Axogen Canaccord Genuity's MedTech, Diagnostics and Digital Health & Services Forum

Sure. The nice thing about AxoGen I like to share with people is that there's not a lot new, insofar as what we're doing is we're just continuing the cadence of executing the strategic plan, and specifically, that's the various work streams. One of the most important work streams is expanding the sales footprint within each of the clinical application areas that we have prioritized so that we can have a touchpoint to all the service sites, and then in addition, have the capacity to meet and then develop the individual surgeons who might treat those patients. To put that in context, there's no part of the areas that we target today which are fully staffed such that they can serve all the providers.

That's the most important thing that's going on with AxoGen is that we're building into each of these areas, and we still have several years ahead of us by each application area before we reach to full capacity support. The other element is that we've long focused on, for the last several years, coverage and reimbursement. We've made significant progress on that strategic initiative, frankly, even faster and more effectively than we'd even planned. While we still have gaps, for the most part, coverage and reimbursement is strategically no longer a decisive issue for us as an obstacle and is now a situation where it allows us, because we have good coverage and reimbursement in most of the areas that we work, the ability to focus on the clinical consultation as to, is this patient justified or not justified?

We no longer need to tend to the obstacles that come along with a lack of coverage and reimbursement. From an R&D standpoint, our pipeline, as we alluded, and not alluded, but explained very openly at our first investor day a couple years ago, we have various areas that we believe that are critical strategically to make progress in order to enable adoption in nerve repair. One of those is coaptation, which is, for those who are unfamiliar, very simply, how do you stick two nerves together? In our world, that's historically been done only by one method, because there's only one method to do it, and that was microsurgery, which are tiny hair-like sutures that require headlamps and skills in terms of how you actually sew to a nerve.

Making that simpler, making that faster, and mechanically more effective is a key opportunity to enable adoption of nerve repair, and we made significant progress on that with our recent acquisition of BioCircuit.

As confident as someone like Lindsey Hartley and I can be in our positions. The reason why I say that is there's no shortage of patients who could be better served by having their peripheral nerve function addressed. So our market opportunities are significant no matter where we play, and we're very under-penetrated relative to any one of these areas. So that very, very important consideration is not a factor to our growth. So what are the factors? Coverage and reimbursement was one. That's less of a factor than it's ever been. In fact, for the most part, it's not an issue in large specs. So that's not an issue. So what are the challenges? How do we basically work into those opportunities? This is footprint. It's commercial execution and maintenance of your sales process, and from a discipline standpoint.

We have well-characterized business models in terms of how to create and keep a customer. We believe these models are very elastic for many years to come. Our job, therefore, is expand this footprint and prosecute these business models. That is why we are very confident that we have the ability to continue to grow at a high rate, and to do so for years ahead.

Sure. Effectively, we are 90% commercial lives are now covered for nerve work. That said, there are still small pockets of IDNs or individual geographic-specific payers that remain. Our plan is obviously to continue to get to a point where 100% coverage. We just had a payer two days ago, a small one, that removed the experimental designation and opened up peripheral nerve repair. So we will continue to knock those off, but the big ones are mostly behind us now.

Everything that we do becomes simpler and more predictable. When coverage reimbursement is a cloud that hangs over your work, as you might appreciate, the physician might be enthusiastically table-pounding desirous of adoption, but can't because of the things that you need to go through in order to overcome those kinds of obstacles. Once those obstacles are removed, the selling process simply becomes much simpler, it therefore becomes shorter, and the work that's involved is clinical consultation, not administrative management. Everything gets a little easier. One of the reasons why we can't really quantify, well, what has been the impact of this good news is the corollary is the reason why, is that when you have those obstacles, you hear about them every day. Someone's calling you and telling you, "I lost this doc, I lost this patient.

This hospital doesn't want to do it anymore because they're tired of fighting." Once that's out of the way, no one tells you, "Hey, I have good news today." Basically, you just don't have a conversation about coverage and reimbursement any longer, which means it's no longer a factor, and everything just moves more smoothly. We know what we want to do. From a consultation standpoint, we know the kind of positioning and the conversations we'd like to have, and now our work is more and more focused on that, which is really the important thing you want to get to. We just expect everything we've been doing, we're going to continue to do, it's just going to be more efficient and effective.