Axogen, Inc. (AXGN) Earnings Call Transcript & Summary

Well, first of all, let me begin by welcoming everyone who is taking the time to spend their time with and flying to Tampa. I also want to welcome all of those who are listening in today for Axogen's 2025 Investor Day. We have got a lot of information we're looking forward to share with you about our story. This is your day and I hope that you feel quite comfortable in asking whatever questions might be on your mind so that we can help explain the basic assumptions and ideas and rationale of why we believe we have the opportunity to honor our mission purpose. Before I get going, I want to remind everybody in the spirit of the famous Danish physicist, Neil Bohr, that predictions can be very difficult, especially about the future. So please note that, and I referenced and guide you to our most recently filed 10-K with regards to the risks and uncertainties that may surround those individual subjects we'll be talking about today. So let's talk about the objectives. But first and foremost, the reason why we're here is we want to do our best to make it very clear, the rationale and the assumptions underlying our 2025-2028 strategic operating plan. As part of that, we're going to take our time and spend with you to educate everyone on what are the most common peripheral nerve injuries and their relative causes so you can appreciate what our solutions are. To that end, we want to also make sure that we explain as clearly as possible the clinical significance these types of problems relative incidents because they, of course, comprise the substance of our market opportunities that we decided to focus on over the next many years. Finally, what about our solutions? We refer a lot to the actual algorithms. These are a combination of project -- products and techniques that are utilized to restore peripheral nerve function and we're going to do our best to help explain this so that you understand how we're solving these types of problems. And then finally, making clear how we're investing in the future. It's all about sustainable leadership. We're ultimately partners with the people we serve, and they make those decisions based on whether or not they believe that we're leading in technology as well as service. To start, I'd like to introduce to you the Axogen leadership team. They're the architects of the plan and the information that we're going to be sharing with you today. I believe very much in these individuals I've had a chance to work intimately with all of them over the last 6 months, and I couldn't be more delighted to serve them. Starting first, I'd like Marc Began. Stand up. Nir Naor, Erick DeVinney, Jens, he's related to Niels Bohr by the way. Yvonne, Craig Swandal, Stacy Arnold. Al Jacks is not with us today. He's at the office doing some very important work with the FDA right now. Mark Friedman, Jesse Bishop, and Doris Quackenbush. So what is the purpose of Axogen? Why do we exist? Our mission is to restore health and improve the quality of life by making the restoration of peripheral nerve function an expected standard of care. Now you might think that this would be an obvious expectation that already exists, but it actually does not. That's what we do at Axogen. That's why we're working. Every movement you see in this particular slide is dependent upon the healthy function of peripheral nerves, feeling the sun on your face, the wind in your hair, being able to grasp back that bicycle seat, peddling that, whether it be sensory, whether it be motor control. Those are all dependent upon the healthy function of peripheral nerves. When those -- when that function has been eroded for whatever reason, that's where Axogen comes in. These are the types of problems we try to address by virtue of our work and the investments that we make in technology to solve these particular deficits. What I'd like to do is take it some time over the next 2 minutes to let you hear through directly from people who have experienced these types of challenges in life and the solutions and how it's impacted their life thereafter. [Presentation]

This is why we get up every day and go to work. There's great opportunity to add value to life. We have good solutions to do that. And our job is to move forward with an action plan that allows us to actually make progress in that regard and making it standard of care. That's what Axogen is all about. So one of the big and fair questions with any business is that, well, why you? Why are you positioned to succeed relative to this mission purpose that you just described. And I think there's basically 4 elements that I would draw your attention to that we have found -- that basically represents the foundation upon which we're building. First and foremost, partnership. When I did my diligence before deciding to join Axogen, one of the things that I found most notable was the respect that was accorded to Axogen and its people based upon their commitment to good science and good partnership in terms of education. Anything you do in the world of business is essentially building upon trust. And so when you think about that, there couldn't be a more important pillar to start with than that element, the fact that people look at us and they do trust us and they look to us for our leadership in that regard. The second one is with regards to expertise. This is a business that has been working in this area for more than 15 years. We have affected the lives of more than 100,000 patients. We -- while we always have more to learn, we are genuinely experts in work that we do, and we are committed to continuing to build upon that. With regards to access, we have established in more than 2,700 hospitals in the country, the ability to bring forward our nerve care products, the Axogen algorithm. And while we don't actively work in each one of those, we have the ability to build upon that foundation going forward. And then finally, with regards to evidence, there are more than 300 publications that have documented the benefit/risk profile of Axogen, and we've been the partner to more than 3,000 surgeons over the years in terms of treating their patients in their peripheral nerve defects. The opportunities that we have decided to prioritize over the next 4 years are each areas where we believe we have advantage to build upon. The one common element that runs through each of these that they all involve nerve defects. However, the causes of those individual nerve defects are different in each individual situation. And therefore, the care pathways are also very different. One of the notable elements though that we're working on in terms of prioritizing based upon effectiveness and efficiency is going to be within each of these representative areas, elective procedures and emergent procedures and areas where the patient has also the opportunity to advocate for themselves. The other thing that I would draw your attention to is over the planning period, we fully intend to start developing a business outside the United States, given that these problems are global, they're part of the human condition, and we have a huge opportunity to bring these value propositions to the world outside the United States as well. Our TAM is significant, but it is not monolithic. We have, as part of our planning process for the last 6 months, dug into this. very simply, just to kind of lay it out there, what comprises the TAM in terms of the individual value. It's procedure volume times, the Axogen algorithm, the types of products we think might be necessary to solve that kind of problem, times the ASP. In terms of the sources that comprise this individual TAM, a variety of sources, CMS, the AcuityMD, the literature itself in terms of ER visits, depending upon which individual segment we're talking about and the American Society of Plastic Surgeons. So we've used all the publicly available databases in order to do this. And then we comprise -- excuse me, then we apply an algorithm to this which discounts whatever that volume is because not every situation would necessarily entail the need for an Axogen product to solve that problem. So the actual number of procedures that's represented here is larger than what we're utilizing to calculate these individual values. The question for oxygen is not whether or not the problems are large and manifest. The question for Axogen is what are the necessary business models that we need to bring forth that connects patients to providers of solutions for the peripheral nerve sets. That's where the work needs to take place. That's where we are working, and we look forward to sharing with you today as much detail as we possibly can about how we're going to do that. But the opportunity is big, and it's a global opportunity. This is just the United States. These market priorities I've mentioned, are built upon individual advantage in each individual area. We have both history with regards to extremities. And then as we move to the right, we have benefit risk propositions that we have tested through actual clinical experience and otherwise as well as market development capabilities in terms of direct-to-patient activation and otherwise that we believe allow us to move forward in an effective, efficient way. And as with any plan, the whole plan is only as good as the detail that goes into it. It's that detail, the intimacy that allows you to also of course adapt as necessary. We have done our best to plan for success as a leadership team. These are the high-level elements that we've tried to attend as we've worked on deciding how we're going to allocate our time and our people and our capital. We believe that over the planning period we've described that we can generate a compounded annual growth rate of 15% to 20%. We have already, as I just described, prioritized individual markets where we're going to constrain our resources towards. Over this time period, we will continually expand our commercial infrastructure. I think it's really important as a touchstone to realize there has not been an expansion in commercial infrastructure in more than 3 years. So we're just now beginning that process. And then with regards to new markets, looking at our benefit risk proposition, where can we bring the potential for great benefit at no risk. Prostate is one of those areas. We're very excited about that. We'll talk about that. Very important strategically in terms of the work ahead, we're going to methodically work within each individual area to ensure that we ultimately make progress towards becoming true standard of care in the guidelines that involves both evidence as well as advocacy. And then we will continually work to optimize our business models. And this is very important work because, again, these are not monolithic market opportunities. These are individual care pathways. They therefore, require very different business models. And we will -- each quarter, we'll share with you as much as we can about how we're doing, what our assumption was, what's working, what's not working. Finally, from a regulatory standpoint, we will complete our BLA process this year in September. And then as we look OUS, we will also spend our time to ensure that we obtain the equivalent market access around the world so we can build that commercial infrastructure outside the United States and build on the same framework going forward. And then finally, we will continue to build with regards to evidence, particularly Level 1. We know how to do this. We know what would be ideal by each individual application area of interest to us, and we will be initiating those studies in 2025 and then throughout the planning period. And then finally, it's all about the future. We cannot live on yesterday. Our customers expect us as partners and stewards of our leadership position to invest in the future. And you'll hear a little bit about what we're going to do in terms of investment to ensure that we are a sustainable leader today and then into the long term. And so without further ado, again, thank you for spending your time with us today, and I'm going to ask my colleague, Erick DeVinney, to come up and kick us off by speaking to us about the Axogen algorithm. What is that.

Good morning, everyone. Thank you all for joining us here today. My name is Erick DeVinney. I'm Axogen's Chief Innovation Officer. I joined Axogen 18 years ago. Back when we were a little more than a couple of ideas on a piece of paper and a concept about how we were going to develop products to move things forward. And it's really been a privilege to serve that mission over the last 18 years and drive forward an opportunity for patients to see better nerve care and better function after their nerve surgery. When I joined Axogen, we looked at this as a -- this is a huge opportunity and a huge unsolved set of problems that needed to be addressed. And I've been really humbled to be an architect of that plan and to help to drive forward how we are approaching these markets, how we create better understanding with the surgeons. And not just how do we develop technologies, but how do we get those technologies trained and implemented and adopted into their appropriate places within the standard of care. And that's really been our drive, and it's been absolutely wonderful to see that. And even though I've been here for 18 years, I can say that I have never been more excited about where the business is and where the business is going than where we are today. We have a clear vision for how we're driving forward our existing portfolio. We have a clear vision for how we address the next set of unmet needs and a clear vision for how we're delivering to more patients the type of nerve care that they need and they deserve. So let's talk a little bit about it. I thought I might spend some time introducing you to our world. So peripheral nerves, what are they? Well, they're any part of the nervous system that's outside of the brain or the spinal cord, and they really span from head to toe. So as you can imagine, they're addressed by a lot of different surgeons, and they can be injured in a lot of different ways. They control how we interact with our environment. So nerves pick up signals from the periphery, take it back to the brain, nerves pick up and send signals out to our muscle so that we can move any way we interact with our environment are guided and directed by our peripheral nerve. When they're damaged, the unfortunate problem is you see paralysis, pain, numbness, loss of function. And unfortunately, for many years, it was looked at as, oh, you have nerve damage. This is more of a chronic condition. It's hard to see that recovery. But what we know today is if the surgeon can see the damage and identify it and they can access it, then they have the opportunity to be able to help to treat that and restore function to those patients. We've been able to help to raise awareness to that in a lot of different areas, but we're also able to provide enabling technologies that allow them to do procedures that they were not able to achieve before. So in partnership, we've been able to help to improve the nerve space and bring technologies to surgeons so they can help more patients. When we think about what is a nerve injury or what does that nerve injury look like? It can come in many different forms. Just like nerves are head to toe, these injuries can come from a lot of different areas. So I think it's important to think about nerve injuries in a few different buckets. It could be a cut or a laceration. This could be from trauma. It could be from a surgical procedure. It could be from any type of planned resection or a accidental [ hoops ] during the procedure. It could come in the way of a nerve compression, a nerve entrapment or some type of stretch injury that occurs during an injury or during a procedure. So those compressions are things like Carpal Tunnel, but it could also easily be a byproduct of scar entrapment after a surgical procedure. And in instances where the nerve is not reconstructed OR not able to be reconstructed, what often forms at the end of that transected nerve, if it's not managed appropriately is a neuroma. And these neuromas are large masses of nerve tissue that can oftentimes manifest as pain. They create static in the system for the most part and can manifest as pain. And so when you think about these nerve injuries and think about any time surgeons touch scalpel to skin, anytime that there's a laceration or a major trauma, the peripheral nerves are impacted because they are all over our body. Once the surgeon is able to actually see and identify the issue and the damage, then they're able to manage it. And the way we've thought about developing our algorithm is based around what the surgeons can and cannot control during that procedure. As much as we work with the best surgeons in the world, they're not able to make that patient any younger. They're not able to take that patient and make them avoid the accident that got them there to begin with. But they are able to treat the injury or treat the problem. They can control the environment that they're working within. They can control how they're reconstructing the nerve, the amount of tension that's across that nerve and where that nerve is being driven to for a functional target. Using these principles, we looked at our extensive knowledge in both peripheral nerve science and in nerve surgery to look at things through the lens of how can we best bring technologies and translate those into tools that can help the surgeon reconstruct these injuries and better control the things that are within the surgeon's control. And so we looked at things through the lens of whenever there's an injury, a loss of tissue, a gap or a deficit, how do we provide bioactive scaffolding for that nerve reconstruction? How do we give it an appropriate environment to help to guide and direct that nerve that's regenerating. When there's damaged tissue, how do we help to provide an extracellular matrix to rebuild that lost tissue and that lost structure. We do this through applying tissue regeneration and tissue engineering technologies that leverage the dynamic reciprocity of the cells interacting with these tissue scaffolds to be able to restore healthy functioning tissue. But it's not just about the nerve and the nerve gap that we're dealing with. We also look at what's happening in the local environment around the nerve. And so the inflammatory process that occurs whenever there's trauma or a nerve injury or a surgical procedure plays a role on what happens with that nerve, whether it's transected nerve not transected. And so we've developed a suite of technologies that help to take that into consideration and manage it. And when those nerves do not have an appropriate target, we look at what's happening in that nerve regeneration that might form a more painful neuroma. And we've applied some science and technology to be able to control how those neurons grow out and guide and direct them in a way so that they are less likely to become painful and symptomatic. In addition to that, we've also expanded to start to look at the extent and the zone of injury that is seen whenever you have a trauma, whether that's a surgical trauma from a surgeon's scalpel cutting the nerve or a traumatic injury like a piece of broken glass or running your hand through a table saw, all these things that cause trauma. We've worked with a group of surgeon experts to start to look at and understand what's the extent of the injury. How much debridement is necessary to get out of that area of injury and trauma to better reconstruct those nerves. That often results in a much larger nerve gap than originally anticipated and it helps to guide surgeons on how to make sure they have the right reconstruction in the beginning so we can see the right outcomes at the end. When we think about how we apply these technologies over, again, it starts with the foundation of what is the injury. And when we think about these injuries, we put them in a series of different buckets. So if the nerve is cut and lacerated, we look at that through the lens of connection. We're trying to rebuild meaningful connections there. And so when the nerve is lacerated, that's our connection portfolio. And so that's the Avance Nerve Graft to be able to bridge that nerve deficit and the AxoGuard Nerve Connector to be able to ease the coaptation of those nerves and make it easier to bring those nerve ends together, better alignment in a tension-free fashion. When we think about the Avance Nerve Graft, we believe it will be the first FDA-approved biological therapy for being able to bridge peripheral nerve deficits and support those axons regenerating across it. Because of the laminin activity and that bioactive scaffolding within the Avance Nerve Graft, it provides an enabling technology for surgeons that give them the activity and the regenerative potential that you see in human nerve tissue without having to sacrifice and have a harvest of that nerve tissue from elsewhere. The AxoGuard Nerve Connector is there to be able to help with the alignment, visualization of that alignment and to the detension around that coaptation site. Our nerve protection portfolio is the broadest that's available in the industry today. So what is nerve protection. It's when that nerve is compressed either by the surrounding physiologic structures, whether it's or entrapped by scar or soft tissue or impinged upon hardware or stretched during a surgical procedure, those nerves all have injury as well, and they end up having some damage. And so while not transected, they're still damaged, and we still have an opportunity to be able to help surgeons there as they're treating these patients. And so in our protection portfolio, we have 3 protection products. Our AxoGuard HA+, which is a base material from -- similar to our standard AxoGuard, but coated with a hyaluronic acid and allogeneic coating that provides a lubricant on the surface of the AxoGuard. This is intended for areas where you see high mobility where nerve glide is so important. Our nerves naturally glide through the body as we move our joints and as our tissues are moving around. And so what the AxoGuard HA+ does is it allows that low friction, high glide in these areas where the nerves are going to be highly mobile. We also have our AxoGuard Nerve Protector, that classic protector that is there to rebuild the soft tissue structures that are around the nerve when the surrounding soft tissues are damaged, where Avance rebuilds the peripheral nerve structure itself, the AxoGuard Nerve Protector and AxoGuard HA+ rebuilds the soft tissue layers that are around the nerve. HA+ provides that high gliding surface and in areas of high mobility. AxoGuard Classic provides it whenever you're reconstructing your focus on rebuilding the soft tissue that's been lost because of the damage, the trauma or the surgery. And then our most recent addition is the Avive+ soft tissue matrix. And the Avive+ plus soft tissue matrix are for acutely traumatized nerves, where the nerves have been traumatized, beat-up and bruised, but you haven't seen that loss of connective tissue around the nerve or the loss of the surface tissue of the nerve. And so Avive+ is there to be able to treat those more acutely traumatized nerves to be able to provide a more optimal environment as it's going through its healing process. So that's our nerve protection portfolio, addressing those nontransected nerve injuries. When we look at -- when a nerve cannot be reconstructed, and has it has to be terminated in amputation procedures or procedures where the trauma is just so significant that there is not a distal target to tie it to. You still need to do something with that nerve. It will try to regenerate. The nerve has an amazing potential to try to regenerate. But if it's unstructured, you end up with these neuromas and these masses can become very painful. And so the AxoGuard Nerve Cap is designed with some of our own proprietary structure and technology to be able to address how that nerve is generating, mitigate the risk of those nerve spiraling on each other as they're regenerating and so you're less likely to have a painful neuroma when it's isolated and protected inside the nerve cap, and that nerve cap has linearized out the regeneration that's happening there. So we take this algorithm and take these products and apply them over to our algorithm so that surgeons really have the broadest portfolio available to them to be able to address the myriad of nerve injuries that they need that they address and what they're trying to repair. And so in this, what we're really focused on is saying, here's this algorithm and how do we apply it. And so our application of the algorithm really comes into play in our education programs. And I'm really pleased with the work and the impact that Dr. Ducic and our medical affairs team has had on being able to drive forward education in the nerve space, taking that algorithm and putting it to work for the surgeon and for the patient by showing them how to use there technologies, how to apply them for the reconstructions that they have in front of them, understanding both good nerve repair, understanding the very favorable benefit to risk profile that each of our products have and understanding where they fit and how they apply these procedures in their practice. And we've done this across our markets. We've done this specialized and focused in training the next generation of hand surgeons and nerve surgeons with our extremity fellows programs, training these breast teams to be able to bring the resensation procedure to these patients so they can both identify the nerve that's injured, and optimize how they're reconstructing that nerve. And we're bringing that now to the head and neck space for these surgeons that are dealing with mandible reconstructions and head and neck injuries from tumor resections. So our -- we had a very successful 2024 with our education program, and we look forward to continuing to be partners in education with the surgeons, the societies with the key faculty that drive -- that helped to really fuel and drive this program as we move things forward. It really is of our core competencies. It lets us deliver a contemporary nerve algorithm to the surgeons to be able to ensure that they're able to manage their patients. And I can't talk about a contemporary nerve algorithm without touching a little bit on some historical ways of repairing nerve and how things stack up there. And so Historically, if you have a nerve gap, you would look at using a nerve autograft. Unfortunately, with a nerve autograft, you're harvesting nerve from somewhere else in the patient's body, and that comes with a secondary donor site. And it leaves that patient walking out of the OR with a nerve injury that was created to be able to harvest that tissue to do the reconstruction. It takes additional OR time and is a challenge to the patient. We look at the Avance Nerve Graft as an alternative to that autograft and it's really seeing similar results without the sacrifice of what's seen with having to harvest that nerve. We have an extremely favorable benefit to risk profile with the Avance Nerve Graft. It provides that biologically active environment for nerve generation without having the sacrifice of harvesting that donor nerve. And we've seen over 100,000 implants with Avance Nerve Graft to date. Really excited about what this technology does to open up the way surgeons can provide more functional reconstructions. But I'll talk a little bit about how Avance Nerve Graft works. And so we have an animation, which is way cooler than me making hand puppets. So when a surgeon is reconstructing a nerve, they bring the Avance Nerve Graft into this gap after they've debrided out of the zone of injury and gotten back to healthy tissue. Oftentimes, they'll use an AxoGuard Nerve Connector to be able to aid in that coaptation. The body begins to revascularize and repopulate the Avance Nerve Graft with cells. Each of these little areas are an individual axon that's an extension from the nerve cell body. And these are the axons that have to regenerate to be able to reach its distal target and [ reinterate ] it. With the Avance Nerve Graft biologically active scaffold, [ Schwan ] cells and the axons follow that active matrix across the nerve defect into the distal nerve and down to its distal target. Remodeling the tissue and turning it over into the patient's own functioning, healthy peripheral nerve tissue. So that bioactive scaffold serves as the guide to guide and direct those axons as they're regenerating, just as they would in Autograft and just as they would in the in the distal nerve tissue. We're able to replicate that environment through our tissue engineering and our processing to provide surgeons with a biologically active solution. And when we look at the Avance Nerve Graft, we have over 200 publications on its benefit, looking at both safety and efficacy. If we look across our entire portfolio, over 82% meaningful recovery when you look at the function with Avance Nerve Graft, an improvement in these critical quality of life issues that are important to patients. And most importantly, when we compare the efficacy of Avance Nerve Graft to what's seen for nerve autograft, we see absolutely similar and comparable results without the donor site morbidity and without the downsides of what's seen in Autograft harvest. So it enables surgeons to have the confidence that they can leverage this product across these different procedures and should see the similar outcomes as what they would see with nerve autograft. It's taken us a while to build this data. A lot of this was undefined whenever we started as Axogen, but we've been able to lay out a pathway forward that helps to provide answers to these questions and answers to these problems. Looking beyond just Avance Nerve Graft and looking at the clinical evidence that we've been able to build, data has really driven a lot of what we've done here at Axogen. And so when we look across our portfolio, it's not just Avance Nerve Graft and the extremities that we've built data for, but we've built data in protection in the extremities, and we've started building data in our new markets with breast, OMF and data for our AxoGuard Nerve Cap for termination. When we look at what we've done, we've set a strong foundation of procedural technique data and some of the critical Level 1 evidence that's necessary to be able to work through the BLA transition with Avance. Our goal going forward is to continue to build Level 1 evidence that helps to address stakeholder questions and meet stakeholder needs and help us drive towards standard of care designation for our products in their different markets. We have a clear understanding of the models and the work that we need to do there to be able to provide that evidence to ensure that we get standard of care designation and that surgeons, payers and providers and patients have an understanding of the benefit/risk profile of Avance and our other technologies. And I can't leave us without leaving a few trends that we see in the nerve space. So what keeps me so excited about what's peripheral nerve today and where it's going, our nerves are really viewed as the next frontier in many of these functional reconstructions that we see. Being able to get an aesthetically appropriate reconstruction is there and is apparent. But if you have not done an appropriate peripheral nerve repair to reinnervate that tissue, you haven't reconnected it to the patient and the self. The nerves connect our bodies and our minds. So it is really the next frontier in functional reconstruction, getting patients back to their -- to normal, working under the goal of trying to get them like the injury has never even happened. And so there's an increased growth and awareness and the importance of that. We also see a lot of specialization in both academic and private practices looking at incorporating peripheral nerve into those treatments and into how they're branding and specializing their practice. We also see this on the educational front. Recent survey of the American Society for Surgery of the Hand Fellows found that their #1 interest of what they wanted to gain from their fellowship was knowledge in peripheral nerve repair. And so you see that interest in the hand surgeon community. We also see it in academic centers where there are more and more academic centers setting up focused peripheral nerve surgery fellowships to be able to look at it broadly across the care of their patients. Now these are small centers are small programs right now, but that focus in setting up this peripheral nerve focused head-to-toe fellowship plays a big role and gives us confidence of where the future is going and that nerve repair is only going to continue to grow and be a brighter part of future in these reconstructions. And when we look at the data on PubMed, we see that there's been a 70% increase in the number of clinical publications and clinical studies in peripheral nerve over the last 5 years. So a really strong indication that there's a lot of interest in peripheral nerve. There are new technologies that are being translated to be able to further enable additional reconstructions and open up new applications in the nerve space. So we're very excited about the future possibility of nerve repair. When I started here 18 years ago, I had no idea that there would be as much opportunity. I knew it was there, but it wasn't as tangible as it is today. And I'm very excited about where we're going in our next steps here at Axogen and how we're going to bring this technology in this care to the patients that deserve it. And on that point, I would like to hand the floor over now to my colleague, Jens Kemp to talk to you more about our markets and the details of how we're going to case technology and get it to these patients.

Thank you, Erick. Thank you for that great introduction. Hopefully, that gave everyone a much better understanding of what we refer to when we talk about the Axogen peripheral nerve repair algorithm. It's amazing to see the deep scientific foundation that underpins all of our portfolio and how really that portfolio helps solve all of the common nerve injuries that we see. So we are now going to turn into the market sections. We're going to give you a high-level introduction to our market development priorities, why we think these markets are interesting, why we want to be there, what we see as the main growth drivers in these markets and how we plan to continue to drive growth in these markets. So I'm going to start off with giving an introduction to the extremities market and the OMF and head and neck market. Then we're going to have Emily talk about our breast market. And then I'm going to come back and talk about one of our latest market development priorities in prostate and why we think that is such an exciting market for us moving forward. So let's start with the extremities market. So our extremities market is comprised of extremities trauma and chronic nerve conditions. So if we start with extremities trauma, these are typically procedures that are emergent in nature. Typically, patient presents to an ER with extensive trauma that involves damage to the nerves that needs to be treated. By its very nature, trauma is very unpredictable. And the causes of trauma are unpredictable and the actual manifestation of that trauma is also highly variable. That also means that the types of injuries, nerve injuries that we see in these time procedures are also highly variable. As Erick mentioned, there are many different types of nerve injuries. And in trauma, we see everything. We see everything from complete laceration of nerves, sometimes multiple nerves at the same time. And sometimes, although it's a trauma and we think there's a lacerated nerve, it turns out that the nerve is actually intact. But the internal structure of the nerve can still be damaged. It's what we refer to as nontransected nerve injuries. And this can happen as a result of a stretch injury or a contusion, for example. Now there is an emerging understanding of the need to treat these non-transected nerve injuries and protect the nerves from either scarring from the surrounding tissue or from the inflammatory process in the surrounding tissue. So these are quite often -- or these are very common these types of injuries. And actually, of the traumatic nerve injuries, nontransected nerve injuries represent about 40% of the traumatic nerve injuries. Then we have our chronic nerve conditions. These are basically conditions that typically develop over time, become chronic in nature. Erick mentioned a typical compression neuropathy, carpal tunnel or cubital tunnel are good examples of those types of injuries. And then also patients suffering from chronic pain caused by an neuroma that requires surgical treatment. So the extremities market are serviced by multiple surgical specialties, but we really focus on the hand surgeon community. So these are plastic hand or orthopedic hand that have gone through hand fellowship. This is a surgical specialty that's microsurgically trained and they're also trained to manage nerve injuries. So traumatic injuries happens across many different care sites. And we're really focused as a company driving adoption in a subset of hospitals, what we refer to as high potential accounts, and we have an algorithm to really map out the highest potential accounts. And that's the universe that we're really driving adoption and penetration in. That's where we believe that as we drive penetration, we'll see much more consistent and predictable revenue in our trauma business. So the typical adoption journey for Avance, typically, a surgeon will get exposed to Avance during fellowship, attending an Axogen educational program and then start to adopt Avance in their nerve repair practice. They'll typically start with a short sensory nerve in the digits. And then as they get more experience with the products, They'll start to expand into longer gaps and also more complex nerve repair cases, including mix and motor cases. So I want to play a little video here with [ Dr. Cacia ], which would represent what we would call a typical adoption journey for a hand surgeon. [Presentation]

We deal with nerve injuries fairly frequently interactive. We do a lot of trauma, a lot of lacerations, a lot of fracture work and oftentimes nerve injuries are associated with those. My evolution has really gone from autograft, nerve graft to digital nerve allografts. And now I use the larger allograft nerve grafts in almost all of my injuries. And I've been very happy with my outcomes. I feel that they, at a minimum, proximate autograft without the donor site morbidity. I feel that oftentimes, they're faster to use, to handle a little bit better than autograft. There's real benefit to providing a patient with a tension-free nerve repair, so we can use the allograft without being concerned about donor site in order to detension our nerve repairs. I do feel that the use of the allograft in those sort of situations has proven, in my regard to be just as good as using an autograft in those patients. And I think that as we are getting more and more high-level literature in regards to that. I think we can see that the outcomes are similar, if not sometimes better in allograft nerves as opposed to autograft nerves. So the extremities market is highly attractive. It's our largest market, and it's where we're the closest to becoming a standard of care. We've made a lot of progress in this market, and more and more surgeons are incorporating the portfolio into their practice. But it's also a market where incorporating nerve repair and nerve repair products and innovations was sort of an easy first step for Axogen because this market, as I just explained, is serviced by hand surgeons who are already microsurgically trained, already trained to manage nerve. And so introducing new innovations that could elevate and enhance their already existing nerve repair algorithm was a great first step for Axogen. So we've made great progress, but this is still a market where there is no clear societal clinical treatment guidelines that exist. And so there's a high variety of techniques that are still employed. And of course, one of our objectives here is to ensure that this process to nerve repair becomes more standardized to incorporate the Axogen peripheral nerve algorithm. So we believe we have a very good opportunity to do that. As we just saw, we have an incredible portfolio that really address all of the major common nerve repair problems. And we have an incredibly good benefit to risk value proposition, and the portfolio is backed by significant clinical evidence. So we believe in this market has great potential for us, and we believe that we're in a great position to continue to drive growth in this market. So we talked about the prevalence of injury in this market, very high prevalence. But what we haven't talked about is it's also characterized by what I would say, a convoluted patient journey. So although there are a lot of nerve injuries in this market, A lot of them do not get treated because of the patient journey. So 62% of the patients coming through the hospital that have nerve injuries are actually discharged without ever having a diagnosis of nerve injuries. And once those patients leave the hospital, getting them back into the hospital to see the hand surgeon specialists is very tricky. They typically get round up in a loop of treatment either on opioids or some other treatment that will treat the symptom of the nerve injury, but not really cure the underlying cause of the disease. So really addressing the patient journey, we believe, will be one of the big drivers for continued growth in this market. Another important driver for this market would be improving and expanding coverage. Coverage is important. Facilities and surgeons, of course, wants to get paid for incorporating the products into their practice. And although we have a really good position with Medicare coverage, we still have about 50% of commercial lives that are not covered today. So that's a great opportunity to work to expand that coverage to allow more surgeons and facilities to incorporate the Axogen algorithm into their practice. We talked about the high potential accounts, and we believe that driving adoption in these high potential accounts is going to be critical to drive success forward. What we see every year, our largest accounts continue to grow. So our most penetrated accounts continue to grow every year. So that really highlights the great opportunity in our high potential accounts. And then finally, expansion of the algorithm and really driving growth in our protection portfolio, both in nontransected nerve injuries and some of the chronic conditions that Erick mentioned as well. So overall, we feel that there are significant drivers that will allow us to continue to grow in the extremities market. So our objective here in this market is to really drive the Axogen peripheral nerve solutions to standard of care status. That requires getting societal support for standard of care, and it also will require us to be incorporated into clinical treatment guidelines to really standardize the approach to nerve repair. We're going to work hard to expand coverage so that every surgeon and every care site has the opportunity to incorporate the Axogen algorithm, should they choose to incorporate it into their practice. And then really standardizing the approach to nerve repair in strategic accounts, high potential accounts through education and other peer-to-peer engagements. And then as Mike mentioned, we truly believe in innovation. We're an innovation-driven company, and we're going to continue to invest in innovations that improve the standard of care in nerve repair. And we believe these factors are going to be critical to retain long-term leadership in this market. And we have a really strong foundation to win in this market. As mentioned, as Erick talked about, we have very strong clinical evidence. We have Level 1 clinical evidence in the extremities market. We had our pivotal study that was published last year. We had comprehensive meta-analysis that was published in 2023. But in addition to the clinical evidence, we also have great health economic evidence. We have health economic data that basically says that the procedural cost for an allograft versus an autograft are fully comparable. And if you take a more long-term view, then allograft is more cost effective because of the donor site morbidities associated with autograft. So having both that clinical data and health economic data puts us in a really good position. We've already talked about the comprehensive portfolio. And then we have the largest focused sales channel of any company. And of course, that is an extremely valuable resource to be able to service our surgeon customers and provide the intraoperative support they need to manage their nerve cases. Erick talked about educational leadership. We are truly a valued educational partner. We work very closely with societies, and they come to us as a resource for educating their membership on good practice in nerve repair. And we're going to continue to elevate that. We're going to continue to bring more education and activate more surgeons through our excellent clinical education. So what is our 2025 strategic focus? Well, it's really to continue to drive advocacy for standard of care designation, driving consensus for inclusion of the Axogen algorithm in clinical guidelines. And then we're going to continue to drive commercial excellence, driving adoption in these high potential accounts and really try to -- through therapy awareness to influence that patient journey so that we can educate the referral base so that they can start sending more patients to our surgeon customers so that we have higher volumes of treated patients in these high potential accounts. Then we're going to work and increase the engagement for the commercial payers to make sure that they are updated on all the latest clinical evidence. Once we get through the BLA process, that will also be a catalyst for removing these noncoverage policies. So we're going to continue to work to expand coverage and payment, and then finally, continued growth and adoption of our protection portfolio as well. So these are the things that we're going to focus on, but really confident in this attractiveness of this market and our ability to continue to drive growth in this market. All right. So then we're going to transition to our oral maxillofacial facial and head and neck market. This is a market where Axogen has been in for a number of years, but not a market where we've been able to really invest a lot in this market and really to prioritize our market development resources to building this market. Despite that, we've seen very positive organic growth in this market. And we're truly excited to continue to build this market. We think there's significant potential in this market. So one of the things that are unique about this market is that it's highly concentrated. The procedures that we are targeting, mandible reconstructions, iatrogenic injuries and other head and neck procedures are highly concentrated in large academic centers, which, of course, has a very high overlap with our high potential account universe. So about 90% of these procedures are done in only 900 accounts. And so it's a great opportunity for us to service that with our existing sales infrastructure. The call points for head and neck and oral maxillofacial procedures, our oral maxillofacial surgeons, head and neck surgeons and then plastic reconstructive surgeons as well. So one of the procedures where we've had really good progress and where we've excellent clinical data is mandible reconstruction. Now mandible reconstruction typically involves a patient that has a mandibular tumor. So a tumor in a jaw that requires removal. This tumor can be either benign or malignant. If it's benign, it's typically managed by an oral surgeon. If it's malignant, it's typically a head and neck surgeon. But there is some overlap between the 2. But in general, that's the split between the specialties. So if you remove the tumor, you are also transected the inferior alveolar nerve that runs through the mandibular bone and exits at the mental foreament right here. And this is very critical to providing sensation to your chin, but also to your lip. And we heard from the initial video that Mike played, a girl talking about how she couldn't feel food on the lip, she couldn't feel if there is drooling coming out of her mouth. And it really has a big quality of life impact for these patients if they can't feel their lip and their chin. So the procedure basically involves identifying the mass, of course, and then cutting the inferior alveolar nerve, estimating the margins, cutting out the portion of the mandibular bone that's impacted by the tumor. And then following the removal of the bone, restoring the nerve with a connector and Avance Nerve Graft, and then adding a protector to protect it from irritation from the metal implants as well. So that's high level the procedure. And that really allows us to completely restore sensation to the chin and the lips. So let's hear from some of the thought leaders on why they chose to incorporate the actions in Axogen [ acrolyb ] in their practice and what they see impacted from their patients.

I went to skills labs to learn the technique and started doing it, just reconstruction on my own patients. And what I found was that the patients would mostly focus on the way they look to their parents. But what is different about these patients with the nerve reconstruction in that at about 6 months when they start feeling their lip again, that's all they can talk about, and they're so happy to get any sensation back. And I really think that, that experience is seeing their reaction, really compelled me to do these operations to make this a priority for these patients because they really do appreciate it, and it does make a big difference to them. I think that most surgeons address the bony defect and the soft tissue defect and missing teeth, but neglect preparing the nerve. It's not only my personal belief that the nerves should be part of that overall reconstructive effort. But the American Association of Oral Maxillofacial Surgeons' parameters of care mandate that if a nervous is sacrificed, consideration must be given towards nerve construction and nerve grafting and the fact that surgeons don't consider that is a violation of those parameters of care. One of the special stories that I can tell you regarding the nerve reconstruction was a patient who had more than a decade of neuropathic pain relegated to being home all the time. 30 years old, she was living at home, couldn't maintain a job, 6 months after the surgery, she's able to function normally, has a job, has a boyfriend. That surgery from me to me 1.5 hours. Someone did that when she had an injury in that 12 years of suffering patients could be easily resolved. The ability to, as a surgeon to give that sensation back to patients is priceless.

So you can really hear how the impact of the patient's quality of life is driving surgeons to change their clinical practice, right? And so one of the things that we are really focused on is driving increased awareness with surgeons that these surgeries have a significant impact on the quality of life of patients and that nerve repair using Axogen's peripheral nerve repair algorithm can have a substantial impact on these patients' lives. So why are we in this market? Well, as mentioned, we're seeing really strong growth in this market, organic growth. And we believe by adding additional infrastructure and market development investments, we can continue to drive growth in this market. So there's a large procedural volume that involve nerve and nerve damage in this market. And so it's a really big opportunity landscape for addressing nerve injuries in this market. And then head and neck surgeons are also microsurgically trained. So again, we -- if you have a surgeon population and a surgeon target population that is already microsurgically trained, it's much easier for these surgeons to incorporate nerve repair in their clinical practice. And so how are they addressing these injuries today? Well, today, these types of iatrogenic injuries are often not treated at all. And so there are a lot of these patients that are basically impacted by nerve deficits with significant quality of life problems associated with it. And in the head and neck, a certain community, we've, as a company, not really focused on developing the development of the head and neck market. So awareness of Axogen and our nerve repair algorithm in the head and neck market is very low. And so they still, to a large extent, employ traditional nerve repair techniques. But it's a fantastic opportunity to drive awareness of Axogen and our fantastic nerve repair portfolio and our incredible benefit to risk value proposition with this surgeon population as well. So what are some of the market drivers? Well, again, high incidence of nerve injuries in this market. But also, we have a really good foundation to build on. As Dr. Miloro said in the video, we already have societal support with benign and the OMF community, and we can leverage those guidelines to really start engaging with the KOL head and neck societies to incorporate that as a standard of care in head and neck as well. And then we do see head and neck as a really interesting growth market also because what we've seen over the past decade is survival rates in head and neck cancer has improved significantly. So in the past, if a patient had a head and neck tumor and survival rates were not great and they weren't expected to live very long, repairing and reconstructing nerves to improve their quality of life didn't make that much sense. But now that cancer survival rates are improving significantly, these patients are living a lot longer. And so impacting and improving the quality of life becomes a much bigger priority for the surgeons and for the patients themselves. And so that's really exciting to us because that's where we can impact this specialty with our portfolio. So as our other markets, we really are focused on driving the Axogen nerve repair algorithm to standard of care status. And as I mentioned, we have good position in OMF, and we really want to leverage that to drive societal support and advocacy for the head and neck societies. And then we want to grow our presence in head and neck. We want to grow the awareness among head and neck surgeons. We want to train more head and neck surgeons so that they start to incorporate the Axogen algorithm into their clinical practice. And to accelerate awareness in this specialty, we're going to implement a field-based market development team that's going to really help drive awareness with key KOLs in this space so that we develop the advocacy a lot quicker. And then we're going to expand access and availability, and we're going to do that by training more surgeons. We already have established a very effective professional training program for these types of procedures where we see really high adoption rates following these programs. So again, we're really well positioned to win with societal support. We've got excellent clinical evidence that show restoration of sensation and also reduction of pain. This is independent clinical evidence, and then we have a very large direct sales channel to support our customers in this segment as well. So our 2025 strategic priorities for OMF and head and neck are really continue to drive focus in high potential accounts, focusing on driving mandible reconstruction procedures and then extending that into malignant mandible reconstruction with head and neck surgeons, and while we're creating more awareness and advocacy with the head and neck surgeon community, expand to other addressable head and neck procedures. We're going to implement a field-based market development team. As I mentioned, we've already started the process for hiring this and hope to have this team in place very shortly. We're going to expand our professional education programs so that we can train more surgeons, and so that's already planned for this year. And then we're going to work with our KOL partners to develop specific treatment algorithms for malignant cases to have a higher adoption rate for malignant mandible reconstruction. And finally, as I mentioned, general awareness of the quality of life impact is very low, both with surgeons but also with patients. And we have great experience with direct-to-patient marketing. And we believe by educating patients about the quality of life impact and how we can improve that is going to really empower patients to really take a more active decision in their care pathway and seek out surgeons that are trained to do these procedures. So again, a very exciting market for us, and we feel very confident that we will be able to continue to drive growth in this market. So now I'm going to ask Emily to come up and talk about our breast business.

Thank you. All right. Good morning. As Jens said, I'm Emily Hansen. I have been with Axogen for 6 years. I came on board to really lead the development of the breast market and the Resensation technique. I'm really excited to talk to you about our strategic plan today. But before I do that, I think it will actually help to hear from a few of our Resensation patients in their own words, what the procedure has meant to them and to their lives. [Presentation]

So it's pretty powerful. Even though I've met all 3 of these women and many more that have had the procedure, I've also met thousands of women that have permanent numbness after breast cancer and breast reconstruction. I think one other thing that would be helpful for everybody in the room just because it is a complex procedure, we created a very short animation. We wanted to show you what actually happens, how do the nerves run throughout the breast tissue, what happens when you have a mastectomy and then we'll actually show you how the Resensation procedure works. So I'm going to walk you through that quickly right now. So normal breast before surgery is going to have breast tissue. You will have nerves running throughout that tissue, and you will be able to feel sensory signals if the skin is touched or if you have pressure from a hug. When you have a mastectomy, that tissue has to be cut and removed, and when that happens, the sensory signals are going to be lost. It's almost like unplugging a TV from the wall or cutting the cord from that TV. So the way that the Resensation procedure works is we train plastic and breast surgeons how to identify nerve during the mastectomy and perform a surgical repair using Avance Nerve Graft. So this is an example of the Avance Nerve Graft and the AxoGuard nerve connector being connected to that nerve and coapted to nerve endings underneath the nipple areola. And over time, that nerve can regenerate. The process does take a while. It can take up to 2 years, but you can restore some level of sensory function. So it's pretty interesting to see how that works and also see it in practice. So breast is a very fast-growing business for Axogen. You've heard from the patients even that we just shared that numbness after mastectomy is a problem. It does impact their quality of life. It also impacts their physical safety and their psychosocial well-being, so it's a multitude of impacts. Currently, the problem is kind of largely ignored. If I think of the past few decades, there's been so many improvements in breast cancer care, which is wonderful. We've gone from radical mastectomies with no reconstruction. Patients were kind of essentially communicated to that they were lucky to be alive to now we have much more modern treatments. We have nipple-sparing mastectomy. There's different reconstruction options. But sensation has still been largely ignored. And I think we're at a place now where fewer patients are dying from the disease, which is great that we can now function -- we can focus on restoring some of these functional issues like the loss of sensation to really try to restore that for patients. And so the Resensation technique is a great way for us to be able to help surgeons to be able to address this problem. So there's a few different drivers in the market. We think of the prevalence of breast cancer in general. Many of us have heard the numbers. It's 1 in 8 women are going to be affected at some point in their lifetime. There are more than 4 million breast cancer survivors living in the U.S. today. And there are about 150,000 or more breast reconstruction procedures happening annually each year just in the U.S. alone. So there's a really large opportunity to help so many more women, which I think is fantastic. We also know that the problem is real. We know that numbness is an issue. This is well documented in the literature. And the other great news is that there are documented and published surgical techniques for how to address the issue. And then the other big component with this is helping to make people aware because most women are not really understanding that they're going to lose sensation until they actually go through the procedure. Because when you're diagnosed with the disease, your priority is really on survival, as it should be. But as your risk of mortality decreases throughout your cancer journey, other things start to become more important to you. And we want to make sure that women are hearing more about this sooner than later so that they don't find out they're going to be numb only when they actually are numb and they have more options to address that problem. So we focused a lot on helping to educate patients directly through our Resensation website, patient advocacy groups, and that's really helped quite a bit. And we also do a lot of peer education among surgeons, both breast surgeons that perform mastectomies, and plastic surgeons that perform the breast reconstruction. Another piece that's kind of layered on to this is really growing awareness from a media perspective. So we hear patients communicating these stories and their experiences on all kinds of blogs, on social media. It's also well documented in the media overall. We've heard about it on TV and things like that. So we know that it's quite a real issue. So our objective is to really raise the bar in breast cancer care. And to do that, we really want to ensure that breast neurotization and Resensation actually becomes a new standard of care in breast reconstructive surgery. And that's going to take additional effort, of course. So really, our top priorities are evidence generation. You saw the slide that Erick shared earlier just in terms of the current body of literature as it relates to this. So we are focused on driving Level 1 evidence. So that is going to help also from a societal perspective. We want to work with the societies, both on the breast side and the plastic side to really talk about this to become a standard of care and endorse this procedure. The next step for really this path is to establish coverage and payment. So you still need the evidence to be able to do that, to ensure that payers will cover the procedure. And to do that, we need the evidence in the standard of care designation and also really focusing on driving advocacy so we can work to appeal many of the noncoverage policies that exist today so we can help more women. And then the third component really wrapping around all of this is how do we expand access and availability to patients. And in order to do that, we need to train more surgeon teams across the country. It's not really practical or feasible for most women to travel across multiple states or even really far outside of where they live for care. So we want to make sure that we are ensuring that there's care close to home for them so they can access the procedure. I really do believe that we're positioned to win. We've seen a lot of incremental growth in terms of being able to activate patients. Our Resensation website is really such a great hub for educational material but in a patient-friendly way. We want to simplify the procedure. We want to kind of take some of the fear out of the procedure. Patients have enough to worry about already. But we want to explain to them and be very transparent with them what happens to the nerves, just like the animation that I showed and how the Resensation procedure works. And this is working really well. More than 100,000 visitors are going to resensation.com every single month. They're spending time there. They're watching animated videos to understand more, and they're also visiting our surgeon locator. So more than 1,000 visits per month, which means patients are finding surgeons who are trained and they're calling them for consultation so that they can have the procedure. We also have an excellent well-established customer creation process. We have a specialized breast reconstruction sales team. They have very deep knowledge of the breast reconstruction space, both on the breast cancer side and the reconstructive side. And they really excel at helping to identify these surgeons, get them to the right training. And from a marketing standpoint, we have a great capability of translating all of this complex information to make it easy to understand and help these different caregivers be able to educate their patients. And lastly, we wrap around really our excellence as it comes to surgeon education and training. We've built a great program where we actually train surgeon teams how to identify nerves during the breast cancer surgery and how to perform the reconstruction. That's really resulted in amazing adoption. We actually have a higher than 80% adoption, which is well above medtech industry average as well after surgeons go to training. So what are we going to do about it? Well, in 2025, we're going to really put our foot on the gas and focus on these different strategic initiatives. So our #1 priority is working from a clinical study development standpoint. We need to generate and start enrolling a clinical study so that we can publish evidence about the outcomes of the procedure. Second, we want to continue our education and awareness to patients. So we have to -- people are diagnosed every single day. They're finding out if they have breast cancer. And even more frequently now, they're finding out if they're just a high risk for breast cancer because of genetic testing, different BRCA genes and things like that. So we need to be educating every day and making sure that we're communicating with these patients, breast cancer advocacy groups, and health care providers. Third, we're going to really enhance and expand our surgeon education training. So we've got a great program that exists today, but we're also going to build out the surgeon education journeys for both specialties and really provide more comprehensive and long-term support to be able to accelerate the adoption of the procedure. And then lastly, kind of the foundation for this is, how do we scale for growth? We're going to create so much more awareness and demand, we need to make sure that we're set up appropriately to support all of this. So we are investing in that. We're actually going to double our marketing and our sales organization by the end of the year, which I'm really excited about. And we have to increase our capacity for professional education to make sure that we can train -- continually train a lot of surgeon teams so that we are able to expand access to patients. So I'm really excited about it. I've seen a ton of positive momentum just even the past few years, and I'm really excited to take it to the next level. So thank you very much, and I'll bring Jens back up to the stage to talk to you about prostate.

Thank you, Emily. All right. So you've heard us talk about our existing markets and how we believe that we can continue to grow significantly in our existing markets. But there are tons of underserved application areas for nerve repair that's out there. And we do believe that developing new markets, new clinical applications can be a significant growth driver for Axogen in the future. So when we look at these opportunities, how do we prioritize them? Well, we, of course, have to be a substantial market, right, to warrant the allocation of people and capital. There has to be a well-defined clinical problem that we feel confident that we can impact with our peripheral nerve repair algorithm. And we think prostate meets all those conditions. There is a very well-defined clinical problem in radical prostatectomies, both in terms of potency and continence. It's very well described and it's an unmet need. In our research for this market, talking to some of the thought leaders in this space, they're very transparent that this is the last frontier to a radical prostatectomy is really to improve both continence and potency to improve the quality of life of these patients. So how is it being addressed today? Well, the nerve reconstruction is actually not addressed at all today. There have been evolution in, of course, robotic techniques and nerve sparing techniques, but the real addressing the issue of transected nerves, cavernous nerve transections is really not addressed today. And that's where we have a significant opportunity to impact outcomes in this patient population. So the other thing that's unique about this market, as with breast, you have a very highly motivated patient population. Men that have radical prostatectomies are very aware of the quality of life impact from the surgery. And in fact, a lot of men choose to either significantly delay or choose not to have the radical prostatectomy and choose other types of treatments because they are afraid of the side effects of the radical prostatectomy. So providing these patients with an alternative and an opportunity to improve these outcomes post-surgery is a very attractive proposition. So as with breast cancer, there's a very high prevalence of prostate cancer. 1 in 8 men will have prostate cancer, 300,000 new cases and the second most common type of cancer in men. And so the problem the use of Axogen among urologists that do radical prostatectomies is very low, and there's very low awareness of Avance as well. And so once you educate the surgeons about Axogen and the nerve repair algorithm and our really strong benefit to risk value proposition, there is high excitement among these urologists to adopt a technique like this. So again, they start to take a more active path or active role in choosing their care pathway. So we've done that in breast, and we believe that with this highly motivated patient population, we can also do that in this market as well. So our strategic priorities is really working with KOLs, thought leaders to standardize a surgical technique, establish surgeon advocacy and advocacy from key opinion leaders and then really invest in commercial infrastructure. We are going to be investing in a dedicated market development team, in a dedicated sales team, and professional education team to develop this market. So we've already started to establish this infrastructure and that will continue throughout the year. And then finally, we're going to work with some pilot sites this year to start incorporating the technique already this year so that we really can understand the sales process, the support requirements during the procedure so that we really can develop our go-to-market model by the end of the year and scale going into '26. So a very exciting market for us. We believe we have a very good understanding of the clinical need. We have the portfolio to address the problem, and that we have the ability to scale this once we finalize the technique as well. So that really concludes our market section. Mike, did you want to have any comments before we break?

I do, thank you. All right. Thank you, Jens. Thank you, Erick. Thank you, Emily. And thanks to all of you for listening. We're going to take a coffee break right now. For those of you who are online listening, we will recommence at 11:00 on the dot and continue with the program. Again, thank you very much and see you at the coffee break. [Break]

Okay. Welcome back, everybody. We have 3 speakers yet to go. I'm going to invite Jens up here in just a moment, and he's going to give a very high-level overview of the reimbursement landscape. Jens will be followed by Stacy Arnold, who will then speak again at a high level to the investments and the various development platforms that we intend to bring to the marketplace over the planning period. And then finally, we're going to invite Nir to come up, and he's going to give us a high-level overview of our financials, our guidance and, in particular, our cash and the balance sheet. So without further ado, Jens?

Thanks, Mike. All right. So as Mike said, I'm going to provide a high-level overview of the reimbursement situation. So I'm going to talk about coverage and payment, how both facilities and surgeons actually get paid for doing the procedure. So one of the key growth drivers across our different markets, as we talked about today, is really improving coverage, right? And so as a company, we understand this is a very high priority to improve that coverage situation because that is really what's going to make it financially feasible for surgeons and facilities to incorporate the nerve algorithm into their facilities. So as we recognize the importance of driving coverage, this is also one of the areas where we're going to make more investments in our commercial infrastructure. So we are hiring both field-based reimbursement specialists. We are hiring more people on the back end who are experts in health economics and market access. And we are in the process of hiring a new executive leader for the reimbursement and market access function. So really highlighting the importance of this aspect for our strategy. So at a high level, what is the current situation? So from a coverage perspective, we have, as I mentioned, really good coverage from Medicare and Medicaid. 94% of Medicare and Medicaid lives are covered. So what does that mean? That means that if they go into a hospital or a surgery center, have an outpatient procedure where a nerve repair is performed, then there is coverage and payment for both the surgeon and the facility. On the commercial side, we have about 50% of commercial lives covered. So that means there are some insurance companies that are not yet covering. And why is that the case? Well, they will typically use experimental designation as one of the reasons. And that's why the BLA and getting the BLA approval is so critical moving forward because these noncoverage policies that the commercial payers have in place specifically state our investigational status as one of the reasons for noncoverage. So the BLA will certainly help solve that. That will remove us as an experimental therapy, and that should really help our ability to appeal these noncoverage policies. So we usually talk about 3 things that need to be in place to -- for full coverage. One is clinical evidence. The other is not being -- not having an experimental status. And then the third thing is the societal support as the standard of care. And so we talked a lot about coverage. We've talked a lot about standard of care. And that's the reason why standard of care status is so important because this is one of the things that the payers look at when they're deciding on their coverage policies. So we have a plan to really ramp up our engagement, add additional resources to appeal these noncoverage policies with the commercial payers. And so we're confident that post BLA, we'll be in a much better position to drive expanded coverage for our algorithm. So then we have the payment side. And what you'll see here is that we actually have an already established CPT 1 code that allows facilities to get paid for allograft procedures. And what you'll see also is that, that has significantly increased over the last 6 years, making it more feasible for facilities to incorporate our algorithm into their clinical practice. So as an example, 40% increase since 2019 in the hospital outpatient setting. And then after getting device intensive status in the surgery center, that reimbursement has increased almost 140%. So significant improvement in payment rates for allograft and conduit. If we look at it from a physician perspective, so actually, nerve repair pays quite well to the surgeon. It has a high RVU basis, 27 to compare. It's approximately the same as what surgeons would get for a radical prostatectomy. So it's quite RVU intensive. And that surgeon payment has also improved since 2019. So again, these are national averages for Medicare, but we're in a really strong position from a Medicare and Medicaid perspective. And our efforts really now is on driving efforts to expand the commercial coverage. That's it from a high-level perspective. Now I'm going to ask Stacy to come up and talk about our innovation and clinical evidence strategy.

Thank you, Jens. Good morning. I'm Stacy Arnold, our Vice President of Product Development and Clinical Research. I joined Axogen in 2018, and it was very clear from the beginning that I was part of something really special. When I look at the incredible journey and the impact of our work, I'm not talking about what we do in the R&D labs or in our clinical trials, but the real-world lives that we're impacting. In my role, I have the unique privilege to both be at the upfront and inspiration of R&D discovery and also witness firsthand the profound impact that our innovations are making on patients' lives in our clinical research. And so when I think about Axogen's mission, it's simple but bold to restore health and quality of life by making restoration of peripheral nerve function and expected standard of care. I mean that's something that has to happen. And innovation is our right to win, but with responsibility. Every solution that we move forward must make meaningful improvements to the standard of care and nerve repair. And at Axogen, we're innovating. We're not just innovating. We're innovating with purpose. And so every product, every advancement, every investment that we make must drive forward one guiding principle. And that principle is that our solutions must provide a better benefit to risk in creating a profile for advancing surgical nerve repair. Our strategy as we look forward, we're focusing on 3 key things. So for therapeutic reconstruction, we're developing solutions that make nerve regeneration faster and more effective by optimizing outcomes and improving the patient journey. We're also focused on ease of coaptation. Precision in nerve repair, it's critical. And so our goal is to make coaptation easier, more consistent and tension free. And by ensuring surgical alignment at that coaptation site, we're increasing long-term patient outcomes. We're also focused on expanding protection. So the success of nerve repair doesn't just lie in the nerve. It's in the whole surrounding environment of the nerve. And we're enhancing protection strategies that improve surgical outcomes. And we're also expanding those outcomes to other clinical applications. Now commitment -- our commitment to innovation doesn't just stop at concept. We are translating that vision into a clear strategic road map. And we are, as you can see, looking at our pipeline, investing in targeted high-value efforts to drive forward new product development and new clinical applications. I talked a bit about the innovations. But when we look at new clinical applications, we're expanding the reach and the impact of our current portfolio for peripheral nerve repair by expanding in other areas of the body, like prostate, which you heard Jens speak about. Our portfolio and our road map is a commitment that underscores our investment in both near-term value and long-term value for the business. But innovation alone is not enough. To lead, we have to prove it, and that's exactly what we're doing by investing in our Level 1 clinical evidence because the quantity and the quality of the data that we're producing is going to drive adoption and make us the recognized standard of care. The studies that we've done, the trials that we're doing and the initiatives that we have planned are creating a foundation for enduring leadership at Axogen. We're trying to achieve 3 things with our innovation program here in clinical. We're going to demonstrate improved patient benefit. We're going to support payer reimbursement, and we're going to build stakeholder belief. I'm not just talking about surgeons. I'm talking about the entire health care ecosystem. So if I'm to leave you with one message, it would be in innovation, we're not just looking at revolutionizing and pioneering the next solution. We're redefining what's possible in nerve repair. The future of nerve repair is being shaped today, and I'm extremely proud to be a part of Axogen at the forefront. So with that, I'm going to turn it over to Nir to go over financials. Thank you very much.

Thank you very much, Stacy. My name is Nir Naor. I'm Axogen's Chief Financial Officer since a bit over a year ago and very excited to be here. Then to our financials. So I wanted to start off by giving you some financial perspective as to where we currently are and what we've accomplished in the past couple of years. So as you can see, Axogen has enjoyed an accelerated growth in its top line with a 4-year CAGR of almost 14% and a 2-year CAGR of over 16%, and that is driven by our 2024 growth rate of almost 18%. If we're looking at our bottom line profitability, we can see that, that top line growth has been reflected in it. Specifically, EBITDA and adjusted EBITDA growth and adjusted EBITDA, we define as EBITDA excluding stock compensation. As you can see, both of those metrics saw an inflection point in 2024 by turning positive. Our adjusted EBITDA amounted to almost $20 million, which stands for an adjusted EBITDA margin of almost 11%. If we look at our cash flow, we see a similar trend in our operational cash flow that we define as change in cash, cash equivalents, investments, restricted cash minus cash flows from long-term debt. And as you can see and as you know, after many years of net operational cash outflow, we saw this metric also turning the corner in 2024 and turning positive. And as we'll get to that shortly in a few more details, we definitely intend to continue our focus on bottom line profitability and cash flows as we implement our strategic plan in the next 4 years. Then to our 2025 guidance that we walked you through in our earnings call last week. We expect our full year revenue growth to be in the range of 15% to 17%. And that range is predicated on continued momentum that we saw in the prior year and the good execution of our business model and our commercial strategy, predominantly our focus on high potential accounts. In addition, this range is also impacted, albeit to a modest extent and only in the second half of the year by the coming into fruition of some of the strategic investments that we intend to implement already in the course of this year. Going to gross margin, we expect it to be in the range of 73% to 75%, but that includes one-off costs related to the approval of our BLA. We expect those costs to be approximately $2 million. And as such, we expect them to impact the full year gross margin by approximately 1 percentage point. Important to mention that 2/3 of those costs are actually noncash ones and relate to the vesting of our BLA-related stock compensation. From a timing perspective, we expect most of those costs to hit around that time of the BLA approval, currently expected to be in September of this year. From a cash flow perspective, we expect to be net cash flow positive for the year. And as we've mentioned in the past, our strategy is to grow our top line, yet we intend to do it in a cost-efficient manner while optimizing our bottom line profitability and our cash flows. So we intend to be net cash flow positive for the year. Nonetheless, we expect to see the same quarterly cash flow seasonality that we've seen in prior years, namely that the first quarter of the year is a net cash outflow, and that is driven by the national sales meeting and the payout of our yearly bonus, both taking place in the first quarter of the year. And then going to the strategic plan horizon 2025 to 2028. As we've said this morning, our priorities are predominantly focus on planned elective procedures being more addressable, driving the Axogen algorithm to standard of care in extremities while focusing on high potential accounts. Leveraging the growth that we've seen in our breast neurotization portfolio while increasing investments, accelerating our OMF head and neck business; and last but not least, investing in innovation of new products and applications while initially focusing on nerve repair and nerve protection in prostatectomy procedures. All of those priorities and initiatives. With them, we expect our revenue in the next 4 years to have a CAGR of 15% to 20%. And that range is mainly impacted by growth of our existing products and applications with some support from growth coming from our new launches. Moving to gross margin. We expect our gross margin to improve in the course of the planning period as -- predominantly as of 2026, following process improvements that we intend to put in place predominantly following the approval of our BLA. In addition, we expect it to benefit from increased capacity utilization following further demand for our products. Then going to our cash. As we mentioned, our strategy and financial strategy is to grow our top line. It's our top priority. However, we intend to perform that in a cost-efficient manner while prioritizing and optimizing resource allocation, bottom line profitability and cash flows. As such, we expect to be cash flow positive for each of the following 4 years. In addition, we expect to have our operational cash flow grow year-over-year and reaching a run rate of at least $70 million by the end of 2028. In terms of the uses of our cash flows, we intend to be able to self-fund our strategic initiatives. In addition to that, we expect our operational cash flow to be sufficient for us to repay our long-term debt, which is due in '27 and '28. And with this improved balance sheet situation, we expect to have further optionality and flexibility to drive further resources into potential new and further applications. We just wanted to share with you that we've devised several metrics that we will report on, on a quarterly basis that would help you and ourselves track our process and progress into the strategic plan in a more transparent manner. And with that, I'll hand it over to Mike for his concluding comments before we start the Q&A session.

Thank you, Nir. Thanks, everybody. That concludes the formal lecture part of our program. What we're going to do now is we're going to invite all the speakers back up here. We're going to get settled, and then we're going to spend the next 30 minutes taking your questions and further elucidating the subject matter that we've presented to you today. So could I ask everyone to come up? It looks like we're going to need you to bring your own chairs, too they've already got it planned. Okay. And [ Yvonne ], could you come up as well, please? Okay. We're going to try to answer your questions. We also have questions coming in from the online audience as well. And I'm sure we won't be able to get through all of them, but we'll take them one at a time. So Chris?

Okay. Great. There we go. Chris Pasquale from Nephron. Thanks for all the information today. Really interesting presentation. Two questions, one for Nir and then one on prostatectomy. So Nir, no explicit margin targets in the LRP. You talked about gross margin improvement. We heard a lot about investment in a variety of different areas today. How should we think about the middle of the income statement? Are you guys basically going to try to keep those ratios relatively flat in order to fund all these different things to drive the top line growth? Or should we assume operating margin improvement over time coming from SG&A and R&D?

Yes. So unfortunately, we don't break out this ratio as well. But I would think about it high level, as we mentioned, we have a levered P&L. So top line growth with investments, but still growing operational cash flows. I think that should allow you to have a picture over what you were asking.

Okay. And then the prostate opportunity is fascinating. I'm curious, maybe, Jens, you can help with this. How often does the surgeon know that they've caused a nerve injury in these procedures where they would know that a nerve repair is necessary? Or is it something you find out after the fact? And is this about protection? Or is it about repairing those injuries in the same case?

That's a great question. So oftentimes, depending on where the pathology is, they will know going into the procedure, whether or not it involves the nerve bundle. But sometimes they don't know before and they get surprised when they get in there. And so they really make a lot of decisions intraoperatively as well. As for the question of whether it's protection or reconstruction, it really depends on the procedure, whether it's a unilateral nerve sparing, if it's a bilateral or if it's a complete nerve-sparing procedure. So we do see potential for both incorporating our protection portfolio and Avance for reconstruction. So it really is a mix of applications depending on the surgical technique. Erick an [ Evan ], I don't know if you want to elaborate.

No, I agree with everything you've discussed there. And then you have the opportunity to do it during the procedure. So there's not a comeback and repair it later. It needs to be addressed at the time of the procedure currently today to be able to ensure that you have the opportunity to either protect the nerves that are stretched during the dissection or reconstruct those nerves that are resected due to good oncologic practice.

Caitlin Cronin, Canaccord Genuity. Just a little more color on your international strategy going forward. So what's the starting point here? Where are you from a regulatory standpoint already? And also, where do you plan to expand initially? And what does that kind of look like the pathway going forward for the next 4 years?

Sure. Well, as we've basically stated, the priority right now is executing the various programs that we've described today in the U.S. is job #1. And then as we move forward with the -- a final regulatory process for BLA, we're doing in parallel evaluating the market access status in various OUS markets. So today, it's imported as a tissue product. We're going to ultimately be migrating that to a different approval status. And as we have clarity on that, we will formally update everybody as to what that means and our next steps in terms of investment. So while I can't give you explicit guidance today, I think the hope is Jesse? Jesse. By midyear, we should have a pretty -- we should have clarity, do you think?

Yes. I think we will have clarity should have clarity on where we're headed from a regulatory standpoint [indiscernible].

We have highly interested partners literally around the world who constantly check in with us. So we are ready to go once we have that situation established.

Great. And then just one on the growth CAGR, 15% to 20%. Any expectations on the cadence of that going forward to the plan? And what drives you to the top versus the bottom of the range there?

There is no explicit guidance in terms of the cadence in terms of what drives that, probably the obvious is our ability to execute on the aspirations you've described.

Anthony from Mizuho. Just a couple on the BLA and then a couple on the TAM forecast that you have here. So the BLA, you have the targeted PDUFA date September 5. So maybe just any level of communication with FDA between now and then? And under a positive scenario where you secure the BLA, do you think the 50% of commercial lives that are not covered today that the BLA actually facilitates that being covered lives?

Sure. With regards to BLA, the activity level that we have is pretty much weekly now, and we don't see that dissipating. So it's building up. And it's building up because it's the natural cadence of the work that's required for all the various milestones. So what are those? You've got your BIMO audit and the clinical data, basically auditing that so that all the conclusions we draw from it, everyone feels good about that it's kind of the gap, if you will, to accounting at BIMO is that the clinical data. And then the other element is the pre-approval inspection of the plant. So we make these grafts every day. It's the same draft tomorrow after BLA approval. However, the quality system evolves. And so that plan inspection is intended to verify that we're not just making a good graft, but making it now in accordance with the BLA expectations in terms of that new status. So that's all building up. So those would be the next big milestones that take place as we continue to move forward. Bottom line, lots of activity literally weekly across all the teams. And then your last question was.

Can the BLA -- once you secure it, do you think that facilitates like expanded commercial coverage?

The answer is yes, but it's not a light switch. It just means that we can now address the product has a codified approval status. It's not experimental in that respect, and that will be useful in our discussions in the U.S. as well as with external stakeholders.

And then quick on TAM, you have the $2.9 billion extremity. Maybe just a recap on how does that break out in terms of gap length. So you have very good data in 15 millimeters and smaller 15 to 29, you have great data. Is it even across 5 to 70? And is there anything in there for [indiscernible].

I'll ask Jens to talk to this, but simplistically, for just simple transactions where there's no other correlated injury, less than 2 millimeters, we're not assuming those are, for example, part of the TAM. Is that right, Jens?

So the TAM is estimated by gap length and how we can -- how we believe we can address the gap to different gap lengths with our portfolio. So that basically breaks out in short and long-term sensory and mixed and motor and protection as well. So yes, we have a TAM by gap length. And the kind of split between the different gap lengths. I don't think we publicly disclosed that. But of course, we have that.

Although part of it. Bottom line, the TAM is -- does not presume every procedure is an Axogen opportunity.

Mike Kratky with Leerink. You cited you're aiming to increase average account productivity by 21% in 2025. First, can you help quantify or frame what you saw in terms of your account productivity growth in '24? And how does that 21% account for both new accounts you're going to be adding and what's reflected in terms of contribution from new reps?

Sure. Several parts. Go ahead.

Yes. So that's specifically related to our high potential universe. Last year, we saw significantly higher productivity in those accounts, and we expect to continue to drive sales growth productivity in those high potential accounts. So we feel very confident that we can grow that with 21% in 2025. As to whether or not that involves creating new accounts or adding existing users in existing accounts, it's really a mix. But we have a lot of footprint in many of these accounts already. So it's really about mostly driving adoption and algorithm expansion in these facilities. So I hope that answers your question.

Yes, that's very helpful. And -- maybe just one separate one. I mean you cited high procedure concentration for OMF and head and neck of around 90% in 900 hospitals. So just curious if you can comment on where you stand in penetration among those 900 today.

For OMF and head and neck procedures, it's very low. In general, we are below 1% penetrated for all the targeted procedures in OMF and head and neck. So it's a very low penetration currently.

And just as a reminder, part of the strategy is to build the specialty support group in terms of education and market development that's necessary to focus on this cohort. The sales organization is that we will be focusing on OMF, head and neck is the same as that of extremities, one of the same. So it's building a whole focus area for market development, both at the clinical level, training and education.

Mike Sarcone, Jefferies. I guess just to start, maybe dovetails on some things Anthony mentioned. Avance in trauma, extremities, it has really good clinical data. You have been making good progress, and that has accelerated with the focus on high potential accounts. You talked about improving commercial reimbursement. But I wonder, are there any structural impediments to getting to kind of your ultimate standard of care or adoption in the kind of emergency department setting just because things can be chaotic there, you can't really schedule cases. Is there any type of philosophy where it's like, let's get this patient stabilized and out of here, kind of like a throughput focus. Is it just the kind of commercial education awareness that needs to be increased? Or is there structural?

So I think I referred to the convoluted patient journey in trauma specifically. And we believe the key to unlocking more procedures really is to make sure that the entire referral base, when it's not a hand surgeon that is diagnosing the patients that there are more health care professionals that understand nerve injuries and understand that they can be treated and who in that facility are equipped to treat those injuries. So they can refer them to our hand surgeon customers. So that is one of the things that we believe will be an important driver for continued growth in extremities.

Got it. And then just, Nick, [ Yvonne ] wants to elaborate on that.

Just want to add on top of this, as we are all aware, we cannot be on every ER department across the country in every hospital that's not feasible. But our efforts in educating all of those who also come to the ER and see those patients on every aspect from plastics, from neuro, from orthopedics are really reaching far and educating them that additional attention is, so to speak, needed, that it's just patient laceration that they might be called to see. It's not just a laceration, might be a little bit more. So a little bit more in-depth analysis of those patients should help us capture actually those who also need the nerve repair done as well.

At a very high level, if it's not obvious or self, there is a footprint element. So while we have 100 people, and that's the largest dedicated nerve care organization, anywhere. That footprint is insufficient to possibly capture the universe of potential patients that exist that come through the door. So there's more than 5,000 sites of service. As you might imagine, it's a pretty broad bell curve in terms of activity. So for some situations, the nerve situation that someone might see might be the only nerve they see for 6 months. And so if you're not there to build on that, it makes it very difficult. Part and parcel why from a strategy standpoint, we're trying to go deeper and to build nerve care as part of a true practice by staying disciplined and focused on the area where our footprint has a chance to do that. And that's basically the high potential accounts.

That makes sense. And then just one more for me. In some of the reimbursement slides you have here that the codes for allograft are not specific to clinical applications. So as you continue to progress and the BLA helps you knock down some of that experimental characterization, does that basically clear the way then for additional applications like prostate cancer, prostate as well? Or is there more blocking and tackling?

Well, the entire history of Axogen is basically we provide a scaffold that facilitates axonal regeneration. So that's not specific to hands. That's not specific to prostate. It's basically we provide a vehicle to allow that to occur. So in that sense, that's what we're doing. And prostate, just an extension of the innumerable number of things that we've addressed, everything from eyeSight to lower extremities, upper extremities Anywhere there's a nerve deficit, we apply that scaffold.

Thanks for having us. Dave Turkaly from Citizens. I think we all understand sort of the unique position that Axogen has been in, specifically from a competitive standpoint. But maybe for [ Yvonne ] or maybe someone else on the panel, is there anything that you're aware of that any of the competitors are doing? Is there anything you see maybe even over the time of the forecast you just gave us that would be new in the space?

With Axogen in one or the other capacity since 2008. So I've seen lots of stuff happening in the meantime. And I have to tell you very comfortably that Axogen was and will remain the leader in the nerve world. It doesn't matter who wants to accept it or not. So it is normal that other product companies are going to start developing and coming out with other products. But at the same time, we based our product really on a science and the patient needs and the most applicable solutions for the problems that patients have out there. So at this point, at least I'm not waking up and thinking about competition.

Yes. We remain paranoid, but we're unaware of anything over the planning period that would pose a strategic threat.

Yes. We remain paranoid, but we're unaware of anything over the planning period that would pose a strategic threat.

Yes. And I would just like to add, listen, it raises the noise around nerve repair in general. So we kind of welcome it, right? It's getting that word out that we can help these patients. We feel like we have the best solution. So we're not challenged by it, but it absolutely helps create that awareness.

And then just a follow-up. I don't want to put you on the spot too much here, Mike, but the company has been around a long time, 15 years plus, and we're looking at sort of things that most companies that happen, I guess, sooner in that progression. But I guess your thoughts of what inning we're in right now. I imagine it's early, but given all you laid out today, is there a -- could you help us think about where you think this company is?

I look at it as immature. And so regardless of the chronological age, you objectively can measure where are you in terms of market development? What initiatives exist or don't exist. And when you go through that playbook, and that playbook applies to any med tech or health care initiative where you're bringing forward novelty and you're trying to advance it and make it available. First of all, it starts with what's the benefit risk proposition. It's either meritorious of all the effort that's going to be required going forward or it's not. So that's table stakes. And with regards to Axogen, it's our estimation that bingo, we got that, okay? There's no question we have a profoundly positive benefit to risk. we introduce effectively no risk to the patient because they're undergoing whatever they're there for in front of the physician for another reason. So that's already established. And then what we offer is the potential for great benefit to be derived, not guaranteed, but the potential and it's significant. And so that's very important. Now with that, you still have the requirements for awareness, physician training, you have the requirements for establishing yourself within the care guidelines formally and then you have the requirements to generate the evidence. And so when you go and you look at these latter points, in particular, we have not done the work that you might normally do as a novel therapeutic solution. And so what we're engaged in now is we're doing that work. And we have high confidence that we'll win because we're very familiar with what the actual benefit to risk proposition is. And so that's why I used the word immature. It's not a question of whether or not it should be or could be, but whether it should be or could be, you still got to do it. And so this is about executing on those elements. And those elements typically take, on average, 3 to 5 years for any therapy that is deserving a winning. Not every therapy can go through that gut, but Axogen's algorithm absolutely can, and that's what we're going to do. So the goal is that if I'm here 5 years from now, and we have this conversation, it's a different conversation because it's already been achieved in one or more areas. Yes, Chris.

Chris from Nephron again. Stacy, I was curious about your slide, the road map, how we should interpret those bars. Does that mean that at the end of those bars, the products you're talking about are commercially available? Or is it some other interpretation we should be taken from that?

Thanks, Chris. You're interpreting it correctly. So when we're looking at ease of coaptation, those initiatives are being invested in right now. And I believe that bar ends in 2027, which is when we anticipate to have a commercial launch. Similarly, looking at protection expansion, that bar ends in 2026. That is when we would expect a commercial launch for that initiative. And therapeutic reconstruction is looking at advancing and we're assessing different biologics and therapies to make that speed to recover and recovery and effective nerve restoration to those functions. That is the next wave of nerve repair that's pushing the boundary. So that we anticipate might have additional clinical trial work, which would take it outside, which is why it's got the arrow continuing at the end of 2028.

Got you. And you've added a couple of products to the protection portfolio just in the last couple of years. So when you guys look at what's missing today, what are the gaps there that you're looking to address?

We're always looking at how do we make it simpler for surgeons to do this coaptation. It's imperative that we align the fascicles during the nerve regeneration. And we want to unlock for people to be able to do this across very different microsurgical training and techniques and make it easier for people to do. People should be doing nerve repair. And what we want to do is deskill it, reduce risk to patients and improve the patient benefit with the outcomes when they do those coaptations. So any and all efforts that we've assessed in the field, we're going to be exploring to make it the best outcome for patients.

And just one more on prostate. There was a comment that Avance provides better size matching than the sural nerve. Should we think about this? I is autograft being done in these cases today? So this is not a case of replacing autograft like we see in extremities. But even if physicians wanted to go to autograft, you're saying that, that would be a suboptimal choice relative to Avance.

Having done open autograft prostate construction over 20 years ago, I have to tell you, I'm really pleased to see there is a better solution for that today. First, we have robotic procedures done that visualization is uncomparable, obviously better. And second, allograft matching it, the size of this nerve is 3 to 4 to 5 millimeters and length can be 5 to 7 centimeters. And it can be really tricky to really judge it what you need to do if you're going to take the autograft to match the size. Technically, it's much more complicated. Morbidity to the patient is uncomparably bigger and everything. So allograft really offers incredible simplicity to the solution that I think surgeons are going to love once they get onboarded all of this in terms of...

What I'm realizing is what listeners may not appreciate is when we say allograft, it's not like one allograft. We have an entire SKU of different sizes and lengths. So -- and the whole point of that is to be able to take a human allograft, which is basically a replication of the form structure that the individual has because it's human and match it exactly by size to what that patient has. So ironically, what's not appreciated is autograft sounds like, well, that would be better. That's one graft, one size, which means it's not, by definition, going to fit most situations. There's -- and we believe the data is pretty compelling at this point that you compromise nothing in terms of potential efficacy, we actually gain that with allograft. So we have a much better able.

Yes. And just to add on top of this, you get a little bit more granular. But any time that you're adding cables of the autograft, you're also increasing, so to speak, dead space, and we have evidence for that because you're really not -- the only fascicles are going to conduct the nerves information. The surrounding stuff around there will not. So if you add about 4 autograft cables, you will about lose 40% of that to just dead space in between of the fascicles. That's why the size matching autograft I mean, allograft really resolves that in a very elegant simple way, plus it's simple to use.

Ross Osborn from Cantor Fitzgerald. So following up on prostate and I realize you're not providing cadence of the strategic plan. But in terms of contribution from prostate, when should we expect material revenue to kick in?

2026, and that will represent based upon our plan, and we'll update people quarterly on the progress towards preparing for that. But in 2026, the expectation is that we have our training protocols in place, we have our market development plans in place, and we have an initial organization in place. So material revenues will be seen in 2026.

Okay. Great. And then, Stacy, would you walk through what the implant MACN study looks like within breast? And Emily, what -- how are you thinking about the level of data needed to be considered standard of care?

Yes, absolutely. So for the implant NACN study, we're looking at what we've done in Sensation now, which was a real-world registry, but it looked at autologous deep flaps. We want to get Level 1 evidence looking at implant-based neurotization of the Nipple-Areola Complex. And so this will be a Level 1 study that's looking at providing quality of life outcomes and correlation with functional recovery, which would look like sensation of that NACN.

And then I would add just in terms of the type of data that we're going to need, it really -- it needs to cover multiple reconstruction types. So we're addressing that now by adding on the NAC study. It also needs to look at not only the physical sensory recovery, meaning how much sensation can be felt in the breast. But what we are adding into this study as well is really the patient-reported outcome measures. So this is looking at what is actually functionally and clinically relevant to the patient and then how do we work on those 2 together. The last component is there's also independent surgeon research that's currently taking place, which is helping build that body of evidence. And then you layer on top of that the patient advocacy work as well. So I feel like it's the combination of those 3 that's really going to be key.

Emily, you might want to share with people how many patients we treated so far through sensation?

Yes. We're on track right now that we're treating more than 4,000 patients per year. And now I'm going to blank on the actual total.

I think it's 14.

More than 14 total. So it's a really great cadence. And by training more surgeons, we're going to significantly increase that each year.

Then we'll probably be able to take some of the online questions and.

[indiscernible], I'm going to stick on breast and have one on the long-range plan [indiscernible]. How many plastic surgeons are trained? And when you think about ideal guidelines, is it at the time of the mastectomy or when they come back for the implant? And are these -- like at what point is the ideal time to actually do resensitation? And when do you think those guidelines can come? And I'll have a follow-up on guidance.

Okay. We have several hundred surgeons that are trained across the country right now performing this procedure. When we consider when is the best time to perform the procedure, of course, it's going to be immediately. So right when they have the mastectomy and the reconstruction. However, we have additional data in patients where they've had the procedure in a delayed fashion several months, even years later, and they are still getting sensory recovery. So it's important that it's not limited to only the immediate setting. We want to offer this benefit to as many patients as possible and their own diagnosis and care treatment sometimes is going to dictate that.

I might want also to share people, there's 2 ways to go at this. There's the flat procedures and then there's the implant reconstruction.

You want me to elaborate on that?

Yes, please.

Okay. So there are 2 main types of breast reconstruction that are performed. Most predominantly, it's implant-based. That's more than 80% of the population in the United States is having implant-based breast reconstruction. Then we have a portion under 20% that's having autologous reconstruction. So you're taking skin, tissue, fat, blood vessels from other areas of the body. Most common is the abdomen and using that to recreate the breast. And so it's important to us to be able to offer this procedure in both types, and that's why we've worked on expanding these techniques over the past couple of years.

And Nir, just on guidance, you had $2.5 million of cash flow, which translated to $19 million of EBITDA, 11% EBITDA, and you have $70 million of cash flow in 2028. And so when you bridge that to an EBITDA margin, it certainly translates to a very high number. Back of the envelope, if you give some up on investment, you can kind of target a 25-plus EBITDA margin profile, but maybe just a bridge between cash flow and EBITDA in 2028.

Yes. So we don't break that out. But yes, directionally, you're right. Definitely, EBITDA adjusted EBITDA expected to improve as well.

Anna, are there any questions online that we should need to address?

No..

No. Okay.

[ Frank Dagman ] with Lake Street. I was just hoping you could talk a little bit about the BLA label. Is that going to be indication agnostic? Or will you have to wait for some of the Level 1 data for the other indications and add those in a supplemental submission?

No, there's no expectation to add to the label over time. The label as it's currently being worked is not indifferent from the current label that we have. So we basically make a human allograft that creates a physical scaffold that facilitates axonal regeneration. I don't remember the exact words off the top of my head, but it's essentially exactly the same and the BLA -- I can't use the word exactly. It's basically the same as what we have today.

[ Jeff Hearl ], [indiscernible] Capital. Questions on processing and manufacturing. We didn't talk too much about that today. Maybe first, are there differences in the process of -- for producing different products? And are some more time-intensive, labor-intensive than others? Like you mentioned the length, different lengths, for example. What the QA/QC process is? And you mentioned gross margin guidance and then talked about process improvements helping that over time. Maybe like what are those process improvements?

Sure. There's going to be -- today, as we're currently manufacturing, those processes will remain for the most part as they are until the BLA is approved. Why? Because there's not a question whether or not we make a safe product today. But under the BLA process, the biological license expectations, the quality system and the depth of that is different. And so while the end product that's going to come out post BLA approval is no different than the product that we have today, the process by which we can confirm that will be more intensive. And I'm oversimplifying a lot of detail, but more or less, that's what's transpiring. So to your question in terms of process improvements, and Craig, please correct me if I misstate, the kind of things that we would want to then do as a part of a natural evolution and continuous improvement, those are going to wait for the most part until after BLA's approval because whatever changes we make in the process need to build upon the new approval process, not the existing approved status. Does that make sense?

It does.

So that's why -- it's one reason why we're not talking a lot about gross margin this year because the things that we would like to do, the things that we can do, system approvals, electronic records, all the things that an ops organization is typically obsesses about given where we are in the approval process, we need to stay the course and then the day after we start a new and then build upon with improvements thereafter. Did I miss anything, Craig?

Okay. That was helpful. How about this question. In terms of what you think about and the risks you spend your time on, where does manufacturing and all these procedures you're talking about, where does that weigh in your mind in terms of a risk profile?

If Craig sleeps at night, I'm fine. So far, he's sleeping well.

Okay. That's good [indiscernible].

What are the risks? I think, honestly, the way we talk, our risks are execution. We are very comfortable that the markets we described are real, very comfortable that our product does what it's supposed to do. But ever cognizant that no product sells itself, okay? And we need to figure out what are the efficient, effective ways to match patients with people who can provide this solution. And while it sounds very simplistic, each business model has its own characteristics and obstacles, and we need to attend to those. And that's the most important work that actually can do is to get to the point where we have a very tight bell curve in terms of X goes in and Y comes out in terms of time and relative productivity. In some parts of our business, we have very high fidelity around that. We know. In other parts of our business, we think we're moving in the right direction, but we need a little bit more time to confirm that so I can look at people like you in the eye and say, yes, we got this, okay? Let's just talk about the futures and the next investments. And so that's what's going on at Axogen right now. So parts of our business, we're optimizing the business models. And when I'm talking about customer creation processes, and then obviously, we're working on the things we just talked about strategically. So we feel very good about the future, but we know that we need several more quarters to really truly convince ourselves that we're sailing the ship is the metaphor I always use through the ocean to the waypoint accurately.

Mike Sarcone again, Jefferies. Just one around manufacturing capacity. You've got the new APC. I guess just give us an update on where you stand there? And do you have enough capacity there to kind of hit what your targets are for the long-range plan? And then on top of that, how are you thinking about when you attack OUS markets, do you have enough capacity in the U.S. to supply that? Or would you be thinking about building a processing facility overseas?

We have no -- right now, there are -- there is no new plant contemplated during the planning period. That doesn't mean that won't end up changing for some reason. It would be a high-quality reason. But right now, we don't believe that's the case. And in terms of the existing plant for the strategic plan period we required, we believe we have the ability to maximize that facility to support the demand that we're organizing around. Craig, did I tell any mysteries?

Coming in, I've been here 2 months now and just looked at the current period through 2028, and we looked solid. Obviously, the building was built with a certain growth capacity in there, but there's a lot of space to add clean room space and other functions. So we've mapped that out, and it all looks very doable within the APC site.

Okay. One more.

Caitlin Cronin again from Canaccord. So you mentioned 100 people right now in the sales organization, and you mentioned doubling the breast team. Any more color on how large the expansion of the sales or would be in addition to breast? Would it be double that or?

Yes. Yes, we will update that quarterly, just to keep everyone up to date because there's a cadence not going to have -- it hasn't all happened already this quarter. So when we say 100, we're primarily referring to the extremities and OMF group. So that group, we will add, is it 10 or 15 total people to the support network. On the top of my head, I forget. Not the sales force. I'm talking about the marketing support and OMF. About 15 total there. And then we will incrementally start adding customer-facing salespeople on the extremities side. And then the breast side, that's about 12 people today. And effectively, we will double that. And then we will do on prostate, we will be adding a market leader like Emily, an architect of that particular program, a manager and leader of that market application. And then we'll be adding professional education staff across all the parts of the business to ensure that we can keep up with physician training and education. Okay. Well, I want to thank everybody. This really concludes our program, and I look forward to updating everybody along with the team each quarter relative to our progress and what we've discussed today. We are very grateful that you chose to spend time with us and learn more about our story. Obviously, we believe in this. Obviously, and I want to make sure you all understand this. We recognize it's all about execution, and we look forward to speaking to you about that as we go forward. Thank you, and we'll see you again next year formally for our 2026 Investor Day.