Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- AVITA Medical Inc (ASX:AVH, Financial) reported commercial revenue of $15.1 million for Q2 2024, at the higher end of their guidance range.
- The company entered into an exclusive multi-year development and distribution agreement with Regenity Biosciences.
- AVITA Medical Inc (ASX:AVH) added 31 new accounts in Q2, all of which placed orders, and an additional six accounts received VAC approval.
- The launch of RECELL GO has been successful, with FDA approval received on May 29 and the first case completed just two days later.
- Gross profit margin improved to 86.2% in Q2 2024, up from 81.2% in the same period in 2023.
Negative Points
- Net loss for Q2 2024 was $15.4 million, compared to a net loss of $10.4 million in the same period in 2023.
- Total operating expenses increased to $28.7 million in Q2 2024, up from $21.2 million in Q2 2023.
- Cash, cash equivalents, and marketable securities decreased to $54.1 million as of June 30, 2024, from $89.1 million as of December 31, 2023.
- The company revised its annual revenue guidance down to a range of $68 million to $70 million, from the previous guidance of $78.5 million.
- The process of obtaining VAC approvals is taking between four to six months, which is longer than initially expected.
Q & A Highlights
Q: Can you elaborate on the guidance adjustment for Q4 and the expected contribution from full-thickness skin defects?
A: The primary driver is the RECELL GO conversion, which we expect to complete within the quarter. We have 85 accounts in the VAC decision stage, and the launch of Permioderm is gaining traction. These factors underpin our guidance for the next two quarters. (James Corbett, CEO)
Q: How do you plan to achieve cash flow break-even by Q3 2025 despite increased expenses?
A: The plan is primarily driven by top-line revenue growth. We project an 86% gross margin, and sequential revenue growth over the next few quarters will help cover operating expenses. (David O'Toole, CFO)
Q: What are your observations from the early days of the full-thickness skin defect indication launch?
A: We remain optimistic about the TAM and potential. We have learned that VAC processes vary, and we have 85 accounts in the pipeline. The RECELL GO Mini will also help build adoption. (James Corbett, CEO)
Q: Can you provide details on the competitive landscape and pricing expectations for the Regenity dermal matrix product?
A: The competitive price range is around $14-$15 per square centimeter. Initially, we will sell at a lower price until we build data. Our animal studies show promising results, potentially allowing for a single-stage closure with RECELL. (James Corbett, CEO)
Q: Are you feeling any pressure from debt covenants with the new guidance range?
A: We are focused on executing well. We had a strong July, and we believe Q4 will take care of itself if we execute Q3 effectively. (James Corbett, CEO)
Q: What are the reimbursement dynamics and salesforce requirements for international expansion?
A: Reimbursement varies by country, but we expect an ASP of 75%-80% of the US ASP. We are using third-party distributors internationally and do not plan to expand our US commercial headcount over the next 18 months. (James Corbett, CEO)
Q: Are you seeing adoption for specific defects within the full-thickness indication?
A: We are seeing more responsiveness in acute wounds like degloving and necrotizing fasciitis. The dermal matrix and Permioderm will apply to both acute and chronic wounds. (James Corbett, CEO)
Q: How long is it taking to get through the VAC evaluation and decision stages?
A: It typically takes between four to six months. We had 31 approvals and six pending orders this quarter. We expect the process to become more efficient over time. (James Corbett, CEO)
Q: How much of your salesforce's time is spent promoting RECELL versus Permioderm?
A: The sales strategy centers around RECELL. Permioderm is promoted during the application and aftercare stages, so there is no conflict in time allocation. (James Corbett, CEO)
Q: What additional costs should we expect for clinical studies using the dermal matrix and RECELL?
A: We do not expect a significant increase in costs as these studies will replace ongoing R&D expenses. (James Corbett, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
