READ THE FULL MDXG RESEARCH REPORT
After market close on May 3, 2022, MiMedx Group, Inc. (NASDAQ:MDXG) filed Form 10-Q with the SEC and issued a press release summarizing its financial and operational results for the quarter ended March 31, 2022. A conference call and webcast was held the following day to communicate additional detail to analysts and investors.
MiMedx continued its string of core double digit revenues growth in the first quarter of 13%; a trend that is expected to continue as new products and geographies are launched in coming months. Despite the stronger than expected first quarter result, MiMedx maintains its guidance for the year which has improving growth up to a 20% year over year increase by 4Q:22. Some of the key items to watch for in 2022 include a reimbursement decision and first sales of EpiFix in Japan around mid-year, launch of new products AmnioEffect and Placental Collagen Matrix to address wounds that require thicker coverage or are difficult to reach and the start of the knee osteoarthritis (KOA) trial.
Highlights for 2022:
➢ Key strategic milestones for 2022 - January 2022
➢ Dismissal of putative securities class action lawsuit - January 2022
➢ Study demonstrating cost effectiveness of dHACM vs SoC in LEDU1 - February 2022
➢ Presentation at Canaccord Genuity Musculoskeletal Conference – March 2022
➢ Presentation of EPIFIX economics at the Symposium on Advanced Wound Care (SAWC) – April 2022
Revenues and net loss for the first quarter were $58.9 million and ($10.5) million, respectively, and net loss available to common stockholders was ($12.1) million with the difference attributable to the dividend on the Series B convertible stock. Net loss per share for common stockholders was ($0.11). These results compare to net loss of ($0.09) for 1Q:21.2
For the quarter ending March 31, 2022, compared to the one ending March 31, 2021:
➢ Reported revenues were $58.9 million, down 1.8% from $60.0 million. Revenue decrease related to the loss of Section 351 product and lower revenues related to performance obligations were largely offset by increases in tissue and cord sales;
➢ Gross margin fell slightly to 83.1% from 83.9%;
➢ SG&A was $49.6 million, up 9.3% from $45.4 million on higher personnel costs, sales commissions and travel expenses resulting from sales force realignment and expansion and increased sales in surgical recovery results which are completed through sales agents;
➢ Investigation, restatement and related expenses were $2.6 million, down 65% from $7.2 million due to a decline in legal fees;
➢ R&D expenses were $6.0 million, increasing 38% from $4.3 million, reflecting increases in personnel costs, driven by increases in headcount to support clinical research efforts related to the company's development pipelines;
➢ Operating income was ($9.3) million vs ($6.9) million;
➢ Interest expense was ($1.1) million versus ($1.5) million;
➢ Net loss was ($10.5) million versus ($8.4) million, or ($0.07) per share versus ($0.08) per share;
➢ Net loss available to common stockholders was ($12.1) million vs ($8.4) million or ($0.11) and ($0.09).
As of March 31, 2022, cash stood at $75.7 million. Debt was carried on the balance sheet at $48.2 million. Cash burn for the quarter was ($10.4) million compared to ($8.8) million in the prior year period on lower net loss, absence of loss on extinguishment of debt, and support from income taxes and accrued compensation, offset by accrued expenses. Adjusted EBITDA, as calculated by the company which adds back costs incurred related to the investigation and restatement and share based compensation, was ($1.7) million which compares to prior year amount of $5.0 million. EBITDA calculated by the company and Zacks was ($8.3) million.
Key Strategic Milestones for 2022
On January 10, 2022, MiMedx reiterated its 2021 accomplishments and announced 2022 initiatives and guidance. With the revelation of the shelf-life issues that obscured endpoint results from MiMedx' recent Phase IIb KOA trial, the company plans to start a Phase III study in knee osteoarthritis (KOA) in 2H:22, targeting a late-2026 commercial launch. The company also aims for double-digit revenue growth in 2022 driven primarily by advancement into the surgical recovery market, launch of EpiFix in Japan in mid-2022, and launch of two new products in 1H:22, echoing initiatives presented in MiMedx' recent December 7th Investor Day. 2021 highlights included receiving regulatory approval for EpiFix in Japan, multiple peer-reviewed clinical; scientific; and economic publications, additional Investigational New Drug (IND) applications, double-digit topline sales growth, expansion of MiMedx' sales force, and Phase IIb KOA trial results.
2022 Anticipated Milestones include:
➢ Mid-2022 launch of EpiFix in Japan;
➢ Commence two Phase III clinical trials in KOA;
➢ Implement rigorous cGMP3 standards throughout supply chain;
➢ Publish peer-reviewed publications on research and clinical studies;
➢ Launch new US products: AmnioEffect and Placental Collagen Matrix.
Publications
Study Demonstrating Cost-Effectiveness of mdHACM vs SoC in Lower Extremity Diabetic Ulcers
On February 16, 2022, MiMedx announced a publication in the Journal of Wound Care that evaluated the cost-effectiveness of dehydrated Human Amnion Chorion Membrane (dHACM) versus standard of care in treating lower extremity diabetic ulcers (LEDU), including diabetic foot ulcers (DFU). The study retrospectively analyzed 10.9 million Medicare diabetes patients, 1.2 million of whom had an LEDU, and tracked outcomes including amputations and healthcare utilization. Timely use of dHACM significantly reduced long-term healthcare costs compared to standard of care and no treatment.
The results of the study were presented at the Symposium on Advanced Wound Care (SAWC) Spring conference in April by Dr. William H. Tettelbach. The poster cites a resource estimating up to 85% of amputations are avoidable using a holistic multispecialty team approach that uses innovative treatments such as dHACM allografts. The study found that episodes treated with dHACM had fewer amputations and health care utilization, including emergency visits, inpatient admissions and readmissions. It was estimated that in year one, dHACM saved $3,670 per patient and provided a QALY4 gain of 0.013 years. Assuming a willingness to pay of $100,000 per QALY, the five-year net benefit per patient was ~$5,000. DFUs represent an annual incidence of 6%-7% in the Medicare population and 4% in the commercially insured population. For a typical million-person plan, potential savings could amount to $22 million annually.
The Wound Healing Cascade
MiMedx provides a descriptive video explaining the wound healing process and how in some wounds healing can fail to progress due to impaired ECM synthesis, prolonged inflammation and impaired angiogenesis due to chronic inflammation. The use of Epifix can help upregulate many of the growth factors and reduce inflammation so that the wound can properly heal while also providing an extracellular matrix around which new tissue can form. A video illustration is embedded in this page.
Prescience Point Capital Management and Annual Meeting
In an April 20, 2022 Schedule 13D filing, Prescience Point stated its desire to see additional efforts made to communicate the value of the AmnioFix asset in knee osteoarthritis (KOA) and to prevent the election of certain board members. In response, MiMedx management issued a press release asserting the qualifications and experience of the board and highlighted its communications with Prescience Point. This comes along with the filing of MiMedx' 2022 Proxy Statement in preparation for the June 7th annual meeting of shareholders which will be held virtually.
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1. Lower Extremity Diabetic Ulcer
2. Note that shares outstanding is calculated using shares provided on income statement whereas shares outstanding on page 1 of this report include Series B convertible preferred stock as converted. Series B convertible preferred stock is mandatorily convertible into shares.
3. Current Good Manufacturing Practice
4. Quality-adjusted life years
5. Source: MiMedx January 2022 JP Morgan Healthcare Conference Presentation
