• Axogen, Inc Reports Third Quarter 2024 Financial Results and Provides BLA Update

    Source: Nasdaq GlobeNewswire / 07 Nov 2024 06:00:01   America/Chicago

    ALACHUA, Fla. and TAMPA, Fla., Nov. 07, 2024 (GLOBE NEWSWIRE) -- 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 third quarter ended September 30, 2024.

    Third Quarter Financial Results

    • Third quarter revenue was $48.6 million, a 17.9% increase compared to the third quarter of 2023.
    • In the third quarter of 2024, gross margin decreased to 74.9%, down from 76.8% in the third quarter of 2023.
    • Net loss for the quarter was $1.9 million, or $0.04 per share, compared to net loss of $4.1 million, or $0.10 per share in the third quarter of 2023.
    • Adjusted net income for the quarter was $3.1 million, or $0.07 per share, compared to adjusted net loss of $0.7 million, or $0.01 per share, in the third quarter of 2023.
    • Adjusted EBITDA was $6.5 million for the quarter, compared to an adjusted EBITDA of $2.4 million in the third quarter of 2023.
    • The balance of all cash, cash equivalents, and investments on September 30, 2024, was $30.5 million, as compared to a balance of $27.1 million on June 30, 2024

    “We are pleased with the third quarter’s topline revenue and EBITDA growth. Notably, our revenue performance in the quarter was broad based across our entire portfolio of nerve repair and protection applications, reflecting improved sales productivity and commercial execution,” commented Michael Dale, CEO and Director of Axogen, Inc. “Since joining the Axogen team, everything I’ve observed and experienced reaffirms my estimation that we have significant undeveloped potential to make nerve repair an expected standard of care around the world.”

    Summary of Business Highlights

    • On November 1st, the U.S. Food and Drug Administration (FDA) notified the company that they accepted the filing of its Biologics License Application (BLA) for Avance Nerve Graft® under a standard review and assigned a Prescription Drug User Fee Act (PDUFA) goal date of September 5th, 2025. The FDA further indicated that it does not currently plan to hold an advisory committee for the application.
    • During the quarter, at the American Society for Surgery of the Hand (ASSH), we presented novel data highlighting the extent of nerve damage that occurs in common injuries, the importance of protection of the nerve coaptation site and the growing role of Avance Nerve Graft in sensory, mixed and motor nerve repair.
    • Recently, we executed on a National Resensation Breast program as well as numerous regional surgeon education programs in Extremities and Head & Neck.

    2024 Financial Guidance

    We are maintaining our full year revenue guidance in the range of $182 million to $186 million, and now expect to be at the high end of our 74-76% full year gross margin range. Additionally, we reiterate that we expect to be net cash flow positive cumulatively for the period from April 1st through year end.

    Conference Call

    The Company will host a conference call and webcast for the investment community today at 8:00 a.m. ET. Investors interested in participating in the conference call by phone may do so by dialing toll free at (877) 407-0993 or use the direct dial-in number at (201) 689-8795. 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 Axogen

    Axogen (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 used across various applications and surgical specialties, including traumatic injuries, oral and maxillofacial surgery, breast reconstruction, and the surgical treatment of pain. These applications encompass both scheduled and emergent procedures. Specifically, scheduled procedures are often pursued by patients seeking relief from conditions caused by a nerve defect or previous surgical interventions. Such procedures include providing sensation for women undergoing breast reconstruction following a mastectomy, nerve reconstruction after the surgical removal of painful neuromas, and oral and maxillofacial procedures, as well as nerve decompression. Conversely, emergent procedures typically arise from injuries that initially present in an emergency room, with specialists intervening either immediately or within a few days following the initial injury. This broad range of applications underscores Axogen’s vital role in addressing diverse patient needs in peripheral nerve repair.

    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; Axoguard HA+ Nerve Protector™, a porcine submucosa ECM base layer coated with a proprietary hyaluronate-alginate gel, a next-generation technology designed to enhance nerve gliding and provide short- and long-term protection for peripheral nerve injuries; Avive+ Soft Tissue Matrix TM, a multi-layer amniotic membrane allograft used to protect and separate tissues in the surgical bed during the critical phase of tissue repair; 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, the United Kingdom, South Korea, and several other European and international countries.

    For more information, visit www.axogeninc.com.

    Cautionary Statements Concerning Forward-Looking Statements

    This 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. Forward-looking statements include, without limitation, the estimation of significant undeveloped potential to make nerve repair an expected standard of care around the world, the Company's expectations regarding the potential for approval of the BLA in September 2025, as well as statements under the subheading “2024 Financial Guidance.” Actual results or events could differ materially from those described in any forward-looking statements as a result of various factors, including, without limitation, global supply chain issues, hospital staffing issues, product development, product potential, clinical outcomes, regulatory process and approvals, financial performance, sales growth, surgeon and product adoption, market awareness of our products, data validation, our visibility at and sponsorship of conferences and educational events, global business disruption caused by Russia’s invasion of Ukraine and related sanctions, recent geopolitical conflicts in the Middle East, potential disruptions due to management transitions, as well as 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 and in our subsequent Quarterly Reports on Form 10Q. 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.

    About Non-GAAP Financial Measures

    To supplement our condensed consolidated financial statements, we use the non-GAAP financial measures of EBITDA, which measures earnings before interest, income taxes, depreciation and amortization, and Adjusted EBITDA which further excludes non-cash stock compensation expense and litigation and related expenses. We also use the non-GAAP financial measures of Adjusted Net Income or Loss and Adjusted Net Income or Loss Per Common Share - basic and diluted which excludes non-cash stock compensation expense and litigation and related expenses from Net Loss and Net Loss Per Common Share - basic and diluted, respectively. These non-GAAP measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures should be read in conjunction with our financial statements prepared in accordance with GAAP. The reconciliations of the non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP should be carefully evaluated.

    We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. We believe these non-GAAP financial measures are useful to investors because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the performance of our business, the Company’s cash available for operations, and the Company’s ability to meet future capital expenditure and working capital requirements.

    Contact:
    Axogen, Inc.
    InvestorRelations@axogeninc.com


    ​AXOGEN, INC.
    Condensed Consolidated Balance Sheets
    (unaudited)
    (In thousands, except share and per share amounts)

    ​September 30,
    2024    		 December 31,
    2023
    Assets  ​
    Current assets:  ​
    Cash and cash equivalents$18,662  $31,024 
    Restricted cash 6,000   6,002 
    Investments 5,868   — 
    Accounts receivable, net of allowance for doubtful accounts of $888 and $337, respectively 24,629   25,147 
    Inventory, net 29,363   23,020 
    Prepaid expenses and other 1,730   2,811 
    Total current assets 86,252   88,004 
    Property and equipment, net 85,632   88,730 
    Operating lease right-of-use assets 14,886   15,562 
    Intangible assets, net 5,215   4,531 
    Total assets$191,985  $196,827 
    ​   
    Liabilities and shareholders’ equity   
    Current liabilities:   
    Accounts payable and accrued expenses$21,177  $28,883 
    Current maturities of long-term lease obligations 1,856   1,547 
    Total current liabilities 23,033   30,430 
    ​   
    Long-term debt, net of debt discount and financing fees 47,272   46,603 
    Long-term lease obligations 19,734   21,142 
    Debt derivative liabilities 2,445   2,987 
    Other long-term liabilities 94   — 
    Total liabilities 92,578   101,162 
    ​   
    Commitments and contingencies - see Note 12   
    ​   
    Shareholders’ equity:   
    Common stock, $0.01 par value per share; 100,000,000 shares authorized; 44,002,323 and 43,124,496 shares issued and outstanding 440   431 
    Additional paid-in capital 390,677   376,530 
    Accumulated deficit (291,710)  (281,296)
    Total shareholders’ equity 99,407   95,665 
    Total liabilities and shareholders’ equity$191,985   196,827 
     

    ​

    AXOGEN, INC.
    Condensed Consolidated Statements of Operations
    (unaudited)
    (In thousands, Except share and per share amounts)

    ​ Three Months Ended Nine Months Ended
    ​ September
    30, 2024    		 September
    30, 2023    		 September
    30, 2024    		 September
    30, 2023
    ​     ​ ​
    Revenues $48,644  $41,271  $137,933  $116,090 
    Cost of goods sold  12,206   9,567   33,531   26,242 
    Gross profit  36,438   31,704   104,402   89,848 
    Costs and expenses:        
    Sales and marketing  18,924   19,165   58,437   57,471 
    Research and development  6,996   6,694   21,063   20,164 
    General and administrative  10,834   9,870   30,206   30,481 
    Total costs and expenses  36,754   35,729   109,706   108,116 
    Loss from operations  (316)  (4,025)  (5,304)  (18,268)
    Other income (expense):        
    Investment income  296   367   816   1,151 
    Rental income  90   —   90   — 
    Interest expense  (1,893)  (827)  (6,405)  (992)
    Change in fair value of derivatives  13   402   542   649 
    Other expense  (48)  (6)  (153)  (363)
    Total other (expense) income, net  (1,542)  (64)  (5,110)  445 
    Net loss $(1,858) $(4,089) $(10,414) $(17,823)
             
    Weighted average common shares outstanding — basic and diluted  43,882,110   43,022,328   43,610,481   42,821,284 
    Loss per common share — basic and diluted $(0.04) $(0.10) $(0.24) $(0.42)
     

    ​

    AXOGEN INC.
    RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
    (unaudited)
    (In thousands, except per share amounts)

      Three Months Ended Nine Months Ended
      September
    30, 2024    		 September
    30, 2023    		 September
    30, 2024    		 September
    30, 2023
             
    Net loss $(1,858) $(4,089) $(10,414) $(17,823)
    Depreciation and amortization expense  1,719   1,224   5,034   2,874 
    Investment income  (296)  (367)  (816)  (1,151)
    Income tax expense  26   12   76   331 
    Interest expense  1,893   827   6,405   992 
    EBITDA - non GAAP $1,484  $(2,393) $285  $(14,777)
             
    Non cash stock-based compensation expense $5,004  $4,747  $12,830  $13,091 
    Adjusted EBITDA - non GAAP $6,488  $2,354  $13,115  $(1,686)
             
    Net loss $(1,858) $(4,089) $(10,414) $(17,823)
    Non cash stock-based compensation expense  5,004   4,747   12,830   13,091 
    Adjusted net income (loss) - non GAAP $3,146  $658  $2,416  $(4,732)
             
    Weighted average common shares outstanding basic and diluted   43,882,110   43,022,328   43,610,481   42,821,284 
             
    Loss per common share — basic and diluted $(0.04) $(0.10) $(0.24) $(0.42)
    Non cash stock-based compensation expense $0.11  $0.11  $0.29  $0.31 
    Adjusted net income (loss) per common share - basis and diluted - non GAAP $0.07  $0.01  $0.05  $(0.11)
     

    ​

    AXOGEN, INC.
    CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
    (unaudited)
    (In thousands, except per share)

    ​Common Stock Additional
    Paid-in
    Capital
    		 Accumulated
    Deficit
    		 Total
    Shareholders'
    Equity
    ​Shares 
    Amount    		   
    Three Months Ended September 30, 2024         
    Balance at June 30, 202443,824,738 $438 $385,101  $(289,852)  95,687 
    Net loss—  —  —   (1,858)  (1,858)
    Stock-based compensation—  —  5,004   —   5,004 
    Issuance of restricted and performance stock units112,185  1  (1)  —   — 
    Exercise of stock options and employee stock purchase plan65,400  1  573   —   574 
    Balance at September 30, 202444,002,323 $440 $390,677  $(291,710)  99,407 
    ​​ ​ ​ ​ ​
    Nine Months Ended September 30, 2024​ ​ ​ ​ ​
    Balance at December 31, 202343,124,496 $431 $376,530  $(281,296) $95,665,197 
    Net loss—  —  —   (10,414)  (10,414)
    Stock-based compensation—  —  12,830   —   12,830 
    Issuance of restricted and performance stock units695,571  7  (7)  —   — 
    Exercise of stock options and employee stock purchase plan182,256  2  1,324   —   1,326 
    Balance at September 30, 202444,002,323 $440 $390,677  $(291,710) $99,407 
              
    Three Months Ended September 30, 2023         
    Balance at June 30, 202342,979,541 $430 $370,036  $(273,314)  97,152 
    Net loss—  —  —   (4,089)  (4,089)
    Stock-based compensation—  —  4,747   —   4,747 
    Issuance of restricted and performance stock units59,858  —  —   —   — 
    Exercise of stock options and employee stock purchase plan—  —  —   —   — 
    Balance at September 30, 202343,039,399 $430 $374,783  $(277,403) $97,810 
              
    Nine Months Ended September 30, 2023         
    Balance at December 31, 202242,445,517 $424 $360,155  $(259,580) $100,999 
    Net loss—  —  —   (17,823)  (17,823)
    Stock-based compensation—  —  13,091   —   13,091 
    Issuance of restricted and performance stock units356,236  4  (4)  —   — 
    Exercise of stock options and employee stock purchase plan237,646  2  1,541   —   1,543 
    Balance at September 30, 202343,039,399 $430 $374,783  $(277,403) $97,810 
     


    AXOGEN, INC.
    Condensed Consolidated Statements of Cash Flows
    (unaudited)

    ​Nine Months Ended
    ​September 30, 2024 September 30, 2023
    Cash flows from operating activities:​  
    Net loss$(10,414) $(17,823)
    Adjustments to reconcile net loss to net cash used in operating activities:   
    Depreciation 4,831   2,660 
    Amortization of right-of-use assets 889   826 
    Amortization of intangible assets 202   214 
    Amortization of debt discount and deferred financing fees 669   666 
    Provision for (recovery of) bad debt 604   (311)
    Change in fair value of derivatives (542)  (649)
    Investment (gains) loss (95)  (660)
    Share-based compensation 12,830   13,091 
    Change in operating assets and liabilities:   
    Accounts receivable (85)  (766)
    Inventory (6,343)  (4,114)
    Prepaid expenses and other 1,189   (623)
    Accounts payable and accrued expenses (7,125)  3,012 
    Operating lease obligations (1,303)  (1,012)
    Cash paid for interest portion of finance leases (2)  (2)
    Other liabilities 495   (14)
    Net cash used in operating activities$(4,200) $(5,505)
    ​​  
    Cash flows from investing activities:​  
    Purchase of property and equipment$(2,431) $(12,409)
    Purchase of investments (5,773)  (10,203)
    Proceeds from sale of investments —   42,874 
    Cash payments for intangible assets (1,280)  (732)
    Net cash (used in) provided by investing activities$(9,484) $19,530 
    ​​  
    Cash flows from financing activities:​  
    Cash paid for debt portion of finance leases$(6) $(7)
    Proceeds from exercise of stock options and ESPP stock purchases 1,326   1,543 
    Net cash provided by financing activities$1,320  $1,536 
    Net (decrease) increase in cash, cash equivalents, and restricted cash (12,364)  15,561 
    Cash, cash equivalents, and restricted cash, beginning of period 37,026   21,535 
    Cash, cash equivalents, and restricted cash, end of period$24,662  $37,096 
    ​​ ​

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