Q1 2025 Anika Therapeutics Inc Earnings Call
Speaker Change: Jason Onlymode Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press the star zero for the operator. I will now turn the call over to Matt Hall, Director, Corporate Development and Investor Relations. Please proceed.
Thank you.
Speaker Change: Good morning, and thank you for joining us for Anika's first quarter 2025 conference call and webcast. I'm Matt Hall, Anika's director of corporate development and investor relations.
Speaker Change: Our earnings press release was issued earlier this morning and is available on our investor relations website located at www.anika.com As are the 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 Chief Operating Officer, who will present our first quarter 2025 financial highlights and business highlights.
Speaker Change: Please take a moment and open the slide presentation and refer to slide number two.
Speaker Change: Before we begin, please understand that certain statements made during the call today constitute forward-looking statements as defined in the Security Exchange Act of 1934. These statements are based on our current beliefs and expectations and are subject to certain risks and uncertainties.
Speaker Change: The company's actual results could differ materially from any anticipated future results, performance
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 filings for more information about risk factors that could affect our performance.
Speaker Change: In addition, during the call, we may refer to several adjusted or non-GAAP financial measures, which may include adjusted gross margin, adjusted evadab, adjusted net income from continuing operations, and adjusted earnings per share from continuing operations, which are used in addition to results presented in accordance with GAAP financial measures.
Speaker Change: We believe that non-GAAP measures provide an additional way of viewing aspects of our operations and performance. But when considered with GAAP financial measures and the reconciliation of GAAP measures , they provide an even more complete understanding of our business.
Speaker Change: A reconciliation of these adjusted non-GAAP financial results to the most comparable gap measurements are available at the end of the presentation slide deck and our first quarter 2025 press release.
Speaker Change: And now, I'd like to turn the call over to our president and CEO , Dr. Cheryl Blanchard.
Cheryl Blanchard: Thanks, Matt. Good morning, everyone, and thank you for joining us. Please turn to slide three.
Cheryl Blanchard: On balance, we've had a successful start to the year as we had continued strong performance in our commercial channel and advanced many of our key goals and objectives.
Cheryl Blanchard: Offsetting that, we've experienced ongoing pricing challenges in the domestic OA pain market and some short-term supply production yield issues with Monovist and single that Steve will discuss in a moment.
Cheryl Blanchard: I'm pleased to report since our last call that we've made meaningful progress advancing our strategic initiatives within our refocus strategy.
Cheryl Blanchard: As we've communicated, a key objective has been to focus our human and financial capital on our most promising opportunities to create shareholder value, leveraging our proprietary hyaluronic asset technologies.
Cheryl Blanchard: Since announcing our strategic alignment, we have outperformed in our commercial channel where we control sales, marketing, and pricing.
Cheryl Blanchard: We continue to see consistently strong growth within this channel, which is up 18% year over year and up 17% over the past three years.
Cheryl Blanchard: Additionally, our cost saving measures have yielded positive results with our operating expenses is down 12% year-over-year.
Cheryl Blanchard: The foundation that we have laid positions us well to capitalize on our core H.A. products that provide us with the best value building opportunities.
Cheryl Blanchard: These include the integrity implant system and the anticipated U.S. approvals of Hyalafast and SINGAL, which we continue to believe will be market driving forces in the tendon and cartilage repair and next generation OAPA management markets.
Cheryl Blanchard: I'll start today by sharing our financial results for the quarter. Overall revenue in the first quarter was $26.2 million, down 10% compared to the same period in 2024, driven entirely by continued pricing pressure within our OEM channel in the U.S. Visco Supplement Market.
Cheryl Blanchard: Our commercial channel revenue was strong, up 18% in the quarter, driven by continued growth of integrity and international OAP management.
During the quarter, we delivered 13% international OAP management growth.
Cheryl Blanchard: Our efforts to penetrate new markets and strengthen our distribution networks have paid off and we're committed to further expanding our global reach.
Cheryl Blanchard: To further diversify our revenue base and grow our OEM channel outside of J&J. We've begun actively working on new product expansion programs, which would be sold by other partners. These efforts are primarily focused on leveraging our proprietary regenerative higher fiber technology.
Cheryl Blanchard: We believe there is significant untapped potential in this space and our deep expertise positions us to support partners in delivering improved patient outcomes globally.
Cheryl Blanchard: This work is part of our long term strategy to leverage our AIA platform and build value.
Cheryl Blanchard: In our commercial channel, we executed on key objectives that drove strong growth in the first quarter fueled by continued gains in our international OA pain management business and accelerated growth of integrity.
Cheryl Blanchard: Advancing our strategy is focused on a J based products and achieved important milestones in our commercial regulatory and clinical trial goals in the quarter.
Cheryl Blanchard: During the quarter integrity continue to achieve sequential growth for the fourth consecutive quarter with more than 300 surgeries performed well expanding surgeon adoption each month.
Cheryl Blanchard: Year over year, we achieved 33% growth in our regenerative solutions portfolio globally, driven by integrity is outperformance of the soft tissue augmentation market as we continue to exceed our initial launch expectations.
Cheryl Blanchard: This impressive growth is attributed to the superior regenerative properties and timeshare on mechanical strength of integrity compared to collagen products.
Cheryl Blanchard: These key attributes of integrity have resulted in a strong pull from surgeons, our salesforce and new distributors we've brought on.
Cheryl Blanchard: In February we released a white paper summarizing the early clinical results from our first post market study of 29 patients with both partial and full thickness rotator cuff tears.
Cheryl Blanchard: The results showed significant and meaningful improvements in pain and strength at three months and further improvements in pain range of motion and strength with no evidence of any re chairs at six months and no device related complications.
Cheryl Blanchard: Building upon our successful commercial launch capturing more than 1% of the 2024 U S soft tissue augmentation procedures.
Cheryl Blanchard: We're on pace to more than double procedures in 2025.
Cheryl Blanchard: We believe integrity will continue to drive significant commercial channel revenue contributing to our long term revenue targets and market expansion plans.
Cheryl Blanchard: To further accelerate growth in our commercial channel, we continue to advance our integrity platform to add additional near term regenerative solutions products to our pipeline.
Cheryl Blanchard: The new integrity shapes sizes, and configurations, which were previously announced our intended for foot and ankle procedures.
Cheryl Blanchard: These new geometries have broad applicability across various tenant types, and we view them as a strategic opportunity to accelerate platform growth and expand our market presence by addressing real unmet patient needs.
Cheryl Blanchard: Additionally, we advanced our prospective clinical study for integrity in the first quarter, we previously announced enrollment of the first patient in February and active enrollment of patients across multiple sites continues with full activation of all sites targeted for the second half of this year.
Cheryl Blanchard: This study will provide valuable real world evidence that will support expanding sales and marketing efforts and drive further commercial growth.
Cheryl Blanchard: Anticipate that the data from this study will reinforce the clinical benefits and safety profile of integrity further expanding its market position.
Cheryl Blanchard: From this study will also be used for submission to the EU for MTR approval and future European market launch.
Cheryl Blanchard: We continue to make significant regulatory and clinical progress in the quarter with our key pipeline programs fail fast and Cingal with.
Cheryl Blanchard: With respect to hail a fast as previously announced we filed the second PMA module in January and we remain on track to file the third and final clinical module in the second half of this year and anticipate the U S launch of hail a fast in 2026.
Cheryl Blanchard: Hello fastest showed continued market leading positions in geographies, where it is sold and we're excited about its potential to address significant unmet needs for cartilage repair patients in the U S. As well as provide surgeons and payers are more cost effective off the shelf option to treat this patient population.
Cheryl Blanchard: Finally, we achieved a significant milestone for Cingal I previously reported a productive type C meeting with the FDA in February to help finalize the bioequivalence bridging study design.
Cheryl Blanchard: I'm pleased to report that during the quarter. We received formal written feedback from that meeting confirming alignment of the bioequivalence bridging study design and the path to NDA filing.
Cheryl Blanchard: In addition last month, we entered into an agreement to secure access to the material required to complete that study.
Cheryl Blanchard: The bioequivalence study anticipated to start by year's end and the final toxicology testing that started in Q1 of this year remain the two final requirements to file the Cingal NDA.
Cheryl Blanchard: And with that I'll turn the call over to Steve for a detailed review of our financial results.
Steve Griffin: Thank you Cheryl.
Steve Griffin: Let's first start with the updates in the quarters. Please refer to slide four of the presentation.
Steve Griffin: In the first quarter Anika generated $26 2 million and total revenue down 10% versus the same period in 2024.
Steve Griffin: Revenue in the commercial channel, which includes our highly differentiated products sold globally through commercial leaders and independent distributors was up 18% year over year to $11 3 million.
Steve Griffin: Within this channel sales of our OA pain products internationally were up 13% year over year.
Steve Griffin: The remaining expansion in the commercial channel was fueled by regenerative solutions growth of 33% year over year.
Steve Griffin: Our commercial team is laying a strong foundation for future growth, having surpassed our initial launch expectations for integrity.
Steve Griffin: Notably we've achieved sequential growth in integrity sales for the fourth consecutive quarter.
Steve Griffin: Revenue in the OEM channel, which includes our domestic OA pain and non orthopedic products sold under long term agreements decreased 23% in the first quarter to $14 9 million.
Steve Griffin: The decline was primarily due to reduced U S sales driven by weaker end user pricing from J&J, which continues to face pressure in the competitive market.
Steve Griffin: Monovisc and <unk> pricing was lower than anticipated due to the timing of J&J is contractually obligated payor rebates, which can fluctuate greatly from quarter to quarter as also experienced by other competitors in this market.
Steve Griffin: We expect a modest pricing rebound in the second quarter.
Steve Griffin: For the full year 2025, compared to our March outlook, we now anticipate lower pricing, partially offset by higher volume.
Steve Griffin: Despite ongoing pricing pressure monovisc in northwest continue to lead the U S market.
Steve Griffin: Non orthopedic revenue also declined in the quarter, primarily due to the timing of customer orders.
Steve Griffin: First quarter gross margin was 56% down nine percentage points from the same period last year.
Steve Griffin: This decline was primarily driven by a $4 million year over year drop in Monovisc in orthopedics sales to J&J, largely due to lower pricing both in transfer units and royalties, which directly impacted gross profit.
Steve Griffin: These lower sales accounted for a five point reduction in <unk> overall margin.
Steve Griffin: The remaining decline was due to higher manufacturing costs, specifically increased scrap and lower yields in the production of Monovisc and Cingal.
Steve Griffin: These yield challenges stemming from a change in raw material supplier following the exit of our previous supplier from the medical grade market.
Steve Griffin: Lower yields continued into the second quarter. However, we have since implemented manufacturing enhancements that are already showing positive results.
Steve Griffin: While second quarter gross margins will still reflect the earlier inefficiencies, we expect first half gross margins to be approximately 53%.
Steve Griffin: Looking ahead, we anticipate gross margins in the second half of the year will improve to around 58% to 59% as we realize the benefits of these improvements.
Steve Griffin: That said the combined impact of the reduced high margin J&J revenue in first half manufacturing challenges will result in lower overall gross margins for 2025.
Steve Griffin: Turning to operating expenses total first quarter, Opex was $19 million down $2 5 million or 12% compared to the first quarter of 2024.
Steve Griffin: Selling general and administrative expenses declined 14%, while research and development expenses were down just under 5%.
Steve Griffin: These reductions were driven by cost savings measures and head count reductions implemented in the last year.
Steve Griffin: We've optimized our organizational structure to better align with the future needs of the business and remain focused on disciplined spending to ensure capital is deployed efficiently delivers value to shareholders.
Steve Griffin: Continuing operations generated $100000 of adjusted EBITDA down to $6 million compared to 2024, primarily as a result of lower high margin J&J revenue and higher manufacturing expenses offset by operating expense reductions.
Steve Griffin: Now turning to cash and liquidity.
Steve Griffin: In the quarter, we used $100000 in operating cash flow flat to prior year.
Steve Griffin: We invested $2 $8 million in new capital expenditures in the quarter up $1 million versus 2024.
Steve Griffin: This new equipment will support the higher production volumes expected out of our Massachusetts manufacturing facility in the future.
Steve Griffin: In the first quarter, we purchased $4 million in common stock that completed the $15 million initial share repurchase initiated in mid 2024.
Steve Griffin: We expect to provide further updates on our remaining share buyback commitments when we're in a position to do so.
Steve Griffin: We ended the first quarter was $53 million in cash and no debt.
Steve Griffin: Now on slide five I'll review, our full year financial outlook for 2025.
Steve Griffin: For the full year, we continue to expect our commercial channel to generate between 47 and $49 $5 million in revenue, representing 12% to 18% growth in 2025.
Steve Griffin: Just a quick note on the pacing.
Steve Griffin: Quarterly growth varies based on the timing of large international distribution orders were.
Steve Griffin: Our incur encouraged by our strong first quarter performance driven by integrity market share gains and international OA pain management that said, we expect more modest growth in the second quarter due to tougher comparisons with last year's strong international OA pain performance.
Steve Griffin: We anticipate accelerated year over year growth in the second half of this year.
Steve Griffin: In our OEM channel, we are updating our revenue guidance to be in the range of $62 million to $65 million a range of 16% to 20% decline versus 2024.
Steve Griffin: At the midpoint of down 18% this range incorporates higher volumes, but lower pricing for J&J as compared to our March outlook.
Steve Griffin: Our new pricing assumptions include results from the first quarter and our expectations for the rest of the year.
Steve Griffin: As a reminder, J&J has full control of sales marketing and pricing activities for these products in the United States and the Anika receives transfer unit revenue and royalties based on J&J is end user pricing.
Steve Griffin: Now turning to profitability.
Steve Griffin: We're updating our 2025 adjusted EBITDA guidance to a range of negative 3% positive, 3% down from our previous range of 8% to 10%.
Steve Griffin: This revision reflects several key factors.
Steve Griffin: Impacts from lower manufacturing yields and scrap for Monovisc and Cingal.
Steve Griffin: While yields have stabilized in the second quarter, they will still negatively affect the first half results.
Steve Griffin: This accounts for an approximate 4% to five point decline for the full year. However, the pressure will be isolated to the first half.
Steve Griffin: Second half of 2025, we expect to see improvements with gross margins stabilizing between 58% 59%.
Steve Griffin: Second lower pricing from J&J for Monovisc in northwest, including the shortfall we saw in the first quarter.
Steve Griffin: This accounts for an approximate 2% to three point decline.
Steve Griffin: Third updated tariff rates on imported raw materials, which are now factored into our outlook, which accounts for approximately a half a point.
Steve Griffin: And finally, the 2025 costs associated with the Cingal bio equivalent study required for our NDA filing.
Steve Griffin: That weren't known earlier in the year before our type C meeting, which accounts for approximately half a point.
Steve Griffin: We've taken several steps to reduce operating expenses to help offset the impacts of J&J pricing and to improve our overall cost structure. However, these actions won't fully counterbalance the more challenging pricing environment.
Steve Griffin: As a reminder, our 2025 adjusted EBITDA guidance still includes approximately $14 million of investments in our regenerative solutions portfolio that grew 33% in the first quarter the.
Steve Griffin: The company remains well positioned to fund our near term product pipeline and prepare for the launches of pilot Boston Cingal, while continuing to gain share with integrity.
Steve Griffin: Together. These three products are expected to significantly reshape anika as long term trajectory and strengthen our ability to drive profitable growth beyond our legacy OEM agreements.
Sheryl: With that I will now turn the call back over to Sheryl.
Sheryl: Thanks, Steve I'll wrap up by summarizing the significant progress we've made by executing on key pipeline programs, including the on time filing of the second PMA module for Halifax, and clearing the path to NDA filing for Cingal.
Sheryl: While there continue to be opportunities to improve as we work to overcome manufacturing challenges that have impacted yields for monovisc and cingal I am confident that our team will address these short term obstacles and returned to historic production levels in the second half of this year driving continued growth and profitability.
Sheryl: I would like to thank the entire Anika team for all of their contributions over the last four months. Our teams have worked hard to ensure a smooth and effective transition of both the Arthur surface and <unk> businesses.
Sheryl: Nathan that critical milestones on clinical efforts in regulatory filings for key products in our pipeline and continue to develop new adjacencies that will drive future anika growth.
Sheryl: And lastly, we've continued to demonstrate the success of our commercial channel, where our collective organization has once again posted above market total growth illustrating the opportunities that lie ahead as we continue to diversify into markets, where we are closer to the customer and.
Sheryl: And with that we'll open up the line for questions. Operator. Please proceed.
Sheryl: Okay.
Sheryl: Thank you and ladies and gentlemen, we will now begin the question and answer session to ask a question you May press star followed by the number one on your telephone keypad and tweak like a question. Please press star followed by the number Q with that or first question comes from the line of Anderson shop with <unk> Securities. Please go ahead.
Speaker Change: Hey, good morning, Thank you for taking our questions. So first could you elaborate on the timeline and the investment needed for the Cingal Bioequivalence study and then with this in the toxicology study when should we be expecting the NDA filing.
Sheryl: Yeah, It's a great question. Thanks.
Sheryl: I mentioned that we expect to begin that study by the end of the year.
Sheryl: We still have some process activities that we're working our way through so until we get a little bit further along with those we won't be giving additional timeline update but we're excited to get that last study.
Boeing because that's really the last task that we need to complete and finish before we get to NDA filing. So I look forward to give additional updates on kind of the overall timeline, but look for us to start that last study that last bio equivalent study at the end of the year.
Sheryl: And is it just to the first part of your question embedded in my guidance here sort of about a half a point worth of expenses associated with the bioequivalence bridging study. So that's just the 2025 impact will be built in but that's sort of an update that we just provided.
Sheryl: Okay got it. Thank you and then on your OEM guidance. So youre now expecting this segment to be down 6% to 20%, which it.
Sheryl: It seems to imply some sequential growth in the first quarter I guess, what do you see driving this improvement and OEM revenue through the year.
Sheryl: The sequential growth from Q2 versus <unk> would be primarily driven by price. So we are obviously quite sensitive to the final end user pricing and we saw more sizable declines in end user pricing in the first quarter than we had anticipated. So we have some early indications of the pricing rebound in the second quarter that said for the full year price.
Sheryl: <unk> is down more than we had initially anticipated hence the update that we provided for the full year range.
Sheryl: The EBITDA as well.
Sheryl: Okay, and then on the commercial revenue guidance, you kept to where it was I guess what drove this decision with integrity exceeding expectations and on track to double this year and then also continued growth in the international business.
Yeah, we.
Sheryl: Are excited about kind of the over achievement on the integrity side. The O U S business is really on task. We said, we had a really strong Q1, but have.
Sheryl: Have a bit of a tougher comp in Q2, so we're maintaining guidance and are excited to continue to drive the over achievement on that commercial side of our organization, where we're much closer to the customer.
Sheryl: Okay got it and thank you for taking our questions.
Sheryl: Thank you Lynn.
Speaker Change: Your next question comes from the line of Mike <unk> with Barrington Research. Please go ahead.
Mike: Hey, good morning.
Speaker Change: Sure.
Speaker Change: In regards to the how fast the final module filing obviously, a big difference between say July one and December 31 any any.
Speaker Change: Guide in terms of.
Speaker Change: The timing of that where it's likely to be closer to the first half of the second half where these were towards the end.
Speaker Change: Yeah. Thanks, Mike Yeah, we're working hard on that final pilot fast module, we've been on time with the first two modules we plan on being on time by filing that third module by the end of the year.
Speaker Change: I expect we will have some timing updates as we kind of approach or get to the next next quarter earnings call and we're excited to just continue to do the work behind getting to that clinical module filing.
Speaker Change: Okay. I mean, if it goes well is it likely to be towards the middle of the year or is there just no way to get it done until towards the end.
Speaker Change: Yeah, I think you can expect us to give you an update kind of by the time, we have our next earnings call.
Speaker Change: Okay Alright.
Speaker Change: Alright.
Speaker Change: In terms of the OE.
Speaker Change: OA pain in the U S and the pricing deterioration I mean, the conversations that youre having.
Speaker Change: With your with your partner I mean, do you have any visibility as to sort of sort of where the bottom is in terms of pricing strategy or is this just sort of give you an update on a quarterly basis. Hey, This is where we are in sort of.
Speaker Change: So this.
Speaker Change: This is where we think we go.
I'm happy to take that one Mike.
Speaker Change: Let me speak with them quite regularly as you can probably imagine at least weekly as part of the discussions and <unk>.
Speaker Change: My impression on it is that there is some level of a floor based on the competitive dynamics in that market.
Speaker Change: Monovisc and <unk> always been seen as market leaders with great clinical differentiation and as a result, I've always commanded a pricing premium some of that obviously has gone away over this last few months and quarters we.
Speaker Change: We do expect that the the.
Speaker Change: Updates we have in year for pricing reflect the right level for the year and we also expect stabilization in 2026 and nothing has changed in that respect, it's a lower price point exiting this year.
Speaker Change: Okay.
Speaker Change: So.
Speaker Change: Almost certainly I'm not going to get.
Speaker Change: A sense of the fund on this call, but you know what at one time when the Anika story was was entirely focused basically on OA pain.
Speaker Change: Investors had a sense that hey, this is a 35% or 40% margin business.
Speaker Change: I think it would be really a service to investors, particularly given the updated guidance today to consider.
Speaker Change: Giving some window into even with the updated pricing.
Speaker Change: Whether it's in a DAC or or with the next conference call to give investors a sense of how much value is still left in that even with the with the pricing updates.
Speaker Change: I'll move on from the sermon.
Speaker Change: Integrity Cheryl is there any sense that you can give us in terms of hey, we're expanding the footprint with surgeons. We've moved from this many surgeons. So that many surgeons are were getting deeper with surgeons.
Speaker Change: Surgeons, we're doing X amount of procedures three four quarters ago now Theyre doing three times that many like is there is there any sort of.
Speaker Change: Sort of.
Speaker Change: I guess additional detail you can give around the.
Speaker Change: Growth of that business.
Speaker Change: Yeah, So I will tell you that.
Speaker Change: Mentioned that we did over 300 surgeries in the quarter that we anticipate doubling procedure growth in the year relative to last year.
Speaker Change: The way that that's happening is both we are both deepening.
Speaker Change: With existing surgeons as they begin to adopt there's an adoption pattern. Most of the surgeons are doing one or two cases, and then waiting a number of months before they do their next one which is fairly typical for a new technology in the med Tech space.
Speaker Change: But we've been in the market long enough now where we also have a number of surgeons, who are really deepening their use of integrity.
Speaker Change: We are also continuing to add new surgeons into the pipeline. So it's really along that continuum and that is the strategy. As we go forward to continue to grow integrity. We also as I mentioned have our initial.
Speaker Change: Post market clinical data, we have additional post market studies ongoing and expect to see more of that kind of short term data coming out which will also continue to.
Speaker Change: To present opportunities for surgeons to learn about the use case and the clinical outcomes and then of course, we've got the larger prospective study that will also begin to yield data in the future. So there's a lot going on there theres a lot of training and education, that's happening and a lot of excitement and a lot of pull that we're seeing.
Speaker Change: Selling from surgeons from our sales team and from additional new distributors that we've brought on who are becoming productive.
Speaker Change: Mike just one thing to add onto that.
Speaker Change: Integrity progress is great.
Speaker Change: Integrity business fits within our regenerative solutions portfolio that I referenced during the call earlier was about $14 million of investment they are going to be making this year. So going back to your prior question the business. Although it has a lower EBITDA profile in the aggregate when you really back out that one time or not one time, but that investment as part of our regenerative solutions business. It's still.
Speaker Change: A very profitable business on top of the fact that we're also investing in Cingal. This year. So just trying to give you some clarity as to how to think about answering those questions, but I appreciate your feedback about providing more transparency in the future.
Speaker Change: Okay.
Speaker Change: If I could just ask one more question around integrity and sort of.
Speaker Change: Trying to get more traction among amongst surgeons.
Speaker Change: What are sort of the if you were sort of ordering.
Speaker Change: How you sort of get the get the word out.
Speaker Change: Is it publications regarding study results as it is it.
Speaker Change: Industry events is it sort of just missionary youre going door to door.
Speaker Change: Or you're telling the story I mean, what are sort of the needle movers in terms of getting surgeons to try the product.
Speaker Change: Yeah, I would tell you that we have a very comprehensive integrated sales approach that I think you would find to be very mature. We are obviously very focused on getting data because data drives engagement. Many surgeons appropriately want to see some clinical data from the <unk>.
Speaker Change: Early usage they want to see some early clinical outcomes.
Speaker Change: The surgeons understand the value proposition of the product that is strong much stronger at time zero then the collagen products. They also understand how easy it is to us.
Speaker Change: They get to that in just the training and education that they're doing and then as they use it and they do their first couple of cases. They understand then the enhanced regenerative properties of integrity relative to those collagen products. There is also a very integrated approach in terms of accessing new surgeons and we're <unk>.
Speaker Change: Doing that a number of different ways, we were holding a lot of training and education events were holding webinars, where.
Speaker Change: On the podium at various meetings, we obviously have our direct employees working with our distributors who are.
Speaker Change: Having meetings with surgeons that we're targeting that we know are operating in this space and who have an interest in a technology like this.
Speaker Change: There are a lot of surgeons, who have abandoned the collagen products because they for whatever reason didn't feel like they were giving them the outcomes that they wanted and they're very interested in integrity because it presents a lot of options and features and benefits that those collagen products don't so it's really across the board.
Speaker Change: We then have a very comprehensive plan for follow up relative to the surgeons have done a case or two and we're back following up checking in how did it go what are your questions.
Speaker Change: When do you see yourself moving on to your next cases most of the use has been in the shoulder that's where the instrumentation has been designed to really target, but we've also had a lot of use across other tenants in the body. I also mentioned that we're launching yet this year the additional shapes and sizes those are really targeted and design.
Speaker Change: Specifically to fit better in the foot and ankle, but theyre also going to be used for other attendant applications. So it's very comprehensive we're really I think doing a nice job of leveraging that technology platform and addressing a lot of unmet clinical needs and that's really what's driving the growth.
Speaker Change: Alright, very good thanks.
Speaker Change: Thank you Mike.
Speaker Change: And your next question comes from the line of Jim Sidoti with Sidoti and company. Please go ahead.
Jim Sidoti: Hi, good morning, Thanks for taking the questions.
Speaker Change: You've been pretty clear about your distribution points are how fast.
Speaker Change: That gets into the market you'll go through your own.
Speaker Change: <unk> sales team, but what about Cingal have you thought about how you will distribute that product once it's approved.
Jim Sidoti: Yeah. Thanks, Jim.
Jim Sidoti: We have and we've talked about the fact that we have been exploring where we think the best opportunities for distribution are so more to come on that you know that that is a.
Jim Sidoti: While there is crossover to the call point. It has elements of that call point that are different it's typically a therapy. That's delivered in a in a different setting it's not a surgical product.
Jim Sidoti: So more to come on that but there is.
Jim Sidoti: A lot of thinking thats been going into really the best way to distribute cingal.
Jim Sidoti: Could that distribution deal could that include some some.
Jim Sidoti: Payments ahead of approval.
Jim Sidoti: Upon the approval process.
Jim Sidoti: So I think the opportunity there for driving value with Cingal.
Jim Sidoti: There are a number of ways that you could look at that and you have to understand and know that we are looking at the best way to do that to drive shareholder value certainly there.
Jim Sidoti: If we partner there are structures that would contain upfront payments, but really a lot of the value for cingal will continue to be driven by certainty around that FDA process, which is where we're focused right now and we've made a lot of great progress on that and feel like we have a real understanding mutual under.
Jim Sidoti: Ending with FDA and on that path to NDA filing.
Jim Sidoti: Alright, So you ended the quarter with about $53 million in cash.
Jim Sidoti: I assume it's going to.
Jim Sidoti: It's a little bit lower through the year.
Jim Sidoti: Yes.
Jim Sidoti: Can you give us a sense, where you think cash bottomed out.
Jim Sidoti: Do you think you have sufficient cash to get through the regulatory process.
Jim Sidoti: Thanks, Jim.
Speaker Change: To answer the second half of your question first we absolutely have the cash necessary to get through the regulatory filings for both fast and Cingal on.
Speaker Change: On the first part of your question, Yes, we ended the quarter with $53 million in cash operating cash flow was roughly flat for the first quarter always tends to be heaviest usage of cash we would expect to see improvements in the second half of the year. So we will have some investments in our facilities. So net net we could be a little lighter or towards the end of the year, but not materially so and I think the company.
Speaker Change: <unk> remains very well suited to launch these products.
Speaker Change: Alright, thank you.
Speaker Change: Thank you.
Operator: And there are no further questions at this time I would like to turn it back to Ms. Cheryl Blanchard for closing remarks.
Cheryl Blanchard: Thanks, everybody for joining the call have a great day.
Speaker Change: Thank you presenters, ladies and gentlemen. This concludes today's conference call. Thank you all for joining you may now disconnect.