Q4 2022 AxoGen Inc Earnings Call
Speaker 1: The.
Speaker 2: Welcome to the Axigen 4th Quarter 2022 Conference Call. This time all participants are in listen-only mode.
Speaker 2: A brief question and answer session will follow the formal presentation.
Speaker 2: As a reminder, this conference is being recorded.
Speaker 2: I would now like to turn the conference over to your host Ed Joyce, Axigen's Director of Vesta Relations.
Speaker 2: Please begin, Mr. Joyce.
Speaker 3: Thank you, Rob, and good morning, everyone.
Speaker 3: Joining me on today's call is Karen Zattere, Act of Defense Chairman, Chief Executive Officer and President, and Pete Mariani, Executive Vice President and Chief Financial Officer.
Speaker 3: Karen will discuss the quarter and our outlook for the year, and people will provide an analysis of our financial performance, followed by a question and answer session.
Speaker 3: Today's call is being broadcast live via webcast, which is available on the investor section of the Actogen website.
Speaker 3: Following the end of the live call, a replay will be available on the investor section of the company's website at www.axigeninc.com.
Speaker 3: Before we get started, I'd like to remind you that during this conference call, the company will make projections and forward-link statements regarding future events, including the 2023 financial outlook, timing of the BLA submission, and growth trajectory of the framework.
Speaker 3: Forward-looking statements are based on current beliefs and assumptions and are not guarantees of future performance and are subject to risk and uncertainties, including, without limitation, the risks and uncertainties reflected in the company's annual and periodic reports.
Speaker 3: Actual results or events could differ materially from those described in any forward-link statement as a result of various factors, including, without limitation, the continued impact of COVID-19 on our business, global supply chain issues, record inflation, the impacts of the failure of Silicon Valley Bank, and the recent turmoil in the banking industry.
Speaker 3: hospital staffing issues, product development, product potential.
Speaker 3: expected clinical enrollment timing and outcomes, regulatory process and approvals, APC renovation timing and expense,
Speaker 3: financial performance, sales growth, surgeon and product adoption, market awareness of our products, data validation, our visibility at and sponsorship of conferences and educational events, global business disruption caused by Russia's invasion of Ukraine and related sanctions.
Speaker 3: as well as those risk factors described under Part 1, Item 1A, Risk Factors of our annual report on Form 10K for the most recently ended fiscal year.
Speaker 3: Forward-looking statements are not a guarantee of future performance, and actual results may differ materially from those projected.
Speaker 3: The forward-looking statements are representative only as of the date they are made and, except as required by applicable law, we assume no responsibility to publicly update or abide any forward-looking statements.
Speaker 3: In addition, for reconciliation of the non-GAAP measures, revenue as reported to revenue excluding the impact of a VIVE, as well as adjusted core and active account numbers excluding the impact of a VIVE purchases, please reference today's earnings release and materials on the investors section of the company's website.
Speaker 3: And with that, I'd like to turn the call over to Karen. Karen? Karen?
Speaker 4: Stay good, and thank you everyone for joining us this morning.
Speaker 4: Our third call today with an overview of our fourth quarter and our full year achievement.
Speaker 4: and review our outlook for 2023.
Speaker 4: People then provide more detail on our financial performance before we open the line for questions.
Speaker 4: 2022 was a solid year of key accomplishments and milestones.
Speaker 4: We delivered high teens revenue growth during the back half of 2022 and drove improved operating efficiencies across the business. In May, we announced our Pivotal Recon Study successfully achieved its primary endpoint as well as important secondary endpoints.
Speaker 4: Later in the year, we also saw the publication of an independent landmark that announced this a peripheral memory pair.
Speaker 4: This publication provides the strongest clinical evidence to date of the performance of advanced nerve grafts across all gap lengths and nerve types compared to autographs and conduits. Additionally, construction of our new processing facility in Dayton, Ohio was completed and
Speaker 4: and the validation and transition is in process. This new facility will support our BLA for a mass nerve-grapp and provide for a long-term processing capacity.
Speaker 4: We remain on track for submission of our BLA for advance by the end of 2023.
Speaker 4: and anticipate our approval in 2024.
Speaker 4: A BLA approval will complete the regulatory transition of advanced nerve graft from a 361 tissue-based product to a 351 biological product.
Speaker 4: A BLA approval will complete the regulatory transition of advanced nerve grafts from a 361 tissue-based product to a 351 biological product. And importantly,
Speaker 4: Advanced will then be designated as a reference product which would in turn provide 12 years of data exclusivity with regard to potential biosimulators. With over 75,000 advanced nerve grafts and planted synths launch.
Speaker 4: We are well positioned to continue to lead and innovate in this large and developing peripheral nerve repair market.
Speaker 4: well positioned to continue to lead and innovate in this large and developing peripheral nerve repair market. I'm proud of our team.
Speaker 4: And I look forward to continuing our mission of revolutionizing the science of nerve
Speaker 4: Now it's running to fourth quarter performance. Revenue increased 17% to $36.2 million compared to last year.
Speaker 4: excluding the impact of revenue from a bile soft tissue membrane in the fourth quarter of 2021.
Speaker 4: For the full year, we achieved revenue of $138.6 million at 12% increase over the last year, excluding a vibe revenue in 2021.
Speaker 4: As I noted earlier, we were pleased to see our sequential quarterly improvement with high teens growth in the second half of 2022 versus single digits in the first half.
Speaker 4: This improvement reflects improved hospital staffing and surgical capacity in the second half of the year.
Speaker 4: as well as our ability to execute on our strategy and gain surgeon adoption. Getting more surgeon adopters in our core and active accounts is a key driver of our growth.
Speaker 4: As a reminder, active accounts are those that have ordered at least six times in the last 12 months and may still be in the early stages of adoption.
Speaker 4: Core accounts represent more penetrated accounts defined as those that have had greater than $100,000 in revenue in the trailing 12 months.
Speaker 4: The number of our core accounts increased to 332 in the quarter, representing growth of 1% sequentially and 18% over a prior year adjusted level of 282, excluding the impact of our unit so that our budget for the event shall not be individual prices in 2021.
Speaker 4: This represents the impact of our growth strategy to drive deeper penetration into our core and active accounts.
Speaker 4: Core accounts represent about 60% of our revenue and typically contain at least one surgeon who has adopted the oxygen nerve repair algorithm for a significant portion of his or her nerve injury patients.
Speaker 4: Leveraging this surgeon's success with our products, we focus on gaining more cases with that first surgeon and gaining use by additional surgeons, including middle adopters in that account.
Speaker 4: Again, we believe our best opportunity for growth is driving deeper penetration and core accounts across all of our nerve repair applications, including trauma, breast, OMS, and the surgical treatment of pain.
Speaker 4: The number of our active accounts increased to 968 in the quarter, representing growth of 2% to quenchally and 3% over an adjusted prior year level of 941.
Speaker 4: Active accounts represent about 85% of our total revenue, with the top 10% contributing about 35% of revenue.
Speaker 4: We end of the year with 115 direct sales representatives.
Speaker 4: Up from 111 at the end of the third quarter.
Speaker 4: We believe our revenue growth can be primarily supported by increases in our sales rep productivity, and we will modestly add additional sales reps as their territory's approach targeted levels.
Speaker 4: Our direct sales force is also supplemented by independent sales agencies that represent approximately 10 percent of our total revenue.
Speaker 4: We strive to build market awareness of nerve repair with healthcare providers through our direct-to-patient initiatives, particularly for breast and pain applications.
Speaker 4: We utilize our marketing initiatives to drive patient engagement to our recentation and recent pain websites.
Speaker 4: These sites are aimed at increasing patient awareness and education of the potential for nerve repair procedures to improve outcomes for those undergoing mastectomy and reconstruction and also for those suffering from chronic neuro-pathic pain.
Speaker 4: Our certain education programs remain a top priority for oxygen and continue to generate interest in the surgical community.
Speaker 4: Once again in 2022, we achieved our annual goal of training more than 75% of the most recent class of hand and microsurgery fellows.
Speaker 4: We have high engagement from the fellowship training institutions and we're well on our way towards achieving the target with the 2023 class. We remain committed to developing the clinical evidence to demonstrate the safety, performance and utility.
Speaker 4: of our Nervary Care Solutions, to support surgeon adoption of the accident algorithm across our full portfolio of Nervary Care products. We added eight new peer reviewed publications this quarter. Now with a total of 215 across the Exterminary Trauma, Brecht, OMF, and Pain.
Speaker 4: We believe that this portfolio of high quality clinical evidence is the most comprehensive in the area of peripheral nerve repair and a key part of gaining surgeon adoption.
Speaker 4: Later in Q4, we saw the publication of the most comprehensive peer-reviewed analysis on peripheral nerve repair outcomes entitled, The Systematic Review and Meta-analysis.
Speaker 4: Thank you for. We saw the publication of the most comprehensive peer reviewed analysis on peripheral nerve repair outcomes entitled the systematic review and meta-analysis of nerve gap repair.
Speaker 4: The authors compared the meaningful recovery rates between Alagrasse, Autographs, and Tandoas to graph 35 high quality peer-reviewed studies. The studies were screened for nerve injury type and similar outcome measurements, culminating with an evaluation of over 1,500 nerve repairs included in this analysis.
Speaker 4: The authors concluded that meaningful recovery rates for alegraph and autographed repairs were comparable across all gas lengths up to 70 millimeters.
Speaker 4: And that there were no statistical differences between allograft and autograft outcomes in both sensory and motor nerve repairs.
Speaker 4: Additionally, aligraft and autographed repairs delivered significantly better rates of meaningful recovery and shortcuts up to 30 millimeters as compared to condo repairs. Lastly, an additional part of this meta-analysis was an examination of the acute procedure-related cost comparing autographed procedures to aligraft.
Speaker 4: The studies found the costs were comparable in both the inpatient and outpatient setting.
Speaker 4: I would also like to highlight a couple of recent publications in the oral and maxillofacial segment.
Speaker 4: One study found that despite potential concerns the cancer treatments could negatively impact nerve regeneration, the oral cancer patients in the study with aligraf nerve repair reported meaningful sensory recovery rate similar to those previously published for benign reconstruction.
Speaker 4: In addition to that study, another recent publication highlighted the cost-effectiveness of allograft nerve repair compared to non-surgical therapy.
Speaker 4: Patients with persistent trigeminal neuropathy, or nerve damage affecting sensation in their face, tongue, or jaw, are commonly afflicted with high rates of depression, loss of work, and decreased quality of life.
Speaker 4: This patient compared the total cost of ongoing non-surgical therapies compared to surgical repair with aligratory construction.
Speaker 4: and found that nerve reconstruction was more effective and had lower long-term costs and represents a significant improvement for the patient. For our Actige and Sponsored Research Programs, we were pleased to see our recon study discussed in the most recent annual combined hand, nerve, and microsurgery meeting.
Speaker 4: Our ranger and match registries continue to enroll, and this data is an important part in informing surgeons in their clinical decision making.
Speaker 4: Lastly, we anticipate top-line data readout from our Opposed AxiGard NerveCap study in the fourth quarter of this year. Continuous innovation of products and applications is a key strategic pillar for our long-term growth, and we are mission-driven to provide leading, innovative treatments for patients with peripheral nerve injury.
Speaker 4: Our advanced nerve graft has revolutionized peripheral nerve repair and we're excited to see this technology expand into new clinical applications.
Speaker 4: I'd like to highlight one of these exciting initiatives for breast reconstruction patients. Restoring sensation as a part of breast reconstruction is an important quality of life attribute for many women.
Speaker 4: Our lead sensation technique was developed to provide sensations for patients receiving an autologous flap reconstruction.
Speaker 4: which represents roughly 20% of the overall breast reconstruction procedures. The remaining 80% of breast reconstruction procedures are implant-based.
Speaker 4: To support patients undergoing implant-based reconstruction,
Speaker 4: We have collaborated with Pioneer Insurgent to develop a procedure to provide an organization to a subset of this patient population.
Speaker 4: We believe this new approach can be applied to an incremental 10 to 15% of breast reconstruction patients.
Speaker 4: Leading surgeons have seen promising results, and we expect to train 20 breast construction surgical teams in this new procedure in 2023.
Speaker 4: I now like to spend a moment discussing our outlook for this year. We expect a full year 2023 revenue will be on the range of 154 to 159 million, which represents about 11 to 15% growth over 2022.
Speaker 4: Our growth in the second half of 2022 reflects our ability to execute in an environment of improved hospital staffing and surgical capacity. We're confident in our ability to gain adoption and reading measured on the pace of continued improvements to hospitals work continue to work through these challenges and return to more normalized operating schedules.
Speaker 4: Additionally, we expect 2023 growth margin will be reduced in the first half of year with a transition to our new processing facility.
Speaker 4: And we expect gross margins will return to approximately 80% by the fourth quarter of 2023.
Speaker 4: We view oxygen as a growth company and are confident in our ability to continue our long track record of a church in the adoption and growth supported with patient-focused and innovative products and applications.
Speaker 4: high quality clinical data, surgeon education programs, and our commercial execution. We're pleased with our performance and accomplishments in 2022, which include High King's Growth in the second half of the year.
Speaker 4: the reporting of meaningful clinical data, and our progress towards our new processing center and filing the BLA for advance.
Speaker 4: We look forward to extending these accomplishments in 2023. By continuing to move into middle adopters, gaining surge and convergence, and bringing new innovation to peripheral nerve repair, we can further solidify our position as the leader in peripheral nerve repair and drive long-term sustainable growth.
Speaker 5: Now send a call over to Pete for a review of Financial Highlights. Pete. Thank you, Karen. Before I get into the details of our financial performance, I want to comment on the recent disclosure regarding Silicon Valley Bank. We have approximately $8 million of cash with SBB, which is our sole depository bank.
Speaker 5: The majority of our cash, cash equivalents, and investments, which consist of a variety of short-term and high-credit treasury bonds and other liquid investments, are held in custodial accounts with US Bank, for which SBB Asset Management is the advisor.
Speaker 5: We are opening new accounts with JP Morgan and have begun the process of moving the cash investments to those new accounts.
Speaker 5: new accounts with JP Morgan and have begun the process of moving the cash investments to those new accounts. And now turning to our results.
Speaker 5: Fourth quarter revenue was $36.2 million, a 17% increase over the fourth quarter of 2021.
Speaker 5: excluding abide revenue in the fourth quarter of 2021.
Speaker 5: Growth was driven by increases in unit volume of 11%.
Speaker 5: as well as increases in price and product mix of 4 and 3 percent respectively.
Speaker 5: Gross profit in the quarter was $30 million as compared to $26 million in the fourth quarter of 2021. Gross margin was 83% compared to 83.2% in last year's fourth quarter. Total operating expense in the fourth quarter increased 13% to $35.6 million in the quarter.
Speaker 5: Sales and marketing expense in the fourth quarter increased 12% to 19.9 million compared to 17.7 million in the prior year.
Speaker 5: The increase was primarily due to compensation costs.
Speaker 5: As a percentage of total revenue, sales and marketing expense was 66% compared to 68% in the fourth quarter of 2021.
Speaker 5: Fourth quarter research and development expense increased 8% to $6.8 million compared to $6.3 million in the prior year.
Speaker 5: Product development expenses represented approximately 56% of total R&D in the quarter compared to 73% last year and includes spending in a number of innovation programs across our portfolio, including a next generation advanced product.
Speaker 5: Clinical expenses represented approximately 44% of total R&D in the quarter compared to 27% last year. As a percentage of total revenues, research and development expense was 19% in Q4 compared to 20% in the prior year.
Speaker 5: General and administrative expense increased 20% to $8.9 million in the fourth quarter as compared to $7.4 million in the prior year. The increase was primarily due to higher net compensation expenses and G&A as a percent of revenue was 30% in the quarter compared to 28% in the prior year.
Speaker 5: Net loss in the quarter was $5.4 million, or 13 cents per share, compared to a net loss of $5.3 million, or 13 cents per share, in the fourth quarter of the prior year.
Speaker 5: A just in net loss was $1.1 million, or approximately 3 cents per share, in the fourth quarter compared to a loss of $3.3 million, or 8 cents per share, last year.
Speaker 5: Adjusted EBITDA loss in the quarter was $700,000 compared to an adjusted EBITDA loss of $2.5 billion in the prior year.
Speaker 5: The balance of all cash, cash equivalents, and investments on December 31, 2022 was $55 million compared to a balance of $59.4 million at the end of Q3. The net change includes capital expenditures of $5.5 million related to the construction of our new processing facility in Dayton, Ohio.
Speaker 5: partially offset by $1.1 million of positive cash flow in the quarter.
Speaker 5: As Karen mentioned, our full year revenue guidance of $154 to $159 million represents 11 to 15 percent growth.
Speaker 5: Additionally, we expect gross margin will be reduced in the first half of the year with the transition of our new processing facility. We anticipate improvement in the second half of the year with gross margins of approximately 80% in the fourth quarter. Completion of our dating processing facility will include approximately four years of growth from theiusaire slipboard.mm align from launch schedule to theync emails All
Speaker 5: We're confident that our balance sheet will continue to provide sufficient liquidity supported by revenue leverage on our fixed cost infrastructure and thoughtful expense management.
Speaker 5: With a return to more normalized capital expenditures, we expect our operating cash to continue trending towards cash flow breakeven as we continue our path to profitability.
Speaker 5: to more normalized capital expenditures, we expect our operating cash to continue trending towards cash flow breakeven as we continue our path to profitability. At this point, I'd like to open the line for questions.
Speaker 2: Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question today, please press star 1 from your telephone keypad and a confirmation tone will indicate your line is in the question queue.
Speaker 2: You can press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker 2: You can press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you.
Speaker 2: Thank you. And our first question comes from the line of Mike Sarcon with Jefferies. Please use your questions.
Speaker 6: Hey, good morning, Karen, PNED. Thanks for taking my questions. Good morning. So just the first one for you, a clarification on the $8 million of cash at Silicon Valley. Is that basically free and clear and you're just working through the process of transferring that? Can you just talk a little bit more about the accessibility?
Speaker 5: Yes, it is and it is free and clear. We've seen, in fact, we've seen cash receipts were received into that account even yesterday and our ability to move money out of that account is something that we can do.
Speaker 6: We're taking steps to continue to make those transitions. Got it. Okay, thanks. And then just wanted to get an update. Could you parse out what you're seeing across trauma, OMF, and breast recon so far through the year? And then what's baked into your assumptions for 2023 at the low and high ends of guidance?
Speaker 5: although we recognize that that's not, it's still not at capacity. And so we've seen improvement over the last half of the year and we would expect to see just that continued stability and not a lot of improvement is in our top end of our guidance. And the bottom end of our guidance really assumes that there is some disruption.
Speaker 5: see the rest of the year go.
Speaker 4: Yeah, and if I look at what we've seen, hospitals are still understaffed and they're not able to run all of their operating rooms to full capacity, but it has become predictable. And so we see surgeons in breast and LMS and pain where the procedures are scheduled, be able to at least schedule their procedures so they understand.
Speaker 4: In trauma, there has been through last year and into this year some disruption in the ability to take a patient immediately from the emergency department into an OR just because of the lack of flexibility of resources. That has stabilized. They're not always able to do that, but they can refer them and get them into an OR either at the end the end of next year.
Speaker 2: Thank you. Our next question is from the line of Chris Pasquale with Nefron. Please just see with your questions.
Speaker 7: Thanks, good morning guys. Given the fact that it's mid-March, I was hoping that you could provide some thoughts on first quarter. Historically, you get about 22% of full year revenue in the first quarter of the year. Do you expect a similar seasonality in 23 and any other considerations we should take into account in terms of how the year is going to come together?
Speaker 4: Yeah, I think we are returning to typical seasonality. We have these overlays in the past of COVID and hospitals being shut down and then staffing challenges, but we are seeing again in this pattern of wild...
Speaker 4: They're still constrained in OR capacity. We're seeing a return to what I think are more predictable patterns. And so we would expect our big step-ups in Revene to be during the times of more activity, where people unfortunately have more injuries, which is our summer months. So we'd see a step-up in second quarter, another step-up in third quarter.
Speaker 4: as our bigger growth periods, with things being more level in Q1 and Q2. So I don't want to give guidance for the Q1 so far, but I think our patterns are starting to be more predictable.
Speaker 7: How do you think about the revenue potential for the nerve cap product and whether you could get some incremental commercial momentum post the repose results?
Speaker 4: Yeah, I think we published the pilot results from the NerveCap product and we're quite pleased with the pilot data that we saw. And again, it's a smaller, uncontrolled series. We're completing the randomized portion of that study now. But I think what we've seen is that this concept of surgically made...
Speaker 4: fingers, toes, through some surgical procedures in the orthopedic space where you need to cut nerves to access the joint or the surgery that you're trying to get to, but sometimes those patients end up in chronic pain. And we think we have applications to all of those and now there will be an opportunity to educate surgeons on the benefit they can provide their patients with that surgery.
Speaker 2: Thanks. Our next question comes from the line of Kyle Rose with CandaCo continuity. Please just use your questions. Great, thanks for taking the questions. Just wanted to, as we think about guidance in 2023, how should we be thinking about the growth of the underlying...
Speaker 2: new or active accounts and core account growth. And I guess, put another way, how much of the growth in 23 comes from volume versus price and mix? And if you could just break out those dynamics, that'd be helpful.
Speaker 5: Yeah, if you apply revenue guidance of 11 to 15%, I think we've been successful at taking price over the last several years and we would continue to expect as we sort of low single digit price.
Speaker 5: again in 2023. We've also had some mixed impact in revenue here in the fourth quarter and in some previous quarters. The way we think about the mixed impact is more flattish in the coming year. So the rest of that, you know, based on where you put your model, the rest of that would be in units.
Speaker 5: I think we've had 11% unit growth in this quarter and similar Q3. That's the way we think about it from a unit and price perspective. What was the first part of the question? It's more active in core accounts.
Speaker 5: good connections with surgeons, good connections with support staff within the hospitals. And their ability to continue to drive growth along with the data that we've come out with recently, I think, allows them to continue to drive their own increased productivity and do so within their core counts.
And so we could see a mix of both increase of core accounts as well as revenue per core account across 2023.
Okay, thank you. And then obviously the ramp of the manufacturing facility and the submission and eventual regulatory decision on the BLA, those are big milestones for the company. So I'm just wondering, can you frame out any interim
I guess, things that need to happen along the way before the manufacturer is fully up certified and running. And then also, similarly on the BLA filing, just making sure that investors understand all the milestones over the course of the next, call it, two years. So, we are initially transitioning advanced into the new manufacturing facility as a tissue product. So that's the first milestone and that's the work that we're doing right now.
made it cleaner. So we will revalidate the facility as a biologic. Again there's no specific process changes but the data and how you gather data is different between the two validations.
That's probably the biggest milestone for filing the BLA. Well, it is the long lead time item and the biggest milestone for filing the BLA yet this year. We do expect to get the BLA completed by the end of the year and submitted. And then, you know, it's into the FDA process, so I'm not sure that there will be.
milestones that we can really see until they come. Great. Thank you for taking the questions. Our next question is from the line of Ryan Zimmerman with BTIG. Please proceed with your questions.
Good morning Karen and Pete, thanks for taking my questions. Just following up on Kyle's question about the BLA, you know just want to understand kind of your confidence level in getting the BLA and after it's submitted you know is it remind me is it is 180 days that they have to respond
How long, just as we kind of think about 24, and where that could come in? Yeah, so, confidence is, we passed our primary, our endpoint on our pivotal study, so we feel pretty confident in this process. Now, there's a lot of information that we are compiling and providing to the FDA, including this manufacturing facility, but the
I'm not, I think we have to be flexible on that because I'm not sure all the timings have been as accelerated, but FDA has been catching up. So if we get that, then we should see something with a six month clock. If not, it may be a little longer.
Okay, that's helpful Karen. And then a couple other quick questions for me. You know, if I look at account growth, active account growth through the year, something about 17 accounts relative to kind of what you've done historically, how do you think about the pace of account growth, active account growth, and core account growth for that matter.
as we look ahead to next year. Given that it has slowed down, is it even a good proxy for us to think about? It's a metric you guys have given out for some time now. Yeah, I think it's helpful, but our first priority is now driving deeper penetration within those accounts.
The accounts we're in, we're by far and away lightly penetrated. And so that is our lowest hanging fruit and the way that we think that we can achieve better sales rep productivity. So we will move some active accounts into being core accounts. So be some growth.
just organically in active account, that threshold is actually quite low. But I think the number that you want to continue to watch also is the average revenue per account, or just think about what's the penetration into those accounts.
That's helpful Karen and then squeeze one more in. You mentioned flap reconstruction for breast recon. Just curious if you could kind of size the market opportunity that you're referring to. I think you said it was around 20% of those cases and that you guys, I know you're targeting 20 today, but help us understand.
I don't know if there's X breast recon procedures and 20% of those are the flap reconstruction. What is that on an annual basis just in absolute terms? Sure. So breast reconstruction, so I'm going to back up a second and just explain a little bit about breast reconstruction. The breast reconstruction for women who have a mastectomy can be done by a variety of techniques but they fall into...
15 to 20,000 procedures or, excuse me, patients per year. So we have really been focused in that segment, but as happens when there's a new tool available, some leading surgeons have really been looking at that other portion, the implant.
and saying, well these women have numb breasts as well and that's a problem. And is there something that we can do to assist these women? And obviously you can't innervate the implant, but they often have lack of sensation on the skin and the nipple.
and whether we can actually have the sufficient length to reach the target at the nipple and areolar complex. So that's why we're saying as we're seeing this process or procedure expand into implant-based procedures, we're estimating that it's gonna be for a portion today. Now this is evolving as surgeons are figuring out.
Our next question is from the line of Russ Osborn with Cantor Fitzgerald. Please receive your questions.
Hi, good morning. This is Jonathan from Progress. So, starting off with some of your smaller vocals, have you seen any return of growth on OMF to start off a year with those surgeons that were using advanced before COVID to improve quality of life? And what can you do to accelerate growth in this segment? Yeah, thanks. Thanks for the question. Yeah, we saw OMF get...
also be very helpful. One of the things the majority of the work that we've done in OMS has been in benign mandible reconstructions and then some of the injuries from dental procedures so wisdom teeth extraction and putting in dental implants.
And of the two papers that I mentioned, this is the first case series looking at patients with malignant tumors and having a mandible reconstruction. And the concern has been, well, with the follow-on treatments, radiation in particular, that these patients have affect the nerve regeneration. And what this paper showed is that these patients actually achieved quite good meaningful recovery rates.
And so we think that will be very helpful for surgeons if they're making decisions about the care pathway for these patients and they're really trying to achieve quality of life for patients in both benign and malignant tumor reconstruction. The second paper had to do with the iatrogenic injuries from dental procedures and just recognizing that these have a lifelong impact to patients when...
as we reengage surgeons. So we're optimistic in what we see. Long answer is we're optimistic with what we see with OMS and expanding into head and neck with mandible reconstructions. We think that'll be a nice opportunity to continue to reengage with those surgeons and bring in new surgeons who can adopt this procedure.
Okay, great. And then, would you discuss your efforts on accelerating the referral process from patients showing up on your Reteat Pay website? I'm sorry. It's hard to hear the question. Can you say it again? Can you say it again?
Sure. Would you discuss your efforts on accelerating the referral process from patients showing up on your Rekke pain website? Sure. Thank you. Yeah. We really have learned a lot on activating patients through the work that we've done in re-sensation.
So helping women in that case be advocates for their own health care to go in and have be armed with the questions to ask their surgeon and decide is sensation in breast reconstruction important to you. Then if it is important then here are questions to ask your surgeon and here's what you can do to take control of your care.
And we're looking to apply a lot of those same tools into helping patients who suffer from chronic pain determine do they have potentially a neuroma that is the cause of the pain, so is it neuropathic pain? And if it is, how can they find a surgeon who does the surgical treatment of pain?
or a pain surgeon, rather than ending up in a pain clinic as their primary care, which will address the symptoms, but not address the cause of the pain.
And so we're seeing early success in applying those same tools. We still need to build out more information for patients. In pain it is more complex than in a reconstruction. If you're a woman, you have a mastectomy, you know you have a mastectomy and you're kind of thinking about reconstruction.
in pain, you know you have pain, but you don't know that it's neuroma pain. And so we have added some tools to help those patients determine do they have neuroma pain and are they an appropriate potential surgical candidate, with of course a final decision always being made by the healthcare practitioner.
And so we're going to continue to build out those tools this year, but we think that we can help activate these patients again to be good stewards of their own care. Great. Thank you for taking my questions.
Our next question comes from the line of Dave Turculate with JMP Securities. Please proceed with your questions.
Great, good morning. Karen, the meta-analysis you talked about, that large review, who actually did that and where was that published? It's published, it's e-published in PRS. It's a group of independent authors who actually wrote it, but they did this again, deep review...
So PRS is Plastic and Reconstructive Surgery.
Great, thank you for that. I know people have asked a little bit about the guidance, and I was looking at the sort of rep productivity, and I was wondering if you had any color comments there in terms of kind of where your average folks are today and sort of where you think they can go. Is there still... I don't remember.
Great, thank you for that. I know people have asked a little bit about the guidance, and I was looking at the sort of rep productivity, and I was wondering if you had any color comments there in terms of kind of where your average folks are today and sort of where you think they can go. Is there still room for them to expand?
Yeah, no, we're seeing that rep productivity has, you know, it's now over about 1.1 million per rep. And we've always said, you know, we've got reps that do 2 million a year and maybe a little bit more. And we've, as a rep is getting close to 2 million, that's when we split those territories and bring additional resources in to cover those hospitals. So we think that there's plenty of opportunity for rep productivity to go from a million one up to a million three, million five.
plus on average as we continue to drive deeper into these accounts. Now that's not all this year obviously, but over time we're going to increase productivity we think fairly solidly. And then you know as we move up the curve you know from 1.1 to 1.2 to 1.3 we'll continue to add more reps and we'll do so in a way that
allows us to not only drive additional rep growth but continue to drive rep productivity growth. And so we think we've got a lot of opportunity with rep productivity to be the primary driver of growth and we certainly believe we're still in the very early stages of growth even in our best core accounts to continue to bring in additional surgeons within those accounts across our applications.
Thank you for that and one last one maybe for Karen. The timing of the NextGen Advanced Product I think you said is later this year but I guess would that be sort of like used across all indications or will be designed more specifically for one or I guess any color thoughts on timing and what might be new about it if you can elaborate. Thank you.
So this is, you're asking specifically about NixGen Advance? Yes. Yes. So we haven't given any updates on a description of the product. I can tell you it won't be available this year. We'll complete the BLA and then be talking with the FDA about the second generation and the skin types.
session. I'll hand the floor back to Karen Zadary for closing remarks.
Thank you, Rob, and I'd like to thank the oxygen team, who remain very committed to our mission of improving the quality of life for patients with peripheral nerve injury.
We're happy with the progress we've made towards our goal this year, and we remain focused on ensuring our long-term success. I want to thank everyone for joining us this morning. Thank you and have a great day.
This will conclude today's conference. Thank you for your participation. You may now disconnect your lines at this time.