Q2 2024 Anika Therapeutics Inc Earnings Call

Good afternoon, ladies and gentlemen, and welcome to Anika's second quarter 2024 earnings conference call. At this time, all lines are in listen-only mode.

Operator: I would like to remind everyone that this call is being recorded. I will now turn the call over to Mark Namaroff.

Following the presentation, we will conduct a question and answer session.

Instructions will be provided at that time for you to cue up for a question.

If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would like to remind everyone that this call is being recorded.

Mark Namaroff: I will now turn the call over to Mark Namaroff, Vice President, Investor Relations, ESG, and Corp Communications. Please proceed. Thank you. Thank you.

Mark Namaroff: Thank you. Good afternoon, everyone.

Mark Namaroff: Thank you. Good afternoon, everyone. Thank you for joining us for Anika's second quarter 2024 conference call and webcast.

Mark Namaroff: Thank you for joining us for Anika's second quarter 2024 conference call-in webinar. Our Q2 earnings press release was issued after the close of the market today and is available on our investor relations website, located at anika.com, as are supplementary PowerPoint slides that will be used for the discussion today. With me on the call today are Dr. Cheryl Blanchard, President and Chief Executive Officer, and Steve Griffin, Executive Vice President, Chief Financial Officer, and Treasurer.

Mark Namaroff: Our Q2 earnings press release was issued after the close of the market today and is available on our investor relations website, located at anika.com, as are our supplementary PowerPoint slides that will be used for the discussion today.

Speaker Change: With me on the call today are Dr. Cheryl Blanchard, President and Chief Executive Officer, and Steve Griffin, Executive Vice President, Chief Financial Officer, and Treasurer.

Mark Namaroff: 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 1934. These statements are based on our current beliefs and expectations and are subject to certain risks and uncertainty. The company's actual results could differ materially from any anticipated future results, performance, or achievement. We make no obligation to update these statements should future financial data or events occur that differ from the forward-looking statements presented today.

Speaker Change: Please take a moment and open the slide presentation and refer to slide number 2.

Mark Namaroff: Please 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, including 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.

Speaker Change: 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 1934. These statements are based on our current beliefs and expectations and are subject to certain risks and uncertainties.

Mark Namaroff: The company's actual results could different materially from any anticipated future results performance or achievements.

Speaker Change: We make no obligation to update these statements should future financial data or events occur that differ from the forward-looking statements presented today.

Speaker Change: Please also see our most recent SEC findings for more information about risk factors that could affect our performance.

Mark Namaroff: 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 the adjusted non-GAAP financial results to the most comparable GAAP measurements is available at the end of the presentation deck and our second quarter 2024 press release. Now, I'd like to turn the call over to our President and CEO, Dr. Cheryl Blanchard.

Speaker Change: In addition, during the call we may refer to several adjusted or non-gap financial measures, 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 gap financial measures.

Speaker Change: We believe the non-gas measures provide an additional way of viewing aspects of our operation and performance.

Speaker Change: But when considered with gap financial measures and the reconciliation of gap measures, they provide it even more complete understanding of our business.

Speaker Change: A reconciliation of the adjusted non-GAAP financial results to the most comparable GAAP measurements are available at the end of the presentation deck and our second quarter 2024 press release.

Speaker Change: And now, I'd like to turn the call over to our President and CEO , Dr. Cheryl Blanchard. Cheryl? Thanks, Mark. Good afternoon, everyone, and thanks for joining us.

Cheryl Blanchard: Thanks, Mark. Good afternoon, everyone, and thanks for joining us. Please turn to slide three.

Cheryl Blanchard: Now, midway through 2024, we're making great progress on the execution of our strategy to refocus the business on the areas that deliver the greatest value to our shareholders and drive results that accelerate our path to profitability. Our efforts in the first half of the year set the stage for the rest of 2024 and beyond as we announced the full market release of our newest regenerative product, Integrity, and completed our cost savings initiatives to realize significant operating expense savings this year.

Speaker Change: Please turn to slide three.

Speaker Change: Now, midway through 2024, we're making great progress on the execution of our strategy to refocus the business on the areas that deliver the greatest value to our shareholders and drive results that accelerate our path to profitability.

Speaker Change: Our efforts in the first half of the year set the stage for the rest of 2024 and beyond, as we announced the full market release of our newest regenerative product, Integrity, and have completed our cost savings initiatives to realize significant operating expense savings this year.

Cheryl Blanchard: Let me walk you through the key highlights of the quarter, and then I'll turn the call over to Steve to review the financials and our guidance for 2024. Overall revenue for the second quarter was lower by 5% due to the timing of very strong U.S. orthovisc and monovisc units ordered in the second quarter of 2023.

Speaker Change: Let me walk you through the key highlights of the quarter and then I'll turn the call over to Steve to review the financials and our guidance for 2024.

Speaker Change: Overall revenue for the second quarter was lower by 5% due to the timing of very strong U.S. OrthoVisc and MonoVisc units ordered in the second quarter of 2023.

Cheryl Blanchard: I'm very pleased to say that we delivered healthy adjusted EBITDA margins of 15% during the quarter as we're making meaningful progress on our refocused business strategy and our path to profitability. In joint preservation and restoration, we delivered 7% growth as we're seeing the results of our new product launches, particularly X-Twist and our new regenerative hyaluronic acid or HA-based integrity implant system, which I'll speak This quarter, OA pain management was lower by nine percent, as we expected, on higher U.S. revenue last year, offset by strong international growth, which is up 17 percent year-to-date.

Steve Griffin: I'm very pleased to say that we delivered healthy adjusted EBITDA margins of 15% during the quarter. As we're making meaningful progress on our refocus business strategy and our path to profitability.

Speaker Change: In joint preservation and restoration, we delivered 7% growth as we're seeing the results of our new product launches, particularly X-Twist and our new regenerative hyaluronic acid, or HA-based integrity implant system, which I'll speak to more in a moment.

Speaker Change: This quarter, OAP Management, was lower by 9% as we expected on higher U.S. revenue last year, offset by strong international growth, which is up 17% year to date.

Cheryl Blanchard: The strong OUS growth continues to be driven by market share gains as well as new country expansion across all three brands of Syngal, MonoVisk, and OrthoVisk. International growth across our OA pain portfolio has been a key value driver as Sengal is becoming the treatment of choice in many countries, while OrthoVis and MonoVis continue to perform very well. In our U.S. OA pain business, we maintain our market leadership position with MonoVisc and OrthoVisc despite softer pricing dynamics as the impact of the ASP legislation begins to normalize.

Speaker Change: The strong OUS growth continues to be driven by market share gains, as well as new country expansion across all three brands of Syngal, MonoVisk, and OrthoVisk.

Speaker Change: International growth across our OA pain portfolio has been a key value driver, as Syngal is becoming the treatment of choice in many countries, while OrthoVisc and MonoVisc continue to perform very well.

Speaker Change: In our US OA pain business, we maintain our market leadership position with MonoVisc and OrthoVisc despite softer pricing dynamics as the impact of the ASP legislation begins to normalize.

Cheryl Blanchard: This business remains a key foundation for Anika and will continue to drive profitability and cash flow as our U.S. sales and marketing partner works to improve market access, balancing both price and volume. In other key updates, we announced the full market release of Integrity in July in conjunction with the American Orthopaedic Society of Sports Medicine's (AOSSM) annual meeting, with a tremendous surge in interest, marking an important step in the continued expansion of our regenerative portfolio.

Speaker Change: This business remains a key foundation for Anika and will continue to drive profitability in cash flow as our U.S. sales and marketing partner works to improve market access, balancing both price and volume.

Speaker Change: In other key updates, we announced the full market release of Integrity in July in conjunction with the American Orthopedic Society of Sports Medicine, or AOSSM annual meeting, with tremendous surge in interest, marking an important step in the continued expansion of our regenerative portfolio.

Cheryl Blanchard: During the limited market release, we completed over 300 surgeries with over 60 surgeons across the shoulder and foot and ankle spaces, setting the foundation for our growth in the regenerative space in the second half of 2024. Customer response exceeded our expectations during the limited market release, with more than double the number of cases than originally expected.

Speaker Change: During the limited market release, we completed over 300 surgeries with over 60 surgeons across the shoulder and foot and ankle spaces, setting the foundation for our growth in the regenerative space in the second half of 2024.

Speaker Change: Customer Response exceeded our expectations during the limited market release with the completion of more than double the cases and originally expected.

Cheryl Blanchard: This demonstrates the strong pull from the marketplace, with about 25% of the surgeons who have used Integrity representing new customers to Anika. In fact, we saw more than 40% increase in Integrity cases from Q1 to Q2, while still in limited release, and we expect this growth trend to continue through 2024, with our ongoing focus on growing our differentiated regenerative product. We have also seen great initial success in adding new distributors who are specifically focused on and excited about Anika's regenerative solutions.

Speaker Change: This demonstrates the strong pull from the marketplace with about 25% of the surgeons who have used integrity representing new customers to Anika.

Speaker Change: In fact, we saw more than 40% increase in integrity cases from Q1 to Q2 while still in limited release. And we expect this growth trend to continue through 2024.

Speaker Change: With our ongoing focus on growing our differentiated regenerative products, we've also seen great initial success in adding new distributors who are specifically focused on and excited about Anika's regenerative solutions.

Cheryl Blanchard: As we continue to build a presence in the market for integrity, developing high-quality clinical evidence is very important, both for market expansion and surgeon adoption. As such, we have started the process of initiating a prospective multi-center MRI and outcomes-based clinical study on integrity to assess pain, function, and rotator cuff tendon healing. Investigator sites have been identified, and enrollment is expected to start by the end of the year.

Speaker Change: As we continue to build a presence in the market for integrity, developing high-quality clinical evidence is very important, both for market expansion and surgeon adoption.

Speaker Change: As such, we started the process of initiating a prospective multi-center MRI and outcomes-based clinical study on integrity to assess pain, function, and rotator cuff tendon healing.

Speaker Change: Investigator sites have been identified and enrollment is expected to start by the end of the year. This study will provide the clinical data needed for the MDR filing, ultimately to support our plans to launch integrity in the EU, as well as reinforce our positioning strategy in the U.S.

Cheryl Blanchard: This study will provide the clinical data needed for the MDR filing, ultimately to support our plans to launch Integrity in the EU, as well as reinforce our positioning strategy in the U. S. In addition, we have post-market follow-up studies currently ongoing that will yield clinical papers on the results of Integrity next year. The Integrity Implant System will drive significant near-term growth for Anika's regenerative portfolio. With respect to Hylifast, we remain on track to file the first PMA module by the end of this year.

Speaker Change: In addition, we have post-market follow-up studies currently ongoing that will yield clinical papers on the results of Integrity next year.

Speaker Change: The integrity and plan system will drive significant near-term growth for Anika's regenerative portfolio.

Speaker Change: With respect to highly fast, we remain on track to file the first PMA module by the end of this year. I'm also pleased to report that we recently obtained positive feedback from FDA regarding the presentation of our clinical data.

Cheryl Blanchard: I'm also pleased to report that we recently received positive feedback from FDA regarding the presentation of our clinical data. We will work closely with them as part of the modular PMA submission process in order to best position ourselves for an effective review.

Speaker Change: We'll work closely with them as part of the modular PMA submission process in order to best position ourselves for an effective review.

Cheryl Blanchard: Our regenerative technologies represent a key enabler for Anika's growth as we bring integrity to market and prepare for the launch of HyloFast by 2026. With respect to Syngal, we continue to make progress on our regulatory strategy and are having regular communications with the FDA on the non-clinical work required before we can submit the NDA. We have received feedback from FDA on the data required and are planning an additional meeting to clarify their request. We aim to provide further updates by the end of the year. Sengal, now sold in more than 40 countries outside the U.S., remains a key driver as the next generation non-opioid OA pain product of choice.

Speaker Change: Our regenerative technologies represent a key enabler for Anika's growth as we bring integrity to market and prepare for the launch of HyloFast by 2026.

Speaker Change: With respect to Syngal, we continue to make progress on our regulatory strategy and are having regular communications with the FDA on the non-clinical work required before we can submit the NDA.

Speaker Change: We received feedback from FDA on the data required and are planning an additional meeting to clarify their requests.

Speaker Change: We aim to provide further updates by the end of the year.

Speaker Change: Sengal, now sold in more than 40 countries outside the U.S., remains a key driver as the next generation non-opioid OA pain product of choice.

Cheryl Blanchard: We continue to see strong international growth that increases our confidence that Sengal will truly be a game-changer when it is approved in the U.S. Lastly, on this slide, I'd like to reiterate our focus on delivering value to our shareholders. We continue to explore all strategic alternatives for the business to generate shareholder value, including refocusing our business strategy to accelerate profitability and deploy capital towards our highest opportunities. We've taken significant cost actions in 2024 to improve our profitability, to enable investments into our highest growth areas of OA pain management and regenerative solutions while returning capital to shareholders through a new $40 million share buyback program. These actions that focus our investments, combined with our continued strategic assessment of alternatives, position Anika to deliver outsized shareholder value. Please turn to slide four.

Speaker Change: We continue to see strong international growth that increases our confidence that single will truly be a game changer when it is approved in the US.

Speaker Change: Lastly, on this slide, I'd like to reiterate our focus on delivering value to our shareholders. We continue to explore all strategic alternatives for the business to generate shareholder value, including refocusing our business strategy to accelerate profitability and deploy capital towards our highest opportunities.

Speaker Change: We've taken significant cost actions in 2024 to improve our profitability, to enable investments into our highest growth areas of OAP management and regenerative solutions, while returning capital to shareholders through a new $40 million share buyback program.

Speaker Change: These actions that focus our investments, combined with our continued strategic assessment of alternatives, position Anika to deliver outsized shareholder value.

Cheryl Blanchard: Before I turn the call over to Steve to review the results of the quarter, I'd like to review our strategy to drive value with our OA pain management franchise and our HA-based regenerative product. HA is at the core of Anika's 30-plus year heritage, and it's what will drive differentiated product innovation and shareholder value moving forward. HA in gel form is essential to our OA pain injection portfolio, including OrthoVisc, MonoVisc, and Syngal, with Syngal continuing to be a strong grower OUS and representing a billion-dollar addressable market for next-generation OA pain therapy in the US.

Speaker Change: Please turn to slide four.

Speaker Change: Before I turn the call over to Steve to review the results of the quarter, I'd like to review our strategy to drive value with our OA pain management franchise and our HA-based regenerative products.

Speaker Change: H.A. is at the core of Anna because 30 plus year heritage, and it's what will drive differentiated product innovation and shareholder value moving forward.

Steve Griffin: HA in gel form is essential to our OA pain injection portfolio, including OrthoVisc, MonoVisc, and Syngal, with Syngal continuing to be a strong grower OUS and representing a billion-dollar addressable market for a next-generation OA pain therapy in the U.S.

Cheryl Blanchard: Importantly, though, our proprietary HA technologies allow us to uniquely transform our highly regenerative HA into various forms that are already clinically proven. One of those forms is our HIAT technology, which is HA that we modify to turn it into a biopolymer. This technology allows us to develop numerous resorbable regenerative products. For example, we use HIAP to create fibers that can be knit, woven, and woven with other materials, as we've done with Integrity, and even used to create products that are non-woven, such as HyloFast.

Speaker Change: Importantly though, our proprietary HA technologies allow us to uniquely transform our highly regenerative HA into various forms that are already clinically proven.

Speaker Change: One of those forms is our HIF technology, which is HA that we modify to turn it into a biopolymer. This technology allows us to develop numerous resorbable regenerative products.

Speaker Change: For example, we use high F to create fibers that can be knit, woven, and woven with other materials as we've done with integrity, and even used to create products that are non-woven, such as highly fast.

Cheryl Blanchard: Our HIF technology is clinically proven with the success of Hyalofast, our single-stage cartilage repair product sold in over 35 countries with over 40 clinical publications and 15-year data coming soon. We recognize the unique abilities we have to create meaningful products driven by HA in both the OA pain and regenerative solution spaces. Products that solve real, unmet clinical needs for surgeons and the patients they treat. Using our proprietary technology, we have now transformed our new product pipeline of innovation that leverages what we've already done with both Integrity and HyloFast.

Speaker Change: Our high-f technology is clinically proven with the success of high-elfast. Our single-stage cartilage repair product sold in over 35 countries, with over 40 clinical publications, and 15-year data coming soon.

Speaker Change: We recognize the unique abilities we have to create meaningful products driven by HA in both the OA pain and regenerative solution spaces, products that solve real unmet clinical needs for surgeons and the patients they treat.

Operator: 2020-24 earnings conference call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for a question. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would like to remind everyone that this call is being recorded.

Speaker Change: Using our proprietary technology, we have now transformed our new product pipeline of innovation that leverages what we've already done with both Integrity and HyloFast.

Cheryl Blanchard: We'll talk about our pipeline in more detail in the future, but I'll give you one highlight now. With the immense commercial pull we're seeing with Integrity and the real-time feedback we're getting from our direct engagement with surgeons, we are currently working to expand that portfolio with different shapes, sizes, and configurations to address additional tendon repair unmet needs. These products will use the same HIF-based knitted structure as Integrity but will be designed specifically to treat additional tender repairs all over the body.

Speaker Change: We'll talk about our pipeline and more detail in the future, but I'll give you one highlight now.

Mark Namaroff: I will now turn the call over to Mark Namaroff, Vice-President and Vester Relations, ESG and CARP Communications. Please proceed. Thank you. Good afternoon, everyone. Thank you for joining us for Anika's second quarter, 2024 conference call and webcast. Our Q2 earnings press release was issued after the close of the market today and is available on our investor relations website located at anika.com. As our supplementary PowerPoint slides, they will be used for the discussion today.

Speaker Change: With the immense commercial pull we're seeing with Integrity and real-time feedback we're getting from our direct engagement with surgeons, we are currently working to expand that portfolio with different shapes, sizes, and configurations to address additional tendon repair unmet needs.

Mark Namaroff: With being on the call today, our Dr. Cheryl Blanchard, President and Chief Executive Officer and Steve Griffin, Executive Vice-President, Chief Financial Officer and Treasurer. Please take a moment and open the slide presentation and refer to slide number two.

Speaker Change: These products will use the same HIF-based knitted structure as Integrity, but will be designed specifically to treat additional tender repairs all over the body.

Cheryl Blanchard: I can't wait to tell you more about how our proprietary HA technologies will be driving Anika forward into an exciting future. I'll wrap up by saying that I'm thrilled to have Steve now on the Anika leadership team. He's made tremendous progress coming up to speed on the business and has brought in a fresh set of eyes on our key initiatives. Now, I'll turn the call over to him to review our financial results and guidance for 2024.

Speaker Change: I can't wait to tell you more about how our proprietary HA technologies will be driving Anika forward into an exciting future.

Steve Griffin: I'll wrap up by saying that I'm thrilled to have Steve now part of the Anika leadership team. He's made tremendous progress coming up to speed on the business and has brought in a fresh set of eyes on our key initiatives. Now I'll turn the call over to him to review our financial results and guidance for 2024. Steve?

Mark Namaroff: 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 1934. 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 allegation to update these statements should future financial data or events occur that differ from the forward-looking statements presented today.

Steve Griffin: Before I begin with an overview of the quarter, I'd like to take a moment to reflect on my early impressions after joining Anika in June. I joined Anika because of the opportunity to partner with this leadership team on developing and commercializing the next generation of regenerative solutions built on the rich history of HA technology that exists here at Anika. Each employee I've had the opportunity to meet with is mission-oriented and passionate about unlocking the full value of these products and technologies for patients around the world. It's an exciting time to join this energized team as we refocus our attention on our highest-returning programs to deliver great patient and shareholder outcomes.

Steve Griffin: Thank you, Cheryl. Before I begin with an overview of the quarter, I'd like to take a moment to reflect on my early impressions after joining Anika in June .

Steve Griffin: I join Danica because of the opportunity to partner with this leadership team on developing and commercializing The next generation of regenerative solutions built on the rich history of H.A. technology that exists here at Anika.

Mark Namaroff: Please 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-GAT financial measures, 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 GAT financial measures. We believe that non-GAT measures provide an additional way of viewing aspects of our operation and performance.

Steve Griffin: Each employee I've had the opportunity to meet with is mission-oriented and passionate about unlocking the full value of these products and technologies for patients around the world.

Mark Namaroff: But when considered with GAT financial measures and the reconciliation of GAT measures, they provide even more complete understanding of our business. A reconciliation of the adjusted non-GAT financial measures results to the most comparable GAT measurements are available at the end of the presentation deck and our second quarter 2024 press release.

Steve Griffin: It's an exciting time to join this energized team as we refocus our attention on our highest returning programs to deliver great patient and shareholder outcomes.

Steve Griffin: Please refer to slide five in the online presentation, where I'll walk through the results of the second quarter of 2020. Anika generated $41.9 million of total revenue in the second quarter, down $2.4 million as compared to the same period in 2023 and in line with prior expectations, driven by the timing of U.S. OA pain management orders. Revenue in our largest product family, OA Pain Management, decreased 9% in the second quarter to $26.7 million.

Speaker Change: Please refer to slide five in the online presentation where I'll walk through the results of the second quarter of twenty twenty four.

Steve Griffin: And a degenerated $41.9 million in the total revenue in the second quarter, down $2.4 million as compared to the same period in 2023, and in line with prior expectations, driven by the timing of U.S. O.A. pain management orders.

Steve Griffin: Revenue in our largest product family, OA pain management, decreased 9% in the second quarter to $26.7 million.

Cheryl Blanchard: And now I'd like to turn the call over to our president and CEO Dr. Cheryl Blanchard. Thanks, Mark. Good afternoon, everyone, and thanks for joining us.

Steve Griffin: This was primarily due to lower U.S. sales as a result of higher-than-normal shipments in the second quarter of 2023, as previously disclosed. In the quarter, international sales grew by an impressive 19 percent, representing growth in all three brands, MonoVisk, OrthoVisk, and Syngal, as we continue to enter new markets and gain share with our international distributors.

Steve Griffin: This is primarily due to lower US sales, as a result of higher than normal shipments in the second quarter of 2023, as previously disclosed.

Cheryl Blanchard: Please turn to slide three. Now midway through 2024, we're making great progress on the execution of our strategy to refocus the business on the areas that deliver the greatest value to our shareholders and drive results that accelerate our past of profitability. Our efforts in the first half of the year set the stage for the rest of 2024 and beyond as we announced the full market release of our newest regenerative product, Integrity, and have completed our cost savings initiatives to realize significant operating expense savings this year.

Steve Griffin: In the quarter, international sales grew by an impressive 19 percent, representing growth in all three brands, MonoVisc, OrthoVisc, and Syngal, as we continue to enter new markets and gain share with our international distributors.

Steve Griffin: Joint preservation and restoration revenue increased 7% in the second quarter to $13.5 million. This growth was led by our limited market release of Integrity, as well as contributions from XTwist, partially offset by lower sales of more mature products. Our Regenerative Solutions portfolio, including Integrity, continues to be an important avenue for total revenue growth, as we expect to see continued revenue growth into the second half of 2025.

Steve Griffin: Joint Preservation and Restoration Revenue, increase 7% in the second quarter to $13.5 million.

Steve Griffin: This growth was led by our limited market release of Integrity, as well as contributions from XTwist.

Cheryl Blanchard: When we walk you through the key highlights of the quarter, and then I'll turn the call over to Steve to review the financials and our guidance for 2024. Overall revenue for the second quarter was lower by 5% due to the timing of very strong U.S, ortho-visc and mono-visc units, ordered in the second quarter of 2023. I'm very pleased to say that we delivered healthy, adjusted EBITDA margins of 15% during the quarter, as we're making meaningful progress on our refocus business strategy and our path to profitability.

Steve Griffin: Partially offset by lower sales of warmer mature products.

Steve Griffin: Our Regenerative Solutions portfolio, including Integrity, continues to be an important avenue for total revenue growth, as we expect to see continued revenue growth into the second half of 2024.

Steve Griffin: Lastly, our non-orthopedic revenue decreased 26 percent to 1.7 million dollars, in line with prior guidance given lower mature product sales. Gross margin in the second quarter was 65 percent, in line with the prior year. An adjusted gross margin was 66 percent in the quarter, down from 69 percent in the prior year period.

Steve Griffin: Lastly, our non-orthopedic revenue decreased 26% to $1.7 million in line with prior guidance given lower mature product sales.

Cheryl Blanchard: In joint preservation and restoration, we delivered 7% growth as we're seeing the results of our new product launches, particularly ex-twist and our new regenerative hyaluronic acid or HA-based integrity implant system, which I'll speak to more in a moment. This quarter, OAPA management was lower by 9% as we expected on higher U.S, revenue last year, offset by strong international growth, which is up 17% year to date. The strong OUS growth continues to be driven by market share gains, as well as new country expansion across all three brands of single, mono-visc and ortho-visc. International growth across our OAPA portfolio has been a key value driver as single is becoming the treatment of choice in many countries, while ortho-visc and mono-visc continue to perform very well.

Steve Griffin: Gross margin in the second quarter was 65%, in line with the prior year, an adjusted gross margin was 66% in the quarter, down from 69% in the prior year period.

Steve Griffin: Year over year, the change in gross margin was primarily driven by the mix of U.S. OA pain management sales in 2023. However, sequentially, gross margins improved by 40 basis points versus the first quarter of 2024, driven by stabilized operations. Now, moving to operating expenses, operating expenses in the second quarter totaled $27.2 million, down $5.4 million from 2023. This lower operating expense profile includes a full quarter benefit associated with the cost restructuring actions taken in the first quarter of 2024. The company remains on track to achieve $10 million in cost savings from these initiatives.

Steve Griffin: Year over year, the change in gross margin was primarily driven by the mix of U.S. OA pain management sales in 2023.

Steve Griffin: Sequentially, gross margins improved by 40 basis points versus the first quarter of 2024, driven by stabilized operations.

Steve Griffin: Now, moving to operating expenses.

Steve Griffin: Operating expenses in the second quarter totaled $27.2 million, down $5.4 million from 2023.

Steve Griffin: This lower operating expense profile includes a full quarter benefit associated with the cost restructuring actions taken in the first quarter of 2024.

Cheryl Blanchard: In our U.S. OAPA business, we maintain our market leadership position with mono-visc and ortho-visc, despite softer pricing dynamics as the impact of the ASP legislation begins to normalize. This business remains a key foundation for ANICA, and will continue to drive profitability in cashflow as our U.S, sales and marketing partner works to improve market access, balancing both price and volume.

Steve Griffin: The company remains on track to achieve the $10 million of cost savings from these initiatives.

Steve Griffin: The net loss for the quarter was $100,000, compared to a net loss of $2.7 million in the prior year. Adjusted net income was $2.5 million in the second quarter and was down from an adjusted net income of $4.5 million, primarily due to the timing of USOA pain management orders in the second quarter of 2023. Anika generated Adjusted EBITDA in the quarter of $6.3 million, in line with the prior year as cost savings generated from the recent restructuring activities offset the lower US OA pain management sales in the quarter. Now, turning to cash and liquidity.

Steve Griffin: The net loss for the quarter was $100,000 compared to a net loss of $2.7 million in the prior year.

Steve Griffin: Adjusted that income was $2.5 million in the second quarter and was down from an adjusted net income of $4.5 million. Primarily due the timing of U.S. O.A. pain management orders in the second quarter of 2023.

Cheryl Blanchard: In other key updates, we announced the full market release of Integrity in July, in conjunction with the American Orthopedic Society of Sports Medicine or AOS Assign Manual Meeting. With tremendous surge in interest, marking an important step in the continued expansion of our regenerative portfolio. During the limited market release, we completed over 300 surgeries with over 60 surgeons across the shoulder and footnacle spaces, setting the foundation for our growth in the regenerative space in the second half of 2024.

Steve Griffin: Anika generated adjusted EBITDA in the quarter of $6.3 million, in line with the prior year, as cost savings generated from the recent restructuring activities offset the lower US OA pain management sales in the quarter.

Steve Griffin: In the quarter, we used $1.1 million in operating cash flow, an improvement versus the $8.3 million used in the second quarter of 2023, primarily as a result of improved profitability and lower working capital. Capital expenditures were $3.4 million, up $1.9 million as we continue to make investments in our Bedford, Massachusetts-based manufacturing facility to support growth in our OA pain management and HA regenerative solutions portfolio. As Cheryl referenced, we initiated a 10B51 stock repurchase plan in May, and in the second quarter, we purchased $1.4 million of common stock.

Steve Griffin: Now turning to cash and liquidity.

Steve Griffin: In the quarter, we used $1.1 million in operating cash flow as an improvement versus the $8.3 million used in the second quarter of 2023, primarily as a result of improved profitability and lower working capital.

Cheryl Blanchard: Customer response exceeded our expectations during the limited market release, with the completion of more than double the cases that originally expected. This demonstrates the strong pull from the marketplace with about 25% of the surgeons who have used Integrity representing new customers to ANICA. In fact, we saw more than 40% increase in Integrity cases from Q1 to Q2 while still in limited release, and we expect this growth trend to continue through 2024.

Steve Griffin: Capital expenditures were $3.4 million, up $1.9 million as we continue to make investments in our Bedford, Massachusetts-based manufacturing facilities to support growth in our OA pain management and HA regenerative solutions portfolio.

Steve Griffin: As Cheryl referenced, we initiated a 10B51 stock repurchase plan in May, and in the second quarter, we purchased $1.4 million of common stock.

Cheryl Blanchard: With our ongoing focus on growing our differentiated regenerative products, we have also seen great initial success in adding new distributors who are specifically focused on and excited about ANICA's regenerative solutions. As we continue to build a presence in the market for Integrity, developing high quality clinical evidence is very important, both for market expansion and surge in adoption. As such, we started the process of initiating a prospective multi-center MRI and outcomes-based clinical study on Integrity to assess pain, function, and rotator cuff tendon healing.

Steve Griffin: As of this week, we have purchased approximately $3 million, cumulatively, year-to-date, and expect to complete the initial $15 million share repurchase plan before June 2025, in line with our prior commitment. We ended the second quarter with $62.8 million in cash and no debt.

Speaker Change: As of this week, we have purchased approximately $3 million, cumulatively, year-to-date, and expect to complete the initial $15 million share repurchase plan before June 2025, in line with our prior commitments.

Steve Griffin: We ended the second quarter with $62.8 million in cash and no debt.

Steve Griffin: Now turning to slide six, I'll provide a review of our full-year financial outlook for 2025. We are maintaining our total revenue estimate of $168 to $173 million, a growth of 1 to 4% versus 2023. OA Paying Management remains on track to deliver between $102 and $104 million, roughly flat to 2% growth versus 2023. U.S. OA pain sales are slightly below initial expectations as a result of lower end-user pricing offset by stronger first-half performance and full-year expectations for international OA pain sales.

Speaker Change: Now turning to slide six, I'll provide a review of our full year financial outlook for 2024.

Cheryl Blanchard: Investigators sites have been identified and enrollment has expected to start by the end of the year. This study will provide the clinical data needed for the MBR filing, ultimately to support our plans to launch Integrity in the EU, as well as reinforce our positioning strategy in the U.S. In addition, we have post-market follow-up studies currently ongoing that will yield clinical papers on the results of integrity next year.

Speaker Change: We are maintaining our total revenue estimate of $168 to $173 million, a growth of 1 to 4 percent versus 2023.

Speaker Change: OAP Management remains on track to deliver between 102 and 104 million dollars, roughly flat to 2% growth vs. 2023.

Speaker Change: U.S. OA pain sales are slightly below initial expectations as a result of lower end-user pricing, offset by stronger first-half performance and full-year expectations for international OA pain sales.

Cheryl Blanchard: The integrity implant system will drive significant near-term growth for Anika's regenerative portfolio. With respect to Hylophast, we remain on track to file the first PMA module by the end of this year. I'm also pleased to report that we recently obtained positive feedback from FDA regarding the presentation of our clinical data. We'll work closely with them as part of the modular PMA submission process in order to best position ourselves for an effective review.

Steve Griffin: Joint Preservation and Restoration remains on track to deliver between $58 and $60.5 million of revenue, up 6% to 10% versus 2023, as a result of the anticipated contributions from the full market release of Integrity, partially offset by softer legacy product sales. Non-orthopedic revenue is expected to be between $8 and $8.5 million, a decrease of 14 to 19 percent in line with prior guidance. We now anticipate adjusted EBITDA to be towards the lower end of the $25 to $30 million range previously provided.

Speaker Change: Joint preservation and restoration remains on track to deliver between 58 and 60.5 million dollars of revenue.

Speaker Change: Up 6% to 10% versus 2023, as a result of the anticipated contributions from the full market release of integrity, partially offset by softer legacy proxails.

Cheryl Blanchard: Our vegetative technologies represent a key enabler for Anika's growth as we bring integrity to market and prepare for the launch of Hylophast by 2026. With respect to SINGAL, we continue to make progress on our regulatory strategy and are having regular communications with the FDA on the non-clinical work required before we can submit the NDA. We received feedback from FDA on the data required and are planning an additional meeting to clarify their requests.

Speaker Change: Nonorthopedic revenue is expected to be between eight and eight and a half million dollars, a decrease of 14 to 19% in line with prior guidance.

Speaker Change: We now anticipate adjusted EBITDA to be towards the lower end of the $25-$30 million range previously provided.

Steve Griffin: This change is driven by the makeshift of OA Payne management revenue with modestly lower, higher-margin U.S. sales offset by stronger, lower-margin international sales. We expect full-year adjusted EBITDA margin to be approximately 15%. Please note that we have decided to remove projected gross margins for projected adjusted gross margins from our guidance framework, as the predictability of this metric is highly dependent upon the mix of products sold between U.

Speaker Change: This changes driven by the mix shift of OAP management revenue, with modestly, lower, higher margin US sales, offset by stronger, lower margin international sales.

Cheryl Blanchard: We aim to provide further updates by the end of the year. SINGAL now sold in more than 40 countries outside the U.S, remains a key driver as the next generation non-opioid OAPane product of choice. We continue to see strong international growth that increases our confidence that SINGAL will truly be a game changer when it is approved in the U.S.

Speaker Change: We expect full-year adjusted EBITDA margin to be approximately 15%.

Speaker Change: Please note that we have decided to remove projected gross margins.

Speaker Change: projected adjusted gross margins from our guidance framework, as the predictability of this metric is highly dependent upon the mix of products sold between U.S. and international.

Cheryl Blanchard: Lastly on this slide, I'd like to reiterate our focus on delivering value to our shareholders. We continue to explore all strategic alternatives for the business to generate shareholder value, including refocusing our business strategy to accelerate profitability and deploy capital towards our highest opportunities. We've taken significant cost actions in 2024 to improve our profitability to enable investments into our highest growth areas of OAPane management and regenerative solutions while returning capital to shareholders through a new $40 million share buyback program. These actions that focus our investments combine with our continued strategic assessment of alternatives and position antica to deliver outside shareholder value.

Steve Griffin: We continue to focus on total company profitability as the key measurement for performance to deliver shareholder value. In summary, we had a second quarter that demonstrates the strength of international sales for our market-leading OA pain management product, the opportunity for outsized revenue growth from our regenerative solutions portfolio, including integrity, which will continue to grow in the second half of this year, and the realization of cost savings as we work to improve long-term profitability and focus our investments in the highly differentiated HA products in our portfolio. With that, I'll now turn the call back over to Cheryl. Thanks, Steve. Please turn it on.

Speaker Change: We continue to focus on total company profitability as the key measurement for performance to deliver shareholder value.

Speaker Change: In summary, we have a second quarter that demonstrates the strength of the international sales for our market-leading OA pain management products.

Speaker Change: the opportunity for outsized revenue growth from our regenerative solutions portfolio, including integrity, which will continue to grow in the second half of this year, and the realization of cost savings as we work to improve the long-term profitability and focus our investments in the highly differentiated HA products in our portfolio.

Cheryl Blanchard: Please turn to slide 4. Before I turn the call over to Steve to review the results of the quarter, I'd like to review our strategy to drive value with our OAPane management franchise and our HA-based regenerative products. HA is at the core of antica's 30 plus year heritage and it's what will drive differentiated product innovation and shareholder value moving forward. HA and gel form is essential to our OAPane injection portfolio, including ortho-visc, monovisc, and singol, with singol continuing to be a strong grower OUS and representing a billion dollar addressable market for a next generation OAPane therapy in the U.S.

Speaker Change: With that, I'll now turn the call back over to Cheryl. Thanks, Steve. Please turn to slide seven.

Cheryl Blanchard: Please turn to slide seven. In closing, the second quarter was strong, where we demonstrated our commitment to delivering for customers, their patients, and shareholders while advancing the next generation of pain management and regenerative technology. The full market release of Integrity provides Anika with a highly differentiated product that enables us to control our market access and engage directly with surging customers to continue to develop new products that advance early intervention orthopedic care.

Cheryl Blanchard: In closing, the second quarter was strong, where we demonstrated our commitment to delivering for customers, their patients, and shareholders, while advancing the next generation of pain management and regenerative technology.

Cheryl Blanchard: The full market release of integrity provides an echo with a highly differentiated product that enables us to control our market access and engage directly with surgeon customers to continue to develop new products that advance early intervention orthopedic care.

Cheryl Blanchard: Our OA pain management franchise remains a foundational pillar for Anika, and our recent international growth demonstrates the value of single-specialty and opportunity sets that lie ahead in the U.S. Our refocused business strategy provides clarity on our highest ROI initiatives while we continue to strategically assess all value creation opportunities. Lastly, our progress to date wouldn't be possible without every member of the Anika team. I'm proud of their resilience and hard work, and we look forward to sharing more about our progress in the coming months. With that, we'll open up the line for questions.

Cheryl Blanchard: Our OAP management franchise remains a foundational pillar for Anika and our recent international growth demonstrates the value of single and opportunity sets that lies ahead in the U.S.

Cheryl Blanchard: Importantly though, our proprietary HA technologies allow us to uniquely transform our highly regenerative HA into various forms that are already clinically proven. One of those forms is our HA-AP technology, which is HA that we modify to turn it into a biopolymer. This technology allows us to develop numerous, resorbable, regenerative products. For example, we use HA-AP to create fibers that can be knit, woven, and woven with other materials, as we've done with integrity, and even used to create products that are non-woven, such as hyalofast.

Cheryl Blanchard: Our refocus business strategy provides clarity on our highest ROI initiatives. While we continue to strategically assess all value creation opportunities.

Cheryl Blanchard: Lastly, our progress to date wouldn't be possible without every member of the Anika team.

Cheryl Blanchard: I'm proud of their resilience and hard work and we look forward to sharing more about our progress in the coming months.

Speaker Change: With that, we'll open up the line for questions.

Operator: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touch-tone phone, and you will hear a prompt that your hand has been raised. Should you wish to decline the polling process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any key. One moment, please, for your first question. Your first question comes from Jim Sidoti from Sidoti Company.

Speaker Change: Thank you.

Cheryl Blanchard: Our HA-AP technology is clinically proven with the success of hyalofast, our single-stage cartilage repair product sold in over 35 countries, with over 40 clinical publications, and 15-year data coming soon. We recognize the unique abilities we have to create meaningful products driven by H.A, in both the OAPA and regenerative solution spaces, products that self-real unmet clinical needs for surgeons and the patients they treat. Using our proprietary technology, we have now transformed our new product pipeline of innovation that leverages what we've already done with both integrity and high-level fast.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question? Please press the star followed by the number one on your touch tone.

Speaker Change: and you will hear a prompt that your hand has been erased.

Cheryl Blanchard: Should you wish to decline from the polling process, please press the star followed by the number 2. If you are using a speakerphone, please lift the handset before pressing any keys.

Speaker Change: One moment, please, for your first question.

Speaker Change: Your first question comes from Jim Cidote, from Cidote Company.

James Sidoti: Good afternoon. Thanks for taking the question. So, it sounds like there are some headwinds in the U.S. for the pain management business. But is the growth internationally for those products enough to offset those headwinds?

Jim Cidote: Good afternoon. Thanks for taking the questions.

Cheryl Blanchard: We'll talk about our pipeline in more detail in the future, but I'll give you one highlight now. With the immense commercial pull we're seeing with integrity and real-time feedback we're getting from our direct engagement with surgeons, we are currently working to expand that portfolio with different shapes, sizes, and configurations to address additional tender pair unmet needs. These products will use the same high F-based new structure as integrity, but will be designed specifically to treat addition functional tender pairs all over the body.

Jim Cidote: So, it sounds like there's some headwinds in the U.S. on the pain management business. It's the growth internationally for those products. Is that enough to offset those headwinds?

Cheryl Blanchard: Yeah, good to talk to you, Jim. The short answer is yes, we're reaffirming our total revenue guidance on OAPAIN, and you'll see that the outsized growth that we saw in the first half of this year up 17% has done really, really well, and it will continue here into the second quarter, you know, somewhat moderately lower than how it performed in the first quarter or the first half, but we do expect that that will be able to offset some of the softness that you referenced on the U.S.

Speaker Change: Yeah, good to talk to you Jim. The short answer is yes, we're reaffirming our total revenue guidance on the way pain and you'll see that the outside's growth that we saw in the first half of this year up 17 percent.

Speaker Change: has done really, really well, and it will continue here in the second quarter, you know, somewhat moderately lower than how it performed in the first quarter or the first half, but we do expect that that will be able to offset some of the softness that you referenced on the US side.

Cheryl Blanchard: I can't wait to tell you more about how our proprietary H.A, technologies will be driving Anika forward into an exciting future. I'll wrap up by saying that I'm thrilled to have Steve now part of the Anika leadership team. He's made tremendous progress coming up to speed on the business and is brought in a fresh set of eyes on our key initiatives.

Cheryl Blanchard: Right. And then for some of the new products that you expect to have in the next couple of years, like HyloFast and Syngal, any initial comments on how you plan to distribute those products?

Speaker Change: Right, and then for some of the new products that you expect that in the next couple of years, like how do I fast and sing out? Any initial comments on how you plan to distribute those products?

Stephen Griffin: Now I'll turn the call over to him to review our financial results and guidance for 2024.

Cheryl Blanchard: Hi Jim, thanks for the question. Yeah, so for HyloFast, that's obviously a regenerative product and very core to the early intervention portfolio that we've put together. It's a product that we already sell that has lots of clinical data, 40 publications, we'll have 15-year data this year, and we have a really strong process, as you heard me talk about on the call, as we're starting to engage with FDA on that product.

Speaker Change: Hi, Jim. Thanks for the question. Yeah, so for Highly Fast.

Stephen Griffin: Before I begin with an overview of the quarter, I'd like to take a moment to reflect on my early impressions after joining Anika and June. I joined Anika because of the opportunity to partner with this leadership team on developing and commercializing the next generation of regenerative solutions built on the rich history of H.A, technology that exists here at Anika. Each employee I've had the opportunity to meet with is mission oriented and passionate about unlocking the full value of these products and technologies for patients around the world. It's an exciting time to join this energized team as we refocus our attention on our highest returning programs to deliver great patient and shareholder outcomes.

Speaker Change: That's obviously a regenerative product and very core to the early intervention portfolio that we've put together. It's a product that we already sell that we're very excited about that has

Speaker Change: Lots of clinical data, 40 publications will have 15 year data this year and we have a really strong process as you heard me talk about on the call as we're starting to engage with FDA on that product. So I think you're going to expect to hear more from us on Hylifast.

Cheryl Blanchard: So, I think you can expect to hear more from us on Hylifast. Regarding Syngal, that is a product that I think fits more into that OA pain management portfolio, and we obviously haven't announced anything relative to how we would consider distributing that in the United States, but we clearly have a different model that we deploy today, excuse me, with our other OA pain products. I think there is more to come on that relative to Syngal.

Speaker Change: Regarding Syngal, that is a product that I think fits more into that OA pain management portfolio and we obviously haven't announced anything relative to how we would consider distributing that in the United States.

Stephen Griffin: Please refer to slide five in the online presentation where I'll walk through the results of the second quarter of 2024. Anika generated $41.9 million in the total revenue in the second quarter, down $2.4 million as compared to the same period in 2023 and in line with prior expectations, driven by the timing of U.S. OAPAN management orders. Revenue in our largest product family, OAPAN management, decreased 9% in the second quarter to $26.7 million.

Speaker Change: But we clearly have a different model that we deploy today, excuse me, with our other OA pain products. I think more to come on that relative to Syngal.

Steve Griffin: All right, and it seems like the cost-savings initiatives, you know, have really made a difference. Were there any one-time cost savings in the quarter, or should we expect these levels going forward?

Speaker Change: All right, and it seems like the cost savings initiatives, you know, have really made a difference. Were there any one-time cost savings in the quarter, or should we expect these levels going forward?

Steve Griffin: Yeah, I mean, when you take a look at the press release, you'll be able to see the one-time adjustments, those non-recurring items, but when you back those out and you just look at it on a year-over-year basis, I think your conclusion is right. We're seeing about $3 million of real cost savings on the OPEX lines, driven by the actions that were taken in the first quarter. These will continue as we move forward here, driven by the actions. OK.

Speaker Change: Yeah, I mean, when you take a look at the press release, you'll be able to see the one time adjustment is non-referring items.

Speaker Change: But when you back those out and you just look at it on a year-over-year basis, I think your conclusion is right.

Stephen Griffin: This was primarily due to lower U.S, sales as a result of higher than normal shipments in the second quarter of 2023 as previously disclosed. In the quarter, international sales grew by an impressive 19% representing growth in all three brands, mono-visc, ortho-visc, and single as we continue to enter new markets and gain share with our international distributors. Joint preservation and restoration revenue increased 7% in the second quarter to $13.5 million. This growth was led by our limited market release of integrity as well as contributions from X to R. List, partially offset by lower sales of more mature products.

Speaker Change: We're seeing about $3 million of real cost savings on the OPEX lines driven by the actions that we're taking in the first quarter. Those will continue as we move forward here driven by the actions.

James Sidoti: Okay. All right. Thank you.

Speaker Change: Okay, all right, thank you.

Operator: Thank you. The next question comes from Harrison Parsons from Stiffens. Please go ahead.

Jim Cidote: Thanks, Jim.

Speaker Change: Thank you. The next question comes from Harrison Parsons from Stiffens. Please go ahead.

George Sellers: George, good afternoon, and thanks for taking the question. I wanted to just dig in a little bit about your comments around the more mature products in the joint preservation restoration segment. What percentage of that segment do those products make up, and are they declining, or is it just slower growth that you're seeing from those?

Harrison Parsons: George, good afternoon and thanks for taking the questions.

Harrison Parsons: I wanted to dig in a little bit about them.

Harrison Parsons: Your comments around the more mature products and the joint preservation restoration segment, what percentage of that segment, do those products make up and are they declining or is it just slower growth that you're seeing from those?

Stephen Griffin: Our regenerative solutions portfolio, including integrity, continues to be an important avenue for total revenue growth as we expect to see continued revenue growth into the second half of 2024. Lastly, our non orthopedic revenue decreased 26% to $1.7 million in line with prior guidance given lower mature product sales. Gross margin in the second quarter was 65%, in line with the prior year, an adjusted gross margin was 66% in the quarter, down from 69% in the prior year period.

Cheryl Blanchard: Yeah. Hi George.

Speaker Change: Yeah, hi George. Thanks for the question. We have talked about this in prior quarters. There are some, I would say, legacy products in that JPR business.

Cheryl Blanchard: Thanks for the question. We have talked about this in prior quarters. There are some, I would say, legacy products in that JPR business that are either kind of flat, a couple of them to declining. It's not all the products, for sure. We certainly haven't broken them out with any kind of percentages.

Harrison Parsons: that are either kind of flat, a couple of them to declining. It's not all the products, for sure. We certainly haven't broken them out with any kind of percentages.

Cheryl Blanchard: And that's obviously largely being offset by some higher growth, newer products like X-Twist and Integrity, as we've talked about today. So I think you'll see us going forward, continuing to focus on the new products as we really leverage the expertise that we've got here at Anika around hyaluronic acid. And new products are really where we've made a lot of our investments. So we look forward to continuing to report on the growth of that business relative to new products in particular.

Harrison Parsons: And that's obviously largely being offset by some higher growth, newer products like X-Twist and Integrity as we've talked about it today.

Stephen Griffin: Year over year, the change in gross margin was primarily driven by the mix of U.S. OA Payne Management Sales in 2023. Sequentially, gross margins improved by 40 basis points versus the first quarter of 2024 driven by stabilized operations.

Harrison Parsons: So, I think you'll see us going forward, continuing to focus on the new products as we really leverage the expertise that we've got here at Anika around hyaluronic acid. And the new products is really where we've made a lot of our investments.

Stephen Griffin: Now, moving to operating expenses. Operating expenses in the second quarter total $27.2 million, down $5.4 million from 2023. This lower operating expense profile includes a full quarter benefit associated with the cost restructuring actions taken in the first quarter of 2024. The company remains on track to achieve the $10 million of cost savings from these initiatives. The net loss for the quarter was $100,000 compared to a net loss of $2.7 million in the prior year.

Harrison Parsons: So, we look forward to continuing to report out on the growth of that business relative to the new products in particular.

Steve Griffin: And the only thing I might add to that is, you know, specifically the regenerative piece of the JPR business is performing quite well, as you can see, and that's really where you're going to start to see the benefits of the integrity launch come through. So, you know, in the first half of the year, we saw mid-teens growth coming from that regenerative part of the portfolio, and we expect that to pick up now as we head into the second half of the year.

Speaker Change: Yeah, I knew what I think in my dad's dad is

Speaker Change: Specifically, the regenerative piece of the JPR business is performing quite well, as you can tell, and that's really where you're going to start to see the benefits of the integrity launch come through. So, in the first half of the year, we saw mid-teens growth coming from that regenerative part of the portfolio, and we expect that to pick up now as we head into the second half of the year.

Cheryl Blanchard: Okay, great. Yeah, that's helpful. And then I just wanted to stay on that segment, just kind of dig into any products beyond X-Twist and Integrity that are driving that growth to get you to the full year guide. Sure, there are other products that are driving growth.

Speaker Change: i

Stephen Griffin: Adjusted net income was $2.5 million in the second quarter and was down from an adjusted net income of $4.5 million. Primarily, due to the timing of U.S. OA Payne Management orders in the second quarter of 2023. Anika generated adjusted EBITDA on the quarter for $6.3 million in line with the prior year, as cost savings generated from the recent restructuring activities offset the lower U.S. OA Payne Management sales in the quarter.

Speaker Change: Okay, great. Yeah, that's helpful. And then I just wanted to, just staying on that segment,

Speaker Change: just kind of dig into any products beyond X-Twist and Integrity that are that are driving that that growth to get you to the full year guide.

Cheryl Blanchard: Sure, there are other products that are driving growth, but I think we've chosen to focus on X-Twist and Integrity just because those are the newer products. We obviously just got to full market release on the biocomposite version of X-Twist that allows us now to address that full $600 million plus rotator cuff market on the soft tissue fixation side. And now it's early days, but we're about a month into the full market release of Integrity.

Speaker Change: Sure, there are other products that are driving growth, but I think we've chosen to focus on experts in integrity just because those are the newer products. We obviously just got to full marker release on the bio composite.

Stephen Griffin: Now, turning to cash and liquidity. In the quarter, we used $1.1 million in operating cash flow as an improvement versus the $8.3 million used in the second quarter of 2023. Primarily as a result of improved profitability and lower working capital. Capital expenditures were $3.4 million, up $1.9 million, as we continue to make investments in our Bedford, Massachusetts-based manufacturing facilities to support growth in our OA Payne Management and HA Regenerative Solutions portfolio.

Speaker Change: version of X-Twist that allows us now to address that full $600 million plus rotator cuff market on the soft tissue fixation side.

Speaker Change: And now it's early days, but we're in about a month into the full market release of Integrity. So those two products are really, I would say, the higher-growing portions of that JPR.

Cheryl Blanchard: So those two products are really, I would say, the higher-growing portions of that JPR part of the business, and why we chose to point those two out. We'll obviously continue to update as we go forward. I will tell you, though, that the regenerative portion of the business, if you want to think about it that way, which also includes HyloFast and Tactoset, is a piece of that JPR business that is doing very well. Steve, I don't know if you've got anything to add to that. No, I think that covers it.

Speaker Change: Part of the business and why we chose to point those two out. Well, obviously continue to update as we go forward. I will tell you though that the regenerative portion of the business.

Stephen Griffin: As Cheryl referenced, we initiated a 10B51 stock repurchase plan in May, and in the second quarter, we purchased $1.4 million of common stock. As of this week, we have purchased approximately $3 million cumulatively year-to-date and expect to complete the initial $15 million share repurchase plan before June 2025 in line with our prior commitments. We ended the second quarter with $62.8 million in cash and no debt.

Speaker Change: If you want to think about it that way, which includes also HylaFast and Tacticet, is a piece of that JPR business that is doing very well.

Harrison Parsons: Steve, I don't know if you've got anything to add to that. I think that covers you. Okay.

Speaker Change: Thanks for the color.

Operator: The next question comes from Mike Petusky from Barrington Research. Please go ahead.

Steve Griffin: All right. Thank you.

Speaker Change: The next question comes from Mike Petusky from Barrington Research. Please go ahead.

Stephen Griffin: Now, turning to slide 6.

Michael Petusky: Good evening, Cheryl. The international growth that you guys called out for OA, and you sort of said a new country expansion, which countries did you guys recently enter, and I guess were any of them in the second quarter?

Stephen Griffin: I'll provide a review of our full-year financial outlook for 2020, for. We are maintaining our total revenue estimate of 168 to 173 million dollars, a growth of 1 to 4% versus 2023. OAPA management remains on track to deliver between 102 and 104 million dollars, roughly flat to 2% growth versus 2023. US OAPA sales are slightly below initial expectations, as a result of lower end user pricing, offset by stronger first half performance and full year expectations for international OAPA sales.

Mike Petusky: Good evening. Cheryl, the international growth that you guys called out for OA, and you sort of said a new country expansion, which countries did you guys recently enter, and I guess were any of them in the second quarter?

Cheryl Blanchard: Yeah, I'll tell you, Mike, we typically don't break out specifically when we launch in a new country unless it's material to the business. But I will tell you that we've continued to expand in Europe and kind of the South America and Latin America regions going forward. And I would say we haven't expanded into a new country that's really going to change our numbers materially when that happens. I'll certainly let you know

Speaker Change: Yeah we, I'll tell you Mike, we typically don't break out specifically when we launch in a new country unless it's material to the business.

Speaker Change: But I will tell you that we've continued to expand in Europe and kind of the...

Speaker Change: the South America, Latin America regions going forward.

Speaker Change: And we, I would say we haven't expanded into a new country that's really going to change our numbers materially. When that happens, I'll certainly let you know. I think the good news is that the bigger portion of that growth has really come from

Stephen Griffin: Joined preservation and restoration remains on track to deliver between 58 and 60.5 million dollars of revenue, up 6% to 10% versus 2023, as a result of the anticipated contributions from the full market release of integrity, partially offset by softer legacy product sales. Non-orthopedic revenue is expected to be between 8 and 8.5 million dollars, a decrease of 14 to 19% in line with prior guidance. We now anticipate adjusted EBITDA to be towards the lower end of the 25 to 30 million dollar range previously provided. This change is driven by the mix shift of OAPA management revenue, with modestly lower higher margin US sales, offset by stronger lower margin international sales. We expect full year adjusted EBITDA to be approximately 15%.

Cheryl Blanchard: I think the good news is that a bigger portion of that growth has really come from continued market share capture in the countries in which we already sell. And even when we launch in a new country, it takes a little bit of time for those distributors to kind of get their feet on the ground and get up and running. So I think we're really starting to see some of the nice impact as we launch in new countries and they have a chance to really get grounded in the products and drive into those markets. That's really what we're seeing propel much of that significant growth number with that OUS business. It's actually very exciting for us.

Speaker Change: continued market share capture of the countries in which we already sell.

Speaker Change: And even when we launch in a new country, it takes a little bit of time for those distributors to kind of get their feet on the ground and get up and running.

Speaker Change: So, I think we're really starting to see some of the nice impact as we launch in new countries.

Speaker Change: and they have a chance to really get grounded in the products and drive into those markets. That's really what we're seeing propel much of that significant growth number with that OUS business. It's actually very exciting for us.

Cheryl Blanchard: On Tsingtao, the regular communication with the FDA that you called out, the last 90 or so days, I mean, you know, are there learnings there where you say okay, we've pretty much got this dialed in in terms of what we're gonna we're gonna need to do, or there's still a lot of additional communication that needs to needs to happen there.

Speaker Change: Hi, I'm Hansen Gaul, the regular communication with the FDA that you've called out.

Stephen Griffin: Please note that we have decided to remove projected gross margins, projected adjusted gross margins from our guidance framework, as the predictability of this metric is highly dependent upon the mix of products sold between US and international. We continue to focus on total company profitability at the key measurement for performance to deliver shareholder value.

Speaker Change: Has the last 90 or so days, I mean, you know, are there learnings there where you say, okay, we've pretty much got this dialed in in terms of what we're going to need to do, or is there still a lot of, I guess, additional communication that needs to happen there?

Cheryl Blanchard: Yeah, it's a great question, and it's a topic that we would love to have it going faster. We're in constant communication with FDA. We reported out last quarter that they had come back to us with some feedback. We went back to them with some additional questions, and the feedback they gave us from those questions was to go ahead and schedule another meeting. So we're in the process of doing that, and, you know, we feel like that represents good progress, just because we're really starting to, I would say, hone in on the topics that we want to make sure we get full clarification on before we begin any additional non-clinical testing. So there is progress being made, and we look forward to providing a more fulsome update by the end of the year, relative to how we're thinking about that timing.

Speaker Change: Yeah, it's a great question and it's a topic that...

Speaker Change: We would love to have it be going faster.

Stephen Griffin: In summary, we the second quarter that demonstrates the strength of the international sales for our market leading OAPA management products, the opportunities for outsized revenue growth from our regenerative solutions portfolio, including integrity, which will continue to grow in the second half of this year, and the realization of cost savings as we work to improve the long-term profitability and focus our investments in a highly differentiated HA products in our portfolio.

Speaker Change: We're in constigation with FDA. We reported out last quarter that they had come back to us with some feedback.

Speaker Change: We went back to them with some additional questions and the feedback they gave us from those questions was go ahead and schedule another meeting So we're in the process of doing that

Speaker Change: And, you know, we feel like that represents good progress just because we're really starting to, I would say, hone in on the topics that we want to make sure we get.

Cheryl Blanchard: With that, I'll now turn the call back over to Cheryl. Thanks, Steve. Please turn to slide seven.

Speaker Change: full clarification around before we begin any additional non-clinical testing. So, there is progress being made and we look forward to providing a more fulsome update by the end of the year relative to how we're thinking about that timing.

Cheryl Blanchard: In closing, the second quarter was strong, where we demonstrated our commitment to delivering for customers, their patients, and shareholders, while advancing the next generation of management and regenerative technology. The full market release of integrity provides Annika with a highly differentiated product that enables us to control our market access and engage directly with surge in customers to continue to develop new products that advance early intervention orthopedic care. Our OAPA management franchise remains a foundational pillar for Annika, and our recent international growth demonstrates the value of single and opportunity sets that lies ahead in the U.S. Our refocus business strategy provides clarity on our highest ROI initiatives, while we continue to strategically assess all value creation opportunities. Last week, our progress to date wouldn't be possible without every member of the Anika team.

Cheryl Blanchard: And then on the study guys, I guess, are planning to enroll for Integrity, and I just want to make sure I understand. The primary reason for this is sort of for your MDR filing, and I understand also to sort of strengthen the value proposition in the U.S., but can you guys, I guess, first of all, I just want to make sure that I understand what the motivation for that is, and then, or confirm that I understand what the motivation for that is, and then what do you think that costs, and over what time?

Speaker Change: And then on the study you guys, I guess, are planning to enroll for integrity, and I just want to make sure I understand. The primary reason for this is sort of for your MDR filing, and I understand also to sort of strengthen.

Speaker Change: the value proposition in the U.S., but can you guys, I guess, first of all, I just want to make sure that I understand what the motivation for that is and then, or confirm that I understand what the motivation for that is, and then what do you think that costs and over what time frame?

Cheryl Blanchard: Yeah, absolutely. So, we're excited to be able to get that study going. It's been in the planning stages as we've been in limited market release.

Speaker Change: Yeah, absolutely. So, we're excited to be able to get that study going. It's been in the planning stages as we've been in limited market release. It really is two-fold. You know, we know that we need a good set of high-quality clinical data.

Cheryl Blanchard: It really is twofold. You know, we know that we need a good set of high-quality clinical data to really drive market access in the United States in the way that we know is possible with this superior technology. But in Europe now, because this is a Class III device, we have to have high-quality clinical data for the MDR filing prior to marketing, which is different than it used to be. So, it's really twofold in nature.

Cheryl Blanchard: I'm proud of their resilience and hard work, and we look forward to sharing more about our progress in the coming months.

Speaker Change: to really drive market access in the United States in the way that we know is possible with this superior technology.

Operator: With that, we'll open up the line for questions. Thank you.

Speaker Change: But in Europe now, because this is a Class 3 device, we have to have high quality clinical data.

Operator: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touch tone phone. And you will hear a prompt that your hand has been erased. Should you wish to decline from the polling process, please press the star followed by the number two. If you are using a speaker phone, please lift the handset before pressing any keys. One moment please for your first question.

Speaker Change: for the MDR Finally Prior to Marketing, which is different than it used to be. So, it's really two folds in nature.

Cheryl Blanchard: And again, we're excited to get it started. I will tell you, though, we have a couple of post-market studies already ongoing in the United States that are going to yield some clinical publications next year. So, we'll begin to have some clinical data coming out for U.S. marketing and market access purposes before we get to the, what I would consider kind of the higher-quality clinical data that we're going to need for the MDR filing.

Speaker Change: And again, we're excited to get it started. I will tell you though, we have a couple of post-market studies already ongoing in the United States.

Speaker Change: that are going to yield some clinical publications next year or so.

Speaker Change: We'll begin to have some clinical data coming out for U.S. marketing and market access purposes before we get to what I would consider kind of the higher quality clinical data that we're going to need for the MDR filing.

Jim Sidoti: Your first question comes from Jim Sidoti from Sidoti company. Good afternoon. Thanks for taking the questions.

Steve Griffin: Yeah, and we don't necessarily share the details on the breakdown of the cost for each study. But what I'd say is, you know, we'd expect it to start in the second half of this year and continue into next year as well. It'll be a little bit of an offset to some of the cost savings that we've seen on the operating expense line. So, you know, I mentioned this earlier, we've seen about $3 million of operating expense savings in the second quarter alone.

Cheryl Blanchard: So, it sounds like there's some headwinds in the US on the pain management business. Is the growth internationally for those products? Is that enough to offset those headwinds? Yeah. Good to talk to you Jim. The short answer is yes. We're reaffirming our total revenue guidance on the way pain. And you'll see that the outsized growth that we saw in the first half of this year, up 17%. Has done really, really well and it will continue here in the second quarter.

Speaker Change: Yeah, and we don't necessarily share the details on the breakdown of the cost for each study.

Speaker Change: But what I'd say is you know we'd expect it to start in the second half of this year and continue in the next year as well. It'll be a little bit of an offset to some of the cost savings that we've seen on the operating expense line.

Speaker Change: So while, you know, I mentioned this earlier, we've seen about $3 million of operating expense savings in the second quarter alone, it'll eat into that to some degree as we work our way into the fourth quarter here, as a little bit of a drag against some of those cost savings, but, you know, it'll take a number of years to play out associated with the overall study expense.

Steve Griffin: It'll eat into that to some degree as we work our way into the fourth quarter here as a little bit of a drag against some of those cost savings. But, you know, it'll take a number of years to play out associated with the overall study expense.

Cheryl Blanchard: You know, somewhat moderately lower than how it performed in the first quarter or the first half. But we do expect that that will be able to offset some of the softness that you reference on the US side. Right.

Steve Griffin: Okay, any sense of patient enrollment numbers?

Speaker Change: Any sense of patient enrollment number?

Cheryl Blanchard: I'll tell you what, once we get all the details posted on clinicaltrials.gov, I'll be in a better position to provide you with those details. It's a study that we have a very clear line of sight to around excitement from the clinicians for enrollment. It doesn't have any complexities in a clinical trial design that's going to make it difficult to enroll. And as soon as we get that posted, I'm going to look forward to going through it in a little bit more detail about what it looks like, the number of patients, and timing.

Jim Sidoti: And then for some of the new products that you expect out in the next couple of years, like highly fast and sing out.

Speaker Change: I'll tell you once we get all the details posted on clinicaltrials.gov, I'll be in a better position to provide you with those details.

Cheryl Blanchard: Any initial comments on how you plan to distribute those products? Hi, Jim. Thanks for the question. Yeah. So, for highly fast, that's obviously a regenerative product and very core to the early intervention portfolio that we've put together. It's a product that we already sell that we're very excited about that has lots of clinical data. Forty publications will have 15 year data this year. And we have a really strong process as you heard me talk about on the call as we're starting to engage with FDA on that product. So, I think you can expect to hear more from us on highly fast.

Speaker Change: It's a study that we have very clear line of sight to around.

Speaker Change: excitement from the clinicians for enrollment. It doesn't have any complexities in a clinical trial design that's going to make it difficult to enroll and as soon as we get that posted I'm going to look forward to going through in a little bit more detail about what it looks like, number of patients, and timing.

Cheryl Blanchard: Cheryl, I totally understand it's very, very, very early days for the full market release of Integrity, but I'm just curious, I mean, is there anything you can share in terms of, hey, some of these 60 surgeons that were in the limited market release have already done cases in the last 30 or, you know, 35 days or whatever long you guys have been launched? Is there anything you can share just in terms of the last four, five, six weeks, or however long Integrity has been in full market?

Cheryl Blanchard: Cheryl, I totally understand it's a very, very, very early days for the full market release of Integrity, but I'm just curious, I mean, is there anything you can share in terms of, hey, some of these 60 surgeons that were in the limited market release, they've already done cases in the last 30 or 40 years.

Cheryl Blanchard: Regarding single that that is a product that I think fits more into that OAP management portfolio. And we obviously haven't announced anything relative to how we would consider distributing that in the United States. But we clearly have a different model that we deploy today. Excuse me with our other OAP products. I think more to come on that relative to single.

Speaker Change: 35 days or however long. You guys have been launched. Is there anything you can share just in terms of the last 4-5, 6 weeks or however long? And integrity has been in full, full market. Thanks.

Cheryl Blanchard: Yeah, absolutely. I'm excited too, and I think there are some interesting facts that I'd be happy to share. I mean, first of all, the feedback that we're getting is tremendous. We're getting videos of patients that are rapidly rehabilitating and healing that surgeons are posting on LinkedIn and other social media outlets. They're talking about it.

Cheryl Blanchard: Yeah, absolutely. I'm excited too. It's something that I track multiple times a day.

Stephen Griffin: All right, and it seems like the cost savings initiative, you know, have really made a difference. Were there any one time cost savings in the quarter or should we expect these levels going forward? Yeah, I mean, when you take a look at the press release, you may see the one time adjustments, those non-recurring items. But when you back those out, you just look at on a year-over-year basis. I think your conclusion is right.

Speaker Change: And I think there are some interesting factoids that I'd be happy to share. I mean, first of all, the feedback that we're getting is tremendous.

Speaker Change: We're getting...

Speaker Change: videos of patients that are rapidly rehabilitating and healing that surgeons are posting on LinkedIn and other social media outlets. They're talking about it. They're excited about the fact.

Cheryl Blanchard: They're excited about the fact that it's a higher strength construct, even when wet, that it has increased regenerative capacity, which they're seeing play out clinically. They are really appreciative of the all-arthroscopic instrumentation and the streamlined surgical technique and the fact that it's not using a xenograft or an allograft. So that's some of the feedback we're getting, but I'll tell you the pull is real from the surgeon community. And even with some of the distributors. You heard me mention that we're signing on some new distributors that are focused on the Regen products.

Stephen Griffin: We're seeing about $3 million of real cost savings on the OAP X lines driven by the actions that were taken in the first quarter. Those will continue as we move forward here driven by the action. James. Okay, all right, thank you. Thanks, Jim. Thank you.

Speaker Change: that it's a higher strength construct even when wet, that it has increased regenerative capacity that they're seeing play out clinically.

Speaker Change: They are really appreciative of the all arthroscopic instrumentation and the streamlined surgical technique.

Speaker Change: and the fact that it's not using a Xenograft or an Allograft. So that's some of the feedback we're getting, but I'll tell you the pull is real from the surgeon community. And even with some of the distributors, you heard me mention that we're signing on some new distributors that are focused on the Regen products.

George Sellers: The next question comes from Harrison Parsons from Stiffins. Please go ahead. For George, good afternoon, and thanks for taking the questions. I wanted to just dig in a little bit about your comments around the more mature products and the joint preservation restoration segment. What percentage of that segment do those products make up? Are they declining? Or is it just slower growth that you're seeing from those? Yeah, hi, George. Thanks for the question.

Cheryl Blanchard: The fact that we increased, even in a limited market release where we had kind of constrained supply, 40% from Q1 to Q2, is a sign. The fact that we're getting feedback from surgeons immediately saying, "boy, I'd really like to use this in this tendon." I'd like a different geometry. I'd like a different shape factor. These are all things that are terribly exciting for us and really give us a lot of confidence around our product development pipeline and our ability to make these investments in the regenerative portfolio in a way that there's a real ROI here. And again, this leverages our proprietary HA technology, which is really where Anika has the expertise and the right to win.

Speaker Change: The fact that we increased even in a limited market release where we had kind of constrained supply, 40% from Q1 to Q2, I think is a sign. The fact that we're getting feedback from surgeons immediately saying,

Speaker Change: Boy, I'd really like to use this in this tendon. I'd like a different geometry. I'd like a different shape factor.

Speaker Change: These are all things that are terribly exciting for us and really give us a lot of confidence around our product development pipeline.

George Sellers: We have talked about this in prior quarters. There are some, I would say, legacy products in that JPR business that are either kind of flat, a couple of them to declining. It's not all the products for sure. We certainly haven't broken them out with any kind of percentages. And that's obviously largely being offset by some higher growth newer products like ex-twist and integrity as we've talked about it today. So I think you'll see us going forward, continuing to focus on the new products as we really leverage the expertise that we've got here at Annika around Halloranic acid.

Speaker Change: and our ability to make these investments in the regenerative portfolio in a way that there's a real ROI here. And again, this leverages our proprietary HA technology, which is really where Anika has the expertise and the right to win.

Cheryl Blanchard: Okay. A lot of good stuff there, Cheryl. I'm going to give it one more shot, though. Any numbers in terms of surgeons that have actually done cases since the fall?

Speaker Change: Okay.

Speaker Change: I'm going to cut.

Speaker Change: A lot of good stuff there Cheryl. I'm going to give it one more shot though. Any numbers in terms of surgeons that have actually done cases?

Cheryl Blanchard: Oh yeah, I mentioned it in the script, we've had over 60 surgeons in LMR. You know, I would say that... In the limited market release, that's right. If you think about the fact that I also mentioned that we're looking at kind of 40% quarter over quarter growth and about 25% of the surgeons are new to Anika, you can kind of think about it that way. I have already seen, just this week at the beginning of this month, a good number of very new customers doing cases just at the beginning of this month. So again, it's a different type of product.

Speaker Change: St. St. St.

Speaker Change: I mentioned it in the script, we've had over 60 surgeons in LMR.

Speaker Change: In the limited market lease, that's right. If you think about the fact that, I also mentioned that we're looking at kind of 40% quarter over quarter growth.

George Sellers: And the new products is really where we've made a lot of our investments. So we look forward to continuing to report out on the growth of that business relative to the new products in particular. Yeah, and the only thing I might add to that is, you know, specifically the regenerative piece of the JPR business is performing quite well as you can tell. And that's really where you're going to start to see the benefits of the integrity launch come through.

Speaker Change: and about 25% of the surgeons are new to Anika. You can kind of think about it that way. I have seen already just this week at the beginning of the month, a good number of very new customers.

Speaker Change: Doing cases just at the beginning of this month. So again, it's a different type of product and a different level of toll with totally new customers to Anika.

George Sellers: So, you know, in the first half of the year we saw Minteen's growth coming from that regenerative part of the portfolio. We expect that to pick up now as we head into the second half of the year. Okay, great. Yeah, that's helpful. And then I just wanted to just staying on that segment just kind of dig into any products beyond ex-twist and integrity that are driving that growth to get you to the full year guide.

Cheryl Blanchard: Yeah, you hit it there, Cheryl.

Speaker Change: The 40% sequential growth is what we've experienced and what we expect to continue here for a short period of time, so we're excited to share more as we get into the back half of the year. And I just want to make sure I understand, that's cases.

Operator: Page PAGE of NUMPAGES www.verbalink.com Page PAGE of NUMPAGES Correct. Or surgeons.

Cheryl Blanchard: Forty percent are cases.

Krecht: Krecht, or the four surgeons.

Cheryl Blanchard: Thank you. You're welcome. Thank you.

Krecht: Forty percent is cases.

Operator: You're welcome. Thank you.

Speaker Change: All right, very good. Thank you.

Operator: Thank you. There are no further questions at this time. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: You're welcome. Thank you.

George Sellers: Sure, there are other products that are driving growth, but I think we've chosen to focus on ex-twist and integrity just because those are the newer products. We obviously just got to full market release on the biocomposite version of ex-twist that allows us now to address that full $600 million plus rotator cuff market on the soft tissue fixation side. And now it's early days, but we're in about a month into the full market release of integrity.

Speaker Change: Thank you. There are no further questions at this time.

Speaker Change: Ha, ha, ha, ha, ha, ha, ha,

Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

George Sellers: So those two products are really, I would say, the the higher growing portions of that JPR part of the business and why we chose to point those two out. We'll obviously continue to update as we go forward. I will tell you, though, that the regenerative portion of the business, if you want to think about it that way, which includes also highly fast and tactile set, is a piece of that JPR business that is doing very well. Steve, I don't know if you've got anything to add to that. No, I think that covers it. Okay. Thanks for the color.

Mike Petusky: All right, thank you. The next question comes from Mike Petusky from Barrington Research. Please go ahead.

Cheryl Blanchard: Good evening. Cheryl, the international growth that you guys called out for O.A, and you sort of said a new country expansion, which countries did you guys recently enter? And I guess we're any of them in the second quarter. Yeah, we'll tell you Mike, we typically don't break out specifically when we launch in a new country, unless it's material to the business. But I will tell you that we've continued to expand in Europe and kind of the South America, Latin America regions going forward.

Cheryl Blanchard: And I would say we haven't expanded into a new country that's really going to change our numbers materially when that happens. I'll certainly let you know. I think the good news is that the bigger portion of that growth has really come from continued market share capture of the countries in which we already sell. And even when we launch in a new country, it takes a little bit of a little bit of time for those distributors to kind of get their feet on the ground and get up and running.

Cheryl Blanchard: So I think we're really starting to see some some of the nice impact as we launch a new countries and they have a chance to really get grounded in the products and drive into those markets. And that's really what we're seeing propel much of that significant growth number with that OUS business. It's actually very exciting for us. Okay.

Cheryl Blanchard: Once and all the regular communication with the FDA that you called out has the last 90 or so days, I mean, you know, are there learnings there where you say, okay, we've pretty much got this dialed in in terms of what we're going to we're going to need to do or there's still a lot of, I guess, additional communication that needs to happen there. That's a great question. And it's a topic that we would love to have it be going faster.

Cheryl Blanchard: We're in constant communication with FDA. We reported out last quarter that they had come back to us with some feedback. We went back to them with some additional questions and the feedback they gave us from those questions was go ahead and schedule another meeting. So we're in the process of doing that. And, you know, we feel like that represents good progress just because we're really starting to, I would say hone in on the topics that we want to make sure we get full clarification around before we begin any additional non clinical testing. So there is progress being made and we look forward to providing a more full some update by the end of the year relative to how we're thinking about that timing. Okay.

Cheryl Blanchard: And then on the study guys, I guess, are planning to enroll for integrity. And I just want to make sure I understand the primary reason for this is is is sort of for your MDR filing, and I understand also to sort of strengthen the value proposition in the U.S. But can you guys, I guess, first of all, I just want to make sure that I understand what the motivation for that is, and then, or confirm that I understand what the motivation for that is, and then what do you think that costs, and over what time frame thanks?

Cheryl Blanchard: Yeah, absolutely. So we're excited to be able to get that study going. It's been in the planning stages as we've been in limited market release. It really is twofold. You know, we know that we need a good set of high quality clinical data to really drive market access in the United States in the way that we know is possible with this superior technology. But in Europe now, because this is a class III device, we have to have high quality clinical data for the MDR filing prior to marketing, which is different than it used to be.

Cheryl Blanchard: So it's really twofold in nature. And again, we're excited to get it started. I will tell you, though, we have a couple of post-market studies already ongoing in the United States that are going to yield some clinical publications next year. So we'll begin to have some clinical data coming out for US marketing and market access purposes before we get to the, what I would consider kind of the higher quality clinical data that we're going to need for the MDR filing.

Cheryl Blanchard: Yeah, and we don't necessarily share the details on the breakdown of a cost-reached study. But what I'd say is, you know, we'd expect it to start in the second half of this year and continue in the next year as well. It'll be a little bit of an offset to some of the cost savings that we've seen on the operating expense line. So while, you know, I mentioned this earlier, we've seen about $3 million of operating expense savings in the second quarter alone.

Cheryl Blanchard: It'll eat into that to some degree as we work our way into the fourth quarter here as a little bit of a drag against some of those cost savings. But, you know, it'll take a number of years to play out associated with the overall study expense.

Cheryl Blanchard: Okay, any sense of patient enrollment number? I'll tell you what. Once we get all the details posted on clinicaltrials.gov, I'll be in a better position to provide you with those details. It's a study that we have very clear line of sight to around excitement from the clinicians for enrollment. It doesn't have any complexities in a clinical trial design that's going to make it difficult to enroll. And as soon as we get that posted, I'm going to look forward to going through in a little bit more detail about what it looks like, number of patients and timing. Sure. I totally understand.

Cheryl Blanchard: It's very, very, very early days for the full marker release of integrity, but I'm just curious. I mean, is there anything you can share in terms of, hey, some of these 60 surgeons that were in the limited marker release, they've already done case in the last 30 or 35 days or however long you guys have been launched? Is there anything you can share just in terms of the last four, five, six weeks however long an integrity has been in full mark at the thing?

Cheryl Blanchard: Yeah, absolutely. I'm excited to. It's something that I track multiple times a day. And I think there are some interesting factoids that I'd be happy to share. I mean, first of all, the feedback that we're getting is tremendous. We're getting videos of patients that are rapidly rehabilitating and healing that surgeons are posting on LinkedIn and other social media outlets. They're talking about it. They're excited about the fact that it's a higher strength construct even when wet that it has increased regenerative capacity that they're seeing play out clinically.

Cheryl Blanchard: They are really appreciative of the all arthroscopic instrumentation and the streamline surgical technique and the fact that it's not using as the enagrafter and aligraf. So that's some of the feedback we're getting, but I'll tell you the poll is real from the surgeon community. And even with some of the distributors, you heard me mention that we're signing on some new distributors that are focused on the region products. The fact that we increased even in a limited market release where we had kind of constrained supply, 40% from Q1 to Q2, I think is a sign.

Cheryl Blanchard: The fact that we're getting feedback from surgeons immediately saying, boy, I'd really like to use this in this tendon. I'd like a different geometry. I'd like a different shape factor. These are all things that are terribly exciting for us and really give us a lot of confidence around our product development pipeline and our ability to make these investments in the regenerative portfolio in a way that there's a real ROI here. And again, this leverages our proprietary HA technology, which is really where ANICA has the expertise and the right to win. Okay.

Cheryl Blanchard: I'm going to cut a lot of good stuff there, Cheryl. I'm going to give a little more shot though.

Cheryl Blanchard: Any numbers and sorts of surgeons that are actually done cases since the full market. Oh yeah, I mentioned it in the script. We've had over over 60 surgeons in LMR. You know, I would say that that was in the limited market or wasn't it? In the limited market lease, that's right. If you think about the fact that I also mentioned that we're looking at kind of 40% quarter over quarter growth and about 25% of the surgeons are new to Anika, you can kind of think about it that way.

Cheryl Blanchard: I have seen already just this week at the beginning of the month, a good number of very new customers doing cases just at the beginning of this month. So again, it's a different type of product in a different level of pull with totally new customers to Anika. The 40% sequential growth is what we've experienced and what we expect to continue here for a short period of time. So we're excited to share more as we get to the back half of the year.

Cheryl Blanchard: I just want to make sure I understand that cases, correct, or surgeons. 40% is cases. Okay, all right, very good. Thank you. You're welcome. Thank you.

Operator: There are no further questions at this time. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Thank you.