Q3 2022 Anika Therapeutics Inc Earnings Call
Good evening, ladies and gentlemen, and welcome to <unk> third quarter 2022 earnings Conference call Today's conference is being recorded.
I'll now turn the call over to Mark Nemeroff, Vice President Investor Relations.
ESG and corporate Communications. Please proceed.
Thank you very much thank you and good evening everyone.
Thank you for joining us for <unk> third quarter Conference call webcast. Our Q3 earnings press release was issued after the close of the market today and is available on our Investor Relations website located at Www Dot Anika dot com as are the supplementary Powerpoint slides that will be used for the discussion today with.
With me on the call today are Dr. Cheryl Blanchard, President and Chief Executive Officer, and Mike <unk>, Executive Vice President and Chief Financial Officer and Treasurer.
Please take a moment and open the slide presentation and refer to slide number two.
Before we begin please understand that certain statements made during the call today constitute forward looking statements as defined in the Securities Exchange Act of 1930 for.
These statements are based on our current beliefs and expectations and are subject to certain risks and uncertainties. The company's actual results could differ materially from any anticipated future results performance or achievements, we make no obligation to update these statements should future financial data or events occur that differ from the forward looking statements presented today.
We also see our most recent SEC filings for more information about risk factors that could affect our performance.
In addition, during the call we may refer to several adjusted or non-GAAP financial measures, which include which includes adjusted gross margin adjusted EBITDA adjusted net income and adjusted earnings per share, which are used in addition to results presented in accordance with GAAP financial measures.
We believe that non-GAAP measures provide an additional way of viewing aspects of our operation and performance.
But when considered with GAAP financial measures and the reconciliation of GAAP measures. They provide an even more complete understanding of our business.
A reconciliation of these adjusted non-GAAP financial results to the most comparable GAAP measurements are available at the end of the presentation slide deck and our third quarter 2022 press release.
And now I'd like to turn the call over to our President and CEO , Dr. Cheryl Blanchard sharp.
Thanks, Marc good afternoon, everyone and thanks for joining us.
Please refer to slide three as I review, the third quarter highlights.
As we near the end of the year I am pleased to reflect on Anika continued journey toward becoming a global leader in joint preservation, one of the highest opportunity spaces in orthopedics.
Complex much this quarter, including reporting the exciting results from the conclusion of our third phase III clinical trial for our next generation OA pain management product.
Making significant progress towards completion of enrollment in the pivotal phase III clinical trial for <unk> fast are single stage cartilage repair product <unk>.
And receiving great surgeon feedback during the limited launch of our ex twists fixation system for sports medicine soft tissue repair.
We continue to make progress towards sustainable above market growth and profitability, including increased year over year revenue growth.
That said it is no surprise that the sector and our business continued to be impacted by ongoing disruption from the macroeconomic environment in which we are all operating which has continued to impact certain elective procedures and continues to cause supply chain issues across our business.
Third quarter revenue was $43 million up 2% from the same period last year driven by growth in joint preservation, and restoration, which was up 6% and by last time buys of certain noncore non orthopedic products in the quarter.
Our OA pain management revenues were down in the quarter based on J&J My tax order timing in the third quarter of last year, but that was offset in part by our international Visco sales, which continued the strong performance in the third quarter that we saw through the first half of this year.
While staffing and supply chain issues remain headwinds across our portfolio, we continue to benefit from our newer products such as tax asset.
As well as from our market, leading HLA based OA pain management solutions with multi injection ortho risks and single injection monovisc in the U S and internationally as well as our next generation Cingal product currently only sold outside the United States.
During the quarter, we were pleased to have J&J mitek extend their license and supply agreement for ortho <unk> in the U S. For another five years positioning the company to continue our number one market share in U S. Visco supplements through that strong ongoing partnership.
We also continued to advance cingal towards U S commercialization and further geographic expansion.
Cingal is our next generation combination <unk> supplement and steroid injectable designed to provide both short and long term osteoarthritis pain relief.
Cingal has been very successful internationally and is now sold in more than 35 countries outside the United States.
We recently announced the exciting results of our third phase III clinical trial, COVID-19, one, which I will discuss further shortly.
With our transformational strategy, we're leveraging anika is more mature and profitable OA pain management franchise to invest in high opportunity adjacent spaces, including the larger and faster growing joint preservation market, where we're establishing a strong foundation for our multiyear growth strategy.
As I will discuss further we believe our comprehensive portfolio is poised for outsized growth as we successfully managed through our supply chain challenges.
We're confident that our strategy and approach to thoughtfully developing products targeting the highest opportunity spaces will deliver meaningful solutions for surgeons and their patients and significant value to our shareholders.
As we have previously discussed new product introductions are a key driver for our growth in September we announced the first surgeries using our extra fixation system. A new addition to the Anika sports medicine portfolio that addresses the needs of surgeons performing high volume soft tissue repair procedures, such as rotator cuff repair and ankles stabilization.
Surgeries.
In addition, we've made significant progress in enrolling the pivotal phase III clinical study for our single stage cartilage repair product pile of fast, which I'm pleased to report is now 96% enrolled with 193 patients randomized between Microfracture and high all of fast.
We also continued to ramp up joint preservation medical education activities. We've.
We've held multiple events in the U S training more than 400 surgeons at in person hands on courses since the beginning of the year. In addition to holding other key events, including training at major orthopedic meetings that have engaged in additional large number of surgeons.
We continue to receive significant inbound interest from surgeons, including Kols in the product and technologies across our joint preservation portfolio and the differentiated value that we deliver to their patients. Most importantly, our medical education programs are enhancing technical and procedural confidence for our surgeons as they integrate our pre.
<unk> into their practice and return patients to active living more quickly.
Please turn to slide four.
Just last week, we were excited to announce that Cingal successfully achieved its primary endpoint in a third phase III clinical study COVID-19 O one.
Which demonstrated superiority of cingal over steroid alone for OA pain reduction at 26 weeks.
In studying a more difficult patient population compared to the prior clinical trials.
Cingal arm showed 66% improvement in the WOMAC pain index, and 90% were deemed to be <unk> responders, which means they met certain threshold improvements for both pain and function at 26 weeks.
Together with the two previous phase III studies Cingal has consistently proven itself to be a game changing next generation product for osteoarthritis patients.
And we believe the strong clinical data from all of these studies position us well to further advance cingal.
In fact across the three completed phase III studies Cingal has now demonstrated a mean, 71% pain improvement from baseline.
And I mean, 91% of subjects were deemed responders.
Also across all three completed phase III studies, we have now demonstrated the superiority of cingal over each of its active ingredients and saline placebo.
These are remarkable results in this difficult to treat patient population that underscore the significant market opportunity for cingal.
We track this space closely and have yet to see another perfect. The treats both short and long term OA pain and yield such compelling clinical benefits.
Based on our commercial success internationally and the strength of our clinical data we remain highly confident in the differentiated clinical benefits that cingal delivers compared to both the current treatment options on the market and products, we see in development.
Anika continues to control full global rights to Cingal and we intend to proceed thoughtfully as we evaluate our options to continue to commercialize cingal to best serve osteoarthritis patients around the world.
We believe Cingal has the potential to address a true unmet medical need for the more than 32 million patients in the United States suffering from osteoarthritis with an estimated next generation OA pain management U S market opportunity of at least $1 billion and additional expansion opportunities internationally.
We will be engaging with the FDA in the coming months regarding next steps for U S regulatory approval, while we're thrilled about our data foundation. Our first step is to talk to the FDA to gain that clarity before we move ahead with further investments.
In parallel we're exploring the potential to advance cingal through commercial partnerships in the U S in select Asian markets. These.
These collective efforts will inform our work streams to advance cingal, including if and how to proceed with another clinical trial in the United States.
Please turn to slide five.
As I mentioned, we had a successful limited launch of the X with which expands Anika sports medicine portfolio with a cornerstone suture anchor system ideal for key repairs in the shoulder foot and ankle and other extremities the system afford surgeons a variety of not listen not in soft tissue fixation options in a single anchor platform with the.
<unk> ability to support the surgeons preferred combination of multiple sliding suture or tape configurations.
The extra system also deploys Anika has unique explained drive technology, which provides for much easier anchor insertion relative to competitive systems cutting the number of turns required for insertion by more than half.
Technology, we intend to leverage across other anchor systems.
The extra with the strong easy to use and support healing and can be used in nearly any soft tissue repair within the shoulder and throughout the body.
Most importantly, it is uniquely suited for high volume procedures, such as rotator cuff repair and ankles stabilization surgeries.
Especially where we are focused in the ASC, where the majority of these cases are performed.
Extra us as a key growth driver in our joint preservation business and we believe it has the potential to become a true platform technology as we look to leverage certain design elements and future products.
The rotator cuff repair market in the U S alone is nearly $600 million across over 700000 procedures performed annually and we see significant expansion opportunities as we look to the future in this part of our business.
Further with the frequency of rotator cuff procedures performed particularly in the ASC.
Anika has an incredible opportunity through these touch points with customers to truly begin to capitalize on the breadth of our innovative portfolio and drive our portfolio selling effect, especially in a shoulder.
For example, we see ex twist pulling through taxes that usage in situations, where surgeons and counter poor bone quality in the shoulder.
And pulling through over motion plus in like one Wade from the joint solutions part of the portfolio.
Providing more frequent touch points with customers, who do shoulder arthroplasty.
This also paves the way for other exciting products to come in the shoulder as we move into 2023 and beyond.
We're looking forward to the full launch of X twist in early 2023.
It's the first of several anika products launching across each segment and joint preservation, including regenerative solutions Sports Medicine, and Arthur surface, our joint solutions products.
Ex twist and its successful launch demonstrates <unk> commitment and ability to successfully develop market and commercialized products within our expanded 8 billion dollar addressable global market.
Please turn to slide six as I review, our broader product pipeline.
We continue to expand the market opportunity for taxes that are rapidly growing regenerative solutions product, which we launched in 2019.
We remain focused on advancing our new product pipeline with multiple planned five 10-K filings targeting further taxes that expansion as well as a number of key shoulder solutions.
Continued expansion of the taxes that franchise will enable us to increase the addressable market to well beyond $100 million by creating a new market for hardware augmentation.
And expanding our existing insufficiency fracture tactics that base with new products and indications.
In addition to taxes that we have a cadence of multiple near term product launches over the next 18 months across the largest and fastest growing parts of the joint preservation market.
In shoulder repair, which is the biggest part of our portfolio today.
We continue to launch innovative new products across categories and procedures.
We've been making significant progress on several exciting new products.
We're approaching first surgeries with new shoulder implants, which like X twist or in a high volume segment of orthopedics.
We already have the five 10-K clearance we need to move ahead with our limited launch and we look forward to sharing a detailed update soon as our first surgeries are completed.
Our regenerative rotator cuff repair system is also on track for five 10-K submission later this year and this system will further build upon anika is growing and differentiated shoulder portfolio and leverage our regenerative platform.
As I've discussed rotator cuff repair procedures represent one of the highest volume soft tissue procedures in the ASC setting.
Our regenerative rotator cuff system, along with extra with now launching will open up additional surgeon access and even more of this expanding market for anika.
We're building, an innovative and winning shoulder portfolio ideally suited for the ASC and this will drive growth in 2023 and beyond.
All of these products will help accelerate growth as the supply chain challenges subside and reinforce the strength of our joint preservation portfolio.
We have a balanced approach to developing our pipeline that includes five 10-K's and NDA in a PMA.
We're delivering differentiated and meaningful products across the highest opportunity product categories, and regenerative solutions sports medicine and joint solutions.
The result is a portfolio that enables us to capitalize an ever changing market dynamics, while continuing to meet the needs of surgeons in the ASC and hospital settings.
Regarding longer term opportunities and joint preservation, we're continuing to deliver steady progress towards enrolling the pivotal clinical trial for our single stage cartilage repair product pile of fast, which I mentioned, we are pleased to report is now 96% enrolled.
Hello, fast delivers incredible benefits for patients and the health care system as unlike the current cartilage repair solutions available or soon to be available in the U S tile a fast as an off the shelf product that requires a single surgery and does not require removing healthy bone.
We're excited about the significant market potential for Heil, a fast which will enable us to reach an addressable market that we have conservatively size to be at least $350 million.
We expect the trial to be fully enrolled in early 2023, and we remain on track to file a pre market approval with the FDA in 2025.
Lastly, cingal is making tremendous progress towards U S approval as I discussed previously.
With our comprehensive portfolio of solutions robust foundation of clinical data in a regular cadence of new product launches planned for 2023 and beyond we have a lot of important work underway at Anika.
We remain focused on continued strong commercial execution and our hybrid sales organization is energized about the opportunities and value that are robust and growing product portfolio brings to our customers.
We're confident that we're building and delivering the right joint preservation product mix that we need to win in both the ASC and hospital settings.
Please turn to slide seven.
Before I turn the call over to Mike for a review of our financials I'd like to remind you of our transformation strategy since.
Since 2019, we have continued to grow and evolve our portfolio expanding <unk> market opportunity from 1 billion to more than $8 billion today.
We've taken our strong leadership position in the OA pain management market, which continues to generate a strong steady cash flow and actively invested in higher growth yet highly complementary areas building, a joint preservation portfolio and regenerative solutions sports and joint solutions.
We have a broad differentiated product portfolio exciting pipeline and experienced commercial team focused on the joint preservation continuum of care.
This transformation has positioned to anika for accelerated revenue growth and significant value creation. Despite the continued supply chain challenges that anika and the broader industry continued to experience.
These market dynamics and the supply chain challenges are particularly impacting our joint preservation business, while we see strong demand and potential across X twist and our other new joint preservation products supply chain has constrained the growth that we expected to see this year, but we are on a path to deliver steady supply for the full launch in early 2020.
Three.
Please turn to slide eight so I can discuss where we are in the midst of our transformation strategy.
We have maintained our market leading position in the OA pain management market in the U S with Ortho Vista, and Monovisc and advanced Cingal for U S commercialization.
Let me make some clarifying comments related to our U S Visco supplement business.
We have recently seen some other companies report out significant pricing changes in disruption to their visco businesses due to new federal legislation that was enacted earlier this year with respect to Medicare part B a S. P reporting requirements, which moves them from whack to ASP based pricing and reimbursement.
The reimbursement for ortho risk and Monovisc will not change under this new legislation because J&J mitek, our U S marketing partner was already reporting asps for our products prior to the legislation being enacted.
The requirements of this new legislation are expected to create a more level playing field for our products and will enable the selling dynamic in the market to be driven by our strong clinical data.
We remain very pleased with the stable and growing part of our business.
In 2022, we continue to make progress on key development programs to build our best in class product portfolio through advancing our product pipeline and regenerative sports Medicine joint solutions and are focused on strong commercial execution.
Over the last year, we've had successful product launches with taxis at risk motion and extras.
We're excited to get to our near term product launches in the shoulder as well as our longer term opportunities with Halo fast and Cingal, which hit key clinical milestones this year.
This year, we accelerated our in person medical education activities and remain focused on delivering value to the ASC.
And importantly, we have a healthy balance sheet with a solid cash position and no debt.
I'll now turn it over to Mike for a review of our third quarter results and then I'll wrap up the call and we will open the lineup for questions Mike.
Thanks Cheryl.
Please turn to slide nine.
I will now walk you through our financial results for the third quarter of 2022.
Total revenue for the quarter was $43 million, an increase of 2% over the prior year.
With the growth driven by joint preservation and restoration and last time buys in north on a non orthopedics sales.
Revenue in our largest product family OA pain management decreased 2% to $25 $7 million.
Due to ordering patterns from J&J mitek with.
Outsized transfer sales in Q3 of last year.
This decrease was despite continued strong growth in our international Visco supplement sales.
As a reminder, revenues in OA pain management can vary significantly on a quarterly basis based on ordering patterns by our partners and distributors both in the United States and internationally more so over the last couple of years due to the global impact of Covid.
But that quarterly volatility generally stabilizes on an annual basis.
Our joint preservation and restoration revenue increased 6% to $11 8 million.
An improved procedural volumes year over year.
That growth was limited in the period due to the market dynamics Sheryl described impacting the prioritization of elective procedures.
As well as supply chain challenges.
Our non orthopedic revenue increased to $2 8 million.
Compared with $2 $2 million last year or last time buys for certain legacy products.
Our gross margin in the third quarter was 57% and includes the impact of $1 $6 million of noncash acquisition related expenses from the 2020 acquisitions of Arthur surface and purpose as.
As well as a product rationalization related reserve of $2 $6 million associated.
David with legacy non orthopedic products that we no longer expect to sell.
Our adjusted gross margin, which excludes the acquisition related expenses and product rationalization charge was 67% in the third quarter.
From 66% last year.
From a spending standpoint, our research and development and SG&A expenses together totaled $28 6 million in the third quarter.
Up 14% from $25 2 million in the same period of 2021.
As we continue to invest in the development of key products and expand our internal capabilities in support of our growth objectives.
The growth in the quarter included increased sales related travel and medical education.
Which were largely curtailed last year as we emerge from restrictions on in person activities.
The increase in spending also reflected regulatory related expenses in support of compliance with new MBR regulations that are going into effect in Europe governing all products, we expect to continue to sell there.
As well as higher noncash stock based compensation expense driven in part by the growth in personnel to support Anika strategic transformation.
Our net loss for the quarter was $4 $2 million or 29 per share compared to net income of $600000 or <unk> <unk> per share in the third quarter of last year.
Our prior year results included a noncash tax effected benefit of $1 9 million or <unk> 13 per share associated.
With the reduction last year and fair value of contingent consideration associated with our 2020 acquisitions.
Our adjusted net loss was $700000 or <unk> <unk> per share.
Down compared to adjusted net income of $800000 or five cents per diluted share in the prior year.
With the decrease primarily reflecting higher stock based compensation.
As well as incremental commercial investment to support Anika strategic transformation and growth acceleration initiatives.
In the quarter, we generated adjusted EBITDA of $4 1 million.
That's down from $5 7 million in the third quarter of last year and reflects the increased commercial spending which had been largely curtailed last year due to the pandemic.
We generated operating cash of $2 $7 million in the quarter.
That's up from $2 1 million in the third quarter of last year.
And we made capital expenditures in the quarter of $1 $7 million.
Up from $1 3 million in the same quarter last year.
This resulted in free cash flow of $1 million in the quarter.
Up from $800000 less.
During the third quarter, we paid $4 $3 million to park as shareholders for contingent consideration associated with the 2020 acquisition of <unk> medical.
No further contingent consideration payments are expected.
<unk> balance sheet remains strong with $87 $8 million in cash and no outstanding debt.
Please turn to slide 10.
Sure.
Now I would like to review, our full year financial outlook for fiscal year 2022.
We remain on track to deliver revenue growth toward the upper end of our range of low to mid single digit growth.
As Sheryl mentioned supply chain and staffing challenges impacted our results in the third quarter.
And they remain a risk to our guidance and our ongoing areas of focus for our team.
While our overall guidance has not changed the contribution makes sense.
In OA pain management, we are encouraged by our year to date performance and now expect mid to upper single digit percent growth over last year.
This improvement over our prior guidance of low single digit growth.
This is primarily due to our better than expected international sales that continued through the third quarter.
While we believe this largely reflected order timing and expect international sales to decrease sequentially in the fourth quarter.
We now expect to end the year higher than we guided previously.
And joint preservation and restoration, we've been pleased with the positive feedback from our limited market release and strong early demand for our new extra sports medicine product.
We are also seeing continued strong demand for taxes set our <unk> enhanced regenerative solution for insufficiency fractures and hardware argumentation.
Despite these positive dynamics that we expect to drive our long term growth.
There are two headwinds that are causing us to lower our current year guidance in this business.
First supply chain challenges have and will continue to limit our ability to fully meet the strong demand for <unk> through year end.
And second electric procedures that utilize our joint preservation products have not recovered as quickly as some other segments of elective surgeries.
As a result, we are lowering our full year 2022 expected revenue growth and joint preservation and restoration to low to mid single digit percent growth over last year.
Down from our previous guidance of mid single to low double digit growth.
We expect accelerated sequential growth in the fourth quarter in part, reflecting normal seasonality and we're actively ramping up supply to support the full market release of <unk> with early and early 2023.
And our much smaller non orthopedic product family. We continue to expect revenues to decrease approximately 20% as compared to last year down primarily due to higher results last year from last time buys of legacy products and order timing.
With regard to gross margin.
Despite ongoing supply chain and staffing challenges.
Due to the positive operational results year to date, we now expect full year adjusted gross margin to be in the mid 60% range.
Up from our prior guidance of low to mid 60%.
Our team has done a tremendous job delivering high quality products for our customers as efficiently as possible in this current environment.
With regards to spending.
We continue to fund critical growth investments in research and development as well as investments in our commercial transformation such as medical education industry events building, the Anika brand and driving product awareness and system and process enhancements.
We are very excited about our new product development pipeline with a series of joint preservation products set to launch over the coming quarters, specifically targeted for the faster growing segments of the market.
Beginning with the <unk> with full market release in early 2023.
In line with our higher adjusted gross margin guidance, we are raising our expected full year 2022, adjusted EBITDA margin guidance to mid single digit percent that's.
That's up from our previous guidance of low to mid single digits.
In summary, Anika continues to demonstrate the value of its strong financial foundation in the midst of a challenging macroeconomic environment, enabling.
The company to take advantage of its exciting in house portfolio of products and technologies to position for new product launches and accelerated growth and supportive of our multiyear growth targets are.
Our team remains laser focused on both our mission to restore active living and driving value creation for our stakeholders.
I will now turn the call back over to Sheryl.
Thanks, Mike Please turn to slide 11, as I wrap up the call before we open the lineup for questions.
I would like to close by highlighting that Anika is uniquely positioned for success with a strong cash position and no debt robust foundation of clinical data and a comprehensive portfolio of product and technology solutions and new product pipeline for osteoarthritis pain management regenerative solutions sports medicine, and bone preserving joint technologies that we have.
Delivering on we.
We have multiple near term product launches starting with X with planned over the next 18 months, which will be important catalyst for growth and value creation in the coming years.
While we expect some of the macro headwinds to continue in the near term, we have actively taken steps to position anika for consistent above market growth and profitability.
All of us at Anika are taking strategic and pragmatic steps to tackle the ongoing challenges head on as we continue to deliver differentiated high quality products to our customers and their patients and drive value for our shareholders.
I'd also like to take a moment to thank all of our employees for their dedication and hard work.
It is because of their contributions that we continued to make strong progress on our evolution towards becoming a leader in joint preservation and together I look forward to achieving them many more milestones to come on our journey now we will open up the line for questions.
Thank you, ladies and gentlemen, if you'd like to ask a question. Please signal by pressing star one on your telephone keypad using a speaker phone. Please make sure. Your mute function is turned off to let your signal to reach our equipment again. Please press star one will pause a moment to give everyone an opportunity to signal for questions.
We will take our first question from George Sellers with Stephens incorporated. Please go ahead.
Thanks for taking the question and congrats on a great quarter.
I guess I want to start with sort of the underlying macro conditions and what you saw sequentially in the quarter and maybe also what you are seeing sort of quarter to date.
Are there any areas of improvement in terms of the supply chain and maybe procedure volume and staffing shortages.
How should we think about that going forward. Thank you.
Hi, George and thanks for the question Yeah, Let me, let me make some comments on on the macro conditions and I'll start out with supply chain.
I think we are.
Frankly in the same boat that the broader market is in around supply chain, we see broad implied impact around supply chain.
With respect to things ranging from raw materials to key components and we have teams of people that are micro managing this on a daily basis, and frankly I think.
That shows in our ability to deliver product and.
While that can hit gross margin frankly, we've even continued to drive reasonable gross margin even in this difficult environment. So.
I would like to say that we see it starting to give us some relief, but I think across the business. We will continue to manage through supply chain issues.
For for a bit of time to come that said on the joint preservation side of the business, where we've seen.
The largest impact we do expect to see some relief coming, especially as we move toward full release of X twists in the early part of 2023 from a procedural basis, what we see are different parts of the market recovering faster than others and specifically in orthopedics and we've seen this with reports of the law.
<unk> market players in that space. They have been knee business is coming back at kind of high single digit levels, but these the sports extremity and trauma segments have not come back as quickly and so that's really what we're referring we're referring to relative to the market dynamics.
Okay, that's really helpful.
And then following up on on the joint preservation and restoration commentary there.
It sounds like mostly what's what's driving the reduced expectations for this year is macro related but is there anything else in there that we should be aware of in terms of what's limiting maybe that growth there and anything we should read into in terms of the growth outlook in 2023.
Yeah.
Yes regarding joint preservation.
Our incredibly optimistic and confident about that business be.
The adjustment that you see for the rest of this year is really related to the supply chain issues that we just discussed and really being able to come up to frankly, the demand that we're seeing in the market on X twist, the great news about X with as we've seen incredible feedback from the limited market.
Please and it has generated significant demand that we simply haven't been able to meet in the in this.
Sort of the last part of the third quarter and as we see demand continuing to ramp into the fourth quarter, we fully expect to have that issue addressed.
Into early 2023 with the full release so.
We remain excited we were getting great feedback its a great product and we look forward to being able to meet the demand around that supply chain issue in in early next year, Mike I don't know if you have anything to add to that.
Yes, Thank you Sheryl Hi, George.
One thing I would add is as you mentioned the macro environment is not just impacting supply chain. It's also impacting which elective procedures are being done and as we've talked about what's going to drive our business over the coming years. If these new products like X twist like.
<unk> related new products, and implants, and regenerative and those new products that were introducing here over in 2023 and over the next 18 months are targeted at the high opportunity spaces and so when you think about the macro environment.
We really are pleased that the areas that we're coming out with innovative and differentiated technologies and products.
Are those high opportunity spaces, so that positions us for accelerating growth.
As we go forward.
Okay. That's really helpful. And then maybe if I could just squeeze one one last one in here as we think about some of these launches in 2023.
How should we.
Gauge sort of expectations or what should we be thinking about in terms of the build out from a sales perspective.
And a marketing perspective as well thank you.
Yes, I mean, I think we're we're excited to be able to get two announcements on our next product launches obviously.
<unk>.
Risk taxis that ex twister, all the recent ones, we've announced and I think that demonstrates our ability to develop great products too.
Really put together strong commercial programs and frankly training and education for the surgeons to really feel comfortable using them. So as we move into these next product launches in 2023, and what we see is continued ability to execute on that work and it's in a very successful way given the demand that we've seen with <unk>.
What we've done so far.
Continuing to train on on the safe and effective use of that product as we are able to drive that into the market and meet the demand that we're already seeing.
And frankly, as we've talked about accelerated growth in 2023 and 2024, it's new it's those new prospects in the GTR space that are really going to drive that.
Okay. Thank you for the time and congrats again on the quarter.
Thanks George.
Yeah.
We will take our next question from Mike with Husky with Barrington Research. Please go ahead.
Hey, good evening.
So a few questions on <unk>.
Cingal is there.
<unk> payable for speaking more meeting with the FDA for school miner.
Hope you guys out.
I mean, we expect that we'll be meeting with them in the next few months I think I think that's a.
A reasonable timeframe to expect based on the process that we're following Mike.
Okay.
And then sort of.
Switching over to <unk>.
Uh huh.
CPR on the on the supply chain issue I mean are there.
Mitigation efforts that you guys could take getting get it.
When you're an additional suppliers are there things that you can do on your end that that can sort of mitigate these issues are not really.
Yeah. It's a great question. The answer is yes, and we have been.
I will tell you our teams are working like Mad on a day to day basis micromanaging the issues.
And that's why we are confident in our full launch timing for early 2023 and that we are an attractive be able to supply.
Product for the full launch and frankly meet the demand that we have seen building in the marketplace. It's obviously very frustrating to not meet the demand that we have but it's very exciting to have the demand and to know that we've got a great product. So that when the supply chain issues are resolved, which are badly completely external to the company but.
The folks at the company are working like Crazy to address them and so that's why we're bullish about that launch in early 2023 with full supply available.
Okay terrific.
Just staying on GTR when both assets were.
Acquired I think the thought was that hey this.
Businesses this business can be a double digit grower obviously.
A bunch of external headwinds, it's not going to be that in 'twenty, two but when you think about and I'm not talking about 23, I'm just talking in general sort of three to five years normalized normalized that backdrop.
Based on what you believe I mean, as we said.
Because when these assets were bought the idea was that this business will grow double digits. I mean is that still sort of the internal belief there or.
Any thoughts around that.
Yes, Mike This is Mike <unk>.
Absolutely.
We absolutely view this as a strong double digit growth part of our business.
One of the things that I think is important to understand as well.
We're moving from a historic business that it was a $1 billion addressable market to a much larger market and we're a very small player with some really interesting differentiated technologies that now as you look at the new products that are coming out.
That we're going to be talking more and more about over the coming quarters.
And you can see it in the <unk>.
Slides the call slides, there, we talked about the sizable market opportunity the $600 million plus market opportunity for the X with Justin rotator cuff, a $600 million market and it's used in other parts of the body as well.
And that's really a platform technology that we're going to be continuing to innovate on top of.
Good.
Shoulder implants is an even bigger market and so.
We're a small player in a very big market.
And have a real right to win so yes, I mean, I think we've been able to demonstrate strong growth.
When we've introduced new products like <unk> talked about in the past about how much that's grown since 2019 and just this year and if you look at this quarter, we had 30% growth roughly so I mean, it is a healthy product.
It's differentiated that has a lot of room to grow that the tax asset and then when you introduce a product like X twist, where comes right alongside taxes that now with the new hardware augmentation.
Capability in the shoulder.
There is a lot of opportunity in this space and that's why we're making the investments that we are.
Okay. Thank you just one my last question I was going to ask you would you share how much sac grew in the quarter, but 30% or better I guess well. Thank you so much I appreciate it.
Thanks, Mike Thanks, Mike.
We will take our next question from Jim Sidoti with Sidoti <unk> Company. Please go ahead.
Hi.
Afternoon, and thanks for taking the questions and we will just follow up I got to believe that there are people and are expected to be a double digit grower.
So in the relatively near term and 6% growth in Brooklyn, Queens Brooklyn.
You guys are planning on getting to a faster growth rate pretty quickly.
To do that what do you have to do.
Other than the supply chain issues do you think you have enough surgeons trained and do you think that youll have the products available in 2023 to start to hit those metrics.
Hi, Jim Thanks for the question.
The answer is that we do think we'll have the product available, especially around X twist. We do think that we are on track in and frankly, we are on track for those additional product launches and we were excited to be able to talk about them as soon as we get to first surgeries here soon.
And we think that we've got.
Continued acceleration with training programs, we've trained a lot of surgeons, but we will continue to train at a faster and faster rate, especially as we launch those new products that's key.
And we think we've got the commercial team in place that is excited and ready to to continue to drive those new products into the market. It is definitely true that the market dynamics here recently and you can see this with the larger reporting companies have been different in the sports and extremities space.
And they have in the larger hip and knee reconstructive space that said.
Youre right, 6% with nothing to sneeze at this quarter relative to what we saw in the market. So we're excited we're confident and we think we do have everything in place to really drive that acceleration.
How about the instrument sets.
Do you have those available for when these products come out.
Yes, and in fact X with it comes with its own instruments that effectively. So it is it is an all in one deal but there are other instrument sets that we want to make available to our customers. So that we have greater mind share when we're in the or and we're able to do.
A lot more cross selling around.
With X twist in Texas at end of emotion and in like <unk> in the shoulder and in sports.
So we continue to bring additional instrument sets, but also additional inventory so that we can be there in the or with what they need.
And then with regard to Cingal.
<unk> two trial.
I don't think there's any issue with <unk>.
Grocery trials, what hasnt been emissions so.
The group performance now compared to the.
Existing products.
Yes.
Alone in steroids.
The next hurdle you have to jump over to get approval.
Yeah.
It's a great question.
We've talked about the fact that the FDA has changed the way they regulate this product from the start of our first clinical trial until where we are now.
We are very confident about the data package that we will bring to discuss with them.
There is an incredibly.
A favorable safety profile the safety profile basically no different than <unk> alone, which is significant in this space and relative to some other studies that have been published on other products and we have now demonstrated superiority to the two active ingredients into placebo, which is what the FDA wanted us to do so.
So we are excited to bring that data package to them and have that discussion with them.
Okay.
The most recent data has that spurred any interim report.
So we obviously have talked about the fact that that we are.
Interested in exploring potential partnership opportunities both in the U S. In some select Asian markets, where we don't currently sell cingal today.
And we'll obviously give you an update if we move in that direction.
Alright, thank you.
Thank you Jim.
At this time I would like to turn the conference back to Dr. Blanchard for any additional or closing remarks.
Well. Thank you all very much for your attention and interest in Anika. We look forward to speaking next on our fourth quarter year end call in March and I wish everyone a great night. Thanks.
Ladies and gentlemen, this concludes today's conference we appreciate your participation.
May now disconnect.
Yes.
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