Axonics Stock

Axonics, Inc. operates as a global medical technology company that develops and commercializes innovative and minimally invasive products to treat adults with bladder and bowel dysfunction, including implantable SNM systems to treat urinary urge incontinence (UUI) and urinary urgency frequency (UUF), together referred to as overactive bladder (OAB), as well as fecal incontinence (FI), and non-obstructive urinary retention (UR); and a urethral bulking agent (Bulkamid) to treat female stress urinary incontinence (SUI).

SNM Systems

The company's newly developed recharge-free sacral neuromodulation (SNM) system, Axonics F15, received FDA approval in March 2022 and utilizes a primary cell battery with an expected life of 15 years at typical stimulation parameters and over 20 years at lower amplitude settings and offers broad magnetic resonance imaging (MRI) access with 1.5T and 3.0T scanners.

The company's newly developed fourth-generation rechargeable SNM system, Axonics R20, is only 5cc in volume and is designed to last 20 or more years in the human body. R20 provides constant stimulation and offers broad MRI access with 1.5T and 3.0T scanners. R20 utilizes an easy-to-use, intuitive patient remote control and requires recharging for only one hour every 6 to 10 months, which is the longest interval between recharging among available rechargeable SNM systems. The R20 received FDA approval in January 2023 and replaces the previous rechargeable SNM system offered by Axonics that was the first to be marketed worldwide.

The company began the U.S. commercialization in the middle of the fourth quarter of 2019 after receiving FDA premarket approval (PMA) of its first rechargeable SNM system. The company also has marketing approvals from regulators in Europe, Canada, and Australia for certain SNM systems for most relevant clinical indications.

The company engineered its SNM systems to deliver constant-current stimulation, which automatically adjusts stimulation based on changes to impedance that occur as the implanted lead scars into the body, which provides a more consistent therapy over time and reduces management of the therapy. The company's SNM systems include an easy-to-use wireless patient remote control that does not require recharging or replacement batteries. The company also designed and custom built a clinician programmer that guides the implanting physician through lead placement and stimulation programming.

The company focuses most of its sales and marketing efforts in the United States where reimbursement for SNM therapy is well-established and covered by the vast majority of U.S. insurers and Medicare.

Urethral Bulking Agent

The company owns Contura Limited (Contura) and its Bulkamid product, a urethral bulking hydrogel indicated for the treatment of female SUI.

SUI is a common condition that afflicts women of all ages, with childbirth as one of the main contributing factors. SUI is caused by weakness in the pelvic floor, preventing the urethra from closing fully when sudden pressure is put on the bladder.

Bulkamid received a Conformité Européenne (CE) Mark in 2003 and a PMA from the FDA in 2020 and is sold through a combination of a direct sales force in the United States, Germany, United Kingdom, and the Nordic countries and distributors in certain international markets.

Strategy

The key elements of the company's strategy are to continue to promote awareness of its SNM systems among healthcare providers; continue to develop a commercialization infrastructure with a dedicated direct sales team; continuously innovate to introduce enhanced SNM product offerings; further penetrate its initial target market by promoting patient and practice awareness; and expand its product offerings with complementary products in our market.

Markets

The company's SNM target market consists of millions of adults in the United States and Europe with symptoms of UUI, UUF, FI, and UR who have progressed through the care pathway and are eligible to be treated with SNM therapy.

SNM Systems

The company's proprietary SNM systems provide a minimally invasive, effective, and long-lasting solution for patients with bladder and bowel dysfunction. The company has marketing approvals in the United States, Europe, Canada, and Australia for all relevant clinical indications.

The company's SNM systems include two implantable components and various external components.

Implantable Components for Patient

Miniaturized INS, which houses the electronics for the device. The Axonics R20 is a fourth-generation rechargeable SNM system that utilizes an INS that is 5cc in volume and is intended to provide six to ten months of battery life between charges under normal use conditions. The Axonics F15 is a recharge-free SNM system that utilizes an INS that is 10cc in volume and powered by a primary cell battery.

Tined four-electrode lead, which is implanted next to the targeted sacral nerve and delivers stimulation to the nerve. The tines help anchor the lead in its desired position.

Patient Remote Control

The implantable components of the company's SNM systems deliver mild electrical pulses to the targeted sacral nerve, most frequently the S3 nerve, in order to correct the dysfunction by restoring normal communication to and from the brain. The sacral nerves, including the S3 nerve, are located in the pelvic area and are responsible for controlling urethral sphincters, the bladder and anal sphincter muscles. The image below illustrates the location of the two implantable components of the company's INS and the four-electrode lead.

External Trial System

The company's external trial system (ETS) can be used during an evaluation period by a physician to determine if a patient is a good candidate for SNM therapy. This system includes a disposable external stimulation device, a disposable implantable lead, and a patient remote control. The external stimulation device consists of a temporary, non-rechargeable, current controlled pulse generator. The temporary implantable lead has a single electrode. In addition, our ETS can be used for a bilateral percutaneous nerve evaluation trial or a tined lead evaluation trial.

Physician Tools

The company provides physicians with a surgical tool kit to assist them while implanting our SNM systems. The company's clinician programmer also allows physicians to connect to a patient's INS during the implant procedure and at other times to access key therapy data that is stored and maintained on the INS.

Clinician Programmer

The company designed and custom built its touchscreen clinician programmer. The INS is programmed by and wirelessly communicates with the clinician programmer. This programmer is designed to simplify and assist physicians with electrode placement and stimulation programming. It has a series of touchscreens with a graphical user interface that provides information to the physician, such as measured data, test stimulation adjustments, and electrode configurations based on the utilization of proprietary algorithms. Further, it enables the clinician programmer to access any INS data and its complete history. The clinician programmer records and stores all data from the INS and enables a physician to store and retrieve this data electronically.

Clinical Results and Studies with SNM Systems

The company has a body of compelling clinical evidence that demonstrates the safety, effectiveness, and sustained benefits of its SNM systems. The company has two clinical studies relating to our rechargeable SNM system, a European study, RELAX-OAB, and a U.S. pivotal study, ARTISAN-SNM.

In June 2018, the company completed the enrollment and implantation of 129 patients with UUI for our ARTISAN-SNM pivotal study. These patients were evaluated at 14 centers in the United States and five centers in Europe. All patients in the company's ARTISAN-SNM study reached the two-year post-implant follow-up by August 2020, resulting in completion of the ARTISAN-SNM study.

Bulkamid Product

Bulkamid is a urethral bulking agent in the form of a non-particulate hydrogel, consisting of 97.5% water and 2.5% polyacrylamide. Bulkamid is injected into the soft tissue of the urethra, adding volume to narrow the lumen of the urethra and to support the closing mechanism of the urethra, thus preventing urine leakage. Urethral bulking does not close the urethra totally; the urethra still opens normally to allow for urination.

Bulkamid achieves its bulking effect by the volume of the gel injected, unlike competitive bulking agents that achieve bulking effect through their micro particles and the body's inflammatory reaction to the particles.

The Bulkamid procedure is minimally invasive, with no cuts or incisions necessary, and typically takes less than 15 minutes. It is a simple procedure that is easy for physicians to learn and is usually performed in a physician's office or an outpatient facility, typically utilizing a local anesthetic. The injections are made into 3 to 4 locations in the urethral wall; the total volume injected is approximately 2 mL, equivalent to half a teaspoon. The patient is able to return home shortly following the procedure.

The majority of women treated with Bulkamid report dryness or improvement in their symptoms, with many seeing that improvement as soon as they leave the physician's office, hospital or clinic.

Sales and Marketing

The company primarily focuses on commercializing our products in the United States, which accounts for the vast majority of sales worldwide. The company has established a significant commercial infrastructure, with approximately 210 sales representatives and managers and approximately 230 clinical and therapy support specialists in the United States. When making hiring decisions for these roles, the company prioritizes individuals with strong sales backgrounds who also have existing relationships with urologists and urogynecologists. Through its specialized and dedicated direct sales organization, we are targeting urologists, urogynecologists and colorectal surgeons, primarily those who have experience performing SNM procedures.

In order to support our direct sales team, the company's clinical staff is primarily responsible for attending SNM implant procedures and assisting the implanting physician with programming the device. Based on our experience to date, we believe that physicians require minimal training to start implanting our SNM systems.

The company is promoting broader awareness of SNM and Bulkamid therapies for the treatment of OAB among patients and physicians, as well as awareness of the benefits and advantages of our products. We have expanded our awareness raising activities, including direct to consumer advertising on Facebook and national television ads, publication of scientific data in peer reviewed journals and education of physicians.

Although the company's main commercial priority is the United States, in November 2018, it launched a limited commercial effort in Europe. With the addition of the Bulkamid international sales force, the company has approximately 20 dedicated sales representatives and clinical specialists in the United Kingdom, Germany, the Netherlands, the Nordic countries, Canada, and Australia, with distributors serving certain other international markets around the world.

Third-Party Coverage and Reimbursement

In the United States, the company derives revenue from the sale of its products to hospitals and ambulatory surgical centers, which typically bill various third-party payors, including Medicare, Medicaid, private insurance companies, health maintenance organizations and other healthcare-related organizations.

Research and Development Expenses

The company's research and development expenses included $34.9 million in fiscal year 2023.

Competition

The company competes with other third-line treatments, such as BOTOX injections, a product sold by Allergan plc, PTNS, as well as more invasive surgical treatment options, and drugs for the treatment of OAB and FI.

Intellectual Property

The company owns numerous issued patents and pending patent applications that relate to its SNM systems and several issued patents and patent applications were licensed from AMF in 2013 pursuant to the License Agreement. As of December 31, 2023, the company owned 53 issued U.S. patents and 145 issued foreign patents, and 37 pending U.S. patent applications and 26 pending foreign patent applications. The company also licenses from AMF 31 issued U.S. patents, as well as 53 issued foreign patents and two pending foreign patent applications. Issued patents owned or used by it will expire between 2023 and 2043.

AMF License Agreement

On October 1, 2013, the company entered into the License Agreement, pursuant to which AMF licensed it the AMF IP relating to AMF Licensed Products.

Government Regulation

The company's products and its operations are subject to extensive regulation by the FDA and other federal and state authorities in the United States, including the U.S. Department of Justice (DOJ), the Department of Health & Human Services - Office of the Inspector General (HHS-OIG), the United States Federal Communications Commission (FCC), the CMS, the Federal Trade Commission (FTC), as well as comparable authorities in the EEA, Australia, and Canada. These government authorities continue to highly scrutinize our industry. The company's products are subject to regulation as a medical device under the Federal Food, Drug, and Cosmetic Act (FDCA), as implemented and enforced by the FDA.

In addition to U.S. regulations, the company is subject to a variety of regulations in the EEA, Australia, and Canada governing clinical studies and the commercial sales and distribution of its products. The company employs a rigorous supplier assessment, qualification, and selection process targeted to suppliers that meet the requirements of the FDA and the International Organization for Standardization (ISO), and quality standards supported by internal policies and procedures. The company is required to maintain ISO 13485 certification for medical devices sold in the European Economic Area (EEA), which requires, among other items, an implemented quality system that applies to component quality, supplier control, product design and manufacturing operations. The company's quality assurance process monitors and maintains supplier performance through qualification and periodic supplier reviews and audits. The company is required to maintain ISO 13485 certification for medical devices sold in the European Economic Area (EEA), which requires, among other items, an implemented quality system that applies to component quality, supplier control, product design and manufacturing operations.

In addition to U.S. regulations, the company is subject to a variety of regulations in the EEA, Australia, and Canada governing clinical studies and the commercial sales and distribution of its products. The company's SNM systems are Class III devices and as such, it obtained PMA approval to market its devices for the treatment of OAB, FI and UR.

In a PMA, the manufacturer must demonstrate that the device is safe and effective. The PMA is typically supported by data from preclinical studies and human clinical studies. The PMA must also contain a full description of the device and its components, a full description of the methods, facilities and controls used for manufacturing, and proposed labeling. In addition, the FDA will generally conduct a preapproval inspection of the applicant or its third-party manufacturers' or suppliers' manufacturing facility or facilities to ensure compliance with applicable portions of the Quality Systems Regulation (QSR).

Various U.S. federal and state laws restrict the company's business practices regarding items of value provided to healthcare providers, including without limitation, the U.S. Anti-Kickback Statute, the U.S. False Claims Act, and the U.S. Physician Payments Sunshine Act.

The company's operations outside the United States are subject to the U.S. Foreign Corrupt Practices Act (FCPA). For example, the U.S. Health Insurance Portability and Accountability Act (HIPAA), as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH), establishes uniform standards governing the use and disclosure of protected health information (PHI) and requires healthcare providers, called covered entities, to maintain certain safeguards to protect the privacy and security of PHI. HIPAA also requires business associates (independent contractors or agents of covered entities that create, receive, maintain, or transmit PHI on behalf of a covered entity) to enter into business associate agreements with the covered entity.

History

The company was founded in 2012. The company was incorporated in the state of Delaware in 2012. It was formerly known as Axonics Modulation Technologies, Inc. and changed its name to Axonics, Inc. in 2021.