U.S. RECELL® System product sales of A$4.66M
for fiscal second quarter
AVITA Medical Limited (ASX: AVH, NASDAQ: RCEL), a regenerative
medicine company with a technology platform positioned to address
unmet medical needs in therapeutic skin restoration, reported
financial results for the fiscal second quarter ended 31 December
2019 today in its Appendix 4C - Quarterly Cash Flow Report filed
with the Australian Securities Exchange (ASX).
U.S. Commercial Sales of RECELL® System for Quarter and
Half-Year Ended 31 December 2019
Product sales and other revenues for the second quarter and six
months ended 31 December 2019 were as follows (unaudited):
Three Months Ended
Six Months Ended
(Thousand Australian $’s)
31 December 31 December
2019
2018
2019
2018
U.S. product sales
A$4,661
A$1,102
A$ 9,274
A$1,102
International product sales
234
343
410
711
Total product sales
4,895
1,445
9,684
1,813
Other income (including BARDA)
705
2,509
3,846
5,113
Total revenue
A$5,600
A$3,954
A$13,530
A$6,926
“We are extremely pleased with the expanding use of the RECELL
System in a large number of U.S. burn centers and in a broadening
array of burn types. We have very high interest in the RECELL
System with more than 160 trained burn physicians and 63 accredited
burn institutions either having navigated through the Value
Analysis Committee (VAC) approval process or obtaining ad hoc
approval to purchase the RECELL System. In addition, we see ongoing
strong support and usage of the RECELL System, including in the
last two months of 2019 where we witnessed our highest procedural
volumes since FDA approval. Physician feedback continues to be
highly positive and we are well-placed to broaden usage as
physicians gain broader clinical experience and begin to migrate
from large total body surface area (TBSA) full thickness burns to
smaller TBSA burns and partial thickness burns. We believe that
broader TBSA utilization within our existing customer base,
together with the addition of new RECELL customers, provides ample
opportunity for us to drive revenue increases in 2020. By
leveraging our success within our initial market of 14,000 eligible
in-patient burn patients, we are now eager to approach the larger
opportunities within burns (i.e. smaller burns), soft tissue
reconstruction, vitiligo and genetic errors,” said Dr. Mike Perry,
AVITA Medical’s Chief Executive Officer.
2019 in Review
United States In-Patient Burns
31 December 2019 marked the first full calendar year (CY) of
sales since the U.S. commercial launch of the RECELL System in
early January. During the first half of CY2019, our commercial and
clinical support team made concerted efforts to build awareness and
to promote the donor-sparing, point-of-care and related clinical
benefits of the RECELL System among an initial cohort of the 132
burn centers (i.e. the in-patient setting) that treat approximately
40,000 burn patients each year.
The core of these early efforts involved educating and training
many of the 300 certified burn surgeons, proctoring bench and in
vivo use of the RECELL System, and ultimately seeking hospital
approval to purchase the RECELL System through the respective VAC
at each burn center.
With RECELL being the first product in more than 20 years
granted Premarket Approval (PMA) by the U.S. Food and Drug
Administration (FDA) to treat severe thermal burns, we were able to
quickly secure orders in 39 of the 132 U.S. burn centers (and train
136 burn surgeons) by 30 June 2019. Consistent with our two
randomized clinical studies and our PMA, early utilization of the
RECELL System by the first adopters mainly focused on the less
common full thickness or “big burns”; that is, the larger and
deeper (full thickness) TBSA burns bracket within the approximately
14,000 of the 40,000 patients treated within the in-patient
setting.
In the quarter ended 30 September 2019, we added a further 13
institutions (as well as increasing to 157 trained burn surgeons)
and saw our top line revenue consequently benefit from the addition
of these new customers, including some larger stocking orders from
key customers during that period. With the initial core customer
base established within this window, our commercial efforts in Q3
CY2019 shifted to building consistent RECELL utilization by
ensuring strong clinical outcomes within those early users of the
RECELL System. Creating a strong commercial support presence in
centers, paired with excellent RECELL clinical experience was a key
focus during the first quarter of fiscal year (FY) 2020 (Q3 CY2019)
because the in- patient burn treatment setting is characterized by
physician preference and inherent variability in month-to- month
patient accrual (i.e. burns are random, or “accident-induced,” and
therefore lack a consistent referral path).
The closing three months of 2019 (FQ2 FY2020 / Q4 CY2019)
resulted in growing and consistent utilization of the RECELL System
across our customer base, including some of the highest procedural
rates with the RECELL System since PMA (and 15 to 20% higher than
FQ1 FY 2020 / Q3 CY 2019). Furthermore, we were able to add eight
new customers late in the quarter and train an additional nine burn
surgeons. This brought our 2019 total to 63 ordering customers and
166 trained burn surgeons. Due to our commercial team’s efforts in
educating both physicians and burn centers, we have reaped to date
100% success in navigating the VAC approval process and have
established a base of “super users,” or physicians using the RECELL
System across a broad array of burn sizes and depths, and patient
types. In this regard, our top 20 customers are relatively
concentrated and delivered approximately 60% of revenue in each of
the last two quarters of CY2019. Because of this, we see the
opportunity in 2020 to similarly more broadly penetrate our other
RECELL customers, as well as to expand our footprint into new burn
centers.
In pursuit of wider utilization of the RECELL System, we intend
to add 25 new sites in CY2020 and will leverage our current
commercial infrastructure to do so. The rate of in-patient burn
admissions is inherently variable, but we feel very confident of
incremental revenue growth across the entirety of CY2020 as we
continue to focus on our “go deep” strategy of (1) broader TBSA
burn utilization (i.e. broadening RECELL use from large, full
thickness, TBSA wounds, or “big burns,” to the much higher
incidence of smaller or partial thickness burns) consistent with
usage patterns demonstrated by our most experienced users; and (2)
educating and training other burn surgeons within our customer
base. We see a total addressable burn market for the RECELL System
of U.S. $200 million in in-patient burns.
A summary of CY2019 commercial highlights is set out below
United States $'s)
Quarter Ended
31 March
30 June
30 Sept
31 Dec
CY 2019
U.S. RECELL Sales
$1,577,341
$2,036,270
$3,183,030
$3,178,160
$9,974,801
Cumulative. U.S. RECELL Sales
$1,577,341
$3,613,611
$6,796,641
$9,974,801
New Accounts
9
21
13
8
Cumulative Accounts
18
39
52
60
Physicians Trained
32
39
21
9
Cumulative Physicians
97
136
157
166
Other Developments
While we are making multiple strides across the burn landscape
and expanding our addressable markets within those applications, we
see many potential synergies across other areas of skin
regeneration, and we are moving forward exploring new indications
and approvals.
The nearest term opportunity we are advancing is in trauma and
soft tissue injuries where, similar to the burn market, surgeons
graft skin to repair defects from accidents (e.g. road rash,
lacerations, gun shots, etc.). The grafting process in these
situations is surgically quite similar and, importantly, performed
by many of the same physicians as they often complete surgical
rotations both in trauma and in burns (thereby potentially allowing
portability of the RECELL System across multiple different types of
injuries). We expect, and we are already seeing in clinical
practice, that surgeons comfortable with using the RECELL System in
burns would become experienced and ready adopters of RECELL in the
trauma setting. In addition, we are presently pursuing
reimbursement for the outpatient setting which we are optimistic to
see progress with later this year.
In September 2019, we secured an investigational device
exemption (IDE) to pursue FDA approval for soft tissue
reconstruction (i.e. trauma injuries). This study will assess the
safety and efficacy of the RECELL System in a minimum of 65 trauma
patients, and we expect to commence enrollment within FQ3 FY2020
(Q1 CY2020). We see an addressable trauma market for the RECELL
System of U.S. $550 million.
Likewise, we are also seeking FDA approval for a “pediatric
scald” label. We have IDEs in-hand for two pediatric studies and
are pursuing this with BARDA support and financial assistance. We
are working closely with BARDA to obtain agreement to commence
these studies and are targeting enrollment in mid-2020. For
pediatric scalds we see a total addressable market of U.S. $250
million.
Looking ahead to another area of skin regeneration, we see
readily addressable markets in skin defects, which are caused from
other disorders, including conditions such as vitiligo where
patients present with areas of skin absent of pigmentation (color).
Within the burn setting, we’ve already demonstrated that the RECELL
System can deliver Spray-On-Skin cells including melanocytes.
Further, we have treated more than 1,000 vitiligo patients in China
and have seven published scientific papers, which provides a high
degree of confidence that we can help patients with stable
vitiligo. In late December 2019, we received FDA IDE approval for a
feasibility study with 10 vitiligo patients to primarily determine
the optimal concentration of the cell suspension prepared using the
RECELL System. This single site study is expected to commence
enrollment in FQ3 FY2020 (Q1 CY2020). We predict an addressable
market for the use of the RECELL System in vitiligo of U.S. $600
million.
We also see large opportunities for the RECELL System as a
delivery platform to help address cellular and genetic disorders.
We believe that the RECELL System can support, and enable, multiple
therapies that seek to treat disorders of the skin. To this end, we
entered into a sponsored research agreement with the Gates Center
for Regenerative Medicine at the University of Colorado in November
2019. This relationship is focused on proof-of-concept and
development of a spray-on treatment of genetically modified cells
for patients with the genetic skin disease epidermolysis bullosa
(EB), with potential applicability to other genetic skin disorders.
There are more than 50 genetic disorders of the skin and we believe
this opportunity is potentially significantly larger than the
aggregate of the other opportunities mentioned above.
Outside of the U.S., we continue to supply our existing users
while maintaining our plan to devote limited commercial resources
to the select geographical regions in which the RECELL System is
already approved for sale. We will continue to make investments
where there is a business opportunity, such as in our announced
collaboration agreement with COSMOTEC, an M3 Group company, to
market and distribute the RECELL System for the treatment of burns
and other wounds in Japan. On 25 February 2019, COSMOTEC filed a
Japan’s Pharmaceuticals and Medical Devices Act (“JPMDA”)
application for approval to market the RECELL System in Japan. The
JPMDA application has been accepted, and the review is ongoing.
Podium and Papers
CY2019 was also a busy year for scientific publications and
presentations, notably including the following:
- RECELL System clinical data demonstrating cost savings and
efficacy presented by physicians at four regional U.S. burn
conferences and by Dr. Fiona Wood at the Congress of the Asian
Pacific Society for Scar Medicine with the Japan Scar Workshop 2-3
November 2019 in Tokyo, Japan
- Data published in Aesthetic Plastic Surgery by the Department
of Plastic Surgery at Peking Union Medical College Hospital
exploring the use of the RECELL System combination with
dermabrasion to treat facial acne scars
- Feasibility study results presented at the 11th annual meeting
of the Japanese Society of Limb Salvage & Podiatric Medicine
28-29 June 2019 in Kobe, Japan, demonstrating that use of the
RECELL System reduced the size of wounds caused by diabetic foot
ulcers in all participants
- Preliminary data of RECELL for the treatment of vitiligo and
facial acne scars presented at World Congress of Dermatology 10-15
June 2019 in Milan, Italy
- Clinical and cost-savings advantages of using the RECELL System
for the treatment of severe burns in a broad range of patient
populations and burn types highlighted during 10 presentations at
the American Burn Association (ABA) 51st Annual Meeting 2-5 April
2019 in Las Vegas, Nevada
- Published health economic model in Advances in Therapy
demonstrating reduced cost and decreased hospital stay with the
RECELL System. Utilizing this model, healtheconomic data projects
that use of the RECELL System to treat in-patient burns could save
a major U.S. burn center up to U$28 million annually, approximately
14 to 17% of their overall costs, compared to treatment with the
standard of care
- Exhibited at the American Burn Association National Burn
Reconstruction Conference 16-18 October 2019 in Chicago
- Publication in the Journal of Dermatological Treatment of
favorable results, particularly in pediatric patients, from a
retrospective study of before-and-after comparisons exploring the
use of the RECELL System in the treatment of patients with stable
vitiligo
Second Quarter Fiscal 2020 Financial Results
(Unaudited)
(All amounts are in thousands of AUD except where noted)
A copy of the Appendix 4C - Quarterly Cash Flow Report for the
second quarter of fiscal 2020, the quarter ended 31 December 2019,
is attached. Operations for the quarter were focused primarily on
the U.S. national adoption of the RECELL System for the treatment
of acute thermal burns, and the preparation and implementation of
further clinical development of the RECELL System.
During the quarter ended 31 December 2019, total cash receipts
were A$7,689, an increase of A$2,452 or 47% compared to the prior
quarter ended 30 September 2019. Cash receipts from customers for
the quarter ended 31 December 2019 were A$4,920, an increase of
A$841 or 21% compared to the prior quarter due to increased sales
on a year-to-date basis. Cash received from BARDA during the
current quarter totaled A$2,769, an increase of A$1,611 or 139%
compared to the prior quarter. The increase was the result of a
one-time rate adjustment that was received during the quarter ended
31 December 2019. Through 31 December 2019, cumulative payments of
A$31.8 million have been received under the BARDA contract.
Overall payments for operating expenses increased in line with
expectations during the second quarter as a result of increased
initiatives. During the quarter ended 31 December 2019, payments
related to sales and marketing, staffing, administrative and
corporate costs for the current quarter totaled A$10,578, a A$1,043
or 11% increase compared to the quarter ended 30 September 2019
primarily due to higher legal and staffing costs. During the
quarter ended 31 December 2019, payments related to product
manufacturing and operating costs totaled A$1,974, a A$630 or 47%
increase compared to the quarter ended 30 September 2019. During
the quarter ended 31 December 2019, payments for research and
development costs totaled A$1,333, a A$33 or 3% increase compared
to the quarter ended 30 September 2019. As a result of the ongoing
commercialization of the RECELL System in the U.S. along with other
planned initiatives set forth by the Company, payments for
operating expenses are expected to increase during 2020. These
expense payments are expected to be partially offset by receipts
from customers and receipts under the BARDA contract.
Total net cash used in operating activities during the quarter
ended 31 December 2019 was A$6,335, a A$702 or 10% decrease
compared to the quarter ended 30 September 2019 driven primarily by
timing of planned initiatives. Cash and cash equivalents held at 31
December 2019 was A$124,658.
Authorised for release by the Chief Executive Officer of Avita
Medical Limited.
ABOUT AVITA MEDICAL LIMITED
AVITA Medical is a regenerative medicine company with a
technology platform positioned to address unmet medical needs in
burns, chronic wounds, and aesthetics indications. AVITA Medical’s
patented and proprietary collection and application technology
provides innovative treatment solutions derived from the
regenerative properties of a patient’s own skin. The medical
devices work by preparing a REGENERATIVE EPIDERMAL SUSPENSION™
(RES™), an autologous suspension comprised of the patient’s skin
cells necessary to regenerate natural healthy epidermis. This
autologous suspension is then sprayed onto the areas of the patient
requiring treatment.
AVITA Medical’s first U.S. product, the RECELL® System, was
approved by the U.S. Food and Drug Administration (FDA) in
September 2018. The RECELL System is indicated for use in the
treatment of acute thermal burns in patients 18 years and older.
The RECELL System is used to prepare Spray-On Skin™ Cells using a
small amount of a patient’s own skin, providing a new way to treat
severe burns, while significantly reducing the amount of donor skin
required. The RECELL System is designed to be used at the point of
care alone or in combination with autografts depending on the depth
of the burn injury. Compelling data from randomized, controlled
clinical trials conducted at major U.S. burn centers and real-world
use in more than 8,000 patients globally, reinforce that the RECELL
System is a significant advancement over the current standard of
care for burn patients and offers benefits in clinical outcomes and
cost savings. Healthcare professionals should read the INSTRUCTIONS
FOR USE - RECELL® Autologous Cell Harvesting Device
(https://recellsystem.com/) for a full description of indications
for use and important safety information including
contraindications, warnings and precautions.
In international markets, our products are marketed under the
RECELL System brand to promote skin healing in a wide range of
applications including burns, chronic wounds and aesthetics. The
RECELL System is TGA-registered in Australia and received CE-mark
approval in Europe.
To learn more, visit www.avitamedical.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This letter includes forward-looking statements. These
forward-looking statements generally can be identified by the use
of words such as “anticipate,” “expect,” “intend,” “could,” “may,”
“will,” “believe,” “estimate,” “look forward,” “forecast,” “goal,”
“target,” “project,” “continue,” “outlook,” “guidance,” “future,”
other words of similar meaning and the use of future dates.
Forward-looking statements in this letter include, but are not
limited to, statements concerning, among other things, our ongoing
clinical trials and product development activities, regulatory
approval of our products, the potential for future growth in our
business, and our ability to achieve our key strategic, operational
and financial goal. Forward-looking statements by their nature
address matters that are, to different degrees, uncertain. Each
forward- looking statement contained in this letter is subject to
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by such statement.
Applicable risks and uncertainties include, among others, the
timing of regulatory approvals of our products; physician
acceptance, endorsement, and use of our products; failure to
achieve the anticipated benefits from approval of our products; the
effect of regulatory actions; product liability claims; risks
associated with international operations and expansion; and other
business effects, including the effects of industry, economic or
political conditions outside of the company’s control. Investors
should not place considerable reliance on the forward-looking
statements contained in this letter. Investors are encouraged to
read our publicly available filings for a discussion of these and
other risks and uncertainties. The forward-looking statements in
this letter speak only as of the date of this release, and we
undertake no obligation to update or revise any of these
statements.
Appendix 4C
Quarterly report for entities
subject to Listing Rule 4.7B
Introduced 31/03/00 Amended 30/09/01,
24/10/05, 17/12/10, 01/09/16
Name of entity
Avita Medical Limited
ABN
Quarter ended (“current
quarter”)
28 058 466 523
31 December 2019
Consolidated statement of cash
flows
Current quarter
$A’000
Year to date (6
months)
$A’000
1.
Cash flows from operating
activities
1.1
Receipts from customers
4,920
8,999
1.1a
Receipts from government contract
(BARDA)
2,769
3,927
1.2
Payments for
(a) research and development
(1,333)
(2,633)
(b) product manufacturing and operating
costs
(1,974)
(3,318)
(c) advertising and marketing
(1,976)
(4,233)
(d) leased assets
(285)
(531)
(e) staff costs
(6,502)
(11,599)
(f) administration and corporate costs
(2,100)
(4,281)
1.3
Dividends received
-
-
1.4
Interest received
146
297
1.5
Interest and other costs of finance
paid
-
-
1.6
Income taxes paid
-
-
1.7
Government grants and tax incentives
-
-
1.8
Other (provide details if material)
-
-
1.9
Net cash used in operating
activities
(6,335)
(13,372)
Consolidated statement of cash
flows
Current quarter
$A’000
Year to date (6
months)
$A’000
2.
Cash flows from investing
activities
2.1
Payments to acquire:
(a) property, plant and
equipment
(64)
(267)
(b) businesses (see item 10)
-
-
(c) investments
-
-
(d) intellectual property
(126)
(223)
(e) other non-current assets
-
-
2.2
Proceeds from disposal of:
(a) property, plant and
equipment
(b) businesses (see item 10)
-
-
(c) investments
-
-
(d) intellectual property
-
-
(e) other non-current assets
-
-
2.3
Cash flows from loans to other
entities
-
-
2.4
Dividends received (see note
3)
-
-
2.5
Other (provide details if
material)
-
-
2.6
Net cash used in investing
activities
(190)
(490)
3.
Cash flows from financing
activities
3.1
Proceeds from issues of
shares
120,000
120,000
3.2
Proceeds from issue of
convertible notes
-
-
3.3
Proceeds from exercise of share
options
363
363
3.4
Transaction costs related to
issues of shares, convertible notes or options
(8,061)
(8,061)
3.5
Proceeds from borrowings
-
-
3.6
Repayment of borrowings
-
-
3.7
Transaction costs related to
loans and borrowings
-
-
3.8
Dividends paid
-
-
3.9
Other (provide details if
material)
-
-
3.10
Net cash from financing
activities
112,302
112,302
Consolidated statement of cash
flows
Current quarter
$A’000
Year to date (6
months)
$A’000
4.
Net increase in cash and cash
equivalents for the period
4.1
Cash and cash equivalents at
beginning of quarter/year to date
22,656
28,983
4.2
Net cash used in operating
activities (item 1.9 above)
(6,335)
(13,372)
4.3
Net cash from used in investing
activities (item 2.6 above)
(190)
(490)
4.4
Net cash from financing
activities (item 3.10 above)
112,302
112,302
4.5
Effect of movement in exchange
rates on cash held
(3,775)
(2,765)
4.6
Cash and cash equivalents at
end of quarter
124,658
124,658
5.
Reconciliation of cash and
cash equivalents
at the end of the quarter (as
shown in the consolidated statement of cash flows) to the related
items in the accounts
Current quarter
$A’000
Previous quarter
$A’000
5.1
Bank balances
124,658
22,656
5.2
Call deposits
-
-
5.3
Bank overdrafts
-
-
5.4
Other (provide details)
-
-
5.5
Cash and cash equivalents at
end of quarter (should equal item 4.6 above)
124,658
22,656
6.
Payments to directors of the entity and
their associates
Current quarter
$A'000
6.1
Aggregate amount of payments to these
parties included in item 1.2
(792)
6.2
Aggregate amount of cash flow from loans
to these parties included in item 2.3
6.3
Include below any explanation necessary to
understand the transactions included in items 6.1 and 6.2
6.1 Executive Director remuneration
(715k), Directors fees (66k) and Clinical Advisory Board fees
(11k).
7.
Payments to related entities
of the entity and their associates
Current quarter
$A'000
7.1
Aggregate amount of payments to
these parties included in item 1.2
7.2
Aggregate amount of cash flow
from loans to these parties included in item 2.3
7.3
Include below any explanation
necessary to understand the transactions included in items 7.1 and
7.2
8.
Financing facilities
available Add notes as necessary for an understanding of the
position
Total facility amount at
quarter end
$A’000
Amount drawn at quarter
end
$A’000
8.1
Loan facilities
8.2
Credit standby arrangements
8.3
Other (please specify)
8.4
Include below a description of
each facility above, including the lender, interest rate and
whether it is secured or unsecured. If any additional facilities
have been entered into or are proposed to be entered into after
quarter end, include details of those facilities as well.
9.
Estimated cash outflows for
next quarter
$A’000
9.1
Research and development
1,347
9.2
Product manufacturing and
operating costs
1,109
9.3
Advertising and marketing
2,327
9.4
Leased assets
258
9.5
Staff costs
5,160
9.6
Administration and corporate
costs
2,133
9.7
Other (provide details if
material)
-
9.8
Total estimated cash
outflows*
12,334
* Pertains to outflows only, inflows from customer receipts and
government contracts, which totaled $7,689 for the quarter ended 31
December 2019 and are expected to increase in future quarters, are
not included.
10.
Acquisitions and disposals of
business entities
(items 2.1(b) and 2.2(b)
above)
Acquisitions
Disposals
10.1
Name of entity
10.2
Place of incorporation or
registration
10.3
Consideration for acquisition or
disposal
10.4
Total net assets
10.5
Nature of business
Compliance statement
- This statement has been prepared in accordance with accounting
standards and policies which comply with Listing Rule 19.11A.
- This statement gives a true and fair view of the matters
disclosed.
David J McIntyre David McIntyre Chief Financial Officer 31
January 2020
Notes
- The quarterly report provides a basis for informing the market
how the entity’s activities have been financed for the past quarter
and the effect on its cash position. An entity that wishes to
disclose additional information is encouraged to do so, in a note
or notes included in or attached to this report.
- If this quarterly report has been prepared in accordance with
Australian Accounting Standards, the definitions in, and provisions
of, BAAS 107: Statement of Cash Flows apply to this report. If this
quarterly report has been prepared in accordance with other
accounting standards agreed by ASX pursuant to Listing Rule 19.11A,
the corresponding equivalent standard applies to this report.
- Dividends received may be classified either as cash flows from
operating activities or cash flows from investing activities,
depending on the accounting policy of the entity.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200130005914/en/
U.S. Media Sam Brown, Inc. Christy Curran Phone +1
615 414 8668 christycurran@sambrown.com
O.US. Media Monsoon Communications Rude Michelson
Phone +61 (0)3 9620 3333 Mobile +61 (0)411 402 737
rudim@monsoon.com.au
Investors: Westcliffe Partners Caroline Corner
Phone +1 415 202 5678 caroline.corner@westwicke.com
AVITA Medical Ltd David McIntyre Chief Financial Officer
Phone +1 661 367 9178 dmcintyre@avitamedical.com
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