Item 2.02 Results of Operations and Financial Condition.
On April 23, 2020, Axogen, Inc. (the “Company”) issued a press release announcing its estimated first quarter 2020 revenue, as well as certain cost mitigation initiatives the Company is taking in response to the COVID-19 global pandemic (as more fully described in Item 8.01 of this Current Report on Form 8-K). A copy of the press release is furnished as Exhibit 99.1.
The information furnished pursuant to Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of such section, nor shall it be incorporated by reference into future filings by the Company under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, unless the Company expressly sets forth in such future filing that such information is to be considered “filed” or incorporated by reference therein.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
In response to the COVID-19 global pandemic, the Board of Directors (the “Board”) of the Company, supported by the Company’s executive officers, has approved a 20% reduction in salary for each of the following executive officers commencing April 26, 2020 for the remainder of 2020: Karen Zaderej, Peter Mariani, Eric Sandberg, Maria Martinez, Angelo Scopelianos, Isabelle Billet, Erick DeVinney, Mike Donovan, Dr. Ivica Ducic, Greg Freitag and Mark Friedman. Additionally, as of April 26, 2020, the Board approved a 20% reduction in cash retainers for Board and Board Committee membership, chairmanships of Board Committees, and acting as Lead Director, for the remainder of 2020.
Item 8.01 Other Events.
On April 23, 2020, the Company issued a press release detailing certain proactive steps the Company is taking in response to the COVID-19 global pandemic, including: (1) a reduction in cash compensation as of April 26, 2020 for all employees of 10% to 15%, depending on their position; (2) a reduction in salaries and retainers as provided in Item 5.02 of this Current Report; (3) completing an employee layoff of approximately 10% of its workforce; (4) implementing a hiring freeze with very limited exceptions; (5) temporarily suspending recovery and processing of tissue for certain of its products in order to utilize existing inventory; (6) deferring completion and validation of the Company’s new biologics processing center in Dayton, Ohio by up to one year; (7) entering into a Sixth Amendment to the License and Services Agreement (the “Agreement”) with Community Blood Center (d/b/a Community Tissue Services) to extend the termination date to December 31, 2022, which allows the Company to continue its manufacturing pursuant to the Agreement through such date; and (8) reducing certain discretionary spending including travel, conference participation, surgeon education (as a result of surgeon travel restrictions) and selected projects across the organization.
In addition, the press release provided that the Company applied for a Small Business Administration (“SBA”) loan under the Paycheck Protection Program. The Company has received an SBA Loan Number and completed documents for a loan of approximately $7.8 million dollars. The loan will preserve key positions in the Company supporting ongoing operations by providing necessary economic relief during this period of reduced surgical volumes.
Finally, on January 9, 2019, Plaintiff Neil Einhorn (“Plaintiff”), on behalf of himself and others similarly situated, filed a putative class action complaint alleging violations of the federal securities laws against the Company, certain of its directors and officers, and the Company’s underwriters (collectively, “Defendants”). Plaintiff claimed that Defendants made false or misleading statements when the Company provided its opinion as to the size of the total addressable market (“TAM”) for its products. On July 22, 2019, Defendants filed a motion to dismiss. On April 21, 2020, the United Stated District Court for the Middle District of Florida dismissed the complaint without prejudice, finding the Plaintiff failed to state a claim upon which relief could be granted. The Plaintiff has 60 days to file an amended complaint or the action will be dismissed with prejudice.
