AxoGen, Inc. (NASDAQ:AXGN) Q3 2019 Earnings Conference Call - Final Transcript

Nov 06, 2019 • 04:30 pm ET

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AxoGen, Inc. (NASDAQ:AXGN) Q3 2019 Earnings Conference Call - Final Transcript

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Executive
Karen Zaderej

have been slowing the rate of our sales force expansion to allow for the development of efficiencies across our commercial footprint. Although early, these two changes are already providing sequential improvements, and we plan to continue building upon these and other initiatives during the remainder of the year and into 2020.

Let me provide some additional context for these changes. Nerve repair for extremity injuries, including trauma and compression, is our largest addressable market, estimated at a total of $2.2 billion, as compared to an OMF market of $300 million, and a breast reconstruction neurotization market of $250 million. Our position on the trauma market is the result of more than 10 years of development initiatives, including building market awareness, educating surgeons, growing the body of clinical evidence, and focused commercial execution.

The breast and OMF markets continue to be significant opportunities for growth, but remain early in their development. In the OMF segment, we've developed ***3***

we've developed a solid initial footing with oral and maxillofacial surgeons, who are focused on mandible reconstruction and iatrogenic nerve injuries. Through careful analysis, we determined that the successful adoption of these targeted procedures was concentrated with a specific profile of surgeons in major academic institutions, which overlaps significantly, where our trauma business is the most developed.

Additionally, we were often supporting these surgeons and procedures with both, our OMF clinical specialists and our full line sales reps, which created unnecessary redundancy. This demonstrated to us, we had an opportunity to gain efficiencies, through a more effective allocation of resources. As such, we're converting our eight oral and maxillofacial clinical specialist positions to full-line sales role. This reallocation of sales headcount will increase our sales efforts focused on the development of target surgeons and procedures and extremity trauma.

At the same time, given the alignment of our OMF business with our key trauma accounts, our full line sales representatives are well positioned to efficiently support the OMF opportunity, and we'll do so in partnership with other market development resources. This simplified structure will allow us to support OMF growth with an allocation of resources that is better matched to the relative opportunity of this important application. This change will not impact our approach in breast reconstruction neurotization, where we will continue the use of clinical sales specialists in this highly targeted market. We have established a solid foundation in the breast market at 30 centers for resensation, and using sales specialists for this focus call point, has allowed us to efficiently educate and support surgeons, as they integrate the resensation technique into their current breast reconstruction procedures. We're very encouraged by the increasing awareness of patients and surgeons to the improved reconstruction options available for women, including reconstruction with the resensation technique.

Additionally, we slowed the rate of adding new sales reps to allow for stabilization and productivity growth within our current sales force and territory structure. Aggressively splitting territories has been the right long-term decision for the company, but it has inevitably