Hi @Strawman, would you invite either John Van Der Wielen (Chair) or Paul Anderson (CEO and MD) of regenerative medicine firm Orthocell ($OCC) along to a SM meeting?

Update:

They've made a few releases over the summer, which don't add much to my most recent post on them about a month ago. I'll wait for their HY presentation to given an update.

That said, there is one update I wanted to give on US progress.

Previously I made a comment that the last Q of 100 units of sales at A$1000-1200 per device, indicated $0.1m US sales or a starting annual run rate of $0.4m.

The latest disclosure is that US revenue was $90k for 100 devices, which indicates net revenue per device in the US of A$900, but given that the sales are reported to having taken place in December (according to the latest release) then that points to an annual run rate of $1.0m. (Interesting that after launch in ANZ the first year of sales for Remplir was $0.4-$0.5m.)

However, I am not attaching any significance to this.

That's because in the first 6 months they have probably been free issuing directly to KOLs, to get them to try it, and even though they have signed up a large number of distributors, these distributors will clearly wait for orders from hospitals before ordering themselves. They can do this because $OCC have placed inventory of 4,000 units on their books in a US warehouse. Until. demand materialises, it makes sense for the distributors to make $OCC keep the inventory on their books, a practice I expect to continue unless and until there is run-away demand, such that the distributors don't want to be caught short. And given that there are alternatives available in the market (at least 3), I cannot see that happening.

In conclusion, I am more interested in how the number of approved hospital accounts and units sold moves from here. There is no basis for form any judgement based on the 4Q data. It is just too early.

While talking about hospital accounts approved, since mid-December, of the 61 VAC applications, the number of approvals has increased from 17 to 23 - or another 6 added in the month. While that's progress (given the interruption of the holiday season), it is still underwhelming. Let's say they got to 100 approvals by YE2026. Let's further assume that they've selected high volume trauma centres which might do 300 procedures per year (based on some research). Let's say that Remplir gets a 10% share of those, That would be an end-2026-runrate of 100 x 300 x 10% x $900 = $2.7m. That would indicate a trajectory proportionately lower than the ANZ experience, so it probably is the absolute minimum I need to see to remain interested.

So coming back to the Strawman meeting, it would be great if we could get John or Paul into the Star Chamber in March or April, as it would be interesting to see how they talk about the progress in the US.

I've taken a smallish RL position, and I'll either 3x it or exit, depending how the US revenue trajectory unfolds, as well as the opex base. (Been there before with regenerative medicine companies!)

However, if the product really is superior to Axogen AND if they can add indications (like with the ongoing prostate trial) then this could do well over the next 2-3 years. But US has to do well, because the rate of ANZ penetration appears to be maturing. That's said, if the US/Canada can emulate what's happened in ANZ, then we'll be on to a winner. But it is a big "IF".

Disc: Held (RL 3.5%)