Anika Therapeutics - Q2 2024

Transcript

Operator (participant)

Good afternoon, ladies and gentlemen, and welcome to Anika's second quarter 2024 earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for a question. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would like to remind everyone that this call is being recorded. I will now turn the call over to Mark Namaroff, Vice President, Investor Relations, ESG, and Corp Communications. Please proceed.

Mark Namaroff (VP of Investor Relations)

Thank you. Good afternoon, everyone. Thank you for joining us for Anika's second quarter 2024 conference call and webcast. Our Q2 earnings press release was issued after the close of the market today and is available on our investor relations website, located at anika.com, as are our supplementary PowerPoint slides that will be used for the discussion today. With me on the call today are Dr. Cheryl Blanchard, President and Chief Executive Officer, and Steve Griffin, Executive Vice President, Chief Financial Officer, and Treasurer. Please take a moment and open the slide presentation and refer to slide number 2. Before we begin, please understand that certain statements made during the call today constitute forward-looking statements as defined in the Securities Exchange Act of 1934. These statements are based on our current beliefs and expectations and are subject to certain risks and uncertainties.

The company's actual results could differ materially from any anticipated future results, performance, or achievements. We make no obligation to update these statements should future financial data or events occur that differ from the forward-looking statements presented today. Please also see our most recent SEC filings for more information about risk factors that could affect our performance. In addition, during the call, we may refer to several adjusted or non-GAAP financial measures, which includes Adjusted gross margin, Adjusted EBITDA, Adjusted net income, and Adjusted earnings per share, which are used in addition to results presented in accordance with GAAP financial measures. We believe that non-GAAP measures provide an additional way of viewing aspects of our operation and performance. But when considered with GAAP financial measures and the reconciliation of GAAP measures, they provide an even more complete understanding of our business.

A reconciliation of the adjusted non-GAAP financial measures to the most comparable GAAP measures is available at the end of the presentation deck and our second quarter 2024 press release. Now, I'd like to turn the call over to our President and CEO, Dr. Cheryl Blanchard. Cheryl?

Cheryl Blanchard (President and CEO)

Thanks, Mark. Good afternoon, everyone, and thanks for joining us. Please turn to slide 3. Now, midway through 2024, we're making great progress on the execution of our strategy to refocus the business on the areas that deliver the greatest value to our shareholders and drive results that accelerate our path to profitability. Our efforts in the first half of the year set the stage for the rest of 2024 and beyond, as we announced the full market release of our newest regenerative product, Integrity, and have completed our cost savings initiatives to realize significant operating expense savings this year. Let me walk you through the key highlights of the quarter, and then I'll turn the call over to Steve to review the financials and our guidance for 2024.

Overall revenue for the second quarter was lower by 5% due to the timing of very strong U.S. Orthovisc and Monovisc units ordered in the second quarter of 2023. I'm very pleased to say that we delivered healthy Adjusted EBITDA margins of 15% during the quarter, as we're making meaningful progress on our refocused business strategy and our path to profitability. In joint preservation and restoration, we delivered 7% growth as we're seeing the results of our new product launches, particularly X-Twist and our new regenerative hyaluronic acid, or HA-based Integrity Implant System, which I'll speak to more in a moment. This quarter, OA Pain Management was lower by 9%, as we expected, on higher U.S. revenue last year, offset by strong international growth, which is up 17% year to date.

The strong OUS growth continues to be driven by market share gains, as well as new country expansion across all three brands of Cingal, Monovisc, and Orthovisc. International growth across our OA Pain portfolio has been a key value driver, as Cingal is becoming the treatment of choice in many countries, while Orthovisc and Monovisc continue to perform very well. In our U.S. OA Pain business, we maintain our market leadership position with Monovisc and Orthovisc, despite softer pricing dynamics, as the impact of the ASP legislation begins to normalize. This business remains a key foundation for Anika and will continue to drive profitability and cash flow as our U.S. sales and marketing partner works to improve market access, balancing both price and volume.

In other key updates, we announced the full market release of Integrity in July in conjunction with the American Orthopaedic Society of Sports Medicine, or AOSSM, annual meeting, with tremendous surgeon interest, marking an important step in the continued expansion of our regenerative portfolio. During the limited market release, we completed over 300 surgeries with over 60 surgeons across the shoulder and foot and ankle spaces, setting the foundation for our growth in the regenerative space in the second half of 2024. Customer response exceeded our expectations during the limited market release, with the completion of more than double the cases than originally expected.

This demonstrates the strong pull from the marketplace, with about 25% of the surgeons who have used Integrity representing new customers to Anika. In fact, we saw more than 40% increase in Integrity cases from Q1 to Q2, while still in limited release, and we expect this growth trend to continue through 2024. With our ongoing focus on growing our differentiated regenerative products, we've also seen great initial success in adding new distributors who are specifically focused on and excited about Anika's regenerative solutions. As we continue to build a presence in the market for Integrity, developing high-quality clinical evidence is very important, both for market expansion and surgeon adoption. As such, we started the process of initiating a prospective multicenter MRI and outcomes-based clinical study on Integrity to assess pain, function, and rotator cuff tendon healing.

Investigator sites have been identified, and enrollment is expected to start by the end of the year. This study will provide the clinical data needed for the MDR filing, ultimately to support our plans to launch Integrity in the EU, as well as reinforce our positioning strategy in the US. In addition, we have post-market follow-up studies currently ongoing that will yield clinical papers on the results of Integrity next year. The Integrity Implant System will drive significant near-term growth for Anika's regenerative portfolio. With respect to Hyalofast, we remain on track to file the first PMA module by the end of this year. I'm also pleased to report that we recently obtained positive feedback from FDA regarding the presentation of our clinical data. We'll work closely with them as part of the modular PMA submission process in order to best position ourselves for an effective review.

Our regenerative technologies represent a key enabler for Anika's growth as we bring Integrity to market and prepare for the launch of Hyalofast by 2026. With respect to Cingal, we continue to make progress on our regulatory strategy and are having regular communications with the FDA on the nonclinical work required before we can submit the NDA. We received feedback from FDA on the data required and are planning an additional meeting to clarify their requests. We aim to provide further updates by the end of the year. Cingal, now sold in more than 40 countries outside the U.S., remains a key driver as the next generation non-opioid OA pain product of choice. We continue to see strong international growth that increases our confidence that Cingal will truly be a game changer when it is approved in the U.S.

Lastly, on this slide, I'd like to reiterate our focus on delivering value to our shareholders. We continue to explore all strategic alternatives for the business to generate shareholder value, including refocusing our business strategy to accelerate profitability and deploy capital towards our highest opportunities. We've taken significant cost actions in 2024 to improve our profitability, to enable investments into our highest growth areas of OA pain management and regenerative solutions, while returning capital to shareholders through a new $40 million share buyback program. These actions that focus our investments, combined with our continued strategic assessment of alternatives, position Anika to deliver outsized shareholder value. Please turn to slide 4. Before I turn the call over to Steve to review the results of the quarter, I'd like to review our strategy to drive value with our OA pain management franchise and our HA-based regenerative products.

HA is at the core of Anika's 30+-year heritage, and it's what will drive differentiated product innovation and shareholder value moving forward. HA in gel form is essential to our OA pain injection portfolio, including Orthovisc, Monovisc, and Cingal, with Cingal continuing to be a strong grower OUS and representing a billion-dollar addressable market for a next-generation OA pain therapy in the US. Importantly, though, our proprietary HA technologies allow us to uniquely transform our highly regenerative HA into various forms that are already clinically proven. One of those forms is our HYAFF technology, which is HA that we modify to turn it into a biopolymer. This technology allows us to develop numerous resorbable regenerative products.

For example, we use HYAFF to create fibers that can be knit, woven, and woven with other materials, as we've done with Integrity, and even used to create products that are nonwoven, such as Hyalofast. Our HYAFF technology is clinically proven with the success of Hyalofast, our single-stage cartilage repair product sold in over 35 countries, with over 40 clinical publications and 15-year data coming soon. We recognize the unique abilities we have to create meaningful products driven by HA in both the OA pain and regenerative solution spaces, products that solve real unmet clinical needs for surgeons and the patients they treat. Using our proprietary technology, we have now transformed our new product pipeline of innovation that leverages what we've already done with both Integrity and Hyalofast. We'll talk about our pipeline in more detail in the future, but I'll give you one highlight now.

With the immense commercial pull we're seeing with Integrity and real-time feedback we're getting from our direct engagement with surgeons, we are currently working to expand that portfolio with different shapes, sizes, and configurations to address additional tendon repair unmet needs. These products will use the same HYAFF-based knitted structure as Integrity, but will be designed specifically to treat additional tendon repairs all over the body. I can't wait to tell you more about how our proprietary HA technologies will be driving Anika forward into an exciting future. I'll wrap up by saying that I'm thrilled to have Steve now part of the Anika leadership team. He's made tremendous progress coming up to speed on the business and has brought in a fresh set of eyes on our key initiatives. Now I'll turn the call over to him to review our financial results and guidance for 2024. Steve?

Steve Griffin (EVP and CFO)

Thank you, Cheryl. Before I begin with an overview of the quarter, I'd like to take a moment to reflect on my early impressions after joining Anika in June. I joined Anika because of the opportunity to partner with this leadership team on developing and commercializing the next generation of regenerative solutions, built on the rich history of HA technology that exists here at Anika. Each employee I've had the opportunity to meet with is mission-oriented and passionate about unlocking the full value of these products and technologies for patients around the world. It's an exciting time to join this energized team as we refocus our attention on our highest returning programs to deliver great patient and shareholder outcomes. Please refer to slide 5 in the online presentation, where I'll walk through the results of the second quarter of 2024.

Anika generated $41.9 million in total revenue in the second quarter, down $2.4 million as compared to the same period in 2023, and in line with prior expectations, driven by the timing of US OA Pain Management orders. Revenue in our largest product family, OA Pain Management, decreased 9% in the second quarter to $26.7 million. This was primarily due to lower US sales as a result of higher than normal shipments in the second quarter of 2023, as previously disclosed. In the quarter, international sales grew by an impressive 19%, representing growth in all three brands, Monovisc, Orthovisc, and Cingal, as we continue to enter new markets and gain share with our international distributors. Joint preservation and restoration revenue increased 7% in the second quarter to $13.5 million.

This growth was led by our limited market release of Integrity, as well as contributions from X-Twist, partially offset by lower sales of more mature products. Our regenerative solutions portfolio, including Integrity, continues to be an important avenue for total revenue growth, as we expect to see continued revenue growth into the second half of 2024. Lastly, our non-orthopedic revenue decreased 26% to $1.7 million, in line with prior guidance, given lower mature product sales. Gross margin in the second quarter was 65%, in line with the prior year, and adjusted gross margin was 66% in the quarter, down from 69% in the prior year period. Year-over-year, the change in gross margin was primarily driven by the mix of US OA Pain Management sales in 2023.

Sequentially, gross margins improved by 40 basis points versus the first quarter of 2024, driven by stabilized operations. Now, moving to operating expenses. Operating expenses in the second quarter totaled $27.2 million, down $5.4 million from 2023. This lower operating expense profile includes a full quarter benefit associated with the cost restructuring actions taken in the first quarter of 2024. The company remains on track to achieve $10 million of cost savings from these initiatives. The net loss for the quarter was $100,000, compared to a net loss of $2.7 million in the prior year.

Adjusted net income was $2.5 million in the second quarter and was down from an adjusted net income of $4.5 million, primarily due to the timing of US OA Pain Management orders in the second quarter of 2023. Anika generated Adjusted EBITDA in the quarter of $6.3 million, in line with the prior year, as cost savings generated from the recent restructuring activities offset the lower US OA Pain Management sales in the quarter. Now turning to cash and liquidity. In the quarter, we used $1.1 million in operating cash flow as an improvement versus the $8.3 million used in the second quarter of 2023, primarily as a result of improved profitability and lower working capital.

Capital expenditures were $3.4 million, up $1.9 million, as we continued to make investments in our Bedford, Massachusetts-based manufacturing facilities to support growth in our OA Pain Management and HA Regenerative Solutions portfolio. As Cheryl referenced, we initiated a 10b5-1 stock repurchase plan in May, and in the second quarter, we purchased $1.4 million of common stock. As of this week, we have purchased approximately $3 million cumulatively year to date, and expect to complete the initial $15 million share repurchase plan before June 2025, in line with our prior commitments. We ended the second quarter with $62.8 million in cash and no debt. Now, turning to Slide 6, I'll provide a review of our full year financial outlook for 2024.

We are maintaining our total revenue estimate of $168 million-$173 million, a growth of 1%-4% versus 2023. OA Pain Management remains on track to deliver between $102 million and $104 million, roughly flat to 2% growth versus 2023. U.S. OA Pain sales are slightly below initial expectations as a result of lower end user pricing, offset by stronger first half performance and full year expectations for international OA Pain sales.... Joint Preservation and Restoration remains on track to deliver between $58 million and $60.5 million of revenue, up 6%-10% versus 2023. As a result of the anticipated contributions from the full market release of Integrity, partially offset by softer legacy product sales.

Non-orthopedic revenue is expected to be between $8 million and $8.5 million, a decrease of 14%-19%, in line with prior guidance. We now anticipate Adjusted EBITDA to be towards the lower end of the $25 million-$30 million range previously provided. This change is driven by the mix shift of OA Pain Management revenue, with modestly lower, higher margin US sales, offset by stronger, lower margin international sales. We expect full-year Adjusted EBITDA margin to be approximately 15%. Please note that we have decided to remove projected adjusted gross margins from our guidance framework, as the predictability of this metric is highly dependent upon the mix of products sold between US and international. We continue to focus on total company profitability as the key measurement for performance to deliver shareholder value.

In summary, we had a second quarter that demonstrates the strength of the international sales for our market-leading OA Pain Management products. The opportunity for outsized revenue growth from our regenerative solutions portfolio, including Integrity, which will continue to grow in the second half of this year, and the realization of cost savings as we work to improve the long-term profitability and focus our investments in the highly differentiated HA products in our portfolio. With that, I'll now turn the call back over to Cheryl.

Cheryl Blanchard (President and CEO)

Thanks, Steve. Please turn to slide seven. In closing, the second quarter was strong, where we demonstrated our commitment to delivering for customers, their patients, and shareholders, while advancing the next generation of pain management and regenerative technology. The full market release of Integrity provides Anika with a highly differentiated product that enables us to control our market access and engage directly with surgeon customers to continue to develop new products that advance early intervention orthopedic care. Our OA Pain Management franchise remains a foundational pillar for Anika, and our recent international growth demonstrates the value of Cingal and opportunity set that lies ahead in the U.S. Our refocused business strategy provides clarity on our highest ROI initiatives, while we continue to strategically assess all value creation opportunities. Lastly, our progress to date wouldn't be possible without every member of the Anika team.

I'm proud of their resilience and hard work, and we look forward to sharing more about our progress in the coming months. With that, we'll open up the line for questions.

Operator (participant)

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touch tone phone, and you will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Jim Sidoti, from Sidoti & Company.

Jim Sidoti (Analyst)

Good afternoon. Thanks for taking the questions. So, sounds like, there's some headwinds in the U.S. on the pain management business. Is the growth internationally for those products, is that enough to offset those headwinds or?

Steve Griffin (EVP and CFO)

Yeah. Good to talk to you, Jim. The short answer is yes, we're reaffirming our total revenue guidance on OA Pain, and you'll see that the outsized growth that we saw in the first half of this year, up 17%, has done really, really well, and it will continue here into the second quarter. You know, somewhat moderately lower than how it performed in the first quarter or the first half, but we do expect that that will be able to offset some of the softness that you referenced on the U.S. side.

Jim Sidoti (Analyst)

Right. And then, for some of the new products, that you expect out in the next couple of years, like Hyalofast and Cingal, any initial comments on how you plan to distribute those products?

Cheryl Blanchard (President and CEO)

Hi, Jim. Thanks for the question. Yeah, so for Hyalofast, that's obviously a regenerative product and very core to the early intervention portfolio that we've put together. It's a product that we already sell, that we're very excited about, that has lots of clinical data, 40 publications. We'll have 15-year data this year, and we have a really strong process, as you heard me talk about on the call, as we're starting to engage with FDA on that product. So I think you can expect to hear more from us on Hyalofast. Regarding Cingal, that, that is a product that I think fits more into that OA Pain Management portfolio, and we obviously haven't announced anything relative to how we would consider distributing that in the United States, but we clearly have a different model that we deploy today, excuse me, with our other OA Pain products.

I think more to come on that relative to Cingal.

Jim Sidoti (Analyst)

All right, and it seems like the cost savings initiatives, you know, have really made a difference. Were there any one-time cost savings in the quarter, or should we expect these levels going forward?

Steve Griffin (EVP and CFO)

Yeah, I mean, when you take a look at the press release, you'll be able to see the one-time adjustments, those non-recurring items. But when you back those out and you just look at it on a year-over-year basis, I think your conclusion is right. We're seeing about $3 million of real cost savings on the OpEx lines, driven by the actions that were taken in the first quarter. Those will continue as we move forward here, driven by the actions.

Jim Sidoti (Analyst)

Okay. All right, thank you.

Cheryl Blanchard (President and CEO)

Thanks, Jim.

Operator (participant)

Thank you. The next question comes from Harrison Parsons from Stephens. Please go ahead.

Harrison Parsons (Equity Research Associate)

For George. Good afternoon, and thanks for taking the questions. I wanted to just dig in a little bit about your comments around the more mature products and the joint preservation restoration segment. What percentage of that segment do those products make up? And are they declining, or is it just slower growth that you're seeing from those?

Cheryl Blanchard (President and CEO)

Yeah. Hi, George. Thanks for the question. We have talked about this in prior quarters. There are some, I would say, legacy products in that JPR business that are either kind of flat, a couple of them, to declining. It's not all the products for sure. We certainly haven't broken them out with any kind of percentages, and that's obviously largely being offset by some higher growth, newer products like X-Twist and Integrity, as we've talked about it today. So I think you'll see us going forward, continuing to focus on the new products as we really leverage the expertise that we've got here at Anika around hyaluronic acid. And the new products is really where we've made a lot of our investments.

So we look forward to continuing to report out on the growth of that business relative to the new products in particular.

Steve Griffin (EVP and CFO)

Yeah, and the only thing I might add to that is, you know, specifically, the regenerative piece of the JPR business is performing quite well, as you can tell, and that's really where you're gonna start to see the benefits of the Integrity launch come through. So, you know, in the first half of the year, we saw mid-teens growth coming from that regenerative part of the portfolio. We expect that to pick up now as we head into the second half of the year.

Harrison Parsons (Equity Research Associate)

Okay, great. Yeah, that's helpful. And then I just wanted to just staying on that segment, just kind of dig into any products beyond X-Twist and Integrity that are driving that growth to get you to the full-year guide?

Cheryl Blanchard (President and CEO)

Sure. There are other products that are driving growth, but I think we've, you know, chosen to focus on X-Twist and Integrity just because those are the, the newer products. We obviously just got to full market release on the biocomposite version of X-Twist that allows us now to address that full $600 million+ rotator cuff market on the soft tissue fixation side. And now it's early days, but we're in about a month into the full market release of Integrity. So those two products are really, I would say, the, the higher growing portions of that JPR part of the business and why we chose to point those two out. We'll obviously continue to update as we go forward.

I will tell you, though, that the regenerative portion of the business, if you want to think about it that way, which includes also Hyalofast and Tactoset, is a piece of that JPR business that is doing very well. Steve, I don't know if you've got anything to add to that.

Steve Griffin (EVP and CFO)

No, I think that covers it.

Cheryl Blanchard (President and CEO)

Okay.

Harrison Parsons (Equity Research Associate)

Thanks for the color.

Operator (participant)

All right. Thank you. The next question comes from Mike Petusky from Barrington Research. Please go ahead.

Mike Petusky (Research Analyst)

Good evening. Cheryl, the international growth that you guys called out for OA, and you sort of said new country expansion, which countries did you guys recently enter, or, and I guess were any of them in the second quarter?

Cheryl Blanchard (President and CEO)

Yeah, I'll tell you, Mike, we typically don't break out specifically when we launch in a new country unless it's material to the business. But I will tell you that we've continued to expand in Europe and kind of the South America, Latin America regions going forward. And I would say we haven't expanded into a new country that's really gonna change our numbers materially. When that happens, I'll certainly let you know. I think the good news is that the bigger portion of that growth has really come from continued market share capture of the countries in which we already sell.

Mike Petusky (Research Analyst)

Okay.

Cheryl Blanchard (President and CEO)

Even when we launch in a new country, it takes a little bit of time for those distributors to kind of get their feet on the ground and get up and running. I think we're really starting to see some of the nice impact as we launch in new countries, and they have a chance to really get grounded in the products and drive into those markets. That's really what we're seeing propel much of that significant growth number with that OUS business. It's actually very exciting for us.

Mike Petusky (Research Analyst)

Okay. All right, great. On Cingal, the regular communication with the FDA that you called out has the last 90 or so days... I mean, you know, are there learnings there where you say, "Okay, we've pretty much got this dialed in in terms of what we're gonna need to do," or is there still a lot of, I guess, additional communication that needs to happen there?

Cheryl Blanchard (President and CEO)

Yeah, it's a great question. We would love to have it be going faster. We're in constant communication with FDA. We reported out last quarter that they had come back to us with some feedback. We went back to them with some additional questions, and the feedback they gave us from those questions was, "Go ahead and schedule another meeting." So we're in the process of doing that, and, you know, we feel like that represents good progress just because we're really starting to, I would say, hone in on the topics that we wanna make sure we get full clarification around before we begin any additional non-clinical testing. So there is progress being made, and we look forward to providing a more fulsome update by the end of the year relative to how we're thinking about that timing.

Mike Petusky (Research Analyst)

Okay. All right, great. And then, on the study, you guys, I guess, are planning to enroll for Integrity. And I just wanna make sure I understand. The primary reason for this is sort of to for your MDR filing, and I understand also to sort of strengthen the value proposition in the U.S. But can you guys—I guess, first of all, just, I just wanna make sure that I understand what the motivation for that is, and then or confirm that I understand what the motivation for that is, and then what do you think that costs and over what timeframe? Thanks.

Cheryl Blanchard (President and CEO)

Yeah, absolutely. So we're excited to be able to get that study going. It's been in the planning stages as we've been in limited market release. It really is twofold. You know, we know that we need a good set of high-quality clinical data to really drive market access in the United States in the way that we know is possible with this superior technology. But in Europe now, because this is a Class Three device, we have to have high-quality clinical data for the MDR filing prior to marketing, which is different than it used to be. So it's really twofold in nature, and again, we're excited to get it started. I will tell you, though, we have a couple of post-market studies already ongoing in the United States that are gonna yield some clinical publications next year.

So we'll begin to have some clinical data coming out for U.S. marketing and market access purposes before we get to the, what I would consider, kind of the higher quality clinical data that we're going to need for the MDR filing.

Steve Griffin (EVP and CFO)

Yeah, and we don't necessarily share the details on the breakdown of the cost for each study. But what I'd say is, you know, we'd expect it to start in the second half of this year and continue into next year as well. It'll be a little bit of an offset to some of the cost savings that we've seen on the operating expense line. So while, you know, I mentioned this earlier, we've seen about $3 million of operating expense savings in the second quarter alone. It'll eat into that to some degree as we work our way into the fourth quarter here, as a little bit of a drag against some of those cost savings. But, you know, it'll take a number of years to play out associated with the overall study expense.

Mike Petusky (Research Analyst)

Okay. Any, any sense of patient enrollment number?

Cheryl Blanchard (President and CEO)

I'll tell you what, once we get all the details posted on clinicaltrials.gov, I'll be in a better position to provide you with those details. It's, it's a study that we have very clear line of sight to around excitement from the clinicians for enrollment. It doesn't have any complexities in a clinical trial design that's gonna make it difficult to enroll. And as soon as we get that posted, I'm gonna look forward to going through in a little bit more detail about what it looks like, number of patients, and timing.

Mike Petusky (Research Analyst)

Okay. Cheryl, I understand it's very, very, very early days for the full market release of Integrity, but I'm just curious. I mean, is there anything you can share in terms of, hey, some of these 60 surgeons that were in the limited market release, they've already done cases in the last 30 or, you know, 35 days or however long you guys have been launched? Is there anything you can share just in terms of the last four, five, six weeks, however long Integrity has been in full market? Thanks.

Cheryl Blanchard (President and CEO)

Yeah, absolutely. I'm excited to. It's something that I track multiple times a day, and I think there are some interesting factoids that I'd be happy to share. I mean, first of all, the feedback that we're getting is tremendous. We're getting videos of patients that are rapidly rehabilitating and healing, that surgeons are posting on LinkedIn and other social media outlets. They're talking about it. They're excited about the fact that it's a higher strength construct, even when wet, that it has increased regenerative capacity that they're seeing play out clinically. They are really appreciative of the all-arthroscopic instrumentation and the streamlined surgical technique, and the fact that it's not using a xenograft or an allograft. So that's some of the feedback we're getting. But I'll tell you, the pull is real from the surgeon community.

And even with, with some of the distributors, you heard me mention that we're signing on some new distributors that are focused on the regen products. The fact that we increased, even in a limited market release where we had kinda constrained supply, 40% from Q1 to Q2, I think is a sign. The fact that we're getting feedback from surgeons immediately saying: "Boy, I'd really like to use this in this tendon. I'd like a different geometry. I'd, I'd like a different shape factor." These are all things that are, are terribly exciting for us and really give us a lot of confidence around our product development pipeline and our ability to make these investments in the regenerative portfolio in a way that there's a real ROI here.

And again, this leverages our proprietary HA technology, which is really where Anika has the expertise and the right to win.

Mike Petusky (Research Analyst)

Okay. I'm gonna a lot of good stuff there, Cheryl. I'm gonna give it one more shot, though. Any numbers in terms of surgeons that have actually done cases since the full market?

Cheryl Blanchard (President and CEO)

Oh, yeah. I mentioned it in the script. We've had over 60 surgeons in LMR. You know, I would say that-

Mike Petusky (Research Analyst)

That was in the limited market, wasn't it? Or-

Cheryl Blanchard (President and CEO)

In the limited market release. That's right. If you think about the fact that I also mentioned that we're looking at kinda 40% quarter-over-quarter growth and about 25% of the surgeons are new to Anika, you can kinda think about it that way. I have seen already just this week, at the beginning of the month, a good number of very new customers doing cases just at the beginning of this month. So again, it's a different type of product and a different level of pull with totally new customers to Anika.

Mike Petusky (Research Analyst)

Okay.

Steve Griffin (EVP and CFO)

Yeah, and you heard it there, Cheryl. The 40% sequential growth is what we've experienced and what we expect to continue here for a short period of time. So we're excited to share more as we get to the back half of the year.

Mike Petusky (Research Analyst)

I just wanna make sure I understand. That's cases, correct? Or surgeons?

Cheryl Blanchard (President and CEO)

40% is cases.

Mike Petusky (Research Analyst)

Okay. All right. Very good.

Cheryl Blanchard (President and CEO)

Yeah.

Mike Petusky (Research Analyst)

Thank you.

Cheryl Blanchard (President and CEO)

You're welcome. Thank you.

Operator (participant)

Thank you. There are no further questions at this time. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.