AXGN - NASDAQ

Good morning, everyone. Joining me on today's call is Michael Dale, Axogen's Chief Executive Officer and Director; and Nir Naor, Chief Financial Officer. Michael will discuss third quarter 2024 financial results, and Nir will provide an analysis of our financial performance and guidance and discuss our outlook for the year, followed by a question-and-answer session. Today's call is being broadcast live via webcast, which is available on the Investors section of Axogen's website. Following the end of the live call, a replay will be available in the Investors section of the company's website at www.axogeninc.com. Before we get started, I'd like to remind you that during this conference call, the company will make projections and forward-looking statements. Forward-looking statements include, but are not limited to, all statements relating to financial guidance, including revenue, margins, cash flow and future profitability, the availability to fund ongoing operations, the availability to expand markets and revenue, expectations for growth, marketing opportunities within existing and new nerve repair markets and applications and the expected approval of the biologic license application for Avance Nerve Graft, including the anticipated approval time line, the assumption that Avance Nerve Graft will be designated as a reference product for any future biosimilar nerve graft and that such designation will provide marketplace exclusivity. Forward-looking statements are based on current beliefs and assumptions and are not guarantees of future performance and are subject to risks and uncertainties, including, without limitation, the risks and uncertainties reflected in the company's annual and periodic reports, such as hospital staffing issues, regulatory process and approvals, surgeon and product adoption and market awareness of our products. The forward-looking statements are representative only as of the date they are made, and except as required by applicable law, the company assumes no responsibility to publicly update or revise any forward-looking statements. In addition, for a reconciliation of non-GAAP measures, please refer to today's press release and the corporate presentation on the Investors section of the company's website. Now I'll turn the call over to Michael.

Thanks, operator, and thanks, everyone, for joining us today. I'll begin our call by providing a brief overview of our third quarter performance. Then since this is my first call as the CEO of Axogen, I'd like to take time to address a few of the more common questions I get as Axogen's new leader, what compelled me to join Axogen, what have I been doing since joining the business in August and what are our plans for the business going forward. Following this, I will also provide some additional color on our quarterly performance, after which Nir will provide a review of our financial results, followed by a question and answer. So let's begin. We are pleased with the quarter's top line revenue and EBITDA growth. Revenue was $48.6 million, an increase of approximately 18% compared to last year, while adjusted EBITDA was $6.5 million versus $2.4 million last year. Notably, revenue performance in the quarter was broad-based, reflecting growth across our portfolio. Both revenue and EBITDA were positively impacted by improved sales productivity and commercial execution of our present growth strategy. Regarding the most common questions I am asked, I'll begin with why Axogen. Very simply, Axogen as a business opportunity, fulfills all three of the most important elements required for success in my estimation. Firstly, the purpose of the business is credible and relevant. Secondly, the clinical problem is numerous enough to justify the allocation of time, capital and people to build a business. And finally, there is clear and compelling evidence the solution to the business purpose is distinctively advantaged relative to the existing standards of care. Everything I've observed and experienced since joining the organization reaffirms this estimation. While our future is obviously dependent upon execution of our future plan across business functions, these are mechanics I understand and have confidence in how to apply by function. I learned many years ago, however, that good mechanics can't overcome an irrelevant purpose or undifferentiated product solutions. I've had the privilege to test this thesis on numerous occasions over the last 30-plus years in both public and private companies, leading and bringing to market numerous transformative products and therapies in the cardiovascular, neuromodulation, diabetes and electrophysiology markets. I love what I do, which is why I'm still doing it, and I believe Axogen is a very important business with significant undeveloped potential. As for the remaining two questions, what have I been doing since joining the company and what is the plan for the business going forward, on day 1, we established 3 priorities for the remainder of the year: number one, successfully complete the submission of our BLA application; number two, meet our established revenue guidance for the year; and lastly, develop a new strategic operating plan for the business, engaging all employees and key external stakeholders in the process. Consistent with the purpose of strategic planning and relative to the mission underlying our business purpose, our aim is understanding what are the necessary objectives, strategies and processes required to achieve standard of care status for the company's products by market opportunity. While we have one primary product, Avance, upon which the business was founded, the respective applications for Avance are numerous and constitute, in many instances, distinctly different market opportunities characterized by different physician call points and requiring, therefore, different business models. How we prioritize the development of these different opportunities based on return on time and ability to impact standard of care are critical choices. To answer, therefore, the last question, I look forward to providing details on our strategic plan on our fourth quarter call in early 2025, at which time we will describe in detail what we believe will be the most attractive market opportunities for the business and the required business models and time lines for their development. Returning to our quarterly results. As described in our earnings release, overall, we had a solid quarter, achieving several major milestones. We are pleased with the positive trends in revenue growth, bottom line performance and, importantly, the completion of the rolling submission process and the acceptance by the FDA of the filing of the BLA for Avance Nerve Graft. Our strategy remains focused on deepening our presence in high potential accounts, which are primarily characterized by the following criteria: larger hospitals, including Level 1 trauma centers and/or academic affiliated hospitals with a high number of nerve repair procedures; and lastly, already trained microsurgeons. We aim to drive growth in these types of accounts through targeted expansion of nerve repair indications by building on the existing experience in nerve repair in the account, the inherent potential of the account to grow based on size and procedure volume and expanding adoption of our nerve repair algorithm to other surgical specialties within these accounts. We believe our focus on these high potential accounts is the reason for our recent improvements in sales productivity in our extremities trauma and head and neck business, in particular. Regarding revenue mix, we saw broad-based growth across the portfolio, including an increase in nerve reconstruction cases in our targeted clinical applications such as upper extremity trauma, mandible reconstruction and breast neurotization as well as growth from nerve protection procedures. Our growth in nerve protection is driven by adoption of our newest solutions, AxoGuard, HA, Nerve Protector and Avive+ Soft Tissue Matrix, which gives Axogen the most comprehensive portfolio to address these common non-transected nerve injuries. Other key events and programs during the quarter include our continued commitment to leadership in professional education. During the quarter, we sponsored a National Resensation Breast Program as well as numerous regional surgeon education programs in extremities and head and neck. These programs are a key driver of new surgeon activation and broader adoption of our nerve repair portfolio. In Q3, we also attended the American Society for Surgery of the Hand in Minneapolis. Nerve was an important topic at this meeting, and we continue to see a growing interest in incorporating nerve repair among the hand surgeon community. This year, we presented novel data on the extent of nerve damage that occurs in common injuries, the importance of protection of the nerve coaptation site and the growing role of Avance Nerve Graft in sensory, mixed and motor nerve repair. The data presented characterized the extent of nerve damage from common trauma injuries and was generated in collaboration with a leading group of hand surgeons. This involved quantifying the extent of damage from common traumas using micro-CT and other advanced imaging modalities. Importantly, these findings will help further the understanding of how these common traumatic lacerations lead to a more extensive zone of injury than previously appreciated as compared to a surgeon's traditional methods of visual estimation. We also saw a presentation of data from a recently published med analysis comparing meaningful recovery rates of suture-only direct repair to connector-assisted repair. The study findings reported significantly greater proportion of patients achieving meaningful recovery and higher levels of meaningful recovery when connector-assisted repair was performed compared to suture-only direct repair. These data and publications highlight the growing understanding of nerve injury and the important role our products play in nerve repair. Turning to the BLA for Avance Nerve Graft. In September, we completed the rolling submission process. On November 1, we were informed by the FDA that they have completed our filing review and have determined our application is sufficiently complete to permit a substantive review, which allows for a time line and approval with a review goal date of September 5, 2025. Additionally, they informed us that they are not currently planning to hold an Advisory Committee meeting. As a reminder, a BLA approval will complete the regulatory process to transition Avance Nerve Graft to a 351 biological product. Importantly, we believe Avance will be designated as a reference product for potential biosimilars, providing at least 12 years of market exclusivity from the approval date. In conclusion, we are pleased with our third quarter results, which reflect the successful execution of our current growth strategy and commitments to science-based education and market development. Looking ahead, we remain focused on completing the BLA application process, meeting our revenue guidance for the year and completing our new strategic operating plan. I will now hand over the call to Nir, who will provide further details on our financials and full year guidance. Nir?

Thank you, Mike. We're excited about our results for this quarter. We have seen a lot of progress in our strategy, and our commercial execution continues to yield solid results. Turning to our financials. For this quarter, our revenue was $48.6 million, representing 17.9% growth from the third quarter of 2023. This growth is attributed to a 13.7% increase in unit volume and mix and a 4.2% increase in price. Higher unit volumes were driven by broad strength across the existing product portfolio and momentum from new product introductions. Our gross profit for the quarter was $36.4 million, an increase from the $31.7 million recorded in the third quarter of 2023. This represents gross margin of 74.9%, down from 76.8% in the same period last year, driven by product mix. Notably, we saw a sequential increase from the prior quarter gross profit margin of 73.8%, sorry, as we continue to make improvements in our operating processes at the APC facility. Our total operating expenses for the quarter increased by 2.9% to $36.8 million, up from $35.7 million in Q3 of 2023. Our sales and marketing expenses for the third quarter decreased by 1.3% to $18.9 million, partly driven by the Avance royalty fee, which we ceased paying as of the end of last year. As a percentage of total revenue, our sales and marketing expenses for the third quarter decreased to 38.9% from 46.4% in the third quarter of 2023, also reflecting improved sales force productivity. Research and development expenses increased by 4.5% to $7 million from $6.7 million in the third quarter of 2023. As a percentage of total revenues, total R&D expenses decreased to 14.4% from 16.2% in the same quarter of the previous year. General and administrative expenses increased by 9.8% to $10.8 million in the third quarter of 2024 compared to $9.9 million in the same quarter of 2023, driven by stock-based compensation expense related to the departure of the former CEO. The quarter ended with a net loss of $1.9 million or $0.04 per share compared to a net loss of $4.1 million or $0.10 per share in the third quarter of 2023. Adjusted net income was $3.1 million for the quarter or $0.07 per share compared to an adjusted net income of $0.7 million or $0.01 per share in the same period last year. Adjusted third quarter EBITDA was $6.5 million compared to an adjusted EBITDA of $2.4 million in the prior year. Lastly, we generated positive cash flow in the third quarter. As of September 30, our balance of cash, cash equivalents and investments was $30.5 million compared to $27.1 million at the end of the second quarter of 2024. These improvements in our bottom line profitability metrics, such as adjusted EBITDA and cash flow, reflect our ongoing efforts to focus to improve our operational efficiencies across the organization and our ability to leverage economies of scale. We believe these improvements will enable us to fund our ongoing operations. Turning now to our guidance. As outlined in today's press release, we are maintaining our revenue guidance for the full year 2024 in the range of $182 million to $186 million. We're pleased with our performance year-to-date and are optimistic going into 2025. With regards to our full year gross margin guidance, we now expect to be at the high end of the 74% to 76% range we provided earlier. Additionally, we're reaffirming that we expect to be net cash flow positive cumulatively for the period from April 1 through year-end. In summary, we're pleased with our performance in the third quarter. We will continue to execute our strategies, invest in innovation, drive revenue growth and optimize resource allocation and focus on profitability. At this time, we'd like to open the line for questions. Operator?

[Operator Instructions] Our first question comes from the line of Chris Pasquale with Nephron Research.

Congrats on the new position, Mike. Wanted to ask about the decision to just reiterate the full year guide, considering that the third quarter performance came in above the implied second half growth rate. And now what's left for the fourth quarter is a pretty wide range and certainly below the recent performance of the company. So just anything you could tell us about the outlook there and whether there's something that's informing that or it's just conservatism?

No, fair question. As I've mentioned in my remarks, when I joined the business and started to get to know the team, the most important thing we believed was to demonstrate our ability to forecast predictably and to meet the public guidance, which we had already established. And so that's the commitment that we want to make to all of our stakeholders and as such, why we have not made any adjustments to guidance. So we believe that demonstrating that predictability through the end of the year while we work on our plans for the future was one of the most important things that we could do for folks in the near term, in addition to the other priorities of BLA and just completing that plan.

Makes sense. And then I know you're still in the process of formulating the strategic plan, but I think one of the things that has surprised us about the story is the lack of standard of care status of the products given the differentiated clinical outcomes that have been, I think, well demonstrated at this point. In your initial review of kind of where the company stands today, do you think you've identified areas that can be improved on in terms of really pushing towards that standard of care status for products like Avance?

Yes. Great question and, frankly, one of the most important questions because it goes -- it's central to what is the opportunity for all stakeholders here. And as you described, Avance, in particular, as well as the entire algorithm deserves to be standard of care. But standard of care with any health care product has a specific number of steps and milestones that must be attained. And the opportunity for the business going forward is to work on those. And specifically, these involve evidence, collaboration with the societies and the stakeholders who treat these particular patients, the endorsement of that and ensuring that you meet the requirements that allow for classification as an expected solution as opposed to just an option, and then, finally, coordination with payers. And so these are processes that typically take no less than 3 years and, more often, closer to 5 years. And when you look at the various applications for our products, specific plans need to be developed and pursued to achieve those because there is no one single standard of care that will come with a product like Avance or the algorithm because it will be different for breast neurotization than it will be for prostate, than it will be for head and neck or OMF. And that is one of the opportunities that I observed during my original diligence about Axogen and believe can be achieved. There's tremendous goodwill amongst the customers who treat these patients. The employees have a tremendous institutional knowledge upon which to build upon. And I think we can achieve these things for the simple reason that standard of care for any product is ultimately determined by relative benefit versus risk. And the products that Axogen has built over the many years more than justify that status because from a safety signal standpoint, there is literally 0 risk that you're asking a patient to accept as part of the use of one of these products. And as for the question as to whether or not there is efficacious benefit, the evidence is more than sufficient to justify that. As compared to the alternatives, there really is no better solution than the prescription of Avance and/or part of the algorithm for these. So that's why I'm here. I'm very excited about the future. However, those are the mechanics that I referred to. I understand how that game is played. And frankly, we're all pretty excited to play that game going forward.

Our next question comes from the line of Michael Sarcone with Jefferies.

Mike, congrats on the new position. So just to follow up a little bit on Chris' question, understanding we're going to get some more detail in early 2025, Mike, I just wanted to get your take. I agree that the strategy to focus on the primary accounts and deepening penetration there has been great. But when you look kind of mid- to longer term about the sustainability of growth in the business, like how -- I guess, how far does deepening penetration in those primary accounts get you to sustain growth versus, at some point, needing to expand beyond just those primary accounts into maybe a broader customer set?

Sure. I'll speak generally. And as I mentioned, when we get together again in the new year, we're going to go into specifics. We totally understand and respect that each all of our stakeholders need to understand why we're focusing where we focus, and that means there needs to be objective criteria to share with you, and so we fully intend to do that. But if I were to speak generally, when you just look at the world of trauma, whether it be a transected or non-transected situation, there's more than 1 million of these incidents per year that, ideally, should be addressed. So then you then look at where we actually stand in terms of penetrating or fully exploiting these, well, those who know us have high respect for what we do. The reality is that this therapy -- these therapies are very immature in terms of market development. There's much to do. There's many people who still don't know who Axogen or Avance is. And there's others who are interested, but it is only part of their current routine. Hence, a lack of confidence. And when you look at all the potential sites that could participate in nerve repair or intervention, it's a very large universe, begging the question what are the business models necessary to prosecute those. And so that's what we're working on. There's no shortage of opportunity, but you need to stand back and say, "Okay, where are we going to go first? And how are we going to do that?" And that's what we're working on. And we believe we have line of sight to how better to do that. Obviously, we have a historical platform built around trauma. Even trauma has optimizations in the business model that we think we can pursue. And that's what we'll be talking about in the new year. But I'm not all concerned about the ability to sustain growth, so long as we focus on the basics on asking the questions and answering them properly relative to what are the normal requirements for standard of care and what is the business model necessary to deal with a particular area because, again, there's many different applications for our products, different customers, and they will require different business models to support that.

Understood. That's really helpful. And maybe just one for Nir, again, on the guide. Appreciate that there's some level of conservatism there. I was wondering if you could talk, Nir, about what would the underlying assumptions or environment need to be to kind of hit the low end of that 4Q implied guide versus the high end.

Yes. So I think that, as Mike mentioned before, we really wanted to come with a guidance that we feel absolutely confident with. I think that we're, as we mentioned, very optimistic towards going into the new year. That said, there could be some interruptions, say, following the hurricanes with respect to supply chain that could take our revenue and revenue of other companies down. This is what is potentially implied with the lower range.

Our next question comes from the line of Caitlin Cronin with Canaccord Genuity.

Congrats on a great quarter. So just to start with the BLA and the standard review, why did the FDA accept your request for priority review? And what's the significance of the FDA not holding an Advisory Committee meeting?

I would speculate -- the way to answer your question, I have to speculate, we see nothing untoward in terms of that decision. We're very pleased with the fact that they've identified that the submission is ready for review. That's essentially what they've told us. As for whether it was priority or standard, I can't speak to that. To be honest, I don't know. And I could speculate positively and negatively and that -- but that would all be -- they don't -- when we had these conversations, we don't get into discussions with the regulators about that. It's just that -- that's what they came back with. And as for whether or not -- as to why they've decided not to have an Advisory Committee, again, I wouldn't want to speculate on their behalf. But I think when you look at the history of the product, when you look at its safety profile and the relevant evidence, what I want to believe is that they see this as efficacious just as our customers and users do, and that while we need to go through this process, there's confidence in terms of the approval.

Great. And then I didn't see this in the press release, but will you be reporting on core accounts and direct reps going forward?

We will not, not in near term. We mentioned high potential accounts. I think core accounts, I can't really speak to the past. But really, almost 1 year ago now, Doris, the leader of sales and Jens, our leader of global marketing, identifies a very basic application of focus in the trauma business, in particular, that asked everyone to focus on where we already have depth and experience and volume that would allow us to build from. One of the really big -- one of the most important opportunities for trauma going forward is to make a standard of care within an institution the treatment of nerve. There's a lot of nerve opportunity across the country and, in fact, in every marketplace. So you can go to this hospital or go to that hospital, and you can do a procedure. But institutionally, what the team is trying to do is to focus on specific accounts, build upon history and build upon volume potential in already trained microsurgeons and to make within that institution the expectation that treating the nerve is standard of care for them. And so that's why we're focusing on high potential, and it's not really new. They've been working on this for a while. It's just beginning to show some fruits. And our initial inspection is that it is and that we're going to continue with that.

Our next question comes from the line of Mike Kratky with Leerink Partners.

Congrats on the great quarter. Mike, great to have you on board. Maybe a high level, Mike, I'd love to hear how you're thinking about what the potential BLA approval next September could mean from a commercial standpoint for Avance. How much of a game changer do you expect this to be? And based on what you've learned so far, how do you expect this to change the treatment patterns for this product or how it's perceived by patients, physicians or hospitals probably?

Certainly. I think it's very important, and I don't know how everyone is viewing it. I'll just share with you how I and the team view it. And specifically, while we have approval to market today, it's by design a temporary status. And it was all part of a process to expect us to move and qualify the product under the new guidelines. And so while that does allow us freedom to operate, there's always the question marked around the actual status of the product for some folks and then payers, in particular. So from a payer's viewpoint, if they know nothing about this and they were just to go through their normal checkoff process, the product can appear to them from a status standpoint as experimental. So the bottom line is establishing this with -- and gaining the final approval through the BLA process is important strategically because it affirms that, number one, this is a first in its class. It has been accepted as both safe and effective based upon these expectations with no qualifiers necessary, and then with that allows us to move forward on these market development efforts pursuing standard of care. Standard of care requires these formal approvals. It requires consensus guidelines amongst the societies, requires a further accumulation of evidence. And so BLA is important strategically insofar as it enables all of those things that I just described. So hopefully, that answers most of your question.

Yes, super helpful. And maybe just one follow-up. One thing I don't know -- I heard as much about on the call is just how you're exploring business development opportunities. As you're scaling up the adjusted EBITDA, is that something that you're going to be ultimately looking at in terms of broadening your portfolio?

Yes. Well, bottom line, our mission is what described is standard of care status. And so anything that would be necessary to facilitate that would be within scope. I'm not trying to be coy, and just there is no specific target per se. It's what would be required within this space or that space to achieve that. And based upon what that is, we would consider that within scope. So whether that be internal or external, all things are always on the table because it's about winning at the end of the day on behalf of the patient. If we do that, shareholders benefit as well. But I'm not trying to telegraph that there's anything in the way. I'm just saying with -- as we look to the future, it's about how to most solidly and completely attain that status.

Our next question comes from the line of Jayson Bedford with Raymond James.

Congrats on the progress here. Just maybe a couple. Avive+, can you talk about the launch, the uptake and whether it was a notable contributor in 3Q?

Yes. Avive+ has progressed well. We are moving through the manufacturing process, so we can make it more fully available. We've made good progress on that. And relative to, again, the whole algorithm, it's important for the business because for certain applications where temporary healing process is what's the focus of the surgeon, Avive+ fulfills that gap more completely as opposed to some of our other solutions. And to that end, it's been received very favorably. In terms of actual significance, in terms of the results, it's all obviously on a relative basis. And we can discuss more of that in Q1. But the product is being received very well, particularly as we're starting to be able to make it fully available from a supply standpoint.

Okay. Just maybe on that, I thought the gross margin number was also a highlight, looking to be more efficient here from the APC facility. I think the full year guidance implies this. But is the expectation that we trend higher on gross margin from here? And just out of curiosity, is there any way you can kind of frame the level of Avance product coming from this facility now?

Yes. So for the year, as we mentioned, we expect to be at the high end of the annual margin guidance. And also as we mentioned in the last quarter that we expected the last quarter's margin to be at or close to the bottom of the trough. This has been the case. Going forward, as we mentioned in the past, the trend of the gross margin is probably a function of the 2 trends. One, taking it down, the higher proportion of products that we're selling that were manufactured at the APC, the new plant at a higher cost. On the other hand, you have a process and efficiency improvements and a higher capacity utilization, which takes the margin up, which we believe will be the prevalent trend, absent of any product mixes going forward into the future.

Our next question comes from the line of Ross Osborn with Cantor Fitzgerald.

Congrats on the progress. And Mike, welcome aboard. So following up on a previously asked question, but maybe I'll go at it in a different manner. Curious to your thoughts on the company's strategic focus in terms of driving growth versus cash as you seek to become standard of care.

I don't know that the two are mutually exclusive, but that's what we'll be able to describe in a more material way in Q1. So the business is making good forward progress, as Nir described in that regard. And we're laying out what those time lines would be in the various business models, so that we can understand that more completely. But simply said, I don't know that they're mutually exclusive.

Okay. Fair enough. And then, I guess, lastly for us, could you provide some more color on your initiatives in breast neurotization such as the National Resensation Breast Program?

Sure. So this is still a relatively small team, but it enjoys a very high growth. Again, we'll describe the details in the future. What we can share with you from a qualitative standpoint is that the interest in learning how to do these types of procedures with the different ways to conduct breast reconstruction is extremely high. It's considered the right thing to do, and it's considered a necessary skill set to be able to do this. And so when we hold our educational programs, we have very strong demand. And I've had -- really upon my arrival, I had a chance to attend one of these. And I believe that I can look back in my career and say that I know what good looks like from an educational standpoint. And honestly, Axogen's, the quality of their program, the discussions, the actual practical hands-on is some of the best work that I've ever had experienced to be a part of. And so they do a really good job. And you talked about products, you talked about technology and what's proprietary and unique. I would say Axogen's ability to conduct education in these novel areas is one of their distinctive assets. So hopefully, that answers your question, but there's no shortage of interest in breast neurotization. The feedback, I've had a chance to talk to patients, I talk to physicians who are doing these procedures, they believe in this, and there is a very strong future for breast neurotization.

Our next question comes from the line of Dave Turkaly with Citizens JMP.

Congrats, Mike. Given your background and some of the experience you've had, and this is sort of a newer arena for a lot of folks, but I'd just sort of like to ask and appreciate the comments you made upfront, but what's been the biggest surprise since you joined?

Great question. As you can tell, I'm trying to figure out. How would I have an answer?

I'll let you think about that, and I'll ask you a second one if you want.

No, no, no. I think the surprise is, I don't know if it surprise is the right word, just recognition that chronological age aside, market development is still early with every single possible application in terms of the work that you -- that needs to be done in order to take advantage of something as unique as Axogen. So I think, again, I don't know if surprise would be the right word, just more recognition.

Great. And then in your commentary, I heard you say prostate and I've followed the company for a long time. I've not really heard that talked about a lot, and I know they probably expand in on the 4Q call. But just high level, could you explain exactly what that kind of opportunity might look like?

We're not necessarily specific to prostate, but maybe just kind of lay it out. Trauma, by definition of the word, implies that you have an emergent situation, which is significant, and that nerve has been transected or contused in such a way that -- but it's also part of a lot of other things going on at the same time. So these are not the easiest procedures upon which to intervene. Yet that's, of course, where we were founded because that's where the greatest need was. But when you look at any other situation where nerve is impacted, that's elective. You have a more controlled situation. You have the ability to plan for it. You're not dealing most often with collateral damage that also may affect the actual outcome. So in that sense, the -- Avance has the potential to work more simply and with even higher efficacy and almost anything that's outside of trauma simply because you don't have those other attendant elements to deal with. So again, I'm generalizing, but that's one of the things that I think holds a great opportunity is when we start to expand the offering into these other areas because the product is going to work -- has a chance to work even better, not less in those types of situations.

Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Dale for any final comments.

Thank you, operator. On behalf of the Axogen team, I want to thank everyone for their time and interest in our work to fulfill the promise and potential for all stakeholders in our business purpose to restore health and improve quality of life by making restoration of peripheral nerve function and expected standard of care. We look forward to updating you on our continued progress and our plans for the future next quarter. Thank you.