AxoGen Touts Post-BLA Growth Plan, 75%+ Gross Margin Outlook at J.P. Morgan Healthcare Conference

AxoGen (NASDAQ:AXGN) outlined its strategy to expand peripheral nerve repair adoption and improve profitability following the company’s recent biologics milestone, as executives presented at a J.P. Morgan healthcare event.

President and CEO Mike Dale said AxoGen’s purpose is to “restore peripheral nerve function,” positioning the company’s products and education efforts as a means to make nerve repair an “expectation” in clinical care rather than an underutilized intervention. CFO Lindsey Hartley discussed margin expectations and the company’s view of normalized profitability following the transition to biologics licensure.

Clinical focus and care pathways

Dale described four large clinical care pathways that AxoGen targets, spanning both emergent and elective procedures:

• Extremities, the company’s largest and longest-standing business, primarily tied to trauma and emergent procedures.
• Breast reconstruction, focused on restoring sensation as part of post-mastectomy reconstruction.
• Oral maxillofacial and head/neck, elective procedures often associated with cancer or injury in nerve-dense anatomy.
• Prostate, a newer application under clinical evaluation tied to nerve protection and grafting during prostate cancer procedures.

He framed peripheral nerve dysfunction as arising from injuries such as transection, crushing, or stretching, and noted that unrepaired transected nerves can develop neuroma over time.

Avance and the “Axogen algorithm”

AxoGen’s approach, which management referred to as the “Axogen algorithm,” is built around the Avance Nerve Graft, complemented by AxoGuard and Avive products intended to support healing and protect repairs. Dale described Avance as donated human tissue processed to be “immunologically benign” while remaining bioactive, retaining human laminin to support axon regeneration and Schwann cell infiltration.

Dale highlighted that in December the company completed what he called a more-than-decade process moving Avance from device regulatory status to an approved biologics license application (BLA) for treating nerve discontinuities. He characterized the approval as making Avance a “standard of reference” for future technologies.

Commercial execution, education, and growth expectations

Dale said the strategic plan—developed after he joined roughly 18 months ago—remains unchanged, with a target of 15% to 20% annual growth over the planning period. He emphasized expansion of the commercial footprint and “commercial excellence,” noting that each clinical pathway has different messaging and conversion dynamics.

Education was repeatedly cited as a core competency. Dale said AxoGen teaches the majority of U.S. fellows in nerve care and that “more than 70%” of the clinical literature on nerve care has been published in the past five years, driving demand for procedural training.

During Q&A, management said growth has been driven primarily by volume—treating more patients—rather than price/mix. Dale added that all served markets are growing in double digits, and said the elective markets in oral/maxillofacial and breast are growing in “high double digits,” without providing a market-by-market breakdown.

Asked about sales force ramp, Dale said new representatives typically require six to nine months to become confident operating independently and to become “break-even and also accretive” financially.

On the company’s breast opportunity, Dale said AxoGen has not guided to breast revenue as a percentage of total revenue, but argued that if a woman elects reconstruction post-mastectomy, ReSensation “should be a part of that,” suggesting 70% to 90% of that marketplace could ultimately be addressable.

Reimbursement progress and outpatient shift

Management identified reimbursement as a key adoption driver. Dale said about 35% of commercial lives remain uncovered, but argued the BLA approval should help address payer objections that categorize Avance as experimental. He said AxoGen added “almost 20 million covered lives” over the past year and expects continued progress through 2028.

In addition, Dale highlighted a site-of-service change effective January 1 in which CMS established a new level three code for outpatient nerve procedures. He said prior reimbursement groupings made outpatient cases “very uneconomical,” limiting activity. Executives described current outpatient volume as “de minimis,” but said they expect change as hospitals digest the new economics and AxoGen engages with health systems. They did not provide a specific forecast for inpatient/outpatient mix, noting the change is new.

Post-BLA operational changes, margins, and prostate milestones

In response to a question on practical changes post-BLA, Dale cited four near-term actions:

• Re-engaging customers to reinforce trust and awareness that Avance is a first-of-its-kind approved biologic therapeutic for nerve discontinuities.
• Accelerating payer engagement through formal annual review processes, with a focus on remaining payers.
• Moving more aggressively into level-one clinical studies now that the benefit-risk profile is under approved biologic status.
• Eliminating the need to run parallel device and biologic quality systems, enabling focus on one system and planned manufacturing investments (including manufacturing execution systems and electronic batch records).

Hartley said the company believes that post-BLA it is a “75% plus gross margin business.” She said 2026 will include “a little bit of noise,” with gross margin strength similar to recent quarters but pressure in the back half of the year, and then improvements expected in 2027 as plant initiatives take effect. She did not provide a specific long-term gross margin target beyond that framework.

On capital allocation, Hartley said AxoGen is cash flow positive and can fund its strategic plan through cash from operations. Dale also said the company has reached “operational leverage,” generating positive cash flow and profitability while continuing to fund organic growth initiatives.

For prostate, Dale said AxoGen has completed enrollment of 100 patients across 10 sites and is working to complete follow-up. He said the company expects to begin seeing “clinical signals” in the second half of 2026 as patients report outcomes, helping determine whether the procedure can be taught effectively at scale.

Internationally, Dale said the company is evaluating priorities following the BLA, but did not identify specific countries. He said AxoGen would likely focus on markets with a clear regulatory pathway that leads to reimbursement, given the novelty of the therapy.

About AxoGen (NASDAQ:AXGN)

AxoGen, Inc is a Florida-based medical technology company that develops and commercializes surgical solutions for peripheral nerve damage. Founded in 2002 and headquartered in Alachua, Florida, the company focuses on restoring nerve function and improving patient outcomes through innovative biologic and engineered products. AxoGen’s offerings address a range of traumatic and iatrogenic injuries, offering alternatives to traditional nerve autografts.

The company’s core product portfolio includes the Avance® Nerve Graft, a decellularized human nerve allograft designed to bridge nerve gaps without the need for a secondary harvest site, and the Axoguard® Nerve Connector and Protector devices, which facilitate nerve coaptation and protect repaired sites from surrounding scar tissue.