Q1 2021 MiMedx Group Inc Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the my Medics first quarter 2021, operating and financial results Conference call. At this time, all participants are in a listen only mode.
After the speaker presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone if you require any further assistance. Please press star zero I would now like to hand, the conference over to your Speaker Mr. Jack O'brien. Please go ahead.
Thank you operator, and good morning, everyone welcome to the <unk> first quarter 2021, operating and financial results Conference call.
With me on today's call are Chief Executive Officer, Tim Wright.
Chief Financial Officer, Pete Carlson, and executive Vice President and Chief Commercial Officer Rohit ketchup.
And then Pete will provide a summary of the operating and financial results for the first quarter 2021.
And at the conclusion of their remarks, Tim Pete and Dr. Cash it will be available for your questions.
Before we begin I would like to remind you that comments made during today's call include non-GAAP financial measures and we provide a reconciliation to GAAP in our press release, which is available on our website at www Dot lymphatics Dot com.
Also our comments today will include forward looking statements.
We discussed some reasons why we are optimistic actual outcomes and results are subject to risks and uncertainties and may differ materially from those anticipated due to many factors.
Listeners are directed to the cautionary notes in the press release issued today as well as the risk factors set forth in the Magnetics 2020 annual report on form 10-K for factors that could cause actual outcomes and results to differ materially from those reflected in the forward looking statements.
The company assumes no obligation to update or supplement any forward looking statements, except as required by law.
In particular, Tim had mentioned expected clinical trial, FDA submission and approval and product launch timelines for both plantar fasciitis and knee osteoarthritis.
These lead there can be no assurance that our clinical trials will produce favorable results and the actual timing of trials BLA submissions to the FDA and approval will depend on a number of factors, including COVID-19. The results of our clinical trials and other factors that may be outlined in our meetings with the FDA.
Today's prepared remarks will be followed by our typical question and answer session. During which time you will have the opportunity to ask management about our most recent quarter.
As a reminder, the purpose of the call is to discuss our financial and operating results and we appreciate you keeping your questions focused on that topic.
Please be advised that the company its directors and certain of its executive officers are participants in the solicitation of proxies from the company's shareholders in connection with the 2021 annual meeting.
The company intends to file a definitive proxy statement with the SEC in connection with any such solicitation of proxies.
Our holders are strongly encouraged to read such proxy statement once available and all other documents filed with the SEC carefully and in their entirety as they contain important information.
Information regarding the identity of the company's participants and their direct or indirect interests by securities holdings or otherwise can be found in the company's annual report on form 10-K for the fiscal year ended December 31, 2020, the company's definitive proxy statement for the 2020 annual meeting and other materials.
Filed with the SEC and updated information will be included in the company's definitive proxy statement for the 2021 annual meeting and other materials to be filed with the SEC.
These materials can be obtained free through the company's website in the section titled investors or through the SEC's website at Www Dot FCC Dot Gov.
With that I'm now pleased to turn the call over to Tim right Tim.
Thank you Jack good morning, everyone and thank you for joining us on today's call yesterday afternoon, we issued a press release reporting our first quarter 'twenty, one operating and financial results I'd like to start today's call with a review of our commercial business and then move right into an overview of our progress to date on our promising.
Late stage pipeline anthro.
After I complete my opening remarks P. Carlson, our CFO will take you through a full discussion of our first quarter results.
<unk> reported 4% growth in adjusted net sales in the first quarter driven by our wound care business. This included the positive impact from sales of our recently launched MP Court expandable product.
We further attribute the recent growth in our business to a number of strategic changes and investments we've made.
With our commercial organization. These fundamental changes coupled with the addition of talented representatives are designed to accelerate our topline growth.
Not only are we making the right changes investments within our core business, we are retaining the right people to keep our transformation.
And momentum going.
We continue to recruit highly skilled individuals with experience in biotechnology and tissue segments of the health care industry.
Supplementing these hires by focusing on supplying them with a refreshed training.
Model and clinically oriented selling tools.
The people we are onboarding are focused on selling our current portfolio of products and understand the fundamental science differentiates our products and believe in our core mission vision and values.
I'm pleased to report that our sales representative head count stands at 284 people strong.
To further supplement our sales representatives with the right tools our market access group continues to expand the availability of <unk> products to the wound care patients to increase coverage by leading payers around the country.
As you recall that in November of last year, the largest commercial payer in the United States added MP fix.
Their list, who covered products as a reminder, MP fixes the only amniotic tissue based product to receive coverage for diabetic foot ulcers by this payer.
Following this big market access when we were pleased to announce that on April 1st Premier awarded Nomex, and amniotic tissue supplier agreement under their surpassed purchasing program.
<unk> allows surpassed members take advantage of special pricing in.
In terms pre negotiated by premier form of medics amniotic tissue products, we believe that disagreement strengthens our position as an industry leader in amniotic tissue based products backed by the best in class clinical evidence along with broad coverage and reimbursement. We're excited about these new partnerships and remain.
<unk> to increasing patient access to our amniotic tissue products the heel intractable wounds.
I'm also pleased to share with you. We just received notification that another large national commercial payer added coverage for MP cord as a medically necessary option in the treatment of diabetic foot ulcers.
This in addition to the previously existing MP fixed coverage.
Another win for the <unk> team.
I wanted to shift gears now and provide some important updates on our late stage pipeline last week, we announced the final patient visits for our novel therapeutic biologic annual fixed injectable in the phase III plantar fasciitis, and Achilles Tendonitis studies as well as the final blinded efficacy visits.
For the phase II B knee osteoarthritis trial. The achievement of these milestones represents a pivotal advance but to bring amniotic tissue platform technology to market as a treatment option for a range of muscular skeletal conditions with substantial unmet patient need.
As we previously discussed existing treatments for knee osteoarthritis and plantar fasciitis are suboptimal, there is significant patient interest or alternative options that relieve pain and improved functionality.
Today, there continues to be a lack of approved an application treatment.
Particularly in knee OA, which is a widespread debilitating chronic disease.
The Memetic studies, where initially designed to prove clinical efficacy and safety of amnio fix injectable in reducing pain and improving function of these chronic conditions with the last patient business now complete we will lock the databases and conduct the appropriate statistical analysis and prepare.
For meetings with the FDA, we anticipating announcing topline results from all three studies this summer.
As you may recall, our longstanding hypothesis and the feedback from interested physicians.
Is that annual fixed Injectables certainly has the potential to work in keyless tendinitis. However, the original study design, including patient selection criteria may not have been sufficiently designed are powered to demonstrate statistical significance and capture all elements of a clinical response for these reasons that is.
Why we do not anticipate filing a BLA for Achilles Tendonitis at this time.
We continue to believe that the safety results from this study.
Good add valuable valuable information to the amnio fix injectable database and we intend to include them.
Turning now to Andy a fixed injectable for plantar fasciitis.
The phase III study was designed following promising results from our large phase two be prospective trial, which was a single blinded randomized controlled trial of 145 patients.
Previously shared that this trial demonstrated a statistically significant reduction in visual analog score or V. A S score for pain and improvement in the foot function index score.
The phase III trial enrolled 277 patients with an investigator confirmed diagnosis of plants are fasciitis. The primary endpoints are change in bas for pain at 90 days and an incident related adverse events at 180 80 days.
And serious adverse events.
Dissipated events during the first 12 months post injection.
The secondary endpoints include self reported responses to the <unk> function index at 90 days in this case the BLA filing.
Require gathering data from from two adequate and well controlled clinical trials.
Element of these tests to demonstrate consistency and reliability of our manufacturing process, along with satisfactory completion of an FDA inspection of our manufacturing facilities to comply with the agencies good.
Manufacturing practice regulations.
At this point, we believe we are on target to meet all of these criteria in the coming months and remain on track to file.
Our first BLA in the first half of 'twenty 'twenty two.
Another potentially significant opportunity coming out of our pipeline is the initiation of a phase III study in knee osteoarthritis. We are currently exploring ways to accelerate the time flying for this clinical study assuming a positive outcome from our phase <unk> results from our announced plan to initiate phase III is in the first.
Half of 'twenty two.
Osteoarthritis or OA is by far the most common joint disease and millions of adults experience pain and decreased quality of life everyday because of joint destruction caused by OE. According to published data osteoarthritis is responsible for a staggering public health and economic impact more than 240.
2 million people worldwide currently suffer from symptomatic OA of the knee and hip 45% of all people have a lifetime risk of developing OA of the knee and OE is responsible for 71 billion in lost earnings annually in the United States.
Although knee replacement is an option for those with advanced knee arthritis.
There is significant risk and current treatments, including oral anti inflammatory medications cortisone injections and hyaluronic acid injections are all limited in the amount of relief they can provide.
Additionally, anti inflammatories have negative cardiovascular effects.
Injectable steroids may cause further joint deterioration with chronic use.
Current projections indicate that nearly 18 million Americans suffer from knee osteoarthritis annually today, we estimate the injectable size of the market for our products to range from one to $1 5 million patients per year.
That is only based on upon one injection in one knee per year the.
The opportunity for <unk> is potentially significant and our goal is to file a BLA in the second half of 'twenty 'twenty four or early 2025 with an emphasis in 2021 to accelerate timelines.
I'll pause here to provide a comment on our our thinking with respect to the ability of our purion process amniotic tissue in the eye.
The old fixed injectable to slow the progression of knee OA based on our ongoing research.
We have uncovered a novel mechanism that may intent may indeed.
Support our Purion process amniotic tissue is a candidate for disease modifying all shirts Riddick therapy. This is very early research yet very very encouraging.
In addition to these exciting therapeutic biologics.
We are working towards filing two <unk> for our injectable product in the treatment of chronic cutaneous ulcers and surgical incisions and an I D E or investigational device application for amnio fill in the treatment of soft tissue defects.
Last Friday, we received notice from the FDA that the first of three of our three investigational new drug applications.
Were accepted and now in effect. This A&D was filed for chronic cutaneous ulcers and we'll keep you apprised as to the progress towards filing the additional applications once they've been successfully accepted by the FDA as submitted.
Finally, I am pleased to announce the appointment of Derek Stephens ph D. As a senior Vice President quality assurance and regulatory affairs. Dr. Stevens brings more than 35 years of strategic leadership experience and quality management and regulatory compliance across multiple device and pharmaceutical companies.
The addition of Dr. Stephens exemplifies our ongoing commitment to advancing the quality standards for both science and manufacturing in our industry is extensive operational insight relevant experience in regulatory review and submission processes and proficiency and quality system.
<unk> will be instrumental as we continue to advance our late stage pipeline under good.
Manufacturing practices, Dr. Stephens joins us from Smith, <unk> nephew, where he was accountable for regulatory submissions compliance and commercial quality assurance.
Before we get into the first quarter results I'd like to spend a minute putting into perspective, our business development thinking.
Consistent with our fiduciary responsibility to all shareholders.
We continuously evaluate the most productive choices.
For investments and capital deployment.
Several months ago, we stated that we would consider inorganic growth as an option with the goal of potentially adding to top line growth in 2021 and to support other aspects of our BLA filings.
As a company Inc.
Tend to adhere to a stringent criteria whenever we consider and evaluate potential business development opportunities and we'll continue to leverage valuable input and oversight from our highly experienced board of directors.
I will underscore that in general we employ a rigorous process in evaluating any business development opportunity and steadfastly adhere to.
So our commitment to build shareholder value and all that we do.
The evaluation of business development opportunities is no exception.
In 2021, we began the year evaluating opportunities that could potentially mitigate any risk from change in our business environment, such as the end of the enforcement discretion.
And our thinking proved correct in this matter.
We also employ a process, where we look for products with low regulatory risk in the field of regenerative medicine.
That can be integrated easily into our portfolio predominantly through a licensing agreement as a general rule, we require that any transaction enhance our competitive position by expanding either our intellectual property estate operating margins or international footprint.
Lastly, it is critical that any transaction would be accretive to adjusted EBITDA.
Within two years of acquisition.
While we have a clear set of standards for inorganic growth our focus today is.
He is on organic growth rather than inorganic growth. We are on the verge of some very important data readouts that are likely to change the future of <unk> going forward and we look forward to providing you those updates at the appropriate time.
Now I'd like to turn the call over to Pete to take you through our financial results in Q1 Pete.
Thank you, Tim and good morning, everyone.
We'll provide an overview of our first quarter 2021 financial results, starting with an update on some of the underlying trends in our business.
Overall, we saw growth in demand across our core portfolio as patients returned to the hospital for treatment of their wounds and hospitals return to a more normal operational workflow.
Additionally, as Tim noted, our new MP cord expandable product line launched this past September drove additional increased demand during the first quarter.
Net sales for the first quarter ended March 31, 2021 were $60.0 million compared to $61.7 million for the same period in 2020.
Net sales for the first quarter of 2021 and 2020 included the benefit of zero point $3 million and $4 $5 million, respectively, resulting from the change in revenue recognition methodology.
Adjusted net sales, which excludes impacts of the company's transition and revenue recognition.
$59.7 million in the first quarter of 2021, an increase of four 2% from the same period a year ago.
Gross margin in the first quarter of 2021 was 83, 9% compared to 83, 8% in the first quarter of 2020.
Selling general and administrative expenses or SG&A for the first quarter of 2021 were $45 $2 million or a decrease of three 8% compared to the first quarter of 2020.
The year over year decrease was driven by lower travel expenses due to government and company imposed restrictions on travel to mitigate the effects of the COVID-19 pandemic.
Research and development expenses were $4 $3 million for the first quarter of 2021 compared to $2 8 million for the same period last year.
The increase reflects our planned investments to support the company's clinical research efforts and includes increased consulting fees head count additions and additional activity in our preclinical studies.
We continue to expect that these costs will increase over time as we plan to file the additional inv's and continue working towards the filing of our BLA as Tim discussed.
Investigation restatement and related expenses for the quarter were significantly lower at $7 $2 million compared to $15 $6 million in the first quarter of 2020.
As a reminder, we do not anticipate incurring any more costs related to the audit committee investigation or restatement of our prior period financial information.
As both of these are complete.
Other decreases were driven by fewer expenses incurred relative to obligations to advance litigation defense cost two former members of management.
The company is no longer advancing cost to certain former members subsequent to their sentencing in late February.
Turning to the bottom line net loss in the first quarter of 2021 was $8 $4 million compared to a net loss of $4 $8 million in the first quarter of 2020.
Adjusted EBITDA was $4 $7 million in the first quarter of 2021 compared to $3 $1 million in the first quarter of 2020, reflecting the factors I've just discussed.
Now, let me review our cash position.
As of March 31, 2021, the company had $84 $7 million of cash and cash equivalents.
Compared to $95 $8 million.
December 31 2020.
Our healthy cash position continues to provide us the flexibility to invest in our key initiatives for both our core business and R&D pipeline.
Moving now to an update on enforcement discretion.
On April 21 2021 the.
The FDA reaffirmed that the period of enforcement discretion would not be extended and would therefore and on May 31 2021.
As you know this applies across the industry to products that do not meet the criteria for minimal manipulation and homologous use as outlined in section 361 of the public Health Service Act.
Our understanding is that the FDA intends to and I quote take.
Take action regarding on lawfully marketed products that do not have an IMD an effect or an approved biologics license end quote.
We believe without approval of such a license. This means companies are no longer able to actively market. The section 351 products to health care providers and patients after may 31 2021.
To put things in proper perspective.
Sales and Mark and I in particular products have represented approximately 14% of the company's net sales for the three months ended March 31, 2021, and 13% for the year ended December 31 2020.
Given the Fda's reaffirmation of the end of enforcement discretion. The company now expects adjusted net sales for 2021 to be consistent with that amount in the prior year.
This is in line with the expected impact previously disclosed in our 2021 outlook within the company's annual report on form 10-K for the year ended December 31 2020.
It is important to understand that we regularly engage with representatives at the FDA and are committed to adhering to their standards and requirements.
We agree with and welcome their rigor to ensure quality and we continue to align our plans with theirs in an effort to Maine.
Fully compliant with their guidance and direction on enforcement discretion.
I will now turn the call back to Tim Tim.
Thanks, Pete in summary, we've made significant progress on our transformation strategy in a compressed period of time.
And are starting to see tangible results stemming from our efforts.
And the initiatives, we continue to meet with and take calls from a variety of investors interested in our business and our pipeline.
Significant financial investments in R&D and commercial are now possible with most accounting and legal issues resolved.
We have several priorities and milestones ahead for 2021.
Pipeline acceleration, improving our understanding of the full potential of our.
Products based on their mechanism of action sales force expansion.
Central registration of <unk> in Japan.
Cgmp compliance and building a world class.
Regulatory quality and medical affairs team.
Just to name a few.
We're building on our strong foundation, we created in 2020 and are committed to delivering operational excellence across all functions for all stakeholders, increasing the value of our purion amniotic tissue based platform expanding.
Expanding the body of scientific evidence for our product portfolio of products, increasing patient access to the best possible wound care through an expanded coverage.
And advancing our innovative pipeline of muscular skeletal therapies, our four key priorities that we will unlock the value for shareholders.
And our entire company is ready to deliver.
Now before we open the call for questions I'd like to briefly address precious points nomination for director candidates to stand for reelection at our 21 annual meeting. The <unk> Board is made up of nine experienced and highly engaged directors who are committed to acting in the best interest of all <unk> shareholders.
As part of this commitment the company maintains a consistent and open dialogue with shareholders, including precious point, it's unfortunate that precious point is pursuing a potentially costly and distracting proxy contest instead of working constructively with the company.
Among the four directors prescient point is seeking to replace two of their own nominees from 2019, our board chair Dr. Kathy Kathy Barents.
And our audit Committee chair.
Mr. Todd Newton.
Both had been outstanding leaders and made significant contributions to our successful turnaround into the creation.
Of additional shareholder value.
Under this board stewardship, the <unk> management team is executing on its strategy and driving enhanced shareholder value and patient value.
Over the course of 2020 emetic.
<unk> successfully implemented a number of governance operational and financial initiatives that were critical to the company's future success and potential.
Our significant progress.
As created a strong foundation for growth in 'twenty, one and beyond.
With that I'd like to underscore that the purpose of todays call is to talk about our financial results.
We will not be commenting further on <unk> point on this call. We appreciate you keeping your questions focused on our results.
Operator, you May now open the lines for questions.
Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key.
Please standby, while we compile the Q&A roster.
First question comes from William Pascua Lama Kahn with H C. Wainwright. Please go ahead.
Thank you.
Good morning, Tim.
Team.
Got a few questions from me so starting off.
On the top line.
You know in the press release, you stated there was a decline in <unk>.
Sales.
And do you do it.
The decrease in recognition of contracts.
We're just not quite a bad just one 3 million compared to $4 5 million from the previous time period.
I'm just trying to understand what this statement I mean does this mean.
You did not.
Received contracts, a similar or increasing value in 'twenty. One are you are ending up some existing contacts and David have not seen any newer for companies.
I'm just trying to understand how to think about this number going forward.
Okay, It's Pete good morning.
That those remaining contracts simply relate to our transition in the accounting treatment for the <unk>.
For revenue recognition so.
At September or October 1st of 2019, when we transition from the cash receipts to add shifts method.
We had a <unk>.
Series of contour.
Contracts.
Shipments that had been made bills that had been processed the cash that it had not yet been received and we have isolated that so those are just the numbers that are a difference between net sales as reported and adjusted net sales.
We just simply use the accounting term remaining contracts. So there was a fixed amount it was about $40 million as of October one.
During the third quarter and by the end of 2020, there was $1 $8 million of that remaining a $1 $2 million.
Sorry, that's still needed to be collected so the <unk>. Three this year is just that collection, we fully expected that amount to wind down as we collected these are sales that occurred back in.
Prior to <unk>.
The fourth quarter of 2019, so the.
The point of that disclosure is to isolate those numbers to get to the more comparable.
Amounts of adjusted net sales. So those are not lost contracts or anything in that manner. It is just.
The amount we've collected on that remaining balance of news has been declining for these last quarters.
Okay.
Thanks for that explanation.
And then.
Regarding the April 'twenty, one announcement that FDA made.
Made sort of the Phs act, saying that they enforcement discretion will be.
Starting by end of May.
And your statement that the impact was about the impact or the sales that came from that was about 13% of your 2020 revenues.
So.
I understand all that but you know what.
It is.
Our commercial team and management assets.
Are trying to do in terms of.
Mitigating that loss.
You know going forward either by expanding other revenue lines of bringing any other forms of revenue. So that you know it doesn't become ma'am.
A big of an issue going forward.
Yeah.
Just on the sales I understand you have a big R&D.
That's a different question, but just on the top line.
Thank you.
This is a this is robert.
Yes, that's an excellent question about what are we trying to do.
In terms of the products and where they are used in clinical practice.
Trying to understand and we do know some places where theres an alternate at <unk>.
<unk> that can be used which is somewhat of our sheet products that can be deployed where they might have used micronize products that would no longer be available with the 261, Pat at the same time that will help us retain some of that business. We had also launching.
<unk> focused on our sheet products to expand there is again, an untapped potential for that opportunity. So as we continue to push in that area to make up for some of the gap and we also are deploying medic.
Medical education team in order to.
Deploy those resources to more effectively communicate our value proposition and we recently came out with our health economic data on the sheet side, which will further help us mitigate some of that impact. So while we can promote those products directly and we haven't been promoting them in compliance with enforcement discretion. As we go forward, we will look for those.
These four untapped potential to continue to expand and grow our business and mitigate the impact that we are optimistic and confident that we can still continue to show above market growth rate at above 10% as we go forward beyond the enforcement beyond.
Beyond the PD had been enforcement discretion is yes.
Yes.
Thank you Rohit this is Tim.
Well on the on the BD front as we said earlier in the call.
<unk> been approached by several companies around licensing deal.
Some meet our criteria.
Whether its scientific criteria clinical criteria.
And it's we're.
We're constantly scanning that dropped something into our representatives bag, but those are those are licensing types of deals. We have no. We have no interest in.
Will M&A type of deal too.
Compensate for loss of sales.
At least right now so.
I do believe what ROE hits team is doing in transitioning.
From our injectable products in certain settings.
Utilizing our tissue products I think we'll be successful in that transition.
Thank you both of them to hit them.
One last question for Bob.
The amnio fix injectable for the PFS indication.
What is I know that data is going to come out in the summer what is it that.
You need two demands demonstrate.
To get an FDA approval and also.
What else needs to be done between this summer and.
Middle of 'twenty, two when you will be filing the BLA.
Yeah.
Good question on the PFS.
As you know we've are less.
Patient out we've accomplished that.
That was pivotal now we're in the process of scrubbing that database locking it down implementing our statistical analysis plan and meeting with the FDA. So the big steps are complete the.
Complete the analysis of the phase III trial.
Meet with the FDA.
The third big important piece of this is.
Ensuring that our manufacturing facility can be validated at GMP, a big component of the BLA filing will be the chemistry manufacturing controls section, which had been working for two years since I came on with the company to make sure that we're meeting all the critical quality metrics at the SBA.
I would expect this is an important area for us I think we're all over it.
I'm very positive about our.
Our ability to file our BLA.
In the second half of 'twenty two.
Lined the three big steps there obviously there are a lot of smaller steps the very encouraging thing for me is our ongoing dialogue with the FDA in this matter as you know this isn't.
A well tread path.
So the amount of cooperation and dialogue that we get from the agency has absolutely been outstanding.
That's on the manufacturing side as well as the Clinton Glen Dev side or clinical development side. So those are the big.
The big buckets of activity that we're focused on the recent addition of Derek Stevens to our team was important thing.
From a quality standpoint, as well for me.
Manufacturing chemistry manufacturing control and GMP, So we're well positioned to get all that done and get our BLA file.
So a quick follow up Tim.
This GMP facility.
Once you have this.
Are the dead and validated.
What all products.
Will be produced at this facility. So that you don't have to kind of answer this question to the FDA in the future.
We've got products.
Yeah.
I don't think we will have to have a prior approval inspection for knee OA for example.
So that's the benefit of getting out of the shoot early with the PFS from a biologic license application standpoint.
So I really feel that.
Having an approved facility.
Having all of your data, whether whether its purity potency stability.
Basically inserted into your BLA package for P F.
We will be very advantageous now we plan to produce all of our products.
Under GMP.
I think this is an important consideration for the industry.
And it's just another focus on the high quality products that we plan to produce in the future GMP is a critical part of our strategy to.
To make sure that we're producing products the same way every day all the time.
I'll be very comfortable with where we are and our strategy around <unk>.
<unk> and that will affect.
All of our portfolio.
Yeah.
Perfect. Thank you. Thank you very much Tim.
Everybody else. Thank.
Thank you.
Thank you.
Thank you as a reminder, if you would like to ask a question. Please press. The Star then one call. Our next question will come from John Zander motion with that please go ahead.
Good morning, everyone.
To build on.
Previous questions about understanding the impact of enforcement discretion over the next year.
First just.
How will the channel as of May 31, well will everything be.
Continuing to go through that was already repositioned or just explain how that might work.
John It's Pete.
The.
And of enforcement discretion, what happens that day as we are no longer able to sell after that day, so sales up until that day will continue.
At this.
Some of the details are still being worked through but at this point there is no product recall.
<unk> of this so.
Sales up through that day, and then after that we don't ship the product out without pre mark without the biologic license application approved.
Obviously.
We'll have some production going on in some product will be out and about related to our clinical trials.
And there might be an opportunity to expand those trials to to continue to get product into patients' hands.
There's a lot of guidelines around that but.
As far as normal sales eggs they stop as of May 31.
John Let me.
Thank you have a good very good question. There let me just put this in perspective for our patients and physicians.
We've had numerous discussions with the FDA regarding patient access.
We're a patient that's been on our product for the last five years.
Over the last two years you'd like to have continuity of care.
So this is what we've stressed with the FDA is that we feel it's a responsible thing to do to continue to provide patient access to our product.
There is opportunity within the <unk>.
We'll fda's guidelines around expanded access <unk>.
We're a cost recovery model so.
We're working through that with the FDA.
That is in the interest of the physicians, we serve and the patients we serve.
So.
Once we are once we get a little more detail around that I think that we will be able to share that with our investors and equally as important being able to share that with our physicians.
And other health care workers that have been using these products successfully.
In a safe manner in an effective manner.
<unk>.
From what from our perspective, we have an obligation and a responsibility.
To appropriately.
Make sure that the patients have access to our products.
And I think we can do that under expanded access.
Okay.
And I.
I know, it's only been about a week and maybe that's enough not enough time to get feedback, but what feedback has there been from the docs and the users of Micronize products. So far about the cutoffs coming up in about four weeks or so.
I think there's confusion and every company has a little bit different story.
Around what they can and can't do some companies honestly feel that they can if they've got an <unk> on file that can continue to sell these products that's not been our discussion with the FDA.
In the April 'twenty one Dr remarks.
Laid out with all.
All the work that they've done since 2017 operating companies the opportunity.
Two <unk> pursue BLA.
Also very adamant about India enforcement discretion.
So I think theres a lot of confusion out there.
I can tell you that I've had discussions with Dr remarks, and his team about this.
We plan from our standpoint to make sure that we eliminate the confusion for our patients and for physicians.
And other health care and health care systems.
The ongoing dialogue with them that supported by the FDA.
Okay. Okay.
Okay, Yes complex issue.
I guess, we'll find out how it comes out in a couple of months I wanted to move on to the R&D that was cleared chronic cutaneous ulcers. So how does this indication expand where the product is already used.
Yeah.
All the clinical work for our products has been done in the <unk> there are other other.
Indications that wed like to pursue.
And if you see where the regulatory environment is heading it makes sense to have discrete indications that can be reimbursed in the future.
Look.
The beauty of our amniotic tissue platform.
I think as.
It's important to state here.
If you think about it <unk> was a pioneer.
And reducing to clinical practice.
Their amniotic tissue membrane that was produced by a proprietary system engineering system called Purion.
I do not believe that all amniotic tissue is created the same.
Our purion process is a unique process, it's pristine and how it delivers a finished product. The first application was in advanced wound care. This company grew dramatically during that period. It was very disruptive to wound care.
It's going to be disruptive in the muscular skeletal space as well the flexibility the strength of our amniotic tissue platform.
It is rare to be able to expand into other indications.
This whole muscular skeletal space has an enormous amount of unmet need.
We're tackling knee osteoarthritis.
If we're successful there it would change the complexion not only this company, but the industry.
And it'll be well welcomed by patients and physicians.
Other indications like Achilles Tendonitis or plantar fasciitis is just the start with this platform. We feel we can extend that into other areas.
And we're exploring those other areas, we're just not ready to initiate and pull the trigger on it.
But if you think about it.
Partially or partial thickness tiers of rotator cuff very important area here. If you can avoid surgery in that area and avoid the recuperation of the rehab process, it's very significant for that patient.
So.
I think this amniotic tissue membrane platform.
Very unique is supported by an outstanding product.
That's been engineered.
Very successfully here.
We need to build on the clinical data and we need to produce these products in a GMP environment. So that's the cool thing about this company. It's very rare when you are a company that has the.
Potential to keep adding indications based on their underlying amniotic tissue platform technology.
Now I also noted earlier in my presentation.
That we are curious.
About disease modification.
It is a tough standard to hit.
Our indications are focused around pay.
Pain relief and improved function.
Those two things together are very important in the near term long term, if we can demonstrate disease modification.
That is huge.
We got a lot of work to do there, but under the leadership of Dr. Stein of Dr. Who we are.
Really focused down in this area.
So more on that as we have more and more data that we can share with you.
Okay.
A follow up on the chronic cutaneous ulcers indication.
And maybe a snapshot of the background on the etiology and epidemiology.
Can you give us a sense of how big that is.
How it fits in.
Yes, we are.
Currently quantifying that market, we will if you think about where we are.
Look at the number of patients with <unk>.
This particular type of Ulster.
It's probably broader than <unk>.
What we're seeing with <unk>.
In the future, we'll be able to quantify that much better for you.
We have really.
Focus down on getting the IND filed obviously, we wouldn't file a <unk>. If we didn't think there was an opportunity to penetrate this market. This this has been a request by.
Practicing physicians for us the other applications that need to be considered along with this cutaneous.
Issue here is other areas such as.
No.
Tissue defects.
As well as the application of our products potentially in the burn area and I think that there are.
Really important considerations from a health economic standpoint.
Cost effectiveness or cost benefit or the benefit risk of using our products in those areas.
Rohit you may have another more perspective on this particular indication.
Well.
No I'd just say the chronic.
Chronic cutaneous won't include all the pressure aerospace along with Venus.
Diabetic foot ulcers and almost the best shows is that almost as big in market of Washington D. C. At the two combined so there's a huge potential that exclude that it allows us to access.
Tim mentioned that we had exactly that product it would be applicable and how big that opportunity is we still.
Im defining it to give you a more precise.
Aspects of that as we go forward.
Great. Thanks for taking my questions.
Thank you John.
Ladies and gentlemen, thank you for participating in today's question and answer session as well as today's conference call. You may now disconnect and have a wonderful day.
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