My notes for the earnings call:

I’ll do a separate post in the analysis of the results and will redo my valuation then.

Highlights:

• They reiterated the contract with Stedical Scientific to sell PermeaDerm to Burns/Trauma centres in the US.
•  Launch is in March so expect an update in the next quarterly report.
• They are open to offering other complementary products needed for the same customer set as RECELL. Actively looking to find a dermal matrix product partner (Polynovo??)

• Partnering with PolyMedics as to be their 3^rd party reseller to start delivering to Germany, Austria, and Switzerland
• Expecting to sign more 3rd party resellers and have all countries in Europe covered in the next 6 to 12 months.
• Sales will be slow initially but should build throughout the year (I hope they start breaking out sales by region so we can see progress)
• Can’t recall any mention of the progress in Japan.

·        

• Manufacturing of the next gen machine, RECELL GO, to be done in house.
•  The machine will be offered free of charge to customers. Revenue to come from the high margin consumables.
•  Expecting RECELL GO US approval in May; Q3 for Europe.
• Additional product RECELL GO Mini to be used for small use cases, < 500 sq cm. Expect to apply for FDA approval at the end of the year

• Vitiligo – Expect TONE study to be complete at the end of 2024 and to start roll out by the end of 2025.

·        

• Financials and Guidance:
• Debt funding received $40m USD with $50m more available if they hit certain financial milestones.  
• Expecting profitability by Q3 2025 and not need any additional capital to get there.
• Expecting growth to accelerate with revenue up 55-70 % in 2024 over 2023. This comes from a backlog of over 100 hospitals in the VAC process. The increased indications (from burns to other wounds) have 4 times the use cases but increases the time to approval within hospitals.
• Sales team will expand from 70 to 108 people by the end of March – But the implication here was staff growth will slow from this point.
• They also implied R&D expenses should reduces as the TONE study finishes.

What I liked:

• Good growth in the quarter.
• Clear guidance to profitability, expansion strategy, and product road map. There is a lot to hold them accountable to in future earnings calls.

What I didn’t like:

• Taking on debt while being unprofitable. At this stage is seems like debt was the smart choice for shareholders – however it means they are more fragile than I would like; it only takes a speed bump, and then they must raise capital at a less favourable time.
• Giving the RECEL GO away for free – I’m sure they have done the commercials for this, and it makes sense – but I thought you’d at least sell it at cost.

Fourth Quarter 2023 Financial Highlights

• Commercial revenue increased approximately 50% to $14.1 million compared to the same period in 2022

• Gross profit margin of 87.3% Full-Year 2023 Financial Highlights • Commercial revenue increased approximately 46% to $49.8 million compared to the same period in 2022

• Gross profit margin of 84.5%

• As of December 31, 2023, approximately $89.1 million in cash, cash equivalents, and marketable securities

Full-Year 2023 Financial Results

Our commercial revenue, which excludes BARDA revenue, increased by 46% to $49.8 million in the full-year ended December 31, 2023, compared to $34.1 million in the same period in 2022. Total revenue, which includes BARDA revenue, was $50.1 million compared to $34.4 million in the same period in 2022. Gross profit margin was 84.5% compared to 82.4% in the same period in 2022. Total operating expenses for the year were $86.4 million compared to $59.1 million in the same period in 2022. The increase in operating expenses is largely attributed to an increase of $15.4 million in sales and marketing costs as a result of the expansion of our commercial organization in the first half of 2023. Alongside this expansion, G&A costs increased by $5.0 million due to the increased headcount and related salaries and benefits, stock-based compensation, and recruiting costs. Lastly, R&D costs increased by $6.9 million, primarily driven by the cost of the TONE study, final work and completion of the PMA Supplement to the FDA in June of 2023 for RECELL GO and employee related costs, including stock-based compensation. Net loss for the full-year 2023 was $35.4 million, or a loss of $1.40 per basic and diluted share, compared to a net loss of $26.7 million, or a loss of $1.07 per basic and diluted share, in the same period in 2022. Other income, net for the full-year 2023 was $8.5 million, comprised primarily of $3.1 million in income from our investing activities and a $9.4 million non-cash foreign exchange gain as a result of the foreign entity liquidation for previously deferred unrealized cumulative translation adjustments in equity. This was partially offset by a loss on debt issuance of $1.2 million, debt issuance costs of $0.8 million, the change of fair value for our debt of $1.6 million, and change in fair value of warrants for $0.7 million.

Very positive results on sales, gross margin, guidance, increase in sales staff although net loss increased by $2m. The only reason I can see for the 11% ASX drop is the possibility of a capital raise for expansion. They hope to be self sustaining. i'd be grateful of any 2nd opinion before I buy more. I do like this company

https://seekingalpha.com/news/4021528-avita-medical-reports-preliminary-commercial-revenue-of-135m

https://www.miragenews.com/avita-medical-stedical-scientific-ink-us-1159566/

https://ir.avitamedical.comnews-releases/news-release-details/avita-medical-announces-exclusive-distribution-agreement

Anyone know if their guidance includes pereaDerm?

ASX Announcement

Dermal repair company $AVH has received the setback of a delay on FDA approval for their RECELL-GO device, which was under FDA review under the breathrough device 180-day review process, stopping the clock for 4-6 months while the company considers its response.

The SP has reacted sharply and is still down 19% at time of writing, taking it back to levels last seen prior to the approvals for full-thickness skins defects and vitiligo treatment earlier this year.

The RECELL-GO device, which operates with single use cartrdiges, promises to significantly expand adoption of RECELL in the US market.

$AVH have recently significantly expanded their sales and marketing footprint following the FDA approvals, hence most recent financial performance is not too great (a bit like $PNV), however, market consensus is for strong revenue growth in FY23 of $80m up from $51m in FY22, putting it on a similar trajectory to $PNV.

Given the sales momentum and the investment in sales force, as well as the likely temporary nature of the setback, there's probably a good short term trade to be done on this news. However, I'm not a trader, so its not for me.

Disc: I've held $AVH in the past, but my preferred stock in the rapidly growing dermal repair segment is $PNV. However a pullback like this is tempting, as its likely overdone.

20% drop for a 6month delay. Short term pain imo.

Bought more in RL

Can I ask why Avita is only ranked 90 sum on SM?

This just seems to me to be a company and product that is kicking goals, has management with integrity and has the potential to add new treatments in years to come for skin cell therapy, anti aging as well as treating other diseases.

Risks due to FDA approval are low, cash a worry as maybe is a possible takeover offer. I hope this never happens.

Really interested in the negative opinion.

AVITA Medical Announces FDA Approval of RECELL for Treatment of FullThickness Skin Defects 

This is another biotech name that has surged off its lows of just a few months ago, catalysed by a change in management primarily. With two pending FDA approvals expected soon that expands its TAM for burns treatment, the price has carved out a new 52w high today.

It is getting close to a zone of resistance now, but the momentum and price action it has demonstrated thus far has been very healthy, and the upcoming catalysts could well see it breach the wall of resistance it will be running into soon.

One to watch.

Disc. : Small position held IRL.

It looks like the shake up has begun.

I'm taking it as a positive that they have removed a middle manager (the COO) and have those teams now report to the CEO.

The fact that the CFO has left at short notice (perhaps as a protest, perhaps he was pushed) is unsettling...

In total I'm just gonna wait an see what happens from here (while still holding onto my bag)

DISC:HELD (for now)

About time Dr. Perry was shown the door given the woeful underperformance of the business for multiple years from a shareholder return perspective and unjustifiable board and management compensation, though the timing is abrupt.

New CEO announced, seems to be out of the blue (unless I missed something).

Wondering if it was Dr Perry wanting to step down or the board booting him for under performance...

The new guy seems to have the chops - lets hope he makes this happen!

DISC: Held

AVITA Medical Reports Full Second Quarter 2021 Financial Results

Second Quarter Highlights

~ Reported U.S based RECELL® revenue of $5.0 million in the second quarter of 2021 ended December 31, 2020, a 62% increase over the same quarter in the prior year

~ Reported total global revenue of $5.1 million in the second quarter of 2021 ended ~ecember 31, 2020, a 57% increase over the same quarter in the prior year

~Commercial metrics: o Procedural volumes were 487 in the second quarter of 2021 versus 496 in the prior quarter ended September 30, 2020 o Added 7 new accounts in the second quarter 2021 for a total of 93 accounts

~ Enrolled nine patients in the pivotal study assessing the use of the RECELL® System to treat stable vitiligo

I sold 50% last Friday, I think it was, at $8. I like what they do but the cash burn is high which, as reported, could see more capital raising and thus sp dilution. Coupled with the sentiment driven rise recently it was a good selling price. Long term this company could be massive.

15-June-2020:  Redomiciliation Scheme Meeting - Chair's Address

AVITA Medical Limited proposed redomiciliation to the USA (to have their primary listing on the NASDAQ and a secondary listing on the ASX) Chair’s address to Scheme Meeting - click on the link above for the Chairman's script for today's meeting which explains the company's rationale for the move.

02-Jun-2020:  AVITA Files IDE with FDA for Vitiligo Pivotal Study

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, today announced that it has submitted an Investigational Device Exemption (IDE) supplement with the U.S. Food and Drug Administration (FDA) for the initiation of a pivotal clinical trial to investigate the RECELL® System for the treatment of vitiligo. 
 
“We are very pleased to have filed the supplement and look forward to advancing the RECELL® System into the clinic for treatment of vitiligo following acceptance of the application,” said Andrew Quick, Chief Technology Officer of AVITA Medical. “The data from the pivotal trial will form the basis of the FDA submission for consideration to expand use of the RECELL® System for repigmentation of depigmented lesions associated with stable vitiligo. In parallel, and as previously announced, we are also conducting a complementary and more scientifically-oriented feasibility study.” 
 
“Globally, the RECELL® System is approved for additional skin applications, including vitiligo, which is supported by a substantive body of clinical evidence with patients internationally and in peer-reviewed publications, providing us with valuable experience and confidence in pursuing expanded labelling in the U.S.,” said Dr. Mike Perry, Chief Executive Officer of AVITA Medical. “The submission of this pivotal IDE is an important milestone as we continue to explore opportunities to expand the patient populations who can benefit from treatment with the RECELL® System platform.” 
 
About Vitiligo 
 
Vitiligo affects approximately 6.5 million people in the United States, rivalling the prevalence of psoriasis; however, there are limited treatment options available to patients to permanently restore skin pigmentation.

Vitiligo is a disease resulting in loss of color, or pigmentation, in patches of skin that impacts the quality of life for those living with the condition.  There is currently no cure for vitiligo, nor a universally accepted method for limiting the spread of the disease.  Although many treatments are being used for the management of vitiligo, they are often temporary with a high rate of recurrence.  
 
Authorized for release by the Chief Financial Officer of AVITA Medical Limited. 
 
--- end of announcement ---
 
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 RES® REGENERATIVE EPIDERMAL SUSPENSION, 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. 

--- click on link at the top for more, including their "Cautionary Note regarding Forward Looking Statements" and their contact details ---

Disclosure:  I don't current hold AVH shares, due to the fact that they are in the process of moving their primary listing to the NASDAQ and making their ASX listing their secondary listing.  AVITA Medical are already a US-based company soon to have a primary US-listing, despite being originally formed here in Australia.  I tend to avoid those companies personally, not because they don't make good investments, but just because I prefer to invest in Australian based companies directly, and leave my US and other global exposure to my LICs and LITs such as MGG & WQG (and PAI for Asian exposure) or via ETFs. 

That's just a personal preference and is in no way supposed to infer that I don't think AVITA will do OK.  They have wonderful tech (and IP) and I both hope and expect that they will do very well, particularly after they move their primary listing to the US (via the NASDAQ) and get onto the radar of so many more investors and fund managers.  To give some context, I also like Resmed (ASX: RMD), but I likewise don't hold RMD shares directly because their primary listing is in the US, and they are headquartered in the US, with a secondary listing on the ASX, despite originally being an Australian company when they first started out.  That doesn't mean they won't do well either.  They've done pretty well so far.  But you can't pat all the fluffy dogs, and it's a personal preference for me to invest directly only in ASX-listed companies and to gain exposure to other companies via ASX-listed LICs and LITs (listed investment companies/trusts) - or ETFs.

23-Apr-2020: 7:43pm:  Just to answer some of @Hackenbacker's questions in relation to AVH's intention to move their primary listing to the NASDAQ and have a secondary listing on the ASX.  Reading through their documentation - like pages 2 to 4 of this announcement - it sounds like the Australian listing will be not shares but CDIs - which are explained here and here.

CHESS Depository Interests (CDI's) are shares of international companies traded on the Australian exchange markets.  This allows investors to receive the same ownership in foreign companies as holding them on the international exchange, but instead these CDI's are traded here in Australia on the ASX.  Companies which are incorporated overseas cannot transfer their shares through to the ASX.  CDI's open up more opportunities for Australian investors as they can access products which are not available in the local market.  For example, News Corp (NWS) is incorporated in the US and only trades in the US.  However Australian investors can own shares in NWS via CDI's.  My understanding is that Resmed (RMD) "shares" on the ASX are also CDI's.  These are often scaled differently to the shares listed on the primary market (Resmed and News Corp both have primary market listings in the USA).  RMD CDI's on the ASX are scaled 10:1, so ten of our RMD CDIs are worth one NASDAQ: RMD.

There are some differences between CDI’s and ordinary shares.  You can not vote at a company meeting like you would with ordinary shares unless laws from the country where the company is domiciled allow you to.

Initially you would receive 5 Avita US CDIs for every 100 AVH.ASX shares that you currently own, and these should, all things being equal, be worth roughly 20 times what they were trading at here, so if it happened today, theoretically, if you held 1,000 AVH shares currently trading at $0.44 (44 cents each), you would instead own 50 Avita US CDI's which would still trade on the ASX, but at about $8.80 each.  Currently, AVH has a secondary listing on the NASDAQ under the code RCEL - these are ADS's (American Depositary Shares which are foreign stock issued in the US and registered in the ADR system - the American Depositary Receipt system) - their equivalent to our CDI's - which are currently trading at around $6.12.

AVH have proposed a way for those people who currently hold NASDAQ-listed RCEL ADS's to have those swapped for Avita US shares, and they say:

"Therefore, shareholders in eligible jurisdictions and ADS holders (on the Record Date), upon receiving Avita US CDIs or Avita US Shares, will hold an equivalent proportional interest in Avita US as they held in the Company prior to implementation of the Redomiciliation."

In other words, nobody will be better off or worse off, regardless of whether they owned ADH shares on the ASX or RCEL ADS on the NASDAQ before the reorganisation.

In local terms, you'll own one twentieth of the number of shares you held before, but they'll be worth around 20 times as much, so the value will be unchanged.

In reality, it depends on the local sentiment.  When News Corp did this - moved from a primary listing on the ASX to a primary listing in the USA, their share price went down, but they were a big company and some fund managers here were not allowed to continue to hold them (because they were no longer an Australian-domiciled company) and so had to sell.  That would not be such an issue for AVH, I would think.  However, there still might be shareholders who would rather own shares in companies whose primary listing is here in Australia on the ASX rather than the listing being a secondary listing here for a US-domiciled company.

Liquidity:  AVH are a reasonably liquid company here, with over 12 millions shares (over $5m worth) being traded most days, and often up to 60 million shares ($25 m) or more traded on a busy day.  That may change, but they're already dual listed; they're just proposing to change their NASDAQ listing into their primary listing and their ASX listing into their secondary listing.  I would expect that would increase the liquidity on the NASDAQ, but it's hard to say if less Avita US shares would trade here on the ASX.  Liquidity could well reduce, but it would be unlikely to dry up altogether.  Resmed has their primary listing on the NASDAQ and their secondary listing on the ASX and it hasn't hurt their liquidity.  They are clearly a lot bigger, but Avita is no minnow.  At 44 cents/share Avita are a one billion dollar company.

This is not advice, but if I held AVH shares, and I currently don't, I would not see this as a reason to sell them.  I think the opportunity remains the same, regardless of where they choose to be domiciled and where their primary sharemarket listing is.  As a US domiciled company with a primary listing on the NASDAQ, I imagine that, like RMD, they will attract a lot more investor attention globally, particularly in the USA, and that will be good for the company - and ultimately for their share price.

20-Apr-2020:  7:30pm:  AVITA Announces Intention to Redomicile to the USA

AVITA Medical Announces Intention to Redomicile to the United States of America

Intention to establish primary listing on NASDAQ with continued (secondary) listing on ASX 

Valencia, Calif., USA, and Melbourne, Australia, 20 April 2020:  AVITA Medical Limited (Company) (ASX: AVH, NASDAQ: RCEL), a regenerative medicine company with a technology platform positioned to address unmet medical needs in therapeutic skin restoration, announced today its intention to redomicile the Company and its subsidiaries (Avita Group) from Australia to the United States of America by way of a scheme of arrangement under Part 5.1 of the Corporations Act 2001 (Cth) (Redomiciliation).

To implement the Redomiciliation, the Company has entered into a Scheme Implementation Agreement dated 20 April 2020 with AVITA Therapeutics, Inc. (Avita US), a newly-formed company incorporated in Delaware in the United States.  A copy of the Scheme Implementation Agreement is attached and will be available on the Company’s website.

If the Redomiciliation is implemented:

• Avita US will become the new holding company of the Avita Group;
• shareholders will effectively exchange their shares in the Company for equivalent securities in Avita US; and
• the existing listing of the Company on the Australian Securities Exchange (ASX) (being the Company’s current primary listing) and on the NASDAQ Stock Market (NASDAQ) (being the Company’s current secondary listing) will be inverted and replaced with a new listing of Avita US on NASDAQ (as its future primary listing) and on the ASX (as its future secondary listing).

The Redomiciliation is subject to regulatory and court approvals, as well as approval by the Company’s shareholders at an extraordinary general meeting which will be convened to address the Redomiciliation (Scheme Meeting).

Reasons for the Redomiciliation

After carefully considering the advantages, disadvantages and risks of the Redomiciliation, the directors of the Company (Board) are of the unanimous view that the advantages of the Redomiciliation materially outweigh its disadvantages and risks.  In particular, the Board believes that the Redomiciliation will:
 

• substantially reduce the costs, burden, resourcing and risks associated with dual financial reporting and related compliance obligations that the Company has become subject to in both the United States and Australia (since 31 December 2019), which is expected to save approximately A$400,000 per annum in external professional costs alone;

• create a “local” share listing on the NASDAQ exchange in the United States, the largest market for the treatment for burns, and where the Board’s immediate strategy is to further grow the Avita Group’s visibility and presence;

• increase the attractiveness of the Avita Group to a broader range of investors in the United States capital market, the largest in the world in terms of market capitalisation and trading volume; and

• better align the Avita Group’s corporate structure with its business operations in the United States, which is where nearly all of the Avita Group’s employees are located.  The Company derives virtually all of its revenue from the United States, has no physical presence outside of the United States, and a significant majority of its issued share capital (taking into account its American Depositary Shares (ADSs), which are traded exclusively on NASDAQ) is currently held by investors in the United States.

--- click on link above for more ---