Avita Medical Ltd (RCEL)

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Avita Medical Announces Manufacturing Advances
August 27, 2012 13:32 ET
Continuous Manufacturing Improvements Yield Significant Margin Expansion; Reduction of Greater Than 33% in Cost of Goods Across Company's Product Range
NORTHRIDGE, CA and CAMBRIDGE, UNITED KINGDOM--(Marketwire - Aug 27, 2012) - Avita Medical Ltd. (ASX: AVH), (PINKSHEETS: AVMXF), (OTCQX: AVMXY), the regenerative medicine company, announced a brief summary of recent manufacturing improvements, a direct result of the combined efforts of R&D and Operations and implementation of the company's commitment to a Continuous Improvement Model.
Modifications and improvements in manufacturing have generated a reduction of greater than 33% in cost of goods of the company's products over the past 18 months. Recent manufacturing changes and product improvements will be yielding significant additional increases in margins in the near term. These include:
Respiratory Products - In July 2012 Avita Medical completed relocation of manufacture of its respiratory product line (Breath A Tech® and Funhaler®) to Guppy Plastics, located in Malaysia. Guppy is a high quality manufacturer of plastic products supporting such diverse customers as Flextronics, Raymarine, Continental, McDonalds and Kelloggs. Avita is benefiting meaningfully from Guppy's ability to leverage material procurement volumes to provide a full turnkey arrangement with Avita while reducing manufacturing costs by approximately 11%. The improved manufacturing margins will be recognized over the coming months as Avita commences shipment of the new, higher margin product.
Regenerative Products - Avita has worked closely with its manufacturer to implement a number of recent improvements to ReCell® Spray-On Skin® based on customer feedback, best manufacturing practises and component cost improvements. In addition, R&D work focused on both product and field of use has significantly enhanced the margins across all proposed applications of the proprietary ReCell intellectual property. These changes to the ReCell product have included:
Improved and more customer friendly packaging and ease of use through improved mechanics, software and labelling.
Revised and improved manufacturing process including a Turn Key purchasing agreement yielding significant saving in materials procurement.
Manufacturing of the proprietary ReCell Enzyme has been relocated to a specialist US-based manufacturer yielding significant advances in the manufacturing process and performance. Crucially, the new manufacturing process, while meeting all specification requirements, will provide improved availability and contributes to a significant decrease in the cost of goods.
"The significant improvements to Avita's products and manufacturing process have yielded important and quantifiable benefits in product quality, increased margins and reductions in operating costs," said Dr. William Dolphin, CEO of Avita Medical. "Moreover, the new manufacturing ensures ready availability of the ReCell Enzyme, a critical factor as demand for ReCell grows worldwide.
"The company is committed to our Continuous Improvement model with tight control of our Quality and Manufacturing Systems a prerequisite for efficient operations. We look forward to announcing additional improvements as we continue to reach our key milestones."

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