AxoGen Stock

Axogen, Inc. (Axogen) focuses primarily on the science, development, and commercialization of technologies for peripheral nerve regeneration and repair.

The company provides innovative, clinically proven, and economically effective repair solutions for surgeons and healthcare providers. Its platform for peripheral nerve repair features a comprehensive portfolio of products, including Avance Nerve Graft, a biologically active off-the-shelf processed human nerve allograft for bridging severed peripheral nerves without the comorbidities associated with a second surgical site; Axoguard Nerve Connector, a porcine (pig) submucosa extracellular matrix (ECM) coaptation aid for tensionless repair of severed peripheral nerves; Axoguard Nerve Protector, a porcine submucosa ECM product used to wrap and protect damaged peripheral nerves and reinforce the nerve reconstruction while preventing soft tissue attachments; Axoguard Nerve Cap, a porcine submucosa ECM product used to protect a peripheral nerve end and separate the nerve from the surrounding environment to reduce the development of symptomatic or painful neuroma; and Axotouch Two-Point Discriminator, used to measure the innervation density of any surface area of the skin.

The company’s portfolio of products is available in the U.S., Canada, Germany, the United Kingdom (the U.K.), Spain and several other European, Asian and Latin American countries.

The company’s products are used by surgeons during surgical interventions to repair a wide variety of physical nerve damage or transection throughout the body, which can range from a simple laceration of a finger to a complex brachial plexus injury (an injury to the network of nerves that control the movement and sensation of the shoulder, arm, and hand), as well as nerve injuries caused by dental, orthopedic, and other surgical procedures.

Product Portfolio

Avance Nerve Graft

Avance Nerve Graft is a biologically active nerve implant with more than ten years of comprehensive clinical evidence and more than 75,000 implants since launch. Avance Nerve Graft is processed nerve allograft (human) intended for surgical repair of peripheral nerve discontinuities to support regeneration across the defect. It is intended to act as a structural bridge in order to guide and support axonal regeneration across a peripheral nerve gap caused by traumatic injury or surgical intervention. Avance Nerve Graft is decellularized and sterile processed human peripheral nerve tissue. The company developed Avance Nerve Graft by following the guiding principle that the human body created the optimal peripheral nerve structure. The company, through its licensing efforts and research, developed the Avance Method, a proprietary method for processing recovered human peripheral nerve tissue in a manner that preserves the essential structure of the ECM while cleansing away cellular and noncellular debris. Avance Nerve Graft provides the natural peripheral nerve structure of a nerve, including the native laminin to guide the regenerating nerve fibers. The nerve ECM is additionally processed to remove a natural inhibitor to regeneration called chondroitin sulphate proteoglycan.

Avance Nerve Graft is the first off-the-shelf human nerve allograft for bridging nerve transections. Avance Nerve Graft is consisted of bundles of small diameter endoneurial tubes that are held together by an outer sheath called the epineurium. Avance Nerve Graft has been processed to remove cellular and noncellular factors, such as cells, fat, blood, and axonal debris, while preserving the three-dimensional laminin lined tubular bioscaffold (i.e., microarchitecture), epineurium and microvasculature of the peripheral nerve. After processing, Avance Nerve Graft is flexible and pliable, and its epineurium can be sutured in place allowing for tension-free approximation of the proximal and distal peripheral nerve stumps. During the healing process, the body revascularizes and gradually remodels the graft into the patient’s own tissue while allowing the processed peripheral nerve allograft to physically support axonal regeneration across the peripheral nerve transection. Avance Nerve Graft does not require immunosuppression for use.

With lengths up to 70 mm and diameters up to 5 mm, Avance Nerve Graft allows surgeons to choose and trim the implant to the correct length for repairing the relevant peripheral nerve gap, as well as to match the diameter to the proximal and distal end of the severed peripheral nerve. Avance Nerve Graft is stored frozen and utilizes packaging that maintains the graft in a sterile condition. The packaging is typical for medical products so the surgical staff is familiar with opening the package for transfer of Avance Nerve Graft into the sterile surgical field. Such packaging also provides protection during shipment and storage and a reservoir for the addition of sterile fluid to aid in thawing the product. Avance Nerve Graft thaws in less than 10 minutes, and once thawed, it is ready for implantation.

Axoguard Nerve Connector

Axoguard Nerve Connector is a coaptation aid used to align and connect severed peripheral nerve ends in a tensionless repair. The product is in a tubular shape with an open lumen on each end where the severed peripheral nerve ends are placed. It is typically used when the gap between the peripheral nerve ends is 5mm or less in length. Axoguard Nerve Connector is made from a processed porcine ECM that allows the body’s natural healing process to repair the peripheral nerve while its tube shape isolates and protects the transected nerves during the healing process. During healing, the patient’s own cells incorporate into the ECM product to remodel and form a tissue similar to the outermost layer of the peripheral nerve (nerve epineurium). Axoguard Nerve Connector is provided sterile, for single use only, and in a variety of sizes to meet the surgeon’s needs.

Axoguard Nerve Protector

Axoguard Nerve Protector is a product used to protect and wrap damaged peripheral nerves and reinforce reconstructed nerve gaps while preventing soft tissue attachments. It is designed to protect and isolate the peripheral nerve during the healing process after surgery by creating a barrier between the nerve tissue and the surrounding tissue bed. The product is delivered in a slit tube format allowing it to be wrapped around peripheral nerve structures. Axoguard Nerve Protector is made from a processed porcine ECM. During healing, the ECM remodels allowing the protector to separate the peripheral nerve from the surrounding tissue. Axoguard Nerve Protector competes against off-the-shelf biomaterials, such as reconstituted bovine collagen, as well as the use of the patient’s own tissue, such as vein and hypothenar fat pad wrapping. Axoguard Nerve Protector is provided sterile, for single use only, and in a variety of sizes to meet the surgeon’s needs.

Axoguard Nerve Cap

Axoguard Nerve Cap is a proprietary porcine submucosa ECM product used to protect a peripheral nerve end and separate the nerve from the surrounding environment to reduce the development of symptomatic or painful neuroma.

The Axoguard Nerve Cap can address these painful neuroma and address nerve pain without the complications of traditional methods, including pharmacotherapy and chemical injections, among others. Axoguard Nerve Cap can be used to reduce the development of symptomatic or painful neuroma formation.

Axotouch Two-Point Discriminator

The Axotouch Two-Point Discriminator tool can be used to measure the innervation density of any surface area of the skin. The discs are useful for determining sensation after damage to a peripheral nerve, following the progression of a repaired peripheral nerve, and during the evaluation of a person with possible peripheral nerve damage, such as compression. The Axotouch Two-Point Discriminator is a Class I 510(k) exempt medical device.

The Axotouch Two-Point Discriminator tool is a set of two aluminum discs each containing a series of prongs spaced between two to 15 millimeters apart. Additionally, 20 and 25 millimeter spacing is provided. A circular depression on either side of the disc allows ease of rotation. The discs can be rotated between a single prong for testing one-point and any of the other spaced prongs for testing two-point intervals.

Avive Soft Tissue Membrane

The company suspended the market availability of Avive Soft Tissue Membrane (Avive) effective June 1, 2021, and it continues discussions with the FDA to determine the appropriate regulatory classification and requirements for Avive. The suspension was not based on any known or reported safety or product performance issues or concerns with Avive. The company seeks to return Avive to the market, although it is unable to estimate the timeframe or provide any assurances that a return to the market will be achievable.

Acroval Neurosensory and Motor Testing System

Effective November 2019, the company discontinued all sales of the Acroval Neurosensory and Motor Testing System. The company continues to provide service and support for the existing systems in the marketplace.

Tissue Recovery and Processing

Avance Nerve Graft Processing Overview

The company develops the Avance Method, an advanced and proprietary technique to process Avance Nerve Graft from donated human peripheral nerve tissue. The Avance Method requires special training over several months for each manufacturing associate who processes Avance Nerve Grafts. The processing and manufacturing system for Avance Nerve Graft has required significant capital investment, and the company seeks to continually improve its manufacturing and quality assurance processes and systems. The company’s Avance Method is depicted as follows:

Tissue Processing

The company’s Avance Method consists of several steps, including peripheral nerve tissue recovery/acquisition and testing, donor medical review and release, processing, packaging, and sterilization to meet or exceed all applicable FDA, state, and international regulations and American Association of Tissue Banks (AATB) standards. The company has a number of contracts with recovery and acquisition agencies to supply peripheral nerve tissue and umbilical cord and these contracts, and the ability to enter into additional contracts, will provide the company with the tissues it requires for its Avance implants. As an FDA registered tissue establishment, the company utilizes both its own personnel and a variety of subcontractors for recovery/acquisition, storage, testing, processing and sterilization of the donated peripheral nerve and umbilical cord tissue. Additionally, the company along with its subcontractors have contracted with independent Good Manufacturing Practice (GMP) and Good Laboratory Practice (GLP) compliant laboratories to perform testing for product release. The safety of Avance Nerve Graft is supported by donor screening, process validation, process controls, and validated terminal sterilization methods. The Axogen Quality System has built in redundancies that are meant to control the release of each product for implantation only after such product meets the company’s quality control and product requirements.

Tissue Recovery and Processing Facility

The company partners with other FDA registered tissue establishments and AATB accredited recovery agencies or recovery agencies in compliance with FDA, state and international regulations and AATB standards for human tissue recovery. After consent for donation is obtained, donations are screened and tested in detail for safety in compliance with FDA, state and international regulations and AATB standards on communicable disease transmission. The company processes and packages Avance Nerve Graft using its employees and equipment pursuant to a License and Services Agreement, as amended (the CTS Agreement) with Community Blood Center (doing business as Community Tissue Services) (CTS), in Dayton, Ohio. CTS is an FDA registered tissue establishment and an AATB accredited organization.

The CTS Agreement, which was amended in August 2022, terminates December 31, 2023, subject to earlier termination by either party at any time for cause (subject to the non-terminating party’s right to cure, in certain circumstances), or without cause upon 6 months prior notice. Under the CTS Agreement, the company pays CTS a facility fee for clean room/manufacturing, storage, and office space. CTS also provides services in the support of the company’s manufacturing, such as routine sterilization of daily supplies, providing disposable supplies and microbial services, and office support. The CTS facility provides a quality controlled and licensed facility. The company’s processing methods and process controls have been developed and validated to ensure product uniformity and quality.

The company is renovating a property located near the CTS facility, the Axogen Processing Center facility (the APC Facility) consisted of a 107,000 square foot building on approximately 8.6 acres of land. It is expected that renovation and validation will be completed before the termination date of the CTS Agreement to provide a new processing facility that can be included in its Biologics License Application (BLA) for Avance Nerve Graft and the company expects to transfer processing of Avance Nerve Grafts to the APC Facility in mid-2023.

Tissue Packaging

After processing, the packaging operation is performed in a controlled environment at the CTS facility. Each Avance Nerve Graft is visually inspected and organized by size into finished product codes. The tissue implant is then packaged in primary packaging. The outer pouch acts as the primary sterility and moisture barrier.

Tissue Sterilization and Labeling

After being processed and packaged, Avance Nerve Graft is then terminally sterilized and shipped to the company’s Burleson, Texas distribution facility (the Distribution Facility). There the products receive their final labels and are released following a final stringent technical and quality review. Orders for Avance Nerve Graft and are placed with the company’s customer care team and the products are packaged and shipped from the Distribution Facility.

Tissue Product Release

The company has established quality procedures for review of tissue recovery, relevant donor medical record review and release to processing that meet or exceed FDA requirements as defined in the Code of Federal Regulations (CFR) 21 CFR Part 1271, state regulations, international regulations and AATB standards. The Axogen Quality System meets the requirements set forth under 21 CFR Part 1271 for Human Cells, Tissues and Cellular and Tissue-Based Products, including Good Tissue Practices (GTP) and is compliant with the 21 CFR Part 820 Quality System Regulations (QSR). Furthermore, the company utilizes validated processes for the handling of raw material components, environmental control, processing, packaging, and terminal sterilization. In addition to ongoing monitoring activities for product conformity to specifications and sterility, shipping methods have been validated in accordance with applicable industry standards.

Clinical Trials

The company has an active clinical research program to gather data on its product portfolio. The company has completed three clinical studies, is performing six ongoing clinical studies, and has plans to initiate further clinical studies. The ongoing studies are:

A multicenter retrospective study of avance nerve graft utilization, evaluations, and outcomes in peripheral nerve injury repair (RANGER).

A matched autograft and tube conduit case control cohort arm of RANGER (MATCH).

Breast Neurotization Outcomes for Women: A registry study of recovery outcomes, quality of life and patient satisfaction in post-mastectomy autologous breast reconstruction (Sensation-NOW).

Multicenter, prospective and subject blinded comparative study of Axoguard Nerve Cap and Neurectomy for the treatment of symptomatic neuroma and prevention of recurrent end-neuroma pain (REPOSE).

Tolerability and feasibility pilot clinical study of a Large-Diameter Nerve Cap for protecting and preserving terminated nerve ends (REPOSE-XL).

An ambispective, multicenter, observational registry study of patients considering surgical treatment for chronic neuropathic pain (Rethink Pain).

In addition to these clinical research programs, the company is developing additional clinical trials in peripheral nerve repair, including mixed and motor nerve repair, breast neurotization and pain.

The company’s clinical trials must be conducted under the oversight of an institutional review board (IRB) for the relevant clinical trial sites and must comply with FDA regulations, including but not limited to, those relating to Good Clinical Practices.

RANGER

The RANGER study is an observational study in enrollment and is a utilization registry of Avance Nerve Graft. As of December 31, 2022, eleven publications and more than 70 scientific conference presentations had been generated from the study. RANGER is designed to allow up to 2,500 subjects. An additional 500 subjects are allowed to be enrolled in Addendum 1, MATCH, and 2,000 enrolled in Addendum 2, Sensation-NOW. Sensation-NOW is a clinical study cohort designed to assess breast sensation following reconstruction with or without neurotization. The company resumed enrollment in 2021 at select centers after pausing enrollment due to COVID-19 in 2020. The follow-up for the RANGER study is standard of care with a target of up to 36 months post peripheral nerve repair. At the time of BLA submission for Avance Nerve Graft, the company will provide to the FDA Real World Evidence based primarily on Real World Data from the RANGER study data for all qualifying peripheral nerve repairs.

The RANGER study database is also utilized to monitor different nerve repair techniques. As part of this, the company utilizes the database to support additional regulatory submissions for the Axoguard products.

The company has worked with leading institutions, researchers, and surgeons to support innovation in the field of surgical peripheral nerve repair. RANGER is the largest multi-center observational clinical study conducted in peripheral nerve gap repair. Various reviewers of the RANGER study have found Avance Nerve Graft nerve repairs resulted in meaningful motor and sensory recovery and reduced pain following neuroma excision and reconstruction with no safety concerns identified.

RECON

The RECON study is a prospective, randomized, controlled, patient and evaluator blinded, comparative study of Avance Nerve Graft and Collagen Nerve Cuffs (manufactured conduits) in the repair of peripheral nerve transections in digital nerves with gaps of 5 to 25mm. The primary objective of the study is to evaluate the safety and efficacy of Avance Nerve Graft for non-inferiority and if met, superiority, of static two-point discrimination, a measure of sensory function, at twelve months as compared to nerve cuffs. The study is designed to assess the outcomes of peripheral nerve repair in approximately 170 subjects in up to 20 centers. The study completed subject enrollment in July 2020. Subject follow-up was completed in August 2021with topline study data read-out completed during the second quarter of 2022. Topline results showed that this pivotal study met its primary endpoint for the return of nerve function as measured by static two-point discrimination. The data in this study will support the company’s BLA submission, which it expects to file with FDA in 2023.

REPOSE

The company is conducting a multicenter, prospective, randomized, and subject blinded study of Axoguard Nerve Cap as compared to neurectomy for the treatment of systematic neuroma (REPOSE). REPOSE is a two-phase study comparing standard neurectomy to Axoguard Nerve Cap, which leverages the company’s chambered technology to aid in the management of symptomatic neuromas. The first phase, a non-randomized pilot has completed enrollment and one-year follow-up. The second phase, a prospective, randomized controlled study, completed enrollment in 2022. Overall enrollment is designed to target 101 subjects with 15 in the first pilot phase followed by up to 86 in the randomized, comparative phase. The study will assess pain scores, quality of life, neuroma recurrence, and health outcomes over a 12-month follow-up period. Subject follow-up is expected in the third quarter of 2023.

REPOSE XL

REPOSE-XL is a prospective, multi-center clinical pilot study evaluating the tolerability and feasibility of the Axoguard Large-Diameter Nerve Cap (sizes 5-7 mm) for protecting and preserving terminated nerve endings after limb trauma or amputation when immediate attention to the nerve injuries is not possible. Enrollment in REPOSE-XL started in 2022.

Rethink Pain

Rethink Pain is a prospective and retrospective, multicenter, observational clinical study of patients considering surgical treatment for chronic neuropathic pain. Enrollment resumed in 2021 after pausing in 2020 due to COVID-19. Rethink Pain evaluates a patient's healthcare journey and pain history through detailed medical history and record review. For patients who undergo surgical treatment for pain, standardized outcome measures, such as post-operative pain, pain medication usage, quality of life outcomes, and functional outcome of associated nerves as compared to pre-operative levels will be assessed.

Manufacturing of Medical Device Classified Products

Manufacturing for the Axoguard Product Line

The Axoguard product line is manufactured by Cook Biotech Incorporated, in West Lafayette, Indiana (Cook Biotech). The company decided to expand its portfolio of products and felt that the unique ECM material offered by Cook Biotech provided the combination of properties needed in nerve reconstruction. Cook Biotech’s ECM material is pliable, capable of being sutured, translucent and allows the patient’s own cells to incorporate into the ECM to remodel and form a tissue similar to the nerve’s epineurium. Cook Biotech has its own source of the raw material for the ECM material and manufactures Axoguard products from such sources.

Axoguard Nerve Cap

The company developed, patented, and obtained FDA regulatory clearance for the Axoguard Nerve Cap August 8, 2017. This device is made with Cook Biotech’s ECM material. Pursuant to the Nerve End Cap Supply Agreement dated June 27, 2017 (the Supply Agreement), as amended in April 2020 (the Amended Supply Agreement), Cook Biotech is the exclusive contract manufacturer of the Axoguard Nerve Cap and both parties have provided the other party the necessary licenses to their technologies for operation of the Amended Supply Agreement. Consistent with Axoguard connectors and Axoguard Protectors, the company is able to sell the Axoguard Nerve Cap worldwide in the field of the peripheral and central nervous system, but subject to the same exclusions as Axoguard Nerve Connector and Axoguard Nerve Protector. The Amended Supply Agreement has a term through August 27, 2027.

Manufacturing for the Axotouch Two-Point Discriminator

The Axotouch Two-Point Discriminator was contract manufactured by Viron Technologies, doing business as Cybernetics Research Laboratories (CRL), in Tucson, Arizona. CRL supplied the Axotouch unpackaged, and they are packaged at the company’s distribution facility in Burleson, Texas. The company has enough inventory on hand to support sales through 2024.

Sales and Marketing

As of December 31, 2022, the company had 115 direct sales professionals in the U.S. The company’s direct sales force continues to be supplemented by independent sales agencies that represent approximately 10% of the company’s total revenue.

The company’s products are available and sold in 17 countries outside the U.S. through a number of independent in-country distributors. The company provides support and resources for independent agencies and distributors both within and outside the U.S, including two contractors in Germany. The company provides its products to hospitals, surgery centers and military hospitals, calling on surgeons, including plastic reconstructive surgeons, orthopedic and plastic hand surgeons, and certain oral and maxillofacial surgeons to review the benefits of its products.

The company has worked with leading institutions, researchers, and surgeons to support innovation in the field of surgical peripheral nerve repair.

Research and Development

The company’s research and development expenses were $24.2 million for the year ended December 31, 2022.

Intellectual Property

License Agreements

The company has entered into license agreements with University of Florida Research Foundation (the UFRF) and the University of Texas at Austin (UTA). Under the terms of these license agreements, the company holds exclusive worldwide licenses to underlying technologies used by it in its Avance Nerve Graft. The license agreements include both the right to issued patents and patents pending in the U.S. and international markets.

Patents

As of December 31, 2022, the company owned or was the exclusive licensee of about thirty issued U.S. patents, more than thirty-five pending U.S. patent applications (including those for which it has received a notice of allowance) and more than one hundred and forty international patents and patent applications with regard to its peripheral nerve products and other related technologies.

With respect to the company’s Avance Nerve Graft, it has patent protection in the U.S. through at least December 2023. Finally, the company has Enforcement Discretion from the FDA regarding continued distribution under controls applicable to Human Cellular and Tissue-based Products (HCT/Ps) with an agreed transition plan to a BLA.

Trademarks, Trade Secrets and Copyrights

The company holds a significant portfolio of hundreds of registered and applied-for trademarks in the U.S. and worldwide. The company has registered copyrights for training tools and artistic renderings. Additionally, the company entered into the Distribution Agreement and Supply Agreement with Cook Biotech for the Axoguard products.

Government Regulations

The company’s products are subject to regulation throughout their lifecycle by the U.S. Food and Drug Administration (FDA), as well as other federal and state regulatory bodies in the U.S. and comparable authorities in other countries. In addition, the company’s Avance Nerve Graft must comply with the standards of the tissue bank industry’s accrediting organization, the AATB.

The company distributes Axoguard Nerve Connector and Axoguard Nerve Protector products for Cook Biotech, and Cook Biotech is responsible for the regulatory compliance of these products. These Axoguard products are regulated as medical devices and subject to pre-market notification requirements under section 510(k) of the Federal Food, Drug, and Cosmetic Act (the FD&C Act), 21 CFR Part 820 (Quality System Regulation), and related laws and regulations. Cook Biotech has obtained a 510(k) pre-market clearance for Axoguard Nerve Connector from the FDA for the use of porcine small intestine submucosa for the repair of peripheral nerve transections where gap closure can be achieved by flexion of the extremity. Cook Biotech has also obtained a 510(k) pre-market clearance for Axoguard Nerve Protector for the repair of peripheral nerve damage in which there is no gap or where a gap closure is achieved by flexion of the extremity. The company sells the 510(k) cleared devices under the trade names Axoguard Nerve Protector and Axoguard Nerve Connector.

The company also sells the Axoguard Nerve Cap product, which is classified by the FDA as a Class II device. The Axoguard Nerve Cap was cleared for market under 510(k) K163446. It is classified by FDA under 21 CFR 882.5275 (Nerve Cuff, product code: JXI). Cook Biotech is the contract manufacturer for the company’s Axoguard Nerve Cap product and it is responsible for the regulatory compliance of this product.

The company also distributes the Axotouch Two-Point Discriminator. This device is manufactured for the company and distributed from the Burleson Facility. It is a Class I device (general controls) that is exempt from pre-market notification and the Quality System Regulation requirements except for the Recordkeeping and Complaint file requirements. It is classified by FDA under 21 CFR 882.1200 (Two-point discriminator, product code: GWI).

The company is responsible for the regulatory compliance of Avive Soft Tissue Membrane, which it suspended the market availability of effective June 1, 2021. The company continues discussions with the FDA to determine the appropriate regulatory classification and requirements for Avive. The suspension was not based on any known or reported safety or product performance concerns with Avive.

The company transitions to compliance with Section 501(a)(2)(B) of the FD&C Act, the current Good Manufacturing Practice (cGMP) regulations in 21 CFR Parts 210 and 211 and the applicable regulations and standards in 21 CFR Parts 600-610 prior to initiation of a phase 3 clinical trial designed to demonstrate the safety, purity, and potency of Avance Nerve Graft. The company has performed several gap analyses of its quality system for compliance with 21 CFR Parts 210 and 211 and 600-610 regulations.

The company is subject to unannounced inspections by the FDA to determine compliance with the GTP, GMP, and other regulations, and these inspections may also include suppliers' manufacturing facilities.

Competition

The company’s major competitors for off-the-shelf repair options in hollow-tube conduits and bio-absorbable wraps are Integra LifeSciences Holding Corporation; Baxter International, Inc.; and Stryker Corporation.