients, and investors Build Market Awareness Participate in clinical conferences • Exhibits, podium presentations, KOL panels Promote awareness among patients • Axogen patient ambassador program Garner positive media attention • National, regional and
Slide 23: Emphasis on education
23 P I L L A R 2 Emphasis on education Build Market Awareness Educate Surgeons, Develop Advocates • During the last 3 years, held 58 national programs including 25 in 2019 • Trained three-quarters of hand and microsurgery Fellows in 2019 • Expanded offering includes trauma, Breast, OMF, Pain and Fel
Slide 24: Strong commitment to developing clinical evidence
24 P I L L A R 3 *Total number as of September 30, 2019 for the portfolio of surgical implant products. Certain publications contain data on multiple products. Strong commitment to developing clinical evidence Build Market Awareness Educate Surgeons, Develop Advocates Grow Body of Clinical Evidence
Slide 25: Strong commitment to developing clinical evidence
25 P I L L A R 3 Strong commitment to developing clinical evidence Build Market Awareness Educate Surgeons, Develop Advocates Grow Body of Clinical Evidence RANGER® Registry Study: Enrollment Ongoing • The largest multi-center clinical study in peripheral nerve repair; >2,000 Avance nerve repairs en
Slide 26: Focused sales execution, increasing market penetration
26 P I L L A R 4 Focused sales execution, increasing market penetration Build Market Awareness Educate Surgeons, Develop Advocates Grow Body of Clinical Evidence Execute Sales Plan Sales execution focused on driving results • Continue expansion by driving penetration in active accounts and adding ne
Slide 27: What are the new CMS outpatient reimbursement rates?
64912 Nerve allograft repair 5432 $4,566 $ 5,508 21% $1,920 $3,422 78% 64910 Conduit or vein allograft repair2 5432 $4,566 $ 5,508 21% $2,613 $3,133 20% 64891 Autograft repair (hand and foot>4cm)3 5432 $4,566 $ 5,508 21% $1,920 $2,829 47% 64885-98 Autograft repair (all other nerve type) 4 5432 $4,56
Slide 28: 2020 CMS Physician Fee Schedule
2020 Center for Medicare and Medicaid Services (CMS): Physician Fee Schedule (PFS) revolutionizing the science of nerve repair™ 28 January 12, 2020 • In 2020 physician fees for allograft procedures increased 18% from 2019 – Traditionally CMS payments for physician services do not vary significantly
Slide 29: Expand the opportunity in nerve repair
29 P I L L A R 5 Expand the opportunity in nerve repair Build Market Awareness Educate Surgeons, Develop Advocates Grow Body of Clinical Evidence Execute Sales Plan Expand Product Pipeline + Applications International Expansion Product Pipeline Future Market Development Market Expansion Core Busines
Slide 30: Platform for nerve repair across multiple applications
30 Platform for nerve repair across multiple applications Breast Neurotization Loss of breast sensation affects QOL Urology Prostatectomy OMF Iatrogenic nerve injuries, mandible tumor resections affects eating, speaking, intimacy Extremities (Trauma and Compression) Acute trauma, revision carpal tun
Slide 31: Focus on neuroma pain from orthopedic surgeries or trauma
31 Focus on neuroma pain from orthopedic surgeries or trauma • A neuroma is a tangled mass of disorganized nerve and fibrous tissue that can impair function and cause chronic pain • If not properly diagnosed and addressed, the management of these injuries may require long-term pharmacologic treatmen
Slide 32: Historical management options for chronic neuropathic pain
32 Pharmacological Agents Local Injections Physical Therapy Epidural Injections Opioids Nerve Blocks Pain Pumps RFA Neuromodulation Historical management options for chronic neuropathic pain revolutionizing the science of nerve repair™
Slide 33: Creating solutions for chronic neuropathic pain
Creating solutions for chronic neuropathic pain 33 Generate & publish clinical evidence Build a physician referral pathway Build market awareness Examples of initiatives Objectives Build evidence with defined algorithm in selected applications Increase awareness of the surgical treatment of pain as
Slide 34: Axoguard nerve cap for stump neuroma pain
34 • Completed clinical evaluation and user preference study • Enrolling REPOSE, a randomized controlled study of neuroma revision • Product launch expected in February 2020 US FDA Clearance – K163446 Indicated to protect a peripheral nerve end and separate the nerve from the surrounding environment
Slide 35: Executive team
Executive team 35 Karen Zaderej Chairman, CEO, & President J&J (Ethicon) Greg Freitag, JD, CPA General Counsel Pfizer, Guidant Erick DeVinney VP, Clinical & Translational Sciences Angiotech, PRA Intl Mike Donovan VP, Operations Zimmer Peter J. Mariani Chief Financial Officer Lensar, Hansen, Guidant
Slide 36: Balance sheet and capital structure
36 Balance Sheet Highlights September 30, 2019 Cash, Cash Equivalents, and Investments $106.1 million Total Bank Debt $0 Capital Structure (shares) September 30, 2019 Common Stock 39,461,318 Common Stock Options, RSUs, PSUs 4,584,991 Common Stock and Common Stock Equivalents 44,046,309 Balance sheet
Slide 37: Axogen is the preeminent nerve repair company with a foundation for long-term sustainable growth
Axogen is the preeminent nerve repair company with a foundation for long-term sustainable growth 37 ✓ Exclusively focused in peripheral nerve repair across an expanding set of applications addressing large market opportunity ✓ Differentiated platform for nerve repair, anchored with Avance® Nerve Gra
Slide 38: Awards and recognition
nasdaq: axgn Deloitte Technology Fast 500 : 2014, 2015, 2016, 2017, 2018, 2019 Russell 2000 Index : June 2016 DecisionWise Intl Employee Engagement Best Practices Award Winner: 2018 38 revolutionizing the science of nerve repair™
Slide 39: Footnotes
39 Footnotes 1. National Hospital Ambulatory Medical Care Survey: 2015 Emergency Department Summary Tables – Table 18. https://www.cdc.gov/nchs/data/nhamcs/web_tables/2015_ed_web_tables.pdf 2. Noble, et al.. Analysis of Upper and Lower Extremity Peripheral Nerve Injuries in a Population of Patients