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

Great. All right. Well, with that, I'm going to thank my colleagues here for their great comments this morning. And I'll go ahead and get us moving on to the next session and introduce Dr. Wasik Ashraf. Dr. Ashraf is a board-certified fellowship trained surgeon, specializing in sports medicine, joint preservation and cartilage restoration. He completed his residency in orthopedic surgery at the Northwell Hospital System and his fellowship in Sports Medicine at the Houston Clinic in Columbus, Georgia. Currently, he practices in Orange County, New York and provide sports coverage to several local schools. He's the Director of Sports Medicine at St. Luke's Cornwall Hospital and spearheads the opioid-sparing surgery program in the community. We're really excited to have Dr. Ashraf here today to help you all better envision how he uses Anika's joint preservation products to help his patients with their joint preservation needs. So with that, I will turn it over to Dr. Wasik Ashraf.

Hey, good morning, everyone. Thank you again for allowing me to speak about my experience using Anika product. My name is Wasik Ashraf. I'm a board-certified orthopedic surgeon and really wanted to talk to you about a surgeon's perspective and how we restore active living for our patients. Next slide. I did my residency at Northwell in Long Island, did my sports medicine fellowship at the Houston Clinic in Columbus, Georgia, and I currently practice about an hour north of New York City at Crystal Run Healthcare. Next. I think this is an important thing to talk about as orthopedic surgeons. Although fellowship trained in sports medicine, my practice really involves in joint replacement, joint preservation, sports medicine as well as orthopedic trauma. And really, the Anika portfolio gives me the opportunity and the tool to really help my patient in all those patient demographics. Next slide. And what I want to talk about today, and you've heard kind of in the morning about patients' expectations. As our patients' expectations are evolving, our surgeons' expectations and needs are evolving as well. With the employment of new technological advancements, the paradigm shift in orthopedics is changing. No longer do patients want joint replacement, they want joint preservation. They want minimally invasive. They want to return to their activities without restriction. And we'll talk about how Anika has really allowed surgeons, including myself, to help my patients restore their active living. Next. So this is a topic we kind of touched upon all morning is what are patients looking for? And in the past, they were looking for joint replacement. And as information has been shared, more and more patients are searching for joint preservation, joint conservation, cartilage restoration. They don't want cartilage removal. They want to fill it and restore the cartilage that they have. They want minimally invasive regenerative medicine, and they want, again, to be able to return to all their activities. Next. Patients, I take care of a group of active seasoned athletes, they're pickleball players, and they want to play pickleball more than anything else, now that they're retired. And they want to -- when they come, they want to be able to return to playing sports, not be restricted by a procedure. So they want to maintain active lifestyle. They want to do all their activities, and they don't want to be limited due to pain or a stiffness. This helps our patients, and my patients, maintain their independence and quality of life. And there's an increased demand from my patients to find an alternative to large invasive procedures. Next. And we have seen these patients that have been more active turning to joint replacements at an earlier age, and that has ramifications. And these ramifications include more surgery, revision surgery at a younger age, which don't have the same outcomes as primary joint replacements. And one solution such as a joint replacement really truly doesn't work for all of our patients. We saw the video of the bodybuilder who was able to return back to all their sports and lifting after an OVOMotion with an inlay glenoid. I can tell you is that if this was done with a standard stemmed implant, you likely would not be able to return to those activities. And this paradigm shift that we are seeing in osteoarthritis, and also how we manage osteoarthritis is shifting from a hospital setting, especially pre-COVID, to now more into an ASC setting, where more minimally invasive, bone conserving and joint preservation techniques can be employed. Next. So now that we kind of talked about patients doing research, they know what they want, they're more knowledgeable they are looking for alternatives as surgeons, we have to meet their demands. And that's where we are able to meet their demands by finding other solutions than our traditional total joint replacements and other treatment options. And with technology and its advancements, such as MRIs, which help us diagnose things like bone marrow lesions or subcondral fractures we're able to intervene earlier in the disease process and really stop them from getting a joint replacement. So early intervention, minimal invasive joint preservation techniques really help our patients to recover quicker. And as they recover quicker, they're happier and in turn, for us as a surgeon, we get more referrals. Next. This is an important topic that we kind of talked about throughout the morning about the progressive -- the continuum of osteoarthritis. And the best way to kind of think about this is KL Grade 1, which is a healthy knee is somewhere -- someone who has no pain, no joint issues, and as we move over to KL 4, which is a severe osteoarthritis where they need a total joint replacement. But there is a level between KL 1 to KL 4, where the patients, I think, are not receiving all the treatment options that are currently available, and that's a big, large population of patients. These are patients that may have mild to moderate osteoarthritis that can benefit from early interventions such as MONOVISC, ORTHOVISC or CINGAL in the future. They are patients that have arthritis but now have a bone marrow lesion where they could benefit from procedure like TACTOSET, minimally invasive. And then we can also talk about a unicompartmental disease such as patellofemoral osteoarthritis, where we may be able to just replace part of the knee and save them from a total knee replacement. But as orthopedic surgeons in our office, we see the whole spectrum of osteoarthritis. And to be able to treat all throughout the spectrum with different products in a way to help our patients is truly invaluable. Next. We talked about Anika's innovative high-quality products, but this also translates into surgeon and resident and fellow education. Because at the end of the day, educating and really fully informing surgeons, fellows and residents is really key for us to know what is available to offer our patients. We have -- they have knowledgeable sales and executive leadership and really a true spectrum of products that can really help us treat the progressive arthritic disease in knees and shoulders. Where these procedures are done is also something that is shifting and changing. In the past, joint replacement, a lot of the larger sports surgeries, were done at the hospital, and through COVID, especially accelerated the shift to an ASC setting. So when we were able to do such as TACTOSET, Parcus soft tissue, anchor repairs, cartilage lesions, we can now do these procedures at the ASC. Joint preservation, bone preservation techniques such as OVOMotion with an inlay glenoid, patellofemoral also are going to be done and are done at an ASC setting. And we'll kind of talk about more why this product line is perfect for the ASC setting, including advanced instrumentation and looking forward to the HYALOFAST clinical trials. Next. The portfolio power, I think this is an important thing to kind of talk about. For me, personally, my exposure as a surgeon for Arthrosurface was total shoulder replacement. And we had very young patients that wanted to get back to lifting, and I really did not feel comfortable with the standard of what I was using, which was a stemmed implant. And so we -- I went on a search and found OVOMotion with inlay glenoid, and that was my first exposure to an anatomic shoulder replacement. And once I was exposed to the anatomic shoulder replacement, now through the sales force and the sales consultants, they have -- were able to fully inform me about the other products in their portfolio, such as TACTOSET, such as AcTiFlip, Synd-EZ. And these are all things that I'm using now, but the way I was exposed to this was through the Arthrosurface legacy product. And to me, that's important because this is the way the surgeons can learn more about the portfolio power. And you may not have access to the surgeon with one product only, but if you're able to assist the surgeon help their patients through a portfolio of products, you have different ways of really accessing the surgeon to help their patients. Next, this is a patient, a 52-year-old female, sent to me for a second opinion. Pain started approximately 3 weeks ago, and the patient was told they needed a knee replacement. This is an active 52-year-old female. And prior to 3 weeks ago, really had no pain. And what I want to point out on that MRI is all the swelling, all the edema in the tibial plateau, which is where the patient was having pain. With advanced imaging, such as MRI, we're able to see where the bone marrow lesion is, where the subcondral fracture, where the patient is having the pain. And we're able to fix this area with -- utilizing TACTOSET. And within 3 weeks, she was pain-free and back to her activities of daily living. And we can play this video now. [Presentation]

Sorry about the music as well. I guess this is the OR music that always plays through to keep the mood light. As far as what you see here in these images, this patient does have osteoarthritis, but you could see the area where we were able to accurately inject calcium phosphate to support the bone marrow lesion and really save this patient from getting an early joint replacement. Next. So why do I use TACTOSET? And what do I see as the competitive advantage having used other things in the market? A few things. One, the addition of hyaluronic acid truly makes this procedure, the flowability and the ability of the calcium phosphate to penetrate into the bone marrow lesion easier. The calcium phosphate remodels over time, so where you're injecting and over time will be replaced by new bone. The advanced instrumentation is also very important for surgeons. We are able to use fluoroscopy, x-ray machines, to accurately guide and place the pin right where the bone marrow lesion is and then inject it with either an end cannula or a side cannula to really fill where the void is located. And another important thing is easier for my surgical tech to mix. I think one important thing is as we're doing all these procedure, it has to be easy on my staff. And the staff feedback is very important, and the staff feedback so far has been -- it's been easy to mix and easy to use. Next, OVOMotion with an inlay glenoid, it is something that I've been using for all my total shoulder needs. And one thing that is important, we talked about that I have used it and started to use it on my younger patient initially. Over the last 5 years, I use it for all my anatomic shoulder needs at this time from young to our more seasoned athletes and patients. The reason why I use my -- the OVOMotion is, #1 is the patients are actually really faster recovery. And we'll show these videos in a bit, kind of show how 2 spectrums of patients are able to return it within 6 weeks after surgery of their shoulder. It's minimally invasive, which is perfect for an ASC setting. Minimal blood loss, minimal bone resection. It's anatomic. And what's important is that humerus -- the humoral head, it's not a circle. It's an oval shaped. And so what this anatomic shoulder replacement does is replace that oval shape, and that is key in functionality and the stresses that the shoulders see. It's consistent within all stages of arthritis: mild, moderate, severe. And again, back to life and back to active living. First, video. [Presentation]

Next video. [Presentation]

Next. I think what's important here to realize is, normally, you're in a sling for approximately 4 to 6 weeks after a traditional shoulder replacement. With the minimally invasive procedure, with minimal bone resection, you're able to recreate the shoulder joint more anatomically. So as surgeons, we're more comfortable letting our patients do things earlier. So at 6 weeks, you saw a 79-year-old patient really lift their arm unassisted over his head. And then you also saw a 40-year-old hitting a golf ball 6 weeks after. So they're able to return to their activities, their lifestyle, they're active living much sooner and more consistently after an anatomic shoulder replacement OVOMotion. Next, range of motion is very important. Having seen my own patient results with range of emotion after an anatomic shoulder replacement, patients obtain better forward elevation, which is selection over their head, also better external rotation. And those are key as they want to return to their activities of daily living and sports, such as lifting, swimming, pickle ball, tennis, and these are all motions that are important. And what this chart really shows, as many athletes have shown, that a stemless with a non-spherical head -- I think that's a very important thing because there are others that are stemless, but their head is not a sphere, it's a circle. So a nonspherical head demonstrates to have better range of emotion in forward elevation and external rotation. And this has been consistent in my practice as well. And this is why the patients after and OVOMotion with an inlay glenoid are able to return to better and faster activities. Next, so why do I choose OVOMotion? I believe in the anatomic design. Looking at the head of the humerus, which is a non-oval, a non-spherical head we're replacing it with the nonspherical head. Minimal bone resection with an inlay glenoid, and the inlay glenoid is also very important. You don't get that rocking horse phenomenon. And that really just means the socket that's inside the glenoid is not being pushed to make it go loose, which is something that we have seen in other stemless or stemmed anatomic shoulder replacement. The instrumentation of the OVOMotion is also important as we do not overstuff the joint, so patients are able to see better range of motion. One of the reasons why the other shoulder designs may not -- or does not regain the same motion is the fact that some may be overstuffed with an anatomic. With the OVOMotion with an inlay glenoid, it's very hard to overstuff that joint. Faster recovery, better range of motion, ASC setting, really, it's, for me, the way to replace and get my patients back to their activities after a shoulder arthroplasty. And again, my patients are thrilled. I get videos and pictures from all around the state and different states that traveled to me for this procedure, and this is one right here. It's -- you can pay the video. [Presentation]

This is a patient that is 6 months out from a shoulder replacement, able to lift weights over their head without any pain. Next. So trends towards ASC surgery is very important. With COVID, patients are acutely aware of where the surgeries are being done. More and more patients want to go to an ASC center for their surgical needs, and we want to be able to provide a safe way to be able to take care of our patients. So patient safety and satisfaction is very important. Technologically would decrease surgical time, decrease blood loss, minimally invasive approach to be able to do these procedures, really, we're able to take care of these patients in an ASC setting. And the Anika portfolio of product, talking about soft tissue, legacy Parcus to TACTOSET and now to legacy Arthrosurface products are all well positioned in the ASC setting. Next. So in my practice, my current use and how I have been using the product portfolio from Anika is in the office I do use ORTHOVISC, MONOVISC from DePuy Mitek. Alternatives to cortisone. I think CINGAL is an exciting future product. And the thought that CINGAL may cannibalize ORTHOVISC and MONOVISC is well answered by Dr. Blanchard, in that really, there are 2 different ways of treating the patients and really would not come in competition in my practice. Joint preservation. TACTOSET is a great product, which helps us treat bone marrow lesions, subchondral fractures and how patients avoid joint replacements they may not need at this time. Soft tissue anchors and instrumentations are also very important. As we do shoulder replacement with OVOMotion, one of the things that I do now is use Parcus anchors to repair the subscapularis. So again, the power of the portfolio is to come in with one and then also properly educate and talk about different products in the portfolio, and the surgeons are going to be more and more comfortable using things all across that portfolio line. HYALOFAST is something that's very exciting. I can't wait for it to -- get into the U.S. The results and that I've been seeing are very exciting. And again, we talked about joint preservation, bone preservation techniques where OVOMotion with an inlay glenoid, PF, the patellofemoral replacement, and this extends into the hand, wrist foot and ankle. Next.

Great. Thank you. Ashraf. We greatly appreciate you sharing your clinical perspective on Anika and our joint preservation story. Good morning. My name is Ben Joseph, and I'm Vice President of U.S. Commercial and Global Brand Management. And I joined Anika in August of 2020, and I could not be more excited to be here. I've been part of both public and private companies as well as lighter health care innovation start-up. And I'll tell you the building box for something great right here at Anika. What I found when I joined Anika was an exceptionally talented team who is engaged and laser-focused on joint preservation. And the reality is that no company has gotten joint preservation quite right, not yet. During my 10 years at Biomet and Zimmer Biomet, all of them were in sports medicine and extremities, I was in various increasing roles of responsibility across the company, including marketing, branding, sales as well as medical education and training. I was named General Manager of the Foot and Ankle business at close and led that group. And in the entirety, over the 10 years I was there, most notably, we took a U.S. extremities other player and grew it into a market leader all organically. How? We put the right people in the right places, first and foremost. We had incredible product innovation. We anticipated market trends extremely well. We had nearly flawless commercial execution as well as what I believe to be a best-in-class training and education plan. And the result of that, 28 quarters of consecutive double-digit growth. And so we're all here because of our opportunity in joint preservation areas of unmet need. And so how do we become a leader in this space? Let me start with some keys to our commercial execution. As you've heard, a lot has happened over the past 18 months, and we're beginning to execute our strategy on all fronts. We're strengthening our global commercial organization, again, putting the right people in the right places, driving focus and accountability. And we're investing in systems and capabilities, all with the intent of scaling the business. Secondly, we're just beginning to tell our Anika joint preservation story. We have a great joint preservation story to tell, but Anika has very brand -- very little brand recognition right now, and we're changing that, and I'll talk more about that later on in the presentation. And then third, we're driving commercial execution, particularly focused at the ambulatory surgery center. You've heard a little bit about our focused products in shoulder and foot and ankle, but we're also executing on our training and education. Again, we're hiring people across the business, and we're incredibly excited, not only about the products we have today, but the R&D pipeline that's coming. So I'll start by talking about the broad products and segments, beginning with joint pain management. Hyaluronic acid is the foundation that Anika was built on, and is also a key part of our future. Right now, we have the #1 U.S. viscosupplement market position through our partnership with J&J Mitek. And again, we remain very bullish as Sean CINGAL as an exciting growth opportunity in the U.S. when it hits the market. I'm going to talk a little bit more about our joint pain management in more detail beginning with Mitek and viscosupplement. A takeaway message you should hear loud and clear is with Mitek and their in-office call point, we remain a U.S. market leader in viscosupplement and nearly 29% market share, and that the business is stabilizing, stabilizing from COVID as well as other market dynamics. We're seeing an uptick in patient flow in the office as well as from 2020 signed legislation, and we believe a level playing field, ensuring a more consistent reimbursement approach for U.S. visco products. All this leads to a growing confidence that we can meet and outpace this mature $1 billion market growing at about 1% a year. And again, this reinvestment, the cash flow from this part of our business into higher growth rates in joint preservation is critical to our strategy. So let me move on to CINGAL. Again, you've heard a lot about the CINGAL today, and it's sold in multiple international markets. And where it is sold, along with ORTHOVISC and MONOVISC, again, we've not seen any real can cannibalization at all. It's been additive to our visco business. And yes, we are making substantial investments in joint pain management and CINGAL. And so given that, we had an outside firm do an assessment of CINGAL and its competitive position in the $1 billion second-generation intraarticular injection market. And this assessment showed that CINGAL rises to the top of commercial attractiveness. We're looking at many dimensions, such as clinical evidence, pain relief and overall safety profile. And two other very interesting market dynamics became clear during this outside review. First of all, the HA market is going to be quite durable through 2030, which bodes very well for our Mitek visco business. And secondly, this second-generation market really takes over as the treatment of preference and nearly 52% of injections by 2030. And much of that procedure shift is driven by erosion in the current steroid injection market. So in short, CINGAL is well positioned to lead the market when it enters the U.S. So let me spend a little bit more time on regenerative solutions. Similar to in joint pain management, hyaluronic acid is a core foundational technology in our joint preservation product offering and specifically in regenerative solutions. As you heard from Dr. Ashraf and others, harnessing the patient's own biology unlocking the power and healing that's in all of our bodies is quite incredible and compelling. And this is what regenerative solutions is all about. It's driving significant revenue all around the world, in particular, with 2 key brands. You've heard a lot about TACTOSET and HYALOFAST. And let me talk more about TACTOSET. Insufficiency fractures can be really painful for people, and treating these with TACTOSET can delay more invasive procedures like a total knee replacement. And that's a win for patients. This market is about $100 million today and primarily used in foot and ankle and knee and shoulder. And again, we launched TACTOSET in Q4 of 2019 and then COVID hit. So today, although we're early in our launch, we're seeing significant commercial adoption and traction, and we really like our competitive position with TACTOSET relative to the market leader. As you heard from Dr. Ashraf, surgeons love the ease of use, the flowability, and HA is a natural binding agent. And what we found commercially is once we demo the product, we convert business pretty quickly, which is quite nice for us. And with all the additional indications and expansion that were talked about earlier today, you only see an additional commercial acceleration for this key brand. So let's move to another key product, HYALOFAST. HYALOFAST is playing out extraordinarily well all around the world in various international markets. And again, why are we investing a lot in CINGAL -- or HYALOFAST is because we believe it's a truly differentiated single-stage HA scaffold for cartilage regeneration. And again, it competes quite favorably against the top competitor and market leader. Simplified technique. One surgery versus 2, and this is a huge deal for patients as every surgery is a big deal. And again, it's off the shelf. Sometimes preoperative imaging, as you heard earlier, doesn't identify the need for a cartilage solution. And so surgeons can go simply grab it from inventory and move on with his or her bag. So the prospects for U.S. commercial adoption of HYALOFAST is extraordinary when it hits the market, and it fits perfectly into our joint preservation call point and portfolio. So I'll now move into soft tissue and our bones preserving joint technologies. Soft tissue is a strategically important business for us. Again, the same surgeons that are using Arthrosurface and TACTOSET also use sports anchors, but much more frequently. And so being in these cases, opens up access that we need to drive the other parts of our joint preservation portfolio. With a wide variety of suture anchors driven by indication, anatomy and surgeon preference, this is what the ASCs demand. Again, many of these products are in kits, and delivery model innovation is quite important. And so that's really what the soft case markets about is, again, opening up this access and this call point in order to drive the rest of our portfolio. Now moving on to the last pillar in our product offering, bone preserving joint technologies. Our Arthrosurface bone sparing devices are one of the best stories to be told for patients. Again, used earlier, usually in the continuum of care, they're bone and anatomy sparing. They're intended to reduce pain and provide for more natural motion, and we have a lot of patient engagement and advocacy with these product categories. Patients are out there telling their stories in social media, giving their testimonials and, most importantly, living their lives pain free, and that's the best endorsement that we could ever hope for. We've seen significant commercial adoption of our products. And again, OVOMotion and wrist motion are key examples of that, as you can see on this slide. In fact, the upcoming WristMotion total wrist leverages the clinical history and experience of our wrist motion heavy. These are well received in the market, and we're building much broader, bigger brands and categories around them from a portfolio and innovation perspective. We have big expectations commercially for these products. So let me finish the product review talking about the WristMotion total launch. As you've heard today, we expect to launch this in the second half of 2021, and we are on track. This is a $30 million market when you take the traditional wrist fusion market and the total wrist market together. And these arthritic wrists can be quite painful and debilitating for patients, and this is another example of a meaningful innovation at Anika. And markets that we pursue don't have to be massive for us to be interested. Meeting unmet needs, addressing real problems and getting people back to living their lives -- living their full lives pain-free, that's why we're all here. So that's a brief overview of our products and the impacts they made commercially on patients. And I'll now transition into our commercial structure and strategy. So here's our global footprint. We have direct Anika sales leaders all around the world. We work with a large network of distributors, third-party agents and sales reps. And in total, over 200 distributors globally. You've seen this revenue mix before, 79% in the U.S., 21% international. And because our portfolio differs around the world because of clearances and availability, you'll see different adaptations on how we actually execute our portfolio, differ region-by-region and country by country. So I'll walk through each commercial region now in little more detail, beginning with the U.S. 2019 is on the left and 2021 today. We're an entirely different commercial organization today compared to 2019. Back then, we had one product, and that was TACTOSET, and we were selling that through just 4 direct reps. Now flash forward to today, we're a joint preservation company with over 125 independent distributors and over 550, 1099 reps. Our product breadth is different. Our commercial structure is robust, and we are entirely different today. So more specifically, we have 7 geographies and sales leaders in each region covering all 3 businesses, so a broad national coverage. We have a lot of experienced leadership out in the field, and we're driving accountability and focus within the independent distributors. We want to be their top priority. We want be their joint preservation company of choice, and so of course, we want to see full line Anika distributors, where possible, with larger geographic footprints. All of that helps with scale and efficiency. So let's move into now how Anika sales team is structured, and how they work with our independent sales channel. So what are our teams doing out in the field. While they're driving product competency within the distributorships and with the independent reps, they're engaging in key sales activities, things like sales calls and product demos and service, and even sometimes, doing -- helping with first case support. They're helping coordinate product launches, trainings. They're holding distributors accountable for metrics and performance. Really, we're partnering together to grow the Anika joint preservation business together. And yes, 100% of our sales are through our independent distributors and reps and that is intentional and is intentional for 3 reasons. First, it's more cost-effective for us to use an independent channel as opposed to building our own direct channel. Secondly, it helps with speed and scale. Again, building out our own channel would take a significant amount of time. And so we want to leverage the great channel and distribution networks that already exist. And third, and maybe most importantly, customer access. In this industry, a lot of the relationships and those deep engagements happen locally, and so engaging with independent distributors and reps is the right way for us to access that key customer. And again, no company has gotten joint preservation quite right. They often lose focus, they chase other areas with larger addressable markets, perhaps. But the more we stay focused in joint preservation, the more we bring out meaningful innovations and meet unmet needs, the more we rise in importance compared to the other lines that are carried with the independent distributors, and this is our huge opportunity. So moving on to some comments about our international growth strategy. I'll first introduce James Chase virtually, James is my counterpart in the U.K. He started with Anika in 2018 and cannot be here because of COVID travel restrictions. So first, there are some differences, key differences between the U.S. and international markets, things like reimbursement and pricing. There's a little more fragmentation and variability as you go country by country. And again, often, the portfolio and products are sold through third-party distributors and wholesalers. And again, our product availability does differ with 2 key products to call out, particularly CINGAL and HYALOFAST, being available in international markets and not the U.S. So although there are differences, there are many similarities as well between strategies in the U.S. and international. We want to drive meaningful growth through expanded networks, focusing on high-value markets first, focusing on joint pain management. And internationally, that's clearly viscosupplement, so ORTHOVISC and MONOVISC and CINGAL. That's a powerful combination from a portfolio perspective. And then within joint preservation, it's really about cartilage. So HYALOFAST and Nanofracture, which is a microfracture product that came from the arthrosurface side go really well together as well as the suture anchors from Parcus. Again, that focus around joint preservation, cartilage is a key growth driver in many international markets. And then, of course, we want to accelerate speed to market and evaluate possible pilots where they make sense. So now moving on from commercial regions. I'll talk about the U.S. and some specific areas of focus in joint preservation. To be a leader in joint preservation, it requires us to develop and commercialize meaningful innovations. And our beachhead, as you heard earlier today, is in the shoulder and foot and ankle. And you'll see some examples of large market opportunities in the center of this table on the slide. And so why do we like these markets? Well, one, they're massive markets. They match up extraordinarily well with our commercial experience, and they complement our distributors and sales channel quite well. And these are all done in the ASC. But we're not going to forget about existing products that are driving performance today. A lot of innovations to come, a lot of opportunities that we're looking at. But today, we have significant commercial drivers in shoulder and foot and ankle. So an example, you heard about earlier from Dr. Ashraf. In the shoulder, OVOMotion with suture anchors, and TACTOSET applied well together. And then in the foot and ankle, you'll see crossover product categories as well -- to go well together. So total motion, the same soft tissue anchors and TACTOSET, again, go well together. So now let me go on to some market drivers and trends that are shaping our industry and informing our strategy. The health care market is extraordinarily dynamic. And it's been accelerated by COVID, and some of these shifts, we believe, are permanent. So one, procedures are shifting away from hospitals to the ambulatory surgery setting. Dr. Ashraf talked a lot about this earlier, but patients want to get in, they want to get the procedure done, and they want to go home. You'll often find higher patient satisfaction rates in the ASC setting. You'll also find that often, efficiency and workflow are more efficient in the ASC. And again, that COVID dynamic has shifted, we believe, permanently, many elective procedures away from hospitals to the ASC setting. And CMS and other -- and commercial payors are allowing more products to be reimbursed in the ASC setting. All of it supports that first trend. Secondly, patients have higher expectations. They expect more. They're more engaged, they are more knowledgeable and aware about what's being done. They demand new technologies. They want a stepped approach to their care. That's a theme you've heard over and over today. Patients expect less when it comes to their joint disease progression. They want to stay active. They want to live pain-free without limitation. And then, again, from a clinician standpoint, as Dr. Ashraf talked about, clinicians want earlier intervention, and they want minimally invasive options. So this is exactly where our joint preservation business is going, and these dynamics work in our favor. So let's dive a bit deeper into the ASCs and discuss why they are key for us. So the ASC setting is a key for us for 3 reasons: patients, customers, and market dynamics. I just spent some time talking about patients, so let me talk about customers. If you look at our call point, we have at least 6 different customer dynamics, everything from your sports medicine specialist to an upper extremity specialist or a lower extremity specialist, even general surgeons. All of these use our joint preservation products in the ASC setting, and so that's why that call point is so critical for us. And third, market dynamics. If you look at just the U.S. alone, there are 6,000 ASCS, and right now, all of our implants across the portfolio are being reimbursed in the surgical setting. Driving meaningful product adoption, but products are not the only thing that matter. It's becoming more and more important on the delivery model, how our products are delivered because space is limited. There are some capacity constraints in the ASC. We've got to be really thoughtful and intentional about how we deliver our products to customers, and we are. And we predict and forecast more revenue on a percentage basis for Anika coming from the ASC. So let me summarize what we've done and accomplished over the past year and then discuss other keys. As you've heard over and over, beginning with Cheryl, people are always the key to achieving great things, and this has been a focus for us. So on the first column on the left, you'll see that we've identified critical commercial needs and hired or are hiring across the business. Secondly, relating to the innovation you've heard about, we've done a comprehensive portfolio and gap analysis across each business, so we know exactly what we need to do from an R&D perspective in each area of the business to drive long-term growth. We're training on the safe and effective use of our products. We're training our sales force. We just rolled out a rich analytics platform for our sales teams to use to manage the business and various other commercial ops initiatives. And then third, on the right-hand side of the screen, let me talk about branding for a minute. We have a great history of innovation, particularly with hyaluronic acid and Anika, and we've transformed into a global joint preservation company. We have a great story to tell, and we need to build Anika brand awareness. Arthrosurface has phenomenal brand leverage and brand history with it, and you'll see a new brand start to emerge regarding [indiscernible] Anika Sports Medicine. So a lot's been done. Let me show you some visuals on where we're taking the brand. Again, the market doesn't really know Anika right now, but it will. You'll see new imagery come to fruition, real people, authentic people, perfectly imperfect, living their lives, staying active, working, living their fullest life possible, hopefully all pain-free. On the right-hand side of the screen, you'll see a render of our booth that you'll see at the AAOs, or American Academy of Orthopedic Surgeons, meeting later on in August, early September. And unfortunately, because of COVID, we were not able to do the meeting in 2020 as it was canceled. But 2021 is the coming out party for Anika, and you're going to see us in the market. We're building awareness on products and story around who we are and why to believe in us as a joint preservation company. And we're well on our way. So let me wrap up. We've accomplished a lot, and we have line of sight to what we need to do. We're filling key gaps on the people side of the business with experience and energy across the organization. Second, we're focused on the ASC and pushing our entire joint preservation portfolio. Third, we're launching Anika brand, really, for the first time in the market, and building awareness around all that we're doing and us as a joint preservation company. And then fourth and last, were focusing on this $8 billion global market opportunity in joint preservation, and we're laser-focused on executing on that. And at the end of the day, this plan is driven by experience and execution. Thanks for your time, and let me turn it over to Mike Levitz, our CFO. Mike?

Thank you very much, Ben. Good morning, everyone. I'm just thrilled to be with you this morning at this exciting time for Anika. This really is an inflection point for this company. As background for the last going on 20 years, have been brought into companies at this type of inflection point with the charge of being part of a team that drives this next phase of a company's transformation, this next phase of growth. Almost 20 years now ago, when I joined Cytyc in the women's health space, it was around this $200 million size. And the challenge there was we had a high-performing team, but we didn't have a large addressable market. And so we drove growth. When I started, $200 million of revenue and were approaching $700 million when we were acquired by Hologic. And that had to be an acquisition story of growing the addressable market and the product portfolio within our focus of women's health. After that, as CFO of Analogic, it was very different. That was a 50-year-old company that really needed to be reinvigorated for growth, and deciding what we are going to do and what we aren't going to and really focus, as these kind of small companies, you really need to drive focus to drive execution. And then most recently, when I -- when the Cytyc and Hologic team kind of got the band back together at Insulet, along with another broader great team in the diabetes space, there, the growth was all organic. Again, it was around $200 million revenue. Now we grew it's north of $700 million organically. But there, it was around execution and raising the expectations and the delivery of the product and raising the opportunity set. So as I come to Anika, and I joined here this last August, I'm just very excited. One of my former colleagues for Insulet told me, you're really going to like these people. You're going to really like this opportunity. I could not be more thrilled. And so what I'm excited to walk you through in my time here is to really try and put together -- you heard from a great team of people here. And we truly have a wonderful team, and we have a really broad team beyond the people you met today, I mean, very talented and passionate people in this space. So I want to talk to you about 4 key messages, key takeaways. First of all, we're going to talk about this strong financial foundation that we're starting from here at Anika. This company has been around for quite some time and has been very successful in building that foundation, and now, is pivoting at an inflection point to accelerated growth and driving profitability. So I want to talk a little bit about the foundation. Secondly, I want to spend a few moments on 2020 and what a truly transformative year 2020 was. With the 2 acquisitions that occurred during the year, the launch of new products, the change in the management team, not to mention COVID and all of the other things that happened in 2020, the company really did transform and we're in the midst of that transformation. So I want to talk a little bit about that and how we were able to deliver strong performance even in the midst of all that was going on last year and what that means for the future. Third, we have strong operating cash flows here at Anika. But we're being very intentional about taking those operating cash flows and reinvesting them in the business to drive growth. You saw we have a large addressable market. We're a very small player in that market, and we have a lot of opportunity in front of us. So we're being very intentional about putting in place the capabilities and competencies to scale this business. And lastly, we want to talk about our financial plans through 2024 because it's not just about what we're doing today. Obviously, it's -- what does success look like? What do all these investments result in? So we're going to talk a little bit about our strategy over the next few years and how we're going to phase that to deliver on the promise of this company by 2024. And frankly, by then, we're just getting started, and there's a tremendous road ahead after 2024. So the strong financial foundation in Anika. What you can see -- and Cheryl talked a little bit about this, in the top left-hand chart, you see the revenue composition and the revenue growth from 2019 to 2020. In 2019, it's largely a dark blue chart there. 90% of the revenue and over 75% of revenue from one customer in that space at Johnson & Johnson Mitek division. And if you look at the historic company, for the 5 years up until 2019, the annual growth rate, the CAGR was around 5%. And it was really a mature business that was throwing off a tremendous amount of profit. And so 2020 was a transformative year, and you can see it in the numbers, for a number of reasons. Number one, the additions of Parcus and Arthrosurface, those acquisitions, in addition to the launch of TACTOSET, really accelerated joint preservation as a key and important part of the Anika story. At the same time, COVID impacted the business. And the combination of COVID market dynamics brought the traditional business, the legacy products, down to a lower base. And so the combination of those 2 things enabled us to drive double-digit growth in the company from 2019 to 2020. But the company looked very different coming out of 2020 than it did in 2019. While the company looked different, there were a few things that stayed the same. Looking at the top right-hand section of this slide, the profitability, the strength of the gross margins stayed the same. This company continues to have strong gross margins. We have -- I want to talk about one metric that you're going to hear us talk about and that is adjusted gross margin. Adjusted gross margin is GAAP gross margin adjusted for acquisition-related charges. Because this past year, we had 2 significant acquisitions. And so when you'll hear me use the term adjusted gross margin, the most significant difference between that and GAAP gross margin is really to pull out those noncash charges associated with acquisition costs. Also transformation-related charges, closing out all product lines or reducing those things, we'll call those out as well. So this company has had strongest margins historically. We expect that to continue. And I'll talk to you about what we expect 2021 here, this year, as well as the future. As a result of those strong gross margins, even in the midst of all of the change in 2020, this company delivered an 18% EBITDA margin -- adjusted EBITDA margin. So again, a very strong financial foundation for the investments that we're making here going forward. And lastly, looking at the balance sheet. This last quarter ended in March, we had $95 million of cash and investments. We have a line of credit, a $50 million line of credit that the company had borrowed on at the beginning of COVID, paid back entirely at the end of last year. And we have a strong foundation there from that perspective. We do still need to finish paying for the acquisitions. We deployed $100 million last year to buy Parcus and Arthrosurface, but there are remaining earn-outs. As of this last quarter, we estimate it's about $31 million of remaining earn-outs, but we'll update on a quarterly basis what we expect that to be. And again, lastly, this company has strong operating cash flows. We delivered over $13 million last year in positive free cash flow. So let's talk a little bit about 2020 and the transformative year that, that was. First, talking about the acquisitions. The acquisitions of Arthrosurface and Parcus Medical occurred at the end of January of last year. So we have now anniversaried out from that -- those acquisitions in the first quarter of this year. The integration, you've heard my colleagues talk about that. We really have one team and one Anika view to the customer. The sales force has been integrated. And that integration: one, is on track; and two, we expect it to be largely complete by the end of this year. We've been focusing on systems rollouts, a lot of things behind the scenes to make sure that we have -- the team has the tools and the capabilities to drive the growth for the future. And you heard Ben talk about some of those commercial investments we're making in systems and things we rolled out this year, and that's gone very well and positions us for the future. Why did we do these acquisitions, and why are they meaningful to us? Number one, revenue synergies. We bought 2 small companies in Arthrosurface and Parcus Medical, each with their own impressive portfolio, but you heard Dr. Ashraf talk about the portfolio effect. These small companies did not have the financial resources or the scale to really realize their full potential. But now, along with the rest of Anika, we now have a broader product portfolio, and we have the financial resources to invest, and we are intentionally investing them to be able to drive growth in this very large addressable market. In terms of the addressable market, as I said, when I was at Cytyc, we had pretty much owned the market, and we were very limited by that. It's one of the reasons I'm so excited at Anika to move from a $1 billion addressable market with the traditional HA injections. It's now an $8 billion addressable market. As a very small company in that, we don't need other companies to lose for us to win. There's a lot of room for us to grow: one, to the targets we have for 2024, but honestly, well beyond that. And we're focused on innovation and delivering those differentiated solutions and investing in the capabilities in R&D that will then deliver on the real potential that we got for Parcus, Arthrosurface in the combined Anika. So in 2020, we did not sit back at all during the pandemic. There was a lot of work going on, driving the focus of this company from its legacy individual companies to this laser-focused company on growth and innovation and success as a commercial company in joint preservation. We upgraded the talent and the organizational capabilities because the strategy or this phase is different and required additional capabilities to achieve and drive execution. But we didn't just decide what we were going to do, we've decided what we weren't going to do. And so we finished out some legacy product lines that were maybe not driving growth, not driving profitability because as a small company, you need to focus. So we've been making investments in the things that are going to drive growth, and we've been deciding what we're not going to do as well so that we can deliver on our strategy. So let's talk for a moment about this year, 2021. We've been giving directional guidance. Given the cloud of COVID, we haven't gone back to our traditional guidance levels that we will be going back to in the future when COVID lifts, but we wanted to give directional guidance for this year. And I am updating our guidance today. We are updating our guidance. We're raising the range of our revenue to now 10% to 13% revenue growth for the year. We're retiring the COVID risk as we're kind of making our way through the year. Pleased to see that vaccines are taking off in the United States and in certain other markets. Want to see that continue, and we really expect the second half of the year to be a broader growth than the first half of the year. And again, really driven by COVID. So our growth is driven by joint preservation and restoration. Again, that's Arthrosurface, Parcus and TACTOSET products, HYALOFAST outside the United States. We expect that product family to grow in the high 20% to low 30% growth rate from last year. That is our primary growth trend. Our joint pain management business, our legacy injections products, we expect to grow in the low single-digit range. That business has stabilized. We believe it's stabilized from last year, and now, is on that steady cadence of growth at market or above market. From a gross margin standpoint, we continue to expect margins just like we had last year in 2020, adjusted gross margin in the high 60s. And on a spending standpoint, as we've said in our previous calls, we are increasing our spending as a percentage of revenue in 2021 here, this year, to focus on the commercial execution capabilities. As COVID lifts, reopening things with -- you've got trade shows, medical education and all of those marketing efforts and branding efforts around this new story. In addition, you saw the product pipeline, there's a lot of work going on. It's a really exciting product capability. So we are reinvesting organically in this business, and you see that in the numbers. That leaves us with an adjusted EBITDA margin expectation for this year of the low to mid-teens. So last year, we were we are spending more on OpEx as a percentage of revenue. So still going to be strong EBITDA margins, in the teens there, even while we're funding this transformation. And lastly, positive cash flow from operations, positive free cash flows continue. So now let's talk about the road to 2024 and the doubling of the revenue of this business from the pre-COVID 2019 levels. We're very excited about the opportunity in front of us. This target of doubling the revenue of the company from 2019, so if 2019 was $115 million revenue, so by extension, doubling it to $230 million. We have line of sight to doing that entirely organically. You heard about that from my colleagues this morning. But as Cheryl said, we also have the opportunity with our strong financial foundation to accelerate that if there are opportunistically good fit tuck-ins along the way. But what you'll see on the chart at the left is a couple of -- I think there are a couple of takeaways that I want to call your attention to. First of all, the growth from where we've been to the doubling of the company is driven by 2 things: one, commercial execution, That is the portfolio effect, the resources, the investments to focus with the existing products that we have on hand today. That's an opportunity that we have largely in the United States. It's 80% of our revenue, but also globally. In addition, new product innovation. And you'll see that, that new product innovation will be accelerating as a part of our story as we kind of work our way through this 2024 time frame. And I'm going to walk you through how I -- how we see this phasing between now and 2024 and evolving. There's another aspect of this growth that I think is important to recognize, which is if you look at the color of the bar, 2019, it was all deep blue. And that legacy business was strong. It was mature. It wasn't really growing, but it was nicely profitable. As you look to 2024, joint preservation is now the majority of the revenue of this company by 2024. And that's driven by that growth rate that you saw in this 2021 time frame where joint preservation is really driving the growth, supported by solid above-market growth within joint pain. That's what we expect from a composition standpoint as we move between now and 2024. So Anika is going to look different and is very well-positioned for the future beyond 2024. So now I want to spend a few moments talking about beyond revenue, profitability because this is not just a revenue at all cost story. In fact, it's not that at all. We're very focused on driving margin improvement. Our gross margins have historically been strong. We expect by 2024 to accelerate gross margins to above 70%, and that's driven by commercial execution and operational performance. And on the bottom line standpoint, from a further profitability metric, adjusted EBITDA, Cheryl talked about it, we are accelerating to a double-digit run rate EBITDA growth by 2024. What does that mean? That means that by 2024, we expect to grow from where we're saying we expect to be this year in the low to mid-teens to above 20%. And that's why we're making the investments that we're making in commercial execution, new product innovation, clinical and otherwise. There is one caveat to that I want to call out, and it's related to a point that Cheryl made earlier. Due to COVID, one of the other implications of COVID was the pushout of the timing of some of our clinical trials. Now we have normal clinical trials, and you've seen that most of our product portfolio now is 510(k) or PMA in the case of HYALOFAST. But CINGAL is different than that. CINGAL has been viewed as a drug-drug product. And therefore, we have an NDA filing, and there's a lot of additional clinical in that. So Cheryl updated the timing. The pilot is going to extend here into 2022. And then subsequent to the pilot, we will be moving into a pivotal trial. And that pivotal trial is going to be meaningfully larger than the pilot trial, probably 4x larger. And as a result, we expect that the cost of that trial could be approximately $30 million or more, more than $30 million. And so given the timing and the size of that, that will now extend into the '24 time frame that we talk about for our planning period. So from a metric standpoint in how we think about the ongoing operating profitability of this company, our targets are excluding that discrete cost should the pivotal trial move through 2024. But we'll call that out to you as we go forward and work our way to our objectives over the coming years. So now I want to talk about the strategy that Cheryl laid out and that the team discussed and then what does that mean financially. 2020 and 2021 are truly transformative years for Anika. And that's why we're also excited to be here. There's been a lot of work assembling a talented and experienced leadership team that has the capabilities to drive this execution story over the coming years. A lot of work went into integrating Arthrosurface and Parcus. And as I said, while that's on track, there's more work to be done here in 2021 with systems processes capabilities. We're transforming commercial execution now to drive scale going forward. And a lot of work has been done. You saw the R&D pipeline, and this transition from the legacy Anika revenue to the joint preservation being a larger part of this business. So in 2020/2021, we're accelerating what was a mid-single-digit revenue company, mid-single-digit revenue growth company to now a double-digit revenue growth company. We still are delivering large significant adjusted gross margins in the high 60s and nice operating profitability in the teens actually this year, low to mid-teens adjusted EBITDA even while we're funding this transformation. So as that transformation is complete, then we move into building the foundation for the accelerated growth that we're all excited about and why we came to the company. We're focusing on those commercial capabilities that Ben walked you through, the investments in the branding and the capability and understanding the markets where we could target the innovation, launching all of these new products and accelerating that cadence of product innovation. And the geographic opportunity outside the United States is significant, both for the markets that we're currently in, we may be in with 1 or 2 products, and now we have a broader product portfolio where we can bring more of our existing products into the markets where we're already playing. And there are a number of markets that we're not yet in, significant markets. And so there's a tremendous opportunity for us outside the United States, even while you often hear us talk about the U.S. because it's 80% of our revenue. And lastly, during this time that we're building the foundation, we will be moving through the pilot in 2022 and into the pivotal trial for CINGAL, the continued trial for HYALOFAST because those are really exciting products for the future. And one more point I should make just on that last slide. So what that means from a financial standpoint is we are accelerating in that time frame to the mid-teens revenue growth rates. Gross margins will accelerate during that time period as we build the foundation for growth, and we're going to be increasing the bottom line of the adjusted EBITDA rate as we go through that phase. When you get to the latter part of this planning period, '23 to '24, that's when more of those new products are coming to market and are driving growth and leveraging the HA capabilities and beyond. We're accelerating the revenue growth in this period. Again, mid-teens growth rate bringing us to that target organically of the $230 million. And obviously, we had the opportunity to accelerate that inorganically with good fit tuck-ins. International growth will also be an important part of that. During this time, we'll accelerate our gross margins to north of 70%, adjusted gross margins, and deliver strong operating profitability growth with expanding our adjusted EBITDA margin to north of 20%, even while we're making these investments. Now again, as a reminder, that does exclude that discrete CINGAL pivotal trial should it move into the 2024 time frame. So we have a very, I think, execution-oriented strategy for growth here. This isn't rocket science. It's hard work and it's a team of talented people, getting this stuff done together. We're very passionate about what we're doing. And you can see that in the work that's being done and then the execution that's going to come on the financial side from that. Where this leaves us is, as Cheryl started the day, talking about Anika positioned not just as a high-growth revenue company but also one that has very nice profitability at the same time. We have a strong foundation we're building on. We're making targeted and thoughtful investments to drive and accelerate growth and a very key focus on joint preservation. And this is through 2024. As we get beyond 2024, that's when we have, in addition to our core products, the introductions of the CINGAL and HYALOFAST products that we sell in over 30 countries outside the U.S. into the U.S. market, which is the biggest opportunity for those products. I want to spend a moment talking about capital allocation. We are very focused on reinvesting in the growth opportunities organically in this business. You've seen that. We've described that in the numbers. We've described that in the investments that we're making. At the same time, 2020 demonstrated the value of acquisitions. Anika deployed $100 million for the purchases of Arthrosurface and Parcus Medical, while it was investing organically in TACTOSET and these new product innovations. The combination of organic and inorganic, we believe makes sense. Now that said, we did transformational acquisitions in 2020. Our focus and our priority, as I say, we can get to our targets organically, but we want to accelerate our opportunity where it makes sense with good fit tuck-in acquisitions. And what would those look like? Number one, you've seen this, the commercial team we're building out. We want to put more good-fit products into the bag there. And if we can accelerate some of the innovation we're working on, that could make sense too. So we're really looking at commercial products or near commercial products that we can fit right in the bag and will fit nicely financially as well because our targets are both top line and bottom line growth. So in summary, this is an inflection point for Anika, an exciting inflection point. We are singularly focused on joint preservation in a now large market, $8 billion TAM, that's the fastest-growing part of orthopedics. We're leveraging the strong financial foundation and strong cash flows to reinvest in this strategy with the new products and the commercial capabilities to drive success. And what that looks like is accelerating revenue growth to mid-teens growth rate towards doubling the revenue of the company by 2024 and really positioning for tremendous opportunity beyond '24. The transformation is truly underway. This is an exciting time to be at Anika, and we really appreciate your time and your attention. And now I'll turn it over to Cheryl to close.

Thank you, Mike. We're on the home stretch here. I just have a few closing remarks, and then we'll move into Q&A. So Anika right now is really focused on joint preservation, focused on providing meaningful products along that continuum of care, all the way from injections for osteoarthritis pain management to bone preserving joint solutions, really again focused on that early intervention part of orthopedics. We feel we have a right to win focused in this high opportunity space of joint preservation. And again, for us, high opportunity means the part of the market where there's more significant unmet need, the part of the market that's growing faster. And really, the part of the market where patients and patient demographics are driving orthopedic care to. As you heard from the team today and from Mike more recently, 2020 was a big year for Anika, despite all of the COVID dynamics. We made significant progress on integrating 2 acquisitions really progressing our strategy, focusing on integration, making investments in the right places to drive scale and research and development, becoming a commercial company. One of the things I want to highlight that I think is so exciting about becoming a commercial company is that we're closer to our customers. We're closer to really great surgeons like Dr. Ashraf, we heard from today. We get quick feedback from our products, our product gaps, continued areas of unmet need that they have that they see with their patients. And that's going to make us a better company that's going to allow us to grow into the future. You heard from Steve and Kevin about their excitement with our new product development pipeline. And from Ben about the significant market opportunities we have in front of us. We also heard from Dr. Ashraf about how he treats his patients who want to stay active but avoid invasive surgeries. And I love this Pickleball patients because I like to play Pickleball. We've emerged with a strong team through the last year through COVID. It's been a tough dynamic, but we put our heads down, and we got an awful lot done. We put together a full portfolio of differentiated joint preservation products and gave ourselves the ability to invest in the organization through -- and driving growth both organically and inorganically. We have a strong balance sheet to continue to make those types of investments going forward. You heard from Mike how our plan includes both high growth and strong profitability and really puts us in a nice position relative to our peers. I'll end this section before we move into our Q&A by thanking you for all of your interest in Anika and for your attention today. I do hope we get to meet you all in person soon. And with that, we'll take questions now. I'm going to invite Mike and Ben back up here for the second part of our Q&A. And we also have Dr. Ashraf with us. So if there are questions for him, please feel free to send those along, too. Mark, do we have questions that have come in?

We have a couple. Let's see if my screen will open again. So we do have a couple of questions. From -- one question is from Mike Petusky. So we have a question from him. With the transition to an increasing number of orthopedic procedures being done in the ASC versus a hospital, how might that evolution impact procedure volumes and Anika's pricing power and the level of reimbursement for its products?

Yes. That's a great question, Mike. I'm going to turn it over to Ben, although I don't think he's in the field of the camera right now. Maybe they can pan the camera back a little bit so we can see him. But Ben, if you want to scoot over, so they can see you.

Yes. Happy to. Thanks for the question. The reimbursement market dynamic is obviously quite fluid. And as I mentioned earlier in the presentation, that procedural shift from hospitals to ASC, it bodes really well for our business. That's a big part of our focus in the ambulatory surgery center. And so obviously, as we develop new products, we, of course, take into account reimbursement strategy, and that informs how we develop products. And as I mentioned, it's not just the product. It's how we deliver the products. Delivery model innovation, sterile kits, all the things we've talked about, because it's not just top line, at all cost, it's marketing as well. So that reimbursement is always a consideration that we will take into account as we develop and launch products.

Great.

Great. We have a question from Jim Sidoti. So Jim asks, how will CINGAL -- how will the CINGAL study differ from previous studies? And why do you think that it is likely to be in the U.S. approval?

Yes. Great question, Jim. Thanks for that. So the company has done a lot of work understanding the 2 former clinical trials that we did that both had great results and the CINGAL data in both studies like right on top of each other. One of the things that we've done with this study is narrow the inclusion/exclusion criteria to limit the patient population for a specific type of arthritis that removes more of the acute inflammatory patient population, which would respond better to a pure steroid. We're also running the study in the United States, which really allows us to focus on that U.S. patient population and the types of results that the U.S. population could expect to receive. The other thing is we're running a study that includes a placebo. The last study that we ran did not include a placebo. So every patient expected to feel better and every patient felt better, including the steroid patients. But to be sure, the 2 clinical trials we've done, the CINGAL data lays right on top of each other. It's very repeatable. And I've looked at all the clinical data out there in the OA pain management space, and this is still the best clinical data that I've seen. So I think with our current pilot design, we're also planning on learning from the current pilot design to help inform the pivotal design, which is why we took this approach. The FDA taking the approach that this is a drug-drug product certainly added complexity to the clinical trial design and the primary outcomes that we have to deliver relative to the drug-drug fixed combination rules. But we're feeling very optimistic about it based on the last 2 trials that we ran. And again, we're very bullish about the product even in light of the fact that the time lines moved out a bit because of COVID, simply because the other competitive products that are coming were right in line with the timing on those. And again, we really like our clinical data relative to what we've seen being generated out there.

Okay. Great. There's another question came out also on the new product side. So HYALOFAST sold in Europe, but revenue is relatively modest. It seems that Anika believes that HYALOFAST could be a much more of a needle mover in the United States. Is this view primarily due to the differences in the way in which cartilage repair is reimbursed in the United States? And if so, can you please describe the differences?

Yes. It's a great question. So first of all, in the markets that we sell HYALOFAST outside the United States and frankly, most of the OUS markets, reimbursement and pricing are very, very different than they are in the United States. But secondarily, there is a product today that a competitor sells in the United States, it's MACI that Vericel sells. It's a cell therapy. And it's reimbursed in a very significant level, I think, relative to the clinical results that it provides. It's a great product. Ours is just as great a product. But their product drives 2 surgeries. Our product is a big deal for patients, only requires 1 surgery. The other thing is the United States is really the largest, most homogeneous market relative to joint preservation. It is a much more developed joint preservation market than those outside the United States. And then the last thing I would mention is, is this is going to be a product that goes into our sales force, our hybrid sales force's hands. And so the margin opportunities are just different for it based on how we have the business structure in the United States today. So it's all of those things rolled up together, not any one of them separate.

Okay. Great. This is a question for Ben specifically. Can you provide more color on the sales strategy of cross-selling? Is the sales force trained to sell all the product lines? And can you give some examples of opportunities for selling more than one product to one customer.

Yes. Thanks for that question. Yes, as you heard from Dr. Ashraf, there are multiple opportunities for us to sell across the joint preservation portfolio. He specifically talked about shoulder, with OVOMotion and Inlay Glenoid and suture anchors. We see similar combinations with Arthrosurface and Parcus as well as the TACTOSET all over the body. And so yes, our sales force is trained, and we're always continuing to train them as well as our Anika leadership team. And these portfolio combinations are where the power in it really comes to life. It's not about a singular product. It's the combination of all of them that really drives home our story of being a leader in joint preservation. So we see this all over the body. And those are a couple of examples of that.

Okay. Another question came in. Can you provide more color on the investments in key processes and systems that you'll be making to scale commercially? And what are the expected outcomes of these investments?

Yes. It's a great question. I think maybe Mike can start that one off and then Ben can add some color.

Yes, absolutely. So one of the things that I mentioned in my remarks earlier is that Anika bought 2 companies that were smaller private companies. And so what we're focused on is how do we scale for growth. So ERP system rollout is an important project that we're working on this year that's right on track. Very excited about that. Ben talked about some of the data analytics. That's one of the things that we've been focusing on within just as an example of finance organizations, making sure we have the right team and the right tools so that we're driving that data utilization across the company to support the commercial team with Ben and the technology team so that we can measure successful along the way. So there's a big focus on analytics and analytics tools as we go here through 2021 and as we kind of work our way forward.

Yes, I'll just add a couple of points. One, on the data and tools side. I mentioned accountability and efficiency a couple of times in the presentation earlier today. And so we can only manage what we know. And so that information and data is really powerful. So in terms of running the commercial business, of course, that implementation rollout of the rich sales analytics platform has been key. We also, like any company, don't have unlimited resources. We've got to be smart on how we utilize inventory. I guess, this is another example. And we're going to be making investments in systems that optimize inventory efficiency and turn rates. And so these are a couple of things we're working on from a commercial perspective and really systems infrastructure, they're going to be investments now they're going to pay off today and tomorrow.

Okay. There was another question for Mike. As you drive towards your goal of doubling revenues by 2024, how do you see margins being impacted? And how does OpEx leverage change as the business grows?

It's a great question. And that's one of the things that we wanted to lay out for all of you in our materials. So not just what does 2024 look like, but what does it look like as we work our way there. So there's a lot of work that's going on between now and then and investments that are being made. The growth in revenue is driven by a combination -- an equal combination largely of commercial execution And again, like Ben talked about data-driven, a full portfolio of products driving that and new innovation and into our focus in joint preservation what drives that. That same focus on data and just execution is what also drives gross margin acceleration. We're expecting to be hearing this transformation period in 2020, 2021, in the high 60s adjusted gross margin and our target for '24 is to be north of 70%. And so there's just a lot of work that's going on operationally, and on the commercial side, to be very thoughtful about how we drive not just the top line but also the margin improvement. From an OpEx leverage standpoint, there are different capabilities needed to be a global commercial business than to be a contract manufacturing business or to be a small private company and being a large public company. And so we've been making those investments here in 2020 and 2021, and you see those in the R&D and SG&A lines. Even in the midst of those investments in 2021, our updated directional guidance is that we expect to be in the low teens EBITDA margin even while we're making those investments, low to mid-teens. We expect to accelerate and expand that profitability as we work between now and 2024 based upon the revenue growth, the gross margin improvements. And again, these investments being able to leverage them on the OpEx side. So we've tried to lay out how that looks over the coming years. And obviously, we'll update you as we work our way through this plan.

Okay. So this is a question for Dr. Ashraf. So this is from Mike Petusky at Barrington. So he's asking, wouldn't some level of cannibalization of MONOVISC and ORTHOVISC be likely, even in the U.S., even if patients here that CINGAL can provide more -- can be more expedited in a powerful level of pain relief. I guess that's again a question about how the cannibalization of those other 2 products.

So when we see a patient that has a moderate osteoarthritis and on X-ray imaging, we see their arthritic changes. The usual treatment protocol currently is some type of cortisone-based injection and then obtaining authorization for viscosupplementation such as MONOVISC, ORTHOVISC, which could take a few weeks in different practices. For my practice, for example, it takes about a week or 2 to obtain approval and to actually have the MONOVISC and ORTHOVISC in hand to the patient. So having CINGAL available and to be giving instead of cortisone -- will not get in the way of giving MONOVISC and ORTHOVISC. Also, the makeup and why we get those 2 types of injections are also different. A hyaluronic based injection viscosupplementation is no steroids involved. So the acute inflammation pain goes down in a more steady fashion after visco with the cortisone based, if they have acute paint, that's when we give a cortisone-based injection. So that's where I see in my practicing golf fitting. New patient comes in, knee pain, arthritic inflammation, I will provide a CINGAL injection. And I will still use viscosupplementation as the next step in my early intervention for the arthritic process.

Great. Thanks, Dr. Ashraf. I think we have just one last question here. So this is about the 2024 targets. What do you see as the risks to the 2024 targets? And what is your confidence level that you'd be able to achieve these targets?

Sure. Let me take that one and then others can add their comments. I mean, look, we're running a combination medical device biotech business. So there's a lot of hard work involved and there's a lot of execution that has to happen. But we feel like we've put together the right team of people that know how to do that going forward, and we'll remain diligent as we continue our execution story. I think, again, COVID is always hanging out there. I hate to keep bringing that up, but it has impacted our business and most every other business very significantly in the last 18 months. And while we're all very excited about the success of the vaccination programs in many countries, there are still a lot of parts of the world that don't have access to the vaccines. We don't know what the future holds relative to variants coming. I just think there's still some uncertainty related to that. That said, we're going to be heads down focused on driving our commercial execution, driving our product development activities and staying focused on that prize that we've set out for ourselves in 2024. And I think that we've got a strong balance sheet to make the right kinds of investments and to feel good about the decisions we're making with the team moving forward. And look, we still have opportunities for some additional tuck-ins. That is not part of what we've projected with that current 2024 target. But we're not done with that 2024 target. We've got the opportunity to do more inorganic and organic growth to take us beyond the targets that we set for ourselves in 2024. Plus with HYALOFAST and CINGAL driving into the U.S. beyond that time period, we're not done there. We've got a nice long growth trajectory planned for ourselves going forward. Mike, anything to add to that?

The only thing I would add is I think it's important for people to understand. I mean there are definitely -- there's always risk in any business. There are a few things that I think are different to understand here and why we are confident and excited about the opportunity. One is we're not expected -- this is not based on 1 or 2 game-changing products. We have a lot of shots on goal here. We have a lot of different areas that are providing that growth. The growth is driven by commercial execution on our existing portfolio, first of all. That's largely within our control. It's also focused on new product innovation and again, not 1 or 2 products. There's a wide assortment. And you got a chance today to see between Steve and Kevin, and there's a great team behind them. We've got some great people here who have done this before. So we do have some game-changing opportunities like HYALOFAST and CINGAL and who knows some of these things could be better than we think, but other things may not be as good as we think. This is a very balanced plan for growth. And the other thing I would say is this is an $8 billion fast-growing addressable market. We're a very small player within that. So we don't need to corner the market to deliver on this objective. I don't want to diminish the work. There's a lot of work. There's a lot of focus that needs to happen. But I guess that's the other thing I would say is we are very focused. We're focused on joint preservation. We're not all over the place. And so I think this -- everything we've talked to you about today aligns with our strategic plan, we've got the management team, the Board alignment, the company is very focused on that. And we'll give you updates as we work our way through the plan as we execute.

Great. We got no more questions.

Thanks, Mark. All right. Well, I would really like to thank everyone in closing for your time and interest in Anika today. We were all really excited to be here. We're really happy that we could be together in person fully vaccinated. We look forward to being able to get out there and see you in person. And hopefully, the next time we do this, we'll be able to do it face-to-face. We do hope that you'll all tune into our second quarter earnings call in August so that we can continue to report and update you on the exciting trajectory of Anika going forward. Thanks again, and have a great rest of your day. Bye-bye.