AxoGen Breaks Q2 Sales Record

AxoGen Inc., a developer of surgical solutions for peripheral nerve injuries, reported record revenue of $6.4 million in the second quarter of fiscal 2015 (ended June 30), a 52 percent increase compared with $4.2 million in the second quarter of fiscal 2014. It is the first time the company’s quarterly revenue surpassed $6 million.

The company reported gross margin of 83.8 percent compared to 78.9 percent in the second quarter of 2014.

Operating expenses for the quarter increased 33.9 percent to $7.5 million, compared to $5.6 million for the second quarter of 2014. The increased operating expenses reflect the company’s continued investment in sales and marketing. Operating loss was $2.2 million compared to $2.3 million for the same quarter last year. Net loss was $3.2 million, or 13 cents per share, compared to a net loss of $3.7 million, or 21 cents per share for the second quarter of 2014.

“Our team executed our strategy during the second quarter as our professional education forums and expanded sales team continued to drive increased customer interest in AxoGen’s solutions for peripheral nerve injuries and we exceeded our sales goals,” said Karen Zadere, president and CEO. “With the increasing acceptance and adoption of our unique and proprietary products and the successful execution of our growth strategies, we are exploring additional revenue opportunities, which include new geographies and new market applications for our products such as nerves severed during prostate cancer surgery and lower extremity nerve injuries. Our goal is for at least one of these initiatives to begin to contribute to our growth during 2016. Meanwhile, our progress through the first six months of this year, as well as our solid start to the second half, has enabled an increase in our revenue guidance for 2015.”

During the quarter, the company completed a pilot clinical study assessing cavernous nerve reconstruction with Avance Nerve Graft following radical prostatectomy, which demonstrated technical feasibility and promising ability to restore erectile function and reduce incontinence. AxoGen officials are evaluating strategies on how to address this new market opportunity.

For the six months, revenue totaled $11.4 million, a 54 percent increase when compared to $7.4 million reported in the first six months of 2014. Gross margin for the first six months of 2015 was 82.2 percent compared to 78.4 percent for the comparable six-month period in 2014. Operating expenses were $14 million compared to $11.1 million for the first six months of 2014. For the first half of the year, the net loss was $6.8 million, or 29 cents per share compared to a net loss of $8 million, or 46 cents per share for 2014.

Based on a strong first half and the continued momentum the company is experiencing in the third quarter, AxoGen is raising its revenue guidance and now expects 2015 full-year revenue to exceed $25 million with annual gross margins in the mid to high 70 percent range.

AxoGen is based in Alachua, Fla. Its portfolio of regenerative medicine products is available in the United States, Canada and several other countries and includes Avance Nerve Graft, an off-the-shelf processed human nerve allograft for bridging severed nerves without the comorbidities associated with a second surgical site; AxoGuard Nerve Connector, a porcine submucosa extracellular matrix (ECM) coaptation aid for tensionless repair of severed nerves; and AxoGuard Nerve Protector, a porcine submucosa ECM product used to wrap and protect injured peripheral nerves and reinforce the nerve reconstruction while preventing soft tissue attachments.