Axonics, Inc. (NASDAQ:AXNX) is a global medical technology company that has developed and commercialized innovative and minimally invasive products to treat adults with bladder and bowel dysfunction. The company's product portfolio includes implantable rechargeable sacral neuromodulation (SNM) systems to treat overactive bladder (OAB), urinary retention (UR), and fecal incontinence (FI), as well as a urethral bulking agent called Bulkamid to treat female stress urinary incontinence (SUI).
Business Overview
Axonics was founded in 2012 and is headquartered in Irvine, California. The company's SNM systems are designed to deliver mild electrical pulses to the targeted sacral nerve in order to restore normal communication to and from the brain, reducing the symptoms of OAB, UR, and FI. Axonics' rechargeable SNM system, the Axonics R20, is only 5cc in volume and is designed to last 20 or more years in the human body. The company's recharge-free SNM system, the Axonics F15, received FDA approval in 2022 and utilizes a primary cell battery with an expected life of 15 years.In addition to its SNM systems, Axonics acquired Contura Limited in 2021, which brought the Bulkamid product into the company's portfolio. Bulkamid is a urethral bulking agent indicated for the treatment of female SUI, a common condition that affects millions of women. Bulkamid is a unique, non-particulate hydrogel that is injected into the urethral wall to restore the natural closing pressure of the urethra.
Financial Performance
Axonics has experienced strong revenue growth in recent years, reporting annual revenue of $366.4 million in 2023, up from $280.0 million in 2022. This represents a year-over-year increase of 30.8%. The company's net loss for 2023 was $6.1 million, compared to a net loss of $9.2 million in 2022.For the first quarter of 2024, Axonics reported net revenue of $91.4 million, an increase of 29.4% compared to $70.7 million in the first quarter of 2023. The company's gross margin for the quarter was 75.8%, up from 74.3% in the prior-year period. Axonics reported a net loss of $19.1 million in the first quarter of 2024, compared to a net loss of $9.2 million in the first quarter of 2023.
The company's strong revenue growth has been driven by increased sales of its SNM systems in the United States, as well as the continued adoption of its Bulkamid product. In the first quarter of 2024, SNM revenue in the U.S. was $69.8 million, up 29.6% from the prior-year period. Bulkamid revenue in the U.S. was $15.2 million, an increase of 31.0% year-over-year.
Axonics has also seen growth in its international markets, with SNM revenue in international markets reaching $1.8 million in the first quarter of 2024, up 40.8% from the same period in 2023. Bulkamid revenue in international markets was $4.5 million, an increase of 16.3% year-over-year.
The company's net loss in the first quarter of 2024 was primarily driven by increased operating expenses, including higher research and development costs, general and administrative expenses, and sales and marketing expenses as Axonics continues to invest in the commercialization and marketing of its products.
Liquidity and Capital Resources
As of March 31, 2024, Axonics had $348.6 million in cash, cash equivalents, short-term investments, and restricted cash, compared to $357.7 million at the end of 2023. The company's operating cash flow for 2023 was -$2.0 million, and its free cash flow was -$5.6 million.Axonics has funded its operations through a combination of proceeds from public offerings of its common stock and cash receipts from sales of its products. The company has no outstanding borrowings as of March 31, 2024.
Risks and Challenges
Axonics faces several risks and challenges, including:1. Competitive landscape: The company operates in a competitive market, with established players such as Medtronic offering competing SNM systems. Axonics must continue to innovate and differentiate its products to maintain its competitive edge.
2. Regulatory approvals: The company's ability to commercialize its products is dependent on obtaining and maintaining regulatory approvals in various jurisdictions. Any delays or setbacks in the regulatory process could impact Axonics' financial performance.
3. Intellectual property litigation: Axonics is currently involved in patent infringement litigation with Medtronic, which could result in significant legal expenses and potentially impact the company's ability to commercialize its products.
4. Supply chain disruptions: The company has experienced, and may continue to experience, challenges related to global supply chain disruptions, which could impact its ability to manufacture and distribute its products.
5. Reimbursement and pricing pressures: Axonics' products are subject to reimbursement policies and pricing pressures from third-party payors, which could affect the company's profitability.
Outlook and Guidance
Axonics has not provided specific financial guidance for the full year 2024. However, the company has stated that it remains focused on driving continued growth in the adoption of its SNM systems and Bulkamid product, both in the United States and internationally.The company is also pursuing strategic initiatives, including the recently announced agreement to be acquired by Boston Scientific Corporation for $71 per share in cash. The transaction is expected to close in the third quarter of 2024, subject to the approval of Axonics' shareholders and the satisfaction of other customary closing conditions.