Anika Therapeutics, Inc.'s (ANIK) CEO Cheryl Blanchard On Q3 2020 Results - Quick Version Earnings Call Transcript
Anika Therapeutics, Inc. (NASDAQ:ANIK) Q3 2020 Earnings Conference Call October 4, 2020 4:50 PM ET
Company Participants
Kristen Galfetti - Investor Relations
Cheryl Blanchard - President and Chief Executive Officer
Mike Levitz - Executive Vice President, Chief Financial Officer and Treasurer
Conference Call Participants
Jim Sidoti - Sidoti & Company, LLC
Michael Petusky - Barrington Research Associates, Inc.
Disclaimer: *NEW* We are providing this transcript version in a raw, machine-assisted format and it is unaudited. Please reference the audio for any questions on the content. A standard transcript will be available later on the site per our normal procedure. Please enjoy this timely version in the interim.
Operator
[00:00:02] That evening, ladies and gentlemen, and welcome to Anika's third quarter Twenty Petoskey earnings conference call was a reminder all participants are in listen only mode and the conference is being recorded after the presentation. There will be an opportunity to ask questions to join the question queue. You may press star, then one on your telephone keypad. Should you need assistance. During the conference call, you may signal an operator by pressing star in zero. I will now turn the conference over to Christine Guzzardi, executive director of Investor Relations. Please proceed.
Kristen Galfetti
[00:00:39] Thank you, darling. Good evening, everyone, and thank you for joining us. With me on the call today is Dr. Cheryl Blanchot, president and chief executive officer, and Mike Leavitt, executive vice president, chief financial officer and treasurer of Unica during today's call. Cheryl and Michael, Danica's third quarter twenty Blanchet financial results and key business highlights which were summarized in our earnings release issued today. A copy of the earnings release is available on the investor relations section of our website at Annica Dot Com. In addition, a slide presentation is posted on our website in the Investor Relations Section and the events and presentations tab. We invite you to take a moment now to open the file and follow the presentation along with us. Please turn to slide to. Before we begin, please remember that certain statements made during this conference call constitute forward looking statements as defined in the Securities Exchange Act of 1934. These statements are based on our current beliefs and expectations, including statements with respect to impact of the covid-19 pandemic. On ANICKA, these statements are subject to certain risk and uncertainty. The company's actual results could differ materially from any anticipated future results, performance or achievements. We've also seen the S.E.C. filing for information about factors that could affect our results in certain financial measures. We will discuss on the call our non-GAAP financial measures. We believe that providing these measures helps investors gain a more complete understanding of the results and is consistent with our management and our financial performance. A reconciliation of these non-GAAP financial results to the most comparable gap measurement calculated and presented in accordance with us. Gap is available under the quarterly results tab in the Investor Relations section of our website. I will now turn the call over to our president and CEO, Dr. Charles Winter. Cheryl.
Cheryl Blanchard
[00:02:29] Thank you, Christine, and good evening. We hope that everyone joining us on this call remains in good health while we navigate continue to navigate the covid pandemic. I'm happy to report that the third quarter showed positive momentum with continued gains in passenger rates and revenues relative to the COGAT impactive levels we saw in the spring and summer months. And we are seeing top line synergies from our recent transformative acquisitions with Danica's legacy business. I'm also very pleased with how the ANICKA team has remained focused on execution while successfully navigating the pandemic as we see elective procedures moving towards more normal patterns of activity. Please turn to slide three. As the integration of these businesses has progressed, our value proposition is clear we're focused on creating and delivering meaningful advancements in early intervention. Orthopedic care, our strategic plan to focus on joint preservation has expanded our addressable market from one billion dollars for all a pain management to a much broader eight billion dollar addressable market that now includes faster growing segments of the orthopedics base, including sports medicine and extremities. By remaining uniquely focused on the joint preservation space, we are addressing significant surgeon and patient needs with a set of capabilities and technologies that leverage and complement each other to bring real value to the health care system and all of our stakeholders. We believe that Annika is unique in this focus. We're committed to investing in leading and high opportunity spaces within orthopedics, including osteoarthritis, pain management, regenerative solutions, soft tissue repair and bone preserving joint technology by combining our ability to develop and offer new therapies across these key joint preservations spaces.
[00:04:26] We can provide full and unique solutions to our customers and leverage, a commercial organization focused on the joint preservation orthopedic practitioner and patient. We also partner with those physicians to understand what they need most to treat their patients, and we work closely with them to collaboratively develop minimally invasive products that restore active living for people around the world. During this call, we will share with you the work we are doing to establish Hanukkah as a force in these large and growing markets and why we have a right to win within these high opportunity spaces. In addition, we will share with you how we have successfully navigated the past several months during covid resulting in growth for Anicka, despite the difficult situation in the world and industry have experienced since early this year. Please turn to slide four. Even in light of the Cauvin pandemic, we delivered strong revenue performance in the quarter, with total revenue increasing seven percent year over year. This speaks to the success of executing on our strategic initiative and the strength of our more diversified business. I'm encouraged as we continue to see elective surgeries come back in those markets, although like other companies that serve the elective surgery spaces, we do expect continued lumpiness over the next several quarters due to covid.
[00:05:50] While we note that in office injection procedures appear to lag the rebound in elective surgery. We are also seeing some nice top line synergies with the combination of the three legacy businesses and leveraging new products across the new ANICKA. As a reminder, the vast majority of our products are used in one of two environments. The first is office space procedures for the pain management injectable side of the business, and the second is in surgical settings, including hospital errors and ambulatory surgery centers, or AC. We anticipate hospitals will continue to face challenges to fully open up to elective surgeries with the ongoing dynamic covid environment. We are encouraged by the recovery of elective procedures in the U.S. and office setting, which will at about 90 percent of pro forma historical levels in the southeast, and we're at about 75 to 85 percent in the office space procedures in the third quarter. Our surgical products are primarily used in the U.S. setting, which puts us in a strong position to continue our positive momentum going forward. In fact, our joint preservation revenues increased 77 percent sequentially from Q2 to Q3, showing strong recovery and demand for surgical products. Our integrated U.S. commercial team continues to sell our expanding portfolio with over 30 sales professionals and over and fifty distributors rounding out our hybrid sales model in U.S.. With the completion of the last seven product launches, our product portfolio now includes the six sports medicine and Extremities products launched in Q3, as well as the tactics that franchise expansion with the launch of the small bone cannula instruments to access small joints.
[00:07:38] Importantly, on the clinical trial side, we are pleased to announce that we enrolled and treated the first patient in the single pilot study single is our single injection ironic after the steroid combination to treat our pain. We also resumed enrollment in the Haisla Phase three trial. I was asked as our highly ironic based scaffold for single stage cartilage regeneration, as a reminder both trials were paused in March due to the pandemic. We are optimistic that the clinical trials will continue, but want to caution that the uncertainty that the current environment brings could affect our clinical trial enrollment rates and therefore completion timing. Additionally, single in Halifax obtained regulatory approval in Israel, and all of this is now registered in Estonia and France with launches to follow in those geographies, we continue to look forward to pursuing both of these potentially game changing products in the US market based on our positive commercial experience with them internationally. Finally, we receive we recently issued a press release announcing the five can take care of our bone sparing with motion turtle after plastic system to treat pain associated with arthritis of the wrist, which is a great accomplishment for the company.
[00:08:58] The resolution system was developed by the Legacy Arthroscope Service team to add to the clinical and commercial success of the motion preserving wrist motion semiotic, plus the implant that we currently sell today. Our new terrorist product provides a unique solution to preserve restaurant kinematics, better known as dart throwers ocean, but as people wish to retain. This product category comes from the acquired Undersurface business and is a great example of the differentiated solutions they've developed over 20 years and the continued engagement of that team. Please turn to slide five. We continue to add talented and experienced team members to ANICKA this quarter, the company is now a combination of Legacy ANICKA executive talented leaders that joined Anicka through the acquisitions of Pakistan, Arthur Surface and recently added industry veteran. I am very pleased that Mikovits joined Dannica in early August. The CFO, Mike, brings over 20 years of public company financial experience to Anicka and has helped deliver significant increases in enterprise value and operating performance at several medical technology companies. We also added banjoes this week sales marketing for the Americas. Then, as an orthopedic industry veteran with great experience in product branding, marketing, portfolio management and driving sales growth from his 10 years with Zimmer Biomet leading their foot and ankle and upper extremities businesses. Additionally, we were delighted to expand our board of directors with the appointment of Jack Hannaman and Steve Richard as independent directors.
[00:10:35] In September, Jack joined Danica's board following a 25 year career in the health care industry, including executive management roles at Integral Life Sciences and NewLink Genetics Corporation. He brings a breath of global leadership experience gained in multiple industries throughout his 30 plus year career, including his current role as chief risk officer and chief audit executive at that Dickinson and Co.. Jack and Steve will serve as incredible advisers for Anicka and if joined at a pivotal time as we continue to execute on our strategy and propel the company toward a period of more rapid growth. Our enhanced team, along with continued progress, building out and because infrastructure sets us up very well for continued success in the current environment and moving forward. Today, we are pleased to share with you our high level new product development roadmap shown on Slide six. Since February, we've taken a close look at the three legacy businesses and the technologies and capabilities they bring to bear. We've spoken to our surgeon customers, met with our surgeon advisory board, looked at the unmet needs and mapped out an initial new product development roadmap for Annika. This refreshed road map includes products that range from disruptive innovation to gap fillers, the addition of these meaningful products will ensure we are carrying a fully competitive bag in the joint preservation space while simultaneously advancing early intervention to the care. In the near term, we will focus our R&D efforts on developing new kit configurations, new soft tissue fixation products and extremity products such as our recently cleared total resolution.
[00:12:19] Following this, we will start to leverage our core capabilities, such as our hieratic, acid based regenerative solutions platform across the combined business to create great products targeted around tissue repair. This roadmap will include product development through both internal R&D activities as well as inorganic opportunities. We will continue to refine and develop a meaningful new product pipeline from which we expect to launch a steady cadence of high opportunity products over the coming years. If you look at the slide, you can see where we plan to focus and earn the right to win in our newly expanded eight billion dollar addressable market on the left, always management will continue to figure prominently in our strategy as we partner with Change, my tax for sales and marketing of our fiscal supplement products in the U.S. and continue to expand that business in international markets. The 18 management new product development roadmap will continue to focus on single novel third generation fiscal supplement therapy that combines hieratic, acid and asteroid. Tango is commercially available now in over 30 countries outside the U.S. and we continue to progress with additional geographic expansion while we focus on moving to approval in the US. This product is a very meaningful therapy for patients with knee osteoarthritis, with a global market opportunity of over a billion dollars.
[00:13:47] Moving to the next column, we show our regenerative solutions, new product development roadmap. This space includes meaningful products to treat patients that have had their lives impacted because of cartilage damage and injuries to bone and multiple orthopedic soft tissues and regenerative therapies. Product development work will leverage the significant hydroponic acid technology platform and expertize for ANICKA has built over the last 25 plus years. We remain excited to advance our development program for how fast our game changing single stage cartilage repair therapy in the US currently so Hellfest in over 30 international markets where it has been growing strongly. In fact, we're seeing nice traction selling Hellfest in combination with the legacy Arthur Surface and Purkiss portfolios, including our nano nanostructure instruments used to perform second generation microfracture procedures also in this category relative to bone repair. We are working on additions to the tax that franchise, a product that addresses insufficiency, fractures to include procedure and anatomy's specific kit. We also view rotator cuff repair as a critical space for us, and we are doing work to develop a comprehensive rotator cuff strategy that will build our platform to treat these pathologies, including combining regenerative materials such as hyaluronic acid with a delivery model. This, again, speaks to the strength of bringing these businesses together. And finally, in this section, we have work ongoing around surgical augmentation of other orthopedic soft tissues, which rounds out a total market opportunity of a billion dollars in the regenerative solutions area.
[00:15:29] The photo focus is soft tissue repair, using more traditional sports medicine technology. This area includes portfolio gap fillers and novel products for soft tissue fixation, including suture anchors and instrumentation for rotator cuff repair, resectable sutures, procedural kits and deeper penetration into the hands in risk for an ankle and in general, extremities. The focus on the extremities market aligns well with our strength in the other areas of the combined ANICKA portfolio and for the Q3 launches of six new sports medicine products. As part of the soft tissue repair portfolio, we are planning to launch our next to new products from the Legacy Purkiss business that are primarily used for rotator cuff repair. The first new offering will be restored to those future anchors used to attach soft tissue to bones and will round out our suture anchor portfolio so that we can be fully competitive in these cases. The second product is a usable suture parser also used in rotator cuff repair procedures. These product additions provide enhanced access and traction in the over two billion dollar soft tissue addressable market. The final area of our new product development roadmap includes bone preserving joint technologies with products that address areas of unmet needs, where the disease process is further progressed and an implant is needed. These cars will stand multiple joints, including the shoulder and elbow and the foot and ankle.
[00:17:01] Psychology comes from the Legacy Undersurface business and includes partial joint and resurfacing implants and minimally invasive and bolstering implants that will allow patients with further progression or disability with actively. This is the category where recently cleared with motion total was replaced by a system set a launch that is planned in 2021. Preserving joint technologies is an expansive area of opportunity for ANICKA, with a total addressable market of over four billion dollars. As described by our new product development roadmap will allow us to create and deliver meaningful advancements in early intervention, orthopedic care to patients. Our pipeline is focused on joy, preservation, implant and fixation solutions. And with to longer term opportunities are in the joint. Pain management and regenerative solutions areas are incremental to our business with truly innovative products. All of these areas represent large and faster growing orthopedic market opportunities where we will continue to partner with physicians to develop minimally invasive products that restore active living for patients around the world. We expect the revenue from the opportunities I've just described to provide substantial incremental business for Anicka in line with our stated five year strategic goals of doubling our revenue with double digit top line and EBITDA growth. I will now turn the call over to Mike to review our third quarter results, and then I will wrap up with some additional comments on the quarter before opening the line for questions like.
Mike Levitz
[00:18:37] Thank you, sir. I'm very excited to join the Hanukkah team at such a pivotal time in the company's growth, and I look forward to our future successes together. He would please turn to slide. Total revenue for the third quarter, Twenty twenty increased seven percent year over year to thirty one point seven million. Revenue growth was driven by eleven point seven dollars million in orthopedic joint preservation and restoration revenue. Rose eleven point two million from the prior year, primarily due to the acquisitions of Arthus Surface and Pakis Medical in the first quarter of this year. We are pleased that these revenues recovered significantly, a sequential quarter basis from the initial covid impact that settlement. Opposing free covid pro forma level as procedure volume increased, our integrated sales team gained traction and as we introduce new product. This growth more than offset lower joint pain management revenue. As we mentioned on last quarter's earnings call, we had expected that orders from JNJ might back to market and distribute Zamana this and all of its product in the United States would be lower in the second half of Twenty twenty as a result of the Soviet impact and my tax related ordering pattern. We expect my to continue to manage their inventory levels in the fourth quarter as they work to fully address the impact of covid by the end of the year. Also, as expected, while down year over year due to covid are royalty revenue from my favorite, notably on a sequential quarter basis, as patients return to doctors offices and end users, sales of monitus in orbit rebounded from the initial covid impact.
[00:20:24] As a result of the strong growth of our joint preservation restoration sales, as well as the unfavorable impact of quoted on the ordering by our joint and joint pain management distributors, our revenue mix diversification accelerated, notably in the third quarter, the joint pain management representing 58 percent of America's total revenue. That's down from 93 percent of revenue in the same period last year. Further revenue from JMJ Mysak representing forty eight percent of total revenue in the third quarter, that's down from 71 percent in the same period last year. While we are pleased with the recovery of procedure volume across our product line in the third quarter, we expect covid related volatility to continue. It's impacting our visibility and for revenue to. Therefore, we are continuing to suspend our financial guidance for the remainder of Twenty twenty. Our product gross margin in the third quarter was fifty five percent. That's compared to 80 percent in the third quarter of last year. With the decrease due primarily to the unfavorable fifteen point impact of four point eight dollars million of non-cash acquisition accounting related expenses and the unfavorable covid impact on revenue and manufacturing by. Research and development and Aschiana expenses together totaled twenty one point one dollars million in the third quarter.
[00:21:46] That's up from eleven point seven million in the same period of last year, reflecting the acquisitions of Arthur Surface and Pakistan, as well as expenses to support future growth, such as clinical trial cost, incentive compensation and investments in our commercial and related support organization. Please note the total operating expenses also included four point two dollars million in the third quarter due to an increase in the estimated value of our contingent consideration liability associated with the acquisitions of Pakistan Arkestra. As a reminder, this liability is remeasured each period until the state and the increase this quarter is primarily due to the passage of time higher than expected revenues during the quarter and a reduction in market based borrowing rate. As a reminder, we had a similar charge in the second quarter, driven by the same favorable operating by. Also related to this contingent consideration, as Cheryl mentioned, we were pleased to see if I can get clearance from the FDA for this motion to buy subsequent to quarter end. This clearing triggers a five million dollar payout for the Earth's surface acquisition agreement, and that was paid in the fourth quarter. A net loss for the quarter was six point four dollars million, forty five cents per diluted share compared to net income of nine point two million or 64 cents per diluted share in the third quarter of last year. Excluding the non-cash charges discussed earlier, we achieved adjusted net income of 800000 dollars, five cents per diluted share.
[00:23:23] Adjusted EBITDA was four point nine dollars, compared to fourteen point nine million for the same quarter of last year. The decrease in profitability was primarily due to the unfavorable covid impact, as well as investment supporting our future growth. As a reminder, adjusted net income, adjusted net income per share and adjusted EBITDA are not measures, please refer to the reconciliations of these measures to the corresponding gap reported figures and third quarter first released in the investor section of our website. Lastly, with regards to our financial position and at the end of the quarter, with just under one hundred and twenty five million dollars in cash and invest. As a reminder, in April, we drew down 50 million dollars on our outstanding credit facility to strengthen liquidity in light of covid-19. Based on performance, recovery and stabilization of our business through the pandemic, thus far, we retain 25 million dollars that the outstanding principal now of the credit facility during the third quarter. While we remain focused on controlling costs, we are also balancing that with reinvesting to support growth and long term profitability consistent with our strategic objective. We believe the long term fundamentals of our business remain strong and we are well positioned to navigate this period of uncertainty. I will now turn the call back over to show.
Cheryl Blanchard
[00:24:47] Thank you, Mike. We started to fight eight. Our performance in the third quarter underscores the resolve of our leadership team and the strength, depth and diversity of our product portfolio propelling this organization forward. We are very pleased to see the procedure volumes trending toward three Kovik levels and are energized to position the new ANICKA to continue to provide products across our new, more diverse product portfolio by integrating the strengths that each legacy company bring to the table. Our strong financial position and continued investment in R&D with our unique focus on joint preservation and then expanded eight billion dollar total addressable market positions, us to address large and higher growth segments within the orthopedic market. This, along with leveraging our commercial teams focus on the joint preservation CarPoint, will be our growth catalysts into the future. Our expanded and talented team will continue to focus on delivering value to all of our stakeholders. And we look forward to sharing our successes with you through future discussions. Please turn to slide nine, and we're now ready to take your questions. Thank you.
Question-and-Answer Session
Operator
[00:25:58] Will now begin the question and answer session to join the question to your press star, then one on your telephone keypad, you'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up the handset before pressing any keys to withdraw your question, please. Press star, then to. Our first question is from Jim Sidoti with Sidoti.
Jim Sidoti
[00:26:26] Glad you're all doing well. We just just go through the revenue in the quarter a little bit. If you break out the revenue from the acquisition, you know, your core revenue is about 20 million compared to about 30 million a year ago. Now, I don't think procedures were down 50 percent from a year ago. So is that because some of the some of the are my check buying in June kind of pushed some of that revenue into the second quarter? And can you comment on pricing?
Mike Levitz
[00:27:16] Jim, this is Mike, I'll ask that question, so you're correct that this is related largely to order timing. As I was said on the last earnings call, Mike Tech had kept their order flow steady into the second quarter and therefore, the impact of covid on their purchases from from Anicka did not really reflect that until the third quarter as it related to their purchases. From a as a reminder, remember, the revenue from Asia-Pac is split between a combination of their purchases from us and then also the royalties that they pay us for sales they make and customers. And so, as I think was said on the last quarter, we expect that the second half of this year to have lower revenues from my desk as a result of their ordering patterns in Twenty twenty. But as they as I said a little bit ago, we expect that to be resolved by the end of the year as they're continuing to adjust their inventory levels for covid here as we go into the fourth quarter. In terms of the change year over year to change year over year was largely driven by the volume that you saw there and then I just described pricing was not as big of an impact. Volume was much more significant. And I think that, you know, pricing comments are things that I think the change they might take would speak to more than we would. But I would say that from understanding our trend is really looking at the volume is the important piece that we did say that sequentially we saw a nice recovery from the second quarter to the third quarter within the domestic business, the joint pain business associated with the recovery of end-user sales that we saw there.
Jim Sidoti
[00:28:56] So you're saying there could be some some more? Inventory rationalization in the fourth quarter that it'll be probably Q1 before they get back to their normal purchases? Well, yeah, that's that's correct.
Mike Levitz
[00:29:11] And that's consistent with what was said on the call last quarter. It really is the first half, second half impact. And we expect that impact that we saw in the third quarter will continue on the purchases that we that makes from us. And we have a really good relationship with them. And so we're really looking towards, you know, getting through covid together and managing managing that out so that, you know, we can continue to grow the.
Jim Sidoti
[00:29:38] So if we look at the business longer term, you did about 115, 140, 150 million in 2019. Is there any reason why and I'm not going to pin you down to it, you know, to start. But is there any reason why you shouldn't get back to that level at some point the next year or so?
Mike Levitz
[00:30:04] Jim, I would just say, you know, obviously we're not talking about guidance, but in terms of direction, the company laid out strategic targets of doubling the revenue by 2024 and also driving double digit profitability. And that's exactly what we are focused on. We have not changed our focus one bit. So, you know, I think it's fair to say that in many ways kind of a new ANICKA, because historically and you saw that in the composition of the revenue a year ago, 93 percent of the revenue came from joint pain, joint pain management, part of our business. And now that's down to 58 percent this quarter. You know, and so a significant part of our business is coming from the joint preservation and restoration, which we saw nice, nice growth from in the quarter. And, you know, we're very excited about where that that is going. The girl mentioned procedure volumes are increasing faster in the surgery, say, surgery center setting than they are in, you know, safe places where you might get your shots for business. And so we see a little bit of that dynamic playing out as well. But in terms of growth in the business, yeah, I mean, we are very focused on our long term target.
Jim Sidoti
[00:31:18] And so there's no fundamental change with your relationship with Michael. So once was the noisome covid dissipates, there's no reason why that shouldn't get back to at least where it was in 2008. Sounds like to me.
Cheryl Blanchard
[00:31:33] Yeah, I think that, first of all, they continue to be a very good sales and marketing partner for us with these products. They're they're very dedicated to these products. It's certainly a very important part of their business. And our our good relationship continues. And we see them being appropriately focused on this. You know, again, we're not giving guidance because of covid, which I know you understand, Jim, but we remain bullish on this business along with.
Jim Sidoti
[00:32:08] Quick question of R&D now that you're starting to ramp up the trial system now and do you expect those costs? You know, again, you know, I know you're not going to give guidance, but directionally, should we monitor those costs ticking up, you know, as we get through the next three or four quarters?
Mike Levitz
[00:32:33] Yeah, Jim, without giving without giving guidance, and obviously we're going to we're going to give you guys as soon as we can and you know, but directionally, you know, Annika has been a company that is focused on R&D and innovation. And that's going to continue. You're going to see in R&D spending, as we've seen our numbers today, both on the traditional management side, but also with the R&D roadmap. You can see a lot of the new areas where we're making investment on the clinical trial front. As Sheryl said, we we've now just begun, you know, kind of moving forward with those now is covered is, you know, settling in a little bit, moving on with those clinical trials. And so those costs are going to be coming into our numbers and that's going to be impacting the number, you know, as we go forward. But broadly speaking, nothing in what we're talking about is different than, you know, historic direction and investment in innovation companies. Nor am I. And they are in line with our double digit EBITDA growth targets as we come out of 2014.
Jim Sidoti
[00:33:38] And then I guess I have one more. Are you satisfied with the size of the sales force, whether it is or do you agree with these new products? Do you think your sales people as well?
Cheryl Blanchard
[00:33:50] Wow, that's a great question. First, I'll tell you, we're really bullish on this business and I feel like that investment that we made with the acquisitions and really kind of bringing together the sales forces from all three legacy companies. You know, we talked about the fact that that was really a transformative move that was was going to be an investment for the company, but an investment that we will to pay off as we scale the sales line and our ability to really drive into that focused call point of the Joint Preservation Commission that we call on. So, you know, we'll continue to obviously to to look at all of the metrics as we run the business. But we feel like we are well positioned with a really strong commercial team right now to continue to drive an awful lot on the top line, and especially as we launch a lot of the new products that we've announced in the last couple of quarters and that we've got in development coming out here probably over the next six to eight months.
Jim Sidoti
[00:34:59] Thank you. You're welcome.
Operator
[00:35:04] The next question is from Mike Petoskey with Barrington Research. Your line is open.
Michael Petusky
[00:35:10] You know, good evening. So surely high on those you know, those four columns where he essentially lay out the global market opportunity, are there are there areas where you guys are more inclined to sort of internally develop products and solutions or, you know, versus sort of inorganic? I mean, are there biases? And, you know, certain of these categories worry that, hey, we got we sort of got to buy our way in there. But but here we really feel like we have, you know, an opportunity to develop, you know, some special things. Can you talk about that? All the.
Cheryl Blanchard
[00:35:48] Absolutely, and I'll tell you a couple of things, if you focus in on the Regenerative Solutions column for a second, we definitely plan to leverage the, you know, 25 plus years of expertize that Annika has invested in developing out how ironic acid based biomaterials technologies for that, for those region need solutions. That said, we're not you know, we're continuing to look at new technologies from an opportunistic perspective that could represent Poletown, opportunities that could represent adding another regenerative platform. We're open to the inorganic exploration piece of that also. And then on the soft tissue repair and the bone preserving joint technologies pieces, those are really areas of expertize and technology platforms and manufacturing capabilities that we acquired on the soft tissue repair side to purchase medical and on the bone, preserving joint technology side through surface. So while we will be focused on our internal capabilities there, we definitely have interest in continuing to build out in the hand and wrist, in the foot and ankle, in extremities in general. And so we will continue to look at inorganic opportunities in some of those areas also.
Michael Petusky
[00:37:15] Can you just remind me and maybe a few other people that we've talked about this, how many how many patients? I think I'm halophiles. I think of 200. You're looking to enroll, but I'm single. What's the patient target? If I'm wrong on halophiles, please correct me.
Cheryl Blanchard
[00:37:33] Well, it's around that number on how fast and. We're trying to find the exact number because I don't want to give you a wrong answer. You know, the thing the thing that I can't comment to on the single pilot trial is that it's really more focused on a bigger placebo. And this kind of addresses the needs that the FDA put in front of us so that that trial design is really focused on making sure that we drive that piece of those pieces of the study arm.
Michael Petusky
[00:38:13] Right. What was that, six, six months, 12 months like, I can't recall.
Cheryl Blanchard
[00:38:17] Well, I agree with the original timing for that was that the entire study would take about a year, but that was pretty covid. So, again, we're not giving guidance on that timeline right now simply because we just at this point in time don't really have a sense of what enrollment rates are possible because of covid.
Michael Petusky
[00:38:37] Cheryl, would you mind giving a sense of when that initial patient was like, was that patient enrolled in July or just in the last few weeks or when you realized?
Cheryl Blanchard
[00:38:46] The patient actually the trial restarted in September. So that first patient was enrolled in September.
Michael Petusky
[00:39:03] Ok, and then I guess just in terms of and I don't know how close you are to be able to speak to this, but just in terms of the last three or four weeks with the sort of the elevated spikes and covid across most of the country, has you guys heard anything either from FSD, you know, where you're sort of plugged in or some of the office based stocks, you know, about any changes in how they're seeing patients or, you know, how they're sort of allocating their time?
Cheryl Blanchard
[00:39:39] Well, I think in general, what we're hearing is that. The certainly the faces are coming back the fastest, but we are also hearing that there are, you know, as parts of the country are impacted by covid, that things will shut down temporarily, you know, as things spike. So certainly the asdis are coming back the fastest, but are still kind of at risk for continued bumpiness, I would say, because of covid and then be in office. Injectable procedures have just come back more slowly than the AC. So, again, I said sort of the AFSC recovery we're seeing is that about 90 percent in the in office injections are ranging more between 75 to 85 percent of pre covid numbers.
Michael Petusky
[00:40:38] And maybe this might be more for Mike, but Mike, as you guys think about sort of longer term gross margin, just based on your current product portfolio and assuming sort of a normalized environment and no sort of unusual accounting related to, you know, Yamane. I mean, you know, can you guys get back to the mid, mid, upper 60s or what's what's the longer term reasonable gross margin target for you guys based on sort of your current product portfolio under normalized conditions?
Mike Levitz
[00:41:13] By make sure so. If you look at the numbers for the quarter, we had a gross margin of 55 percent and we said that about there was a 15 point unfavorable impact of the acquisition related accounting and that acquisition or accounting related to the inventory for value stuff, the amortization of the technology intangibles and so on. So if you take out the acquisition related and do more of an apples to apples to historic levels, that would be around 70 percent. And, you know, as you know, I'm new to the story here. I've only been on board for days and three months now. But, you know, as I look at historic transcripts, I believe that it's been said in the past that 70 percent was more of the normative gross margin that the company had talked about. But I I really you know, I can't comment further than what the company has said before, but I would say that we now have joint pain management and joint preservation products in our mix. Obviously, covid is, you know, creating all sorts of interesting impacts, as we've described. And I think we'll all be happy when we're through that. But even in the midst of covid, our gross margin this quarter was at 70 percent when you exclude the acquisition related accounting. So, you know, I don't think that. That's that's all that different from where the company is talking about the.
Cheryl Blanchard
[00:42:45] And my sense of those numbers for you, the single pilot study is scheduled for two hundred and thirty one patients in total and the Hierophant trial is 200 patients to give you that update.
Michael Petusky
[00:42:59] So it just last question, though, on how fast, you know, previous management, I mean, man, the enrollment for this thing has been several years. Can you talk about strategically and again, I know it's the covid environment, so where everything is just harder, but, you know, strategically, you know, have you guys thought about, you know, ways to sort of unlock and sort of get that trial sort of fully enrolled and and done?
Cheryl Blanchard
[00:43:30] Yes, in fact, we had a secular plan to do that and covid hit, so we we changed the protocol, expanded the number of sites and moved ahead, implementing a number of international sites that would have allowed us to significantly increase enrollment rates. And we did all that and we did literally. Right. Mikovits So our fortunately, our plans to get this thing enrolled in a in a very timely manner were interrupted by Copan again, you know, if we started an enrollment in this trial. But we've got a number of international stuff lined up that we expanded through. And so I am not getting any guidance timing for that at the present time simply because of the dynamic is just difficult to know how quickly will be able to enroll even in those international sites.
Michael Petusky
[00:44:28] All right, very good. Thank you. You're very welcome. Good night.
Operator
[00:44:36] This concludes the question and answer session. I'd now like to turn the conference back over to Cheryl Blanchard for closing remarks.
Cheryl Blanchard
[00:44:45] Thank you for your time today, everyone. We look forward to updating you as we continue to deliver progress on our strategic initiatives. Have a great evening. And please stay well.
Operator
[00:44:55] This concludes today's conference call, you may disconnect your lines. Thank you for participating and have a pleasant day.
