I just read this summary from the investor briefing:
· Ease of Use RECELL device launched very recently which is going to be valuable in the outpatient market as it decreases the number of steps by 1/3 and only requires one pair of hands (previously two) in the sterile field. Getting nice, continued feedback from burn surgeons who are currently using the new device
· FDA meeting H2 ’22 to discuss IND enabling study requirements for both EB & Rejuvenation to move forward with first in human trials
· Japan Burns – Reimbursement expected to be announced in Q4. COSMOTEC will fund Recell in Japan and Avita will get 40% of the reimbursed price
· Top line results for vitiligo and soft tissue trials “likely early Q4”, PMA submissions by the end of the year for both indications, anticipate approval in H2 ’23
· Sales – “feeling good about (sales in) Q122 and the trend continues into Q222”
· Sufficient cash (US$95M) to fund operations for 2-3 years relatively easily
· Granted patent and pending patent coverage would provide a further 20 years protection (if half of the pending patents are approved - they anticipate more than half to be approved)
· JAK inhibitor treatments, if approved, from companies such as Pfizer and Incyte, will increase Avita’s vitiligo target market because they will increase the number of stable vitiligo patients eligible for re-pigmentation with Recell. Also, these larger companies will likely be spending significant amounts of money to create increased awareness which will be complimentary to Avita
· Competitive landscape, in the pipeline and in the market, looks relatively clear. Recell for burns, soft tissue and vitiligo is providing better outcomes at a better price than competitors e.g. StrataGraft
· Contributing factors to the share price decline: - They don’t believe it’s because of how the business has been performing, the company has been executing the major milestones on or ahead of guidance - Macro environment i.e. Covid; Inflation, rate hikes which has caused a shift of institutional investment out of technology stocks, especially in the medtech and biotech spaces, into safer sectors; Russia and Ukraine conflict; Supply chain disruptions
· Share price recovery - “we’re heads down, we’re executing, we’re hitting milestones, and we feel confident that, sooner rather than later, this (the share price) will turn around and the market will favour us once again”
· Return on investment (ROI) for the approved markets in the Australian (TGA) and European (CE) markets is currently negative for burns. However, once the company has received approval and launched the soft tissue and vitiligo indications in the US, then it will make good sense from an ROI perspective to re-launch in Australia and Europe
· Won’t be de-emphasising the burns business as the soft tissue and vitiligo indications are approved and commercialised. Will continue to grow (sales and innovation – automated device at 1:80 skin harvesting ratio) in burns, however, the burns business (SAM $260M) will be "dwarfed" by the additional soft tissue (SAM $450M) and vitiligo ($750M+ if JAK inhibitor treatments are approved) indications
· Prioritise burns, soft tissue, and vitiligo indications over the much higher risk cell and gene therapy indications (E.B. and Rejuvenation)
· Cash position was US$95M on 31 March 2022
- Should have sufficient cash for 2-3 years, and could last longer if required by not spending as much on the cell and gene therapy indications, partner or spin out (wholly owned subsidiary) the cell and gene therapy assets; Control on how aggressively the company rolls out the vitiligo and soft tissue programs
- Cash is significantly ear marked for the burns, soft tissue, and vitiligo markets - Burns business is profitable on a direct cost basis - No guidance provided on when the company will become cashflow positive, however, they are comfortable with the resources they have.
