AxoGen at Goldman Sachs Conference: Strategic Path to Nerve Repair Growth

On Wednesday, 11 June 2025, AxoGen (NASDAQ:AXGN) presented at the Goldman Sachs 46th Annual Global Healthcare Conference. CEO Mike Dale outlined a strategic vision focused on expanding AxoGen’s leadership in nerve repair solutions. While the company anticipates challenges, such as recent gross margin fluctuations, it remains optimistic about achieving significant growth and enhancing its product portfolio.

Key Takeaways

• AxoGen aims to treat nerve defects in every clinical situation, tapping into a U.S. market opportunity exceeding $5 billion.
• The company forecasts 15% to 20% revenue growth over the next four to five years.
• A new manufacturing facility has been completed, supporting the transition to a biological license approved product.
• AxoGen plans to expand its commercial team and develop new clinical application areas.
• The company expects to be net cash flow positive each quarter moving forward.

Financial Results

• Revenue Growth Guidance:

- AxoGen projects 15% to 20% growth over the next four to five years.

- Q1 revenue growth aligned with expectations.

• Gross Margin Guidance:

- Incremental improvements expected over the next four to five years.

- Year-end gross margin is projected to reach around 75%.

- Q1 gross margin miss attributed to episodic, transitory issues.

• Operational Cash Flow:

- Q1 saw an $11 million cash consumption due to national sales meetings and annual bonuses.

- The company anticipates being net cash flow positive each quarter henceforth.

Operational Updates

• Commercial Expansion:

- AxoGen is expanding its commercial team and adding new clinical application areas.

• Market Development:

- The company is increasing professional education activities and expanding to new areas.

• High Potential Accounts:

- Improved productivity and an increase in high potential accounts.

• Professional Education:

- Training initiatives are on track with expanded activities compared to the previous year.

• Clinical Compendium:

- Eight new publications were added this quarter.

Future Outlook

• Growth Drivers:

- AxoGen sees dramatic under-penetration in existing markets.

- Plans to expand commercial teams and market development efforts.

• Product Innovation:

- Continued investment in Avance and complementary products, focusing on regeneration and protection devices.

• Evidence Development:

- Commitment to developing level one evidence to support product benefits.

• International Expansion:

- Plans to begin developing an international presence in 2026.

Conclusion

For a deeper dive into AxoGen’s strategic plans and financial outlook, refer to the full conference call transcript below.

Full transcript - Goldman Sachs 46th Annual Global Healthcare Conference:

Mike Dale, CEO, AxoGen: All good? All right. Well, to everyone who was here today to learn a little bit about AxoGen. Just before I get started, just want to draw everyone’s attention to our forward looking statements. You’re familiar with these and we will certainly be making forward looking statements but we may or may not be updating these on a regular basis.

So, little bit about me. My name is Mike Dale. I’ve been, as you can tell by my gray hair, around for a little while and I’ve been more than forty years in medtech and as a CEO since the early 2000s. And I’ve always made my decisions based upon whether or not the things I engage in provide and present a credible clinical problem that justifies the time and the energies and all the resources that go into developing a company. And then secondly, whether or not that technology or in that particular problem, whether or you have a technology that in a distinctive way based upon benefit versus risk can solve that problem.

When you do, while it sounds very simple, you have the opportunity to build a great business and solve great problems and as such, probably a good vehicle for all stakeholders. I joined AxoGen a little more than nine months ago because I believe that in that case AxoGen represented a solution that was both genuinely incredible clinical problem that was in need of solutions and then finally that we had products that could solve those problems in a distinctive way. And so what I’d like to do today is spend my time with you explaining to you some of the high level strategic assumptions underlying our recent strategic plan that we presented publicly, our progress to that plan and our guidance for the near term with regards to the profile of the business for investors. So of all, is oxygen all about? So our business purpose is focused on making and establishing an expectation to treat nerve defects in every clinical situation.

Today that is not the case. So what are peripheral nerves? What functions do they serve? So Peripheral nerve function is something we all take for granted until we can’t, but in this particular gif that you see right here, the mother, her motor function in terms of being able to push the bicycle, the child the bicycle, that’s all completely dependent upon healthy functional nerve function. Feeling the sun in their faces is only possible because of the peripheral nerves within their face functioning normally allowing to feel changes in temperature.

Virtually everything that we do every day from swallowing, from tasting, all elements of motor function are dependent upon healthy peripheral nerve function. And so this is indeed something from a health standpoint that’s important to all of us and AxoGen is unique in that we are literally the leaders in developing an entire focus area on providing the tools and the products that are necessary to ameliorate these problems when they present either through trauma or because of disease. And I’d like to tell you a little bit more about that. So how big is this opportunity? How often do these problems occur?

It’s very large as market opportunities go based upon incidence rate and both the trauma as well as presentation of disease. In The United States alone, estimate that the market opportunity is more than $5,000,000,000 and it’s equally as large outside The United States, although at present more than 95% of our entire revenue and activities are domestically focused towards the end of this year and beginning in 2006 and thereafter we will begin to develop in more earnest an international presence to bring these same products and solutions. One of the key things here is that these markets, while we’ve been active in these markets doing work, are still very under penetrated in terms of both awareness and actual clinical activity and therein lies the opportunity going forward which we’ll talk about. of all, what are common nerve injuries? As you might guess, trauma, cuts, lacerations, these situations are one of the things that we probably think about if you were to think about a potential nerve injury because of the damage that can happen to an extremity or other part of the body but there’s also iatrogenic injuries so other surgical procedures anytime you’re cutting through the skin, you’re cutting peripheral nerves and depending upon that situation, you leave that patient with a deficit and there’s also oncological presentations and other peripheral related diseases such as diabetes for example.

All these things can ultimately affect nerve function through either direct transection, stretching, contusions, pressures and then also amputation where a limb is removed but unless that nerve is capped in a proper way, that patient can develop a neuroma which can lead to chronic continuous pain which can range in terms of problem from one of simply bothersome to absolute debilitation. So lots of opportunities to do better for patients on our products and portfolio and we’ll talk about those. So what are those solutions? In green is Avance. Avance is the foundation that the oxygen home is built around.

What is Avance? Avance is what’s referred to as an allograft. This is basically donated human tissue that has been processed in such a way that makes it safe for re implantation without an immunological response. However, Avance is unique as allografts go in so far is it’s still bioactive. So we retain a substance called laminin, which is a protein which reacts as a signal to guide naxonal regeneration.

So the nerve itself is a physical scaffold, it’s a human nerve, so the actual structure and containment that you anastomose the allograft to the patient’s nerve ending is similar. We’re able to match these in terms of size and length. But what makes it particularly special is not that we just have the physical scaffold, but we have the laminate to help guide that axonal regeneration and therein lies the foundation for the home. That’s graft recall of Vance. Complementing that is what we have and refer to as the algorithm.

So when you make these connections of an allograft to another nerve or even in the absence of using Vance, maybe in this transaction we have a simple nerve connection, you need to complement that connection so that it’s steady, so it can allow for that regrowth and regeneration. So we use things like connectors. Sometimes in procedures you have a lot going on. There’s metal plates that have been put in as part of the traumatic surgical intervention and the nerves might be laying over these and you don’t want those to be abraded or irritated and so we use protection wraps to help avoid that. So there’s lots of different things that need to go in to ensure that you get the best chance for nerve regeneration and oxygen leads the way in developing the solutions in both surgical technique as well as the products necessary to support that kind of outcome.

So why us? Why are we positioned here to win to use that common phrase that anyone like myself would stand up and say, what’s my right to win? We’ve been at this for a while and while the market is under penetrated, we’ve been working for many years to develop the techniques and the science to underlie our rationale including the clinical studies, our recon study which is our principle level one evidence study which was just published about two years ago and we have been now organizing the company to go forward and to fully develop these opportunities we’ve worked so many years on. There’s more than 100,000 patients that have been treated with our product. Our benefit to risk profile which is what every single solitary health medtech product is ultimately evaluated upon is profoundly positive.

We introduce essentially no risk but offer the potential for great benefit. As a salesman I can tell you that’s something you can’t always say to your customer and we can literally say that. And to that end we are well positioned to go forward. We have a foundation to build upon and we are genuinely appreciated as a trusted partner committed to good science. So the priorities that we have organized ourselves around with the delivery and presentation publicly in March of our new strategic plan are these four clinical application areas.

They are all based upon advantage. Trauma, extremities is our Why is that still a priority? That’s the company we built around and we have our largest commercial footprint and our largest scientific database to build upon and that remains a priority for our business. The other segments listed here are all adjacencies and or new clinical pathways where the benefit to risk proposition and the logistics associated with identifying the customers and service providers are favorable to AxoGen and while there are many others, these represent the priorities that we have selected for now to develop going forward. So let’s talk a little bit about those.

Extremities, why are we here? Very large incidence rate on an annual basis in The United States alone around the world, where trauma is incurred and the opportunity to restore that patient’s function along with treating the other elements, broken bones, vascular injuries and so on create an opportunity for nerve repair. We have the largest body of physicians that are trained. We are partners in training all new fellows coming out of training in all the medical institutions in The United States and the penetration level still remains very modest and so as such it represents a marketplace that we still have opportunity to add value. The business is presently growing at double digits and we think this can continue over the course of the strategic plan period.

Oral, maxillofacial, head and neck. This is a much smaller universe of actual physician practitioners and service providers. These are very technically very complex procedures involving head and neck. Head and neck as you might guess is proliferated with a huge peripheral nerve network. So every time these procedures are done there is damage to peripheral nerves.

There is an opportunity for us based upon Avance in particular as well as our other products to help complement these procedures as they treat these patients in these types of situations where we can restore their quality of life and reduce the morbidity associated with these procedures. It’s one of our fastest growing new areas of development. We’re very excited about the future here and we have made this a priority for development. Our next area moves into the oncological space. This is breast resensation.

It’s a procedure and a technique that we pioneered and developed. We have been working on this for several years and have now decided to double the current sales group which is a very small team of 12 to more than 24 and we’ll probably continue to be expanding this group all over the strategic plan period. Why is this a problem? Well breast cancer is continually growing presenting incident rate in The United States. While a lot of people don’t realize as well, aesthetic reconstruction has advanced and come a long way post me that when you do these procedures and remove this tissue, the woman’s chest is essentially numb.

There is no feeling here and so as you can imagine from a quality of life standpoint, that’s a difficult element to grasp and to appreciate. A lot of women are even unaware that that’s one of the side effects that come from this. And so as part of the Women’s Healthcare Reconstruction Act, one of the expectations is that the patient and the family and the physician have the right to discuss and to decide what their reconstruction journey should be for them. So given that we provide a nerve allograft that allows for regeneration and construction, what we are doing is we are pioneering the techniques to teach people how to remove the breast tissue by leaving the opportunity to regraft and then we teach people how to do the regrafting and so we train the surgeon pairs both on the reconstructive side as well as on oncological side how to do these procedures. It’s a very rewarding marketplace.

The feedback that you get as you might imagine when you’re able to give people some level of sensation restoration is profoundly rewarding. And we expect this market to continue to grow in high double digits for years to come. We are very small in terms of penetration levels and sites developed but therein lies the reason for the investments in this space. Prostate, similar situation. Why are we here?

While prostatectomy by robot has come a long way and it’s the primary means by which most of these cancers are intervened with, the dysfunction that accompanies these procedures still remains very high. There’s almost universal recognition that the problem has not been solved and while we try to spare the nerves, we’re not oftentimes successful. What’s the opportunity? Very simply, a nerve is a nerve is a nerve. If you can re graft, once you remove those tissues, an advanced allograft, you have the opportunity for that allograft to regenerate and therefore mitigating the dysfunction that accompanies these types of procedures.

This is our newest application area that we are working on in terms of developing the protocols that are necessary to train for this but we have high expectations for this over the next four years as we continue that process. So what this represents therefore our strategic plan in terms of the areas of the basic focus. There is nothing esoteric about this. These are all focused on areas of market development that come along with any novelty. The reason why we have guided over the course of our strategic plan period 15% to 20% is based upon the present growth even before we initiate these activities.

But as expand the commercial footprint as we continue to develop our level one evidence, as we focus on societal associations and development for creating care guidelines, and as we continue to invest in innovation, we believe that these particular opportunities are all imminently developable and will further enhance both the purpose of the business and then finally AxoGen as an investment vehicle. So one of the elements given that continuing to invest in new products is one of our objectives is that AccuGen is special because of innovation, that’s Avance. But Avance is just one opportunity among many that we believe still exists. So we will continue to invest both in the product side, one enhancing regeneration through intrinsic improvements and advance in the future and or complementary products and form factor that would further enhance regeneration. Those projects are under way.

We are funding them as we speak. Next, easy coaptation. So we can talk all about this and all what’s possible and it’s all true, but technically these are not easy procedures and so the more we can make these procedures simple, the more and the greater adoption that can transpire and so we’re working on that. And then finally, with regards to protection, there’s a lot of complimentary procedures going on when you do these anastomosis. You want to protect that work that you’ve just done and so our wraps and our protection devices are essential for that.

Next is evidence. So claims are great. Evidence to support those claims is even better. And these are projects that typically take three to five years to complete and get to publication. We are committed strategically just as I have throughout my entire career of making sure that we complement and invest accordingly in developing the evidence and the things that we believe in.

And these projects that are underway today just part of them but we have a number of level one evidence efforts that are planned that will commence as soon as we complete our transition to a biological license approved product which is expected in September. What I’d like to do now is talk a little bit about the finances, why do we believe some of these things are possible, what’s different today than maybe three or four years ago. And here is part of the reason. So drawing your attention to accelerating growth, this business continues to enjoy good growth. What’s the basic reasons?

We have a good focus on science, partnership and these are highly underpenetrated areas and this is talking about. But that investment has also allowed us to reach a classic point of equilibrium and then scale and now leverage such that we are enjoying the benefits of that in terms of now contributing to positive cash flow. In addition, one of the key things that has consumed a great deal of time and cash in recent years has been the development of a new manufacturing facility to support the biological license approval. Those are capital expenditures, huge cash consumers has been completed. And so those monies are now available for other parts of the business.

And as you can see in 2024, we moved to positive cash flow and we predict and expect that that will absolutely continue into the future and allow us to fund our entire strategic plan. So therefore our guidance will be provided to people of 15% to 20% over the next four to five years. We continue to expect gross margins to incrementally improve over that period of time once we have one quality system that we can work upon as opposed to two which is our current environment. And then finally the ability to self fund all of these activities in house. A little bit about the growth.

One of the questions we constantly get is as you might have guessed are you sure you guys can grow, are sure you can grow? Well you can see what we have grown 2022 to 2024. We believe there is no reason this business can’t support that for the reasons I have already described, dramatic under penetration. We are expanding the commercial teams. We are completely committed to classic market development exercises and then finally we are adding new clinical application areas for development which will further leverage this opportunity.

Our financial guidance for the year was fifteen percent to 17%. We are on track as of Q1. Our gross margin we have guided based upon the transition to the BLA to be a little bit lower this year and noisy 73 to 75%. It has certainly started out that way. We did have one miss in Q1.

These are episodic and we believe transitory. We still maintain our gross margin guidance for the year and it will ultimately exit the year at around 75%. In operational cash flow, we consumed $11,000,000 in Q1. This is fully expected and consistent with prior history. Why?

This is national sales meetings and payout of annual bonuses to employees based upon the performance of the company but going forward each quarter we will be net cash flow positive. Our measures of success, we published secondary strategic plans so that people can kind of watch and ask questions as we report quarter to quarter. I’m not going go through all the elements of the slide, but these are available publicly online on the website along with the rest of strategic plan in detail. The takeaway that I would ask investors to note is that we are on track. The things that we said that we do, we are doing.

The business is growing in double digit across the entire portfolio and we expect that to continue. Our high potential accounts which is the primary target customers that we have decided to develop and concentrate our resources upon has improved productivity and we have more of them than we have in the past and we continue to add to those. Professional education which is key, it’s all about training people to do the things that we believe need to be done. Those are on track and that’s an expansion of our prior year’s activities. And then finally, from a market development standpoint, we’ve had just eight new publications added to the clinical compendium just this quarter alone.

And the take away from all of this is that the benefit risk proposition is broad, is transparent both in the controlled as well as contemporary publication standpoint and remains very positive. And with that, thank you for your time. I look forward to those who are interested to continue to watch us. If you have any questions, we look forward to answering those in the future. I’d also like to introduce Lindsay Hartley.

Lindsay has recently joined the team and taken on the position of Chief Financial Officer for Actogen. So thank you again.

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