Axonics Modulation Technologies, Inc. (NASDAQ: AXNX), a medical technology company that has developed and is commercializing novel implantable Sacral Neuromodulation (“SNM”) devices for the treatment of urinary and bowel dysfunction, today reported financial results for the first quarter 2020 and provided an update on operational initiatives.

Recent Business & Financial Highlights

Net revenue was $26.3 million in the first quarter of 2020, the first full quarter of commercial results following U.S. Food & Drug Administration (“FDA”) approval of the Axonics r-SNM ® System in November 2019. Sales momentum accelerated throughout the first quarter, peaking in mid-March prior to COVID-19 related postponement of elective procedures.

Over 350 unique accounts (hospitals and ambulatory surgery centers) in the United States implanted patients with the Axonics r-SNM System in the first quarter of 2020.

Over 110 facility agreements with national and regional IDNs as well as large urology groups and ambulatory surgery centers have been signed since the U.S. launch. Included in this group are agreements with three of the largest national IDNs in the U.S. which were executed in March. Another 85 agreements are currently in process.

In January 2020, the FDA approved an enhanced, second-generation programmer for the Axonics r-SNM System under a premarket approval (“PMA”) supplement. The new programmer features, among other things, a predictive programming algorithm that translates intra-operative responses and suggests how to program the patient for optimum therapy, thereby reducing the need to adjust post-implant therapy.

In April 2020, Axonics submitted a PMA supplement to the FDA for the purpose of gaining full-body MRI conditional labeling for 3.0T MRI scans. Both 1.5T and 3.0T labeling is approved in Europe under the CE Mark. In September 2019, the FDA approved full-body labeling for 1.5T MR scanners. Axonics has since performed all the required tests to support the rationale for full-body 3.0T labeling.

In April 2020, the FDA approved a next generation rechargeable implantable neurostimulator (“INS”) for the Axonics r-SNM System under a PMA supplement. The new INS decreases how frequently a patient needs to recharge their implanted device to once a month for about one hour and for some patients, once every other month. The next generation Axonics INS is expected to begin shipping to U.S. customers early in the third quarter of 2020.

Raymond W. Cohen, CEO of Axonics, commented, “We are quite proud of this quarter’s exceptional revenue result considering we had only been in the market for two months prior to the start of 2020. Moreover, we believe that this result ranks among the highest revenue total generated in the history of the medical device industry for a company’s first full quarter of sales in the U.S. following FDA approval. The results are a testament to the quality of our 170 person U.S. commercial team and were driven by the overwhelmingly positive response from the SNM implanting community and their patients to the introduction of a bespoke SNM device that is intuitive, fuss-free, long-lived, MRI compatible, safe and clinically effective. This quarter’s results reinforce our confidence that the SNM market is poised for meaningful expansion in the years ahead, driven to a large extent by Axonics’ continuous innovation and commitment to increasing patient awareness. As elective procedures are rescheduled, we expect to be very active in the months ahead as more patients say ‘yes’ to Axonics and SNM therapy. Despite the setback from COVID-19, we remain bullish about our prospects for continued growth in 2020 and beyond.”

Mr. Cohen continued, “The Axonics team would like to express its gratitude to the courageous and selfless healthcare workers providing care for those impacted by COVID-19. At Axonics, we remain focused on supporting our customers and their patients as well as protecting the health of our employees and their families.”

First Quarter 2020 Financial Results

Net revenue was $26.3 million in the first quarter 2020, as compared to net revenue of $1.1 million for the same period of the prior year.

Net revenue from the United States accounted for $25.0 million, with select European markets and Canada accounting for the balance of first quarter 2020 revenue.

Gross margin was 62.4% in the first quarter 2020, as compared to 49.2% for the same period of the prior year.

Operating expenses were $31.1 million in the first quarter 2020, as compared to $14.1 million for the same period of the prior year. This increase was primarily due to higher personnel costs for the U.S. commercial team and in other parts of the organization.

Net loss was $14.6 million in the first quarter 2020, as compared to $13.1 million for the same period of the prior year.

As of March 31, 2020, cash, cash equivalents and short-term investments were $159.8 million, as compared to $183.7 million at December 31, 2019.