AxoGen, Inc. (NASDAQ:AXGN) Q4 2022 Earnings Call Transcript

Ryan Zimmerman: Okay. That’s helpful, Karen. And then a couple of other quick questions for me. If I look at account growth, active account growth for the year, so about 17 accounts relative to kind of what you’ve done historically. How do you think about the pace of account growth, active account growth and core account growth for that matter as we look ahead to next year, given that it has slowed down, is it even a good proxy for us to think about? It’s a metric you guys have given out for some time now.

Karen Zaderej: Yes. I think it’s helpful, but our first priority is now driving deeper penetration within those accounts. The accounts we’re in, we’re by far and away, lightly penetrated. And so that is our lowest hanging fruit and the way that we think that we can achieve better sales rep productivity. So we will move some active accounts into being core accounts. There’ll be some growth just organically in active accounts. That threshold is actually quite low. But I think the number that you want to continue to watch also is the average revenue per account or just think about what’s the penetration into those accounts.

Ryan Zimmerman: That’s helpful, Karen. And then squeeze one more in. You mentioned flap reconstruction for breast recon. Just curious if you could kind of size the market opportunity that you’re referring to. I think you said it was around 20% of those cases and that you guys – I know you’re targeting 20 today, but help us understand, I mean, if – I don’t know if there’s x breast recon procedures and 20% of those are the flap reconstruction. What is that on an annual basis? Just in absolute terms?

Karen Zaderej: Sure. So breast – so got to back up a second and just explain a little bit about breast reconstruction. The breast reconstruction for women who have a mastectomy can be done by a variety of techniques, but they fall into predominantly two buckets. One is a flap where they use autologous tissue to reconstruct the breast mount and the second are implant-based procedures. And so we have historically been focused only on the flap procedures. Those are about 15,000 to 20,000 procedures a year, just depending on the data, but 15,000 to 20,000 procedures or excuse me, patients per year. So we have really been focused in that segment. But as happens when there’s a new tool available, some leading surgeons have really been looking at that other portion, the implant-based repairs and saying, well, these women have numb breast as well, and that’s a problem.

And is there something that we can do to assist these women. And obviously, you can’t innovate the implant, but they often have a lack of sensation on the skin and the nipple-areolar complex. And that’s an important part of sensation. And so techniques were developed that would allow some a subset of some of those patients. And it really has to do with length and size of the implant and whether we can actually have the sufficient length to reach the target at the nipple-areolar complex. So that’s why we’re saying, as we are seeing this process or procedure expand into implant-based procedures, we are seeing – we’re estimating that it’s going to be for a portion today. Now this is evolving as surgeons are figuring out enhanced surgical techniques to try and reach better – a broader set of patients.

But right now, we would estimate that in this implant-based group that we can assist about 15% to 20% of those patients.

Ryan Zimmerman: Thank you, Karen.

Operator: Next question is from the line of Ross Osborn with Cantor Fitzgerald. Please proceed with your questions.

Ross Osborn: Hi. Good morning. Congrats on progress. So starting off with some of your smaller vehicles. Have you seen any return of growth on OMF to start off the year with those surgeons that were using Avance for COVID to improve quality of life? And what can you do to accelerate growth in this segment?