AxoGen, Inc.
Q4 2020 Earnings Call Transcript

Published: 22 Feb 2021

[Operator:]

Greetings, and welcome to the AxoGen Incorporated Fourth Quarter 2020 Conference Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal of presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Pete Mariani, AxoGen's Chief Financial Officer. Please begin, Mr. Mariani.

[Pete Mariani:]

Thank you, Victor, and good afternoon, everyone. Joining me on Today's call is Karen Zaderej, AxoGen's Chairman, Chief Executive Officer and President. Karen will begin today's call with an overview of our fourth quarter performance and an update on our operational highlights. I will then provide an analysis of our fourth quarter and full-year financial performance, followed by closing remarks from Karen and a question-and-answer session.

[Karen Zaderej:]

Thank you, Pete, and good afternoon, everyone. Our total revenue for the fourth quarter was $32.5 million, representing growth of 15% compared to the prior year. I'm pleased with our Q4 results, which reflect our team's continued focus on commercial execution, our customers' ability to successfully navigate the ongoing challenges of COVID-19 and surgeons and hospitals continuing to prioritize nerve repair. At the same time, COVID-19 continue to dampen our revenue in Q4 as trauma remained below normal levels, access for sales representatives to customer facilities remained restricted and the resurgence in COVID cases further reduced elective procedure volumes, particularly late in the quarter. We're also pleased with the pace of our overall recovery in the second half of 2020 with mid-teens growth each quarter, allowing us to deliver a total revenue of $112.3 million for the year, representing growth of 5% compared to 2019. In addition to achieving year-over-year growth in 2020, we've reached a noteworthy milestone during the year surpassing 50,000 Avance Nerve Grafts and planted since launch. Avance has been featured in more than 125 peer reviewed clinical publications and has demonstrated clinical outcomes that exceed those reported for conduits and are comparable to those for autograft. The challenges of COVID-19 have further highlighted the benefits of Avance Nerve Graft as an off-the-shelf alternative to the surgical harvesting of an autograft for the repair of transected nerves. Along with avoiding the risk of complications from a second surgical site, the desire to shorten procedure time to increase patient and healthcare worker's safety and to minimize resource utilization favors the use of our Avance Nerve Graft.

[Pete Mariani:]

Thank you, Karen. Fourth quarter revenue increased 15% to $32.5 million, our revenue increase for the quarter was the result of a 12% increase in unit volume and a 3% net benefit from changes in pricing and product mix. The growth in unit volume was primarily attributable to unit growth in our active accounts. Gross profits for the fourth quarter was $27 million, compared to $23.3 million in Q4 of ‘19. Gross margin was at 83.2% for the quarter compared to 82.7% in the prior year. After temporarily suspending tissue processing in the second quarter, we restarted in late Q2 and returned to normal levels in January of ‘21. Our quarterly gross margins continue to improve sequentially as revenue and tissue processing volumes have increased. Our inventory levels have also increased slightly in Q4 and we expect inventory will continue to build across 2021 as we support customer demand. Total operating expense in the fourth quarter increased 6% to $32.4 million, compared to $30.7 million in the prior year. Total operating expense in the fourth quarter included $2.8 million in non-cash stock compensation compared to $2.9 million in the prior year. Total operating expenses increased over the prior year primarily due to higher sales commissions and other compensation related costs, which were partially offset by decreases in travel, in person conferences and surgeon education programs due to pandemic related restrictions. Sales and Marketing expense in the fourth quarter increased 5% to $19.8 million, compared to $18.8 million in the prior year. As a percentage of total revenue sales and marketing expense decreased to 61% for the three months ended December 31 compared to 67% in the prior year. Research and Development spending in the fourth quarter was $4.9 million, which is consistent with the prior year. Research and development costs include product development, including non-clinical expenses in support of our BLA for advanced nerve graph, and expenses for clinical research. Product Development expenses represented approximately 55% of total R&D in the fourth quarter compared to 49% in the prior year, while clinical expenses represented the remaining 45% in Q4 of ‘20, compared to 51% in the prior year. As a percentage of total revenues, research and development expenses were 15% in Q4 compared to 17% in the prior year. General and administrative expense in the fourth quarter increased 10% to $7.7 million or 24% of revenue, compared to $7 million, or 25% of revenue in the prior year. The increase is primarily related to higher compensation related expenses. Adjusted net loss and net loss per share in Q4 of 2020, was $3.3 million and $0.08 per share, compared to adjusted net loss and loss per share in the prior year of $4 million and $0.10 per share. Adjusted EBITDA loss in the quarter was $2.1 million, compared to an adjusted EBITDA loss of $4.2 million in the prior year. The reconciliation of these non-GAAP financial measures to GAAP can be found in today's earnings release and on our website. Turning to our balance sheet, on June 30, we announced a new seven year interest only financing agreement with Oberland capital which provides up to $75 million in total financing commitments, with $35 million drawn as of December 31. Interest is paid at approximately 9.5%, a portion of which is capitalized into the construction costs of our daily biologics process center. The agreement with Oberland capital also provided Oberland the right to purchase $3.5 million of AxoGen common stock based on a trailing 45 day weighted average trading price. On December 10, of 2020 Oberland fully exercise this option and purchase 247,699 shares at $14.13 per share. Balance of cash, cash equivalents and investments on December 31st, was $110.8 million, compared to a balance of $106.7 million on September 30. The net change includes the $3.5 million in equity proceeds from exercise of Oberland adoption , and positive operating cash flow of $3.4 million partially offset by capital expenditures of $2.8 million related to our new facilities in Tampa and Dayton. As previously discussed, we opened our new Tampa office and lab facility in the fourth quarter. This facility represents a great milestone for the company that will allow us to continue to recruit exceptional talent and execute meaningful scientific discovery and development over many years to come. Definitely we resumed construction of our date and biologics processing center in January of this year. We anticipate completing construction of the facility later this year, followed by a one year validation process, and expect to convert production to the new center in late 2022. We anticipate capital expenditures of approximately $26 million for this facility in 2021. Our positive operating cash flow in both the third and fourth quarters were the result of a unique influence of events that allowed us to over deliver from a profitability perspective as revenue growth exceeded expense growth. We are ramping investment into projects previously placed on hold including surgeon clinical trials, product development, and market administrative and initiatives, all of which are key to driving long term sustainable growth. As a result, we anticipate that operating expenses will increase sequentially, and that we will see a modest increase in operating cash burn in 2021. We are encouraged by the strength of our business in the fourth quarter, as we continue to realize improvements driven by increasing demand across our markets, and by our teams improve commercial execution. As the healthcare community in general and our business specifically moves towards a normalized environment, we're confident that the operating improvements that we have implemented and the investments we are making will position us to grow the business meaningfully and emerge from this pandemic related downturn, a stronger leaner organization on a path to profitability. And with that, I'd like to hand the call back over to Karen.

[Karen Zaderej:]

Thank you, Pete. I am proud of the achievements of the entire AxoGen team in 2020 in the face of unprecedented challenges. We remain committed to delivering our innovative nerve repair solutions to patient, surgeons and hospitals. And I believe we're well positioned for success in 2021 and beyond. At this point, I'd like to open up the line for questions. Victor?

[Operator:]

Our first question comes from Brandon Folkes with Cantor Fitzgerald. Please proceed with your question.

[Brandon Folkes:]

All right, thanks for taking my question and congratulations on another good quarter. Maybe just digging first off into the 4Q results. I know you did pre-release there but they were quite a lot there; as an expected win you had your 3Q call. And we heard from a number of companies that instead of the impact of COVID came from the November or December depending on the company. So I guess what changed from the positive from where we last had earnings quarter in November? And what did you see in the quarter that was actually better than expectation? And then similarly, are you seeing things get better, or at this stage, or more just a continuation of the trends we saw towards the end of 2020? Thank you.

[Karen Zaderej:]

Thanks, Brandon. So if I just look at the cadence, it's been a little bit of a roller coaster over time, we had a very strong entry into Q4 seeing continued growth in our extremity trauma business, but also starting to see some recovery in our again smaller segments, but more elective procedures in breast reconstruction, and surgical treatment of pain and the beginning to see some recovery in OMS. Towards in the December timeframe, as COVID levels increased, we saw certainly the more elective procedures shutting down, but we also saw some parts of the United States where the COVID levels became so high, that they even again, started to defer things that are not quite as elective like our surgical trauma cases. That continued that decrease continued into Q1, where we saw again, where COVID became quite high in some regions of the country, decreased levels of nerve repair. Now, what we saw on the past was the dose procedures are brought back pretty quickly, we've done a strong job, I think of educating both the surgeons and the hospitals, that nerve repair outcomes are always better when they're done sooner, you can get a meaningful recovery up to a year of a delay, but sooner is always better. And so we anticipate that we'll be able to see a lot of these deferred procedures occur still here in this quarter. We're beginning to see that now up until the snowstorms disrupted things over the last week. But we were starting to see that recovery in terms of COVID. And so we think it'll continue to follow that pattern that will get those differed cases in pretty quickly.

[Brandon Folkes:]

Right, and one follow up if I may. Maybe just jumping ahead a little bit. So on Avance with the filing of the BLA, I'd imagine that allows you a lot more flexibility in terms of perhaps sort of innovation around the product. Pete, you mentioned about investing in some programs in 2021. You know, I guess maybe call it events 2.0 is innovation around this post BLA? Is this something we may share about prior the BLA approval or should we expect not to hear anything about that be for competitive reasons or just from a regulatory perspective and not trying to push the FDA in terms of what you may have in store for Avance once it's improved under BLA? Thank you.

[Karen Zaderej:]

Yeah, great question. And one that we're not prepared to answer just yet. So in terms of innovation of advance, we continue to see opportunities to continue to have as you said, it's an advanced 2.0 and maybe a 3.0 down the road. But for both reasons, both for competitive reasons, as well as not wanting to get out ahead of ourselves in front of the FDA. We've not released any information about what those will look like. But we do continue to invest in innovation, both in thinking about advance but also in new products like you've seen with our AxoGuard Nerve Cap, which is a new product that we released actually in February of last year, and continue to be pleased with its both clinical utility and the opportunities for growth in the future with that product.

[Brandon Folkes:]

Great. Thank you very much.

[Operator:]

Thank you. Our next question comes from Richard Newitter with SVB Leerink. Please proceed with your question.

[Richard Newitter:]

Hi, thank you for taking the questions. A couple here. So first, congrats on the positive data readout that you had on nerve cap there, can you just remind us how you size the nerve cap market opportunity and when you might start to see that become a meaningful revenue contributor?

[Karen Zaderej:]

So, first of all AxoGuard Nerve Cap is used in those locations where you want to terminate or end the nerve and manage or prevent a symptomatic neuroma, which is one of the what we believe substantially under diagnosed causes of chronic pain. And where these patients historically have been referred to a pain center to be managed predominantly pharmacologically but you know maybe other pain types of treatments. We think that there's an opportunity to go in and remove the physical source of the pain and reduce the painful stimulus and therefore make people have a much better quality of life. And we see that at least in the early results, we see from the pilot phase of our riposte study, we see the application here it is what it's actually all across the body. But we're initially focusing on both trauma procedures, and injuries due to orthopedic procedures. And that has a lot more to do with referral patterns than it is necessarily about market size. And so we just think that that's a simpler way to manage the referral of these patients, because they're still within the orthopedic practice. In a long way, that's a long winded answer to say we decided it's big enough that we think it's important for us to focus on it. And it is not distracting to the business interests that we have today and that we're taking our existing customers, and expanding the amount of nerve repair that they can do. Sizing this opportunity is very difficult, because again, it has been under diagnosed, we believe it's been under diagnosed as a cause of the pain. So therefore, it's very hard to find references that actually identify how often people who have pain, have pain that's due to a symptomatic neuroma. So when we talk about the total addressable market of $2.7 billion, we ask ourselves and say this doesn't include what we think are the pain applications, because they're on top of this, but because it has been so hard to size it again, with our focused approach that we're doing, I don't have an addressable market that I'm comfortable to give you at this time.

[Richard Newitter:]

Okay, that's helpful color. Thanks for that. I guess, you've made tremendous progress on getting the focus direct rep productivity efforts, and the focus that you brought to the organization to getting that direct productivity growing again, and over $1 million markers if my math is correct two quarters in a row now. You said that you're going to hire 10 reps in the second half of 2021. And that's a big step up again. And I guess the first with a multi-question here, the first part of it is what can you say to investors just to give them confidence now that you're ramping up rep higher again, that you've got the on boarding process down, and that you won't run into maybe some of the issues that you previously have in the past? Again to, I think, Pete, you said that you expect productivity to increase year-over-year? And if you're hiring 10 reps in 2021 that would suggest some pretty meaningful growth. So maybe just is that rep productivity on an annual basis? Should we be thinking of that on a quarterly basis? Just help me get a better understanding of that comment in the context of the rep hiring. Thanks.

[Karen Zaderej:]

Sure. So first of all, just to be clear, we're saying up to 10. What we're really looking at is we believe that we're going to have some territories that will become large enough by the end of the year that just be unwieldy. But we're going to make judgment calls about when and how many territories to split. So if we end up doing six, that's because that's our judgment, that's how many we need, that because we couldn't hire 10. So just kind of take that as we're really trying to dial this in to be very careful in our splitting of territories. We do believe that on an annualized basis, we will continue to see productivity enhancements with our reps. And we've got a series of plans that we think will continue to deliver that productivity growth. So that productivity will be the primary driver, we still believe that when we hire new reps in their first year, there'll be less productive on a per person basis than some of our more established reps have been. So obviously, you'll have some dilution of productivity in a particular quarter as we add a few people, but it will be at a much smaller percentage than what you've seen in past years. And so we are very mindful of the disruption that adding reps cause. And we think that we've gone through and setting the right footprint for our sales team. So this is not so much about the organizational shifts that we had to do before. But really in selected territories where we again, just think that the territory has gotten so large, we'll be better off by adding some resources.

[Richard Newitter:]

Thank you very much.

[Operator:]

Our next question comes from Chris Pasquale with Guggenheim. Please proceed with your question.

[Chris Pasquale:]

Thanks. Couple of questions. One, just to follow up on repos, those results were pretty impressive, pretty profound impact relative to the vast scale there. Curious whether there is any good data to compare that to in terms of the alternative treatment options that are available to these patients?

[Karen Zaderej:]

Sure, there have been some publications and we use those actually empowering the study, we see that from the past work that's been done the minimum clinically meaningful difference is vast of ‘17. So we felt actually pretty encouraged by seeing that 69 at three months and 80 point reduction at 12 months.

[Chris Pasquale:]

Okay. And can you share anything about what you assumed in the comparative study?

[Karen Zaderej:]

In terms of what well, we powered it on the vast scores, and we have an 80% power, and again, using that 17 difference, as what we assume is the clinically meaningful difference, minimum clinical meaning, I'm getting my term tingled up, minimum clinical difference for the study.

[Chris Pasquale:]

Okay. And I'm curious whether you can talk about the practical implications of the improved reimbursement environment for allograft and for conduits, it's may be difficult to sort of suss this out relative to the COVID environment, because I'm sure that's had an impact on setting up care as well. But that improved ASC reimbursement, I'm curious whether you're seeing that change customer behavior, maybe bring some customers on board who were previously not that interested in adding this to their practice. But now that the economics have changed, there's it puts you on a different level in terms of being able to engage a wider customer base?

[Karen Zaderej:]

So I would just remind everybody, that the change is actually a very strong structure for the future in that TMS unbundled directory care where there's no implant used from where an implant is used. So they took down the reimbursement when no implant issues and raise the reimbursement for both allograft and connectors. We think that's a very reasonable and meaningful change that will allow surgeons to be able to do nerve repair in their ambulatory surgery centers or hospitals to do them more economically in their outpatient setting. Having said that only very small amounts of traumatic injuries are actually the Medicare population, trauma tends to be a younger population than that. And so it's going to take time for commercial payers to mirror this structure. We were looking forward to seeing that happen, actually, in 2020. We have, I can tell you anecdotally that there are some centers that either negotiated that with their commercial payers or their contracts happened to be that they mirrored exactly whatever within CMS and so we saw some shifts at the Centers, but because of COVID, many centers actually just sort of punted for a year and pushed back to her renewal date. So we're really thinking it's going to take another couple of years to see this as ambulatory surgery centers go through their negotiations with their commercial payers. Again, I think anecdotally we saw some nice wins where surgeons were able to do put patients into where they thought was the appropriate side of care. And there are some real opportunities that are a win-win for the patient, the surgeon and the payer to move them to the ambulatory surgery center. But there are other things that will remain more appropriate to be done either inpatient, or outpatient in a hospital and a surgeon will have the flexibility to choose that.

[Chris Pasquale:]

Thanks.

[Operator:]

Thank you. Our next question comes from Ryan Zimmerman with BTIG. Please proceed with your question.

[Ryan Zimmerman:]

Hey, thanks for taking the questions. Long time, no talk. I just wanted to ask a few. Karen, you talked about the amount you made up in the quarter, I think it was on a $1 million, particularly in breast in OMS. But there was an impact in COVID in the fourth quarter. I'm wondering if you can maybe size that up for us? And maybe, if you will, at least I'll try asking, kind of where you were run rating before you saw that impact start to slow down, I guess at the tail end of the fourth quarter?

[Karen Zaderej:]

Yes. I don't really have a quantification of what that December impact was. But I would say it's still not a material impact. Really for us, you're really only looking at two or three weeks in December where we saw a slowdown. And again, a slowdown wasn't like a slowdown in April, it was just definitely some trending in some regions of the country that were affected. When we've looked ahead, in our thinking and the way I think about modeling things is that we think the impact of deferred procedures will not be material in any quarter this year, that it will be again in that million or less and we won't see the big swing. That's it. The benefit of having been able to get our procedures in quickly and now it's going to be really focusing on that organic growth.

[Ryan Zimmerman:]

Okay, that's helpful. And then two short ones for me here. Just do you plan to add -- you stepped up independent distributors by a couple this quarter. Do you expect to hold that level of independent distributors in 2021 and beyond? Or could you see more step ups in kind of these far-flung territories where you want to just kind of fill the gaps?

[Karen Zaderej:]

Yes, I think we will have more and more in number of independent agencies over the next year -- maybe not adding every quarter, but as we identify these, call it corners of the territory, that's what we're really trying to do is to carve off corners of the territory, so that our direct reps are not driving four or five hours to help a surgeon with a case. And we think that's in part of what we're doing to help with productivity, one step of things. We're helping to improve the productivity of our direct reps. So yes, I think the number will go up. Having said that, we still think that the percentage of our total revenue that will be from independent agencies will not appreciably change, it'll still be in that same range that we are today of 12% to 13%.

[Ryan Zimmerman:]

Understood and appreciate the productivity implications for that segment of the business. And then just lastly for me -- I'll hope in queue -- you mentioned the breast neurotization business and you added some sites, but then they did selectively slowdown because of COVID. I think if we last recall, you were probably around 20 to 25 sites in breast neurotization? And that might be an old number. Maybe just help us understand kind of where you're at in selective sites that you've added to focus on its breast neurotization business. Thank you.

[Karen Zaderej:]

Yes, we still remain very selective about the sites that we work with in breast neurotization. So we work with 35 specialty centers today that do flap reconstructions. So remember, this is not breast implants, these autologous tissue flap reconstructions. And we want to make sure that the surgeons are trained in understanding how to do the notarization in combination with a course doing the full flap procedure. And so, we spend quite a bit of time working on educating on the technique. So that's why we keep it limited to the number of sites that we work with and we've spent time in those 35 sites, especially over the last several quarters of expanding across the surgeons at the site. We're now trying to have all of the surgeons who are doing flap reconstructions of this site to offer neurotization as a part of their treatment option.

[Ryan Zimmerman:]

Got it. Thank you.

[Operator:]

Thank you. Our next question comes from Kyle Rose with Canaccord Genuity. Please proceed with your question.

[Kyle Rose:]

Great, thank you very much for fitting me in tonight. Just had a few questions, a bit more high-level because a lot has been asked. But Karen, you've always given the metrics with respect to the top 10% of accounts and how much revenue they account for. You've been pretty clear about calling out and going deeper into accounts and being the biggest driver of growth moving forward. So, could you just maybe help us understand, frame out what those top 10% of accounts are doing differently than the broader base? And maybe, your confidence with respect to translating some of the those productivity gains across your broader group? I mean, obviously, you're always going to have different styles of productivity. However, what are those top 10% doing that's different than the remainder of the business?

[Karen Zaderej:]

Yes, that's a great question. When we look -- just to remind people, the top 10% of our active accounts remain approximately 35% of our overall revenue and that metric has been relatively constant over the last many quarters, which just shows that our top accounts continue to get bigger, which is what our strategy is. Yes, we're adding new active accounts, but we want to continue to drive penetration in our existing accounts. We are also putting focused effort on following our surgeons to every site of care that they go to, to make sure that we're helping them to convert their algorithms, irrespective of where they do their nerve surgery. And so, that part of our account growth is making sure that as our surgeons move, they have access to our products across all of those sites. We're seeing that that is actually probably the biggest driver in our productivity improvements because our lowest hanging fruit is continuing to take our existing users who often, there may be one active user who uses -- remember, we have five implants -- who typically may use three of our implants. So, we have room to expand that user, we have huge room to expand into types of nerve repair that even that big active user does. And then of course, every site has multiple surgeons who would be taking trauma call . And so, we see significant opportunities to drive penetration in those biggest accounts and continue to take that same approach to again the next tier of accounts and continue to drive productivity to have our sales team using those tools.

[Kyle Rose:]

Okay, that's helpful. And then, you have talked about you do have the five products, you've obviously had some big data just in the last couple of weeks with respect to one of those products. Can you just maybe help level-set us with respect to the overall mix of your business as it stands across the different product types and then maybe, geographically as well? U.S. or no-U.S. ?

[Karen Zaderej:]

Sure. So Avance has remained a little over half of our revenue. As we've grown over the years, that has actually been a pretty consistent metric. The rest of our new products make up the remainder of our revenue. Obviously AxoGuard Nerve Cap is new. So, it'll add its own dimension over the next year or two as it continues to grow. We are optimistic about it, but at this point, it's still a relatively small part of our overall business. We are also still predominantly a U.S. company. We have some revenue ex-U.S. predominantly in Europe. But at this point, it's a minor part of our revenue and we see it as a growth opportunity to expand into for the future.

[Kyle Rose:]

Great, thank you for taking the questions.

[Operator:]

Thank you. Our next question comes from Anthony Petrone with Jefferies. Please proceed with your question.

[Anthony Petrone:]

Thanks, and good afternoon. I think I'll have two here. One will be on new active sites and then I'll go back to account penetration as well. And so, when you look at total new active sites in 2020, almost 100 were added. I think it's about 93. If those new active sites sort of came online during COVID, so I'm wondering as we get to the second half vaccine rollouts or more widely-dispersed around the country, where do you think that those new active accounts could actually settle? Or said in other way, those new active accounts, how depressed of a level have they been operating at since they've been on boarded last year? And then I'll have one on account penetration.

[Karen Zaderej:]

Well, before we even get to account, let's talk about the overall incidence of trauma. So, the overall incidence of trauma is still depressed in the mid-teens from what we would consider a normal level of trauma if you look at emergency room visits as a way to measure the incidence of traumatic injuries. We're still seeing a decrease in the incidence of trauma as people are less active in this current COVID environment. So, we see an opportunity -- it's kind of funny to say, but we see an opportunity to have more trauma, but there will be more trauma as people return to a more active lifestyle, as they get vaccinated and more comfortable with doing activities. In terms of the active account, we've not given projections on the active accounts, active account growth. Again, if I go back to our strategy, our strategy is to drive penetration first and foremost in our existing active accounts with our existing users. We then add users at our existing active accounts and we then follow users to alternate sites of care. So, it's not our first driver for growth. Our first driver for growth is continuing to drive penetration into the existing accounts with existing users.

[Anthony Petrone:]

And then on the follow up on penetration would be when you look at the top 10% of accounts, another way to ask it would be when you look at those top 10%, you help penetrate those sites in terms of active Avance users. And sort of what is the mix of Avance in those accounts versus the combined nerve grafting and conduit mix? And so out of 100 procedures, where's that today and where could it go? And I would assume over time, the goal is to get 30% or more of the 893 active accounts to that level over time. And so, is that sort of an accurate sort of long-term goal to think about? Thanks.

[Karen Zaderej:]

Yes, great question. And it does frame out what we're trying to do. We see that we're still -- if I look at the average of those top 10% of our active accounts, we are still lightly penetrated into those accounts. We have room to continue to expand with quite a bit of runway in even just those sensors. And then yes, we want to continue to take what we're doing in that top 10% and translate that to -- let's call it even the next tier. Not even all of the rest of the active accounts, but the next tier of accounts to grow them like our top 10% have. And so, we see these are stages of development of these accounts. But we think we've got a strong runway to continue to be able to drive penetration in each of those levels of accounts and then ultimately, to expand in places that were not today. There are a little over 5,000 accounts that do nerve repair and obviously, we're not active in many of them. So that's our future growth. So again, if I just recap, driving penetration with our existing users, expanding to the other surgeons at that same account, but at that account, they'll be 10 to 15 surgeons that would be in the range of -- if I roll in breast, and trauma, and oral maxillofacial, and the surgical treatment of pain -- that we would consider very good targets and very often we have one active user. So, we've got an opportunity to expand.

[Anthony Petrone:]

That's helpful. Thanks.

[Operator:]

Thank you. There are no further questions at this time. I'd like to turn the floor back over to management for any closing remarks.

[Karen Zaderej:]

Thank you, Victor. I want to thank everyone for joining us on today's call. We look forward to speaking with many of you virtually at the upcoming 10th Annual SVB Leerink Global Healthcare Conference on February 24. Thank you.

[Operator:]

Ladies and gentlemen, this concludes today's web conference. You may now disconnect your lines at this time. Thank you for your participation and have a great day.