Therapeutics. With us, we have the CEO, Cheryl Blanchard, the new CFO, Steve Griffin, and also the Vice President of Investor Relations, Mark Namaroff. As always, this will be a 30-minute presentation. There should be some time at the end for Q&A, so if you do have a question, you can type them into the Q&A tab at the bottom of your screen. With that out of the way, Cheryl, it's all yours.
Great. Thank you, Jim, and thank you everybody for joining us today. Mark, if you want to move to the next slide, I'll just point out the standard safe harbor language, and then we can move on. I'd like to give a quick overview of the company with some key updates that I think you all would find interesting today, and then make sure we have a good amount of time at the end for questions. So please feel free to add those to the chat for Jim to be able to communicate to us. So let me give you a little bit of background about Anika.
We are a company that is very focused on early intervention orthopedics in the joint preservation, regenerative therapy space, and OA pain management, both areas where there are very large addressable market opportunities, and where there continue to be a number of significant unmet needs, where the products that we're developing, the products that we've launched, really are very meaningful and meaningful potential plays and future plays in those spaces. So the first thing that I will tell you is that the biggest part of our business is in the OA pain space today in the United States with Monovisc and Orthovisc. Those are our single injection and multi-injection viscosupplement products, where we today, with our US sales and marketing partner, Johnson & Johnson, maintain the number one position in the US market.
Alongside that, though, the part of the business with the OA pain piece that we have control over is OUS, and we have seen very strong international growth with now three products, Monovisc and Orthovisc, that we sell in the US, and Cingal, our next generation OA pain product that I'll talk about in a moment, that we're moving toward getting FDA approval of in the United States. This year, in the first half of the year, we saw 17% growth. This quarter, Q2, we saw 19% growth. This is a very exciting part of our business, and that OA pain business is really a foundational pillar for Anika. It's a highly cash generative, very healthy margin business for us.
At the same time, this company was really built on very differentiated Hyaluronic Acid technology, and what we've done with that is progress it into the regenerative therapy spaces focused on the early intervention orthopedic area. The next thing I want to mention to you, and I'll talk more about this in detail in a moment, is our new Integrity Implant System, that just in July, we announced that we had formally entered the full market release phase after a number of months of a Limited Market Release. During the Limited Market Release, we saw over 300 cases done with over 60 surgeons using it. A lot of excitement around that technology.
Again, I'll talk about it more in a minute, but it's really in the United States, our first big foray, aside from Tactoset, a great bone regenerative product that we have, that we're really starting to see how highly differentiated that therapy and that technology is. I mentioned Cingal a minute ago, relative to our OUS business. This is a product that we sell in over 40 countries today, and we are having good interactions with the FDA, progressing that product along to get that approved in the United States into the future. We see a very significant market opportunity in the United States for Cingal, which is both a short and long-acting OA injectable product.
Then the only other thing I'll mention on this slide, just to round this out with our HA technology, is Hyalofast, our single-stage cartilage repair product that's sold in over 35 countries and is on track right now to be launched in the United States. A very meaningful single-stage cartilage repair product will be launched by 2026. The other thing that I'll mention here is that we are very focused on driving shareholder value and driving a very strong capital allocation strategy to drive that shareholder value. We announced some cost reductions earlier in the year. Here recently in Q2, in our earnings call, you can start to see those flow through the P&L.
We reported an EBITDA margin of 15%, and we'll continue really driving those cost efficiencies so that we can ensure that we have the capital to reinvest in really focusing on that OA pain and regen space, where we see a really high opportunity for a strong ROI and driving shareholder value, in addition to some other capital allocation elements that we'll talk about a bit later on. So Mark, if you'd like to move to the next slide, I want to talk for a minute about where we are really in the process of refocusing our business strategy in the joint preservation space, specifically on our regenerative portfolio. Again, this leverages our hyaluronic acid technology that Anika was really founded on.
The HA gel products I mentioned, Orthovisc, our our multi-injection visco product, Monovisc, our single injection viscosupplement product, and Cingal, which is our combination next generation OA pain product, combination of Monovisc and Triamcinolone Hexacetonide or TH, a steroid. I'll speak to that first, because that is one that we are progressing well through the FDA. We sell it in over 40 countries today. It contributed to those very strong... that very strong double-digit growth that we're seeing this year. But it is fast acting, it is long lasting. We have 3 phase III clinical trials. We know that it provides 72% pain relief at a 92% responder rate, really presenting spectacular OA pain resolution data and really showing nice clinical traction outside the United States.
We look forward to continuing to drive that through the FDA and getting that into the United States market, where we think there's an additional billion-dollar addressable market opportunity on top of the viscosupplement market that we sell into today. But if you look on the top of our pyramid there, you see that word HYAF. HYAF is our biopolymer hyaluronic acid technology, where we can take HA, turn it into a biopolymer, and spin it into fibers, and turn those fibers into regenerative products. The first one I'll talk about is Integrity, that I mentioned earlier. We launched that, fully launched that in July of 2024, and we're really seeing a nice pull from the market.
This is a product that from Q1 to Q2 of this year, we saw a 40% increase in procedures that were done using Integrity, even while still in the limited market release. Now that we're in full market release starting in July, we continue to see a lot of really nice uptick of this product, a really significant pull from the marketplace. It's highly differentiated. It has a strength profile that is vastly superior to the first-generation collagen regenerative patches that are on the market today. It has suture retention strength, even when wet, and it has about 3x the regenerative capacity of collagen. So the surgeons are really starting to get excited about this technology, and we are really focusing our new product development pipeline to leverage this technology that we've developed.
It was cleared under a 510(k), so those new products that we look forward to telling more information about in the future here, are able to leverage that 510(k) as a predicate, and allow us to bring additional products that leverage that technology into the market, first in the United States, but we're also focused on bringing this technology outside the United States. We see this right now in the US, a market of about $220 million that's based on that collagen technology I mentioned. While we're going after that current market that exists and are seeing a lot of uptick, we also think there's a significant market build opportunity into the future because surgeons are using this in areas for tendon repair, where they can't use the collagen technology today because of the benefits that this provides.
So we see a nice long runway here for Integrity, both providing significant near-term growth with our regenerative business, but also really driving growth into the future. The second thing that really leverages that HYAF technology is Hyalofast, our single-stage, off-the-shelf cartilage repair technology. This is a nonwoven, highly porous, highly regenerative scaffold. We sell this product today in over 35 countries outside the United States. We'll have 15-year data on this technology today. We have a breakthrough device designation from the FDA on Hyalofast, and approval to file a modular PMA in the United States. We'll file that first module this year, and the last module, which will be the clinical module, in the first half of 2025, to plan for a launch of this product by 2026 in the United States.
This is going after a billion-dollar-plus market, into a market where there's a current competitor today that requires two separate surgeries, that is not off-the-shelf, that is a $60,000 product. And this product is really gonna allow us to not only go after that existing market, but to do an additional market build. Because a lot of these cartilage defects are not known when a surgeon goes in to do a meniscal repair, an ACL repair, and having a product that's off-the-shelf will allow them to grab this product, take care of it right then and there, not have to ask the patient to come back for a second surgery, and go through a significant insurance reimbursement process, and get that cartilage defect repaired. So we're very excited about launching Hyalofast in the US by 2026.
So this really kinda speaks to our refocused strategy around the strength of this company, which is our proprietary hyaluronic acid technology, and the significantly, significantly differentiated products that we have now in the market in the US, and coming more in the US by 2026, and even before that in the regenerative space, with products that are gonna leverage that Integrity platform. So Mark, if you'd like to move on to the next slide, I can show you a little bit more about Integrity here. The 300 surgeries that we did in the LMR, 60 surgeons, about 25% of those surgeons were new, completely new relationships to Anika. So this is really a different day with a very highly differentiated product. It's very strong. It's strong when wet. It has suture retention. It's versatile. We're seeing it used...
It was developed primarily in this instance to treat rotator cuff tears, and the instrumentation that we developed is well-accepted by the surgeons. But what we've seen is the foot and ankle surgeons are using it in Achilles tendon repair and peroneal tendon repair. We've seen it used in the knee, in patella tendon repair, in the elbow. So there's a very broad use case for this, and this is gonna speak to our go-forward product development pipeline. Again, the regenerative capacity is about three times that of the collagen technologies. It's very easy to use, it's very easy to implant, and we're very excited about where this technology is gonna go into the future, both with Integrity and with new product development that's to follow.
And then Mark, if you'd like to go to the last slide, I can make sure we leave a good amount of time for questions. So I, I just wanna kinda close out by highlighting the fact that we feel very strongly that Anika is, is very well-positioned for significant value creation. We, on the regenerative side, where we're really focused, we think there's a significant opportunity for ROI here with our regenerative solutions, with Integrity now in the market, with Hyalofast in the market OUS, with 15-year data coming on Hyalofast this year, with a new product development pipeline coming in the near term that leverages that Integrity portfolio, now in full market release of Integrity.
With our 40% procedural growth number that we saw from Q1 to Q2, expecting to see that kind of growth trajectory continue through the rest of this year, with a significant growth trajectory with this regenerative portfolio that we see in the further out years, really driving a lot of value creation opportunity for Anika, for the investors. Our OA Pain Management franchise, which is really a foundational pillar for the company, it's highly cash generative, it's a, it's a very profitable piece of the business.
We have a very strong sales and marketing partner in the United States, in J&J, and very strong, strong double-digit growth with the part of the business that we control outside the US, which includes Orthovisc, our multi-injection product, Monovisc, our single-injection product, and Cingal, our next-generation OA pain product with both short and long-term pain relief, and some of the best clinical data that I've seen out there in the OA pain space. Really looking at continuing to drive value for our shareholders, not only from a value perspective with our US business, but a growth perspective in the OUS, and a longer-term growth perspective prospect with Cingal in the US.
Then around our financial strategy with enhanced capital allocation, we have seen a lot of the financial discipline that we implemented in the beginning of the year starting to flow through the P&L, with 15% EBITDA margins reported here in Q2. We'll continue with that financial discipline and an enhanced capital allocation strategy with a recent stock buyback that we've announced. So I look forward to taking questions and following up with any questions that you all have who have joined the call. So I'll turn it back over to Jim, and thanks for your time today.
Thank you, Cheryl. And you know, I've followed the company a long time, right? I was there before any of you. And you know, when I first picked it up, it was a two-product company with one main distributor, and it’s really transformed over the past seven or eight years. It is pretty incredible. First question I have is for Steve, actually. Steve, you're new to the company, in there in the last couple of months. You know, what were the things at Anika that made you wanna join? And you know, now that you're there, are you seeing those are coming to fruition?
Yeah, thanks for the question, Jim. So I spent 12 years with GE, both in the aerospace world as well, and also in healthcare, and then I was the CFO for a small public company going through a transformation, so complete transformation of the company in a very public setting. And I really wanted to get back into the healthcare space, and when exploring companies, Anika stood out to me because they do have a 30-year track record of being the leader in hyaluronic acid. So it has a unique capability set, as Cheryl mentioned, in terms of what it means in regen, and having a 30-year history of market-leading position in the US, to me, meant a lot about the quality of the company.
But then, what really spurred me to join was a mixture of the leadership team, so it's an extremely high-quality leadership team, with the three sets of products that Cheryl mentioned, Integrity, Hyalofast, and Cingal. I look at them all as being transformational for what it means to Anika, with a really strong team that's ready to execute to bring them to market. That, to me, just led to an opportunity, and I view this company as, you know, one that has a long trajectory here in the future and one that I wanted to be a part of. Going back to your earlier question, what surprised me, I shared this with you last week after we spoke during earnings, you know, the quality of the products and the uptake on Integrity, I think, stands, you know, on its own.
We're excited about this product, and every week we continue to see progress being made with our surgeons and our interactions around what it means for them in the future, and I think that continues to excite me. So you see me smiling a lot, and 'cause I'm excited about what is to come.
Yeah, and that leads into my next question, with Integrity, because, you know, it up until now, it's just been a partial launch, but now that you've fully launched it, you know, how do you envision the growth sequentially, and, you know, how long do you think it takes for it to really hit its stride and meet its full potential?
Yeah, it's a great question, and I appreciate it, Jim. So we talked about the fact that from Q1 to Q2, we saw over 40% growth in procedures, and again, that was still in the Limited Market Release. It was, it was significantly higher than kind of what we had originally modeled out in a Limited Market Release. The Limited Market Release is really to get feedback, early feedback on the regenerative patch, on the instrumentation that we developed to, to ensure that the instrumentation was really providing a smooth, efficient workflow for the surgeons and the kinds of results that they would be looking for. And we took full advantage of that Limited Market Release time period to get all of that feedback, but we were pleasantly surprised at the degree of pull that we felt from the field in even in that Limited Market Release.
While the system was originally designed to treat rotator cuff tears, we immediately saw foot and ankle surgeons start to adopt it. We saw other disciplines starting to use it in the knee, in the elbow, in the hip, all on label use, by the way. It was very exciting for us to just get that very early feedback on the use case for Integrity and the excitement that the field was experiencing. We saw that 40% growth from Q1 to Q2. We expect that to continue for the rest of this year, and really expect Integrity and the new products that we're working on that really leverage the Integrity platform, to continue to drive in our regenerative business, some very, very attractive growth numbers going forward.
In terms of the kind of the timescale of that, I think the other thing that's very exciting for us is that we see this really playing out over a nice, long period of time. While we have an existing market, about a $220 million US market to go after between the shoulder and the foot and ankle, we also see a lot of market expansion opportunities beyond what the current market provides, because Integrity is being used in areas where regenerative patches aren't being used today because of the benefits that it provides. So I think we have a lot of years ahead of us of really significant growth in our regenerative business, both from our current products that we've launched and the products that we have coming in the short term, and Hyalofast coming by 2026.
Is it something that's relatively easy for a surgeon to use? Is there a lot of training involved?
Yeah, it's a great question. We do training because we wanna make sure that the surgeons are trained on the safe and effective use of the product, but we also have a lot of surgeons telling us how easy it is to use. There are a lot of use cases where the surgeons are doing suture-only techniques, and the fact that it has high suture retention strength when wet is a big benefit that the collagen patches can't provide. You know, we're just hearing, "This, this is really giving me a great result. My patients are having great outcomes. I feel good about it when I finish the surgery. The biomechanical construct feels good to me," which is a big deal for orthopedic surgeons. And it has been very easy for them to use and to implant. So while we do training, we have a lot of surgeons that feel like it's just very intuitive, and they haven't had a big learning curve.
Is the collagen patch the major competitor now, or are there any other products that it's competing with?
It is in the rotator cuff and foot and ankle space, but in some of the other areas where we've seen Integrity be used, they're not using a regenerative patch today. So again, that's why we feel like there are market expansion opportunities beyond that current $220 million US market in the shoulder and foot and ankle today.
So, you know, what do you do next with this, and how do you build on it? Do you enter new geographies? Do you create new versions of the for other joints, or, you know, what's in the pipeline?
Both. So on the geography question, we did mention on the Q2 call that we are starting a clinical trial here in very short order. That clinical data will give us the data that we need to file MDR filing for a new product to sell in the European Union, so that is coming. The countries where we can register it today, we have processes ongoing, and we, you know, we look forward to expanding the current product to, to the extent that we think there's a business case in a given country to do so. But we also have a refocused product development pipeline that really leverages the Integrity platform technology and the Hyalofast platform technology. Integrity is a knitted construct of HYAFF fibers. Hyalofast is a non-woven construct.
So there are, we think, meaningful solutions to real unmet needs that surgeons have today for their patients, that expanding the Integrity platform with shapes, sizes, and configurations. By the way, using Integrity as a predicate, so that's a 510(k) process and should go, you know, relatively rapidly. But also for Hyalofast, we think there's some exciting applications there, even outside of the cartilage repair space.
Is capacity an issue if it does ramp up, or are you set?
We have plenty of manufacturing capacity in our Bedford manufacturing facility. That's a facility that we've continued to invest in, both on the OA pain side and on the kinda the HYAF manufacturing side. We have plenty of capacity to continue to manufacture and drive these products.
All right. All right, and if we, you know, take a minute to switch over to the OA, the pain business, you know, it, it's been a sure and steady growth driver since I've covered it. And it seems to continue to be that. You know, what drives that growth, and, you know, what's the long-term trend for that OA business?
Yeah, great question. So I'll split that up into two parts, US and OUS. In the United States, we have a very strong sales and marketing partner in Johnson & Johnson, their Mitek division. And the United States has had some interesting dynamics, market dynamics for the viscosupplement products. There are a handful of competitors, and that space went through kind of a, an ASP legislation change that actually didn't impact us, but it impacted some of the competitors. We're kind of normalizing out of, anniversary-ing out of that ASP dynamic change for a couple of those competitors. And we see, and we've talked about this, and, and don't change our mind about this, we see kinda low single-digit market growth for that viscosupplement space in the US, and that includes our Monovisc and Orthovisc products. Great products, great clinical data.
J&J Mitek very happy with those products, continuing to drive market access opportunities in the United States with products that we think have the strongest clinical data out there. That's a very, kinda strong foundational pillar of our business. It's a, it's a strong profit piece of our business, strong cash flow piece of our business, and we see that kinda continuing along that trajectory going forward. Outside the United States, where that's a piece of the business that we do control, we have seen very strong double-digit growth. This year, in the first half of the year, we grew that piece of the business 17%, in Q2, 19%, and that was across all three brands: Orthovisc, our multi-injection product; Monovisc, our single-injection product; and Cingal, our next-generation combination HA steroid triamcinolone hexacetonide product, all growing strong double digits.
We see that is happening through both geographic expansion, but more so just continuing to grow within the markets in which we sell. I think the fact that those are growing so strongly, and especially Cingal, is just a really nice, kind of proof point for why we're so bullish about bringing Cingal into the United States, where we think there's a kind of billion-dollar-plus addressable market opportunity for a next generation OA pain product here. Really strong foundational business, high growth outside the United States, strong profit in the United States, with a new product coming that we see really driving a significant uptick in our addressable market in the US.
All right, so when we think about the overall growth rates of the company, Steve, how, you know, how do we balance that low single-digit growth for the OA business with the faster-growing, pain, joint replacement business?
Yeah, I think-
Or regenerative business.
I think Cheryl, Cheryl explained the OA pain dynamics. You know, we kind of looked at it as flat to mid-single-digit growth this year. We talked about underlying that as the US sort of dynamics around pricing a little softer, but offset by the strength of the international. The real growth engine for us is gonna come from regenerative, which sits within our our joint preservation business, and that is where the Integrity patch sits. We, you know, we heard Cheryl talk about Tactoset as well, and that's where Hyalofast, when it, you know, launches in 2026 in the US, will also sit as well. We look at that, just this year alone, we previously communicated, like, kind of 40% sequential growth quarter-over-quarter as we gonna make our way, make our way through this year. Now, obviously, that can't continue forever, but that's...
This initial launch is really, I think, proving that regen is where we're gonna see the revenue growth engine come from. So we kind of look at the business as OA pain is that flat-ish to kind of modestly higher, which is more like an annuity, you know, great return on capital. And then we look at that regen business as being our higher growth opportunity from a revenue perspective, where we're making investments to kind of create a new channel for ourselves as we go to market with these products in the US and, and internationally as well.
Can we talk about Hyalofast a little bit? Because, you-
Would love to
... you both mentioned it. You know, you said you would hope to launch that product in 2026, but, you know, what are the milestones you have to hit between now and then for that to happen?
Yep. Well, we're on track for filing the first module of our modular PMA. So we have a breakthrough device designation, and FDA has given us permission to file the PMA with the modular approach. So we'll file that first module this year, and we're on track to do that, so that's very exciting. And then we will file the last module, which is the clinical one, in the first half of 2025, with a planned launch by 2026. This is gonna allow us to go after what we think is easily a $1 billion-plus addressable market in the United States, competing against a current product that is $60,000 for the product, requires two separate surgeries, where Hyalofast is one surgery, single stage, off the shelf, going after an ability to grow the market because of those reasons.
We'll have very strong clinical data coming out of our clinical trial that we've completed in the United States. So very excited to get to that point with a product that we've sold outside the US for over 15 years, and we sell in over 35 countries today. So good progress on that and can't wait to get to talking about further progress on that, which we're fully on track for.
Will that go through the same sales channel as the Integrity product?
Yes, so we continue to build out our expertise, our commercial expertise and strength in the regenerative space, and that is exactly where Hyalofast will go.
Okay, and then, we're running out of time, but just try and get a couple more in. Cingal, you know, you know, what's the update with the FDA on that? And, you know-
Yep
... when you do go to market, do you think that the ex- you know, it'll look similar to the way Monovisc and Orthovisc did when you launched those products?
Yeah, Cingal, we're making good progress with FDA. We continue to have good interactions with them. It's certainly taken a little longer than we would have liked, but we're getting good responsiveness out of FDA today. And in terms of the commercial approach on that, it will most likely be partnered, just because it's a bit of a different sales force and sales process. But we've had good, you know, good outcomes with partnering Orthovisc and Monovisc in the United States, and look forward to making great progress on a product that we think is highly differentiated in the OA pain space.
All right, and then last one on capital allocation. You know, you've been able to do all this development so far with cash you generated from the OA business. You know, going forward, what's your capital allocation strategy? And I know you do have a stock repurchase plan approved. You know, what's the timing on that?
Yeah. Let me start with the stock repurchase plan that just kicked off in the end of May this year. So in total, it's gonna be $40 million of stock repurchase between now and June of 2026. $15 million of that is gonna be committed through a 10b5-1 program between now and June of 2025, and I shared on the earnings call that we've already completed about $3 million of that repurchase as of last week. So that is underway, and I'd say that's returning capital to shareholders off the, the cash balances on the balance sheet.
As it relates to capital allocation priorities, you know, we did go through a cost restructuring initiative earlier this year, which will result in about a $10 million reduction to operating expenses on an annualized basis, which we've just started to see the benefit of in Q2 . Q2, sort of, we look at our adjusted operating expenses is down about $3 million, so we're starting to see the realized benefits of that cost savings. And really, what we're focused on, from an organic reinvestment standpoint, is around CapEx for our Bedford manufacturing facility.
So when we think about where we're gonna put our dollars to work, it is gonna be on our regenerative capacity from a commercial execution standpoint, and making sure that we've got the capacity to meet what we expect to be very strong demand all through the remainder of this decade. So those are our priorities, and very, very focused on making sure that we're generating the most shareholder value that we can.
All right. All right, well, we are out of time. Thank you again, Cheryl, Steve-
Thanks, Jim
... and Mark. Hope to talk to you soon. Thank you.
Great. Thanks for the opportunity. Bye bye.
Yes.
Thank you.