MDXG: New Year's Resolutions

By John Vandermosten, CFA

NASDAQ:MDXG

READ THE FULL MDXG RESEARCH REPORT

Key Strategic Milestones for 2022

On January 10, 2022, MiMedx Group, Inc. MDXG reiterated its 2021 accomplishments and announced its 2022 initiatives and guidance. With the recent revelation of the shelf-life issues that obscured endpoint results from MiMedx' recent Phase IIb KOA trial, the company plans to soon start a Phase III study in knee osteoarthritis (KOA), 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 7^th Investor Day. 2021 highlights included receiving regulatory approval for EPIFIX in Japan, multiple peer-reviewed clinical; scientific; and economic publications, additional IND applications, double-digit topline sales growth, expansion of MiMedx' sales force, and Phase IIb KOA trial results.

2022 Anticipated Milestones include:

➢ Achieving annual growth target;

➢ Mid-2022 launch of EPIFIX in Japan;

➢ Commence two Phase III clinical trials in KOA;

➢ Implement rigorous cGMP¹ standards throughout supply chain;

➢ Peer-reviewed publications on research and clinical studies;

➢ Launch two new products in US: AMNIOEFFECT and Placental Collagen Matrix.

MiMedx also provided financial guidance for 2022:

➢ Annual revenue growth of 11%-14% in existing product portfolio;

◦ 1Q:22: mid-single digit percent growth;

◦ 2Q:22: high-single digit percent growth;

◦ 3Q:22: mid- to high-teens percent growth;

◦ 4Q:22: high-teens to twenty percent growth;

➢ R&D spend is expected to increase to $22 million in 2022;

➢ Gross margin is expected to be slightly lower due to competition and product mix.

Investor Day

On December 7, 2021, MiMedx held a Virtual Investor Day for the first time in four years. The Investor Day was held via webcast and featured a number of distinguished Key Opinion Leaders (KOLs). The primary concern since the September 13^th topline data report for KOA was addressed in the presentation and a path forward for the KOA program was provided. Based on an extensive review of the data, MiMedx determined that the age of the micronized dehydrated human amnion chorion membrane (mdHACM) product impacted its potency, obscuring clinical efficacy results from the trial. The analysis allows us to conclude that product less than two years old should provide a statistically significant benefit as seen in the first patients enrolled in the Phase II KOA trial. We summarized the detail from the even in our research report here.

Key takeaways from the Investor Day include:

➢ Interim result details including p-values from Phase IIb KOA study supporting registrational trials;

➢ Root cause analysis related to shelf life for Phase IIb KOA endpoint miss;

➢ Expected 2022 start to two Phase III trials for KOA;

➢ KOA Biologics License Application (BLA) filing anticipated in late 2025;

➢ Outlined commercial business strategy for double-digit growth;

➢ Updated net sales outlook for 2021.

Company Milestones

➢ IND / IDE submission for multiple wound care indications – As of August 2021:

◦ Chronic cutaneous ulcers (AmnioFix) – IND Cleared

◦ Surgical incisions (AmnioFix) – IND Cleared

◦ Soft tissue defects (AmnioFill) – IND Filed

➢ Conclusion of enforcement discretion – May 2021

➢ Regulatory approval for EPIFIX in Japan – June 2021

◦ Launch of EPIFIX in Japan – Mid-2022

➢ Virtual Investor Day – December 2021

➢ Launch AMNIOEFFECT and Placental Collagen Matrix – 1H:22

➢ Phase III KOA trials launch – 2022

◦ Phase IIa KOA trial completion – April 2021

◦ Final analysis & database lock – 2H:21

◦ Final safety follow up – October 2021

◦ Generation of full data set – 2H:21

◦ End of Phase II meeting with FDA – 2H:21

◦ BLA submission - Late-2025

◦ Commercial launch – late 2026

Summary

MiMedx recapitulated its 2021 accomplishments and announced its targeted milestones for 2022 in a January 10^th press release. The company also provided financial guidance for the upcoming year. 2022 initiatives include the launch of two clinical trials under its Phase III KOA program, launch of EPIFIX in Japan, and launch of two new products, AMNIOEFFECT and Placental Collagen Matrix, with the latter two contributing to MiMedx' goal of double-digit percent revenue growth. Other initiatives include implementing rigorous cGMP standards throughout MiMedx' supply chain and continued research on clinical efficacy; economic viability; and underlying mechanism of action of MiMedx' tissue product. Management also provided financial guidance for revenue growth including quarterly expectations. Management guided toward higher R&D spend at $22 million for the year and lower gross margin due to competition and changes in product mix.

MiMedx will participate in the JP Morgan Healthcare Conference on Wednesday, January 12 at 5:15 pm ET to share additional detail on its 2022 expectations.

MiMedx hosted a Virtual Investor Day on December 7^th, for which details can be found here. The company discussed its KOA program, as well as commercial opportunities and strategy and offered updated financial guidance for revenues. The KOA program session, led by Dr. Robert Stein, MD, PhD, revealed more information about its mdHACM KOA program, including a root-cause analysis that revealed product degradation as a function of shelf life. Management is confident they can address the deterioration issue as they target two registrational trials to begin simultaneously in 2022.

See our recent initiation on MiMedx for an in-depth discussion of MiMedx' technologies and products, our investment thesis, and discussion of recent events and milestones.

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1. Current Good Manufacturing Practice