Anika Therapeutics, Inc. (ANIK) Earnings Call Transcript & Summary

Okay. Great. Good morning, everyone. Thanks for joining us on the second day of the UBS Healthcare Conference. My name is Young Li from UBS' U.S. Medical Devices and Devices Team (sic) [ U.S. Medical Supplies and Devices Team ]. For this session, I'm pleased to be joined by management from Anika Therapeutics, including Dr. Cheryl Blanchard, President and CEO; and Mike Levitz, EVP, CFO and Treasurer. Just to kick things off for this session, we're going to have some slides from Anika, followed by Q&A. [Operator Instructions] So Cheryl and Mike, thanks so much for joining us. Really appreciate your time today. I'll turn over the floor to you.

Great. Thanks, Young, and thanks to UBS for the invitation to present today and have some time for Q&A so that we can tell Anika's story. Let me just remind everybody of our safe harbor statement, our cautionary note on forward-looking statements and the fact that we use some non-GAAP financial measures in our numbers. So if we want to move to Slide 3, let me kick off by just giving you an overview of Anika and who we are. I'm excited to be able to tell you the Anika story today because it's really changed quite a bit in the last year. Anika today is a joint preservation company, and we are focused on delivering meaningful products in early intervention orthopedic care. This is a change. Anika historically was a company primarily focused on manufacturing hyaluronic acid-based therapies, which has been a great foundation for the business and continues to be as we hold the #1 position in HA-based OA Pain Management products with our franchise in the United States, ORTHOVISC and MONOVISC, that we sell through our very successful sales and marketing partnership with J&J Mitek. But today, we are a joint preservation company. And in the last year, we really changed the face of the company in a number of ways. We did 2 significant acquisitions with Arthrosurface and Parcus Medical, bringing a portfolio of products into the company that are focused on joint preservation. And we continue to focus on developing a robust pipeline, leveraging our hyaluronic acid technology that we've developed and have great background in over the last 30 years in the regenerative solutions space, again, focused on joint preservation. We also now have a commercial organization that is selling product into 75 countries around the world, and in the U.S., have built out a fully hybrid commercial team with over 30 sales reps, again, focusing on that joint preservation space. So today, I want to tell you a little bit more in detail about who we are as a company. If you all want to turn to Slide 4, on the top, you can see kind of what the legacy Anika organization looked like with our OA Pain Management products, ORTHOVISC and MONOVISC. And then in late 2019, we had just launched a product called TACTOSET, which is, again, a product that leverages our hyaluronic acid-based regenerative solutions. It is a product that treats insufficiency fractures that fits really nicely into that joint preservation bag. With the acquisitions of Parcus and Arthrosurface, we brought into our portfolio a full complement of soft tissue, sports medicine fixation devices and bone-preserving joint technologies that are implants that really treat osteoarthritis as it progresses along that continuum of care. These are minimally-invasive bone-preserving implants that really take a patient through the next stage of osteoarthritis before they need a larger, say, total hip or total knee. So what we've assembled here really is now a full portfolio of joint preservation products that go all the way from OA Pain Management, regenerative solutions into soft tissue, sports medicine and bone-preserving implants. So we're excited now, on Slide 5, to be able to access a much larger market opportunity. What Anika legacy was able to access was that HA viscosupplement $1 billion market. We now have access to a global market opportunity of greater than $8 billion with regenerative solutions, with soft tissue repair and with those bone-preserving implants. And we have a full pipeline of product development activities: a second-generation OA Pain Management product called CINGAL that I'll talk a little bit about; regenerative solutions, I mentioned TACTOSET. We sell HYALOFAST, our single-stage cartilage repair solution, outside the United States, have a clinical trial ongoing in the United States to bring that to the U.S. We're very busy right now developing a number of biocomposite anchors, implants and instrument kits, again, in that soft tissue repair space that's really focused on the ASC customer, and then additional bone-preserving joint technologies. We've talked about the fact that we're launching a wrist product in the second half of this year. So again, we're focused on joint preservation, but really looking to build out a product portfolio and a new product development pipeline that really accesses that full $8 billion joint preservation market opportunity. On Slide 6, one of the things that we've really focused on this year is building out a very experienced management team that knows how to get this done. So we've brought in a number of people, really reconfigured what the management team looks like with a group of people that have expertise from companies like BioMed, Zimmer Biomet, Smith & Nephew, Insulet and LifeCell. So a lot of biotech regen solutions companies and medical device companies. And specifically, have a commercial team in Ben Joseph, James Chase, Steve Ek and Kevin Stone, commercial and R&D, that have built out extremities businesses, sports medicine businesses and bone-preserving implant businesses for the last 20 years. So we're really excited to bring together this team of expertise that is going to know how to get this execution story done at this point. So what are our growth catalysts? On Slide 7. I mentioned that we have the #1 position in osteoarthritis pain management injectables in the United States. We plan on maintaining that #1 position. That is a very good business for us. It's cash generative. And while that business in the U.S. is growing low single digits, it's a very solid, very strong business for us. And it is funding our growth opportunities into now that expanded market of now from $1 billion to $8 billion as we deliver differentiated solutions in that joint preservation space into now our strength in commercial organization, and at the same time, really continuing to leverage what we're excited about that hyaluronic acid-based regenerative solutions platform. And I'll talk a little bit about HYALOFAST and CINGAL, but we also have other products in development, for example, in the rotator cuff space and with our recently launched product, TACTOSET. From a financial perspective, and Mike will talk -- give a little bit more color around our financials, but we have stated back in 2019 that our strategic plan had us intending to double revenue by 2024 and driving toward double-digit adjusted EBITDA growth. We are still on track to do that. So let's look at Slide 8, and I can give you a little bit better picture of what our product portfolio looks like, and then I'll talk a little bit more about our pipeline. So again, the legacy Anika activities are on the 2 bottom boxes in blue, ORTHOVISC and MONOVISC being really the strong basis for the growth of the company over the last 25 to 30 years. And then we're bringing on board a second-generation product that we sell in over 35 countries outside the United States, CINGAL, which is a combination steroid, triamcinolone hexacetonide/hyaluronic acid, to give both short pain and long-term osteoarthritis pain relief. Then on the regenerative solutions front, we have HYALOFAST, which is a single-stage cartilage repair product that we're very excited about, especially as we see it being used outside the United States. It's extremely competitive as it's off the shelf. It is a single surgery, which is very different than, in the United States, MACI, the competition that we'll be up against in the U.S., which requires 2 surgeries. HYALOFAST is in a clinical trial in the United States today. Then TACTOSET, I mentioned, again, is a hyaluronic acid-based insufficiency fracture treatment that plays really nicely into that joint preservation bag in that joint preservation call point. We launched that in late 2019. And because of COVID, we're now just seeing -- starting to see the acceleration of that product in the marketplace. On the soft tissue repair side, we have a full complement of soft tissue anchors that get used across sports medicine surgeries, and we're very strong in the shoulder, in the foot and ankle, which, again, plays very nicely into the TACTOSET franchise. And then on the bone-preserving joint technologies, we have a full complement of truly innovative, minimally invasive, bone-preserving and motion-preserving implants. You can see here our ToeMotion; our patellofemoral product; and our OVOMotion, which is one of our largest selling products in the shoulder. So this is really kind of showing you now a full continuum of care in early intervention orthopedics that we've assembled through organic activities and through acquisitions. And we will continue to build out this pipeline in both of those manners. If you want to move to Slide 9, that gives you a sense of what our commercial footprint looks like. So again, in the United States, we sell those OA Pain Management products through our relationship with J&J Mitek. But our joint preservation products, we sell now through a sales force that includes over 30 sales reps that leverages a broad network of 1,099 distributors and sales reps. So we have very broad and very deep coverage in the joint preservation space now in the United States. Outside the United States, we have a very established network of distributors that sell our full bag, both Joint Pain Management and joint preservation products. We also have manufacturing, distribution and R&D operations in the United States and in Europe. So we're really now focused on our commercial footprint of investing in systems and processes that will allow us to most efficiently scale our commercial organization as we launch additional products that you can see now on Slide 10 into that commercial organization and really allow patients to access these great technologies and drive that commercial number. So on Slide 10, you can see TACTOSET that was recently launched in 2019, really leveraging that hyaluronic acid regenerative solutions platform. And we're just now starting to see, coming out of COVID, some really nice uptake in that TACTOSET product. We also, at the end of last year, launched 6 new soft tissue repair products. Again, that plays nicely into making sure that we have a broad spectrum of sports medicine, soft tissue repair products, that those products get used in many, if not most, joint preservation procedures. And so that's a really important set of products to have so that we can be in the operating room with a full complement of products to provide those joint preservation surgeons. We've talked a little bit about the WristMotion product. We're very excited to be launching that in the second half of this year. That's our next bone-preserving joint implant that we'll be launching. This is a really unique product in that it's really preserving motion in the wrist. Still today, most wrist arthritis procedures are fusion, which obviously is not a motion-preserving solution for those patients. So we're excited to bring forward a novel bone-preserving total implant in the wrist space that is going to allow those patients to preserve their motion. And we're looking to convert those fusion procedures to an implant procedure to give those patients that added benefit. CINGAL, I think many of you are aware if you've been following the company, is a product that we sell in over 35 countries outside of the United States. And we remain bullish on this product because of the way that it's been received in those many product -- those many countries outside the U.S. We are currently in a pilot study -- enrolling in a pilot study in the United States today. And we are looking to continue to move forward after that pilot study into a pivotal trial. HYALOFAST is the single-stage cartilage repair product that I mentioned, we are actively enrolling in a definitive trial in the United States with this product today. And obviously, COVID has had an impact on our enrollment rates with that trial, but we are looking to continue to drive enrollment on that and move that trial through as quickly as possible so that we can bring that great cartilage repair technology into the United States. So with that, I would like to turn it over to Mike Levitz, our CFO, so he can dive into the numbers a bit. And then we're looking forward to taking your questions when Mike is done with his comments. Mike?

Great. Thank you, Cheryl. Good morning, everybody. If you would turn to Slide 11 and we look at the revenue chart here, you'll really see a reflection of what Cheryl was describing. If you look at Anika in the past, even as recently as 2019, 90% of the revenue at Anika came from its historic legacy Joint Pain Management business and over 70% of the revenue came from the historic relationship with Johnson & Johnson Mitek, great relationship and a really strong basis for the company. If you fast forward 1 year to 2020, and the company shifted dramatically. First of all, if you look at the historic company, it had been a mid-single-digit growth company. As you look at 2020 and the targets that the company has for 2024, we moved into the teens growth, and we're really excited about our focus for driving growth through 2024 and beyond. But the composition of the company is very different from a revenue standpoint. As you can see on this chart, Joint Pain Management represented a much smaller portion of the revenue in 2020. Even in the midst of COVID, joint preservation with the addition of Arthrosurface, Parcus Medical, the growth of TACTOSET, as examples, moved us significantly forward into the joint preservation space, 30% of the revenue now in that faster-growing, higher opportunity part of the market. So we're very excited about how that positions Anika going forward. And as you look at the story for Anika, the growth portion of that story is really driven by Joint Preservation & Restoration, and 2020 was a significant step forward in that transformation. If you would turn to Slide 12. We just reported our results a few weeks ago for the first quarter. And I think the most meaningful thing that I would call your attention to here is if you look at the top center chart, you'll see that, that moved towards joint preservation continued to strengthen, now representing -- Joint Preservation & Restoration now representing over 1/3 of the revenue of Anika, 36% and the Johnson & Johnson relationship representing less than 50% in the 40s. So really strong foundation, really great relationship, but a much smaller piece of the story. The other thing I would call your attention to on this slide is the gross margins of Anika. Anika has historically had very nice strong gross margins, on average, around 70% or so. And if you look at the results in 2020, you're actually here in the first quarter of 2021, we had gross margins of 61%. Now just keep in mind that within that, there was a 12-point unfavorable hit of noncash acquisition-related costs associated with the acquisitions and addition of Arthrosurface and Parcus this past year. And so when you pull out those acquisition-related expenses, you're back at the 70% range, 70% plus in the quarter. So in other words, really healthy gross margin profile for this company, supporting our ability to drive not just the top line but also the bottom line. If you would turn to the next slide, Slide 12 (sic) [ Slide 13 ]. So for 2021, we reinstituted guidance for the year after pooling it last year, but we reinstituted directional guidance. We really don't believe that COVID is behind us, but we're very pleased to see the progress that's happening with vaccines in the United States. And hopefully, we'll see that continue outside the United States. We do continue to expect, as we said here on May 6, that we'll see a nice recovery here and continued recovery through the year and really the second half being stronger than the first. And despite COVID headwinds, our expectations for this year are high single-digit to low double-digit revenue growth driven by significant growth in Joint Preservation & Restoration. We talked about upper 20% to low 30% growth on the call on May 6 and are really excited about what that business can mean, not just this year but the direction from commercial execution in that space and also new product and innovation. The Joint Pain Management business has seen a significant amount of volatility through COVID. But now, we're seeing it stabilize as we had expected coming out of the year and we reminded folks here on this last call. And so we're pleased to see that stability with low single-digit revenue growth in that important part of our business. All of this is really focused on -- so what does this mean for the future? We laid out some goals in the 2019 time frame around doubling the revenue of the company by 2024, and we're right on track for what -- where we want to be there. So we're very excited about that. And also we're very focused on the bottom line, the strong gross margin support, continued strong EBITDA growth and profitability expansion. So we believe a very meaningful story to drive shareholder value. If you would turn to the next slide. Slide 14 walks through a little bit about how we think about our capital deployment strategy. Anika has historically had a strong balance sheet. We ended this last quarter with $95 million roughly of cash and investments and positive cash flows for the year last year, even with the challenges of COVID. So a very strong foundation to build from. We also have positive free cash flows and are focused on organic growth. The additions of Parcus and Arthrosurface, the new product launches, we really believe position us very well for delivering on the value that we've laid on the multiyear goals. We invested a significant amount in research and development. We expect that to continue. And we deployed $100 million for Parcus and Arthrosurface last year. We still have additional funds to pay as the earn-outs play out over here in '21 and '22. For M&A, we believe that we've really seen good value from the companies that we've acquired, positioning us for the future. And we believe that additional tuck-ins can make a lot of sense for us as well. So this move from a $1 billion addressable market to an $8 billion addressable market, there's a lot of opportunity in front of us. And so while we have line of sight into delivering on our targets organically, we also recognize the opportunity in front of us with additive tuck-in M&A. If you would turn to the last slide, Slide 15. So in summary, this is an exciting time to be at Anika. The move -- the increase of the addressable market from $1 billion to $8 billion creates a lot of opportunities for us while we remain focused on early intervention orthopedics. We already have a diverse product portfolio with advanced regenerative solutions, and we're adding to that. We have a robust pipeline of innovative solutions that we're excited to be telling you more about. We've talked to you about in the past, but we have an upcoming Investor Day on June 3, where we'll go into more detail about that. We are pleased with the strength of our commercial channel and to be able to bring those products to market and all of this on top of a strong financial footing with strong balance sheet and positive cash flows that positions very well for driving investor value over the coming years. So thank you for your time. And with that, we'll turn it over for questions.

All right. Great. Thank you guys so much for that. It was a great overview. And yes, there's been a lot of changes, and you guys are certainly keeping busy with a lot of the developments and progress. I guess maybe turning to some of the recently launched products or approved products, the WristMotion total wrist replacement system, that's a pretty interesting one. It's one that you've been highlighting. Just wondering if you can talk about how meaningful is that product and the total replacement category? How are you competitively positioned? You're launching it in the second half. Can you talk about the expected ramp from the product?

Absolutely. Thanks, Young, for the question. We are really excited about the WristMotion product. We've actually been in the wrist space historically with a product that's more of a resurfacing product. And so this really allows the upper extremity surgeons to have a new tool in their toolbox for their patients whose osteoarthritis has progressed even further along that osteoarthritis degradation process. The wrist market is an interesting one. I mentioned in my earlier comments that it is largely a fusion market, which from my perspective, it's kind of interesting because orthopedics has largely gone away from fusion. You think about many, many years ago, hips used to be fused and that hardly ever happens anymore. So I'm excited to be able to launch a product that is coming into a space where implants really aren't used all that much. There are a couple of competitive products out there, but they are -- I would not put them into the category of bone preserving and minimally invasive. And so we feel like we've got something really exciting coming that will allow patients to preserve their motion. And it's interesting, in the wrist space, people talk about preserving that dart thrower's motion and really maintaining the ability to move your wrist in the biomechanical ways that you do in order to use your hand. So in this case, our marketing plan really has us not only going after the competitive wrist market but also going after converting what would have been a fusion into now an implant. So there's opportunities to expand the market. We have not broken out this specific implant in terms of what we think it will drive on the top line because it really rolls up into our ability to double that revenue from the 2019 baseline that we set, but we will be doing this launch in the second half of this year. This year, what we have planned, which is pretty typical for a device launch is initially a limited launch. And then to really start to see more of a ramp into next year. But we are excited. The surgeons are excited that are waiting for the products to show up, and they're already starting to line patients up. So we'll have more to come on the WristMotion device when we get into the actual launch phase.

All right. Great. That's a really helpful color. I guess maybe on a product that is already out there, obviously disrupted by COVID, but just on TACTOSET. So that's the injectable HA-based bone substitute. You launched it at the end of 2019. Just wondering, how is it now performing sort of relative to your pre-COVID expectations. I think before, you were expecting somewhere around $3 million in the first year. Are you sort of on that back to that run rate trajectory yet?

Yes, it's a great question. So again, we are not breaking out individual product categories, but what I can tell you is that we are very pleased with the ramp that we're seeing now that we're sort of starting to emerge from the COVID dynamic. This is a product that the surgeons have gotten very excited about. It offers a lot of advantages that some of the couple of competitive products that are out that don't offer, and they're seeing some really nice clinical results. They're reporting that patients' pain is gone within days once they get past the acute postoperative perioperative period. So the answer is we're seeing a very nice ramp relative to what we had originally planned. And again, this is a product that plays so nicely into that joint preservation call point and gets used really broadly across foot and ankle surgeons; across extremities, like upper extremities-focused surgeons, more broad sports medicine-focused surgeons; and even total joint surgeons that are treating their patients a little earlier in the continuum of care. And we're getting a lot of nice feedback on it from the clinicians, and we're very happy with the commercial ramp that we're experiencing at this point.

Okay. Great. Yes, that's good to hear. Everyone's hoping for a more normal second half. So we certainly hope that things continue to improve from here.

Yes, absolutely.

Maybe a question for Mike. It's on the longer-term 2024 targets, doubling the revenue off of 2019 baseline. Most of that growth would be coming from the joint preservation business. Maybe if you can talk a little bit about product flow and sales force expectations that's needed to get there?

Great. Yes, happy to talk about that. So as we look forward here to 2024, you're absolutely right, the growth is driven by joint preservation. And it's mainly the things we've talked about a bit from a product flow standpoint. We talked about TACTOSET. We talked about the wrist coming out. We've got a number of innovative products coming out that we've talked about it in the past, and we'll talk more about it at the Investor Day related to things in the rotator cuff area and shoulder, our soft tissue repair and so on. So we've got a number of really exciting product opportunities. But the growth to 2024 is not really all about new products. It's really about a few things. First of all, commercial execution. So we bought Parcus and we bought Arthrosurface, small companies, and they each had their particular area. But what we're finding is a portfolio effect, and Cheryl kind of mentioned some of this as it relates to TACTOSET. And this combination of having that same call point but with these differentiated solutions. And so we're investing a significant amount in commercial execution. We're building the presence around these products, trade shows, medical education and so on. And so I would say, as we look forward to 2024, it really is a combination of commercial execution as well as the new product innovation that will be coming on a pretty steady cadence along the way. Obviously, since we just bought those companies, you'll see an increasing cadence towards the latter part of that period. But still, we've just introduced new products, as Cheryl said, this past year, and we'll continue to be doing that on the cadence each year. In terms of the sales force, so we have a hybrid commercial sales force with 30-or-so direct reps and then a wide distribution network. And so the benefit of that is we don't need to add to our direct reps to grow this revenue stream because we have -- we leverage that distributor for us. And so we believe we have the right size in terms of our existing sales force. What we are investing in this year is we are investing in the things that surround that sales force. As I mentioned, medical education, trade shows and the like as well as the systems and processes and capabilities that support commercial execution. We really are in the beginnings of this transformation of this company towards joint preservation with a really significant opportunity in front of us. So we want to make sure that we make the investments now that build that capability to continue to add to over the coming years. So from a sales force side, again, we have the right size right now. To unlock this opportunity, we're adding additional investments surrounding that team in addition to the new product cadence.

All right. Great. That's very helpful. I guess maybe turning back to some of the products. Just on CINGAL and HYALOFAST, both are commercial, outside of the U.S., in 30-plus countries. Can you maybe talk a little bit about the OUS experience with those products? Which countries are doing particularly well in terms of their uptake? And how does that inform you about an attempt for a U.S. launch after 2024?

Yes. That's great. I appreciate the opportunity to talk about those 2 products because they are very exciting. Let me make a comment if -- again, if people were familiar with the Anika story before, the Anika story was really all about CINGAL and HYALOFAST, and they are products that because they are in enrolling clinical trials right now that, unfortunately, have been mediated because of COVID. I will tell you one of the most exciting things about this strategy pivot is the fact that we now have a lot of products existing in the portfolio and a planned cadence of product launches between now and when CINGAL and HYALOFAST become commercial realizations in the United States. That said, we sell CINGAL and HYALOFAST outside the United States today. And those opportunities are really teaching us a lot about what we think these will do when we get them into the U.S. market. So let me take CINGAL first. CINGAL is a product that I am very excited about. This is a space I've worked in for years, and I've not only followed the space but I've really followed the clinical data of whatever has been available around the second-generation osteoarthritis pain management products. And still to this day, I've not seen clinical data that's as exciting as the clinical data that we have on the 2 large clinical trials that we've already done on CINGAL. And while there are other second-generation products coming in the pipeline, again, I still don't see products that have the kind of data in the large clinical trials that we've done. The other thing that makes me continue to be bullish on this product is the OUS sales. The biggest country from a sales perspective for CINGAL is actually Canada, which to me is very telling, given the very similar orthopedic paradigm that exists between Canada and the U.S., is very telling about what CINGAL will be able to do in the United States. And interestingly, we don't see CINGAL cannibalizing ORTHOVISC and MONOVISC. We really see it playing a much bigger role in what was the steroid injection market. So both from a clinical outcomes perspective and a surgeon uptake perspective, we really like what CINGAL has to offer and what it can do in the United States. For both CINGAL and HYALOFAST, those products are post 2024 from a U.S. top line perspective. HYALOFAST, we have the clinical trial ongoing in the U.S., and again, it's an exciting product outside the United States. I would say it's sort of broadly used. Pan-European is the biggest concentration of where that product gets used. And it really is kind of the primary cartilage repair adjunctive product that gets used in that pan-European market today. So we like those clinical results that we see there. We like the surgeon uptake that we see in the kind of pan-European market. And we also like the U.S. market for what that brings, if you look at sort of the corollary to that, in the U.S., it's MACI that Vericel sells. And Vericel has done very well with that product, but it's a very expensive product. It requires a patient to go through 2 separate surgical procedures. And so we're excited to be able to get HYALOFAST on the shelf in the OR where surgeons can just grab it and use it in a single-stage procedure. So continue to be excited about those 2. We will continue to invest in those clinical trials, but think of them as kind of post 2024 for U.S. sales events.

All right. Great. That's a really helpful color. I guess maybe turning to sort of the core HA injection business a little bit. So you're the market leader in the U.S. And I guess, recently, there's been some competitive noise and clinical trials from some of the other companies that are in the periphery. I guess can you maybe talk a little bit about the competitive dynamics? And what are some of the upcoming trials or programs that you are closely monitoring?

Yes. In terms of the straight viscosupplement space, I'd say the competitive dynamics are really more around -- first of all, that business has been pretty significantly moderated by COVID. What we did see and then the industry saw, this is just a market observation, is that the in-office injection market was differentially and greater -- more greatly impacted by COVID and had a bit of a slower recovery because the surgeons were focusing on surgeries, where their patients had a greater need. But within that market, I would say one of the competitive dynamics to call out is historically, there's been a bit of an uneven playing field based on how companies either chose to report or not report their ASPs to CMS. And more recently, in late 2019, there was a new law signed in to place that will now compel companies to report their ASPs, which by 2022, will effectively put all the companies on a more level playing field from a commercial sales perspective. So I think that is a dynamic that is certainly coming in the next few months that will be a good thing, I think, for the industry. I think the clinical trials that we watch are really around the second-generation OA Pain Management therapies. And we do watch them like a hawk, and that's kind of what I was previously commenting on with CINGAL, I watch those clinical trials and the data that come out of them and have yet to see a product that performs as well as CINGAL in a pain trial. So again, we feel like we have a very solid position in our ORTHOVISC and MONOVISC baseline business and a great future with the second-generation product in CINGAL.

All right. I guess maybe within the Arthrosurface and Parcus Medical portfolios, outside of the ones that you previously mentioned, are there particular products that you would like to highlight as sort of some flagship products or differentiated products that physicians are particularly positive on?

Yes. I would -- I guess, in the Parcus portfolio, we play largely in shoulder, soft tissue repair procedures, rotator cuff, bicep tenodesis, SLAP repair. That is largely a suture anchor suture business, and that is one where we have probably the most significant concentration of business. We also have some really innovative products in the hand and foot and ankle. A syndesmosis system that was launched not too long ago that's getting a lot of traction that surgeons are really excited about. And then again, those procedures will often use TACTOSET at the same time because there's often a bone lesion that needs to be treated in conjunction with that. On the Arthrosurface side, again, there's a heavy concentration in our shoulder franchise. Those OVO and OVOMotion are definitely the most significant products that we sell out of that business. And at the same time, the motion preserving, bone preserving aspects of that technology got designed into a bunch of other products that we continue to leverage across toe, wrist, elbow, shoulder, and so they're -- and outside the United States in the knee. So there are a number of product areas that we like with that Arthrosurface business that are really giving patients additional options as their disease progresses, but allows them to stay kind of in that minimally invasive category. Again, I would think of this as a portfolio of products that the surgeons really can leverage to treat that joint preservation-driven patient, which also is largely a play in that ASC market, which is where most of these procedures went during COVID, and I think they will probably stay there. So we're really positioned well to continue to focus on that call point.

Yes. I guess speaking of ASCs, it's a -- the access point that's becoming more and more important. It's recovering faster than the hospital channels. I was just wondering this in terms of access to physicians and ASCs training, how would you characterize that? Is that mostly back to normal? Or are you still seeing some restrictions in any parts of the U.S.?

Let me just clarify, was the question on procedures or on training on safe and effective use of product because I thought I heard training.

Yes. It's more for training, access to training.

Yes. It's a great question. As everyone understands, training on the safe and effective use of product is really important for surgeons to feel comfortable in using and adopting the technology and to make sure that they are fully trained to give their patients the best outcomes. We have continued to train on the safe and effective use of products throughout COVID. During the lockdown, we were very focused on things that we could do virtually. TACTOSET really lends itself to virtual training. It's a fairly simple surgical procedure. And we trained a lot of clinicians on safe and effective use of TACTOSET during COVID. But we are back doing labs and doing face-to-face training. It is starting to ramp up. I guess the other thing that we're starting to see ramp up are face-to-face meetings. American Academy of Orthopedic Surgeons is continuing to plan for their meeting at the end of August, which will be great. It's been 1.5 years since we've really been able to get in front of our customers in a congress setting. So the answer is yes. It is starting to return. It is still, though, very mediated by access to surgeons, access to facilities and just kind of the hospital rules around surgeons interfacing with folks outside the hospital setting, but it is starting to ramp back up.

Okay. Great. That's good to hear. We're definitely excited to go out there and start to see some people go to some conferences and learn about the product.

Absolutely. We're all itching to do it. And I think that it's coming. I think we're starting to really see the tides turn with the vaccines coming. And we did 2 meetings in the last 2 months, and they were face-to-face. Attendance wasn't what it used to be, but it was real, and we were able to get in front of a number of customers. So we're excited to be able to do more of that as the year goes on.

All right. Great. I think we've got a few more minutes left. Maybe just a few more questions. Just -- you guys have your Analyst Day next week. It's going to be very exciting, lots of new updates. Maybe if you can give us a quick preview. What should we expect in terms of some of the products, updates, commercial strategies, pipeline and maybe some physician feedback?

Yes. Young, thanks for that question, and I get a little time to give an advertisement on that. I hope people join us. We've put a lot of work into providing materials and access to a surgeon that is going to talk about our products. We're excited to have the surgeon kind of give his perspective on our portfolio and how he uses it to help his patients return to active living. People are going to gain better insight into our commercial organization, our commercial strategy. We're going to go into a little bit more detail around our R&D pipeline more than what you've seen me talk about either today or the last few weeks. We're going to have our commercial heads and our R&D heads speaking. So you'll have greater access to the broader management team. And we're -- it's just going to be a great opportunity for us to do a deeper dive into the business, especially since the acquisitions, which we haven't had the opportunity to do. And we just -- we hope people take the advantage of the opportunity to hear the deeper story with greater access to the broader management team and to hear from a surgeon.

All right. Great. Definitely looking forward to that. Maybe just a last question in the interest of time. What's the #1 misperception about Anika that investors might have?

Yes. I think -- look, I've been in the job a little over a year now. And so if I think back across the many, many great investor conversations I've had, I think one of the bigger misperceptions is that Anika is still a contract manufacturer largely for -- J&J was the biggest relationship. Although there were many others, I just think J&J was the most visible one. That's not who we are anymore. We are a joint preservation company. We have our own commercial team. We are selling our own products. We still have that relationship with J&J. It is still a very important part of our business, both from a top line and free cash flow perspective. But we have greatly diversified our top line away from kind of the dependence on that J&J revenue, and we have completely shifted the strategy of the company to be our own commercial, fully integrated organization focused on joint preservation. And look, that happened pretty quickly and during COVID. So I think maybe not everybody understands that we really are a different company today. I, for one, am looking -- really looking forward to the American Academy of Orthopedic Surgeons booth because I think that will be a great opportunity for people to walk into the booth and see that broad portfolio of joint preservation products that we have, to see a little bit more about who we are as a new Anika. So thanks for the question.

All right. Great. Thanks, Cheryl. Thanks, Mike, for your time. Hopefully, you can enjoy the rest of the conference. And thanks, everyone, for tuning in.

Thanks, Young. We appreciate the opportunity. Have a great day, everybody.

All right. Great.