8-K
Axogen, Inc. (AXGN)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 13, 2020
AXOGEN, INC .
**(**Exact name of registrant as specified in its charter)
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| Minnesota | **** | 001-36046 | **** | 41-1301878 |
| (State or other jurisdiction of | | (Commission File Number) | | (IRS Employer Identification No.) |
| incorporation) | | | | |
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| 13631 Progress Boulevard , Suite 400 , | | |
| Alachua , Florida **** | | 32615 |
| (Address of Principal Executive Offices) | | (Zip Code) |
Registrant’s telephone number, including area code
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| ( 386 ) 462-6800 |
| (Former name or former address if changed since last report,) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e- 4(c))
Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class | | Trading Symbol(s) | | Name of exchange on which registered |
| Common Stock, $0.01 par value | | AXGN | | The Nasdaq Stock Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On January 13, 2020, Axogen, Inc. (the “Company”) issued a press release announcing its estimated fourth quarter and full year 2019 revenue. A copy of the press release is furnished as Exhibit 99.1.
The information furnished pursuant to Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of such section, nor shall it be incorporated by reference into future filings by the Company under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, unless the Company expressly sets forth in such future filing that such information is to be considered “filed” or incorporated by reference therein.
Item 7.01 Regulation FD Disclosure.
On January 13, 2020, the Company also released a corporate update related to the estimated fourth quarter and full year 2019 revenue, among other items to be presented in San Francisco, California at the Solebury Trout Management Access SF 2020 Event and JP Morgan 38^th^ Annual Healthcare Conference on January 13–15, 2020 and January 16, 2020, respectively. A copy of the investor update is furnished as Exhibit 99.2.
The information in this Item 7.01, including Exhibit 99.2, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section and shall not be deemed incorporated by reference into any filing under the Securities Act or Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
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|---|---|---|
| Exhibit No. | Description | |
| 99.1 | | Axogen, Inc. Press Release, dated January 13, 2020. |
| 99.2 | | Axogen, Inc. Corporate Presentation, dated January 13, 2020. |
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | AXOGEN, INC. | |
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| Date: January 13, 2020 | By: | /s/ Gregory G. Freitag |
| | | Gregory G. Freitag |
| | | General Counsel |
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Ex\_99.1
Exhibit 99.1
Axogen Reports Preliminary Unaudited Revenue for Fourth Quarter and Full-Year 2019 and Provides 2020 Annual Guidance
ALACHUA, FL – January 13, 2020 – Axogen, Inc. (NASDAQ: AXGN), a global leader in developing and marketing innovative surgical solutions for peripheral nerve injuries, today announced preliminary unaudited fourth quarter and full-year 2019 revenue.
Preliminary Unaudited Fourth Quarter and Year-End Performance Highlights | · | Fourth quarter revenue is expected to be at least $28.1 million, up 20% compared to fourth quarter 2018 revenue of $23.4 million | | --- | --- | | · | Full-year 2019 revenue is expected to be at least $106.6 million, up 27% compared to 2018 revenue of $83.9 million | | --- | --- | | · | Ended the fourth quarter with 109 direct sales representatives, including 8 former OMF sales roles that were converted to full line territory reps during the quarter. This represents a net increase of 4 representatives during the quarter and 24 representatives in 2019 | | --- | --- | | · | Revenue from our direct sales channel represented approximately 90% of total revenue in the fourth quarter, compared to approximately 85% in the fourth quarter of 2018 | | --- | --- | | · | Increased active accounts in the fourth quarter to 797, up 12% from 712 in the fourth quarter a year ago | | --- | --- |
“We delivered solid revenue growth in both the fourth quarter and the full year, and I am pleased with the progress we continue to make in rebalancing and refocusing our commercial efforts towards extremity trauma, our largest market opportunity,” commented Karen Zaderej, chairman, CEO, and president of Axogen. “New market development requires persistence and hard work, and I am confident that we have the right team and commercial strategy in place to continue driving strong surgeon adoption of our technology over the next several years.”
Updated 2019 Financial Guidance
Management has updated its 2019 revenue guidance and now expects 2019 revenue to be at least $106.6 million. Management reiterates its expectation of full-year 2019 gross margin above 80%.
2020 Financial Guidance
Management anticipates that 2020 revenue will be approximately $124 million to $128 million and expects that the number of direct sales representatives will increase to approximately 126 to 131. Additionally, management expects gross margin to remain above 80% and that operating margin will see moderate improvement year over year.
Exhibit 99.1
The results disclosed in this press release are preliminary and unaudited. The Company will report full, audited results for the fourth quarter and year ended December 31, 2019 on February 24, 2020.
Previously Scheduled Investor Meetings to be Held This Week
Members of the Axogen senior management team will participate in the Solebury Trout Management Access SF 2020 Event in San Francisco, January 13 –15, 2020. These annual meetings provide an opportunity for management to meet individually with investors to address Axogen’s differentiated platform for nerve repair in an expanding set of applications.
Presentation at JP Morgan Healthcare Conference
As previously announced, Karen Zaderej will present at the JP Morgan 38th Annual Healthcare Conference in San Francisco. The presentation is scheduled for Thursday, January 16, 2020 at 10:30 a.m. PST (1:30 p.m. EST). The presentation will be webcast live and will be accessible through the Investors page at www.axogeninc.com. For those not available to listen to the live broadcast, a replay will be archived for 90 days and will be available through the Investors page on www.axogeninc.com.
The company’s updated corporate presentation is available through the investors page on www.axogeninc.com.
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, 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 Avive® Soft Tissue Membrane, a processed human umbilical cord intended for surgical use as a resorbable soft tissue barrier. The Axogen portfolio of products is available in the United States, Canada, the United Kingdom, and several other European and international countries.
Cautionary Statements Concerning Forward-Looking Statements
Exhibit 99.1
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. The forward-looking statements may include, without limitation, statements regarding our growth, our 2019 and 2020 guidance, product development, product potential, financial performance, sales growth, product adoption, market awareness of our products, data validation, our assessment of our internal controls over financial reporting, our visibility at and sponsorship of conferences and educational events. 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 discussed under Part I, Item 1A., “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, 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.
Peter J. Mariani, Chief Financial Officer
pmariani@axogeninc.com
InvestorRelations@AxogenInc.com
Exhibit 99.2
| As of December 31, 2019<br>nasdaq: axgn<br>Corporate presentation |
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| 2<br>This presentation contains “forward-looking” statements as<br>defined in the Private Securities Litigation Reform Act of 1995.<br>These statements are based on management's current<br>expectations or predictions of future conditions, events, or<br>results based on various assumptions and management's<br>estimates of trends and economic factors in the markets in<br>which we are active, as well as our business plans. Words<br>such as “expects,” “anticipates,” “intends,” “plans,” “believes,”<br>“seeks,” “estimates,” “projects,” “forecasts,” “continue,” “may,”<br>“should,” “will,” “goals,” and variations of such words and<br>similar expressions are intended to identify such forward-<br>looking statements. The forward-looking statements may<br>include, without limitation, statements regarding our growth,<br>our 2019 and 2020 guidance, product development, product<br>potential, financial performance, sales growth, product<br>adoption, market awareness of our products, data validation,<br>our assessment of our internal controls over financial<br>reporting, our visibility at and sponsorship of conferences and<br>educational events.<br>The forward-looking statements are and will be subject to<br>risks and uncertainties, which may cause actual results to<br>differ materially from those expressed or implied in such<br>forward-looking statements. Forward-looking statements<br>contained in this presentation should be evaluated together<br>with the many uncertainties that affect our business and our<br>market, particularly those discussed under Part I, Item 1A.,<br>“Risk Factors,” of our Annual Report on Form 10-K for the<br>fiscal year ended December 31, 2018, as well as other risks<br>and cautionary statements set forth in our filings with the U.S.<br>Securities and Exchange Commission. Forward-looking<br>statements are not a guarantee of future performance, and<br>actual results may differ materially from those projected. The<br>forward-looking statements are representative only as of the<br>date they are made and, except as required by applicable law,<br>we assume no responsibility to publicly update or revise any<br>forward-looking statements, whether as a result of new<br>information, future events, changed circumstances, or<br>otherwise.<br>Safe harbor statement<br>revolutionizing the science of nerve repair™ |
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| 3<br>The Axogen platform for nerve repair<br>revolutionizing the science of nerve repair™ |
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| 4<br>The function of nerves<br>Nerves are like wires<br>• Transfer signals across a network<br>• If cut, data cannot be transferred<br>• If crushed, short circuits and data corruption may occur<br>The peripheral nervous system is a vast network<br>from every organ to and from the brain<br>• Sensory<br>• Motor<br>• Autonomic<br>revolutionizing the science of nerve repair™ |
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| Axogen is the preeminent nerve repair company<br>with a foundation for long-term sustainable growth<br>5<br>✓ Exclusively focused in peripheral nerve<br>repair across an expanding set of applications<br>addressing large market opportunity<br>✓ Differentiated platform for nerve repair,<br>anchored with Avance® Nerve Graft<br>✓ 10+ years of demonstrated clinical<br>consistency and meaningful recovery<br>outcomes<br>✓ 105 peer-reviewed clinical publications<br>featuring the Axogen product portfolio<br>(as of September 30, 2019)<br>✓ Avance RMAT designation highlights<br>clinical evidence strength and unmet medical<br>need for improved nerve injury treatments<br>✓ “Five Pillar” Market Development<br>Strategy delivered 36 consecutive quarters of<br>YOY double-digit growth<br>✓ Commercial and Professional Education<br>capability to convert experienced surgeons<br>while training the next generation<br>✓ Significant barriers to competitive entry<br>✓ Solid balance sheet provides resources to<br>execute business plan<br>✓ Experienced management team with<br>strong track record of success<br>revolutionizing the science of nerve repair™ |
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| 6<br>84.2% Gross Margin for the quarter ended September 30, 2019<br>$23.4<br>$28.1<br>Q4 2018 Q4 2019<br>Q4 Revenue (a)<br>20% Growth<br>U.S. $ in millions<br>Delivering strong consistent revenue growth & gross margins<br>revolutionizing the science of nerve repair™<br>a) Unaudited estimate of 2019 year-end and fourth quarter revenue.<br>• Solid revenue growth in Q4<br>and 2019<br>• Continuing to rebalance and<br>refocus our commercial efforts<br>toward our largest market<br>opportunity of extremity trauma<br>• Completed conversion of 8<br>former OMF sales roles to full<br>line reps in late Q4<br>• Solid commercial foundation in<br>place to drive strong adoption<br>of our technology over the next<br>several years<br>Operational Highlights |
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| Guidance Update<br>January 12, 2020 revolutionizing the science of nerve repair™ 7<br>2019<br>• Revenue at least $106.6m<br>• Gross margin above 80%<br>2020<br>• Revenue approximately $124m - $128m<br>• Direct sales rep increase to approximately 126 - 131<br>• Gross margin above 80%<br>• Operating margin will see modest improvement year<br>over year<br>• Continued maturation of expanded sales<br>footprint, offset by near-term effects of efforts to<br>refocus commercial strategy toward extremity<br>trauma<br>• Measured approach to expanding the<br>commercial organization in 2020 after<br>significant change in 2019<br>• Net price increase in the low single digit range<br>Factors contemplated in 2020 revenue<br>guidance include: |
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| 8<br>How are nerves injured?<br>Transections<br>Motor vehicle accidents, power<br>tool accidents, battle field injuries,<br>gunshot wounds, surgical injuries,<br>natural/other disasters<br>Compression<br>Carpal, cubital, tarsal tunnel<br>revision, blunt trauma,<br>previous surgery<br>Repair<br>Protect<br>revolutionizing the science of nerve repair™ |
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| Current targeted nerve markets (U.S.)<br>9<br>Trauma<br>$1.9B<br>Breast<br>$250M<br>OMF<br>$300M<br>Carpal & Cubital<br>Tunnel<br>$270M<br>U.S. potential procedural estimates >900,000**<br>• Trauma: > 700,000(1,2,3,4)<br>• Carpal Tunnel Revisions & Cubital Tunnel:<br>130,000(5,6,7,8)<br>• OMF: > 55,000(9,10,11,12,13,14,15,16,17)<br>• Breast Neurotization Procedures: 15,000(18)<br>*$2.7B estimate does not include pain market<br>**Referenced papers were used to derive specific assumptions in the procedure potential<br>estimates. Papers used include both U.S. and OUS databases and studies.<br>>$2.7 Billion*<br>revolutionizing the science of nerve repair™ |
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| Annual<br>Incidence(a)<br>Weighted Average<br>Procedure Value<br>Total Addressable<br>Market<br>Trauma 700,000(b) $2,725(C) $1,900M<br>Carpal and Cubital Tunnel 130,000 $2,100 $270M<br>Oral and Maxillo-Facial<br>(OMF) 56,000 $5,400 $300M<br>Breast Reconstruction<br>Neurotization<br>24,500 flaps<br>(15,000 patients) $10,200 $250M<br>Totals >900,000<br>(potential) >$2.7B<br>a) Annual incidence of PNI surgery are figures rounded to the nearest thousandth except for Breast Reconstruction Neurotization (rounded to nearest hundredth).<br>b) See slides 9 and 10 for further details.<br>c) Includes factor of 1.22 nerves by procedure based upon data observed in the RANGER® registry.<br>10<br>Estimated $2.7B value of market opportunity<br>in existing applications<br>revolutionizing the science of nerve repair™ |
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| 11<br>Trauma total addressable market<br>revolutionizing the science of nerve repair™ |
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| Trauma total addressable market (continued)<br>12 revolutionizing the science of nerve repair™ |
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| Traditional TRANSECTION repair options are suboptimal<br>13<br>SUTURE<br>Direct suture repair of no-gap injuries<br>• Common repair method<br>• May result in tension to the repair<br>leading to ischemia<br>• Concentrates sutures at the<br>coaptation site<br>AUTOGRAFT<br>Traditional method despite several<br>disadvantages<br>• Secondary surgery<br>• Loss of function and sensation at<br>harvest site<br>• 27% complication rate including<br>infection, wound healing and chronic<br>pain 19<br>• Limited availability of graft length and<br>diameter<br>HOLLOW-TUBES<br>Convenient off the shelf option; limited<br>efficacy & use<br>• Provides only gross direction for<br>regrowth<br>• Limited to small gaps<br>• 34%-57% failure rate >5mm gaps20, 21<br>• Semi-rigid and opaque material limits<br>use and visualization<br>• Repair reliant on fibrin clot formation<br>revolutionizing the science of nerve repair™ |
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| 14<br>25 µm<br>Processed human nerve allograft for bridging nerve gaps<br>Clinically studied off-the-shelf alternative<br>• A biologically active nerve therapy with more than ten years of comprehensive clinical evidence<br>• 84% meaningful recovery in sensory, mixed and motor nerve gaps in multi-center study22<br>• Eliminates need for an additional surgical site and risks of donor nerve harvest22<br>• May reduce OR time<br>Structural support for regenerating axons<br>• Cleansed and decellularized extracellular matrix (ECM)<br>• Offers the benefits of human peripheral nerve micro-architecture and handling<br>Revascularizes and remodels into patient’s own tissue similar to autologous nerve23<br>16 Size options in a variety of lengths (up to 70mm) and diameters (up to 5mm)<br>Only minimally processed porcine ECM for connector-assisted coaptation<br>Alternative to direct suture repair<br>• Reduces the risk of forced fascicular mismatch24, 25<br>Alleviates tension at critical zone of regeneration<br>• Disperses tension across repair site26<br>• Moves suture inflammation away from coaptation face27, 28<br>Revascularizes and remodels into patient’s own tissue28, 29, 30, 31<br>Axogen solutions for TRANSECTION repair<br>revolutionizing the science of nerve repair™ |
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| Traditional COMPRESSION repair options are suboptimal<br>15<br>VEIN WRAPPING<br>Autologous vein<br>• Barrier to attachment to surrounding<br>tissue<br>• Requires extra time and skill to<br>perform spiral wrapping technique<br>• Second surgery site<br>HYPOTHENAR FAT PAD<br>Autologous vascularization flap<br>• Barrier to attachment to surrounding<br>tissue<br>• Only wraps part of the nerve<br>circumference<br>• Increases procedure time<br>COLLAGEN WRAPS<br>Off-the-shelf<br>• Semi-rigid material limits use<br>• Degrades over time and does not<br>provide a lasting barrier to soft tissue<br>attachment<br>revolutionizing the science of nerve repair™ |
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| 16<br>Axogen solution for COMPRESSION repair<br>Minimally processed porcine extracellular matrix for<br>wrapping and protecting injured peripheral nerve<br>Protects repair site from surrounding tissue<br>• Processing results in an implant that works with the<br>body’s natural healing process32<br>• Minimizes soft tissue attachments33<br>Allows nerve gliding<br>• Minimizes risk of entrapment33<br>• Creates a barrier between repair and surrounding tissue bed33<br>• ECM Revascularizes and remodels into patient’s own tissue29,34<br>Easy to use<br>• Semi-translucent to allow visualization of underlying nerve<br>• Conforms to nerve<br>revolutionizing the science of nerve repair™ |
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| 17<br>Processed human umbilical cord intended for surgical use as<br>a resorbable soft tissue barrier<br>Smart processing to preserve the natural properties of the umbilical cord<br>amniotic membrane<br>Designed with the surgeon in mind<br>• Easy to handle, suture, or secure during a surgical procedure<br>• Up to 8x thicker than placental amniotic membrane alone35<br>• Specifically designed as a resorbable soft tissue barrier to separate<br>the tissue layers for at least 16 weeks36<br>Axogen resorbable solution to protect from the<br>surrounding environment<br>revolutionizing the science of nerve repair™ |
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| Axogen platform for nerve repair<br>18<br>Repair peripheral nerve<br>discontinuities.<br>Transected nerve (5mm-70mm)<br>Repair transected or severed<br>peripheral nerves.<br>Transected nerve (< 5mm)<br>revolutionizing the science of nerve repair™<br>Connection Protection<br>Protect injured nerves and<br>reinforce nerve reconstruction<br>while preventing soft tissue<br>attachments.<br>Surgical use as a resorbable<br>soft tissue barrier. |
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| 19<br>Avance IP and regulatory barriers to competitive entry<br>Avance Nerve Graft is<br>processed and<br>distributed in<br>accordance with US<br>FDA requirements for<br>Human Cellular and<br>Tissue-based<br>Products (HCT/P)<br>Avance Nerve Graft<br>Issued U.S. Patents<br>6,696,575 9,572,911<br>6,972,168 9,597,429<br>7,402,319 9,690,975<br>7,732,200 9,996,729<br>7,851,447 10,311,281<br>8,758,794 10,441,681<br>8,986,733<br>9,402,868<br>Axogen has Enforcement<br>Discretion from FDA<br>allowing continued sales<br>under controls applicable to<br>HCT/Ps with agreed<br>transition plan to regulation<br>as a Biological Product<br>under a Biologic License<br>Application (BLA) if<br>approved.<br>A new (non-biosimilar)<br>competitive processed nerve<br>allograft we believe would<br>need to complete clinical<br>testing and obtain BLA<br>approval prior to clinical<br>release.<br>Avance expected to be<br>the reference product<br>for the category of<br>processed nerve<br>allograft<br>Avance Nerve Graft<br>IP protection to 2023 and beyond<br>New (non-biosimilar) Competitive BLA<br>product estimated 8 years<br>Protection from potential biosimilars –12<br>years data exclusivity from BLA approval<br>revolutionizing the science of nerve repair™ |
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| Unique Avance technology creates barriers to competitive entry<br>revolutionizing the science of nerve repair™ 20 January 12, 2020<br>Progress toward Biologic License Application (BLA) for Avance Nerve Graft<br>• Received Regenerative Medicine Advanced Therapy (RMAT) designation for Avance Nerve Graft in<br>September 2018<br>– Highlights strength of clinical evidence and the unmet medical need for improved therapies to treat<br>nerve injuries<br>• On track to reach RECON enrollment of 220 subjects by end of Q2 2020<br>– Prospective randomized controlled double-blinded study compares Avance Nerve Graft to synthetic<br>conduits in digital injuries<br>• Expected protection from potential biosimilars –12 years data exclusivity from BLA approval<br>• Began the build-out of our new 70,000 square foot, state-of-the-art biologics processing facility<br>– Facility being built to cGMP standards under 21 CFR Part 210/211 regulations<br>– Anticipate full transition of tissue processing by early 2022<br>– Supports long term capacity expansion |
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| 21<br>Market development strategy<br>Build Market<br>Awareness<br>Educate Surgeons,<br>Develop Advocates<br>Grow Body of<br>Clinical Evidence<br>Execute Sales Plan<br>Expand Product<br>Pipeline + Applications<br>revolutionizing the science of nerve repair™ |
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| 22<br>Focus on building awareness among<br>surgeons, patients, and investors<br>Build Market<br>Awareness<br>Participate in clinical conferences<br>• Exhibits, podium presentations, KOL panels<br>Promote awareness among patients<br>• Axogen patient ambassador program<br>Garner positive media attention<br>• National, regional and local broadcast, print and online<br>revolutionizing the science of nerve repair™ |
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| 23<br>P I L L A R 2<br>Emphasis on education<br>Build Market<br>Awareness<br>Educate Surgeons,<br>Develop Advocates<br>• During the last 3 years, held 58 national programs<br>including 25 in 2019<br>• Trained three-quarters of hand and microsurgery<br>Fellows in 2019<br>• Expanded offering includes trauma, Breast, OMF, Pain<br>and Fellows national programs as well as targeted<br>regional programs<br>• Expect to train three-quarters of hand and microsurgery<br>Fellows in 2020<br>revolutionizing the science of nerve repair™ |
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| 24<br>P I L L A R 3<br>*Total number as of September 30, 2019 for the portfolio of surgical implant<br>products. Certain publications contain data on multiple products.<br>Strong commitment to developing clinical evidence<br>Build Market<br>Awareness<br>Educate Surgeons,<br>Develop Advocates<br>Grow Body of<br>Clinical Evidence<br>105<br>Portfolio Peer<br>Reviewed<br>Clinical<br>Papers*<br>Extremity Trauma<br>Breast<br>Oral & Maxillofacial<br>Other Applications<br>67<br>2<br>Pain<br>18<br>10<br>8<br>revolutionizing the science of nerve repair™ |
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| 25<br>P I L L A R 3<br>Strong commitment to developing clinical evidence<br>Build Market<br>Awareness<br>Educate Surgeons,<br>Develop Advocates<br>Grow Body of<br>Clinical Evidence<br>RANGER® Registry Study: Enrollment Ongoing<br>• The largest multi-center clinical study in peripheral nerve repair; >2,000 Avance nerve<br>repairs enrolled to date<br>• Overall meaningful recovery rates of 82-84%; comparable to autograft outcomes without<br>associated donor site comorbidities<br>MATCHSM Registry Study: Enrollment Ongoing<br>• Autograft and Synthetic Conduit outcomes<br>RECONSM Study: Enrollment Ongoing<br>• Prospective, randomized study of Avance Nerve Graft controlled vs Synthetic conduits in<br>digital injuries 5 to 25mm<br>• IND Pivotal Study to support BLA Submission<br>• Study enrollment target of 220 expected to be completed by the end of Q2 2020<br>Sensation-NOW ® Registry Study: Enrollment Ongoing<br>• Multi-center clinical study in breast neurotization<br>REPOSESM: Enrollment Ongoing<br>• Prospective, randomized study of Axoguard Nerve Cap<br>controlled vs neurectomy<br>revolutionizing the science of nerve repair™ |
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| 26<br>P I L L A R 4<br>Focused sales execution,<br>increasing market penetration<br>Build Market<br>Awareness<br>Educate Surgeons,<br>Develop Advocates<br>Grow Body of<br>Clinical Evidence<br>Execute Sales<br>Plan<br>Sales execution focused on driving results<br>• Continue expansion by driving penetration in active<br>accounts and adding new active accounts<br>• 5,100 potential U.S. accounts perform nerve repair<br>• 797 active accounts as of December 31, 2019<br>o Top 10% of active accounts represent approximately 35%<br>of total revenue<br>Expanded sales reach<br>• U.S. direct sales team<br>o 85 direct sales professionals at end of 2018<br>o 109 direct sales professionals at end of 2019<br>o 126 - 131 direct sales professionals expected by end of 2020<br>• Supplemented by independent agencies<br>• Revenue from direct sales channel represented<br>approximately 90% of total revenue in Q4<br>revolutionizing the science of nerve repair™ |
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| 64912 Nerve allograft repair 5432 $4,566 $ 5,508 21% $1,920 $3,422 78%<br>64910 Conduit or vein allograft repair2 5432 $4,566 $ 5,508 21% $2,613 $3,133 20%<br>64891 Autograft repair (hand and foot>4cm)3 5432 $4,566 $ 5,508 21% $1,920 $2,829 47%<br>64885-98 Autograft repair (all other nerve type) 4 5432 $4,566 $ 5,508 21% $1,920 - $3,575 $2,170 -39% to +13%4<br>64831, 61, 58 Direct Repair (digital, brachial plexus, sciatic) 5431 $4,566 $1,719 -62% $1,920 $793 -59%<br>What are the new CMS outpatient reimbursement rates?<br>27<br>Although CMS rates1 only apply to Medicare cases, which represents a small percentage of traumatic<br>injuries, the increased 2020 rates reflect the positive evolution of nerve repair, and private payors are often<br>influenced by the analysis and decisions made by CMS<br>Hospital Outpatient and ASC rates:<br>Allograft, autograft and conduit repair increase<br>Direct repair for digital, sciatic and brachial plexus rates decrease<br>(all other direct repairs = allograft and autografts)<br>1. National average payment rates. Commercial payments are traditionally 1.5-2x higher than Medicare.<br>2. ASC 2019 and 2020 payment for Conduits received device intensive status for both years.<br>3. ASC 2020 payment for autograft repair CPT 64891 hand/foot >4cm met device intensive criteria for the first time<br>4. ASC 2020 payment for autograft repair CPT 64885 - head/neck </4cm, 64886 - head/neck >4cm, and 64890 -hand/foot </4cm, lost device intensive status with a<br>29%-39% decrease ($3,575, $3,172, $3,075 payment respectively in 2019) |
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| 2020 Center for Medicare and Medicaid Services (CMS):<br>Physician Fee Schedule (PFS)<br>revolutionizing the science of nerve repair™ 28 January 12, 2020<br>• In 2020 physician fees for allograft procedures increased 18% from 2019<br>– Traditionally CMS payments for physician services do not vary significantly from year to year.<br>64912 Nerve allograft repair $804 $ 951 18%<br>64910 Conduit or vein allograft repair $825 $820 -1%<br>64885 to 64898* Autograft repair $1,096 to $1,495 $1,096 to $1,495 -1% to 0%<br>64831 to 64868* Direct Repair $713 to $1,604 $717 to $1,578 -2% to 1%<br>*excludes add-on procedure codes |
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| 29<br>P I L L A R 5<br>Expand the opportunity in nerve repair<br>Build Market<br>Awareness<br>Educate Surgeons,<br>Develop Advocates<br>Grow Body of<br>Clinical Evidence<br>Execute Sales Plan<br>Expand Product<br>Pipeline + Applications<br>International<br>Expansion<br>Product<br>Pipeline<br>Future<br>Market<br>Development<br>Market<br>Expansion<br>Core<br>Business<br>revolutionizing the science of nerve repair™ |
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| 30<br>Platform for nerve repair across multiple applications<br>Breast<br>Neurotization<br>Loss of breast sensation<br>affects QOL<br>Urology<br>Prostatectomy<br>OMF<br>Iatrogenic nerve<br>injuries,<br>mandible tumor<br>resections<br>affects eating,<br>speaking, intimacy<br>Extremities<br>(Trauma and<br>Compression)<br>Acute trauma, revision<br>carpal tunnel and<br>cubital tunnel<br>Head &<br>Neck<br>OB/GYN<br>Ophthalmology<br>General<br>Surgery<br>Pain<br>Iatrogenic injuries,<br>post-traumatic, migraine,<br>joint pain, amputations,<br>symptomatic neuromas,<br>and nerve compressions<br>Cardio<br>Thoracic<br>Orthopedic<br>Podiatry<br>Vascular<br>revolutionizing the science of nerve repair™ |
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| 31<br>Focus on neuroma pain from<br>orthopedic surgeries or trauma<br>• A neuroma is a tangled mass of disorganized<br>nerve and fibrous tissue that can impair<br>function and cause chronic pain<br>• If not properly diagnosed and addressed, the<br>management of these injuries may require<br>long-term pharmacologic treatment and pain<br>management<br>The surgical treatment of pain<br>revolutionizing the science of nerve repair™ |
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| 32<br>Pharmacological<br>Agents<br>Local Injections<br>Physical Therapy<br>Epidural<br>Injections<br>Opioids Nerve Blocks<br>Pain Pumps<br>RFA<br>Neuromodulation<br>Historical management options<br>for chronic neuropathic pain<br>revolutionizing the science of nerve repair™ |
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| Creating solutions for chronic neuropathic pain<br>33<br>Generate &<br>publish<br>clinical evidence<br>Build a<br>physician<br>referral pathway<br>Build market<br>awareness<br>Examples of initiatives Objectives<br>Build evidence with defined<br>algorithm in selected applications<br>Increase awareness of the surgical<br>treatment of pain as a viable option<br>• Educate physician referral base through podium<br>presentations and papers across disciplines<br>• Conduct education programs in nerve pain<br>Establish the surgical treatment of<br>pain as a valid treatment option<br>Develop<br>business model<br>Create the most efficient model<br>for clinicians and Axogen<br>• Establish referral pathways to nerve pain surgeons<br>• Standardize algorithm for patient selection and<br>integrated care<br>• Expand our KOL pain advisory board<br>• Launch patient awareness/activation programs<br>• Partner with pain advocacy groups<br>• Enroll patients in the Nerve Pain Registry<br>• Enroll REPOSESM – Axoguard® Nerve Cap RCT<br>• Initiate RCT on neuroma treatment<br>revolutionizing the science of nerve repair™ |
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| 34<br>• Completed clinical evaluation and<br>user preference study<br>• Enrolling REPOSE, a randomized<br>controlled study of neuroma revision<br>• Product launch expected in<br>February 2020<br>US FDA Clearance – K163446<br>Indicated to protect a peripheral nerve end and separate the nerve from the<br>surrounding environment to reduce the development of symptomatic or<br>painful neuroma.<br>Axoguard nerve cap for stump neuroma pain<br>revolutionizing the science of nerve repair™ |
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| Executive team<br>35<br>Karen Zaderej<br>Chairman, CEO,<br>& President<br>J&J (Ethicon)<br>Greg Freitag, JD, CPA<br>General Counsel<br>Pfizer, Guidant<br>Erick DeVinney<br>VP, Clinical &<br>Translational<br>Sciences<br>Angiotech, PRA Intl<br>Mike Donovan<br>VP, Operations<br>Zimmer<br>Peter J. Mariani<br>Chief Financial Officer<br>Lensar, Hansen, Guidant<br>Eric A. Sandberg<br>Chief Commercial<br>Officer<br>Guidant<br>Ivica Ducic, M.D., Ph.D.<br>Medical Director<br>Washington Nerve<br>Institute<br>Angelo Scopelianos, Ph.D.<br>VP, Research & Development<br>J&J<br>Isabelle Billet<br>Chief Strategy & Business<br>Development Officer<br>J&J, C.R. Bard, Cardinal<br>Maria Martinez<br>Chief Human<br>Resources Officer<br>HSNi, Bausch + Lomb<br>Mark Friedman, Ph.D.<br>VP, Regulatory & QA<br>AtriCure, Enable<br>Medical<br>revolutionizing the science of nerve repair™ |
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| 36<br>Balance Sheet Highlights September 30, 2019<br>Cash, Cash Equivalents, and Investments $106.1 million<br>Total Bank Debt $0<br>Capital Structure (shares) September 30, 2019<br>Common Stock 39,461,318<br>Common Stock Options, RSUs, PSUs 4,584,991<br>Common Stock and Common Stock Equivalents 44,046,309<br>Balance sheet and capital structure<br>revolutionizing the science of nerve repair™ |
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| Axogen is the preeminent nerve repair company<br>with a foundation for long-term sustainable growth<br>37<br>✓ Exclusively focused in peripheral nerve<br>repair across an expanding set of applications<br>addressing large market opportunity<br>✓ Differentiated platform for nerve repair,<br>anchored with Avance® Nerve Graft<br>✓ 10+ years of demonstrated clinical<br>consistency and meaningful recovery<br>outcomes<br>✓ 105 peer-reviewed clinical publications<br>featuring the Axogen product portfolio<br>(as of September 30, 2019)<br>✓ Avance RMAT designation highlights<br>clinical evidence strength and unmet medical<br>need for improved nerve injury treatments<br>✓ “Five Pillar” Market Development<br>Strategy delivered 36 consecutive quarters of<br>YOY double-digit growth<br>✓ Commercial and Professional Education<br>capability to convert experienced surgeons<br>while training the next generation<br>✓ Significant barriers to competitive entry<br>✓ Solid balance sheet provides resources to<br>execute business plan<br>✓ Experienced management team with<br>strong track record of success<br>revolutionizing the science of nerve repair™ |
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| nasdaq: axgn<br>Deloitte Technology Fast 500 : 2014, 2015, 2016, 2017, 2018, 2019<br>Russell 2000 Index : June 2016<br>DecisionWise Intl Employee Engagement Best Practices Award Winner: 2018<br>38 revolutionizing the science of nerve repair™ |
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| 39<br>Footnotes<br>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<br>2. Noble, et al.. Analysis of Upper and Lower Extremity Peripheral Nerve Injuries in a Population of Patients with Multiple Injuries. J Trauma. 1998; 45(1): 116-122.<br>3. Uzun, et al., Traumatic peripheral nerve injuries: demographic and electrophysiologic findings of 802 patients from a developing country. J Clin Neuromusc Dis. 2006; 7(3): 97–103.<br>4. Portincasa, et al. Microsurgical treatment of injury to peripheral nerves in upper and lower limbs: a critical review of the last 8 years. Microsurgery. 2007; 27(5): 455–462.<br>5. Medicare National HCPS Aggregate Summary Table CY2016. https://data.cms.gov/Medicare-Physician-Supplier/Medicare-National-HCPCS-Aggregate-Summary-Table-CY/jtra-d83c/data<br>6. Sotereanos, et al. Vein wrapping for the treatment of recurrent carpal tunnel syndrome. Tech Hand Up Extrem Surg.1997; 1(1):35-40.<br>7. Seradge, et al. Cubital tunnel release with medial epicondylectomy factors influencing the outcome. J Hand Surg Am. 1998; 23(3): 483-491.<br>8. Papatheodorou, et al. Preliminary results of recurrent cubital tunnel syndrome treated with neurolysis and porcine extracellular matrix nerve wrap. J Hand Surg Am. 2015; 40(5): 987-992<br>9. Lin, et al. Systematic Review and Meta-Analysis on Incidence of Altered Sensation of Mandibular Implant Surgery - PLoS One. 2016; 11(4): e0154082.<br>10. Hussaini. Procedure frequency in the jaws related to implant location. Dent Oral Craniofac Res. 2016; 2(2): 230-233.<br>11. Nguyen, et al. Risk factors for permanent injury of inferior alveolar and lingual nerves during third molar surgery. J Oral Maxillofac Surg. 2014; 72(12): 2394-2401.<br>12. Cheung, et al. Incidence of neurosensory deficits and recovery after lower third molar surgery: a prospective clinical study of 4338 cases. Int J Oral Maxillofac Surg. 2010; 39(4): 320–326.<br>13. Dental Implants Market (Product - Endosteal Implants, Subperiosteal Implants, Transosteal Implants, Intramucosal Implants; Material - Titanium Implants, Zirconium Implants; End User - Hospitals, Dental Clinics, and Academic & Research Institutes) - Global Industry Analysis,<br>Size, Share, Growth, Trends, and Forecast 2017 – 2025. https://www.transparencymarketresearch.com/dental-implants-market.html<br>14. Cha, et al. Frequency of bone graft in implant surgery. Maxillofac Plast and Reconstr Surg. 2016; 38(1): 19.<br>15. Miloro, M (ed). Trigeminal Nerve Injuries. Springer; 2013.<br>16. Pogrel et al. Permanent nerve involvement resulting: From inferior alveolar nerve blocks. J Am Dent Assoc. 2000; 131(7): 901-907.<br>17. Agbaje, et al. Systematic review of the incidence of inferior alveolar nerve injury in bilateral sagittal split osteotomy and the assessment of neurosensory disturbances. Int. J Oral Maxillofac. Surg. 2015; 44(4): 447-451.<br>18. ASPS 2017– Plastic Surgery Statistics Report. www.plasticsurgery.org/documents/News/Statistics/2017/plastic-surgery-statistics-full-report-2017.pdf<br>19. Rappaport, et al. Clinical utilization and complications of sural nerve biopsy. Am J Surg. 1993; 166(3): 252-256.<br>20. Weber, et al. A randomized prospective study of polyglycolic acid conduits for digital nerve reconstruction in humans. Plast Reconstr Surg. 2000; 106(5): 1036-1045.<br>21. Wangensteen, et al. Collagen tube conduits in peripheral nerve repair: A retrospective analysis. Hand. 2010; 5(3): 273-277.<br>22. Data on file at Axogen<br>23. Karabekmez, et al. Early clinical outcomes with the use of decellularized nerve allograft for repair of sensory defects within the hand. Hand. 2009; 4(3): 245-249.<br>24. Boeckstyns, et al. Collagen conduit versus microsurgical neurorrhaphy: 2-year follow-up of a prospective, blinded clinical and electrophysiological multicenter randomized, controlled trial. J hand Surg Am. 2013; 38(12): 2405-2411.<br>25. Brushart, et al. Selective reinnervation of distal motor stumps by peripheral motor axons. Exp Neurol. 1987; 97(2): 289-300.<br>26. Schmidhammer, et al. Alleviated tension at the repair site enhances functional regeneration: The effect of full range of motion mobilization on the regeneration of peripheral nerves--histologic, electrophysiologic, and functional results in a rat model. J Trauma. 2004; 56(3): 571-584.<br>27. Tang, et al. The optimal number and location of sutures in conduit-assisted primary digital nerve repair. J Hand Surg Eur Vol. 2018; 43(6): 621-625.<br>28. Data on file at Axogen<br>29. Badylak, et al. Small intestinal submucosa: A substrate for in vitro cell growth. J Biomater Sci Polym Ed. 1998; 9(8): 863-878.<br>30. Hodde, et al. Effects of sterilization on an extracellular matrix scaffold: Part II. Bioactivity and matrix interaction. J Mater Sci Mater Med. 2007; 18(4): 545-550.<br>31. Nihsen, et al. Bioactivity of small intestinal submucosa and oxidized regenerated cellulose/collagen. Adv Skin Wound Care. 2008; 21(10): 479-486.<br>32. Hodde, et al. Vascular endothelial growth factor in porcine-derived extracellular matrix. Endothelium. 2001; 8(1): 11-24.<br>33. Data on file at Axogen<br>34. Kokkalis, et al. Assessment of processed porcine extracellular matrix as a protective barrier in a rabbit nerve wrap model. J Recon MicroSurg. 2011; 27(1): 19-28.<br>35. Data on file at Axogen<br>36. Data on file at Axogen<br>37. Data on file at Axogen. American Society for Surgery of the Hand. 2019.<br>revolutionizing the science of nerve repair™<br>Avance Nerve Graft, Axoguard Nerve Protector, Axoguard Nerve Connector, Axoguard Nerve Cap, Avive Soft Tissue Membrane, RANGER, revolutionizing the science of nerve repair, and<br>their logos are trademarks of Axogen Corporation. Axoguard Nerve Connector and Axoguard Nerve Protector are manufactured in the United States by Cook Biotech Incorporated, West<br>Lafayette, Indiana, and are distributed exclusively by Axogen Corporation.<br>LB 588 |
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