Earnings call transcript Q4 2022

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Operator

Good day and thank you for standing by. Welcome to AVITA Medical Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there’ll be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded.

to Corner conference Please like speaker to now Caroline today, go would hand over the your I ahead.

Caroline Corner

Thank Medical you, fourth AVITA quarter XXXX operator. earnings call. Welcome to

include you Before and matters should position Private Medical the relate this Reform performance, All this we regarding call me facts XXXX. Litigation historical within demand remind for the operates, of be AVITA made begin, call in meaning let which Securities will to expenses statements forward-looking market. Act statements, and statements of that of products considered statements including the markets financial trends, not that technology, in on expectations its expected forward-looking its do the and

risks or These actual or could the statements statements. are to promises achievements achievements guarantees by forward-looking neither any unknown uncertainties results, expressed and cause nor results, performance and materially and differ from that implied performance or known involve

AVITA risk forward-looking today. ended for expectations report XXXX are AVITA during the performance the year additional in December with Medical’s most including call, of this management’s Form provided for based future on Any information. described as filings Please for review on recent XX-K particularly Medical’s statements XX, SEC, projections the annual

www.avitamedical.com PM call also be Pacific X:XX these results. the AVITA website for AVITA website, to required Medical’s available filings, Investors AVITA has financial Medical’s Recording you’re undertakes fourth its is additional Medical’s statements, press section AVITA today. website available review. will includes quarter latest obligation about today’s the encouraged Medical details under Time which on of to by by no its SEC update on release as and except applicable law. XXXX results

Chief are Executive today’s Sean on Financial me Officer; and Jim Ekins, Chief Officer. Acting call Joining Corbett,

I'll Jim the his over to call comments. for now turn

Jim Corbett

our for XXXX. opening guidance thank full then as and the call Sean everyone, as year provide more afternoon, Q&A. by expectations highlights well discussing on and I for our today's us Good today. to for before you fourth Caroline. performance you, quarter detailed commentary the will begin joining call Thank and will financial

we with prior XXXX, XX% which commercial top line same in the performance million begin a To strong increase with had over in period $X.X year. a the QX is revenue

year increase full was the $XX.X prior our was million, the which commercial a For revenue over XXXX, XX% year.

reminder team a and excludes quarter $XXX,XXX global includes commercial $XXX,XXX revenue congratulate revenue I'd personally for As recognized year. XXXX. successful like all the the their the field revenue sales to for our BARDA in and

quarter our was an FDA, tissue independently I'd December supplement on of the third designation. have device two priorities Both With respect submitted application PMA like Xth the our applications on for initial vitiligo provide to with pending discussed the submitted on to XXth. breakthrough for call. update our the was submissions soft on I and PMA our

allow us which both significantly As imply which tissue respective used or have market such the programs, to would met expedited approvals. soft to cycle existing we the in their infrastructure. and for PMA our burns exceeded have burns our each applications. studies review XXX-day primary broaden the supplement review The Notably, existing June leverage support endpoints

the the Our important. drive commercial and and plans significant burns synergies tissue repair soft between are team maximize the developed growth drive which to has soft synergies tissue our opportunity and over These three-plus to will years. next

outpatient and tissue same repair burns. the soft codes First, as utilizes inpatient reimbursement

transitional DRG be through indications. for in-hospital approval outpatient code and As FDA a immediately pass-through effective reimbursement soft a through such reimbursement both tissue will upon

immediate which the approval. hospitals centers presently or that we access burn sell will upon these means X expanded approximately are to Second are nearly approved of half have to Level in X also centers, either XXX the Level trauma label that

current our so and X hospital will that approximately centers adding Level we call points Level to points. are hospital or be X XXX call X,XXX Additionally, trauma

US the trauma on of Level are call the remaining eligible where the Third US sales capture our XX% treated. burn cases burn we centers within positions of to centers only and the Level market X X RECELL the force to configured burn The XX% are inpatient market. expansion into

second the centers. quarter, will In begin these we on calling trauma

will in allow to centers begin soft this for tissue committee promoting rapid begin Level more seeking a We value X that and use repair Level in RECELL opportunity launch and will analysis July. X burns for these trauma approval

full our supplement opportunity as approval. approvals unique expanded to XXXX launch that July Together offer immediate in tissue these access these should and synergies many the of already hospitals indications to soft of commercial prepare us X, the for we on PMA have upon

during team This the launch. second This at we peak Currently, direct is our QX field approximately place of of be that such will salespeople organization. in US people, percent is ahead field expanding in the the initiate our we have sales roles. supplement trained expected for of will as repair and which quarter, June that to PMA the soft operating XX both XXXX. will a Further clinical planned expense sales in field sales tissue revenue a we approval includes and XX expansion of result

a exceeds is I of average This emphasize itself month to per call that quickly. field penetration contribution like XX our expansion I weaponizing where breakeven our and sales profit pays adoption market sales what individual. with kits approximately productivity month. sales per RECELL for new the per to force rep enhance five the margin kits direct gross is professional on sold Currently,

For we the expect XXXX approval in Vitiligo as PMA indication, well. June

It January CPT by We is of reimbursement process XXXX. are our to in goal through AMA pursuing process. reimbursement in-office the Medicare secure code

build for period, launch be interim commercial pay podium presence an patients for will intended and to Vitiligo our implementing January we cash physician-sponsored in XXXX. the studies During

By the disaggregation I is our on of from requires an by also cells call, background training currently our field team. sales manually program. and sample During providing the way last commit update our of autologous automation done to frequent

automate will allow leverage designed and staff better operating which to training team to is device that less and our require selling field time automation room organization. will sales us by our disaggregation, Our by

XX We application PMA this our by plan FDA of year. June the to submit supplement to

we like will soft to we by the have cycle, and project XXX-day Just review approval tissue, subject January with XXXX. be

QX, our begun Japan reported These are very through are in in have our partner, returns launch in revenues we we foreign Early positive. Japan US in sales As report recognized our COSMOTEC. the in and will footnotes revenue line. dollars,

over will communicated, providing of be communicate call. to XXXX With QX During our With guidance expect and quarterly agenda XXXX, international account earnings our revenues. to the that international annual it will broader quarter. remains Japan November strategy, on for to updated respect XX% our during we respect strategy every we guidance, as those

guidance be of Our annual XX% be for midpoint $XX revenue to which XXXX. to would in XXXX over growth the million guidance, of million, at is range expected $XX

For $XX million XX% quarter XXXX, up million. we guidance, expect revenues the first over the prior over of and midpoint this of would be between the we commercial At $XX to be year.

transforming be inflection trajectory. and multiple expanding I AVITA the to outlined, Medical, of year business our have indications encompass As will growth for XXXX dramatically our

forward making updating Our on great regulatory and on teams you calls. progress commercial our strides to and I future are look

to that, I'd Acting Sean Ekins, turn to With Officer. Financial over it like Chief

Sean Ekins

same excludes three in by the which same was In XX% to $X.X you, in BARDA to XX, revenue, revenue $X.X in profit Gross compared our quarter BARDA Thank to period in revenue compared the million, XX% of ended $X.X increased for compared includes XXXX. to months by $X.X XXXX, period increased which to XXXX. the XX%, XXXX. revenue Total XX% fourth million margin commercial the Jim. million, December million

period for expenses quarter compensation partially expenses, pre-commercialization operating by the in lower same X% and $XX the and operating $XX.X Total to million, increase and to offset research increased XXXX. costs development salaries attributable expenses increased is in compared The million and to share-based expenses. in by benefits, selling

selling costs driven support increased related costs in increased are are and benefits to Higher future salaries with by of vitiligo. resale tissue are activities to launches by operation. associated the increased events expansion commissions, our overall sales to Higher training costs driven the workforce pre-commercialization soft repair and activity, attributable and travel

following. burn The was pediatric lower Research and closed study costs for to development enrollment. were due the

Soft trial for pipeline period, along research and sponsored expenses were in development. to the phases costly less tissue this treatment period, in fall compared toward participants repair with lower a prior phases and agreements vitiligo more costly recruitment

current Skin cells, Share-based unvested awards Spray-On prior to recognized had current the were we expenses ongoing from year. termination to a development compensation currently compared Officer. as for former in of of addition, In related the the development lower-cost Executive in period year for reversal a we in phase due of a to of the expense lower expenses preparation are next-generation automated devices project previously lower

the in the net loss same in XX% in a $X.XX loss same share $X.X Adjusted by million million a XXXX. or to million in of $X to decreased loss per Net decreased or compared $X.XX million share XXXX. $X.X per XX% loss of to period by to period EBITDA $X.X compared

For full in with to commercial individual ended in partner the growth COSMOTEC penetration year XX% revenues revenue the largely million our customer million December XX, accounts along driven by commercial compared increased XXXX. of $XX.X The XXXX, $XX.X period by Japan. deeper same commercial our to in commencement sales the in with was within

costs, to our pre-commercialization to by team, the in XXXX. $XX expenses our relatively in and an period benefits, Total in million $XX.X to expansion the salaries lower XXXX. higher $XX.X in partially million by in the were by the result XX% the period selling flat increase profit is XX% million expenses, X% to Higher a development revenue share-based of expenses. operations. million increased compared operating primarily margin in costs, offset support benefits expenses salaries along compared increase in to XXXX. compared was research with overall to period and attributable to and operating $XX.X Gross same same compensation workforce of increased same commercial The Total

current events activity. new a partially awards from in to with are Executive In activities costs in Higher offset equity costs a costs Executive compensation to future increased vested launches by vitiligo. to due to associated of addition, increased are the Officer. travel training and grants sales driven by recognized and a repair by of the former commissions, driven Officer. were expense Share-based reversal current year a pre-commercialization higher Higher costs expenses the we termination in of soft incurred related termination tissue attributable previously selling reset severance year related former the

due to costly study repair lower lower period burn tissue this a The phases more follow-up expense trial were research offset for the participants devices prior to next-generation early sales, expenses closed an and current period. costs costly partially year period were pediatric current as in towards due pipeline phases Skin sponsored development to for and the preparation by development treatment and and development in automated is was soft higher in vitiligo Spray-On of testing. the prototype compared ongoing for development and to Research the year enrollment, This development in recruitment the compared following. from in prior less of

$XX.X was of $XX.X XXXX. table in compared reference. or per same share was today's million loss reconciling compared loss same press million a period in net measures loss EBITDA $XX.X share, included in loss a is to of in Net XXXX. for or A to million, in $X.XX period $XX the $X.XX per million the non-GAAP Adjusted release

we for time. call now to thank With questions. the And back that, your you for the I'll your operator turn

Operator

we Our Joshua Thank comes of [Operator Jennings session. from of line you. this will question time, conduct first question-and-answer At Cowen. the the Instructions]

now Your open. line is

Joshua Jennings

Sean. anticipate And inflection afternoon. in outlook Difficulty] confidence start. burn maybe maybe RECELL and any quarter outlook about to the to the ask then was business, help contributions guidance year assumptions and [Technical core Thank soft can to XXXX. the you. business One first on us the for through the full your for if year. and and the tissue burn Congrats and any way you strong in Jim there's you for full Good growth call finish hoping for think

for it's the sequential a quarter just first step nice up. then And

the carrying QX. If States. this the I follow you burn from in months about us can first that tailwinds, strict in is remind counter trends just just QX these And of into XXXX sequential step-up And giving seasonality market in and nice issue momentum or the two up. already is United seasonality some there would

Jim Corbett

Josh. Thanks, single was question. That distinct a very

take me it on. just Let teasing. I'm

them, start just seasonality. not let's claims if you the at to So saw first burn growth sequential that years I'll And by clearly. that. And QX year admits XX of three data that all with does We sound the like average business, and the look regard to some last this XX to give reflect contribution burn XX you the XX. data. QX eligible RECELL you quarter with for average are

its and So admit. minor QX and the QX between in one-point changes terms very of annual

So data. that claims there's reality not seasonality define really can the a we from

we're and So growth is penetration. seeing therefore what

element first the to your question. that's I think So

of QX to adoption it – and terms experience exit grow early field use and the we with our QX of to validated multiple get who – per the users course burn through taking as see its we really the month of evidence That's continued the expect continues What increasing the a is as team really year number and from surgeons terrific done tissue has hospital. our sparing in healing continues and to course and job. its own sales times

second we call about I'm trauma and of as they burns which to not And market, math depending happens – cases okay? excuse and staying in a – of are What admits XX,XXX been into repair. tissue two the are one half me, we the on. on one-third burns soft have second That in XX,XXX them move comparing level your is XX% in on centers for the of XX,XXX are

So through we've and commercial as one come centers. experience sales accumulated physicians will only way focusing of we year be on is had evidence adoption our those the expectations with the of course, burn on team strong move very will our calling because that our

driver really burns the big in the So market. that's year for a

tissue We're We're the of feeling our type. repair very a supplement FDA. increasingly not any surprises we're soft comfortable having getting terms interaction productive in of with timing, with PMA

clock path. As Device Breakthrough deficiency. know, stop us material are that giving the unless expedited you and there's course, of we is, don't a on the review designation And

bet, on that speak, X so readiness. approval to So to June caused July us has and that

I that readiness, expanding, XX. as to with field we're approximately So XX our QX, force mentioned, during from

curve So soft increasing with a during the momentum tissue will build second half, it. we'll in associated have repair, it

and have will burn VAC we the example, X centers repair qualified. and Level are tissue indication Level which half X For soft approved of virtually available in

how VAC many trained X team bit that the number moment VAC process fully the X process. will we'll running during for Level sales also launch. during trauma X have of uncertain start. QX, a get indication a centers that exactly our in burns We'll The through for and place our begin certainly but using And QX and as be at will July in

soft us we'll going in our tissue. So course, honestly, the during scale high up quite rate because growth will it's in to of second really is QX, And exciting, be exit half position for really what XXXX. in

Joshua Jennings

that. on sales team. just through follow-up the the us build-out I walking And for of Thanks appreciate it. a

QX, to Just feel are from? to-date? was experience taking Thanks to based pretty hoping to again and understand shot that on where recruiting a you're number like better these reps And do you there the in getting for questions. that's any XX or straight challenges

Jim Corbett

sharing evaluation mind It is Josh. part, I qualitative with my a it. don't on Thanks but

candidates. First very we of of all, a strong have pipeline

well we is been and of that capitalized think a are fact that recruiting. experiencing appreciated, I coming a success indications strategy AVITA that the the has translates in very capital are to The companies growth have in don't because marketplace, that execute that. that of the lot the terms have translates well and expanding well we have

So expanding that salespeople. identified are or filled the our returns begun management roles into interviewing we're we've the have largely them. We've early that

from have really companies. high-quality They're come great related background. from but come a wound type They of We from of places, care coming a pipeline MedSurg candidates. they number

and OR, a we're pipeline who salespeople, in candidates. strong of are finding want experienced comfortable the we and So really

commercial to in And we're really stepping have team place that we're into us. big It time to this So, up train one. team for adequate quite and scale is a going is confident get them. our our

do of kind to watch really it's them it. inspiring So

Joshua Jennings

hear. to Excellent. Great

Operator

of you. the line next Piper. from Instructions] Phillip of Dantoin question comes Thank Our Okay. [Operator

now is Your line open.

Phillip Dantoin

Thanks Phil for excellent our growth? at do you in growth for taking This the XX% it And questions on XXXX durable Matt. exiting here to XXXX, time Hey. call you're say and how given nearly inflection commentary in frame? for quarter. XXXX XXXX I congrats that guess, XX% it this is expected just is on see wrong Thanks. starters your the and the

Jim Corbett

Yes. Philip. Thanks,

XX%, at just a XX% point First, midpoint it. it's of not fine make to

XX% rate QX correct. greater a I than exit in think, you're that implies

So more do as rate commercial to well into have The it I coverage. how I quite us durable XXXX terms in think it's think will expand our cause of exit is? durable. to

some growth on think soft burns either So in and tissue of have ahead years their of launch I we or not very with strong January to adding expansion international XX. vitiligo us own an a the

Phillip Dantoin

increase appreciate moving look about capitalization one guess think given That's burn OpEx expected how And I the spend On helpful. forward? do in the for sales that in QX we here more should force there? And the but be should keep about what to really you rapid in what I like? QX me. commentary cash thinking

Jim Corbett

an we're Well, clearly, market investment making in growth.

at gets Now a go of profit resale XX% Contribution for to those covered margin gross sales investments. five we look back and how our rep month. a each sales by

is for averages XX at from So a us our burns each experience, over month. – well that per looking rep

about when number getting do variability they cross it will that over. an without have we they about So does and it's months is expectation because of cross over – have it it a a not precise year

we burn think of cash quite comfortable. So I from view a point feel

absent we're cash. with or we an $XX to million investments expect excess of in of end For example XXXX Vitiligo international

So another will and growth expansion that after be another year.

capital our it with position today. comfortable very feel we So as is

Phillip Dantoin

Thank so Awesome. you much.

Jim Corbett

Thank bet. You you.

Operator

Thank you.

of the comes Our of BTIG. Ryan from next Zimmerman line question

Your open. is now line

Unidentified Analyst

have Thank expect from And Saib on market the a follow-up think we with This Ryan. market given about XXXX? well. This for Do Japanese [ph] partnership COSMOTEC. I is you've that in the the one you. to should contributions provided? you the how is Japanese on and next Then as guidance meaningful

Sean Ekins

hundred in so performed of of far. have them the guidance with experience of Japan we do the it's specific recognized is note we in do that at the been that We've of all, that from on short expect selling not price. early it well. returns That hundreds although of going even Japan patients giving first couple you'll said, remembering territory time XX% Japan, our performance strong of a in we're Well, excess in a enough are we

a hand type on – high So operating sale. high one it's gross very profit

but case produce. lower It's per revenue also to in lower expense

We're ready with think our objective a be moment. just my in in in can conversations not this coming project we for quite place to is in forward my I that the So Japan. quarter COSMOTEC where to express expectations

Unidentified Analyst

helpful. is on The Thank you. Vitiligo. helpful. next That's very one That's very

You be likely as you June insurance had establish Vitiligo to look is Thank again. of reimbursement Can us provide indicated reimbursement for with payers that insurance XXXX to Vitiligo. XXXX. with in January updates still conversations approved established you've of on you in any you,

Jim Corbett

Yeah.

conversations from Actually products You still with few that dedicate payers time. had no this for months of time are their that. They ready course and bet. we've away we to market formal are at a

we're as Our course RECELL expectation is alternative. is treatment an of looking that establish in-office what to for

is So of is in world. embedded that a the process that sort reimbursement

of a to question complex So answer. it's kind

private to gone yet to haven't CMS fact in We first. insurers will go

post will later that year. happen -- this all So

Unidentified Analyst

Thank you.

Operator

stand Please for by next you. our Thank Okay. question. caller or

Our Street Brooks next Markets. question of Lake of comes Capital the line from O'Neil

is Your open. now line

Brooks O'Neil

regard you're Well. Thank was your appropriate might the number attack. market, about bit everyone. case. talk of for, you experience terms in be little with what the are And many dynamics you. in might soft tissue the in RECELL relative say, with per I per going hoping a per cases Good kind or of afternoon, sort to your that of burns to expectations to how centers of kits month week let's large

how to tissue. opportunity view sort us help would of a good for things feel get those of the you soft in Some

Jim Corbett

Brooks. Thanks Yes.

of and thought, try raised. number you I through me because there's, work think questions that Let a

label cases be soft tissue and repair first the will patient. which kits in foremost, So will RECELL reconstruction themselves we and believe, per utilize less the

often. in happen one So for or where market to tissue in large the will burns, kits used be it's common more quite a on that soft less patient

your think that's part first the I question. of So

of of the the is order RECELL burns. number It's available Xx, treated. second to relative candidates to The patients be viable in

this different that So there's, And have broader a substantial applications that of we is will indication. access a lot to really with increase.

So of patients for example, that that in center there Level trauma range a a X wide might -- themselves. things might is present

They smaller the TBSA that will For burns who example, large be treatment. but there'll present be be nonetheless burns, happen. patients greater burns, will won't need than XX% there

necrotizing wounds. see see acute bacteria. see see We'll We'll We'll We'll degloving. abrasions.

team. there's other It market a opportunity. applications the focus hand, is the training extensive hand many So requires, one on of on part so which and sales great on our

we really you will camp speak, course, ready smaller to from our program small. we that the big to the in big you to get cook So so centers moving expect launched access allow to and moving indications we're improved. the out by automation, And to have so the of and is those reason, submission the all accounts, January when be time X accounts and at FDA and go X FDA, for trauma to Level in our automation XXXX, we

indications So constant to ability to move to broader evolution our, a centers into be from the of VAC benefiting absolute to adrenaline there's it's X automation. in the X these Level all approvals starting to a smaller and everything trauma injection and both -- get way going

automation So much our more productive. make so team sales will

Brooks O'Neil

That's helpful. Great. really

made to get you the envision sell five quickly And that kits sell I XX kits, the average just getting might for how able or of people soft of average tissue what's think you to better? expectation you very a I think with salesman will more? by being kits. an dynamics up be have same kind able the So being do Do average the in your to being they or -- terms in be to and lot about more. might one let said breakeven I'm per XX me wrong month, comments but ask intrigued you heard a

Jim Corbett

Perfect. Okay.

for margin is XX. in And of a excess current that reps sales equivalent five used RECELL approximately kits. of metric cost I rep was the are in contribution clarification, our the burns-only to So averaging for

are. So that's just baseline, as we where

you’ll our that expanded kit same -- yes. the organization? same answer you're for same So sold It's sales is, five that first be virtually do the is, expect The to price. the be same is at the selling we question

for So therefore, we the same. manufacture it

gross XX% that the equation. So profit works in still

opportunity to greater Actually think we than be exists? that the very much so. per XX Do month market

We course, burn. cases, that the times of is higher quite are we expect treating the that the number that the because in than X are patients potential market are that, approximately

So is we that opportunity rich. really think

we Now have execute, big for but to opportunity a that's us.

I think got all questions one? I or I did your miss

Brooks O'Neil

No, Jim. unfold. pretty a to can't it's opportunity see and lot. you did, Thanks a And exciting wait it I

Jim Corbett

Brooks. too. Thanks Me

Operator

question from [Operator the Bank of Instructions] Our next comes line of Lyanne America. Harrison of

line open. Your now is

Lyanne Harrison

Hi, good afternoon, all.

Just a on I follow more question. have Brooks' up one that. on

In a a takes to five a kits rate terms of, from looking to at be it then like purposes profile what a get the kits us of five from the ramp-up might for look tissue? for that month salesperson to and does soft what for zero month, ramp-up month XX the kits

Jim Corbett

it a it's than is Yes, end, variable. end have fairly And Lyanne, of really But it's year. longer year. a terrific the on question. data less a on well do half that. We front under the It's on

So it's know variable, not months. its but We it's know years. we

then a number months, they that So five get more consistently of pretty in pass and short work. they

we We time. And terms that were with less it In indication in fact harder. actually were when market proven burns at pursuing. of, was was launching we narrower the the were

make its not I as months I that equation more as that's precise year. optimistic but And give a you is to very are can say you're tight I that a to interval like answer, I'd the actually probably can -- describing. about at moment. the we think suffice So

Lyanne Harrison

And a a helpful. then on gross margins. very follow-up That's question just

this So might the on target end obviously, you at margin seeing slightly expectation financial Do or volume of it's gross increased. gross slightly have margin up you over but expanded quarter, down where -- XXXX? significantly time end an as

Jim Corbett

Actually, some price into discounts has of end the gross move come that it. -- particularly but as variability we to volume-related play you don't margin have Yes. through the competition, are experience our very year. There we

category, in factor. you So in don't kind manufacturing that's, one of geek specifically, the improvements process if of made mind. some our very recently note, We've

this that control we in had process few succeeded we But shipping And cold the last that called months, will rather to to see in forward. chain going necessary, package ship data substantial had a cost where not chain, cold establishing we what's we temperature. that in the and removed made

we selling goods confident to think improving about things: cost I price price, competition. very discount and the subject of mostly versus average where volume two stability it feel So, our of our is

Lyanne Harrison

very much. I all you That's have. Thank

Operator

Okay. your This does Thank program. conference. you in today's the for participation conclude

You may now Thank disconnect. you very much.

Jim Corbett

very you Thank much.

AVITA Medical (RCEL) 23 Feb 232022 Q4 Earnings call transcript