AxoGen Inc

NASDAQ:AXGN

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Operator]

Greetings, and welcome to the AxoGen, Inc. Reports 2024 Second Quarter Financial Results Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.[Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Harold Tamayo, Vice President of Finance and Investor Relations. Thank you, Harold. You may begin.

[Harold Tamayo, executive]

Thank you, Maria. Good morning, everyone. Joining me on today's call is Karen Zaderej, AxoGen's Chairman, Chief Executive Officer and President; and Nir Naor, Chief Financial Officer. Karen will discuss the second quarter of 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 the AxoGen 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, including our financial guidance, our expectations regarding our ability to expand our markets, and expand revenue from Core Accounts, anticipated growth for revenue categories, marketing opportunities with nerve repair applications associated with breast, OMS protection, and the surgical treatment of pain and new products. Our expectations regarding the commercial performance of Avive-plus Soft Tissue Matrix are statements regarding the timing of the complete Biologics license application submission for advanced nerve graft as well as statements regarding the timing for approval of the BLA. Our expectation that, assuming approval of the BLA Advanced Nerve Graft will be designated as a reference product and the expected market exclusivity of such designation and our expectations around cash flow, including that will continue trending toward cash flow breakeven and profitability.

Forward-looking statements are based on current beliefs and assumptions and are guarantees of future performance and are subject to risks and uncertainties, including, not without limitation, the risks and uncertainties reflected in the company's annual and periodic reports such as hospital staffing issues, regulatory processes and approvals, surgeon and product adoption and market awareness of our products. The forward-looking statements are represented only as of the date they are made and except as required by applicable law, we assume no responsibility to publicly update or revise any forward-looking statements. In addition, for a reconciliation of non-GAAP measures, please reference today's press release and our corporate presentation on the Investors section of the company's website. Now I'd like to turn the call over to Karen. Karen?

[Karen Zaderej, executive]

Thank you, Harold, and thank you all for joining us today to discuss our 2024 second quarter financial results. Before discussing the quarter and as we announced earlier today, I would like to welcome Michael Dale to AxoGen. Effective August 9, Michael will be stepping in as AxoGen's Chief Executive Officer. Mike recently served as the President of Abbott's Structural Heart and has a long history of successfully leading building and scaling commercial stage life science companies. With his extensive experience, Mike is well equipped to lead AxoGen through its next phase of growth and innovation as I retire.

Turning now to the quarter. We had a solid second quarter achieving a number of major milestones. We're pleased with our positive trends in revenue growth, bottom line performance and the launch of Avive-plus Soft Tissue Matrix and the progress of our BLA submission for Avance Nerve Graft. Our achievements highlight the strides we are making towards reaching our growth targets, driving towards profitability, and generating positive cash flow. During today's call, I will review our accomplishments and the advancements we've made across our business. We're pleased with the quarter's top line revenue and EBITDA growth. Revenue was $47.9 million, an increase of 25.6% compared to last year, while adjusted EBITDA was $5.6 million versus a loss of $0.2 million last year. Notably, revenue growth was broad-based across our products and applications.

During this quarter, our results were driven by improved sales productivity and solid commercial execution of our growth strategy. Our strategy remains focused on deepening our presence in high potential accounts. Specifically, Level 1 trauma centers and academic-affiliated hospitals with a high number of trained microsurgeons. Our goal is to continue to penetrate the nerve repair business within these accounts across all of our targeted nerve repair applications. In addition to the strong execution in the quarter, and as we mentioned in our Q1 earnings call, we saw a shift in some procedures from March to early Q2. We believe this shift positively impacted our results for this quarter, approximately $1.5 million. As a result of our strong performance and momentum in the first half of the year, we are raising our revenue guidance for the full year, and Nir will provide more detail in a few moments. In this quarter, our Core Accounts increased to 412 versus 347 at the end of the second quarter of the prior year and 400 at the end of the first quarter of this year. As a reminder, Core Accounts are defined as those generating more than $100,000 in revenue over the trailing 12 months and currently represent approximately 65% of our total revenue. Our largest Core Accounts are over $1 million in annualized sales. We ended the second quarter with 117 direct sales representatives, an increase of 2 reps sequentially, and compared to a year ago. We believe our revenue growth will continue to be driven primarily by increased productivity of our sales force, and we will evaluate and add additional sales reps as needed. Our direct sales force is supplemented by independent sales agencies that represent approximately 10% of our total revenue.

As the leader in the nerve repair market, driving innovation through new products and expanded applications to provide advanced solutions for surgeons and their patients is a key pillar of our growth strategy. We previously announced three new innovations to our portfolio, which included re-sensation for implant-based breast neurotization and two new products in the nerve protection space. In the quarter, we continue to see strong surgeon and patient interest in implant-based breast neurotization. We completed an additional surgical education program, training new teams of both breast and reconstructive surgeons in the re-sensation procedure, a nerve repair technique providing the opportunity for the return of sensation to the breast. These immersive training programs are surgeon-led and prepare the surgical team to incorporate the re-sensation procedure into their breast reconstruction. We're pleased with the response from the two programs we've completed this year and are on track to complete an additional education program in the third quarter.

In addition to our surgeon education programs, we continue to invest in driving awareness and education on the quality of life impact of numbness after mastectomy. We work with patient advocacy groups to build awareness and support the right of mastectomy patients to receive breast neurotization as a part of their reconstructive procedure. We're pleased with the increasing number of patients who are connecting with surgeons who perform breast neurotization through our recent patient website. We've also expanded our innovation and focus on protecting injured nerves. The category of nerve protection covers a wide range of diverse nerve injuries and defects, including compression, nerve crush injuries and complex traumatic injuries. In these injuries, the nerve is still intact, but could have damage to its internal structure or surrounding tissue bed, which drives the need for protecting the nerve during the critical phase of healing. The nerve protection market, which we estimate to have a potential market opportunity of above $800 million, represents a significant growth opportunity for AxoGen, and we see a need for multiple solutions to address these diverse types of non-transected nerve injuries. Our first portfolio addition in the nerve protection category was AxoGuard HA-plus Nerve Protector, which continues to be well received by surgeons and an important growth driver.

We're continuing to expand our offerings for nerve protection. And in June of 2024, we announced the full launch of our newest product, Avive-plus Soft Tissue Matrix. Avive-plus is intended for use as a soft tissue barrier and is a re-absorbable multilayer amniotic membrane allograft that provides temporary protection and tissue separation during the critical phase of peripheral nerve healing. We are pleased with the initial positive surgeon feedback, and we believe that Avive-plus will have use cases in multiple nerve repair applications. With these additions, we believe we offer the most comprehensive protection portfolio for nerve repair, which addresses the diverse needs in the protection market.

Moving on to updates on our growing body of clinical evidence. Over the years, we've made significant investments to develop quality clinical evidence to demonstrate the safety, performance, health care economics and utility of our nerve repair solutions. Our active clinical programs are progressing as expected. As of the end of the quarter, we had 275 peer-reviewed publications, including applications in trauma, breast, OMF and pain. In July of 2024, a new study evaluating nerve coaptation approaches was published in the Journal of Plastic and Reconstructive Surgery Global Open. The study, titled: Comparative Effectiveness, Systematic Review and A Meta-Analysis of Peripheral Nerve Repair Using Direct Repair and Connector-Assisted Repair assessed differences in outcomes between nerves repaired with suture-only direct repair and connector-assisted repair techniques. This level 1 evidence found that the connector-assisted repair group had significantly more patients achieved meaningful recovery and significantly fewer patients experienced cold intolerance than those in the direct repair group.

A suture-direct repair is considered a historical standard of care and is one of the most common nerve repair methods. This evidence supports the benefit of protecting the nerve coaptation site with implants like our AxoGuard connectors and protectors as compared to direct repair alone. Similar to meta-analysis previously published for nerve gap repair, we believe that these findings will play an important role in surgeon clinical decision-making and in the adoption of connector-assisted repair techniques for transected nerves.

Turning to the BLA for Avance Nerve Graft. We're excited that we completed an important milestone with the submission of the first wave of data to FDA in May. We plan to provide the remaining modules in the third quarter. We believe this submission time line will allow for a potential approval in mid-2025. 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 the reference product for potential biosimilars, providing at least 12 years of market exclusivity from the approval date. Another key component of our transition to a biologic was the construction and validation of our new AxoGen processing center near Dayton, Ohio. By the end of 2023, we had fully transitioned all advanced processing to this new facility. And in June of 2024, we celebrated the official ribbon-cutting event supported by many esteemed community leaders. This new center not only enhances our processing capabilities and capacity, but it also underscores our commitment to quality and innovation. It demonstrates our investment in the local community, fostering strong relationships with local leaders and showcasing our dedication to creating high-quality jobs and contributing to this regional economy.

As often seen in the ramp-up of new facilities, we have incurred some start-up costs that were a greater magnitude than we initially expected and have impacted our gross margin in the near term. We have resolved these early challenges, and we're confident in our ability to execute moving forward. During the start-up process, we've also gained some insight into incremental operating costs of running this state-of-the-art biologics facility. We expect to see higher capacity utilization and other improvements that will help offset these costs over time.

In conclusion, we're pleased with our strong second quarter results, which reflect the successful execution of our growth strategy and commitment to innovation. Looking ahead, we remain focused on delivering on our revenue growth and profitability, as we advance our mission to revolutionize the science of nerve repair. I'll now hand the call over to Nir, who will provide further details on our financials and provide the updated financial guidance for the full year 2024. Nir?

[Nir Naor, executive]

Thank you, Karen. 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 financial results. For this quarter, our revenue was $47.9 million, representing 25.6% growth from the second quarter of 2023. This growth is attributed to a 22.4% increase in unit volume and mix and a 3.2% increase in price. Higher unit volumes were driven by broad strength across the existing product portfolio, momentum from new product introductions as well as some benefits from a shift in procedures from March to the early part of the second quarter, which we believe added approximately $1.5 million in revenues to this quarter. As we mentioned on past calls, we expect gross margin to contract as we sell more products from our new facility, which are at a higher relative cost. We expect this headwind to be offset by higher capacity utilization and other improvements as we scale up processing.

Nonetheless, as Karen mentioned, we have incurred some start-up issues and saw some incremental ongoing costs associated with this type of facility. On a positive note, we have resolved these early challenges and as such, expect to see gross margin improvements over time. Our gross profit for the quarter was $35.3 million, an increase from the $29.7 million recorded in the second quarter of 2023. This represents gross margin of 73.8%, down from the 77.7% in the same period last year, mainly due to product mix, including the previously mentioned trends of higher cost of products sold, driven by the higher relative costs of our new facility. Our total operating expenses for the quarter decreased by 2.2% to $35.8 million, down from $36.6 million in Q2 of 2020. The net decrease in total expenses was primarily the result of a reduction in R&D expenses, royalty fees and travel costs.

Our sales and marketing expenses for the second quarter grew by 4.2% to $19.7 million, driven by compensation and occupancy-related expenses. Sales and marketing as a percentage of total revenue decreased to 41.1% from 49.4% in the second quarter of 2023 as we saw improved sales force productivity and top line growing faster than sales and marketing expenses. Research and development expenses decreased by 5.6% to $6.7 million from $7.1 million in the second quarter of 2023. As a percentage of total revenues, total R&D expenses decreased to 13.9%, down from 18.7% in the same quarter of the previous year. General and administrative expenses decreased to $9.4 million in the second quarter of 2024 compared to $10.6 million in the same quarter of 2023, mainly driven by lower compensation costs. The quarter ended with a net loss of $1.9 million or $0.04 per share, compared to a net loss of $6.7 million or $0.16 per share in the second quarter of 2023.

However, we recorded an adjusted net income of $2 million for the quarter or $0.05 per share compared to an adjusted net loss of $1.3 million or $0.03 per share in the same period last year. Adjusted second quarter EBITDA was $5.6 million compared to an adjusted EBITDA loss of $0.2 million in the prior year. This change stands as a testament to our focused execution and improvement in operational efficiency and underscores our commitment to optimizing our total cost structure. Despite the previously mentioned gross margin headwinds, we generated positive cash flow in the second quarter.

As of June 30, our balance of cash, cash equivalents and investments was $27.1 million compared to $23.6 million at the end of the first quarter of 2024. Turning now to our guidance. As outlined in today's press release, we are raising our revenue guidance for the full year 2024. Given the momentum we saw in the first half, we now expect revenue for the full year to be in the range of $182 million to $186 million. In addition, we're adjusting our gross margin for the year to be in the range of 74% to 76%, driven by the costs we described 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 second quarter. We will continue to execute our strategies, invest in innovation, drive revenue, growth and optimize versus allocation and profitability. And at this time, we'd like to open the line for questions. Maria?

[Operator]

We will now be conducting a question-and-answer session. [Operator Instructions] One moment, please, while we poll for questions. Our first question comes from Chris Pascal(sic) [ Pasquale ] with Nephron Research.

[Christopher Pasquale, analyst]

Thanks, and congrats on the quarter guys. Karen, I was hoping you could talk a little bit more about what drove the growth inflection here in 2Q? I understand the $1.5 million of procedure shifting. But even if we adjust for that, growth was still over 20%. And it looks like it was driven by the core Avance product line more so than some of the newer products you've just launched. So what led to that? Why did we see a pickup in utilization?

[Karen Zaderej, executive]

Actually, our growth was across all of our products. So Avance, of course, is our flagship product, but still remains about 65% of our revenue. So it didn't outpace all of the other areas. It remains our leading product, but we saw growth across the way. So we see -- some of the innovations that I mentioned helped to drive it with -- certainly of AxoGuard HA-plus, Avive-plus is recently launched, so it's smaller, but we think it has a good trajectory ahead of it. And then of course, we continue to see strong acceptance and growth in our newer applications like breast and OMF. Having said that, we also saw substantial growth in our trauma business and continue to be really pleased as our sales reps are executing and really focusing in on those high-value targets, they're continuing to drive deeper penetration in those targets across all of those areas.

[Christopher Pasquale, analyst]

And then the follow-up with just the guidance implies 10% to 15% growth in the back half of the year. So given the factors that you talked about for 2Q, which were mostly not onetime in nature, but the result of execution and things that should be sustainable, why the deceleration in the back half of the year, you just want to be conservative? Or are there things that you're assuming will be incremental headwinds in 3Q and 4Q?

[Nir Naor, executive]

Right. So just to add, again, we're very happy about our results for the second quarter, but it is relatively high also driven by this $1.5 million, Chris, that you mentioned. In addition to that, Q2 of last year is probably a very favorable compare in terms of year-over-year growth. Nonetheless, yes, as Karen mentioned, we're very happy with the execution of our commercial strategy and the broad-based growth. And if that continues, we expect to be around the high end of the guidance. But again, there are various puts and takes here. If we do see some deceleration of our key growth products and applications that will be more towards the lower end. And yes, we wanted to give guidance that we feel absolutely confident with. So, there's some level of caution here, you could argue.

[Operator]

Our next question comes from Michael Sarcone with Jefferies.

[Michael Sarcone, analyst]

Good morning, and thanks for taking my question.

[Karen Zaderej, executive]

Good Morning, Mike.

[Michael Sarcone, analyst]

Good morning. So just to start, some of the expenses you talked about in the new facility that were a greater magnitude than expected, you mentioned some challenges that were resolved. Could you just maybe elaborate on what those challenges were and how you resolve them and that you feel confident in the go forward?

[Karen Zaderej, executive]

Yes. I think like any new start-up, there were some mistakes that were made as we started up in processing by new operators or equipment processes that weren't quite set up for daily operation as we had hoped they would be. And so the losses were up -- that we ended up quarantining lots that had deviations to them and ultimately deciding that they should not be released for commercial use. They'll be used for demo. And so we had a greater -- the cost to us directly, we had a greater number of lots failing, mostly not because they failed in terms of product quality, but because they had these procedural issues that came up with them, that were -- ended up being written off. We've resolved that. We've put in place a lot of investigation, a lot of good engineering work. And today, we're running at -- at or greater yields and acceptance rates than what we have historically. So we're -- we're certainly where we expect to be now. But in the earlier part of this year, we saw some bumps.

[Michael Sarcone, analyst]

Got it. And then you talked about better sales force productivity. Can you also give us some more color there on what you're doing commercially that's helping to drive that better rep productivity?

[Karen Zaderej, executive]

Yes. I think it's directly related again to our strategy of really focusing in on these high-value targets. So the reps are spending their time, where they can continue to get -- where they can continue to build a solid repeat business. And that's particularly important in the trauma space. Again, with those unscheduled cases, you really need to be top of mind and -- and build it out so there's more than one surgeon who's using your products for -- for traumatic injuries. And so we've been pleased with that strategy. We see the reps engaging in it. They're happy because they're making their numbers, and we're happy because we're seeing the growth we expect.

[Operator]

Our next question comes from Caitlin Cronin with Canaccord Genuity.

[Caitlin Cronin, analyst]

Hey, great. Congrats on an awesome quarter, and thanks for taking the questions. So, just to jump off of the ATC question. What do you expect the margin [ cadence ] to be as you recover from those challenges, given you already expected to kind of a lower gross margin through the second half of the year, just from the transition to the facility?

[Nir Naor, executive]

Right. So our guidance for the year took into account the Q2 results, those start-up issues that we've had and our assessment of overall cost. I would say that the end result would be then a function of two trends that we mentioned before. So, one, gradually filling more products from the new facility at a higher cost, that will take the margin down gradually. On the other hand, offsetting this is benefiting the margin higher capacity utilization and other improvements that we are putting in place. So, in the end, the margin for the year will be the result of the relative weight and balance of those two trends, again, for the year, between 74% and 76%.

[Caitlin Cronin, analyst]

Okay. Great. And congrats on the new CEO, Karen, really sad to see you go, but what do you think Michael brings to the table that can help AxoGen along in its next phase of life cycle?

[Nir Naor, executive]

Yes, absolutely. Very excited to have Mike. He brings over 30 years of leadership experience in MedTech companies across various therapeutic areas, predominantly a very good commercial experience and his focus will be driving our commercial growth and boosting our move towards profitability and cash flow positivity. And he brings experience from both small companies, larger companies, private and public.

[Operator]

Our next question comes from Mike Kratky with Leerink Partners.

[Brett Gasaway, analyst]

This is Brett on for Mike. Congrats on another great quarter. So obviously. . .

[Karen Zaderej, executive]

Thank you.

[Brett Gasaway, analyst]

Yes, of course, you saw a substantial step-up in revenue per non-Core Accounts this quarter, even excluding the benefit from that procedure shift. So can you talk through some of the drivers and some of the commercial efforts that may be driving that step-up in non-Core revenue per account?

[Karen Zaderej, executive]

Well, again, it is -- we've identified target accounts that we want our reps that have a high potential -- that we want our reps to really focus on. And some of those are Core Accounts today, many of them, frankly, are Core Accounts today, but some are not. Some are just a high potential account that we think meets our criteria for focus. And so that's where our reps have been really spending their time. I think they really hit their stride here in second quarter, understanding the strategy, understanding where we're going and they're just continuing to execute and put the numbers on the page.

[Brett Gasaway, analyst]

Got it. That makes total sense. And then just as a follow-up, obviously, you're not breaking out scheduled versus trauma going forward, but you did see a benefit from trauma this quarter. So how should we be thinking about the contribution from that, I guess, in the second half, 2025? Is there anything we should be thinking about that is more durable that may be kind of lying under the surface at this point?

[Karen Zaderej, executive]

At the core of this strategy that we have is the philosophy that by building -- by building concentration in accounts, you build a stronger annuity business, and you get -- you continue to build on that. And so we -- we think that the important thing here is that -- that business is sticky and that it continues to grow with some momentum. And that's really been our philosophy in thinking about the strategy and the results that we've seen today.

[Operator]

Our next question comes from Jayson Bedford with Raymond James.

[Jayson Bedford, analyst]

Karen, I'm not sure if you'll be on these calls going forward, but certainly, congratulations on what you've helped build here.

[Karen Zaderej, executive]

Thank you, Jayson.

[Jayson Bedford, analyst]

You're welcome. The -- a couple of questions. Avive-plus, can we assume there -- you launched it more broadly late in the quarter. Can we assume there wasn't much contribution in 2Q? And then, I know you're in the early introduction phase here. But has the value analysis process within hospital has been burdensome, or has this process been pretty smooth?

[Karen Zaderej, executive]

Yes. Great question. And you're right. As you launch a new product, you've got a number of administrative hurdles that you've got to get through in account. And so the total contribution in this quarter is modest. We think it's got a lot of potential, but it's going to be modest in the initial stages. And yes, one of the administrative hurdles is that when you bring in a new product, you've got to go through a value analysis committee. Our assumption going in was that we would need value analysis committee in essentially all accounts. We have been pleasantly surprised in some in that they still had Avive, the original Avive that we withdrew because of the regulatory changes in 2021. They still have the Avive on their -- in their systems, and they've allowed Avive-plus to come in without going through a full value analysis committee. So we actually have done -- had a little higher step-up than we expected, but I don't want to overplay that to make it sound -- that it was a major driver of growth. It's just a really good foundation for us to start to build that growth from.

[Jayson Bedford, analyst]

Okay. That's helpful. Maybe just last one on the OpEx. You were able to leverage revenue really well. Just curious, was there a timing dynamic that we'll see costs jump in the second half? Or is this level reflective of a business kind of settling into a more normalized level of spending?

[Nir Naor, executive]

Yes. I would say that there's some seasonality in our OpEx spend, but not material ones. So I would consider the level of OpEx spend in the past quarters, even a bit more is indicative. So we don't expect any major swings or increases in OpEx.

[Karen Zaderej, executive]

And just a reminder, though, at the beginning of next year, our Q1 OpEx is typically higher.

[Nir Naor, executive]

No, the Q1, yes, that is a good point. So the Q1 will have a high -- as every year, a high amount of cash outflow. But still due to accruals and so on, the OpEx itself, again, should not be materially higher than the average.

[Operator]

Our next question comes from Ross Osborn with Cantor Fitzgerald. Please proceed with your question.

[Karen Zaderej, executive]

Oh, did we lose Ross?

[Operator]

Ross, are you muted? Okay, we can go to the next question and Ross, if you are able to, you can rejoin. Our next question comes from Dave Turklay -- Turkalay(sic) [ Turkaly ] with Citizens JMP.

[David Turkaly, analyst]

Great. Try not to say this, but yes, congrats on the print. And congrats on hiring Mike. He is a great guy and a great leader. Karen, you mentioned the level 1 trauma centers and the academic centers that you're focused on. I'm just curious, do you have a number, like an outright number, of how many there are? And then as I look at your Core Accounts at 4.12%, I'm just trying to get an understanding of like are you in most of these already? Or is there a green space? Like what percent of Core are those Level 1 centers?

[Karen Zaderej, executive]

Yes. We are -- thanks for the question. We still see a lot of room to go. That was one of the things that we came to the conclusion was we really wanted to focus the reps because we felt that they were trying to spread themselves to thin and trying to go after too many things at once. And that was really the focus on this targeted approach. If you look at the number of Level 1, Level 2 trauma centers, academic centers, we talk about that there's a little over 5,000 accounts out there. 1/2 to 1/3 of that, we would consider to be what I'd call a good target. And so our focus today is still a subset of that, and there's still quite a bit of room to grow.

[David Turkaly, analyst]

Great. And then as a follow-up on the comments you made on the sales force productivity. I was wondering if you could comment on broadly like what that is or what level that's at? And then if you think there's still room to go for those guys to continue to sell even more?

[Karen Zaderej, executive]

Yes. We still have the same views on productivity that we've talked about in the past, which is that a rep, stand-alone rep in a territory, providing full service to an account has the potential to do about $2 million on average in their territory. We've seen reps do higher than that. But the trick is how do we get the whole average up. So obviously, our average is still below that but continuing to increase and showing really good trends. The other thing that I think is a potential to help improve that number and bring the $2 million up is to add support people in the territory that a lower cost. And so we continue to look at these ways that we can continue to push productivity and ultimately improve -- improve the number even above $2 million. But right now, our target is that $2 million number.

[Operator]

There are no further questions at this time. I would now like to turn the floor back over to Karen Zaderej for closing comments.

[Karen Zaderej, executive]

Thank you, Maria. And before we conclude today's call, I actually want to just take a moment to reflect on our incredible AxoGen journey. Over the past 18 years at AxoGen, we've achieved remarkable milestones together. We've demonstrated the opportunity to have a significant impact on patient outcomes and a broad range of applications. From our single-minded focus on building awareness of the significant impact of nerve injuries to the success of our flagship product, Avance Nerve Graft and the recent launches of our latest innovations, AxoGuard HA-plus Nerve Protector and Avive-plus Soft Tissue matrix, AxoGen has truly transformed the landscape of nerve repair.

I want to express my heart-felt appreciation to the patients who have inspired us with their courage and resilience. You're at the heart of everything we do. Your stories of recovery and restored function have been our greatest motivation and the driving force behind our relentless pursuit of innovation and excellence. I also want to thank the surgeons and medical professionals who have embarked -- who have embraced our products and who have trusted us to improve the lives of their patients. Your feedback and collaboration have been invaluable in refining our solutions, building robust clinical data, educating the next generation of surgeons and pushing the boundaries of what is possible in nerve repair.

Our partnerships with leading institutions have been instrumental in advancing our research and development efforts. Together, we've expanded the knowledge and application of nerve repair techniques, and I'm confident that this collaboration will continue to yield transformative results in the years to come. Our accomplishments are a testament to the dedication and passion of our extraordinary team. We are all here because we believe we can change the world. Our shared purpose is to make life-changing improvements in the quality of life for patients with peripheral nerve entries.

AxoGen was originally created out of my belief, my vision and my tenacity that this was a purpose worth fighting for. Along the way, each of you have joined me in this purpose. Each one of you has played a crucial role in making AxoGen what it is today. Thank you for believing in my vision and sharing this journey with me. Your hard work, resilience, creativity and commitment to excellence have been the driving forces behind our success, and I'm incredibly proud of what we've built together.

As I depart, I'm filled with optimism for AxoGen's future. I have no doubt that the company will continue to thrive and grow. AxoGen has and will continue to make a profound impact on the field of nerve repair. In closing, thank you for the incredible journey we've shared. It has been an honor and a privilege to build and lead AxoGen. And I'm excited to see all the great things that lie ahead. I wish the entire AxoGen team continued success as you embark on this next chapter. And with that, I say thank you and farewell.

[Operator]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.