Greetings, and welcome to the AxoGen Incorporated Third Quarter 2016 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Mr. Brian Korb. Please begin Mr. Korb.

Thank you, Devin, and good afternoon, everyone. Thank you for joining us today for the AxoGen Incorporated conference call to discuss the financial results for the third quarter ended September 30, 2016. Today’s call is being broadcast live via webcast, which is available on the AxoGen website. Within an hour following the end of the live call, a replay will be available on the company’s website at www.axogeninc.com, under Investors. Before we get started, I’d like to remind you that during the course of this conference call, the company will make projections and forward-looking statements regarding the future events. We encourage you to review the company’s past and future filings with the SEC, including without limitation, the company’s Forms 10-K and 10-Q which identify the specific factors that may cause actual results or events to differ materially from those described in these forward-looking statements. These factors may include, without limitation, statements regarding the product acquisitions and or development, product potential, regulatory environment, sales and marketing strategies, capital resources or operating performance. And with that, I’d like to turn the call over to Karen Zaderej, President and Chief Executive Officer of AxoGen. Karen?

Thanks, Brian and good afternoon, everyone. Welcome to our third quarter 2016 conference call. Joining me on the call today is AxoGen’s Chief Financial Officer, Pete Mariani. I would like to begin today's call with a review of our third quarter highlights followed by a brief company overview and an update on our key strategic initiatives. Pete will then provide a review of our third quarter results and financial guidance after which time we will open it up to Q&A. Before we begin, I would like to welcome Amy Wendell to the AxoGen Board of Directors. Amy is a former Covidien executive and brings us a wealth of market development and operating leadership. We are pleased to attract to our Board someone with Amy's breadth of experience. Now turning to the quarter, we achieved record revenue of $11.2 million, which is up 37% over the prior year Q3. This nice growth is seen in spite of the 72% year-over-year growth we saw in Q3 2015. We are pleased that our nine-month year-to-date revenue growth is 52% over the prior year. We are executing on our strategic initiatives and our sales efforts continue to deliver solid results. We are building awareness and expanding usage of our products with innovator and early adopter surgeons and are excited to be moving toward developing the early majority segment of the nerve repair market. Our recent equity raise and the refinancing of our debt provides us with a solid capital structure as we continue to drive awareness and growth in the nerve repair market. With our current capital position, increasing sales team, expanding customer base and growing body of clinical evidence, we believe we are in a strong position to move towards the broader market opportunity as early majority surgeons and continue to drive our…

Thanks Karen. Third quarter revenue was $11.2 million, 37% increase over the prior year. For the nine months ended September 30, revenue was $29.7 million, a 52% increase over the prior year. The growth in revenue was primarily the result of increases in unit volume as well as price. As in prior quarters, the majority of our revenue growth is driven by growth in active accounts. Additionally we continue to see growth in our pipeline of new accounts as surgeons become familiar with our products and begin to expand their treatment algorithms. Gross profit for the third quarter was $9.5 million and increased 41% compared to the prior year's third quarter. Gross margin for the third quarter was 84.9% compared to 82.7% in the prior year. The year-over-year increase was driven by growth in unit volume, operational efficiencies and price increases. Total operating expenses in the third quarter were $10.7 million up 23% over the prior year. This increase was due to added investment and expanding our sales footprint, increasing surgeon education, expanding market awareness and developing future products. These investments are driving growth in the company's operating expenses, but importantly at a lower rate than sales growth, demonstrating the operating leverage of our business model. Sales and marketing expenses in the third quarter were $7.1 million up 29% over prior year. As a percentage of revenue, sales and marketing expenses improved to 63% compared to 68% in the prior year. And as Karen mentioned, we ended the quarter with 45 direct sales reps up from 38 in the third quarter of 2015. Year-to-date we have completed 11 national education courses and plan to conduct two more for a total of 13 of these courses in the calendar year. R&D spending in the third quarter was $1.1 million compared to…

Thanks, Pete. Before we close, I’d like to highlight a few investor events in the coming months. We are looking forward to hosting our analyst and investor event on November 21 in New York City. November 29 will be presenting at the 28th Annual Piper Jaffray healthcare conference in New York City. January 9 to 11 will be attending the Trout management access event in San Francisco which takes place during the annual J.P. Morgan healthcare conference. The investor even in New York City will include a review of clinical data and best practices in repair of peripheral nerves from surgeons to use the AxoGen portfolio products and a business review from AxoGen’s leadership team. Information about these events will be available on the AxoGen website. In closing our efforts in market awareness expansion, surgeon education and sales execution have enabled us to deliver solid results. We’re pleased with the growing surgeon awareness of nerve injury and repair a key medical meetings where building awareness and expanding usage of our products with innovator and early and after surgeons and we’re excited to be moving toward developing the early majority segment of the nerve repair market. Additionally we will continue to expand our portfolio of products and develop new nerve repair markets where we believe we can bring meaningful solutions to current clinical challenges. Before taking questions I want to welcome our new investors and thank all the members of the AxoGen team for their commitment to helping patients with nerve injuries. At this point I’d like to open it up the line for question Devin?

Thank you. We will now be conducting a question-and-answer session [Operator Instructions] Our first question comes from the line of Dave Turkaly with JMP Securities. Please proceed with your question.

Thanks a lot. And hadn’t had the opportunity to attend the [Hansa] Conference as one of the interesting things we heard was about the expanded use of AxoGuard. So particularly and like direct repair scenario, so I would love to just get your thoughts on that and then any comments on how you are training your sales force or is that an area of focus ahead because I think that's something that we hadn’t heard in the past?

Yes, thank Dave. So nerves -- when are cut we've talked a lot about Avance nerve graft for bridging the gap, but when the gaps are less than 5 millimeters AxoGuard Nerve Connector is an ideal solution for the surgeon to align the two nerve ends and to allow what really is the perfect, very tiny gap between the two never phases while at the same time sealing up the coaptation since the nerve fibers don't leak out essentially into the surrounding tissue. And what we’re seeing is that surgeons are really excited as we've trained our sales team and had some of the clinical conferences present on this concept of connector-assisted direct repair, we're finding that there is a significant amount of excitement around surgeons in thinking about this new technique. It's just part of their algorithm for nerve repair. And so in the last few months I would say over this year, we've seen were actually a nice adoption of the technique amongst surgeons as they've talked about it amongst themselves and at the clinical conferences and we think that adoption is on a good curve and will continue. Again it has its place when there's a sharp laceration it's not going to replace Avance. It supplements Avance as a way to handle any coaptation that is a short coaptation.

Great and I guess as we look at your margins in some of the comments you made, about the levels I guess any color you may give us on the mix. I know the AxoGuard products have higher gross margins as well so may be for Pete and just any color as to where you stand today given that it seems like a lot of people are getting, using some of the AxoGuard lines more than they had in the past.

We’re seeing all of our products are growing and I wouldn't say that one product is growing necessarily faster than the other and impacting margins because of that. I think we're seeing solid growth across all of our brands and our margins and our margins continue to be strong with mix shift is really not changing that much its more just overall unit volume and the impact of the price that the increases that we take every year.

And just one clarification and thank you for the 2017 guidance, assuming that your sales force kind of stays at the number that you exit this year or is there any expansion plan in that as well? Thank you.

Yes. No thanks for asking that question. So we expect to end the year with least 50 associates at the end of the year and each year we’ve added and if you look back historically 10 to 15 associates direct sales associates in the year and I expect us to continue to do that through next year.

Great, thanks.

Thank you. Our next question comes from the line of Bruce Jackson with Lake Street Capital. Please proceed with your question.

Hi, congratulations on all the progress this quarter, couple of revenue model questions. If you don’t mind first the revenue mix between Avance and AxoGuard its been Avance has been running typically in the 50 to 55% range is that still the case this quarter?

Yes, it’s actually our mix to still approximately the same as Pete said are all of the products have grown and we talked about the market overall being a little more than half will be from a revenue perspective Avance and the rest will be made up by the AxoGuard’s and we still continued to see as we've grown we’re in approximately that same mix.

Okay. And then same questions for the sales, direct sales reps versus the distributors is that also sill make - work range?

Well as we’ve increase the number of direct associates we have cropped up in the revenue contribution from a direct associate and our direct associates in the U.S. to over 70% of our revenue and the remainder from the distributors.

Okay. And then with the physician education programs that you did this year how many doctors have been through those programs?

We typically have between 25 and 30 surgeons in each of the courses we completed 11 to date and we have to put out a total number in and out that in front of me that if we've generally been in that range of 25 to 30 per course.

Okay. That’s it from me. Thank you very much.

Okay, thanks Bruce.

Thank you. This concludes our question-and-answer session. I’d like turn the floor back over the AxoGen for closing comments.

Thank you, Devin. And I want to thank everyone for joining us on today's call. I look forward to seeing many of you in person at our upcoming analyst and investor event in New York City. We also look forward to speaking with you on the year-end conference call in Q1.

This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.