Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Anika Therapeutics Inc (ANIK, Financial) reported a 7% increase in overall revenue compared to Q1 last year, driven by strong performance in OA pain management.
- The company successfully completed cost reduction initiatives, including significant headcount reductions, positioning Anika to realize $10 million in annualized cost savings.
- Anika Therapeutics Inc (ANIK) is on track to deliver 75% growth in adjusted EBITDA in 2024, accelerating profitability for the year.
- The company extended the exclusive distribution agreement with Penta farm for the Canadian market, reinforcing its market leadership position in Canada.
- Anika Therapeutics Inc (ANIK) has made significant progress in its regenerative solutions pipeline, with over 200 cases completed using the HA-based integrity implant system and positive clinical feedback.
Negative Points
- The FDA provided feedback requiring additional clarity on nonclinical data for Qingdao, delaying progress until further clarity is received.
- The RevA motion Reverse Shoulder System is experiencing a slower than anticipated adoption rate due to a complex sales cycle and the need for facility approvals.
- Anika Therapeutics Inc (ANIK) reported a net loss of $4.5 million for the quarter, although this is an improvement from the previous year's net loss of $10.4 million.
- The company's joint preservation and restoration revenue growth was partially offset by lower sales of certain mature products.
- The CFO, Michael Levitz, announced his decision to step down, introducing a period of transition in the financial leadership of the company.
Q & A Highlights
Q: How should we think about the cadence through the remainder of the year for the OA pain management business, considering its strong performance?
A: Michael Levitz, EVP, CFO, and Treasurer of Anika Therapeutics, explained that the guidance remains unchanged with expected revenue growth of 0% to 2% for the year. He noted that Q2 of the previous year had unusually high revenue due to inventory management by large companies, which makes the upcoming Q2 a tough comparison. He anticipates higher revenue in the second half of the year due to the timing of transition shipments.
Q: Can you discuss the competitive dynamics in the HA injection market, especially with new entries like Organogenesis's renew injection?
A: Cheryl Blanchard, President and CEO, mentioned that it's challenging to comment on the competition from Organogenesis's renew injection as they have not released detailed data yet. She remains confident in Anika's offerings and highlighted the upcoming launch of Hyalofast in the U.S., which she believes will be competitive due to its unique attributes and extensive data supporting its efficacy.
Q: What is the growth outlook for the Joint Preservation & Restoration business, and are you deemphasizing sales of mature products?
A: Cheryl Blanchard noted that new products like X twist and Integrity are performing well and driving growth, despite headwinds from more mature products. The company continues to focus on commercial execution and is not planning to de-emphasize sales of mature products but is instead working on enhancing their market performance.
Q: Regarding the FDA's requirements for Qingdao, how long might it take to gather and submit the necessary nonclinical data once clarity is achieved?
A: Cheryl Blanchard responded that once they have clear feedback from the FDA on the nonclinical testing requirements, she will be able to provide a more precise timeline. She emphasized that the required tests are nonclinical, not clinical, which suggests a potentially shorter timeline once the requirements are clarified.
Q: What are the expectations for gross margin improvement throughout the year?
A: Michael Levitz indicated that the adjusted gross margin for the year is expected to be between 66% and 66.5%, with improvements anticipated due to favorable product mix and resolution of one-time production inefficiencies noted in Q1. He expects the gross margin to align with full-year guidance as the year progresses.
Q: How is the Integrity product performing in its limited market release, and what feedback have you received?
A: Cheryl Blanchard shared that the Integrity product has received positive feedback from surgeons, particularly for its strength, ease of use, and patient outcomes. The product is experiencing strong market pull, and full market release is on track, which is expected to drive further growth in the Joint Preservation & Restoration segment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
