Anika Therapeutics(ANIK) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for the second quarter was $28.2 million, an 8% decline compared to the same period in 2024 [21] - Adjusted EBITDA from continuing operations was negative $200,000, a decline of $4.9 million compared to the same period in 2024 [28] - Gross margin for the second quarter was 51%, down 16 percentage points from the same period last year, primarily due to a one-time $3 million charge related to lower yields [25][26] Business Line Data and Key Metrics Changes - Regenerative solutions revenue grew 41% year over year, driven by the Integrity Implant System [18][22] - Revenue in the OEM channel declined 13% to $16.3 million, reflecting continued pressure on demand and pricing for OrthoVisc and lower pricing for MONOVisc [23] - International OA pain sales experienced a 10% decline, primarily due to unfilled orders stemming from lower yields [22] Market Data and Key Metrics Changes - The U.S. augmentation market remains primarily driven by the shoulder, but there is meaningful traction in other areas such as the hip, knee, and ankle, representing over $40 million in addressable market opportunity [16] - Integrity has achieved sequential growth for five consecutive quarters and is on track to more than double in 2025 [22] Company Strategy and Development Direction - The company plans to submit the third and final PMA module for HYALOFAST in the second half of the year, with an extended commercial timeline to 2027 [13][14] - The company is focused on leveraging proprietary hyaluronic acid technologies and has streamlined its organizational structure to align with future growth [28][19] Management's Comments on Operating Environment and Future Outlook - Management remains confident in the key value drivers of the business, particularly the performance of Integrity and the anticipated double-digit organic growth in the commercial channel [35] - Despite the HYALOFAST trial not meeting its primary endpoints, management believes the totality of the data supports a viable path to FDA approval [35][44] Other Important Information - The company ended the second quarter with $53 million in cash and no debt, maintaining strong liquidity [30] - The company has successfully completed divestitures of Parkis and Arthrosurface, allowing for a focused strategy on core products [19] Q&A Session Summary Question: What will drive the sequential improvement in gross margin? - Management indicated that the sequential improvement is expected due to the resolution of one-time charges and improved performance excluding those impacts [38][39] Question: Any progress on additional OEM partnerships? - Management stated that there are no new updates on additional OEM partnerships but continues to assess opportunities [40][41] Question: How should the market opportunity for Integrity be viewed with new configurations? - Management expressed optimism about the expanded market opportunity with new shapes and sizes for Integrity, which are expected to enhance market penetration [42][43] Question: What gives confidence for FDA approval of HYALOFAST despite missed primary endpoints? - Management noted that the FDA has encouraged submission of the full data package, including secondary endpoints that achieved statistical significance [44][45] Question: How should gross margin be viewed as the commercial channel grows? - Management indicated that while the commercial channel may have lower gross margins, new products like Integrity and HYALOFAST are expected to be accretive to gross margin [50][52] Question: Will cash flow improve going forward? - Management expects improvements in operating cash flow, although capital expenditures may impact cash balance [55][56] Question: Will capacity be sufficient to meet demand for new products? - Management indicated that continued investments will be necessary to meet future demand for Integrity, CINGAL, and HYALOFAST [57][58] Question: Any updates on the HYALOFAST trial's patient data? - Management confirmed that the study had a target of 200 patients, but dropout rates were higher in the microfracture arm, impacting the data set [62][63]