MiMedx(US:MDXG)2022-05-04 18:39Financial Data and Key Metrics Changes - The company reported net sales of $58.9 million for Q1 2022, a slight decrease of 1.8% from $60 million in Q1 2021, primarily due to the loss of sales from micronized and particulate products in the U.S. [34] - The advanced wound care portfolio, which includes tissue and cord products, grew by $7.2 million or 13% year-over-year [36]. - Gross margin for the quarter was 83.1%, down from 83.9% in the previous year, influenced by inflationary pressures on materials and labor costs [37]. - The net loss for the quarter was $10.5 million compared to a net loss of $8.4 million in the prior year [42]. Business Line Data and Key Metrics Changes - The continuing portfolio of tissue and cord products achieved a 13% year-over-year growth in net sales [8]. - The company faced a 13% shortfall due to Section 351 products coming off the market, but strong performance in the continuing portfolio helped close that gap [35]. Market Data and Key Metrics Changes - The company anticipates a total addressable market in Japan of over 600,000 patients for EPIFIX, with an expected access to approximately 100,000 patients [19]. - The company is preparing for the launch of two new products in the U.S., AMNIOEFFECT and PCM, expected to launch in the second half of 2022 [19][22]. Company Strategy and Development Direction - The company has created two internal business units: one focused on Wound Care and Surgical recovery markets, and the other on regenerative medicine technologies [29][30]. - The company aims to launch two new products each year to improve its product vitality index [29]. - The strategic focus includes expanding into the surgical recovery market and enhancing the regenerative medicine pipeline, particularly for knee osteoarthritis [30][31]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 11% to 14% growth in the continuing portfolio for 2022, despite challenges from new product launches and market entries [43][55]. - The company is focused on addressing the treatment void in knee osteoarthritis and believes its products can significantly impact this market [138]. Other Important Information - The company is working on a micronized dHACM injectable platform, with plans to initiate a clinical trial for knee osteoarthritis later in the year [23][24]. - The company has been assessing third-party collaborators to assist with clinical trial oversight and data management [25]. Q&A Session Summary Question: Why is the company being conservative with full-year guidance despite strong growth? - Management acknowledged the strong Q1 results but noted challenges ahead due to new product launches and market entries, which informed their conservative outlook [55]. Question: Will AMNIOEFFECT and PCM launch simultaneously? - AMNIOEFFECT will have a limited market release starting in June, while PCM is expected to launch in the second half of the year without a limited release [60]. Question: What is the market missing regarding the company's core business and pipeline potential? - Management highlighted the strong fundamentals of the business, including three consecutive quarters of growth, and emphasized the significant market potential for knee osteoarthritis treatments [72][76]. Question: What specific changes will improve the stability of the micronized dHACM products? - The company has reduced the shelf life of the micronized product from five years to two years and made changes in manufacturing to enhance stability [100]. Question: How is inflation impacting the business? - The primary inflationary pressure is seen in labor costs, while raw materials, particularly donated placenta, remain unaffected by inflation [124]. Question: Will the two new products come from separate divisions? - Both AMNIOEFFECT and PCM are developed within the Wound Care and Surgical recovery group, while the regenerative medicine group focuses on clinical and research aspects [117].