Anika Therapeutics, Inc.: Form 10-Q for the period ended Jun 30, 2025

You should read the following discussion in conjunction with our financial statements and related notes appearing elsewhere in this report and our audited consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the year ended December 31, 2024, or our 2024 Form 10-K. In addition to historical information, this report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 concerning our business, consolidated financial condition, and results of operations. The Securities and Exchange Commission, or the SEC, encourages companies to disclose forward-looking statements so that investors can better understand a company’s future prospects and make informed investment decisions. Forward-looking statements are subject to risks and uncertainties, many of which are outside our control, which could cause actual results to differ materially from these statements. Therefore, you should not rely on any of these forward-looking statements. Forward-looking statements can be identified by such words as "will," "likely," "may," "believe," "expect," "anticipate," "intend," "seek," "designed," "develop," "would," "future," "can," "could," and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters. All statements other than statements of historical facts included in this report regarding our strategies, prospects, financial condition, operations, costs, plans, and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements regarding expected future operating results, expectations regarding the timing and receipt of regulatory results, anticipated levels of capital expenditures, and expectations of the effect on our financial condition of claims, litigation, and governmental and regulatory proceedings.

Please also refer to “Item 1A. Risk Factors” of our 2024 Form 10-K for important factors that we believe could cause actual results to differ materially from those in our forward-looking statements. Any forward-looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Management Overview

We are a global joint preservation company that creates and delivers meaningful advancements in early intervention orthopedic care. Based on our collaborations with clinicians to understand what they need most to treat their patients, we develop minimally invasive products that restore active living for people around the world. We are committed to leading in high opportunity spaces within orthopedics, including osteoarthritis, or OA, pain management and regenerative solutions.

We have over thirty years of global expertise developing, manufacturing and commercializing products based on our hyaluronic acid, or HA, technology platform. HA is a naturally occurring polymer found throughout the body that is vital for proper joint health and tissue function. Our proprietary technologies for modifying the HA molecule allow product properties to be tailored specifically to multiple uses, including enabling longer residence time to support OA pain management and creating a solid form of HA called Hyaff, which is a platform utilized in our Regenerative Solutions portfolio.

In early 2020, we expanded our overall technology platform, product portfolio, and significantly expanded our commercial infrastructure, especially in the United States, through our strategic acquisitions of Parcus Medical, LLC, or Parcus Medical, a sports medicine and instrumentation solutions provider, and Arthrosurface Incorporated, or Arthrosurface, a company specializing in bone preserving partial and total joint replacement solutions. These acquisitions augmented our HA-based OA Pain Management and Regenerative Solutions products with a broad suite of products and capabilities focused on early intervention joint preservation, primarily in upper and lower extremities such as shoulder, foot/ankle, knee and hand/wrist.

In October 2024, we announced a strategic shift to focus on our OA Pain Management and our Regenerative Solutions businesses. This strategic decision involved the sale of Arthrosurface in October 2024 and the sale of Parcus Medical in March 2025.

As we look towards the future, our business is positioned to capture value within our target markets of OA Pain Management and Regenerative Solutions. We believe our future success will be driven by our:

• Over 30 years of experience in HA and HA-based regenerative solutions and early intervention orthopedics, combined with seasoned leadership with a strong financial foundation for future investment in meaningful solutions for our customers and their patients;
• Utilizing proprietary HA-based technology and manufacturing expertise to provide new and differentiated solutions in next generation OA pain management (e.g., Cingal) and regenerative (e.g., Integrity Implant System and Hyalofast) markets;
• Growth of the Integrity Implant System, our hyaluronic acid-based scaffold for rotator cuff and other tendon repairs, launched in 2024;
• Targeting to introduce key HA-based products into the US market upon FDA approval/clearance, such as Cingal and Hyalofast, and developing additional products that leverage our proprietary Hyaff regenerative platform;
• Robust network of stakeholders in our target markets to identify evolving unmet patient treatment needs;
• Global commercial expertise, which we will leverage to drive growth across our product portfolio, including continued international expansion;
• Opportunity to pursue strategic inorganic growth opportunities, including potential partnerships and smaller acquisitions, technology licensing, and leveraging our strong financial foundation and operational capabilities; and
• Energized and experienced team focused on strong values, talent, and culture.

Products

OA Pain Management

Our OA Pain Management product family consists of Monovisc and Orthovisc, our injectable, HA-based OA pain management offerings that are indicated to provide pain relief from osteoarthritis conditions; and Cingal, our novel, single-injection OA Pain Management product consisting of our proprietary cross-linked HA material combined with a fast-acting steroid. Cingal is our next generation fast-acting, long-lasting, non-opioid, clinically proven osteoarthritis pain product which is designed to provide both short- and long-term pain relief through at least six months. It is currently sold outside the United States in over 35 countries. In 2022, we completed a third Phase III clinical trial for Cingal, which achieved its primary endpoint. Cingal is not currently approved for commercial use in the United States. We have been actively engaging with the U.S. Food and Drug Administration, or the FDA, on next steps for U.S. regulatory approval.

Regenerative Solutions

Our Regenerative Solutions product family consists of: (a) our portfolio of orthopedic regenerative solutions products utilizing HA, including Integrity, our hyaluronic acid-based scaffold for rotator cuff repair and other tendon procedures, Tactoset, an HA-enhanced, flowable, injectable and settable bone void filler used to facilitate bone regeneration and augment hardware in poor quality bone, and Hyalofast, a hyaluronic acid scaffold for cartilage repair, sold outside of the United States in over 30 countries. Hyalofast is not currently approved for commercial use in the United States.

In early 2023, we completed enrollment of 200 patients in our U.S. pivotal FastTRACK Phase III clinical trial evaluating Hyalofast, a single-stage, hyaluronic acid scaffold for cartilage repair. This clinical trial had a two-year follow-up protocol. We are using a modular Premarket Approval (“PMA”) filing process for our regulatory submission to the FDA for approval of Hyalofast in the U.S. We have filed the first two modules with the FDA and were awaiting clinical data to submit the final module to the FDA. In July 2025, we received topline results from the study and Hyalofast did not achieve significance on its pre-specified co-primary endpoints for pain and function. Although the study did not meet its co-primary endpoints, Hyalofast demonstrated consistent improvements over microfracture across all measures of pain and function, including statistically significant outcomes on key secondary endpoints such as Knee Injury and Osteoarthritis Outcomes Score (“KOOS”) Sports and Recreation Function and Quality of Life and other measures including Total KOOS. The study was likely impacted by both a higher subject dropout rate in the microfracture arm and missed visits due to COVID. Based on the strength and consistency of the overall data and the positive real-world clinical experience including data from multiple independent studies outside the U.S. over the past 15 years, we plan to submit the final PMA module to the FDA in the second half of 2025.

Results of Operations

Three and Six Months Ended June 30, 2025 Compared to Three and Six Months Ended June 30, 2024

(in thousands, except percentages)

(in thousands, except percentages)

19

Revenue

During the year ended December 31, 2024, we changed our classification of revenue. We previously disclosed revenue in three categories: OA Pain Management, Joint Preservation and Restoration and Non-Orthopedic. As a result of a change in strategic focus announced by us in 2024, revenue classification was delineated to provide a clear view to our value drivers. Revenue has been split between the Commercial Channel and the Original Equipment Manufacturer (“OEM”) Channel. In the Commercial Channel, we have full responsibility for sales, marketing, and pricing of products through our commercial leaders, direct sales representatives, and independent distributors. Revenue from our Regenerative Solutions and international OA Pain Management businesses is included in the Commercial Channel. In the OEM Channel, we are responsible for development and manufacturing of products sold to our OEM partners governed by long-term agreements, but we do not control sales, marketing, or pricing with end users. Revenue from our U.S. OA Pain Management business and the Non-Orthopedic business is now included in the OEM Channel. All other revenue is reported in the Commercial Channel.

The following table presents revenue by product family for the three and six-month periods ended June 30, 2025 and 2024:

(in thousands, except percentages)

(in thousands, except percentages)

Revenue for the three- and six- month periods ended June 30, 2025 were $28.2 million and $54.4 million, respectively. Revenue decreased $2.5 million and $5.4 million, or 8% and 9%, for the three- and six- month periods ended June 30, 2025 compared to the same period in 2024, respectively. The decrease in revenue was driven by lower sales activity with our OEM Channel partners, primarily J&J MedTech.

Revenue from our OEM Channel product family decreased by 13% and 18% for the three- and six-month periods ended June 30, 2025, as compared to the same period in 2024. For the three-month period ended June 30, 2025, the $2.5 million decrease was primarily driven by a $3.0 million decrease in J&J MedTech revenue, attributable to lower sales volumes of $1.9 million and lower pricing which contributed $1.1 million of the decrease. This was offset somewhat by higher non-orthopedic product revenue of $0.5 million due to higher veterinary product sales. For the six-month period ended June 30, 2025, OEM Channel revenue decreased due to a $7.1 million reduction in J&J MedTech revenue, attributable to lower sales volumes of $2.9 million and lower pricing which contributed $4.2 million of the decrease. There was no change in non-orthopedic revenue for the six-month period ended June 30, 2025 with prior year.

Revenue from our Commercial Channel product family had no change for the three-month period ended June 30, 2025 and increased 8% for the six-month period ended June 30, 2025, as compared to the same period in 2024. For the three-month period ended June 30, 2025, regenerative revenue was up $1.0 million due primarily to higher Integrity and Hyalofast sales offset by a $1.0 million decrease in international OA pain management product sales, primarily related to timing of Monovisc shipments. For the six-month period ended June 30, 2025, regenerative revenue was up $1.7 million due primarily to higher Integrity and Hyalofast revenues.

Gross Profit and Margin

Gross profit for the three-month period ended June 30, 2025 decreased $6.1 million and $10.4 million for the six-month period ended June 30, 2025 to $14.4 million and $29.0 million, respectively. Gross profit for the three- and six-month periods ended June 30, 2024 was $20.5 million and $39.5 million, respectively. The decrease in gross profit for the three- and six-month periods ended June 30, 2025 was primarily related to higher inventory reserves, higher production costs and lower revenue related to the timing of OA Pain Management revenues.

Gross margin for the three- and six-month periods ended June 30, 2025 was 51% and 53%, respectively. Gross margin for the three- and six-month period ended June 30, 2024 was 67% and 66%, respectively. The decrease in gross margin was due to higher inventory reserves, higher manufacturing costs and a larger percentage of international sales which have a lower average selling price.

Research and Development

Research and development expenses for the three- and six-month periods ended June 30, 2025 were as follows:

(in thousands, except percentages)

(in thousands, except percentages)

Research and development external costs for the three- and six-month periods ended June 30, 2025 were $2.8 million and $5.1 million, respectively. Research and development external costs for the three- and six-month periods ended June 30, 2024 were $5.1 million and $4.3 million, respectively. The increase in research and development external costs was primarily due to increased spending on Cingal and Integrity clinical studies.

Research and development internal costs for the three- and six-month periods ended June 30, 2025 were $3.5 million and $7.3 million, respectively. Research and development internal costs for the three- and six-month periods ended June 30, 2024 were $4.3 million and $8.8 million, respectively. The decrease in internal research and development costs was primarily due to a reduction in headcount and a gain on the sale of an intangible asset during the three-month period ended June 30, 2025.

Selling, General and Administrative

Selling, general and administrative expenses for the three- and six-month periods ended June 30, 2025 were $12.2 million and $25.1 million, respectively. Selling, general and administrative expenses for the three- and six-month periods ended June 30, 2024 were $15.6 million and $30.7 million, respectively. The decrease was primarily due to $1.0 million and $2.4 million in non-recurring shareholder activism costs in the three- and six-month periods ended June 30, 2024, respectively with the remainder of the decrease attributed to lower headcount.

Loss from Continuing Operations

For the three- and six- month periods ended June 30, 2025, the loss from continuing operations was $4.3 million and $8.6 million, respectively. For the three- and six month periods ended June 20, 2024, the loss from continuing operations was $1.8 million and $4.3 million, respectively. The increase in the loss from continuing operations was primarily due to lower revenue and higher manufacturing costs.

Income Taxes

The income tax expense was $0.7 million and $0.8 million for the three- and six-month periods ended June 30, 2025, resulting in effective tax rates of (17.2)% and (9.8)%, respectively. The income tax expense was $1.3 million and $1.4 million for the three- and six-month periods ended June 30, 2024, resulting in an effective tax rate of (109.2)% and (43.8)%, respectively.

The net change in the effective tax rate for the three- and six-month periods ended June 30, 2025, compared to the same periods in 2024, was primarily driven by the impact of a higher year-to-date pre-tax loss in the current year and higher U.S. current tax expense in the prior year. The higher tax expense in the prior year was due to greater projected U.S. taxable income, despite the continued presence of a full valuation allowance in 2025.

Non-GAAP Financial Measures

We present certain information with respect to adjusted Earnings Before Interest, Tax, Depreciation and Amortization, or EBITDA, adjusted net income, adjusted diluted earnings per share or adjusted EPS, which are financial measures not based on any standardized methodology prescribed by accounting principles generally accepted in the United States, or GAAP, and is not necessarily comparable to similarly titled measures presented by other companies.

We have presented adjusted EBITDA, adjusted net income, adjusted EPS, because they are key measures used by our management and board of directors to understand and evaluate our operating performance and to develop operational goals for managing our business. We believe these financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude. In particular, we believe that the exclusion of these items in calculating these measures can provide a useful tool for period-to-period comparisons of our core operating performance. Accordingly, we believe that these measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects and allowing for greater transparency with respect to key financial metrics used by our management in their financial and operational decision-making.

Adjusted EBITDA

We present information below with respect to adjusted EBITDA, which we define as our net income (loss) excluding interest and other expense, net, income tax benefit, depreciation and amortization, stock-based compensation, and acquisition-related expenses.

Adjusted EBITDA is not prepared in accordance with GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of adjusted EBITDA rather than net (loss) income, which is the nearest GAAP equivalent. Some of these limitations are:

• adjusted EBITDA excludes depreciation and amortization, and, although these are non-cash expenses, the assets being depreciated or amortized may have to be replaced in the future, the cash requirements for which are not reflected in adjusted EBITDA;
• we exclude share-based compensation expense from adjusted EBITDA although (a) it has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy and (b) if we did not pay out a portion of our compensation in the form of stock-based compensation, the cash salary expense included in operating expenses would be higher, which would affect our cash position;
• the expenses and other items that we exclude in our calculation of adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from adjusted EBITDA when they report their operating results;

The following is a reconciliation of adjusted EBITDA, a non-GAAP metric, to net loss, the most directly comparable GAAP financial measure, for the three and six-month periods ended June 30, 2025 and 2024, respectively:

Adjusted EBITDA in the three-month period ended June 30, 2025 decreased by $5.0 million as compared with the same period in 2024. The decrease in Adjusted EBITDA for the period was primarily driven by lower gross profit from lower revenue and higher manufacturing costs.

Adjusted EBITDA in the six-month period ended June 30, 2025, decreased $7.6 million as compared with the same period in 2024. The decrease in Adjusted EBITDA for the period was primarily driven by lower gross profit from lower revenue and higher manufacturing costs.

Adjusted Net Income (Loss) and Adjusted EPS

We present information below with respect to adjusted net (loss) income and adjusted EPS. We define adjusted net (loss) income as our net (loss) income excluding amortization and depreciation of acquired assets, share-based compensation, and other non-recurring items, such as product rationalization charges, severance costs and costs of shareholder activism. We define adjusted EPS as GAAP diluted earnings per share excluding the above adjustments to net (loss) income used in calculating adjusted net (loss) income, each on a per share and tax effected basis.

The following is a reconciliation of adjusted net loss, a non-GAAP metric, to net income (loss), the most directly comparable GAAP financial measure, for the three and six-month periods ended June 30, 2025 and 2024, respectively:

The following is a reconciliation of adjusted diluted EPS, a non-GAAP metric, to diluted EPS, the most directly comparable GAAP financial measure, for the three and six-month periods ended June 30, 2025 and 2024, respectively:

Adjusted net income and adjusted diluted earnings per share in the three-month period ended June 30, 2025 decreased $2.3 million and $0.16, respectively, as compared with the same period in 2024. The decrease for the period was primarily due to lower revenues and lower gross profit.

Adjusted net income and adjusted diluted earnings per share in the six-month period ended June 30, 2025 decreased $7.8 million and $0.53, respectively, as compared with the same period in 2024. The decrease for the period was primarily due to lower revenues and lower gross profit.

Liquidity and Capital Resources

We require cash to fund our operating activities and to make capital expenditures and other investments in the business. We expect that our requirements for cash to fund these uses will increase as our operations expand. We continue to generate cash from operating activities and believe that our operating cash flows, cash currently on our balance sheet and availability under our credit facility will be sufficient to allow us to continue to invest in our existing business, to manage our capital structure on a short and long-term basis, and to meet our anticipated operating cash needs. Cash and cash equivalents aggregated $53.2 million and $55.6 million, and working capital totaled $83.2 million and $90.3 million, at June 30, 2025 and December 31, 2024, respectively.

On November 12, 2021, we entered into a Third Amendment to Credit Agreement with Bank of America N.A. as administrative agent, which amended our existing revolving line of credit agreement dated October 24, 2017 which provides up to $75.0 million in the form of a senior revolving line of credit. Subject to certain conditions, we may request up to an additional $75.0 million for a maximum aggregate commitment of $150.0 million. As of June 30, 2025, and December 31, 2024, there were no outstanding borrowings, and we are in compliance with the terms of the credit facility.

Summary of Cash Flows (in thousands):

The following changes contributed to the net change in cash and cash equivalents in the six-month period ended June 30, 2025 as compared to the same period in 2024.

Operating Activities

Cash used in operating activities was $0.3 million for the six-month period ended June 30, 2025, as compared to cash used in operating activities of $1.2 million for the same period in 2024. The decrease in cash used in operating activities for the six-months ended June 30, 2025, compared to the same period in prior year, was primarily due to an improvement in the change in working capital during the six-month period ended June 30, 2025, primarily from a reduction in inventory and accounts receivable.

Investing Activities

Cash provided by investing activities was $1.1 million for the six-month period ended June 30, 2025, as compared to cash used in investing activities of $5.2 million for the same period in 2024. The change was primarily due to $4.5 million received from the sale of Parcus Medical. Capital expenditures were $4.3 million in the six-month period ended June 30, 2025 compared to $5.2 million for the same period in 2024. The decrease in capital expenditures was due to timing of purchases related to our continued manufacturing capacity expansion at our facility in Bedford, Massachusetts.

Financing Activities

Cash used in financing activities was $5.3 million for the six-month period ended June 30, 2025, as compared to cash used in financing activities of $3.4 million for the same period in 2024. In both periods, the cash used in financing activities was primarily attributable to utilization of cash for share repurchases and employee tax withholding in exchange for shares surrendered by equity award holders.

Critical Accounting Policies and Estimates

The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to use judgment in making estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We believe that our accounting policies for revenue recognition, accounts receivable and allowance for credit losses, goodwill, acquired in-process research and development, inventory and contingencies are based on, among other things, judgments and assumptions made by management that include inherent risks and uncertainties. There have been no significant changes to the above critical accounting policies or in the underlying accounting assumptions and estimates used in such policies from those disclosed in our annual consolidated financial statements and accompanying notes included in our 2024 Form 10-K for the year ended December 31, 2024. We monitor our estimates on an ongoing basis for changes in facts and circumstances, and material changes in these estimates could occur in the future. Changes in estimates are recorded in the period in which they become known. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate.

Recent Accounting Pronouncements

A discussion of Recent Accounting Pronouncements is included in our 2024 Form 10-K for the fiscal year ended December 31, 2024 and is updated in the Notes to the condensed consolidated financial statements included in this report.

Contractual Obligations and Other Commercial Commitments

Our contractual obligations and other commercial commitments are summarized in the section captioned “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Contractual Obligations and Other Commercial Commitments” in our 2024 Form 10-K for the year ended December 31, 2024. There were no material changes to our contractual obligations reported in our 2024 Form 10-K during the six months ended June 30, 2025. For additional discussion, see Note 11 to the condensed consolidated financial statements included in this report.

To the extent that funds generated from our operations, together with our existing capital resources, are insufficient to meet future requirements, we will be required to obtain additional funds through equity or debt financings, strategic alliances with corporate partners and others, or through other sources. No assurance can be given that any additional financing will be made available to us or will be available on acceptable terms should such a need arise.

Our market risks and the ways we manage them are summarized in the section captioned “Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes in the first six months of 2025 to our market risks or to our management of such risks.

(a) Evaluation of disclosure controls and procedures.

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined by Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based upon that evaluation, the chief executive officer and chief financial officer have concluded as of June 30, 2025 that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. On an on-going basis, we review and document our disclosure controls and procedures, and our internal control over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.

(b) Changes in internal controls over financial reporting.

There were no material changes in our internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

Except as set forth below, there have been no material changes to the risk factors described in the section captioned “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 as amended and supplemented by the information in “Part II, Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025. In addition to the other information set forth in this report, you should carefully consider the factors discussed in the section captioned “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 and in “Part II, Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, which could materially affect our business, financial condition, or future results. The risks described in our Annual Report on Form 10-K and such subsequently filed Quarterly Report on Form 10-Q are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may have a material adverse effect on our business, financial condition, and/or operating results.

We may experience difficulties or delays in securing regulatory approval for Hyalofast, which could negatively affect our business and financial results.

In July 2025, we announced topline results from our U.S. pivotal FastTRACK Phase III trial of Hyalofast, our single-stage, off-the-shelf, cartilage repair therapy, currently sold only outside the United States. This trial failed to achieve the pre-specified co-primary endpoints, although it did demonstrate statistically significant improvements in key pre-defined secondary endpoints. We plan to submit this data, as well as certain post-hoc analyses and alternative endpoints previously accepted by the FDA for cartilage repair product approvals, as part of our third and final PMA module for Hyalofast by the end of 2025. We may experience delays in completing this module, which would negatively impact the timing of FDA review. Although we believe the totality of the data we plan to submit to the FDA could be sufficient to support approval, there can be no assurance that the FDA will agree. Failure to achieve the pre-specified co-primary endpoints in the trial could materially negatively impact our ability to obtain regulatory approval, or delay a decision by FDA. Moreover, the FDA may determine that any post hoc analyses or alternative endpoints we propose are not sufficient to support approval. Although the FDA may have used similar endpoints for other cartilage repair product approvals there can be no assurance they will apply the same standards in this case because, among other factors, these endpoints were not part of our original trial design. If our PMA submission or FDA’s review of this submission is delayed, or if we fail to achieve regulatory approval for this product candidate, it would have a material adverse effect on our future revenue and adversely impact our business and financial results, including impairment of our sole in-process research and development intangible asset.