MiMedx Group, Inc. (NASDAQ:MDXG) Q4 2022 Earnings Call Transcript

John Vandermosten: Okay. And then I had a question for you, Pete, on R&D. Now that we kicked off the trial, the KOA trial. What should we — how should we think about the incremental costs in 2023 over 2022 on the R&D line?

Pete Carlson: When you look at R&D overall, there certainly will be an increase between the 2 years. The increase will be concentrated in the Regenerative Medicine segment. We’ve talked about those trials, individually, those trials being somewhere in the $20 million, maybe $25 million cost level. And that cost is going to be incurred over a multiyear period. For this first trial, it will be principally 2023 and 2024 with some of that front loaded.

John Vandermosten: Okay. Got it. Yes, that makes sense. And then on the 2 trials that you’re going to run for KOA, are they going to go — is there going to be any overlap there? Are you going to wait until you analyze the first one and then perhaps talk with the FDA before starting the second? How do you think that will run in between the 2 of them?

Pete Carlson: The second trial would be a trial we would look to be our pivotal trial. And the important thing there is that we need to have our final commercially ready product ready to go. And so that’s really the gating factor for that second trial. And that will involve interaction with the FDA as well as our own work. If we reach a point where that’s ready and the other — this first trial is still going on, we’ll make an assessment. And yes, it’s possible they could overlap. But again, the gating factor is more about the interaction with the FDA in our preparation for that regarding the chemistry manufacturing and controls process for the product itself.

John Vandermosten: Okay. No, that’s some good detail there. And last question for me is on the growth that you expect. There’s a few different components of growth, organic product growth, international sales and new products. How do you break that down among those 3 components?

Pete Carlson: Certainly, the predominant driver is our existing book of business. And now as you think about your existing book of business, that includes these 2 new products we launched in 2022. So that’s going to be a predominant driver. New products are a driver as well as the growth in Japan and other countries. So they are all pieces of it. We’re pleased with the way that the team has performed domestically, again, 10-plus percent growth year-over-year, driven by the new products, driven by our work in the surgical recovery application and it’s driven by the team’s efforts working in some tough environments in that private office setting. So we’re pleased with that and look for that to continue.

Operator: Our next question comes from Anthony Petrone with Mizuho Group.

Anthony Petrone: Appreciate that. Just a follow-up on some of the proposals MiMedx has out there as it relates to physician office reimbursement. Just kind of thinking of a scenario here. In other words, if the – if there’s acceptance on other products having to secure a tissue reference group letter from FDA and that all there should be uniformity that all of these skin stuff to products should be on the Medicare ASP list. If that sort of is accepted and plays out, what is the potential for some of these products to drop out of market, A, and what would be the upside for EPIFIX if the MiMedx proposals are adopted?