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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Presentation
Executive
Karen Zaderej

caused short term disruption. We will continue to split territories and add new sales reps, although at a more measured pace, as we look to drive further efficiency and productivity gains with an expanded commercial footprint.

We previously stated that we plan to end the year with 115 direct sales reps. However, with the reallocation of the eight OMF positions to full-line sales reps in Q4 and the slowing of our hiring of new sales reps, we now anticipate exiting the year with between 105 and 110 sales reps ***4***

110 sales reps.

Our efforts to rebalance our commercial focus toward our core trauma market contributed to a modest sequential improvement in rep productivity in the third quarter. While we are encouraged by these early results, it's important to remember that these changes are not a magic bullet, but are a step in the right direction, and we will continue to pursue improvements to our commercial execution.

Before providing updates on our clinical progress, I want to comment on a very recent and encouraging ruling from CMS. On November 1, CMS released the outpatient prospective payment system final rule, which determines how much hospitals and surgery centers will be paid for outpatient care provided to Medicare patients. The new rates will be effective January 1, 2020. In this update, CMS has separated direct suture nerve repairs, from repairs with conduit and allograft. An updated the rates to reflect the diversity of cost of these procedures. The rates for direct repair were reduced and conduit and allograft payment rates were increased, compared to the 2019 rate.

CMS also recognized allograft repair as device-intensive, leading to a more significant increase in payment to surgery centers. Although CMS rates only apply to Medicare cases, which represent a small percentage of traumatic injuries, the change is positive, as it reflects the evolution of nerve repair adoption, and private payers are often influenced by the analysis and decisions made by CMS.

Turning now to our clinical progress; as of the third quarter, our RANGER Registry has now enrolled over 1,900 Avance Nerve Graft repairs and continues to provide significant new evidence in the management of nerve injuries. Data from the registry continues to demonstrate meaningful recovery, treating a variety of nerve injuries and gap lengths. The data on Avance Nerve Graft demonstrates the ability to restore sensory and motor functions, and shows positive outcomes, while eliminating the donor-site morbidities associated with autograft. Surgeons are using this clinical data to better understand nerve repair outcomes and to expand their treatment algorithms.

In September, we attended the 2019 meeting of the American Society for Surgery of the Hand. The meeting included several events and presentations regarding improved nerve repair techniques, using the AxoGen portfolio. These presentations included a RANGER data update of 511 upper extremity nerve repairs. Findings demonstrated a consistent meaningful recovery rate of 84% for Avance Nerve Graft across the study. Findings from the MATCH study were presented at ASSH as well. As a reminder,