10q10k10q10k.net
Axogen, Inc.

Axogen, Inc.AXGNEarnings & Financial Report

Nasdaq · Health Care · Electromedical & Electrotherapeutic Apparatus

Axogen is a developer of surgical solutions, including human tissue grafts, based in Alachua, Florida. Axogen products are designed to remedy peripheral nerve damage. In 2013 the company raised $18 million in its initial public offering (IPO). Axogen uses a cell graft technology AVANCE to mimic a human nerve. The company also creates nerve connectors and soft tissue membranes. The company reports sensory and movement recovery in 87 percent of patients with peripheral nerve injuries. Axogen is...

What changed in Axogen, Inc.'s 10-K — 2023 vs 2024

Top changes in Axogen, Inc.'s 2024 10-K

508 paragraphs added · 496 removed · 402 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

185 edited+34 added−45 removed174 unchanged
This abnormal section of the nerve can, under certain circumstances, be surgically removed and the nerve managed by capping, burying, or surgically repairing the nerve.
This abnormal section of the nerve can, under certain circumstances, be surgically removed and the nerve can be managed by capping, burying, or surgically repairing the nerve.
Axoguard Nerve Cap has the following advantages: • Separates the nerve end from surrounding tissue, neurotrophic factors and mechanical stimulation; • Reduces painful neuroma formation; • Allows for anchoring of a nerve end or stump to nearby tissue structure; • Material gradually remodels into the patient’s own tissue to protect the nerve end; and • Semi-translucence allows for visualization of nerve ends or stumps and easy visualization for suture placement. • Is available in six different sizes to address a variety of situations. • Stored at room temperature with a minimum of 18-month shelf life.
Axoguard Nerve Cap has the following advantages: • Separates the nerve end from surrounding tissue, neurotrophic factors and mechanical stimulation; • Reduces painful neuroma formation; • Allows for anchoring of a nerve end or stump to nearby tissue structure; • Material gradually remodels into the patient’s own tissue to protect the nerve end; • Semi-translucence allows for visualization of nerve ends or stumps and easy visualization for suture placement; • Is available in six different sizes to address a variety of situations; and • Stored at room temperature with a minimum of 18-month shelf life.
In instances that patent protection is not possible, product value to our portfolio can still be derived. Trademarks, Trade Secrets and Copyrights We hold a significant portfolio of hundreds of registered and applied-for trademarks in the U.S. and worldwide.
In instances that patent protection is not possible, product value to our portfolio can still be derived. Trademarks, Trade Secrets and Copyrights We hold a significant portfolio of hundreds of registered trademarks and applied-for trademarks in the U.S. and worldwide.
Failure to comply with applicable regulatory requirements could expose us to potential compliance actions by FDA or state regulators and could risk the commercial availability of the product.
Failure to comply with applicable regulatory requirements could expose us to potential compliance actions by the FDA or state regulators and could risk the commercial availability of the product.
However, through a series of FDA Guidance for Industry documents including the July 1998 Guidance "Guideline for the Format and Content of the Clinical and Statistical Sections of an Application" and, more recently, the September 2023 Guidance "Demonstrating Substantial Evidence of Effectiveness with One Adequate and Well-Controlled Clinical Investigation and Confirmatory Evidence", FDA has accepted a single adequate and well-controlled clinical investigation with supporting evidence through preclinical studies and literature to approve a new biologic products.
However, through a series of FDA Guidance for Industry documents including the July 1998 guidance "Guideline for the Format and Content of the Clinical and Statistical Sections of an Application" and, more recently, the September 2023 guidance "Demonstrating Substantial Evidence of Effectiveness with One Adequate and Well-Controlled Clinical Investigation and Confirmatory Evidence", the FDA has accepted a single adequate and well-controlled clinical investigation with supporting evidence through preclinical studies and literature to approve new biologic products.
For Avance Nerve Graft, in the 2010 Enforcement Discretion letter, FDA only required Axogen to perform a single Phase 3 Clinical Study.
For Avance Nerve Graft, in the 2010 Enforcement Discretion letter, the FDA only required Axogen to perform a single phase 3 clinical study.
RECON results demonstrated statistical superiority for return of sensory function, as measured by static two-point discrimination, as compared to conduits in gaps greater than 12 mm (p-value REPOSE We are conducting a multicenter, prospective, randomized, and subject blinded study of Axoguard Nerve Cap as compared to neurectomy for the treatment of systematic neuroma ("REPOSE").
RECON results demonstrated statistical superiority for return of sensory function, as measured by static two-point discrimination, as compared to conduits in gaps greater than 12 mm (p-value REPOSE We are conducting a multicenter, prospective, randomized, and subject blinded study of Axoguard Nerve Cap as compared to neurectomy for the treatment of systematic neuroma.
The following regulations apply to the IND application process: • 21CFR Part 201 Drug Labeling • 21CFR Part 312 Investigational New Drug Application • 21CFR Part 314 IND and NDA Applications for FDA Approval to Market a New Drug (New Drug Approval) • 21CFR Part 316 Orphan Drugs • 21CFR Part 50 Protection of Human Subjects • 21CFR Part 54 Financial Disclosure by Clinical Investigators • 21CFR Part 56 Institutional Review Boards • 21CFR Part 58 Good Lab Practice for Nonclinical Laboratory Studies Biological Product License Application ("BLA") Pa thway Th e BLA is a request for permission to introduce, or deliver for introduction, a biological product into interstate commerce (21 CFR 601.2).
The following regulations apply to the IND application process: • 21 CFR Part 201 Drug Labeling • 21 CFR Part 312 Investigational New Drug Application • 21 CFR Part 314 IND and NDA Applications for FDA Approval to Market a New Drug (New Drug Approval) • 21 CFR Part 316 Orphan Drugs • 21 CFR Part 50 Protection of Human Subjects • 21 CFR Part 54 Financial Disclosure by Clinical Investigators • 21 CFR Part 56 Institutional Review Boards • 21 CFR Part 58 Good Lab Practice for Nonclinical Laboratory Studies Biological Product License Application Pa thway Th e BLA is a request for permission to introduce, or deliver for introduction, a biological product into interstate commerce (21 CFR Part 601.2).
Axoguard HA+ Nerve Protector has the following advantages: • Processed porcine submucosa ECM layer is vascularized and remodeled by the patient into new site-specific tissue; • Double-sided HA+ gel coating to reduce friction and enhance nerve gliding through traumatic tissue beds; • Formulated for optimized handling and flexibility of surgical application—quick hydration, flat sheet configuration and is easy to suture if needed; • Allows the body's natural healing process to repair the nerve; • Minimizes the potential for soft tissue attachments and peripheral nerve entrapment by physically isolating the nerve during the healing process; • Allows peripheral nerve gliding; • Is available in five different sizes up to 4cm x 8cm to address a variety of peripheral nerve repair situations; and • Stored at room temperature with a minimum o f 24-mon th shelf life.
HA+ has the following advantages: • Processed porcine submucosa ECM layer is vascularized and remodeled by the patient into new site-specific tissue; • Double-sided HA+ gel coating to reduce friction and enhance nerve gliding through traumatic tissue beds; • Formulated for optimized handling and flexibility of surgical application—quick hydration, flat sheet configuration and is easy to suture if needed; • Allows the body's natural healing process to repair the nerve; • Minimizes the potential for soft tissue attachments and peripheral nerve entrapment by physically isolating the nerve during the healing process; • Allows peripheral nerve gliding; • Is available in five different sizes up to 4cm x 8cm to address a variety of peripheral nerve repair situations; and • Stored at room temperature with a minimum o f 24-mon th shelf life.
Axoguard Nerve Protector has the following advantages: • Processed porcine submucosa ECM used to reinforce a coaptation site, wrap a partially severed peripheral nerve or protect peripheral nerve tissue; • Creates a protective layer that isolates and protects the peripheral nerve in a traumatized wound bed; • Remodels to form a new soft tissue layer; P11 Table of Conten t • Easily conforms and provides 360-degree wrapping of damaged peripheral nerve tissue; • Allows the body's natural healing process to repair the nerve; • Minimizes the potential for soft tissue attachments and peripheral nerve entrapment by physically isolating the nerve during the healing process; • Allows peripheral nerve gliding; • Strong and flexible, plus easy to suture; • Is available in five different widths and two different lengths to address a variety of peripheral nerve repair situations; and • Stored at room temperature with a minimum of 24-month shelf life.
Axoguard Nerve Protector has the following advantages: • Processed porcine submucosa ECM used to reinforce a coaptation site, wrap a partially severed peripheral nerve or protect peripheral nerve tissue; • Creates a protective layer that isolates and protects the peripheral nerve in a traumatized wound bed; • Remodels to form a new soft tissue layer; • Easily conforms and provides 360-degree wrapping of damaged peripheral nerve tissue; • Allows the body's natural healing process to repair the nerve; P9 Table of Conten t • Minimizes the potential for soft tissue attachments and peripheral nerve entrapment by physically isolating the nerve during the healing process; • Allows peripheral nerve gliding; • Strong and flexible, plus easy to suture; • Is available in five different widths and two different lengths to address a variety of peripheral nerve repair situations; and • Stored at room temperature with a minimum of 24-month shelf life.
As an FDA registered tissue establishment, we use both our own personnel and subcontractors for recovery/acquisition, storage, testing, processing, and sterilization of the donated peripheral nerve tissue and placental tissues. Additionally, we and our subcontractors, have contracted with independent Good Manufacturing Practice ("GMP") and Good Laboratory Practice ("GLP") compliant laboratories to perform testing for product release.
As an FDA registered tissue establishment, we use both our own personnel and subcontractors for recovery/acquisition, storage, testing, processing, and sterilization of the donated peripheral nerve tissue and placental tissues. Additionally, we and our subcontractors, have contracted with independent Good Manufacturing Practice ("GMP") and Good Laboratory Practice compliant laboratories to perform testing for product release.
We have sought, and will continue to seek, patent protection for select proprietary technologies and other inventions emanating from our research and development ("R&D"), including with respect to uses, methods, and compositions, in an effort to further fortify our IP stronghold in areas of importance to us and our growing product portfolio.
We have sought, and will continue to seek, patent protection for select proprietary technologies and other inventions emanating from our research and development ("R&D"), including with respect to uses, methods, and compositions, in an effort to further fortify our IP in areas of importance to us and our growing product portfolio.
As distributor of these two products in the EU, we are not yet able to fully determine the costs of complying with these regulations, how the E.U. will continue interpreting and enforcing them, what the timelines for approvals of products will be and the overall effect of the E.U. MDR on the marketplace.
As distributor of these two products in the E.U., we are not yet able to fully determine the costs of complying with these regulations, how the E.U. will continue interpreting and enforcing them, what the timelines for approvals of products will be and the overall effect of the E.U. MDR on the marketplace.
Employee safety is critical to our operations, and we follow Occupational Safety and Health Administration (OSHA) 29 CFR 1910, and use a series of company-wide policies, trainings, and procedures to protect all employees’ health and safety.
Employee safety is critical to our operations, and we follow Occupational Safety and Health Administration 29 CFR 1910, and use a series of company-wide policies, trainings, and procedures to protect all employees’ health and safety.
The steps for obtaining FDA approval of a BLA to market a biological product in the U.S. include: • Completion of pre-clinical laboratory tests, animal studies, and formulation studies under the FDA’s good laboratory practices regulations; • Submission to the FDA of an IND for human clinical testing, which must become effective before human clinical trials may begin and which must include independent Institutional Review Board, ("IRB"), approval at each clinical site before the trials may be initiated; • Performance of an adequate and well-controlled clinical trial in accordance with Good Clinical Practices to establish the safety and efficacy of the product for each indication; • Submission to the FDA of a BLA, which contains detailed information about the CMC for the product, reports of the outcomes and full data sets from the clinical trials, and proposed labeling and packaging for the product.
The steps for obtaining FDA approval of a BLA to market a biological product in the U.S. include: • Completion of pre-clinical laboratory tests, animal studies, and formulation studies under the FDA’s good laboratory practices regulations; • Submission to the FDA of an IND for human clinical testing, which must become effective before human clinical trials may begin and which must include independent IRB approval at each clinical site before the trials may be initiated; • Performance of an adequate and well-controlled clinical trial in accordance with Good Clinical Practices to establish the safety and efficacy of the product for each indication; • Submission to the FDA of a BLA, which contains detailed information about the CMC for the product, reports of the outcomes and full data sets from the clinical trials, and proposed labeling and packaging for the product.
Axoguard Nerve Connector has the following advantages: • Processed intact porcine ECM with an open, porous structure that allows for cell infiltration and remodeling; • Designed as a coaptation aid for tensionless repair of transected or severed peripheral nerves; • Alleviates tension at the repair site; • Remodels into the patient’s own tissue; • Reduces the number of required sutures (versus direct repair with suture); • Allows surgeon to move sutures away from the repair site which may minimize inflammation and aid nerve regeneration; • Reduces potential for fascicular mismatch; • Allows visualization of underlying peripheral nerve ends; • Available in seven different diameters and two different lengths to address a variety of nerve repair situations; • Strong and flexible, easy to suture; and • Stored at room temperature with a minimum of 18-month shelf life for the sizes with 6-layers and 24-month shelf life for those with 5-layers.
P8 Table of Conten t Axoguard Nerve Connector has the following advantages: • Processed intact porcine ECM with an open, porous structure that allows for cell infiltration and remodeling; • Designed as a coaptation aid for tensionless repair of transected or severed peripheral nerves; • Alleviates tension at the repair site; • Remodels into the patient’s own tissue; • Reduces the number of required sutures (versus direct repair with suture); • Allows surgeon to move sutures away from the repair site which may minimize inflammation and aid nerve regeneration; • Reduces potential for fascicular mismatch; • Allows visualization of underlying peripheral nerve ends; • Available in seven different diameters and two different lengths to address a variety of nerve repair situations; • Strong and flexible, easy to suture; and • Stored at room temperature with a minimum of 18-month shelf life for the sizes with 6-layers and 24-month shelf life for those with 5-layers.
RECON results demonstrated statistical superiority for return of sensory function, as measured by static two-point discrimination, as compared to conduits in gaps greater than 12 mm (p-value • We continue to comply with the regulations and standards under 21 CFR Part 1271. ◦ We were audited by the FDA at the Avance Processing Facility in March 2013, March 2015, October 2016 and September 2022 and at the Avance Distribution Facility in October 2015 with respect to its Human Tissue Quality System under 21 CFR Part 1271 and in July 2022 with respect to Level 1 Quality System Inspection Technique ("QSIT") Medical Device Inspection under 21 CFR 820.
RECON results demonstrated statistical superiority for return of sensory function, as measured by static two-point discrimination, as compared to conduits in gaps greater than 12 mm (p-value • We continue to comply with the regulations and standards under 21 CFR Part 1271. ◦ We were audited by the FDA at the Solvita facility in March 2013, March 2015, October 2016 and September 2022 and at the Avance distribution facility in October 2015 with respect to its Human Tissue Quality System under 21 CFR Part 1271 and in July 2022 with respect to Level 1 Quality System Inspection Technique Medical Device Inspection under 21 CFR Part 820.
Failure by us or our suppliers to comply with applicable regulatory requirements can result in enforcement action by the FDA or other federal or state authorities, which may include any of the following sanctions, among others: • Warning letters, fines, injunctions, consent decrees and civil penalties; • Customer notifications, repair, replacement, refunds, recall or seizure of our products; P29 Table of Conten t • Operating restrictions, partial suspension, or total shutdown of production; • Suspension or termination of our clinical trials; • Refusing our 501(k), de novo classification request, PMA or BLA for new products, new intended uses, or modifications to existing products; • Withdrawing or suspending pre-market approvals that have already been granted; and • Criminal prosecution.
P26 Table of Conten t Failure by us or our suppliers to comply with applicable regulatory requirements can result in enforcement action by the FDA or other federal or state authorities, which may include any of the following sanctions, among others: • Warning letters, fines, injunctions, consent decrees and civil penalties; • Customer notifications, repair, replacement, refunds, recall or seizure of our products; • Operating restrictions, partial suspension, or total shutdown of production; • Suspension or termination of our clinical trials; • Refusing our 510(k), de novo classification request, PMA or BLA for new products, new intended uses, or modifications to existing products; • Withdrawing or suspending pre-market approvals that have already been granted; and • Criminal prosecution.
Additionally clinical data obtained from the observational study, RANGER, will be provided as supportive safety data and confirmatory data for Avance Nerve Graft. Our Clinical Trials We have an active clinical research program to gather data on our product portfolio. We have completed five clinical studies, are performing six ongoing clinical studies, and have plans to initiate further clinical studies.
Additionally clinical data obtained from the observational study, RANGER, will be provided as supportive safety data and confirmatory data for Avance Nerve Graft. Our Clinical Trials We have an active clinical research program to gather data on our product portfolio. We have completed five clinical studies, are performing four ongoing clinical studies, and have plans to initiate further clinical studies.
A BLA must also contain extensive Chemistry, Manufacturing and Controls ("CMC") and other manufacturing information, as well as Labeling information. The applicant must pass an FDA pre-approval inspection of the manufacturing facility or facilities at which the biological product is produced to assess compliance with the FDA’s current Good Manufacturing Practice ("cGMP") requirements.
A BLA must also contain extensive Chemistry, Manufacturing and Controls ("CMC") and other manufacturing information, as well as labeling information. The applicant must pass an FDA pre-approval inspection of the manufacturing facility or facilities at which the biological product is produced to assess compliance with the FDA’s current cGMP requirements.
Reference to our website, or any other website, does not constitute incorporation by reference of the information contained on the site and should not be considered part of this Annual Report on Form 10-K. P34 Table of Conten t Item 1A. RISK FACTOR SUMMARY Below is a summary of our risk factors.
Reference to our website, or any other website, does not constitute incorporation by reference of the information contained on the site and should not be considered part of this Annual Report on Form 10-K. P31 Table of Conten t Item 1A. RISK FACTOR SUMMARY Below is a summary of our risk factors.
HA+ was cleared for market under 510(k) K223640 on April 7, 2023, and a second 510(k) K231708 regulatory clearance was obtained on October 12th expanding the indication for use of HA+. The products are classified by FDA under 21 CFR 882.5275 (Nerve Cuff, product code: JXI).
HA+ was cleared for market under 510(k) K223640 on April 7, 2023, and a second 510(k) K231708 regulatory clearance was obtained on October 12, 2023, expanding the indication for use of HA+. The products are classified by the FDA under 21 CFR § 882.5275 (Nerve Cuff, product code: JXI).
We currently believe we comply with applicable regulations when exporting our products and we intend to continue such compliance in the event there are any regulatory changes regarding its products in the U.S. The European Medicines Agency (EMA) is the decentralized body of the European Union, located in Amsterdam in the Netherlands.
We currently believe we comply with applicable regulations when exporting our products and we intend to continue such compliance in the event there are any regulatory changes regarding its products in the U.S. The European Medicines Agency ("EMA" is the decentralized body of the E.U., located in Amsterdam in the Netherlands.
Our Product Portfolio Avance Nerve Graft Avance Nerve Graft is a biologically active nerve implant with more than fifteen years of comprehensive clinical evidence and more than 100,000 implants since launch. Avance Nerve Graft is processed nerve allograft intended for the surgical repair of peripheral nerve discontinuities to support regeneration across the defect.
Our Product Portfolio Avance Nerve Graft Avance Nerve Graft is a biologically active nerve implant with more than sixteen years of comprehensive clinical evidence and more than 100,000 implants since launch. Avance Nerve Graft is processed nerve allograft intended for the surgical repair of peripheral nerve discontinuities to support regeneration across the defect.
It is Axogen's belief from the guidance documents and communications with FDA, the Phase 3 RECON clinical study as a single adequate and well-controlled clinical investigation with preclinical data, literature and confirmatory data from the RANGER Registry will support Avance Nerve Graft' approval as a biologic product.
It is Axogen's belief from the guidance documents and communications with the FDA, the phase 3 RECON clinical study as a single adequate and well-controlled clinical investigation with preclinical data, and literature and confirmatory data from the RANGER Registry will support Avance Nerve Graft's approval as a biologic product.
In addition, we believe nerves are often one of many structures injured in a trauma (i.e., amputation) or in surgery and the incidence of these nerve injuries are often not coded or tracked. Quantifying the procedures involving nerve repair may also be challenging.
In addition, we believe nerves are often one of many structures injured in a trauma (e.g., amputation) or in surgery and the incidence of these nerve injuries are often not coded or tracked. Quantifying the procedures involving nerve repair may also be challenging.
Because a sponsor often needs to ship an investigational drug or biological product to clinical investigators in many states, it must seek an exemption from that legal requirement. The IND is the means through which the sponsor obtains this exemption from the FDA.
Because a sponsor often needs to ship an investigational drug or biological product to clinical investigators in many states, it must seek an exemption from that legal requirement. The Investigational New Drug ("IND") application is the means through which the sponsor obtains this exemption from the FDA.
We, through our licensing efforts and research, developed the Avance Method ® , a proprietary method for processing recovered human peripheral nerve tissue in a manner that preserves the essential structure of the extracellular matrix (ECM) while cleansing away cellular and noncellular debris.
We, through our licensing efforts and research, developed our Avance Method ® , a proprietary method for processing recovered human peripheral nerve tissue in a manner that preserves the essential structure of the ECM while cleansing away cellular and noncellular debris.
Tissue Recovery and Processing Avance Nerve Graft Processing Overview We developed the Avance Method, an advanced and proprietary technique to process Avance Nerve Graft from donated human peripheral nerve tissue. The Avance Method requires special training over several months for each manufacturing associate who processes Avance Nerve Grafts.
Tissue Recovery and Processing Avance Nerve Graft Processing Overview We developed our Avance Method ® , an advanced and proprietary technique to process Avance Nerve Graft from donated human peripheral nerve tissue. Our Avance Method requires special training over several months for each manufacturing associate who processes Avance Nerve Grafts.
We met with the FDA Center for Biologics Evaluation and Research ("CBER") in July 2010 and, between July 2010 and November 2010, provided information to CBER that resulted in the FDA issuing a letter stating the agency’s intent to exercise enforcement discretion with respect to the continued introduction or delivery for introduction into interstate commerce of Avance Nerve Graft assuming that certain conditions are met relating to the transition of Avance Nerve Graft from regulation as an HCT/P under Section 361 to a biological product under Section 351 of the Public Health Service Act.
We met with the FDA Center for Biologics Evaluation and Research ("CBER") in July 2010 and, between July 2010 and November 2010, provided information to CBER that resulted in the FDA issuing a letter stating the agency’s intent to exercise enforcement discretion with respect to the continued introduction or delivery for introduction into interstate commerce of Avance Nerve Graft assuming that certain conditions are met relating to the transition of Avance Nerve Graft from regulation as an HCT/P under Section 361 to a biological product under Section 351 of the PHS Act.
MDR requires changes in the clinical evidence required for medical devices, post-market clinical follow-up evidence, annual reporting of safety information for Class III products, and bi-annual reporting for Class II products, Unique Device Identification (“UDI”) for all products, submission of core data elements to a European UDI database prior to placement of a device on the market, reclassification of medical devices, and multiple other labeling changes.
MDR requires changes in the clinical evidence required for medical devices, post-market clinical follow-up evidence, annual reporting of safety information for Class IIb and Class III products, and bi-annual reporting for Class IIa products, Unique Device Identification (“UDI”) for all products, submission of core data elements to a European UDI database prior to placement of a device on the market, reclassification of medical devices, and multiple other labeling changes.
Axoguard Nerve Connector and Nerve Protector In August 2008, we entered into an agreement with Cook Biotech, amended in February 2012, October 10, 2014, and February 26, 2018, and August 4, 2023 (the “Distribution Agreement”), to distribute its ECM technology in the form of the Surgisis ® Nerve Cuff, the form of a nerve wrap or patch, or any other mutually agreed to configuration.
Axoguard Nerve Connector and Axoguard Nerve Protector In August 2008, we entered into an agreement with Evergen, amended in February 2012, October 10, 2014, February 26, 2018, and August 4, 2023 (the “Distribution Agreement”), to distribute its ECM technology in the form of the Surgisis ® Nerve Cuff, the form of a nerve wrap or patch, or any other mutually agreed to configuration.
We police and enforce our marks. We possess trade secrets and material know-how in the following general subject matters: nerve and tissue processing, nerve repair, product testing methods, and pre-clinical and clinical expertise. We have registered copyrights for training tools and artistic renderings. Additionally, we entered into the Distribution Agreement and Supply Agreement with Cook Biotech for the Axoguard products.
We police and enforce our marks. We possess trade secrets and material know-how in the following general subject matters: nerve and tissue processing, nerve repair, product testing methods, and pre-clinical and clinical expertise. We have registered copyrights for training tools and artistic renderings. Additionally, we entered into the Distribution Agreement and Supply Agreement with Evergen for the Axoguard products.
The activities the FDA regulates include the following: • Product design, development, and manufacture; • Product safety, testing, labeling, and storage; • Pre-clinical testing in animals and in the laboratory; • Clinical investigations in humans; • Pre-marketing clearance, approval, or licensing; • Record-keeping and document-retention procedures; • Advertising and promotion; • The import and export of products; • Product marketing, sales, and distribution; P21 Table of Conten t • Post-marketing vigilance, surveillance and medical device reporting, including reporting of deaths, serious injuries, communicable diseases, device malfunctions, or other adverse events; and • Corrective actions, removals and recalls.
The activities the FDA regulates include the following: • Product design, development, and manufacture; • Product safety, testing, labeling, and storage; • Pre-clinical testing in animals and in the laboratory; • Clinical investigations in humans; • Pre-marketing clearance, approval, or licensing; • Record-keeping and document-retention procedures; • Advertising and promotion; • The import and export of products; • Product marketing, sales, and distribution; • Post-marketing vigilance, surveillance and medical device reporting, including reporting of deaths, serious injuries, communicable diseases, device malfunctions, or other adverse events; and • Corrective actions, removals and recalls.
No FDA Form 483 observations were received. ◦ In August 2023 we were inspected by the FDA at our Alachua, FL Human Tissue Establishment with respect to our Human Tissue Quality System under 21 CFR Part 1271. No FDA Form 483 observations were received.
No FDA Form 483 observations were received. ◦ In August 2023, we were inspected by the FDA at our Alachua, Florida Human Tissue Establishment with respect to our Human Tissue Quality System under 21 CFR Part 1271.
Currently, when a patient undergoes autologous breast reconstruction after a mastectomy, the patient receives the shape of a natural breast, but often times experiences little to no return of sensory feeling. In certain cases, sensation can be returned to the breast area with the use of our products through an innovative surgical technique called Resensation ® .
Currently, when a patient undergoes autologous or implant-based breast reconstruction after a mastectomy, the patient receives the shape of a natural breast, but often times experiences little to no return of sensory feeling. In certain cases, sensation can be returned to the breast area with the use of our products through an innovative surgical technique called Resensation.
Our processing methods and process controls have been developed and validated to ensure product uniformity and quality. Pursuant to the CTS Agreement, we pay license fees on a monthly basis to CTS. See "Item 8.
Our processing methods and process controls have been developed and validated to ensure product uniformity and quality. Pursuant to the Solvita Agreement, we pay license fees on a monthly basis to Solvita. See "Item 8.
No FDA Form 483 observations were received. ◦ In September 2022 we were inspected by the FDA at the CTS Facility with respect to our Human Tissue Quality System under 21 CFR Part 1271.
No FDA Form 483 observations were received. ◦ In September 2022, we were inspected by the FDA at the Solvita facility with respect to our Human Tissue Quality System under 21 CFR Part 1271.
In connection with our Avance Nerve Graft, per Section 351(k)(7) and 351(i)(4) of the Public Health Service (PHS) Act, from the date of BLA approval, Avance Nerve Graft we believe we will have a period of 12 years of exclusivity in the U.S. from commercial competition from biosimilars using Avance as t he reference product.
In connection with our Avance Nerve Graft, per Section 351(k)(7) and 351(i)(4) of the PHS Act, from the date of BLA approval, we believe we will have a period of 12 years of exclusivity in the U.S. from commercial competition from biosimilars using Avance Nerve Graft as t he reference product.
Cook Biotech has also obtained a 510(k) pre-market clearance for Axoguard Nerve Protector for the repair of peripheral nerve damage in which there is no gap or where a gap closure is achieved by flexion of the extremity. We sell the 510(k) cleared devices under the trade names Axoguard Nerve Protector and Axoguard Nerve Connector.
Evergen has also obtained a 510(k) pre-market clearance for Axoguard Nerve Protector for the repair of peripheral nerve damage in which there is no gap or where a gap closure is achieved by flexion of the extremity. We sell the 510(k) cleared devices under the trade names Axoguard Nerve Connector and Axoguard Nerve Protector.
Tissue Product Release We have established quality procedures for review of tissue recovery, relevant donor medical record review, and release to processing that meet or exceed FDA requirements as defined in the Code of Federal Regulations ("CFR") 21 CFR Part 1271, state regulations, international regulations, and AATB standards.
Tissue Product Release We have established quality procedures for review of tissue recovery, relevant donor medical record review, and release to processing that meet or exceed FDA requirements as defined in 21 CFR Part 1271, state regulations, international regulations, and AATB standards.
We have also retained an external former FDA consultant with experience in auditing to 21 CFR Parts 210 and 211 and 600-610 regulations to verify quality system compliance with the regulations. • We conduct a phase 3 clinical trial to demonstrate safety, purity and potency of Avance Nerve Graft under a Special Protocol Assessment (“SPA”).
We have also retained an external former FDA consultant with experience in P21 Table of Conten t auditing to 21 CFR Parts 210 and 211 and 600-610 regulations to verify quality system compliance with the regulations. • We conduct a phase 3 clinical trial to demonstrate safety, purity and potency of Avance Nerve Graft under a Special Protocol Assessment (“SPA”).
REPOSE XL REPOSE-XL is a prospective, multi-center clinical pilot study evaluating the tolerability and feasibility of the Axoguard Large-Diameter Nerve Cap (sizes 5-7 mm) for protecting and preserving terminated nerve endings after limb trauma or amputation when immediate attention to the nerve injuries is not possible. Enrollment in REPOSE-XL started in 2022 and is underway.
P25 Table of Conten t REPOSE XL REPOSE-XL is a prospective, multi-center clinical pilot study evaluating the tolerability and feasibility of the Axoguard Large-Diameter Nerve Cap (sizes 5-7 mm) for protecting and preserving terminated nerve endings after limb trauma or amputation when immediate attention to the nerve injuries is not possible. Enrollment in REPOSE-XL started in 2022 and is underway.
Cook Biotech believes it has know-how and trade secrets with respect to its ECM technology that provides certain additional competitive obstacles to third parties, in addition to those obstacles existing in view of Axogen-owned IP. Government Regulations U.S.
Evergen believes it has know-how and trade secrets with respect to its ECM technology that provides certain additional competitive obstacles to third parties, in addition to those obstacles existing in view of Axogen-owned IP. Government Regulations U.S.
Because the requirements of the biomaterials used in peripheral nerve repair can vary based on the severity and location of the damaged nerve, the size and function of the nerve, surgical technique, and patient preference, our peripheral nerve repair products compete against both autograft materials (nerve in the case of a bridging repair and vein or fat in the case of a nerve protection repair), and a limited number of off-the-shelf alternatives for repairing and protecting.
P16 Table of Conten t Because the requirements of the biomaterials used in peripheral nerve repair can vary based on the severity and location of the damaged nerve, the size and function of the nerve, surgical technique, and patient preference, our peripheral nerve repair products compete against both autograft materials (nerve in the case of a bridging repair and vein or fat in the case of a nerve protection repair), and a limited number of off-the-shelf alternatives for repairing and protecting.
We have estimated the portion of these nerve repair procedures due to trauma that would require gap repair, primary repair and/or nerve protection and applied, as we believed was appropriate in each procedure segment, the number of units and average sales price of Avance Nerve P8 Table of Conten t Graft and the average market price for nerve connectors, and nerve protectors to determine the probable Total Addressable Market.
We have estimated the portion of these nerve repair procedures due to trauma that would require gap repair, primary repair and/or nerve protection and applied, as we believed was appropriate in each procedure segment, the number of units and average sales price of Avance Nerve Graft and the average market price for nerve connectors and nerve protectors to determine the probable Total Addressable Market.
We cannot provide any assurance that regulatory, or enforcement authorities will view our relationships with physicians or policies as being in compliance with applicable regulations and laws. P31 Table of Conten t Regulation Outside of the U.S. Distribution and sales of medical products outside of the U.S. are subject to foreign governmental regulations that vary substantially from country to country.
We cannot provide any assurance that regulatory, or enforcement authorities will view our relationships with physicians or policies as being in compliance with applicable regulations and laws. Regulation Outside of the U.S. Distribution and sales of medical products outside of the U.S. are subject to foreign governmental regulations that vary substantially from country to country.
Satisfaction of FDA approval requirements for biologics typically takes several years and the actual time required may vary substantially based on the type, complexity, and novelty of the product. We cannot be certain that any BLA approvals for our products will be granted on a timely basis, or at all.
Satisfaction of FDA approval requirements for biologics typically takes several years and the actual time P20 Table of Conten t required may vary substantially based on the type, complexity, and novelty of the product. We cannot be certain that any BLA approvals for our products will be granted on a timely basis, or at all.
The guidance clarified the FDA's position that any processing that alters the biological characteristics of peripheral nerve tissue would be considered more than minimal manipulation, and therefore require a BLA prior to marketing. P25 Table of Conten t Clinical Trials Clinical trials are a category of clinical research designed to evaluate and test new interventions, medications, or procedures.
The guidance clarified the FDA's position that any processing that alters the biological characteristics of peripheral nerve tissue would be considered more than minimal manipulation, and therefore require a BLA prior to marketing. Clinical Trials Clinical trials are a category of clinical research designed to evaluate and test new interventions, medications, or procedures.
Our Avance Method is depicted as follows: Tissue Processing Our Avance Method ® comprises peripheral nerve tissue recovery/acquisition and testing, donor medical review and release, debridement and other processing steps, packaging, and sterilization to meet or exceed all applicable FDA, state, and international regulations and the American Association of Tissue Banks (“AATB”) standards.
Our Avance Method is depicted as follows: P11 Table of Conten t Tissue Processing Our Avance Method comprises peripheral nerve tissue recovery/acquisition and testing, donor medical review and release, debridement and other processing steps, packaging, and sterilization to meet or exceed all applicable FDA, state, and international regulations and the American Association of Tissue Banks (“AATB”) standards.
We also similarly make available, free of charge on our website, the reports filed with the SEC by our executive officers, directors and 10% shareholders pursuant to Section 16 under the Exchange Act as soon as reasonably practicable after copies of those filings are provided to us by those persons.
We also similarly make available, free of charge on our website, the reports filed with the SEC by our executive officers, directors and 10% shareholders pursuant to Section 16 under the Exchange Act as soon as reasonably practicable after copies of those filings P30 Table of Conten t are provided to us by those persons.
Medical devices must be registered with the MHRA if they are being placed in the UK market after May 1, 2021. Cook Biotech is responsible for appointing the UK Responsible Person and registering Axoguard Nerve Connector and Axoguard Nerve Protector in the UK.
Medical devices must be registered with the MHRA if they are being placed in the UK market after May 1, 2021. Evergen is responsible for appointing the UK Responsible Person and registering Axoguard Nerve Connector and Axoguard Nerve Protector in the UK.
Our products, as well as the chemicals used in processing these products, are handled and disposed of in accordance with country-specific, federal, state, and local environmental regulations. Since 2007, we have used outside third parties to perform all biohazard waste disposal. We contract with independent, third parties to perform sterilization of our allografts.
P29 Table of Conten t Our products, as well as the chemicals used in processing these products, are handled and disposed of in accordance with country-specific, federal, state, and local environmental regulations. Since 2007, we have used outside third parties to perform all biohazard waste disposal. We contract with independent, third parties to perform sterilization of our allografts.
Overall, medical device companies can continue to expect longer lead times to obtain product conformity assessments and registrations (i.e., CE Mark Certification) in the E.U. and a substantially costlier pathway to compliance in the E.U. Cook Biotech is responsible for registering and attaining MDR conformity for Axoguard Nerve Connector and Axoguard Nerve Protector in the EU.
Overall, medical device companies can continue to expect longer lead times to obtain product conformity assessments and registrations (i.e., CE Mark Certification) in the E.U. and a substantially costlier pathway to compliance in the E.U. Evergen is responsible for registering and attaining MDR conformity for Axoguard Nerve Connector and Axoguard Nerve Protector in the E.U.
Avance Nerve Graft provides the natural peripheral nerve structure of a nerve, including the native laminin, to P9 Table of Conten t guide the regenerating nerve fibers. The nerve ECM is additionally processed to remove a natural inhibitor to regeneration called chondroitin sulphate proteoglycan. We believe that Avance Nerve Graft is the first off-the-shelf nerve allograft for bridging nerve transections.
Avance Nerve Graft provides the natural peripheral nerve structure of a nerve, including the native laminin, to guide the regenerating nerve fibers. The nerve ECM is additionally processed to remove a natural inhibitor to regeneration called chondroitin sulphate proteoglycan. We believe that Avance Nerve Graft is the first off-the-shelf nerve allograft for bridging nerve transections.
We have incorporated these principles into our relationships with healthcare professionals under our consulting agreements, payment of travel and lodging expenses, research and educational grant procedures and sponsorship of P30 Table of Conten t third-party conferences. In addition, we have conducted and will continue to conduct training sessions on these principles.
We have incorporated these principles into our relationships with healthcare professionals under our consulting agreements, payment of travel and lodging expenses, research and educational grant procedures and sponsorship of third-party conferences. In addition, we have conducted and will continue to conduct training sessions on these principles.
Although distribution and sales of products in the Trauma, OMF, Breast and Upper Extremity Compression portions of the Total Addressable Market constitute our primary revenue sources today, market expansion opportunities in lower extremity surgery, head and neck surgery, urology, and the surgical treatment of pain could offer us expanded revenue opportunities.
Although distribution and sales of products in the Trauma, OMF/H&N, Breast and Upper Extremity Compression portions of the Total Addressable Market constitute our primary revenue sources today, market expansion opportunities in lower extremity surgery, urology, and the surgical treatment of pain could offer us expanded revenue opportunities.
These Axoguard products are regulated as medical devices and subject to pre-market notification requirements under section 510(k) of the Federal Food, Drug, and Cosmetic Act (the “FD&C Act”), 21 CFR Part 820 (“Quality System Regulation”), and related laws and regulations.
These Axoguard products are regulated as medical devices and subject to pre-market notification requirements under section 510(k) of the Federal Food, Drug, and Cosmetic Act (the “FD&C Act”), 21 CFR Part 820 QSR, and related laws and regulations.
The RMAT designation provides access to a streamlined approval process for regenerative medicine technologies and informal meetings with the FDA in support of the BLA for Avance Nerve Graft, as appropriate. FDA can withdraw the RMAT designation if the designation criteria are no longer met.
The RMAT designation provides access to a P22 Table of Conten t streamlined approval process for regenerative medicine technologies and informal meetings with the FDA in support of the BLA for Avance Nerve Graft, as appropriate. FDA can withdraw the RMAT designation if the designation criteria are no longer met.
Adoption of the AdvaMed or PhRMA Codes by a medical device manufacturer is voluntary, and while the OIG and other federal and state healthcare regulatory agencies encourage its adoption, they do not view adoption of these codes as proof of compliance with applicable laws.
Adoption of the AdvaMed or PhRMA Codes by a medical device P27 Table of Conten t manufacturer is voluntary, and while the OIG and other federal and state healthcare regulatory agencies encourage its adoption, they do not view adoption of these codes as proof of compliance with applicable laws.
Given the significant additional pre-market and post-market requirements imposed by the E.U. MDR, the overall impact of these new rules could have a material, adverse effect on our international revenue and expenses. P32 Table of Conten t The UK left the E.U. in January 2020.
Given the significant additional pre-market and post-market requirements imposed by the E.U. MDR, the overall impact of these new rules could have a material, adverse effect on our international revenue and expenses. The UK left the E.U. in January 2020.
We believe the Axoguard Nerve Cap can address these painful neuromas and address nerve pain without the complications of traditional methods, including pharmacotherapy and chemical injections, among others. Axoguard Nerve Cap can be used to reduce the development o f symptomatic or painful neuroma formation.
We believe the Axoguard Nerve Cap can address these painful neuromas and P10 Table of Conten t address nerve pain without the complications of traditional methods, including pharmacotherapy and chemical injections, among others. Axoguard Nerve Cap can be used to reduce the development o f symptomatic or painful neuroma formation.
We believe that there is an opportunity to P16 Table of Conten t improve current approaches to peripheral nerve repair and that our approach will solidify our position as a leader in the field of peripheral nerve repair products. The following provides the key elements of our sales and marketing strategy.
We believe that there is an opportunity to improve current approaches to peripheral nerve repair and that our approach will solidify our position as a leader in the field of peripheral nerve repair products. The following provides the key elements of our sales and marketing strategy.
Cook Biotech received the renewal of the CE Mark for Axoguard Nerve Connector and Axoguard Nerve Protector in May 2021. In addition, the new European Medical Device Regulation (“E.U. MDR”) passed in the European Parliament on April 5, 2017, and went into effect on May 25, 2017. The E.U.
Evergen received the renewal of the CE Mark for Axoguard Nerve Connector and Axoguard Nerve Protector in May 2021. In addition, the new European Medical Device Regulation 2017/745 (“E.U. MDR”) passed in the European Parliament on April 5, 2017, and went into effect on May 25, 2017. The E.U.
The EU has adopted numerous directives, regulations, and promulgated voluntary standards regulating the design, manufacture and labeling of, and clinical trials and adverse event reporting for medicinal products including medical devices.
The E.U. has adopted numerous directives, regulations, and promulgated voluntary standards regulating the design, manufacture and labeling of, and clinical trials and adverse event reporting for medicinal products including medical devices.
Nerves that are not repaired or heal abnormally may result in a permanent loss of motor and/or sensory function. Additionally, abnormal healing can form a neuroma that may send altered signals to the brain resulting in the sensation of pain.
Nerves that are not repaired or heal abnormally may result in a permanent loss of motor and/or sensory function. Additionally, abnormal healing can form a neuroma that may send P5 Table of Conten t altered signals to the brain resulting in the sensation of pain.
Cook Biotech is the contract manufacturer for our Axoguard Nerve Cap product, and we are responsible for the regulatory compliance, distribution, and sale of this product. We are the specification developer and authorization holder of the Axoguard HA+ Nerve Protector (HA+) product, which is classified by the FDA as a Class II device.
Evergen is the contract manufacturer for our Axoguard Nerve Cap product, and we are responsible for the regulatory compliance, distribution, and sale of this product. We are the specification developer and authorization holder of the HA+ product, which is classified by the FDA as a Class II device.
The primary objective of the study is to evaluate the safety P27 Table of Conten t and efficacy of Avance Nerve Graft for non-inferiority and if met, superiority, of static two-point discrimination, a measure of sensory function, at twelve months as compared to nerve cuffs.
The primary objective of the study is to evaluate the safety and efficacy of Avance Nerve Graft for non-inferiority and if met, superiority, of static two-point discrimination, a measure of sensory function, at twelve months as compared to nerve cuffs.
Even if a trial is completed, the results of clinical testing may not adequately demonstrate the safety and efficacy of the biological product or device, or may otherwise not be sufficient to obtain FDA approval to market the product in the U.S.
Even if a trial is completed, the results of clinical testing may not P24 Table of Conten t adequately demonstrate the safety and efficacy of the biological product or device, or may otherwise not be sufficient to obtain FDA approval to market the product in the U.S.
We believe that the ideal breast reconstruction should restore breast size, shape, symmetry, and softness, as well as sensation, without the potential risks and comorbidity associated with autogr aft. We believe the Resensation technique incorporates a patient's desire for the opportunity to return sensation to their breasts with a reproducible and efficient surgical approach for reconstructive plastic surgeons.
We believe that the ideal breast reconstruction should restore breast size, shape, symmetry, and softness, as well as sensation, without the potential risks and comorbidity associated with autograft. We believe the Resensation technique incorporates a patient's desire for the opportunity to return sensation to their breasts with a reproducible and efficient surgical approach for reconstructive plastic surgery.
Pursuant to the Nerve End Cap Supply Agreement dated June 27, 2017 (the “Supply Agreement”), as amended on April 6, 2020, and August 4, 2023, (the "Amended Supply Agreement"), Cook Biotech is the exclusive contract manufacturer of the Axoguard Nerve Cap and both parties have provided the other party the necessary licenses to their technologies for operation of the Amended Supply Agreement.
Pursuant to the Nerve End Cap Supply Agreement dated June 27, 2017, as amended on April 6, 2020 and August 4, 2023, (the "Amended Supply Agreement"), Evergen is the exclusive contract manufacturer of the Axoguard Nerve Cap and both parties have provided the other party the necessary licenses to their technologies for operation of the Amended Supply Agreement.
In that case, P22 Table of Conten t the IND sponsor and the FDA must resolve any outstanding FDA concerns or questions before clinical trials can proceed. Therefore, submission of an IND may not result in the FDA allowing clinical trials to commence.
In that case, the IND sponsor and the FDA must resolve any outstanding FDA concerns or questions before clinical trials can proceed. Therefore, submission of an IND may not result in the FDA allowing clinical trials to commence.
Products regulated solely under Section 361 of the Public Health Service Act are a product category under close scrutiny by FDA for compliance with the regulatory requirements and potentially subject to regulatory change in the future.
Products regulated solely under Section 361 of the PHS Act are a product category under close scrutiny by the FDA for compliance with the regulatory requirements and are potentially subject to regulatory change in the future.
P12 Table of Conten t Axoguard Nerve Cap Axoguard Nerve Cap is a proprietary porcine submucosa ECM product used to protect a peripheral nerve end and separate the nerve from the surrounding environment to reduce the development of symptomatic or painful neuroma.
Axoguard Nerve Cap Axoguard Nerve Cap is a proprietary porcine submucosa ECM product used to protect a peripheral nerve end and separate the nerve from the surrounding environment to reduce the development of symptomatic or painful neuroma.
CTS also provided services in support of our manufacturing such as routine sterilization of daily supplies, providing disposable supplies and microbial services, and office support. The service fee was based on a per donor batch rate. The CTS facility provides a cost effective, quality controlled and licensed facility.
Solvita also provides services in support of our manufacturing such as routine sterilization of daily supplies, providing disposable supplies and microbial services, and office support. The service fee is based on a per donor batch rate. The Solvita facility provides a cost effective, quality controlled and licensed facility.
It is responsible for the scientific evaluation, supervision, and safety monitoring of medicines for human and veterinary use in the EU. The EMA serves the EU and three countries from the European Economic Area (EEA)—Iceland, Norway, and Liechtenstein.
It is responsible for the scientific evaluation, supervision, and safety monitoring of medicines for human and veterinary use in the E.U. The EMA serves the E.U. and three countries from the European Economic Area—Iceland, Norway, and Liechtenstein.
Investigational New Drug (IND) Application for Drugs and Biologics Federal law requires that a new drug be the subject of an approved marketing application and that a biological product be properly licensed before each is introduced or delivered for introduction into interstate commerce.
P19 Table of Conten t Investigational New Drug Application for Drugs and Biologics Federal law requires that a new drug be the subject of an approved marketing application and that a biological product be properly licensed before each is introduced or delivered for introduction into interstate commerce.
Clinical trials for biological products require the submission and FDA acceptance of an IND and clinical trials for medical devices require the submission and FDA approval of an Investigational Device Exemption ("IDE") application unless the device regulations provide for an exemption from the IDE requirement.
Clinical trials for biological products require the submission and FDA acceptance of an IND and clinical trials for medical devices require the submission and FDA approval of an Investigational Device Exemption ("IDE") application unless the device regulations provide for an exemption from the IDE P23 Table of Conten t requirement.
P7 Table of Conten t In addition, compression on a nerve, blunt force trauma or other physical irritations to a nerve can cause nerve damage that may alter the signal conduction of the nerve, result in pain, and may, in some instances, require surgical intervention to address the resulting nerve compression.
In addition, compression on a nerve, blunt force trauma or other physical irritations to a nerve can cause nerve damage that may alter the signal conduction of the nerve, resulting in pain, and may, in some instances, require surgical intervention to address the resulting nerve compression.
The Distribution Agreement terminates on December 31, 2030. Although the agreement requires certain minimum purchases, through mutual agreement, the parties have not established such minimums and to date have not enforced such provision. The Distribution Agreement also establishes a formula for the transfer cost of the Axoguard Nerve Connector and Axoguard Nerve Protector.
Although the agreement requires certain minimum purchases, through mutual agreement, the parties have not established such minimums and to date have not enforced such provision. The Distribution Agreement also establishes a formula for the transfer cost of the Axoguard Nerve Connector and Axoguard Nerve Protector.

… 184 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

139 edited+30 added−21 removed271 unchanged
We continue to actively monitor the impact of various macroeconomic trends, including high rates of inflation, increasing interest rates, increasing labor costs, supply chain disruptions, labor shortages and, geopolitical instability on our business. We have experienced increased costs consistent with rising interest rates, and inflationary pressures.
We continue to actively monitor the impact of various macroeconomic trends, including high rates of inflation, interest rates, increasing labor costs, supply chain disruptions, labor shortages and, geopolitical instability on our business. We have experienced increased costs consistent with rising interest rates, and inflationary pressures.
However, there are materials within the manufacturing and production process that come from single suppliers, some of which are outside of the U.S., or certain supplies may be difficult to procure due to supply chain shortages or changes in global trade regulations.
However, there are materials within the manufacturing and production process that come from single suppliers, some of which are outside of the U.S., or certain supplies which may be difficult to procure due to supply chain shortages or changes in global trade regulations.
For the CE Mark, the Axoguard Nerve Protector indication is the same; however, for Axoguard Nerve Connector, the indication is more specific - “The Axoguard Nerve Connector is indicated for the repair of peripheral nerve discontinuities with gaps up to 5 mm.” We are the authorization holder of the Axoguard Nerve Cap and Axoguard HA+ Nerve Protector.
For the CE Mark, the Axoguard Nerve Protector indication is the same; however, for Axoguard Nerve Connector, the indication is more specific - “The Axoguard Nerve Connector is indicated for the repair of peripheral nerve discontinuities with gaps up to 5 mm.” We are the authorization holder of the Axoguard Nerve Cap and HA+.
The first regulation requires that companies that produce and distribute HCT/Ps register with the FDA. The second regulation provides criteria that must be met for donors to be eligible to donate tissues and is referred to as the “Donor Eligibility” rule.
The first regulation requires companies that produce and distribute HCT/Ps register with the FDA. The second regulation provides criteria that must be met for donors to be eligible to donate tissues and is referred to as the “Donor Eligibility” rule.
To date, we have focused our commercialization efforts in the U.S., except for minor revenue in certain foreign countries. We intend to expand distribution and sales outside the U.S. and will need to comply with applicable foreign regulatory requirements, including obtaining the requisite approvals to do so. The regulatory environment for our portfolio of products is complex.
To date, we have focused our commercialization efforts in the U.S., except for minor revenue in certain international countries. We intend to expand distribution and sales outside the U.S. and will need to comply with applicable foreign regulatory requirements, including obtaining the requisite approvals to do so. The regulatory environment for our portfolio of products is complex.
Because of the absence of a harmonized regulatory framework and the proposed regulation for advanced therapy medicinal products in the E.U., as well as for other countries, the approval process for human derived cell or tissue based medical products may be extensive, lengthy, expensive, and unpredictable.
Because of the absence of a fully harmonized regulatory framework and the proposed regulation for advanced therapy medicinal products in the E.U., as well as for other countries, the approval process for human derived cell or tissue based medical products may be extensive, lengthy, expensive, and unpredictable.
Macroeconomic factors could cause disruptions in the supply chain and impair our ability to obtain the materials needed for our product line. We do not have written contracts that guarantee supply with any of our suppliers, and at any time they could stop supplying our orders.
Macroeconomic factors could cause disruptions in the supply chain and impair our ability to obtain the materials needed for our product line. We do not have written contracts that guarantee supply with our suppliers, and at any time they could stop supplying our orders.
Limiting and/or restricting the use of certain personal data and information, as well as added transparency obligations to data subjects is becoming an increasing focus as evidenced by the implementation of the California Consumer Privacy Act (“CCPA”) which became effective on January 1, 2020.
Limiting and/or restricting the use of certain personal data and information, as well as added transparency obligations to data subjects is becoming an increasing focus as evidenced by the implementation of the California Consumer Privacy Act which became effective on January 1, 2020.
Our success is dependent on continued acceptance of our products by the medical community, which will depend on our ability to demonstrate that our products are an attractive alternative to existing or new nerve reconstruction treatment options, including both surgical techniques and products.
Our success will be dependent on continued acceptance of our products by the medical community. Our success is dependent on continued acceptance of our products by the medical community, which will depend on our ability to demonstrate that our products are an attractive alternative to existing or new nerve reconstruction treatment options, including both surgical techniques and products.
When our products are used in the operating room of a hospital, they are commonly treated as general supplies utilized in surgery, and the cost is included in payment to the facility for the procedure.
When our products are used in the operating room of a hospital, they are currently commonly treated as general supplies utilized in surgery, and the cost is currently included in payment to the facility for the procedure.
The trading price of our common stock has experienced volatility and is likely to continue to be volatile in response to a number of factors including, without limitation, the following: • Fluctuations in price and volume due to investor speculation, including short sales, social media speculation and other factors that may not be tied to our financial performance; • Our performance in the execution of our business plan; • Financial viability; • Actual or anticipated variations in our operating results; • Announcements of developments by us or our competitors; • Market conditions in our industry; • Announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; P53 Table of Conten t • Adoption of new accounting standards affecting our industry; • Additions or departures of key personnel; • Introduction of new products by us or our competitors; • Sales of our common stock or other securities in the open market; • Regulatory developments in both the U.S. and foreign countries; • Performance of products sold and advertised by licensees in the marketplace; • Economic and other external factors; • Period-to-period fluctuations in financial results; and • Other events or factors, including the other factors described in this “Risk Factors” section, many of which are beyond our control.
The trading price of our common stock has experienced volatility and is likely to continue to be volatile in response to a number of factors including, without limitation, the following: • Fluctuations in price and volume due to investor speculation, including short sales, social media speculation and other factors that may not be tied to our financial performance; • Our performance in the execution of our business plan; • Financial viability; • Actual or anticipated variations in our operating results; • Announcements of developments by us or our competitors; • Market conditions in our industry; • Announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • Adoption of new accounting standards affecting our industry; • Additions or departures of key personnel; • Introduction of new products by us or our competitors; • Sales of our common stock or other securities in the open market; • Regulatory developments in both the U.S. and foreign countries; • Performance of products sold and advertised by licensees in the marketplace; • Economic and other external factors; • Period-to-period fluctuations in financial results; and • Other events or factors, including the other factors described in this “Risk Factors” section, many of which are beyond our control.
We estimate that commercial payors covering a significant number of U.S. covered lives have legacy non-coverage policies relating to our Avance Nerve Graft and our Axoguard product lines, designating these products investigational or experimental. Some commercial payors do not currently cover or reimburse our products because they have determined insufficient evidence of favorable clinical outcomes is available.
We estimate that commercial payors covering a significant number of U.S. covered lives have legacy non-coverage policies relating to our Avance Nerve Graft and our Axoguard Product Line, designating these products investigational or experimental. Some commercial payors do not currently cover or reimburse our products because they have determined insufficient evidence of favorable clinical outcomes is available.
Future acquisitions, joint ventures or minority equity investments by us could result in the following, any of which could seriously harm our results of operations or the price of our stock: • issuance of equity securities that would dilute our current shareholders’ percentages of ownership; • large one-time write-offs or equity investment impairment write-offs; • incurrence of debt and contingent liabilities; • difficulties in the assimilation and integration of operations, personnel, technologies, products and information systems of the acquired companies; • inability to realize cost efficiencies or synergies, thereby incurring higher operating expenditures as a result of the acquisition; • diversion of management’s attention from other business concerns; • contractual disputes; • risks of entering geographic and business markets in which we have no or only limited prior experience; and • potential loss of key employees of acquired organizations.
Future acquisitions, joint ventures or minority equity investments by us could result in the following, any of which could seriously harm our results of operations or the price of our stock: • issuance of equity securities that would dilute our current shareholders’ percentages of ownership; • large one-time write-offs or equity investment impairment write-offs; • incurrence of debt and contingent liabilities; • difficulties in the assimilation and integration of operations, personnel, technologies, products and information systems of the acquired companies; • inability to realize cost efficiencies or synergies, thereby incurring higher operating expenditures as a result of the acquisition; • diversion of management’s attention from other business concerns; • contractual disputes; • risks of entering geographic and business markets in which we have no or only limited prior experience; and P41 Table of Conten t • potential loss of key employees of acquired organizations.
We cannot completely eliminate the risk of errors, defects or failures and could experience quality system issues where corrective actions must be taken. In addition, we may experience difficulties in scaling-up processing of our Avance products, including problems related to yields, quality control and assurance, tissue availability, adequacy of control policies and procedures, and lack of skilled personnel.
We cannot completely eliminate the risk of errors, defects or failures and could experience quality system issues where corrective actions must be taken. In addition, we may experience difficulties in scaling-up processing of our Avance product, including problems related to yields, quality control and assurance, tissue availability, adequacy of control policies and procedures, and lack of skilled personnel.
We cannot ensure that: • We, or our licensors, were the first to make the inventions covered by each of our patents; • We, or our licensors, were the first to file patent applications for these inventions; • Others will not independently develop similar or alternative technologies or duplicate any of our technologies; • Any of our pending patent applications will result in issued patents; P50 Table of Conten t • Any of our issued patents or those of our licensors are valid and enforceable; • Any patents issued to us, or our collaborators will provide any competitive advantages or will not be challenged by third parties; • We will develop additional proprietary technologies that are patentable; • The patents of others will not have a material adverse effect on our business rights; or • The measures we rely on to protect our IP underlying our products are adequate to prevent third parties from using, disclosing, or misappropriating that IP, all of which could harm our ability to compete in the market.
We cannot ensure that: • We, or our licensors, were the first to make the inventions covered by each of our patents; • We, or our licensors, were the first to file patent applications for these inventions; • Others will not independently develop similar or alternative technologies or duplicate any of our technologies; • Any of our pending patent applications will result in issued patents; • Any of our issued patents or those of our licensors are valid and enforceable; • Any patents issued to us, or our collaborators will provide any competitive advantages or will not be challenged by third parties; • We will develop additional proprietary technologies that are patentable; • The patents of others will not have a material adverse effect on our business rights; or • The measures we rely on to protect our IP underlying our products are adequate to prevent third parties from using, disclosing, or misappropriating that IP, all of which could harm our ability to compete in the market.
Avance Nerve Graft is distributed in Canada, the UK, and certain other countries. We received approval to distribute Avance Nerve Graft in Germany in December 2019. Avance use in Spain currently requires approval for each case to be approved by tissue authorities under an alternative therapies designation.
Avance Nerve Graft is distributed in Canada, the UK, and certain other countries. We received approval to distribute Avance Nerve Graft in Germany in December 2019. Avance Nerve Graft use in Spain currently requires approval for each case to be approved by tissue authorities under an alternative therapy designation.
In Europe, E.U. member states and other foreign jurisdictions, including Switzerland, have adopted data protection laws and regulations which impose significant compliance obligations. Moreover, the collection and use of personal health data in the E.U. is governed by the European Union General Data Protection Regulation (“GDPR”).
In Europe, E.U. member states and other foreign jurisdictions, including Switzerland, have adopted data protection laws and regulations which impose significant compliance obligations. Moreover, the collection and use of personal health data in the E.U. is governed by the E.U. General Data Protection Regulation (“GDPR”).
Further, if these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, need to be replaced, or the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our non-clinical development activities or clinical trials may be extended, delayed, suspended or terminated, and we would not be able to obtain regulatory approval for our products on a timely basis, if at all, and our business, results of operations, financial condition, and prospects would be adversely affected.
Further, if these third parties do not successfully carry out their contractual duties or regulatory P52 Table of Conten t obligations or meet expected deadlines, need to be replaced, or the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our non-clinical development activities or clinical trials may be extended, delayed, suspended or terminated, and we would not be able to obtain regulatory approval for our products on a timely basis, if at all, and our business, results of operations, financial condition, and prospects would be adversely affected.
Although some payors consider Avance Nerve Graft and our Axoguard product lines investigational or experimental at this time, these payors may in the future determine sufficient evidence has been developed to cover and reimburse our products and related procedures.
Although some payors consider Avance Nerve Graft and our Axoguard Product Line investigational or experimental at this time, these payors may in the future determine sufficient evidence has been developed to cover and reimburse our products and related procedures.
The FDA could take negative action on the BLA or could approve the BLA but restrict the Avance Nerve Graft labeling if the FDA does not agree with the data is sufficiently supportive of the application. Restrictions to our labeling could have an adverse effect on Avance Nerve Graft commercialization.
The FDA could take negative action on the BLA or could approve the BLA but restrict the Avance Nerve Graft labeling if the FDA does not agree that the data is sufficiently supportive of the application. Restrictions to our labeling could have an adverse effect on Avance Nerve Graft commercialization.
Some state laws require pharmaceutical or device companies to comply with the industry's voluntary compliance guidelines (the PhRMA Code and AdvaMed Code) and the relevant compliance program guidance promulgated by the federal government (HHS-OIG) in addition to other requirements, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
Some state laws require pharmaceutical or device companies to comply with the industry's voluntary compliance guidelines (the PhRMA Code and AdvaMed Code) and the relevant compliance program guidance promulgated by the OIG in addition to other requirements, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
Cyber-attacks, intrusions, or other breaches could adversely impact our business, results of operations, financial condition, and prospects and potentially subject us to fines and penalties. In the U.S., federal and state privacy and security laws require certain of our operations to protect the confidentiality of personal information, including patient medical records and other health information.
Cyberattacks, intrusions, or other breaches could adversely impact our business, results of operations, financial condition, and prospects and potentially subject us to fines and penalties. In the U.S., federal and state privacy and security laws require certain of our operations to protect the confidentiality of personal information, including patient medical records and other health information.
Cook Biotech has also obtained a 510(k) pre-market clearance for Axoguard Nerve Protector for the repair of peripheral nerve damage in which there is no gap or where a gap closure is achieved by flexion of the extremity. In countries where Axoguard is marketed, Cook Biotech has obtained regulatory clearance with the same indications except for Europe and the UK.
Evergen has also obtained a 510(k) pre-market clearance for Axoguard Nerve Protector for the repair of peripheral nerve damage in which there is no gap or where a gap closure is achieved by flexion of the extremity. In countries where Axoguard is marketed, Evergen has obtained regulatory clearance with the same indications except for Europe and the UK.
We are dependent on our relationships with independent agencies to generate a material portion of our revenue. We derive material revenue through our relationships with independent agencies. In 2023, approximately 10% of gl obal product revenue was generated through independent agencies.
We are dependent on our relationships with independent agencies to generate a material portion of our revenue. We derive material revenue through our relationships with independent agencies. In 2024, approximately 10% of gl obal product revenue was generated through independent agencies.
Risks Related to Financing Our Business Our credit facility and payment obligations under the Revenue Participation Agreement with Oberland Capital contain operating and financial covenants that restrict our business and financing activities, require cash payments over an extended period of time and are subject to acceleration in specified circumstances, which may result in Oberland Capital taking possession and disposing of any collateral.
Risks Related to Financing Our Business Our credit facility and payment obligations under the Revenue Participation Agreement with Oberland Capital contain operating and financial covenants that restrict our business and financing activities, require cash payments over an P55 Table of Conten t extended period of time and are subject to acceleration in specified circumstances, which may result in Oberland Capital taking possession and disposing of any collateral.
Although the Avance Nerve Graft product has not yet been approved by the FDA through a BLA, it is currently distributed under the controls applicable to an HCT/P regulated under section 361 of the Public Health Service Act and 21 CFR Part 1271 of FDA’s regulations, subject to FDA’s enforcement discretion and our compliance with a transition plan established by the FDA.
Although the Avance Nerve Graft product has not yet been approved by the FDA through a BLA, it is currently distributed under the controls applicable to an HCT/P regulated under section 361 of the PHS Act and 21 CFR Part 1271 of FDA’s regulations, subject to FDA’s enforcement discretion and our compliance with a transition plan established by the FDA.
Although the Avance Nerve Graft product has not yet been approved by FDA through a BLA, FDA outlined a transition plan subject to FDA enforcement discretion, that we: (1) transition to compliance with section 501(a)(2)(B) of the FD&C Act, the cGMP regulations in 21 CFR Parts 210 and 211 and the applicable regulations and standards in 21 CFR Parts 600-610 prior to initiation of a phase 3 clinical trial designed to demonstrate the safety, purity, and potency of Avance Nerve Graft; (2) conduct a phase 3 clinical trial to demonstrate safety, purity, and potency of Avance Nerve Graft under an SPA; (3) continue to comply with the requirements of 21 CFR Part 1271; and (4) exercise due diligence in executing the transition plan.
Although the Avance Nerve Graft product has not yet been approved by the FDA through a BLA, the FDA outlined a transition plan subject to FDA enforcement discretion, that we: (i) transition to compliance with section 501(a)(2)(B) of the FD&C Act, the cGMP regulations in 21 CFR Parts 210 and 211 and the applicable regulations and standards in 21 CFR Parts 600-610 prior to initiation of a phase 3 clinical trial designed to demonstrate the safety, purity, and potency of Avance Nerve Graft; (ii) conduct a phase 3 clinical trial to demonstrate safety, purity, and potency of Avance Nerve Graft under an SPA; (iii) continue to comply with the requirements of 21 CFR Part 1271; and (iv) exercise due diligence in executing the transition plan.
In the U.S., Cook Biotech has obtained a 510(k) pre-market clearance for Axoguard Nerve Connector from the FDA for porcine (pig) small intestine submucosa for the repair of peripheral nerve transections where gap closure can be achieved by flexion of the extremity.
In the U.S., Evergen has obtained a 510(k) pre-market clearance for Axoguard Nerve Connector from the FDA for porcine (pig) small intestine submucosa for the repair of peripheral nerve transections where gap closure can be achieved by flexion of the extremity.
Other federal, state, or foreign governmental authorities might also take action if they consider our promotion or training materials to constitute promotion of an uncleared or unapproved use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement, or exclusion from participation in federal health programs.
Other federal, state, or foreign governmental authorities might also take action if they consider our promotion or training materials to constitute promotion of an uncleared or unapproved use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting P48 Table of Conten t false claims for reimbursement, or exclusion from participation in federal health programs.
Any failure by us to maintain or protect our information technology systems and data integrity could result in the unauthorized access to patient data and personally identifiable information, theft of intellectual property or other misappropriation of assets, or otherwise compromise our confidential or proprietary information and disrupt our operations.
Any failure by us to maintain or protect our information technology systems and data integrity could result in the unauthorized access to patient data and personally identifiable information, theft of IP or other misappropriation of assets, or otherwise compromise our confidential or proprietary information and disrupt our operations.
If we are unable to establish new agency relationships or renew certain current distribution agreements on commercially acceptable terms, our business, results of operations, financial condition, and prospects could be materially and adversely impacted. If we do not manage product inventory in an effective and efficient manner, it could adversely affect profitability.
If we are unable to establish new agency relationships or renew certain current distribution agreements on commercially P40 Table of Conten t acceptable terms, our business, results of operations, financial condition, and prospects could be materially and adversely impacted. If we do not manage product inventory in an effective and efficient manner, it could adversely affect profitability.
These delays may limit our ability to meet demand for our products and delay our clinical trials, which would have a material adverse impact on our business, results of operations, financial condition, and prospects. Technological change and competition for newly developed products could reduce demand for our products. P39 Table of Conten t The medical technology industry is intensely competitive.
These delays may limit our ability to meet demand for our products and delay our clinical trials, which would have a material adverse impact on our business, results of operations, financial condition, and prospects. Technological change and competition for newly developed products could reduce demand for our products. The medical technology industry is intensely competitive.
We are required to perform a clinical trial for our Avance Nerve Graft under FDA’s statutory requirements to obtain approval of a BLA for the product.
We were required to perform a clinical trial for our Avance Nerve Graft under FDA’s statutory requirements to obtain approval of a BLA for the product.
High profile security breaches leading to unauthorized release of sensitive information have occurred with increasing frequency at a number of major U.S. companies, despite widespread recognition of the cyber-attack threat and improved data protection methods.
High profile security breaches leading to unauthorized release of sensitive information have occurred with increasing frequency at a number of major U.S. companies, despite widespread recognition of the cyberattack threat and improved data protection methods.
For example, a portion of our cash flow from operations will be needed to make payments to Oberland Capital and will not be available to fund P52 Table of Conten t future operations. Additionally, we may have increased vulnerability to adverse general economic and industry conditions. Payment requirements under the credit facility and RPA will increase our cash outflows.
For example, a portion of our cash flow from operations will be needed to make payments to Oberland Capital and will not be available to fund future operations. Additionally, we may have increased vulnerability to adverse general economic and industry conditions. Payment requirements under the credit facility and RPA will increase our cash outflows.
We are governed by the provisions of Sections 302A.671, 302A.673 and 302A.675 of the Minnesota Business Corporation Act (the “MBCA”). These provisions may discourage a negotiated acquisition or unsolicited takeover of us and deprive our shareholders of an opportunity to sell their common stock at a premium over the market price.
P57 Table of Conten t We are governed by the provisions of Sections 302A.671, 302A.673 and 302A.675 of the Minnesota Business Corporation Act (the “MBCA”). These provisions may discourage a negotiated acquisition or unsolicited takeover of us and deprive our shareholders of an opportunity to sell their common stock at a premium over the market price.
Section 302A.675 does not apply if a committee of our Board of Directors consisting of all of its disinterested directors (excluding its current and former officers) approves the proposed acquisition before any shares are acquired pursuant to the earlier tender offer. P54 Table of Conten t We are subject to legal proceedings from time to time.
Section 302A.675 does not apply if a committee of our Board of Directors consisting of all of its disinterested directors (excluding its current and former officers) approves the proposed acquisition before any shares are acquired pursuant to the earlier tender offer. We are subject to legal proceedings from time to time.
We have obtained 510(k) pre-market clearance for Axoguard Nerve Cap, indicated to protect a peripheral nerve end and to separate the nerve from surrounding environment to reduce the development of symptomatic or painful neuroma.
We have obtained 510(k) pre-market clearance for Axoguard Nerve Cap, indicated to protect a peripheral nerve end and to separate the nerve from surrounding environment to reduce the development of symptomatic or painful neuroma. We have obtained two 510(k) pre-market clearances for HA+.
Economic conditions, such as rising inflation, higher interest rates, increasing labor costs, supply chain pressures, changes in regulatory laws and monetary exchange rates, and government fiscal policies, can also have a significant effect on the cost of P37 Table of Conten t operations including the cost of materials and labor, as well as the interest on our debt.
Economic conditions, such as rising inflation, higher interest rates, increasing labor costs, supply chain pressures, changes in regulatory laws and monetary exchange rates, and government fiscal policies, can also have a significant effect on the cost of operations, including the cost of materials and labor, as well as the interest on our debt.
The transition to a permanent CEO may cause disruption to our business due to, among other things, diverting management’s attention away from the Company’s financial and operational goals or causing a deterioration in morale. During the transition period there may be uncertainty among investors, customers, and other third parties, concerning our future direction and performance.
The transitions may cause additional disruption to our business due to, among other things, diverting management’s attention away from the Company’s financial and operational goals or causing a deterioration in morale. During the transition period there may be uncertainty among investors, customers, and other third parties, concerning our future direction and performance.
Additionally, initiatives sponsored by government agencies, legislative bodies, and the private sector in the U.S. and elsewhere to limit the growth of healthcare costs, especially for drugs and biologics, including price regulation and policies P49 Table of Conten t regarding generic drugs and biosimilars, are ongoing in markets where we do business.
Additionally, initiatives sponsored by government agencies, legislative bodies, and the private sector in the U.S. and elsewhere to limit the growth of healthcare costs, especially for drugs and biologics, including price regulation and policies regarding generic drugs and biosimilars, are ongoing in markets where we do business.
During this same timeframe, reimbursement rates for procedures involving conduits and connectors also increased 35% in hospital outpatient centers and 49% in ambulatory surgery centers. While Medicare patients represent a relatively small percentage of trauma cases, CMS’ direction often influences commercial payor policies and payments.
During this same timeframe, reimbursement rates for procedures involving conduits and connectors also increased 40% in hospital outpatient centers and 70% in ambulatory surgery centers. While Medicare patients represent a relatively small percentage of trauma cases, CMS’ direction often influences commercial payor policies and payments.
We are highly dependent on our ability to recover human peripheral nerve tissue from tissue donors for our Avance Nerve Graft product. The availability of acceptable donors is relatively limited, and this availability is impacted by regulatory changes, P41 Table of Conten t general public opinion of the donation process, and our reputation for handling the donation process.
We are highly dependent on our ability to recover human peripheral nerve tissue from tissue donors for our Avance Nerve Graft product. The availability of acceptable donors is relatively limited, and this availability is impacted by regulatory changes, general public opinion of the donation process, and our reputation for handling the donation process.
If any of these actions were successful, in addition to any P51 Table of Conten t potential liability for damages, we could be required to obtain a license to continue to manufacture or market the affected product, in which case we may be required to pay substantial royalties or grant cross-licenses to our patents.
If any of these actions were successful, in addition to any potential liability for damages, we could be required to obtain a license to continue to manufacture or market the affected product, in which case we may be required to pay substantial royalties or grant cross-licenses to our patents.
We have historically incurred net losses and operated with negative cash flow from our operations and may continue to incur losses and operate with negative cash flow from operations for the foreseeable future. We have incurred net losses of $21.7 million, $28.9 million and $27.0 million for the years ended December 31, 2023, 2022 and 2021, respectively.
We have historically incurred net losses and operated with negative cash flow from our operations and may continue to incur losses and operate with negative cash flow from operations for the foreseeable future. We have incurred net losses of $10.0 million, $21.7 million, and $28.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.
For P38 Table of Conten t example, although our Avance Nerve Graft follows stringent safety standards, including sterilization by gamma irradiation, we believe that a small portion of the medical community has lingering concerns over the risk of disease transmission through the use of allografts in general.
For example, although our Avance Nerve Graft follows stringent safety standards, including sterilization by gamma irradiation, we believe that a small portion of the medical community has lingering concerns over the risk of disease transmission through the use of allografts in general.
Cyber-attacks and other tactics designed to gain access to and exploit sensitive information by breaching mission critical systems of large organizations are constantly evolving and have been increasing in sophistication in recent years.
Cyberattacks and other tactics designed to gain access to and exploit sensitive information by breaching mission critical systems of large organizations are constantly evolving and have been increasing in sophistication in recent years.
If the medical community and patients do not ultimately accept our products as safe and effective or we are unable to raise awareness of our products and processes, our ability to sell the products may be materially and adversely affected, and our business, results of operations, financial condition, and prospects may be adversely affected.
If the medical community and patients do not ultimately accept our products as safe and effective or P37 Table of Conten t we are unable to raise awareness of our products and processes, our ability to sell the products may be materially and adversely affected, and our business, results of operations, financial condition, and prospects may be adversely affected.
If one or more of our executives or other key personnel P55 Table of Conten t are unable or unwilling to continue in their present positions, or if we are unable to attract and retain high quality executives or key personnel in the future, our business, results of operations, financial conditions, and prospects may be adversely affected.
If one or more of our executives or other key personnel are unable or unwilling to continue in their present positions, or if we are unable to attract and retain high quality executives or key personnel in the future, our business, results of operations, financial conditions, and prospects may be adversely affected.
The federal physician payment transparency requirements, sometimes referred to as the Physician Payments Sunshine Act, or the Sunshine Act, was created under the Affordable Care Act ("ACA").
The federal physician payment transparency requirements, sometimes referred to as the Physician Payments Sunshine Act ("the Sunshine Act"), was created under the Affordable Care Act.
Similar to other companies, the size and complexity of our information technology systems makes them vulnerable to a cyber-attack, malicious intrusion, breakdown, destruction, loss of data privacy, or other significant disruption.
Similar to other companies, the size and complexity of our information technology systems makes them vulnerable to a cyberattack, malicious intrusion, breakdown, destruction, loss of data privacy, or other significant disruption.
We believe that near-term growth can be supported first through expanded productivity of our existing sales force with existing accounts and second by adding additional customers. We expect the number of direct sales professionals to increase P36 Table of Conten t over time.
We believe that near-term growth can be supported first through expanded productivity of our existing sales force with existing accounts and second by adding additional customers. We expect the number of direct sales professionals to increase over time.
While to date we have not experienced a significant data loss, significant compromise or any material financial losses related to P58 Table of Conten t cybersecurity attacks, our systems, those of our customers, and those of our third-party service providers are under constant threat.
While to date we have not experienced a significant data loss, significant compromise or any material financial losses related to cybersecurity attacks, our systems, those of our customers, and those of our third-party service providers are under constant threat.
P47 Table of Conten t If our products cause or contribute to a death, a serious injury, or any adverse reaction involving a communicable disease, or malfunction in certain ways, we will be subject to reporting regulations, which can result in voluntary corrective actions or agency enforcement actions. See “Business — Regulation — Education Grants, U.S.
If our products cause or contribute to a death, a serious injury, or any adverse reaction involving a communicable disease, or malfunction in certain ways, we will be subject to reporting regulations, which can result in voluntary corrective actions or agency enforcement actions. See “Business — Regulation — Education Grants, U.S.
As of December 31, 2023, we had an accumulated deficit of approximately $281.3 million. If revenue does not increase as anticipated, then we will continue to incur net losses and experience negative cash flows and adverse operating conditions.
As of December 31, 2024, we had an accumulated deficit of approximately $291.3 million. If revenue does not increase as anticipated, then we will continue to incur net losses and experience negative cash flows and adverse operating conditions.
The loss of accreditation or registration could keep us from selling and distributing our products, which may have negative effects on our business, results of operations, financial condition, and prospects. Defective products could lead to recall or other negative business conditions.
The loss of accreditation or registration could keep us from selling and distributing our products, which may have negative effects on our business, results of operations, financial condition, and prospects. P51 Table of Conten t Defective products could lead to recall or other negative business conditions.
We are exposed to the risk of changes in social, geopolitical, legal, and economic conditions. The global economy has been, and may continue to be, negatively impacted by Russia’s invasion of Ukraine and illegal annexation of Ukrainian P56 Table of Conten t territories.
We are exposed to the risk of changes in social, geopolitical, legal, and economic conditions. The global economy has been, and may continue to be, negatively impacted by Russia’s invasion of Ukraine and illegal annexation of Ukrainian territories.
In addition, any products regulated solely under Section 361 of the Public Health Service Act are a product category under close scrutiny by FDA for compliance with the regulatory requirements and potentially subject to regulatory change in the future.
In addition, any products regulated solely under Section 361 of the PHS Act are a product category under close scrutiny by FDA for compliance with the regulatory requirements and potentially subject to regulatory change in the future.
Any failure in the physical infrastructure of our facilities, including the APC Facility and the facility we license from CTS, could lead to significant costs and disruptions that could reduce our revenue and harm both our business reputation and financial results.
Any failure in the physical infrastructure of our facilities, including the APC Facility and the facility we lease from Solvita, could lead to significant costs and disruptions that could reduce our revenue and harm both our business reputation and financial results.
We and our CROs are required to comply with all applicable regulations governing clinical research, including good clinical practice ( “ GCP ” ). The FDA enforces these regulations through periodic inspections of trial sponsors, principal investigators, CROs and trial sites.
We and our CROs are required to comply with all applicable regulations governing clinical research, including Good Clinical Practices. The FDA enforces these regulations through periodic inspections of trial sponsors, principal investigators, CROs and trial sites.
We are dependent on internal information and telecommunications systems, and any failure of these systems, including system security breaches, data protection breaches or other cybersecurity attacks, may negatively impact our business and results of operations.
P43 Table of Conten t We are dependent on internal information and telecommunications systems, and any failure of these systems, including system security breaches, data protection breaches or other cybersecurity attacks, may negatively impact our business and results of operations.
The Axoguard Nerve Connector and Nerve Protector CE Mark has been renewed as of May 2021 by Cook Biotech. Further, we will need to either enter into distribution agreements with third parties or develop a direct sales force in foreign markets.
The Axoguard Nerve Connector and Axoguard Nerve Protector CE Mark has been renewed as of May 2021 by Evergen. Further, we will need to either enter into distribution agreements with third parties or develop a direct sales force in international markets.
Together, the three basic requirements of 21 CFR Part 1271 are P48 Table of Conten t designed to ensure that sound, high quality practices are followed to reduce the risk of tissue contamination and of communicable disease transmission to recipients.
Together, the three basic requirements of 21 CFR Part 1271 are designed to ensure that sound, high quality practices are followed to reduce the risk of tissue contamination and of communicable disease transmission to recipients.
Subject to the FDA’s enforcement discretion, we can commercially distribute Avance Nerve Graft until the FDA makes a final determination on an Avance Nerve Graft BLA submission, assuming we remain in compliance with the transition plan and exercise due diligence in executing the transition P43 Table of Conten t plan.
Subject to the FDA’s enforcement discretion, we can commercially distribute Avance Nerve Graft until the FDA makes a final determination on an Avance Nerve Graft BLA submission, assuming we remain in compliance with the transition plan and exercise due diligence in executing the transition plan.
P46 Table of Conten t The use, misuse or off-label use of our products may harm our reputation and the reputation of our products, which could result in injuries leading to product liability suits, and could be costly to our business, and/or result in FDA sanctions.
The use, misuse or off-label use of our products may harm our reputation and the reputation of our products, which could result in injuries leading to product liability suits, and could be costly to our business, and/or result in FDA sanctions.
Changes in political conditions in China and changes in the state of China-U.S. relations, including the current trade tensions, are difficult to predict and could adversely affect our operations or financial condition.
Changes in political conditions in China and changes in the state of China-U.S. relations, including the P42 Table of Conten t current trade tensions, are difficult to predict and could adversely affect our operations or financial condition.
Neither the occurrence nor the potential impact of risks such as earthquakes, hurricanes, floods and other natural disasters, fire, power shortages, geopolitical unrest, war, terrorist attacks and other hostile acts, epidemics or pandemics such as COVID-19 pandemic, outbreaks of RSV and the flu, nuclear disasters, international hostilities or other criminal activities and other events beyond our control and the control of the third parties on which we depend can be predicted.
Neither the occurrence nor the potential impact of risks such as earthquakes, hurricanes, floods and other natural disasters, fire, power shortages, geopolitical unrest, war, terrorist attacks and other hostile acts, epidemics or pandemics, international hostilities or other criminal activities and other events beyond our control and the control of the third parties on which we depend can be predicted.
Although we believe that our tax estimates are reasonable, due to the complexity of our corporate structure, the multiple intercompany transactions and the various tax regimes, we cannot assure you that a tax audit or tax dispute to which we may be subject will result in a favorable outcome for us.
Internal Revenue Service and by foreign tax jurisdictions. Although we believe that our tax estimates are reasonable, due to the complexity of our corporate structure, the multiple intercompany transactions and the various tax regimes, we cannot assure you that a tax audit or tax dispute to which we may be subject will result in a favorable outcome for us.
If we cannot produce reliable financial reports, investors could lose confidence in our reported financial information, the market price of our common stock could decline significantly, we may be unable to obtain additional financing to operate and expand our business and our business, results of operations, financial condition, and prospects could be adversely impacted. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If we cannot produce reliable financial reports, investors could lose confidence in our reported financial information, the market price of our common stock could decline significantly, we may be unable to obtain additional financing to operate and expand our business and our business, results of operations, financial condition, and prospects could be adversely impacted.
Additionally, in the event that Cook Biotech were to enforce minimum purchase quantities and we fail to reach an agreement as to such minimums, Cook Biotech could terminate the agreement if we fail to generate commercially reasonable sales of Axoguard as measured by sales similar to a competitive product at the same stage in its commercial launch as verified by a mutually acceptable third party.
Additionally, in the event that Evergen were to enforce minimum purchase quantities and we fail to reach an agreement as to such minimums, Evergen could terminate the agreement if we fail to generate commercially reasonable sales of Axoguard Nerve Connector and Axogen Nerve Protector as measured by sales similar to a competitive product at the same stage in its commercial launch as verified by a mutually acceptable third party.
Additionally, approximately 60% of our total revenues are from sales of Avance Nerve Graft, any change in position by the FDA regarding its use of enforcement discretion to permit the sale of Avance Nerve Graft or a negative action on the BLA could have a material negative impact on our revenues and our operations.
Additionally, approximate ly 60% of our total revenues are from sales of Avance Nerve Graft, any change in position by the FDA regarding its use of enforcement disc retion to permit the sale of Avance Nerve Graft or a negative action on the BLA could have a material negative impact on our revenues and our operations.
In partnership with healthcare providers, we are working actively to reverse these non-coverage decisions and have been successful with several regional plans. However, we cannot provide assurance that we will continue to be successful in these efforts.
In partnership with P39 Table of Conten t healthcare providers, we are working actively to reverse these non-coverage decisions and have been successful with several regional plans. However, we cannot provide assurance that we will continue to be successful in these efforts.
Our operating results could be adversely impacted if we are unable to effectively manage and sustain our future growth or scale our operations. There can be no assurance that we will be able to manage our future growth efficiently or profitably.
P36 Table of Conten t Our operating results could be adversely impacted if we are unable to effectively manage and sustain our future growth or scale our operations. There can be no assurance that we will be able to manage our future growth efficiently or profitably.
In addition, we may plan to expand the APC facility or open additional office, lab or distributions space in the future, and our ability to license, renovate, rebuild, or find acceptable service facilities takes a considerable amount of time and expense.
In addition, we may plan to expand the APC facility or open additional office, lab or distributions space in the future, and our ability to license, renovate, rebuild, or find acceptable service facilities takes a considerable amount of time and expense. There may be significant fluctuations in our operating results.
The IRA includes several provisions to lower prescription drug costs for people with Medicare and reduce drug spending by the federal government, including allowing Medicare to negotiate prices for certain prescription drugs, requiring drug manufacturers to pay a rebate to the federal government if prices for single-source drugs and biologics covered under Medicare Part B and nearly all covered drugs under Part D increase faster than the rate of inflation (CPI-U), and limiting out of pocket spending for Medicare Part D enrollees.
The IRA includes several provisions to lower prescription drug costs for people with Medicare and reduce drug spending by the federal government, including allowing Medicare to negotiate prices for certain prescription drugs, requiring drug manufacturers to pay a rebate to the federal government if prices for single-source drugs and biologics covered under Medicare Part B and nearly all covered drugs under Part D increase faster than the rate of inflation based on the consumer price index for all urban consumers, and limiting out of pocket spending for Medicare Part D enrollees.
The price of our common stock could be volatile due to a number of factors, which could lead to losses by investors and costly securities litigation.
P56 Table of Conten t The price of our common stock could be volatile due to a number of factors, which could lead to losses by investors and costly securities litigation.
Risks Related to the Regulatory Environment in which We Operate Our Avance Nerve Graft product is currently distributed pursuant to enforcement discretion and a transition plan with the FDA, however we expect to complete the rolling BLA submission for the Avance Nerve Graft in the third quarter of 2024 .
Risks Related to the Regulatory Environment in which We Operate Our Avance Nerve Graft product is currently distributed pursuant to enforcement discretion and a transition plan with the FDA; however, we completed the rolling BLA submission for Avance Nerve Graft in September of 2024 .
When Avance Nerve Graft and Axoguard P40 Table of Conten t Connector are used in an outpatient setting where the nerve repair is the primary reason for the procedure, facilities may use a Category I CPT code to facilitate payment.
When Avance Nerve Graft and Axoguard Connector are used in an outpatient setting where the nerve repair is the primary reason for the procedure, facilities currently may use a Category I CPT code to facilitate payment.
Any disruption in our ability to generate revenue from the processing, distribution, and sale of products, especially Avance Nerve Graft, will have a material adverse impact on our business, results of operations, financial condition, and prospects. Axoguard Nerve Connector and Axoguard Nerve Protector are only available through the Cook Biotech Distribution Agreement.
Any disruption in our ability to generate revenue from the processing, distribution, and sale of products, especially Avance Nerve Graft, will have a material adverse impact on our business, results of operations, financial condition, and prospects. Axoguard Nerve Connector and Axoguard Nerve Protector are only available through a distribution agreement with Evergen. The Distribution Agreement terminates on December 31, 2030.
Although we believe we could develop or obtain products that would replace the Axoguard products obtained through the Cook Biotech agreements, the loss of the ability to sell the Axoguard products could have a material adverse effect on our business, results of operations, financial condition, and prospects.
Although we believe we could develop or obtain products that would replace the Axoguard P35 Table of Conten t products obtained through the Evergen agreements, the loss of the ability to sell the Axoguard products could have a material adverse effect on our business, results of operations, financial condition, and prospects.

… 110 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

11 edited+1 added−0 removed14 unchanged
Governance The Board, in coordination with the Audit Committee, oversees the management of risks from cybersecurity threats, including the policies, standards, processes and practices that the Company’s management implements to address risks from cybersecurity threats.
Governance The Board, in coordination with the Audit Committee, oversees the effectiveness of management of risks from cybersecurity threats, including the policies, standards, processes and practices that the Company’s management implements to address risks from cybersecurity threats.
The Company's cybersecurity standards and practices follow industry trends, which align with frameworks established by the Center for Internet Security ("CIS").
The Company's cybersecurity standards and practices follow industry trends, which align with frameworks established by the Center for Internet Security.
Cybersecurity threats, resulting from any previous cybersecurity incidents, have not materially affected or are not reasonably likely to affect the Company, including its business strategy, results of operations, or financial condition. P61 Table of Conten t
Cybersecurity threats, resulting from any previous cybersecurity incidents, have not materially affected or are not reasonably likely to affect the Company, including its business strategy, results of operations, or financial condition. P60 Table of Conten t
Through the ongoing communications from these teams, the VP of Information Technology, Security and Business Intelligence and senior leadership monitor the prevention, detection, mitigation and remediation of cybersecurity incidents in real time, and report such incidents to the Audit Committee when appropriate.
Through the ongoing communications from these teams, the Vice President of Information Technology, Security and Business Intelligence and senior leadership monitor the prevention, detection, mitigation and remediation of cybersecurity incidents in real time, and report such incidents to the Audit Committee when appropriate.
The Company approaches cybersecurity threats through a cross-functional approach which endeavors to: (i) identify, prevent and mitigate cybersecurity threats to the Company; (ii) preserve P59 Table of Conten t the confidentiality, security and availability of the information that we collect and store to use in our business; (iii) protecting the Company’s intellectual property; (iv) maintaining the confidence of our customers, clients and business partners; and (v) providing appropriate public disclosure of cybersecurity risks and incidents when required.
The Company approaches cybersecurity threats through a cross-functional approach which endeavors to: (i) identify, prevent and mitigate cybersecurity threats to the Company; (ii) preserve the P58 Table of Conten t confidentiality, security and availability of the information that we collect and store to use in our business; (iii) protecting the Company’s IP; (iv) maintaining the confidence of our customers, clients and business partners; and (v) providing appropriate public disclosure of cybersecurity risks and incidents when required.
The Company’s VP of Information Technology, Security and Business Intelligence has served in various roles in information technology and information security for over 18 years, including Biogen, AstraZeneca, Iron Mountain, and consulting roles at Charles River Labs, Sunovion Pharmaceuticals, Agero and DentaQuest.
The Company’s Vice President of Information Technology, Security and Business Intelligence has served in various roles in information technology and information security for over 18 years, including Biogen, AstraZeneca, Iron Mountain, and consulting roles at Charles River Labs, Sunovion Pharmaceuticals, Agero and DentaQuest.
The Company’s VP of Information Technology, Security and Business Intelligence, in coordination with senior leadership, works collaboratively across the Company to implement a program designed to protect the Company’s information systems from cybersecurity threats and to promptly respond to any cybersecurity incidents.
The Company’s Vice President of Information Technology, Security and Business Intelligence, in coordination with senior leadership, works collaboratively across the Company to implement a program designed to protect the Company’s information systems from cybersecurity threats and to promptly respond to any cybersecurity incidents.
The VP of Information Technology, Security and Business Intelligence works in coordination with senior leadership, which includes our Chief Executive Officer, Chief Financial Officer, and General Counsel.
The Vice President of Information Technology, Security and Business Intelligence works in coordination with senior leadership, which includes our Chief Executive Officer, Chief Financial Officer, and General Counsel.
P60 Table of Conten t The Company’s VP of Information Technology, Security and Business Intelligence is the member of the Company’s management that is principally responsible for overseeing the Company’s cybersecurity risk management program, in partnership with other business leaders across the Company.
P59 Table of Conten t The Company’s Vice President of Information Technology, Security and Business Intelligence is the member of the Company’s management that is principally responsible for overseeing the Company’s cybersecurity risk management program, in partnership with other business leaders across the Company.
Governance: The Board’s oversight of cybersecurity risk management is supported by the Audit Committee, which regularly interacts with the the Company’s VP of Information Technology, Security and Business Intelligence and other members of the cyber team and management.
Governance: The Board’s oversight over the effectiveness of the Company's cybersecurity risk management is supported by the Audit Committee, which regularly interacts with the Company’s Vice President of Information Technology, Security and Business Intelligence and other members of the cyber team and management.
The VP of Information Technology, Security and Business Intelligence holds a MBA from Boston University, a Master’s degree in Electrical and Computer Engineering from Utah State University, and a Bachelor’s degree in Electronics Engineering from Mumbai University. The Company’s Information Technology team has specific professional certifications, and has over 10 years of experience with managing risks arising from cybersecurity threats.
The Vice President of Information Technology, Security and Business Intelligence holds a master's degree in business administration from Boston University, a master’s degree in electrical and computer engineering from Utah State University, and a bachelor’s degree in electronics engineering from Mumbai University.
Added
The Company’s Information Technology team has specific professional certifications and has over 10 years of experience with managing risks arising from cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed1 unchanged
LEGAL PROCEEDINGS Information required by this item is set forth in Note 14 - Commitments and Contingencies of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K and is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES None. P62 Table of Conten t PART II
LEGAL PROCEEDINGS Information required by this item is set forth in Note 15 - Commitments and Contingencies of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K and is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES None. P61 Table of Conten t PART II
(2) Property is collateral to our Credit Facility. (3) Property is encumbered by our CTS Agreement as an embedded lease. (4) Total square feet and utilization varies each month for the use of CTS's clean room/manufacturing, warehousing, and office space in accordance with the CTS Agreement.
(2) Property is collateral to our Credit Facility. (3) Property is encumbered by our Solvita Agreement as an embedded lease. (4) Total square feet and utilization varies each month for the use of Solvita's clean room, manufacturing, warehousing, and office space in accordance with the Solvita Agreement.
PROPERTIES Our material physical properties consisted of the following as of December 31, 2023 Location General Character Total Square Feet Square Feet Utilized Expiration Alachua, Florida (1) Headquarters - General office, warehousing and distribution 19,000 19,000 10/31/2026 Tampa, Florida (1) Headquarters - General office, medical laboratory, and meeting space 75,000 62,500 10/31/2034 Burleson, Texas (1) Facility - Raw material and finished goods warehousing and distribution 15,000 15,000 4/30/2027 10,000 5,000 9/30/2027 Vandalia, Ohio (2) Facility - Clean-room, manufacturing, warehousing, and office space. 107,000 82,500 N/A Dayton, Ohio (3)(4) Facility - Clean-room/manufacturing, warehousing, and office space Varies Varies 12/31/2026 (1) Property is encumbered by a lease agreement and is collateral to our Credit Facility.
PROPERTIES Our material physical properties consisted of the following as of December 31, 2024: Location General Character Total Square Feet Square Feet Utilized Expiration Alachua, Florida (1) Headquarters - General office, warehousing and distribution 19,000 19,000 October 31, 2026 Tampa, Florida (1) Headquarters - General office, medical laboratory, and meeting space 75,000 50,000 October 31, 2034 Burleson, Texas (1) Facility - Raw material and finished goods warehousing and distribution 15,000 15,000 April 30, 2027 10,000 5,000 September 30, 2027 Vandalia, Ohio (2) Facility - Clean-room, manufacturing, warehousing, and office space 107,000 84,000 N/A Dayton, Ohio (3)(4) Facility - Clean-room, manufacturing, warehousing, and office space Varies Varies December 31, 2026 (1) Property is encumbered by a lease agreement and is collateral to our Credit Facility.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−0 removed5 unchanged
Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not repurchase any of our securities in the fourth quarter of 2023. Recent Sales of Unregistered Securities We had no sales of unregistered securities in 2023.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not repurchase any of our securities in the fourth quarter of 2024. Recent Sales of Unregistered Securities We had no sales of unregistered securities in 2024.
Performance Graph The following graph compares the cumulative total shareholder return on our common stock for the period from December 31, 2018, to December 31, 2023 with (i) the Nasdaq Stock Market Biotechnology Index and (ii) the Nasdaq Stock Market Composite Index.
Performance Graph The following graph compares the cumulative total shareholder return on our common stock for the period from December 31, 2019 to December 31, 2024 with (i) the Nasdaq Stock Market Biotechnology Index and (ii) the Nasdaq Stock Market Composite Index.
The graph assumes an investment of $100 in our common stock and the respective indices for the period of December 31, 2018, to December 31, 2023.
The graph assumes an investment of $100 in our common stock and the respective indices for the period of December 31, 2019 to December 31, 2024.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the Nasdaq Capital Market under the symbol “AXGN.” On March 1, 2024, the last reported closing sale price of our common stock on the Nasdaq Capital Market was $10.69 per share.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the Nasdaq Capital Market under the symbol “AXGN.” On February 19, 2025, the last reported closing sale price of our common stock on the Nasdaq Capital Market was $18.68 per share.
Shareholders As of March 1, 2024, we had 43,206,246 shares of common stock outstanding, and approximately 226 common shareholders of record, based upon information received from our stock transfer agent. However, this number does not include beneficial owners whose shares were held of record by nominees or broker dealers. We estimate that there are approximately 11,343 individual owners.
Shareholders As of February 19, 2025, we had 44,343,785 shares of common stock outstanding, and approximately 218 common shareholders of record, based upon information received from our stock transfer agent. However, this number does not include beneficial owners whose shares were held of record by nominees or broker dealers. We estimate that there are approximately 11,964 individual owners.
Added
P62 Table of Conten t ITEM 6. [RESERVED] Not applicable. P63 Table of Conten t

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

50 edited+39 added−26 removed12 unchanged
We believe these accounting policies and the others set forth in Note 2 - Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements Part II Item 8 of this Form 10-K are critical to understanding our results of operations and financial condition.
We believe these accounting policies and the others set forth in Note 2 - Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K are critical to understanding our results of operations and financial condition.
Product development costs include spending for a number of specific programs including the non-clinical expenses related to the BLA for Avance Nerve Graft. Product development expenses represented approximately 60% and 52% of total research and development expense for the years ended December 31, 2023, and 2022, respectively.
Product development costs include spending for a number of specific programs, including the non-clinical expenses related to the BLA for Avance Nerve Graft. Product development costs and expenses represented approximately 60% and 52% of total research and development costs and expenses for the years ended December 31, 2023 and 2022, respectively.
The change was primarily due to the increase in interest expense of $2,211 and other expenses of $208, partially offset by the increase in investment income of $918 and the fair value of the derivative liability of $488.
The increase was primarily due to the increase in interest expense of $2,211 and other expenses of $208, partially offset by the increase in investment income of $918 and the fair value of the derivative liability of $488.
Credit Facilities As of December 31, 2023, we had $50,000 outstanding in indebtedness under a credit facility; $35,000 maturing on June 30, 2027, and 15,000 maturing on June 30, 2028. Quarterly interest only and revenue participation payments are due through each of the maturity dates.
Credit Facilities As of December 31, 2024, we had $50,000 outstanding in indebtedness under a credit facility; $35,000 maturing on June 30, 2027 and $15,000 maturing on June 30, 2028. Quarterly interest only and revenue participation payments are due through each of the maturity dates.
See Note 9 - Long-Term Debt, Net of Debt Discount and Financing Fees and Note 14 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements Part II, Item 8 of this Form 10-K.
See Note 9 - Long-Term Debt, Net of Debt Discount and Financing Fees and Note 15 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements Part II, Item 8 of this Form 10-K.
Sensitivity of Estimate to Change As of December 31, 2023, we have reserved $1,342 for potential losses relating to inventory. If our actual product life cycles, product demand or acceptance of new product introductions are less favorable than projected by management, additional inventory write downs may be required, which could unfavorably affect future operating results.
Sensitivity of Estimate to Change As of December 31, 2024, we have reserved $1,630 for potential losses relating to inventory. If our actual product life cycles, product demand or acceptance of new product introductions are less favorable than projected by management, additional inventory write downs may be required, which could unfavorably affect future operating results.
Product Portfolio • Avance ® Nerve Graft, a biologically active off-the-shelf processed human nerve allograft for bridging severed peripheral nerves without the comorbidities associated with a second surgical site; • Axoguard Nerve Connector ® , a porcine (pig) submucosa extracellular matrix ("ECM") coaptation aid for tensionless repair of severed peripheral nerves; • Axoguard Nerve Protector ® , a porcine submucosa ECM product used to wrap and protect damaged peripheral nerves and reinforce the nerve reconstruction while preventing soft tissue attachments; • Axoguard HA+ Nerve Protector™, is comprised of a processed porcine submucosa ECM base layer with a hyaluronate-alginate gel coating designed to provide short- and long-term protection for peripheral nerve injuries.
Product Portfolio Our platform for peripheral nerve repair features a comprehensive portfolio of products, including: • Avance ® Nerve Graft, a biologically active off-the-shelf processed human nerve allograft for bridging severed peripheral nerves without the comorbidities associated with a second surgical site. • Axoguard Nerve Connector ® , a porcine (pig) submucosa extracellular matrix ("ECM") coaptation aid for tensionless repair of severed peripheral nerves. • Axoguard Nerve Protector ® , a porcine submucosa ECM product used to wrap and protect damaged peripheral nerves and reinforce the nerve reconstruction while preventing soft tissue attachments. • Axoguard HA+ Nerve Protector™, is comprised of a processed porcine submucosa ECM base layer with a hyaluronate-alginate gel coating designed to provide short- and long-term protection for peripheral nerve injuries.
Actual results could differ from our estimates and assumptions, and any such differences could be material to our results of operations and financial condition. P70 Table of Conten t Inventories Description Inventories consist of purchased materials, direct labor and manufacturing overhead, are stated at the lower of cost or net realizable value, as determined by the first-in, first-out method.
Actual results could differ from our estimates and assumptions, and any such differences could be material to our results of operations and financial condition. Inventories Description Inventories consist of purchased materials, direct labor and manufacturing overhead, and are stated at the lower of cost or net realizable value, as determined by the first-in, first-out method.
Liquidity and Capital Resources Our expected future capital requirements may depend on many factors including expanding our customer base and sales force and timing and extent of spending in obtaining regulatory approval and introduction of new products.
Sources of Capital Our expected future capital requirements may depend on many factors including expanding our customer base and sales force and timing and extent of spending in obtaining regulatory approval and introduction of new products.
The increasing need for capital could also make it more difficult to obtain funding through either equity or debt. Should additional capital not become available to us as needed, P69 Table of Conten t we may be required to take certain actions, such as slowing sales and marketing expansion, delaying regulatory approvals, or reducing headcount.
The increasing need for capital could also make it more difficult to obtain funding through either equity or debt. Should additional capital not become available to us as needed, we may be required to take certain actions, such as slowing sales and marketing expansion, delaying regulatory approvals, or reducing headcount.
As of December 31, 2023, we had 1,006 active accounts, an increase of 3.9% from 968 from the prior year and 376 core accounts, an increase of 13.3% from 332 at December 31, 2022.
As of December 31, 2023, we had 1,006 active accounts, an increase of 3.9% from 968 at December 31, 2022 and 376 core accounts, an increase of 13.3% from 332 at December 31, 2022.
Other Income and Expense Total other (expense) income decreased $1,013, or 133.5% to expense of $254 for the year ended December 31, 2023, as compared to income of $759 for the year ended December 31, 2022.
Other (Expense) Income Total other expense increased $1,013, or 133.5%, to expense of $254 for the year ended December 31, 2023, as compared to income of $759 for the year ended December 31, 2022.
Based on current estimates, we believe that our existing cash and cash equivalents and investments, as well as cash provided by sales of our products will allow us to fund our operations through at least through the next 12 months from the issuance of these financial statements.
Based on current estimates, we believe that our existing cash and cash equivalents and investments, as well as cash provided by sales of our products will allow us to fund our operations through at least the next twelve months from the date of issuance of the accompanying financial statements.
Embedded derivatives that are not clearly and closely related to the debt host are bifurcated and are recognized at fair value on the consolidated balance sheet with changes in fair value recognized as either a gain or loss on the consolidated statement of operations each reporting period.
Embedded derivatives that are not clearly and closely related to the debt host are bifurcated and recognized at fair value on the Consolidated Balance Sheets with changes in fair value recognized as either a gain or loss on the Consolidated Statements of Operations for each reporting period.
Judgements and Uncertainties The fair value of embedded derivatives are measured based on equity markets and interest rates, as well as an estimate of our nonperformance risk adjustment. This estimate includes an option adjusted spread and an estimate of our discount rate. Sensitivity of Estimate to Change As of December 31, 2023, we recorded a derivative liability of $2,987.
Judgements and Uncertainties The fair value of embedded derivatives is measured based on equity markets and interest rates, as well as an estimate of our nonperformance risk adjustment. This estimate includes an option adjusted spread and an estimate of our discount rate. Sensitivity of Estimate to Change As of December 31, 2024, we recorded a derivative liability of $2,400.
However, if the discount rate were to change by 1%, it would have a less than $50 effect on our derivative liability. Share-Based Compensation Description Share-based compensation is in the form of stock options, restricted stock units ("RSU") and performance stock units ("PSU").
However, if the discount rate were to change by 1%, it would have a less than $50 effect on our derivative liability fair value. Stock-Based Compensation Description Stock-based compensation is in the form of stock options, restricted stock units ("RSU") and performance stock units ("PSU") granted to employees and directors.
A discussion of net cash provided by financing activities during the year ended December 31, 2021, can be found in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed on March 14, 2023.
A discussion of net cash provided by financing activities during the year ended December 31, 2022 can be found in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 5, 2024.
Derivative Instruments Description We review debt instruments to determine whether there are embedded derivative instruments, which are required to be bifurcated and accounted for separately as a derivative financial instrument.
P70 Table of Conten t Derivative Instruments Description We review debt instruments to determine whether there are embedded derivative instruments, which are required to be bifurcated and accounted for separately as a derivative financial instrument.
A discussion of net cash used in operating activities during the year ended December 31, 2021, can be found in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed on March 14, 2023.
A discussion of net cash used in investing activities during the year ended December 31, 2022 can be found in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 5, 2024.
Dollar amounts referenced in this Item 7 are in thousands, except per share amounts. Unless the context otherwise requires, all references in this report to “Axogen,” the “Company,” “we,” “us” and “our” refer to Axogen, Inc., and its wholly owned subsidiaries Axogen Corporation (“AC”), Axogen Processing Corporation, Axogen Europe GmbH and Axogen Germany GmbH.
Unless the context otherwise requires, all references in this report to “Axogen,” the “Company,” “we,” “us” and “our” refer to Axogen, Inc., and its wholly owned subsidiaries Axogen Corporation (“AC”), Axogen Processing Corporation, Axogen Europe GmbH and Axogen Germany GmbH.
The change in net cash provided by financing activities was primarily due to an increase of $159 in proceeds from the exercise of stock options and ESPP purchases year-over-year.
The increase in net cash provided by financing activities was primarily due to an increase of $336 in proceeds from the exercise of stock options and Employee Stock Purchase Plan (“ESPP”) purchases year-over-year.
We estimate the grant date fair value, and the resulting stock-based compensation expense, using the Black-Scholes option pricing model for each purchase period. The grant date fair value is expensed on a straight-line basis over the offering period.
We recognize compensation expense related to the ESPP based on the estimated fair value of the options on the date of grant. We estimate the grant date fair value using a Black-Scholes option pricing model for each purchase period. The grant date fair value is expensed on a straight-line basis over the offering period.
Net Cash Provided by Financing Activities Net cash provided by financing activities was $1,954 as compared to $1,794 for the years ended December 31, 2023, and 2022, respectively, an increase of $161 or 9%.
Net Cash Provided by Financing Activities Net cash provided by financing activities was $2,290 as compared to $1,954 for the years ended December 31, 2024 and 2023, respectively, an increase of $335, or 17%.
See Note 8 - Leases and Note 14 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements Part II, Item 8 of this Form 10-K, for further information.
See Note 8 - Leases, Note 9 - Long-Term Debt, Net of Debt Discount and Financing Fees, and Note 15 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K, for further information.
The increase in total operating costs was primarily attributable to the following (i) $5,083 in compensation costs; (ii) $1,277 in professional services; (iii) $1,243 in marketing programs costs; (iv) $852 in travel; (v) $ 185 i n occupancy related costs partially offset by decreases of (i) $1,190 in research and development projects; (ii) $2,257 of other general business costs including insurance expenses of $1,033, bad debt recovery of $883, merchant fees of $727, other items administrative in nature of $355 offset by increased packaging, shipping and handling expenses of $741.
The increase in total operating costs and expenses was due to the following: (i) $5,469 in compensation costs; (ii) $1,243 in marketing program costs; (iii) $1,156 in professional services fees; (iv) $852 in travel costs; and (v) $326 in occupancy related costs; partially offset by decreases of (i) $1,190 in research and development projects and (ii) $3,041 of other general business costs, including insurance expenses of $1,033, bad debt recovery of $883, merchant fees of $727, and other items administrative in nature of $398.
Interest is calculated as 7.5% plus the greater of the Adjusted SOFR or 2.0% (12.99% as of December 31, 2023). Revenue participation payments are calculated as a percentage of our net revenues, up to $70,000 in any given year, adding approximately 1.5% per year of additional interest payments on the outstanding indebtedness.
Revenue participation payments are calculated as a percentage of our net revenues, up to $70,000 in any given year, adding approximately 1.5% per year of additional interest payments on the outstanding indebtedness.
The estimated fair value of the options related to the Employee Stock Purchase Plan are based on the Black-Scholes option pricing model. Judgments and Uncertainties We estimate the grant date fair value of each stock option award on the date of grant using a multiple-point Black-Scholes option-pricing model.
Stock-based compensation expense is based on the fair value of the stock options, RSUs and PSUs. Judgments and Uncertainties We estimate the grant date fair value of each stock option award on the date of grant using a multiple-point Black-Scholes option-pricing model.
A discussion of net cash provided by investing activities during the year ended December 31, 2021, can be found in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed on March 14, 2023.
A discussion of net cash used in operating activities during the year ended December 31, 2022 can be found in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission ("SEC") on March 5, 2024.
Cash Flow Information The following table presents a summary of our cash flows from operating, investing and financing activities: Year Ended December 31, (in thousands) 2023 2022 Net cash (used in) provided by: Operating activities $ (5,716) $ (16,066) Investing activities 19,253 (3,200) Financing activities 1,954 1,794 Net increase (decrease) in cash and cash equivalent $ 15,491 $ (17,472) Net Cash Used in Operating Activities Net cash used in operating activities was $5,716 and $16,066 during the years ended December 31, 2023, and 2022, respectively.
Cash Flow Information The following table presents a summary of our cash flows from operating, investing and financing activities: Year Ended December 31, (in thousands) 2024 2023 Net cash provided by (used in): Operating activities $ 4,535 $ (5,716) Investing activities (10,297) 19,253 Financing activities 2,290 1,954 Net (decrease) increase in cash and cash equivalents $ (3,472) $ 15,491 P68 Table of Conten t Net Cash Provided By (Used In) Operating Activities Net cash provided by operating activities was $4,535 compared to net cash used in operating activities of $5,716 for the years ended December 31, 2024 and 2023, respectively.
In addition, we measure stock options granted to employees at a premium price based on market conditions, such as the trading price of our common stock, using a Monte Carlo Simulation option-pricing model in estimating the fair value at the grant date. Key assumptions in determining fair value include volatility, risk-free interest rate, dividend yield and expected term.
In addition, we estimate the grant date fair value of stock options granted to employees at a premium price based on market conditions, such as the trading price of our common stock, using a Monte Carlo simulation option-pricing model.
Our portfolio of products is currently available in the United States "(U.S."), Canada, Germany, United Kingdom, Spain and several other European, Asian and Latin American countries.
Our portfolio of products is currently available in the United States ("U.S."), and 19 other countries including Canada, Germany, United Kingdom, Spain and several other European, Asian and Latin American countries. We derive substantially all of our revenues from sales of our nerve repair products to customers in the U.S.
The gel layer facilitates enhanced nerve gliding to aid in minimizing soft tissue attachments, while the base layer is remodeled into a long-term protective tissue layer. • Axoguard Nerve Cap ® , a porcine submucosa ECM product used to protect a peripheral nerve end and separate the nerve from the surrounding environment to reduce the development of symptomatic or painful neuroma; • Axotouch ® Two-Point Discriminator, used to measure the innervation density of any surface area of the skin.
The gel layer facilitates enhanced nerve gliding to aid in minimizing soft tissue attachments, while the base layer is remodeled into a long-term protective tissue layer. • Axoguard Nerve Cap ® , a porcine submucosa ECM product used to protect a peripheral nerve end and separate the nerve from the surrounding environment to reduce the development of symptomatic or painful neuroma. • Avive+ Soft Tissue Matrix™, a multi-layer amniotic membrane allograft used to protect and separate tissues in the surgical bed during the critical phase of tissue healing.
Results of Operations Comparison of the Years Ended December 31, 2023, and 2022 The following table sets forth, for the periods indicated, our results of operations expressed as dollar amounts and as percentages of total revenue: Year Ended December 31, 2023 2022 % of % of Amount Revenue Amount Revenue (dollars in thousands) Revenues $ 159,012 100.0 % $ 138,584 100.0 % Cost of goods sold 31,138 19.6 % 24,147 17.4 % Gross profit 127,874 80.4 % 114,437 82.6 % Costs and expenses: Sales and marketing 86,060 54.1 % 80,228 57.9 % Research and development 28,333 17.8 % 27,158 19.6 % General and administrative 34,943 22.0 % 36,758 26.5 % Total costs and expenses 149,336 93.9 % 144,144 104.0 % Loss from operations (21,462) (13.5) % (29,707) (21.4) % Other (expense) income: Investment income 1,487 0.9 % 569 0.4 % Interest expense (2,835) (1.8) % (624) (0.5) % Change in fair value of derivatives 1,531 1.0 % 1,044 0.8 % Other expense (437) (0.3) % (230) (0.2) % Total other (expense) income, net (254) (0.2) % 759 0.5 % Net loss $ (21,716) (13.7) % $ (28,948) (20.9) % Revenue s Revenues for the year ended December 31, 2023, increased, $20,428 or 14.7%, to $159,012 as compared to $138,584 for the year ended December 31, 2022.
P66 Table of Conten t Comparison of the Years Ended December 31, 2023 and 2022 The following table sets forth, for the periods indicated, our results of operations expressed as dollar amounts and as percentages of total revenue: Year Ended December 31, 2023 2022 Amount % of Revenue Amount % of Revenue (dollars in thousands) Revenues $ 159,012 100.0 % $ 138,584 100.0 % Cost of goods sold 37,143 23.4 29,775 21.5 Gross profit 121,869 76.6 108,809 78.5 Costs and expenses: Sales and marketing 77,580 48.8 71,983 51.9 Research and development 27,339 17.2 25,627 18.5 General and administrative 38,412 24.2 40,906 29.5 Total costs and expenses 143,331 90.1 138,516 100.0 Loss from operations (21,462) (13.5) (29,707) (21.4) Other (expense) income: Investment income 1,487 0.9 569 0.4 Interest expense (2,835) (1.8) (624) (0.5) Change in fair value of derivatives 1,531 1.0 1,044 0.8 Other expense (437) (0.3) (230) (0.2) Total other (expense) income, net (254) (0.2) 759 0.5 Net loss $ (21,716) (13.7) % $ (28,948) (20.9) % Revenue s Revenues for the year ended December 31, 2023 increased $20,428, or 14.7%, to $159,012, as compared to $138,584 for the year ended December 31, 2022.
Research and development expenses increased $1,175, or 4.3%, to $28,333 for the year ended December 31, 2023, as compared to $27,158 for the year ended December 31, 2022. The increase was primarily due to product development and clinical expenses.
Research and development costs and expenses increased $428, or 1.6%, to $27,767 for the year ended December 31, 2024, as compared to $27,339 for the year ended December 31, 2023. The increase was primarily due to product development and clinical expenses.
Net Cash Provided by Investing Activities Net cash provided by investing activities was $19,253 as compared to cash used in investing activities of $3,200 for the years ended December 31, 2023, and 2022, respectively, an increase of $22,453 or 702%.
Net Cash (Used In) Provided By Investing Activities Net cash used in investing activities was $10,297 compared to net cash provided by investing activities of $19,253 for the years ended December 31, 2024 and 2023, respectively.
Long-term Debt and Note 14. Commitments and Contingencies in Part II, Item 8 of this Form 10-K. (2) Calculated at 13.0%; the interest rate as of December 31, 2023. (3) See Note 8. Leases in Part II, Item 8 of this Form 10-K.
(2) Calculated at 12.19%; the interest rate as of December 31, 2024. (3) See Note 8 - Leases in Part II, Item 8 of this Form 10-K.
Sales and marketing expenses increased $5,833, or 7.3%, to $86,060 for the year ended December 31, 2023, as compared to $80,228 for the year ended December 31, 2022.
Sales and marketing costs and expenses increased $5,597, or 7.8%, to $77,580 for the year ended December 31, 2023, as compared to $71,983 for the year ended December 31, 2022.
We do not believe that there are any additional tax expenses or benefits currently available. P68 Table of Conten t Liquidity and Capital Resources As of December 31, 2023, our principal sources of liquidity were our cash and cash equivalents totaling $31,024.
We do not believe that there are any additional tax expenses or benefits currently available. Liquidity and Capital Resources As of December 31, 2024, our principal sources of liquidity were our cash and cash equivalents and investments totaling $33,482. Our cash equivalent is comprised of a money market mutual fund and our investments are comprised of U.S. Treasuries.
The increase in sales and marketing was due to the following: (i) compensation costs of $1,969; (ii) $1,243 in marketing programs;(iii) $831 in travel costs; (iv) $745 in professional services, and (v) $1,034 of other costs which included packing, shipping and handling costs of $741 and other items administrative in nature of $293.
The increase in sales and marketing costs and expenses was due to the following: (i) $2,497 in compensation costs; (ii) $1,243 in marketing program costs; (iii) $831 in travel costs; (iv) $625 in professional services fees; (v) other items administrative in nature of $251 and (vi) $150 in occupancy related costs.
General and administrative expenses decreased $1,816, or 4.9%, to $34,943 for the year ended December 31, 2023, as compared to $36,758 for the year ended December 31, 2022.
General and administrative costs and expenses decreased $2,494, or 6.1%, to $38,412 for the year ended December 31, 2023, as compared to $40,906 for the year ended December 31, 2022.
The number of PSU's that will ultimately be earned is based upon our performance as measured against specified targets over the measurement period. Expectations related to the achievement of performance goals associated with PSU grants is assessed at each reporting period and is used to determine whether PSU grants are expected to vest.
Expectations related to the achievement of the revenue goals associated with the Revenue PSU grants is assessed at each reporting period and is used to determine whether any of the Revenue PSU grants are expected to vest.
Clinical trial expenses represented approximately 40% and 48% of total research and development expense for the years ended December 31, 2023, and 2022, respectively. The increase in research and development included increases in compensation costs of $1,635; $331 in professional fees; $287 in occupancy costs; and $98 in travel costs to support these clinical and non-clinical expenses.
Clinical trial costs and expenses represented approximately 40% and 48% of total research and development costs and expenses for the years ended December 31, 2023 and 2022, respectively.
Gross margin as a percentage of revenue decreased to 80.4% for the year ended December 31, 2023, as compared to 82.6% for the year ended December 31, 2022. Costs and Expenses Total costs and expenses increased, $5,192 or 3.6%, to $149,336 for the year ended December 31, 2023, as compared to $144,144 for the year ended December 31, 2022.
Costs and Expenses Total costs and expenses increased $4,815, or 3.5%, to $143,331 for the year ended December 31, 2023, as compared to $138,516 for the year ended December 31, 2022.
The change in net cash used in investing activities was due to the increase in the net purchase and proceeds of the sale of investments totaling $16,118 and net decrease in the capital expenditures, primarily related to the renovation of the APC Facility, of $6,206.
The unfavorable change in net cash used in investing activities of $29,550 was due to the decrease in proceeds from the sale of investments, net of investment purchases, totaling $39,944, partially offset by a net decrease in capital expenditures of $10,771, primarily related to the renovation of the APC Facility completed in 2023.
If performance-based milestones related to PSU grants are not met or not expected to be met, any compensation expense recognized associated with such grants will be reversed. P71 Table of Conten t We recognize compensation expense related to the Employee Stock Purchase Plan (“ESPP”) based on the estimated fair value of the options on the date of grant.
If the performance-based milestones related to the Revenue PSU grants are not met or not expected to be met, any compensation expense recognized associated with such grants is reversed. The estimated grant date fair value of the Total Shareholder Return PSUs ("TSR PSUs") is calculated by using a Monte Carlo simulation.
The decrease was primarily due to $1,033 in insurance costs, $833 in bad debt recovery, $727 in merchant fees, $330 in other services, and $205 in licenses and fees partially offset by an increase in compensation costs of $1,479.
The decrease in general and administrative costs and expenses was primarily due to the following: (i) $1,033 in insurance expenses, (ii) $883 in bad debt recovery, (iii) $727 in merchant fees, (iv) $330 in other services, (v) $205 in licenses and fees; (vi) other items administrative in nature of $128; (vi) $112 in occupancy related costs; and (vii) $78 in travel costs, partially offset by increases of (i) $801 in compensation costs and (ii) $201 in professional services fees.
P67 Table of Conten t Gross Profit Gross profit for the year ended December 31, 2023, increased $13,437 or 11.7% to $127,874 as compared to $114,437 for the year ended December 31, 2022.
P65 Table of Conten t Gross Profit Gross profit for the year ended December 31, 2024 increased $20,108, or 16.5%, to $141,977, as compared to $121,869 for the year ended December 31, 2023.
The favorable change in net cash used in operating activities of $10,350 or 64.4% was due to the following: (i) the net favorable change of $5,172 in working capital accounts and (ii) the decrease in net loss of $7,232.
The favorable change in net cash provided by operating activities of $10,251 was due to the decrease in net loss of $11,751 and the favorable change in noncash accounts of $6,093, partially offset by an unfavorable change in working capital of $7,594.
( 4) Includes CEO's 2023 bonus to be paid in March 2024, 2024 Salary, 2024 bonus to paid in March of 2025, accrued PTO through January 4, 2025, nine months of senior advisory fees, and eighteen months of COBRA payments.
( 4) Includes former CEO's 2024 bonus to be paid in March of 2025, senior advisory fees through May 2025, eighteen months of Consolidated Omnibus Budget Reconciliation Act ("COBRA") payments and related employer paid taxes. See Note 15 - Commitments and Contingencies in Part II, Item 8 of this Form 10-K.
As a result, if factors change and different assumptions are used, the stock-based compensation expense could be materially different in the future. The fair value of the PSU grants is based on our closing stock price on the grant date.
If factors change and different assumptions are used, stock-based compensation expense could be materially different in the future. Sensitivity of Estimate of Change As of December 31, 2024, if we determine that the unvested PSUs outstanding were in a pay-out range of 150%, our stock-based compensation expense would increase by $616.
Removed
Revenue from the distribution of our nerve repair products, Avance ® Nerve Graft, Axoguard Nerve Connector ® , Axoguard Nerve Protector ® , Axoguard HA+ Nerve Protector™, and Axoguard Nerve Cap ® , in the U.S. is the main contributor to our total reported sales and have been the key component of our growth to date.
Added
Dollar amounts referenced in this Item 7 are in thousands, except per share amounts.
Removed
As previously announced, we suspended the market availability of Avive ® Soft Tissue Membrane ("Avive") on June 1, 2021, to have discussions with the U.S. Food and Drug Administration ("FDA") about the appropriate regulatory classification and requirements for Avive. The reported safety or product performance issues or concerns with Avive.
Added
Financial information for prior periods has been reclassified to reflect the retrospective application of voluntary changes in the Company’s accounting policy for shipping and handling costs and changes to certain allocated corporate costs, as discussed under “Note 2 – Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements in this Form 10-K.
Removed
Based on preliminary feedback from FDA on the product classification and regulatory pathway, we have decided not to continue discussions with FDA and will not pursue regulatory approval for Avive. Therefore, we will not seek to return Avive to the market.
Added
On June 24, 2024, we announced the launch of Avive+ Soft Tissue Matrix. Avive+ Soft Tissue Matrix is processed and distributed in accordance with U.S. Food and Drug Administration ("FDA") requirements for Human Cellular and Tissue-based Products under the Code of Federal Regulations ("CFR") Title 21 Part 1271 regulations and U.S.
Removed
We are working on developing a replacement product called Avive + that we believe would not require a BLA and would fall under the criteria set forth in 21 CFR 1271.10(a) for regulation solely under Section 361 of the Public Health Service Act and the regulations in 21 CFR Part 1271.
Added
Public Health Service Act regulations as a Section 361 human tissue product. Products regulated solely under Section 361 of the Public Health Service Act are a product category under close scrutiny by the FDA for compliance with the regulatory requirements and potentially P64 Table of Conten t subject to regulatory change in the future.
Removed
We seek to launch Avive+ in the second quarter of 2024. We have observed that surgeons initially are cautious adopters for peripheral nerve repair products. Surgeons typically start with a few cases and then wait and review the results of these initial cases.
Added
Failure to comply with applicable regulatory requirements could expose us to potential compliance actions by the FDA or state regulators and could risk the commercial availability of the product. Our strategy remains focused on deepening our presence in high-potential accounts, specifically Level 1 trauma centers and academic-affiliated hospitals with a high number of trained microsurgeons.
Removed
Active accounts are usually past this wait period and P65 Table of Conten t have developed some level of product reorder.
Added
We will drive growth in these accounts through targeted expansion of nerve repair indications and driving deeper adoption of our nerve repair algorithm across multiple surgical specialties. Summary of Operational and Business Highlights • We completed the Biologics License Application ("BLA") submission for Avance Nerve Graft on September 6, 2024.
Removed
These active accounts have typically gone through the Value Analysis Committee approval process, have at least one surgeon who has converted a portion of his or her treatment algorithms of peripheral nerve repair to our portfolio and have ordered our products at least six times in the last twelve months.
Added
On November 1, 2024, the FDA informed us that they had accepted the BLA for filing and assigned a Prescription Drug User Fee Act goal date of September 5, 2025.
Removed
As of December 31, 2023, we had 1,006 active accounts, an increase of 3.9% from 968 one year ago. Active accounts are approximately 87% of our revenue. The top 10% of these active accounts continue to represent approximately 40% of our revenue. Core accounts are defined as accounts that have purchased at least $100 in the past twelve months.
Added
The FDA further indicated that it does not currently plan to hold an advisory committee meeting for the application. • Revenue was $187,338 for the year ended December 31, 2024, an increase of $28,326, or 17.8%, compared to the year ended December 31, 2023. • Gross profit was $141,977 for the year ended December 31, 2024, an increase of $20,108, or 16.5%, compared to the year ended December 31, 2023.
Removed
As of December 31, 2023, we had 376 core accounts, an increase of 13.3% from 332 one year ago. These core accounts represented approximately 65% our revenue in 2023, which increased approximately 60% ov er the past two years.
Added
Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 The following table sets forth, for the periods indicated, our results of operations expressed as dollar amounts and as percentages of total revenue: Year Ended December 31, 2024 2023 Amount % of Revenue Amount % of Revenue (dollars in thousands) Revenues $ 187,338 100.0 % $ 159,012 100.0 % Cost of goods sold 45,361 24.2 37,143 23.4 Gross profit 141,977 75.8 121,869 76.6 Costs and expenses: Sales and marketing 78,461 41.9 77,580 48.8 Research and development 27,767 14.8 27,339 17.2 General and administrative 39,036 20.8 38,412 24.2 Total costs and expenses 145,264 77.5 143,331 90.1 Loss from operations (3,287) (1.8) (21,462) (13.5) Other (expense) income: Investment income 1,141 0.6 1,487 0.9 Interest expense (8,206) (4.4) (2,835) (1.8) Change in fair value of derivatives 587 0.3 1,531 1.0 Other expense (199) (0.1) (437) (0.3) Total other (expense) income, net (6,677) (3.7) (254) (0.2) Net loss $ (9,964) (5.3) % $ (21,716) (13.7) % Revenue s Revenues for the year ended December 31, 2024 increased $28,326, or 17.8%, to $187,338, as compared to $159,012 for the year ended December 31, 2023.
Removed
Our business was originally anchored in emergent trauma and over the past several years we have introduced a number of new nerve repair applications that utilize our Avance and Axoguard product lines. These new applications share common characteristics that now lead us to think about our business along two primary categories, scheduled non-trauma (“Scheduled”) procedures, and emergent trauma (“Emergent”) procedures.
Added
Revenue growth was driven by an increase in unit volume of approximately 9.0%, as well as the net impact of changes in product mix and price of approximately 5.5% and 3.3%, respectively.
Removed
Scheduled procedures are generally characterized as procedures where a patient is seeking relief of a condition caused by a nerve defect or surgical procedure. These include breast reconstruction following a mastectomy, nerve reconstruction following the surgical removal of painful neuromas, oral and maxillofacial procedures, and nerve decompression.
Added
Gross margin as a percentage of revenue decreased to 75.8% for the year ended December 31, 2024, as compared to 76.6% for the year ended December 31, 2023. The decrease in gross margin was due to the change in our product mix.
Removed
The nature of Scheduled procedures affords patients the opportunity to actively search for treatment options and advocate for solutions that may improve quality of life following the procedure. For example, in breast reconstruction, this may include prioritizing neurotization as a part of their treatment plan. These procedures lend themselves to standardization of surgical techniques and more consistent nerve repair algorithms.
Added
Costs and Expenses Total costs and expenses increased $1,933, or 1.3%, to $145,264 for the year ended December 31, 2024, as compared to $143,331 for the year ended December 31, 2023.
Removed
In addition, these patients are likely to engage in extended follow-up evaluations with their physicians. Emergent procedures generally result from injuries that initially present in an emergency room. These procedures are typically referred to and completed by a specialist either immediately or within a few days following the initial injury.
Added
The increase in total operating costs was primarily attributable to the following: (i) $9,745 in compensation costs; (ii) $ 1,288 in professional services fees; and (iii) $308 in net other costs, partially offset by decreases of (i) $3,593 in research and development project costs; (ii) $3,114 in royalty expenses; (iii) $1,621 in marketing program costs; and (iv) $218 in travel costs.
Removed
Given the emergent and diverse nature of traumatic injuries, the required repair algorithm and procedure scheduling can be highly variable, and follow-up evaluations are generally inconsistent. While the various applications can have unique surgeon customers, the procedures are often performed in the same accounts and use the same family of Axogen products.
Added
Sales and marketing costs and expenses increased $881, or 1.1%, to $78,461 for the year ended December 31, 2024, as compared to $77,580 for the year ended December 31, 2023.
Removed
Scheduled procedures typically have a higher value of Axogen products used per procedure as compared to routine trauma; and, given the planned nature of these procedures, there is a higher level of predictability and are generally additive to our sales rep productivity. Reporting by application has historically been challenging.
Added
The increase in sales and marketing costs and expenses was due to the following: (i) $6,028 in compensation costs and (ii) $311 in occupancy related costs, partially offset by decreases of (i) $3,114 in royalty expenses; (ii) $1,621 in marketing program costs; (iii) $173 in travel costs; (iv) $153 in professional services fees; and (v) $396 in net other costs.

… 35 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+1 added−2 removed1 unchanged
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk We are subject to market risk from exposure to changes in interest rates based upon our investing and cash management activities. For our cash equivalents and investments, a change in interest rates affects the amount of interest income that can be earned.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk We are subject to interest rate risk from exposure to changes in interest rates based upon our investing and cash management activities. For our cash equivalents and investments, a change in interest rates affects the amount of interest income that can be earned.
We have not entered into derivative transactions related to cash and cash equivalents. We do not expect changes in interest rates to have a material adverse effect on our income or our cash flows in 2024. However, we give no assurance that interest rates will not significantly change in the future.
We have not entered into derivative transactions related to cash and cash equivalents. We do not expect changes in interest rates to have a material adverse effect on our income or our cash flows in 2025. However, we give no assurance that interest rates will not significantly change in the future.
We also have interest rate exposure as a result of the Credit Facility. As of December 31, 2023, the outstanding principal amount of our loans under the Credit Facility was $50,000.
We also have interest rate exposure as a result of the Credit Facility. As of December 31, 2024, the outstanding principal amount of our loans under the Credit Facility was $50,000.
Interest on our loans under the Credit Facility is payable quarterly during the term of the loans and is calculated as 7.5% plus the greater of Adjusted SOFR or 2.0% (12.99% as of December 31, 2023); provided that the interest rate shall never be less than 9.5%.
Interest on our loans under the Credit Facility is payable quarterly during the term of the loans and is calculated as 7.5% plus the greater of Adjusted SOFR or 2.0% (12.19% as of December 31, 2024); provided that the interest rate shall never be less than 9.5%.
Credit Risk Financial instruments that potentially subject us to credit risk consist of cash and cash equivalent balances, investments in commercial paper and accounts receivable. Certain of our cash and cash equivalents balances exceed Federal Deposit Insurance Corporation ("FDIC") insured limits or are invested in money market accounts with investment banks that are not FDIC-insured.
Credit Risk Financial instruments that potentially subject us to credit risk consist of cash and cash equivalent balances, investments in U.S. Treasuries and accounts receivable. Certain of our cash and cash equivalents balances exceed Federal Deposit Insurance Corporation ("FDIC") insured limits or are invested in money market accounts with investment banks that are not FDIC-insured.
Concentrations of credit risk with respect to accounts receivable are limited because a large number of geographically diverse customers make up our customer base, thus spreading the trade credit risk. We also control credit risk through credit approvals and monitoring procedures.
With respect to accounts receivable, we perform credit evaluations of our customers and do not require collateral. There have been no material losses on accounts receivable. Concentrations of credit risk with respect to accounts receivable are limited because a large number of geographically diverse customers make up our customer base, thus spreading the trade credit risk.
Foreign Currency Exchange Risk The value of the U.S. dollar compared to the foreign currencies of the countries where we distribute our products has little to no effect on our financial results. In our international markets, we distribute our products and services to independent distributors who, in turn, distribute and market to medical clinics.
We also control credit risk through credit approvals and monitoring procedures. Foreign Currency Exchange Risk The value of the U.S. dollar compared to the foreign currencies of the countries where we distribute our products has little to no effect on our financial results.
The revenue from the distribution of our products in our international markets through independent distributors is denominated in U.S. dollars. As a result, we have minimal exposure related to foreign exchange rate fluctuations. Our portfolio of products is currently available in the U.S., Canada, Germany, United Kingdom ("UK"), Spain and several other European, Asian and Latin American countries.
In our international markets, we distribute our products and services to independent distributors who, in turn, distribute and market to medical clinics. The revenue from the distribution of our products in our international markets through independent distributors is denominated in U.S. dollars. As a result, we have minimal exposure related to foreign exchange rate fluctuations.
As of December 31, 2023, $30,524 of the cash and cash equivalents balance was in excess of FDIC limits. We invest our cash primarily in commercial paper, money market accounts, and U.S. government securities.
As of December 31, 2024, $27,054 of the cash and cash equivalents balance was in excess of FDIC limits. We invest our cash primarily in money market accounts and in U.S. Treasuries. We believe our cash is invested in a conservative manner, with cash preservation being the primary investment objective.
Removed
Although we believe our cash is invested in a conservative manner, with cash preservation being the primary investment objective, the value of the commercial paper held will fluctuate with changes in the financial markets, including, among other things, changes in interest rates, credit quality and general volatility.
Added
Our portfolio of products is currently available in the U.S. and 19 other countries, including Canada, Germany, United Kingdom, Spain and several other European, Asian and Latin American countries. P72 Table of Conten t
Removed
This risk is managed by investing in high quality investment grade commercial paper with short-term maturities. With respect to accounts receivable, we perform credit evaluations of our customers and do not require collateral. There have been no material losses on accounts receivable.

Other AXGN 10-K year-over-year comparisons