AxoGen yesterday updated on the company’s nerve repair technology and business strategies for the coming years, saying that it believes that the total addressable market for peripheral nerve repair has grown from earlier estimates of $2.2 billion up to $2.7 billion.
The Alachua, Fla.-based company said that the shift in its value was driven by updated net procedure value assumptions and an increased prevalence of Connector Assisted Repair in trauma cases.
“AxoGen has established itself as a leader in the peripheral nerve repair market and we are continuing to invest in the commercial and physical infrastructure to support our long-term sustainable growth in this developing market. In our 10+ years of experience, we’ve seen expansion of the algorithm, and growing surgeon acceptance of the value of our differentiated portfolio of products, to treat patients suffering from debilitating nerve injuries across a broad set of applications,” prez & CEO Karen Zaderej said in a prepared statement.
The company also updated on new developments and initiatives exploring the surgical treatment of chronic neuropathic pain, saying it sees a significant opportunity in those markets.
“AxoGen believes that the surgical treatment of pain represents a market expansion opportunity as surgeons and patients seek a solution for chronic neuropathic pain. Surgeons will now have the tools to treat one of the causes of chronic neuropathic pain by removing the source of the pain, a symptomatic neuroma, and repairing the resulting deficit with the AxoGen portfolio of products for nerve repair,” the company wrote in a press release.
The company added that it believes the total addressable market for surgical pain treatment could be more than $2 billion, though it will focus initially on trauma and orthopedic procedures which it estimates at approximately $1 billion of the larger market.
AxoGen said that next year it expects to begin several market development and initiatives to support a commercial launch including pilot referral tools and education with three reference centers, three new clinical studies and the launch of its AxoGuard Nerve Cap during the second half. It also reiterated its financial guidance for 2019, expecting to see growth of at least 35% year-over-year.
“We are excited to begin these initiatives which we believe will provide a potential solution for chronic neuropathic pain and allow us to develop a deliberate go-to-market strategy in this important application. Our initial applications are a natural practice extension for many of our existing surgeon customers and provides them with the opportunity to treat additional clinical problems. We are seeing growing surgeon awareness of the demonstrated clinical consistency and meaningful recovery outcomes reported from our data. We believe this awareness will continue to drive adoption across our current and expanding applications, anchored with our Avance Nerve Graft, a biologically active nerve therapy. The FDA’s recent RMAT designation of Avance Nerve Graft further highlights both the strength of the existing clinical data within the Ranger registry and the significant unmet medical need for improved therapies to treat nerve injuries,” Zaderej said in a press release.
The company also reiterated its 2018 annual revenue guidance, expecting to see 40% growth over 2017 and gross margins above 80%. It also said it expects to expand its sales team to at least 80 reps this year, with 18 surgeon education programs running. Those numbers are expected to grow to 115 reps in 2019 and 25 education programs, AxoGen said.
Leerink Partner analyst Richard Newitter said that they view the news as positive, and added that the company’s expanded sales representatives could have a lasting effect over the coming years.
“We also suspect some of this more aggressive rep hiring will result in an increasingly payoff into 2020 & beyond as it tends to take 9 months for new reps to become fully productive,” Newitter wrote in a letter to investors.
Shares in AxoGen have risen 3% so far today, at $29.23 as of 11:01 a.m. EST.
