By John Vandermosten, CFA
NASDAQ:MDXG
READ THE FULL MDXG RESEARCH REPORT
New Products Adding to Revenues
Over the last several weeks MiMedx Group, Inc. (NASDAQ:MDXG) has announced the launch of two new products and the receipt of reimbursement approval in Japan. On September 20, Axiofill, an extracellular matrix (ECM) particulate product derived from human placental tissue was launched. The day prior, Amnioeffect was fully launched, following limited distribution a few months earlier. Epifix was granted reimbursement approval in Japan as shared in a September 12 release. Full product launch is expected in 4Q:22.
Each of the products was released later than expected due to low staffing levels at hospitals related to post-COVID recuperation and vacation related absences. Regulatory delays in Japan contributed to the later than expected reimbursement approval. Distributors in Japan have not entered into agreements for products until the reimbursement details are clear. Training must also take place before sales, another factor that has delayed the recognition of revenues for Epifix in Japan until 4Q:22. The net result of these delays is that no new product sales will be contributing to 3Q:22 revenues and year over year growth will predominantly be organic in the third quarter. We reduce our estimates to $65 million in sales for 3Q:22, representing a 3% year over year increase. We also reduce fourth quarter revenue estimates to reflect a later ramp up in sales of Axiofill, Amnioeffect and Epifix.
Axiofill is an acellular human placental extracellular matrix (ECM) derived from the placental disc intended for use in surgical recovery procedures. It preserves several ECM components and other matrix-bound proteins and can be used in replacement or supplementation of damaged or inadequate integumental tissue. The product’s features include versatility in application, support from clinical trials and the ability for use in negative pressure wound therapy (NPWT) and hyperbaric oxygen therapy (HBOT). MiMedx estimates market size for xenograft products at $230 million. The product is distinguished from other solutions in that it is able to address an uneven surface defect or a deep, tunneling wound.
Amnioeffect is a thick human amnion, intermediate layer and chorion allograft. It provides a semi-permeable protective barrier that supports the healing cascade and protects the wound bed to aid in the development of granulation tissue. The product protects the wound bed to aid in the development of granulation tissue by creating a semi-permeable protective barrier. Amnioeffect is biocompatible and contains over 300 regulatory proteins. It is in sheet form and is suitable for a number of clinical uses from amputations to minimally invasive surgery.
Epifix has been sold in the United States for some time and is now available in Japan following the reimbursement approval in that territory. This provides MiMedx access to an estimated $500 million and 400,000 patient hard to heal wound market for the treatment of refractory diabetic and venous ulcers. It is the only amniotic tissue product approved in Japan and an important stepping off point for further product penetration. The product is eligible for reimbursement from the Japanese Social Healthcare System. Pricing for the product was set at 35,100 Yen/cm2 or approximately $245 per square centimeter using recent exchange rates. Further milestones required prior to sale include completing distributor agreements, training, gaining local patient experience and building market awareness. As of the date of the press release, over 250 physicians have been trained on the use of Epifix with further penetration expected.
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1. Source: MiMedx company website accessed September 2022.
2. Source: MiMedx company website accessed September 2022.