AVITA Medical, Inc. (NASDAQ:RCEL) Q4 2022 Earnings Call Transcript

Phillip Dantoin: That’s really helpful. And I guess one more for me. On spend given the rapid increase in the sales force here in Q2 what cash burn expected to look like? And how do you think about capitalization moving forward? I appreciate the commentary that OpEx should keep in Q3 but what should we be thinking about there?

Jim Corbett: Well, clearly, we’re making an investment in market growth. Now go back to our 83% gross profit and how we look at each of those investments. Contribution margin for a sales rep gets covered by five resale sales a month. So for us that is from a €“ looking at our burns experience, each rep averages well over 20 per month. So we do have an expectation about when they cross over and it is €“ without getting precise about it because it does have variability it’s a number of months not a year that they will cross over. So I think from a cash burn point of view we feel quite comfortable. For example we’re absent investments in Vitiligo or international we expect to end 2024 with an excess of $30 million of cash. So that will be after another expansion and another growth year. So we feel very comfortable with our capital position as it is today.

Phillip Dantoin: Awesome. Thank you so much.

Jim Corbett: You bet. Thank you.

Operator: Thank you. Our next question comes from the line of Ryan Zimmerman of BTIG. Your line is now open.

Unidentified Analyst: This is Saib on for Ryan. This next one is on the Japanese market and the partnership with COSMOTEC. Do you expect to meaningful contributions from the Japanese market in 2023? And how should we think about that given the guidance you’ve provided? Then I have a follow-up as well. Thank you.

Sean Ekins: Well, first of all, our early returns in Japan are going well. We’ve performed in the territory of in excess of hundreds of patients so far. That said, we do not have enough experience with them that we’re giving specific guidance on Japan, although you’ll note that it is even at a couple of hundred in the short time it’s been we do expect a strong performance from Japan remembering that we recognized 40% of the selling price. So on one hand it’s a very high gross €“ high operating profit type sale. It’s also lower per case in revenue but lower expense to produce. So I think in the coming quarter my objective in my conversations with COSMOTEC is to be in a place where we can project forward our expectations for Japan. We’re just not quite ready to express that in this moment.

Unidentified Analyst: Thank you. That’s very helpful. That’s very helpful. The next one is on Vitiligo. You indicated that Vitiligo is likely to still be approved in June of 2023 with insurance reimbursement established in January of 2025. Can you provide us any updates on conversations you’ve had with insurance payers as you look to establish reimbursement for Vitiligo. Thank you, again.

Jim Corbett: Yeah. You bet. Actually we’ve had no formal conversations with payers at this time. They of course dedicate their time to products that are ready for market and we are still a few months away from that. Our expectation is of course that what we’re looking for is to establish RECELL as an in-office treatment alternative. So that is a process that is embedded in sort of the reimbursement world. So it’s kind of a complex question to answer. We haven’t gone to private insurers yet will in fact go to CMS first. So that will all happen post — later this year.

Unidentified Analyst: Thank you.

Operator: Okay. Thank you. Please stand by for our next caller or question. Our next question comes from the line of Brooks O’Neil of Lake Street Capital Markets. Your line is now open.