Q1 2022 AVITA Medical Inc Earnings Call
Okay.
Good day and thank you for standing by welcome to the Davita Medical first quarter 2022 earnings conference. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session.
Ask a question during the session you will need to press star one on your telephone.
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Now like to hand, the conference over to your speaker today, Caroline corner with Investor Relations. Please go ahead.
Thank you operator, welcome to feed them medical fiscal first quarter 2022 earnings call. Joining me on today's call are Mike Perry Chief Executive Officer and.
Michael Holter, Chief Financial Officer.
This call will include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Statements made on this call that do not relate to matters of historical facts should be considered forward looking statements, including statements regarding the markets in which medical operate trends demands and expectations for its products and technology expected financial performance expenses on our position in the market and the impact of COVID-19 on its operations and its customers operation.
These statements are neither promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual results performance or achievements to differ materially from any results performance or achievements expressed or implied by the forward looking statements. Please review of Vita medical most recent SEC filings with the SEC, particularly the risk factors described in the beta medical.
FRE and 10-K filings and then the beta Medicals quarterly report on Form 10-Q for the first quarter ended September 32021 for additional information any forward looking statements provided during this call including projections for future performance are based on management's expectations as of today it'd be the medical undertakes no obligation to update these days.
Except as required by applicable law.
BD Medical's press release with first quarter results is available on its website www dot Davita medical Dot com under the investors section and includes additional details about the financial results.
Medical's website also has the latest SEC filings, which you're encouraged to review.
A recording of today's call will be available on a beta medical's website by five P. M Pacific time today now I'd like to turn the call over to Mike for his comments and first quarter of 2020 to business highlights.
Thank you Caroline and thank you everyone for joining US today, we are encouraged by our recent commercial performance and we remain extremely excited about the opportunities ahead with our pipeline indications here with Davita medical we are driven by our primary goal of commercializing.
Our proprietary technology to enable healthcare providers to successfully address skin defects to save lives and improve quality of life for our patients.
As we grow from treating burns the trauma to the <unk>, the cell and gene therapy and to aesthetics and beyond our focus is on delivering leading edge therapeutics skin restoration solutions to our patients.
While the company was founded with Burns treatments in mind.
Team is working to leverage our point of care autologous spray on skin platform across many markets and indications I am very pleased to update you today on our latest developments with that I'd like to turn to our Byrne's business I'm pleased to report that our commercial revenues.
Were $6 9 million in the first fiscal quarter compared to $6 7 million in the previous quarter ended June 2021.
Last Tuesday.
Centers for Medicare and Medicaid services or CMS approved debate.
Medical applications for a transitional pass through payment device category sic code that will provide.
Separate payment for resell used in procedures that are performed in hospital outpatient facilities and in ambulatory surgical centers.
<unk> device category code, which is intended to facilitate the adoption of new technology for Medicare beneficiaries.
Offsetting the cost of the device to facilities will be effective January one 2022. This new code expands resale burden treatment towards new care setting with existing customers and laser reimbursement foundation for our soft tissue repair indication that we are.
Working towards.
As a quick update on the product development front.
At the end of June we submitted to the FDA PMA supplement application for our new version of the resale device with improved ease of use which we hope will allow us to approach our future markets more readily.
We anticipate FDA approval in the first half of calendar 2022.
Commercial launch thereafter.
Approved ease of use device will allow us to medical to better address our burn outpatient market facilitated by the new TPP code issuance as well as our soft tissue repair indication once approved.
More specifically the ease of use device allows for improved surgeon and staff handling by only requiring one set of hands in the sterile field as well as the reduction in device handling steps by one third.
We've been building our Burns focus sales force for three years and believe we have the largest and most experienced burns dedicated sales force in the market.
However, at this time due largely to Covid, our sales force is selling into our system, which is experiencing staffing shortages.
Our surgeons rely heavily on their experience nursing staff and high turnover and early retirements are impacting resale procedures in response to the situation, we have prioritized our training and education efforts and hope to see improvement in procedure rates as the patent that might continue.
To abate.
Our commercial focus is on driving utilization and broadening penetration within our footprint of over 100 hospitals.
<unk> 250 trained physicians.
Revenue from our top 20 accounts increased approximately seven 7% in fiscal Q1 over fiscal Q4, driven by growth in the top five accounts.
<unk> saw 18, 3% growth.
Our top five accounts have been less impacted by the staffing shortages being larger and with dedicated burn staff, which has enabled our growth here.
It's clear that nursing training has a tremendous impact on the hospital's ability to perform procedures and the nursing staff. Therefore has a substantial influence on the use of resell.
We are continuing to train physicians, we are approaching our training efforts with a strong focus on advanced practice providers.
Training includes local regional and national events for both surgeons and their staff. In addition in the last quarter. We have held the almost 550 hands on training in the field and we are currently performing approximately 200 and hospital training sessions per <unk>.
Good.
Last weekend, we presented 10 abstracts at the HBA Southern region Burn conference the largest aea region and the largest U S. Burn conference next to the annual meeting.
Meeting in the spring.
The presentations covered topics such as small burns pediatric burns topics of integration of resell into practice, such as synergistic combinations with resell and health economics.
Additional later this week, we will have to resell presentations at the North East region Burn conference interest and resell remains high and despite the pressure on procedure rates, we are completing cases and delivering on our mission to save and improve patients' lives.
In the first quarter during hurricane Ida.
Normally suffered severe burns when theyre gas grill, they were using due to power outages exploded.
The pregnant mother her husband and their toddler, where are all burn the family was taken to University Medical Center in New Orleans, where they were treated by three different surgeons.
All were successfully treated with resale.
Today I'm very pleased to tell you that all family members are recovering and the mother, who suffered burns to her legs.
The climb the stairs to her third floor home and to carry her toddler.
While our commercial focus to date has been in Burns another area of important impact for us is injuries not originating for burns.
Reopening of the economy and the corresponding increase in accidents meant that in our fiscal fourth quarter and first quarter enrollment in our soft tissue reconstruction trial materially accelerated.
This trial involved injuries, such as the resection of necrotizing soft tissue infections, and the Gloving injuries, which are wounds that commonly present at the same trauma centers, where we're currently treating our burn patients.
If you recall, we had our first patient in this pivotal trial enrolled in March 2020, and we saw slow enrollment for the first year due to the pandemic.
Today, we have 19 of the 20 planned sites up and enrolling with 58 of 65 subjects enrolled to date.
In October alone, we enrolled 10, new subjects spanning broad geographies.
Since the close of the June quarter, a resounding, 40% of the required 65 subjects have been enrolled.
Assuming current trends continue and allowing for the typical slowdown in clinical research during the holiday season, we now plan to complete recruitment by Q1 of 2022, well ahead of our last update.
With a six month follow up for patients in this trial, we're aiming for an approval by the end of 2023.
As a reminder, based on our internal calculations, we foresee a serviceable addressable market or SaaS for trauma in soft tissue injury, a $450 million.
Patients presenting with a requirement for skin grafting and resell whether for burns trauma or other skin repair are routinely treated by the same surgeons within an institution.
We plan to address this market through our existing hospital accounts and with the addition of 220 level, one and level two trauma centers. After we have U S. FDA approval, we plan to quickly leverage our existing trauma and burn centers sales relationships to launch.
Into trauma and acute wounds and we will incrementally expand our sales force to address this opportunity.
Moving on now from Burns and trauma to our continued progress in vitiligo.
For those unfamiliar with the condition that <unk> as a skin disorder characterized by deep pigmented areas of skin that appear as white spots or patches, and which are primarily attributed to an underlying autoimmune disorder in the patient.
There are an estimated 100 million sufferers of bit of Lago worldwide, including up to $6 5 million Americans.
Of those in the U S. We estimate approximately one 3 million have stable that ally go our target population, meaning that their underlying autoimmune disease is being well managed and that their disease is not continuing to spread.
On October 22nd the Global Vitiligo Foundation, and the online community.
My Dash Vitiligo dash team posted a public webinar on clinical trials for patients with vitiligo.
As a proud sponsor of the GBS. Our trial was featured and we've been very pleased with interest levels.
Today, all 15 sites are up and running and 8% to 23 subjects have been enrolled.
Continue to plan for completion of enrollment at the end of this calendar year and approval in 2023.
To support the vitiligo opportunity our products team is developing a new fully automated version of the resell system tailored for the dermatology setting.
Dermatologists see high volumes of <unk> patients and this version of resell automate some steps and specifically the skin scraping step to make best use of physician and nursing staff time.
Work progresses, and our collaborations with the University of Colorado Gate Center for regenerative medicine, and epidural licensed below <unk> and with the Houston Methodist Research Institute for Rejuvenation.
Both groups have preliminary proof of concept experiments ongoing.
The work to date gives us confidence that the methods developed will yield successful proof of concept in the animal models by the end of this calendar year.
I would now like to walk you through the growth drivers we see ahead.
We continue to drive forward on provider engagement and education.
Whether in person or virtual or discussions have shifted from whether or not to use resell.
And today, our focus is on optimizing the use of resell as well as training and refining the expertise of support staff.
Our commercial team will be continuing to drive penetration into our burn center accounts, we are vac approved and what we believe is a critical mass of burn centers and with that we are focused on penetration within those accounts we.
We have shown that our strategy of driving into smaller burns results in overall broader resell usage to underscore our approach today over one third of resale procedures involve burns that are less than 10% TBS say or total body surface area and these smaller burns.
Represent about three quarters of burn admissions.
On November 2nd CMS published the 2022, Medicare outpatient prospective payment system with payment going into effect in January of 2022.
Based on this.
Code will be assigned to resell, which we anticipate will cover the cost of the device for all Medicare patients.
We plan to then commence a pilot launch at key sites to ensure coverage with commercial carriers before proceeding with a broader nationwide launch in mid 2022.
Our pipeline initiatives are continuing to move forward.
More specifically we are excited about progress within our <unk> trial, which should complete enrollment at year end as well as our soft tissue trial, which now has 58 of 65 patients enrolled with the uptick driven by the recent increase in trauma related accidents.
We continue to be optimistic about our preclinical pipeline work in epidermis licensed below.
In rejuvenation and we are on track to demonstrate proof of concept by the end of the calendar year.
We are determining our future steps and path forward with the FDA. Our next goal is to review the <unk> data requirements to submit an NDA application for first in human treatment and once timelines are clear I will update you accordingly.
Moving to our last growth driver, we plan to broaden our geographic footprint over the coming years Kosmos Tech our commercial partner in Japan has revised its approval strategy to focus on Burns initially based on Japanese health authority or PMD a feedback.
The Japanese health authority is working through a backlog of applications and we have been advised to expect approval in the first half of 2022.
Non approval cosmetic will meet next year with the Japanese Ministry of Health Labor and welfare or MH L. W. Two present resell for reimbursement review, which we anticipate will occur in June.
<unk> will then launch to burn customers shortly thereafter.
Once we have it a lego and soft tissue data from our U S. Pivotal trials cosmetic will seek regulatory and reimbursement approval for those indications as well.
In summary.
Despite continued pressure on procedures largely due to recent hospital staffing challenges, we have made substantial progress across our business.
While we anticipate continued staffing of headwinds in the near term I'm pleased with how our commercial team has responded driving advanced practice training and keeping resell front and center in the minds of burn care practitioners.
Finally, and looking further ahead the substantial progress in our clinical trials for vitiligo and soft tissue trauma reflects a groundswell of interest in and the potential of these larger market opportunities with that I'll now turn it over to Michael for Dieter.
<unk> on our financial performance in the quarter Michael.
Thank you Mike.
Total revenue for the three months ended September 32021 was $7 million, an increase of $2 million or <unk>, 39% over the $5 1 million reported for the same period in 2020 the.
The increase was largely driven by broader utilization among our customer base as well as deeper penetration within individual customer accounts.
Gross profit margin for the three months ended September 32021 was 85% compared to 82% reported for the same period in 2020.
Higher gross margin was driven by lower shipping cost.
<unk> increased production at our Ventura facility.
Total operating expenses for the three months ended September 32021 was $12 3 million a decrease of $2 7 million or 18% over the $14 9 million reported for the same period in 2020.
The decrease in operating expenses is primarily attributable to lower stock based compensation and higher cost in the prior year related to the beta groups re domiciliation to the United States, along with severance costs associated with a former executive.
This was partially offset with higher travel costs in the current year due to fewer COVID-19 related travel restrictions.
Lower stock based compensation was driven by higher share based compensation expenses in the prior year associated with certain performance milestones being met.
Net loss for the three months ended September 32021 was $5 9 million, a decrease of $4 3 million or 42% over the $10 2 million loss recognized during the same period last year.
The decrease in net loss was driven by the lower operating expenses described above and higher revenue during the three months ended September 32021.
As of September 32021, the company had $60 4 million in cash and cash equivalents and $49 5 million in short term and long term marketable securities as well as no debt.
Moving on to guidance for our second fiscal quarter, we expect total revenue in the second fiscal quarter to be approximately $7 million.
This guidance reflects the anticipated impact of hospital staffing challenges as well as uncertainty with the pandemic.
I would also like to announce that the company will change to effective December 31 2021.
A calendar year basis for financial reporting.
With that we thank you for your attention.
And now I will turn the call back over to the operator for your questions.
Thank you as a reminder, youll need to press star one on your telephone to ask a question.
Draw your question press the pound key.
Our first question comes from Josh Jennings with Cowen Your line is open.
Hi, This is Eric on for Josh. Thanks for taking the question I was hoping to touch on guidance for fiscal <unk>, you're expecting 7 million now and we're almost halfway through the quarter I was hoping if you could just talk about the trends that you're seeing through October and early November here that is driving your guidance and then what is baked in for the remainder of the.
A year.
I'm going to pass.
Ask that one over to Erin our chief commercial officer to respond to Erin sure sure Theres a lot of things that are going on in the market. Some are seasonal which we anticipate and some are kind of relating to the staffing challenges. So typically in the fall we see seasonality.
Seasonality right and so we're just coming out of that seasonality, where you see a bit of a depression in terms of procedures.
Then you see it kind of usually in the November December timeframe really starting to pick up so.
Remember December January is very high and then several months of July.
It's also quite high so we have seasonality in kind of coming out of that and then as I mentioned into the holidays, we certainly see kind of an uptick in terms of procedures.
We have at the end of our year, our rebate scheme, where we often see customers kind of.
Buying up at the end of the year for the rebates.
On the flip side, though we are dealing with some staffing challenges.
Nursing staffing challenges.
And just to kind of get into that a little bit more.
What we're encountering right now is.
There are burnt procedures ongoing.
Many burn procedures.
Getting rescheduled to odd times, such as Nytimes our weekend.
There's a lot of what we're calling traveling nurses going around covering kind of the gap.
And at times or at times, Theres, just not the necessary staff needed. So a lot of surgeons are not comfortable doing a resell procedure without someone there on staff that is has done many many procedures before so.
They're trying to fill in the gaps and do a lot of training, but at the end of the day, we can't provide care.
And there's just certain times, where the surgeon wants to have someone there.
On their team that has done a case before and that were running into some challenges.
And so that is kind of the two dynamics that are that are kind of.
Contradicting I guess each other.
Thanks, Sharon does that answer your question Eric.
That's great. Thank you and then maybe if I could ask one more just on the vitiligo trials you have.
Of 23 subjects enrolled.
Just thinking about any headwinds that we could have towards the end of the year in terms of scheduling.
Where is your confidence that that's going to make the enrollment goes that all 15 sites are up and running and that's going to accelerate is there any read through from your soft tissue enrolment as things pick up that perhaps that would somehow apply to your vitiligo trial, just trying to understand where are those.
Patients are going to be picking up.
Yeah. So.
We have.
Number of patients in the queue.
That are being evaluated and.
For specific detail on that.
I'm going to pass it over to <unk>.
And the quick our Chief Technology Officer, Andy Thanks, Mike. Thanks, Eric for your question, so soft tissue in vitiligo, a different because with <unk>, we can drive recruitment.
We have mentioned I think before our.
Multimedia online et cetera recruitment effort, including radio.
That has enabled us to fill our pipeline so beyond the <unk>, who are enrolled today eight more scheduled.
And an additional 10 plus.
Have met the criteria and are in process of consenting and scheduling. So obviously that puts us over the 2003 and thats really the basis for our confidence with soft tissue.
More of a waiting game for someone to turn up with an injury.
That's helpful. Thank you guys.
Thanks, Eric.
Thank you. Our next question comes from Matthew O'brien with Piper Sandler Your line is open.
Thanks, so much.
A quick clarification for Mike P.
The commentary about soft tissue in Q1, 'twenty two enrollment completed by then.
Approval by the end of 2023 is that calendar or fiscal I, just want to make sure I'm clear on that.
Calendar.
Got it Okay, and then just to follow up a little bit on Erik's question on this dynamic about staffing shortages.
These strange times, where some of these cases are scheduled.
Just wondering when do you think some of these issues may abate a little bit more is it really delta variant driven so maybe it continues here in this calendar sorry, this fiscal quarter and then less so next calendar year or is this something that may may be a headwind for the next.
Several quarters.
It could last longer.
Not sure if it's going to be several quarters.
Really don't believe that specifically the delta variant.
It's really the dynamic of what's happening relative to vaccination requirements in some nurses not necessarily wanting to take the vaccination.
As well as.
As Erin mentioned earlier these traveling nurses theyre getting paid substantially more than the regular nursing staff and then the regular nursing staff.
Sure.
Becoming traveling nurses or are taking early retirement.
Because they just don't.
See the.
Viability or the fairness and the situation.
Anything you would want to add to that Erinn.
I think that's unfortunately.
Yes, we don't have a crystal ball I agree with you. It is not necessarily a delta related I think Bert the nurses are just burnt out I think it was interesting on the <unk> call. This morning, right that some have just.
They are being lured away to other industries. Some of them have felt that the nursing just not for them.
At the last two weeks southern.
The average age of the burn nurses 59, alright, so that much older.
And so some of them are retiring.
And also nursing is a specialized field, but it takes six to 12 months to kind of.
Really kind of idea of Preceptorship and it get specialized in that particular area to really be kind of <unk>. So.
I think theres, just so many variables I hope it doesn't last for long time and things kind of settle down.
But.
I certainly don't think it's going to be not going to go away in a quarter for sure.
Okay, but to be clear that you guys aren't losing accounts you're still you still have those accounts. They are just like.
Because often okay and then I guess just one more quick one on the outpatient side you certainly great to see the pass through update just wondering if you can give us a sense for how impactful that could be to the business as.
As we enter calendar 'twenty two thanks, so much.
Sure Matt.
<unk>.
The GPT code is very valuable to us.
Especially in the long run and the short term.
It really has to do with the adoption curve and as we've said many times the surgeons start out.
On larger burns and in combination and full thickness burns with a mesh split thickness skin graft.
At the end of that adoption curve that they go to the smaller.
Williams and Burns.
<unk>.
It could be treated in the outpatient setting.
So initially with only burns approved at this point.
The impact is going to be realm.
Relatively modest.
But as we get soft tissue approved.
That's really going to be a very important component.
Of our revenue.
So.
Eric anything to add on that the only other thing I would say is of our service.
Serviceable addressable market the $260 million 60 $60 million of that is for burn underneath 10% total body surface area, which outpatient is a big chunk of that right. So with Covid. It's a little murky in terms of how many are inpatient versus out because a lot of them have transitioned more so heavier to outpace.
<unk>.
But that's kind of.
That's kind of the size.
The segment that we're running after that at TVT will help us with.
Got it thank you.
Thank you Matt.
Thank you. Our next question comes from Lyanne Harrison with Bank of America. Your line is open.
And good morning, all and thank you for taking my question.
A follow on from the conversation Craig.
Let me speak about the nursing staff.
And China wanted to scan.
The.
Approval on launch at least 2.0 will help.
I guess some of that.
Particularly we've seen at east Dubuque.
Reduction in the handling.
Hum.
Goodbye.
Thank you Leann for your question.
I think that.
The new device will help somewhat.
Certainly one only needs a single pair of hands in the sterile field.
And as I mentioned.
It's cutting down the number of steps by approximately a third.
That said there are.
Phil.
Still issues relative to burn nurses.
That are qualified that have.
Experience in doing the procedures.
And having the burn surgeons comfortable that they have staff that are going to accurately utilize that device and had been trained sufficiently.
Generally the surgeons like to take the initial skin sample.
As well as do the spray on but they try to dedicate the other elements of the resell procedure.
Two.
Are there other practitioners nurses and advanced care specialists.
Okay. Thank you and just one more question on the Japanese market, obviously some delays.
With respect to approval.
Can you give us an indication of the size.
The Japanese market, if you break it down in <unk>.
This is the other indications so that we can just get a handle on how we think revenues ramped up at this time.
Sure, Let me start off and then I'll pass it over to Aaron, but generally as a rule of thumb.
We would.
We generally look at the Japanese market.
Yes.
10.
Of the U S market.
So you can look at that on indication by indication.
Take our numbers.
<unk>.
And calculate.
Calculate it that way.
And any additional.
You would talk about there, but Japan Hillman.
We're going to have an updated corporate deck on our website in about half an hour that has a funnel for Japan for the burn segment on there.
And just to give you kind of a bit more data on there that's correct there is about 10%.
About 10% of the size now so theres about 6000 patients that have severe burn, meaning they're they're admitted and they may require grafting.
And they're saying that there was about 1400 patients that there'll be targeting with resell.
And so that's kind of the size of the population that cognitive I'll be going after to begin with.
But what we don't know it's kind of what the reimbursed price will be but again that will be on the updated deck will be posted on our website in about half an hour.
Great. Thank you very much.
Very helpful.
Yes.
Thank you as a reminder, if you would like to ask a question press. The Star then the one key on your Touchtone telephone. Our next question comes from Brooks O'neil with Lake Street Capital. Your line is open.
Good afternoon, everyone I'm, hoping you could just amplify a little bit obviously, when I think about the burn.
Things are happening.
I assume the patients are getting treated so.
In some ways it comes down to a question.
We wanted to do.
Fashion.
Skin graft or are we going to use retail and <unk>.
Are you, saying that the phenomenon you're seeing out there.
The nurses and doctors are opting for sort of the old fashion Friedman.
Now because they don't really know how to use your system or how.
What are you seeing out there.
Yes.
Brooks. Thanks for the question first of all.
It's really it's.
It's not the surgeons. The surgeons are yes, there is a number who are retiring as well as a number who are <unk>.
Moving from one center to another.
But that's not really.
Substantial impact.
What is is the nursing staff.
And when a physician or burn surgeon feels that they don't have the right competency in the nursing staff.
Will opt for a split thickness skin graft.
And because that's what they are taught that's what the nurses know how to do.
To be honest there is not a whole lot.
That the nurses necessarily need to assist with.
In the procedure.
As opposed to the after care, where the nurses are really involved in the old model. If you will.
One of the thickness skin grafts, so does that answer your question.
Yes.
I totally get the way the World works out there just seems a little surprising to me given.
Benefits from retail and four.
The patient and frankly from a clinical perspective at sea.
To be a huge improvement over the old approach, where we are.
We're putting less trauma.
Body of already prioritized patient you would think that.
That would be a direction, we want to go even then.
Like we've been in the last year or so.
Yes, Youre absolutely right.
Let me.
Uh huh.
Transfer the call over to Aaron.
To give you a little bit more detail that.
He is getting from our field force Erin.
Unfortunate because I think so when you look at our top 20 accounts are the accounts that are bigger accounts that have dedicated burn teams.
They've got a higher chance of having someone there that has experience with retail because theyre not they bought that dedicated team. That's what we're seeing we're seeing the strong growth in our top 20 accounts because they have that.
Stable team and Theyre always having someone there thats familiar with <unk>. When you look at kind of the smaller accounts that have rotating teams or that they have some win in there.
Just doesn't want to try something new there nervous to try something new because we sell it still perceived as new in many of these accounts without having SaaS that's familiar with it and I think that's just some nervousness there.
Sure.
So and as go ahead Michael.
Yes, just to put this in perspective.
I would say that this has impacted our case load certainly less then to the degree of 10%, maybe 5% to 7%. So in the overall scheme of things it hasn't made a tremendous impact we spent a lot of time, describing this qualitative qualitatively.
But its overall impact is not not that terrific.
Great.
And then I was going to ask you just a little bit about <unk>.
How big an opportunity do you see in the outpatient market and and I think Mike Perry made the comment that the TPP paas.
Repayment will facilitate reimbursement for soft tissue.
Curious for a little extra color on.
Sort of what Youre seeing there.
Sure.
The C code.
Net.
CMS.
Has approved and that will go into effect.
In January of next year generally first.
It is actually.
Indication agnostic.
So when we look at.
Nomadic wounds.
And individuals presenting two trauma centers.
With.
Relatively small wounds that can be treated in the outpatient setting yet they do require skin grafting.
That's where the C code is really going to give.
Bump.
To our revenues.
Great makes total sense to me and then just one final one we've talked over the last year or so, but the opportunities in cell and gene therapy, but since.
And so not really a scientist can you just talk a little bit about some of the things you see as exciting opportunities for the company in that broad area.
Sure.
So number one we started with an orphan disease.
So far as correcting Gino dermatosis or genetic diseases of the skin inborn errors.
And we started with epic derma licensed but low score.
And that is moving along well.
And we anticipate having preclinical proof of concept that in general to generalize from EV.
At utilizing the <unk> system, we can take genetically modified cells skin cells and use the spray on technology.
To create new skin.
And that would be newly corrected skin right and there are a lot of other diseases. In addition to EV and Thats generally a negotiation with FDA as to how many orphan diseases does one need to actually show clinical proof of concept in.
To get.
Get a broader label than just the ones that you've studied clinically.
There is generally they want you to study.
Three four.
Various.
I would say gene mutations.
To show that.
What form that Youre utilizing is robust enough.
And then it opens up.
Another.
Gino Dermatosis another billion dollar opportunity.
Just for the Yeah, and then rejuvenation.
We're using.
RNA telomerase.
That is.
Assuming we get our proof of concept and we do believe that we're almost there so it's working well.
We are getting telomerase into the skin cells.
We've identified that.
And if that comes through obviously.
The multibillion dollar opportunity.
And.
What we'd be looking at.
Just describe how quickly develop it.
We would be looking at.
A real indication beyond rejuvenation.
To start and get the safety data.
So.
Solar Elastosis for example, where their skin.
Their skin damage due to.
A lot of Sun and.
Sunburns.
Those types of things.
There are other indications as well, but we would go into.
A real.
Disease as opposed to just wrinkles.
People, who are are looking.
Look younger.
Generate the safety data and then move as Botox did.
And Erin headed up marketing.
At Allergan.
For Botox Jupiter piece.
So we've got.
<unk> pro sitting right here.
Yes.
Everything is looking good.
So I have to say I'm very very.
Excited about the opportunities ahead.
Thank you very much.
Thank you Brooks.
Thank you. Our next question comes from John Hester with Bell Potter Your line is open.
Good afternoon, Mike just a quick question.
And Eric just didn't relations just in relation to the hospitals I mean, you talked a little bit.
The nursing shortage.
How much of a focus for the hospitals, putting on correcting the problem or is this something that's still going to go away in a quarter or two but is this a focus area for them do you think.
Oh, yes, definitely we're hearing about it in other contexts as well, it's not just with the resell platform.
Overall, there is a problem.
With a shortage of nursing staff.
And hospitals are re.
Running their nursing staff to the bone right now.
And we're hearing a lot about it in.
The General news maybe.
As well as from other companies reporting.
Aaron anything else that you would want to add to that yes.
Andy might have something as well.
Definitely not earn specific our resale specific it's across the board and it's not even nurses support staff as well as janitorial administration.
It's just overall.
Shortage across.
All resources.
And a lot of it is burn out of those individuals who worked through the pandemic didn't get a break and then.
Finally, you see that.
What life's just.
Not worth this job.
And there they are rotating out so it's something that the hospitals are going to have to deal with it won't be an overnight.
<unk>.
Correction.
But I'm sure it will correct Andy anything to add yes, we had the privilege of keynote presentation by the President of the American Nursing Association at last week Southern.
We're in region.
They held their annual research meeting and the <unk> is also taking an active role in commenting this issue part of it is.
Engaging with hospitals to make sure there's a clear understanding that that it is not the case that our nurses and nurses and nurses nurse.
Nurses are specializing in the anh is working on an accreditation program specifically for burn nurses.
So that will help them, they're engaged on Capitol Hill to make.
Make sure that their voices heard with respect to what's needed to improve the situation. So there's really a lot of work ongoing.
From a number of different angles to remedy the situation.
Savi.
John any.
Did that answer your question.
Yes, yes, I mean to the extent.
Just sort of more or less confirm so it's going to be a little while before you have then you get a retrial the newness and stuff and.
And then just to let me shoot is there sort of alluded to earlier.
Doctors don't want to use resold the boss.
The losses, whether or not to whether or not supported nursing stuff, where we don't have vast experience in it. So that's sort of going to continue to be an issue for a couple of quarters. So yes, just had a quick question from me.
I called out if if I my Michael just in relation to the.
Sort of follow up on your earlier scripted.
Scripted comments, just with the allocation of expenses.
Particularly in relation to R&D that sort of three full number for the quarter.
For the rest of you do you think or is that likely to increase decrease.
How are you thinking about them.
Yes, thanks for the question.
We actually would expect that to increase somewhat as we launch into the actual clinical trials for soft tissue and <unk>. So that number will be going up somewhat.
For the balance of the fiscal year.
Okay, that's fine and.
Just in the footnote that you've talked about the share based compensation you have amalgamated that long into the other expenses I mean did that sort of follow the trend from the prior year and the OLED.
OLED expense pretty much falls into the into the September quarter.
No I would say that it's spread out throughout the year.
I don't have those numbers in front of me, but it just depends largely on.
When we hit.
Various goals that are triggered when the stock compensation plan, so again that will vary by quarter.
Alright. Thank you very much that's all for me. Thank you.
Thanks, John.
Thank you and Thats all the time, we have for questions. This concludes today's conference call. Thank you for participating and you may now disconnect.
Thank you operator.
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