Q3 2023 AVITA Medical Inc Earnings Call
Good day and thank you for standing by welcome to the Avino Medical third quarter 2023 conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during the session.
You will need to press star one one on your telephone you will then hear an automated message advising you. Your hand is raised to withdraw your question. Please press star one again.
Please be advised that today's conference is being recorded I would now like to hand, the conference over to your first speaker today, Jessica Ekberg director of Investor Relations. Jessica. Please go ahead.
Thank you operator, welcome to BD medical third quarter 2023 earnings call.
Before we begin let me remind you that this call will include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Statements are neither promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual results to differ materially from any expectations expressed or implied by the forward looking statements.
Please review of BD Medical's, most recent filings with the SEC specifically the risk factors described in our Form 10-Q for the quarter ended September 32023 for additional information.
Any forward looking statements provided during this call are based on management's expectations as of today.
BD Medical's press release for the third quarter of 2023 results is available on our website.
Ww Davita medical Dot com under the Investor Relations section a recording of today's call will be available on our website by five P. M Pacific time today.
Joining me on today's call are Jim Corbett, Chief Executive Officer, and David O'toole, Chief Financial Officer, I will now turn the call over to Jim for his comments.
Okay.
Thank you Jessica good afternoon, and thank you for joining us today.
We'll begin today's call by discussing highlights of the third quarter.
Followed by an update on our priorities.
Following this update I will turn the call over to David who will provide commentary on our financial performance for the quarter.
I'm pleased to relay that our team drove third quarter commercial revenue of $13 $5 million, representing a 51% increase over the same period in 2022.
And marking our highest quarterly growth rate over the prior year.
This achievement underscores our commitment to sustained growth.
Our branch business continues to drive our growth as it has all year. However, we cannot achieve these results without the substantial contribution from remnant revenues stemming from full thickness skin defects I'll provide an update on this launch shortly.
Moving onto our top priorities and recent activity.
During the first quarter, our committed to defining our international expansion strategy. During this earnings cycle.
After months of strategic planning I'm excited to unveil our plans today.
Before doing so I want to give credit to Jerry Bromley, our senior Vice President of global sales, who is leading our international efforts. In addition to his U S responsibilities.
First our team has defined a focused international market for Evita medical as.
As we surveyed the globe, we looked at countries with sizable populations.
Robust health care systems, and the resources to invest in our technology.
These three factors are key because our devices not just a product you can export without training into an unstructured health care system.
To ensure proper device used to have a meaningful impact on patients trained medical professionals within a well established health care system and strong economic support for treatment are fundamental requirements.
When we apply these filters the prime prospects or Australia.
Japan and most of the European Union.
Now, let's explore the plan to expand into the countries we have identified.
As we weigh the advantages of internal sales channels versus indirect sales models. It became evident that the third party distribution model aligns best with our needs and provides the most benefits.
The overarching advantages to this strategy centered around knowledge access and economics.
First we will benefit from local knowledge of distribution reimbursement and commercial strategies within our targeted markets.
Consequently, we will be able to leverage third party expertise to access these markets more effectively and rapidly than if we were to build out new distribution channels within our organization.
Lastly, since we are not establishing international channels through our own subsidiaries. This strategy will be a net contributor to our operating margin almost immediately.
Gary and the team have already made great strides in our new expansion efforts in fact, I'm pleased to announce our newly hired Vice President of Europe Stefan cut.
<unk> reported Terry brings over 25 years of global sales and marketing and services experience in the medical device industry, having most recently served as vice president of global marketing at Convatec.
Additionally, this morning, we announced our first European partnership with Poly medics innovations, a German based company specializing in the commercialization of innovative biomaterials and systems for wound treatment.
Under our agreement Pauline <unk> will be responsible for our expansion in Germany.
Austria, and Switzerland, with an option to expand to additional European markets in the future.
Founded in Germany in 2001, polymeric introduced its first product a synthetic skin substitute to Germany, and Austria in 2004.
Today, there are two flagship products are distributed across over 40 countries worldwide.
<unk> maintains a specialized sales team focused on burns and trauma aligning seamlessly with a targeted procedures for resale.
In fact, many resale procedures already utilized probably medics synthetic skin substitute, making resell a complement complementary solution to their existing customer call points.
We expect to commence training with probably Max before the end of the year paving the way for our planned launch on the second of January 2024.
Okay.
Going forward, we plan to activate actively identify new distributor partnerships over the next six to 12 months to approach the markets that have been identified I will provide updates during future calls.
Turning to the PMA supplement for re sub go.
In September the FDA requested additional information on day 90.
Of the 180 day review cycle under the Fda's breakthrough device program.
This request for additional information caused paused the clock on day 91.
Upon receipt, we immediately began to prepare and submit our complete response to the FDA.
Questions broadly fell into three categories.
The first category, representing a majority consist of clarification questions that we were able to address within several days.
On the other hand, the second and third categories require additional in house testing to fulfill the Fda's request.
We've made incredible progress developing the data planned for the testing in fact, all testing is already underway.
Consequently, we now expect to complete the dataset and submit our response to the FDA on February 28 2024.
Upon submission.
The 180 day real time review resumes on March one 2020 for positioning US for approval 90 days later on May 32024, with an expected launch the following day.
The first area of testing focuses on human factor testing associated with the use of resale go at different sites of service to.
The second area of testing in broad terms aims to establish the comparability of the autologous cell suspension between the current and the more controlled methodology of resale go.
Two examples here include a character characterizing the pressure used to disaggregate to cells and the soak time needed and the process too.
To date over 17000 cases have been performed under the current method of creating the autologous suspension.
As one would expect there is tension variability across the hundreds of surgeons, who have implemented the current device using their individual hand pressure.
Second the sub process is currently 15 to 30 minutes, but with resale go it will be 25 minutes each and every time.
Resale go aims to control the variability introduced from the steps we remain confident that the additional testing and in progress will provide the FDA with sufficient responses to their questions.
In connection to resale go I had previously mentioned that we co developed the durable device and disposable cartridge with the with the contractor who performed the initial development and manufacturing.
Earlier this year, we made the strategic decision to move the entire manufacturing assembly process in house to our Ventura facility.
Originally we had planned to launch resale go simultaneously with the transition of manufacturing to our facility in Ventura and.
An unintended benefit of the delayed launches that allows us to complete the manufacturing transfer to our Ventura facility ahead of the commercial launch we look forward to sharing further updates on our expanding manufacturing and assembly environment.
I'd like to turn to the recent progress we have made with full thickness skin defects.
As I mentioned earlier, we did see an expansion in revenue following approval of the indication.
Currently we have over 100 accounts at various stages within the adoption process. Some are still with the value analysis and analysis committee, while others are performing or have completed their initial cases and are on track for broader adoption.
One interesting takeaway from our initial launch pertains to the broad scope of the expanded label for full thickness skin defects, which allows us to pursue many different applications and forms of skin grafting.
Currently we have found we have access to a wider user base within a single facility than initially anticipated.
Often resulting in a link to your sales process compared to that of burns, but a much larger market.
In fact, a few weeks ago I had opportunity to observe a top burn surgeon.
A form of full thickness skin defect procedure on a road rash patient at a medical center. The expanded label represents a tremendous opportunity within a dynamic environment.
And we continue to affirm that this indication as high growth potential in a market that is about 10 X the size of burns.
Turning now to our cash position.
In October we announced that we secured up to $90 million of non dilutive debt financing with orbit.
With several near term initiatives on the horizon that capital serves as a backstop to our cash position, allowing sustained growth and expansion.
We strategically pursued a debt financing to avoid significant dilution to our shareholders due to the uncertain equity market conditions that have existed in recent times.
Additionally, we are confident this financing provides us with sufficient capital to achieve our growth goals and positions us to reach profitability during 2025 without that a near term need for additional equity financing.
While we do not have the explicit need for the two additional tranches of $25 million each having access to this capital provides us provides us with valuable flexibility and optionality.
We firmly believe our partnership with <unk> is the most shareholder friendly approach to strengthening our cash position.
David will discuss the financial details of the transaction.
One detail I would like to underscore is that in the past communications. We have said that we expected to reach profitability in 2025.
Subject to a vitiligo channel investment.
Today, we are eliminating that vitiligo expansion qualifier further evidence in our bullish view on the growth and profitability of our company.
Let me now provide an update on the vitiligo initiative.
As we've mentioned previously we are in the process of securing reimbursement for vitiligo.
To begin this process, we have initiated a 100 patient post market study called town.
Tony will evaluate re pigmentation using the resale device and we will also seek to measure quality of life after treatment of stable vitiligo lesions.
The three quality of life measures our patient satisfaction.
Clinical satisfaction and patient mental health.
We believe developing these quality of life indicators will help create a basis to understand it understanding the impact of vitiligo in the mental health of the patient and the associated health care costs of treatment.
We expect full enrollment of tone by the end of February 2020 for the trial design. Then includes six months of patient follow up with that in mind, we expect to submit for publication by the end of 2024.
Additionally to support reimbursement we are in the process of initiating a separate health economic study to capture the longitudinal health care costs for <unk> patients.
This study, we will collaborate with a leading healthcare economics firm and a team of physicians for guidance. We expect to publish this study by Q4 2024 <unk>.
Collectively we believe that these studies will demonstrate how treating vitiligo with resale can significantly reduce the lifetime health care costs for patients.
As we work to establish reimbursement. It is important to appreciate that CMS will play pet play a limited role given that the vitiligo patients are an average age of 40 years old and are not Medicare beneficiaries.
Consequently, we will focus on commercial pairs, who will stand to benefit economically by providing coverage of resell for the re pigmentation of stable deep pigmented vitiligo lesions.
The study publication dates put us in position to begin.
Mayor coverage discussions in Q1 2025.
It is also important to recognize that commercial coverage decisions are geographically determined by state and our region.
As such we will focus on larger populated states first where insurance is governed by state law.
This will result in a rolling launch of Vitiligo, we will update you on our progress with the two studies and with the major policy Payors throughout 2024 and 2025.
Given the phased rollout caused by reimbursement timing, we will not expand our commercial team in advance we anticipate that the initial phase of reimbursement coverage will likely begin regionally as coverage is established in Q3 2025 with appropriately sized commercial support as coverage is established.
From a portfolio point of view.
We are looking to expand our strategy, we plan to become a full scale wound care company.
Accordingly, we are actively evaluating dermal scaffolds skin substitutes and wound dressings for co development opportunities.
Currently we're performing early animal work and will keep you informed of our activity and progress in this area.
Looking ahead, there are a number of exciting topics, we will discuss in February on our 2023 annual results call.
As standard we will provide guidance for the quarter and for the full year 2024.
Additionally, we will provide guidance on the quarter in which we will reach cash flow breakeven without the express limitation of a 2025 vitiligo sales channel or any other limitation.
Lastly, we also provide detail on our ongoing commercial expansion efforts.
As previously mentioned, we plan to maintain small sales territories as determined by geography and revenue to keep our growth rate high.
In closing, we remain committing committed to unlocking shareholder value through the continued growth into our expanded indications and the expansion of our portfolio.
I look forward to sharing updates on our progress with that I'd like to turn the call over to David.
Thank you Tim good afternoon, we.
We delivered another strong quarter of financial results.
In the three months ended September 32023, our commercial revenue increased by 51% to $13 5 million compared to $9 million in the same period in 2022.
As a reminder, beginning in Q1 of this year.
We have achieved significant commercial revenue growth rate of 40%, 42% and now 51% for the current quarter compared to the same quarters in the prior year.
The increase in commercial revenue for the current quarter was largely driven by broader surgeon usage as well as deeper penetration, especially within smaller burn procedures.
Additionally, our launch into the full thickness skin <unk> market and the subsequent and continuing acquisition of new accounts through our expanded label contributed to our revenue growth.
Gross profit margin was 84, 5% for the quarter compared to 83% in the same period in 2022.
The gross profit margin for the quarter was at the higher end of our full year guidance of 83% to 85% that we provided last quarter.
Total operating expenses for the quarter were $21 million compared to $14 2 million in the same period in 2022.
The increase in operating expenses.
Is primarily attributable to an increase of $5 1 million in sales and marketing costs. As a result of the expansion of our commercial organization in preparation of the launch of full thickness skin defects that occurred last quarter.
Additionally, we incurred an increase of <unk> 6 million in R&D costs, and an increase of $1 1 million in G&A costs, which was primarily due to an increase in stock based compensation expense.
Net loss for the quarter was $8 7 million or a loss of 34 cents per basic and diluted share compared to a net loss of $5 6 million or a loss of 22 per basic and diluted share in the same period in 2022.
As of September 30, we had cash cash equivalents and marketable securities of $60 1 million.
Compared to $86 3 million as of December 31, 2022.
As Jim mentioned, we entered into a credit agreement with orbit on October 18th.
The debt facility provides us access up to $90 million of which $40 million was funded at closing.
$225 million tranches are available at our option.
The first $25 million available on or before December 31, 2024, but only if our net revenue was $75 million or more for the last 12 months.
If and only if we draw the first tranche and then the second tranche of $25 million is available again at our option on or before June 32025.
But only if our net revenue is $100 million are more for the trailing 12 months prior to the month of a drawdown of the second tranche.
At the current time, we do not have need for either $25 million tranche.
And given our revenue growth and expectations of reaching cash flow breakeven.
We do not foresee a need to take down either the $25 million tranches before they expire.
With our current cash balance and a $40 million funded at closing we are confident that we have sufficient cash reserves to achieve our goals and reach profitability in 2025.
Turning now to our 2023 guidance for the fourth quarter of 2023, we expect commercial revenues to be between $15 3 million and $16 3 million.
At the boundaries. This reflects a growth rate between 64%.
73% over the prior year fourth quarter.
Lastly, we are maintaining our 2023 annual revenue guidance of $51 million to $53 million provided last quarter.
Which within these boundaries would reflect growth between 50% and.
56% over 2022.
With that we thank you for joining us and now I will turn the call back to the operator for your questions.
Operator.
Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.
Draw. Your question. Please press star one one again, please standby, while we compile the Q&A roster.
Our first question comes from Joshua Jennings of Cowen Josh will go ahead with your question.
Hi, good afternoon, congratulations on all the progress on multiple fronts.
Jim wanted to just ask about the international expansion plans and I was hoping you could just remind us about.
The CE Mark.
And the label I mean, this is probably medics initially and other partners down the line kind of have a broad.
Indication to go after and then a follow up on this question is just will you ultimately pursue CE Mark Caruso go as well.
Standing as you have approval for.
For the standard refill kit now.
We do.
John those are those are good questions. So let me try and line them up here.
We are MTR compliant.
So we will be submitting the technical file for resale go and expect a mid year timing July availability for European resale go availability. So that's the one with respect to the labeling the labeling is identical to burns full thickness skin defects and <unk>.
So the labeling for wood, that's reflected in the U S market is reflected in the European Union and so therefore.
Fully enabled to sell with our ease of use 19% to 20.
January 2nd.
So we are.
I think ready for Europe.
Excellent and then wanted to ask about the.
The 2023 guide or the implied.
Fourth quarter revenue performance, and just thinking about that nice sequential growth that you're expecting to deliver to deliver <unk>.
And just remind us about seasonality in Bern.
<unk> cases, and if there is any.
She is now a tailwind in the fourth quarter and then as the majority of the sequential revenue growth for a few of our <unk> coming from the full tissue skin defect indication. Thanks for taking all the questions.
Okay.
Okay. The seasonality question, we did a in depth claims review of this and we look back three years and it's really rather remarkable if you took all the claims for burns.
And calendarize them into no.
Calendar year, not fiscal separate fiscal calendar.
The spread is $25 $25 26 to 24.
Virtually no seasonality from Burns so thats.
Kind of a good news.
Thanks.
There is a.
Okay.
If your question.
Our underlying growth still is very heavily at burns is growing we are gaining share in burns unquestionably.
And full thickness, we're gaining momentum also.
So they are building on each other but of course, you know full thickness started it.
July was at zero right. So it's got a ways to go to catch up to the burns revenue growth rate.
So no seasonality do we expect.
The full thickness is gaining momentum.
It's a it's a little bit like a wave coming ashore, Josh if you think about it that way right.
We started in a quite a number of new accounts.
So to speak time zero and they all progress forward going through Vac committees during additional.
Cases.
As I mentioned during my prepared remarks, we are finding many more people to influence physicians within the hospital because theres. So many.
Types of skin grafting procedures that are on label so.
<unk> progress is good.
But.
Great I appreciate that you and thank you.
And our next question.
Our next question comes from Matthew O'brien with Piper Sandler Matthew.
Matthew. Please go ahead with your question.
Hey, this is Matt on for Phil on for Matt. Thanks for taking my questions and congrats on all the progress this quarter.
Just kind of in the same vein as Josh on the international expansion plan can you walk us through the thought process.
<unk> international versus further penetration in the U S market.
You'd get launched into that new indication.
And then a follow up how quick can that international revenue start to ramp in 'twenty four.
Yes.
Well, it's a good question. So first of all we're really all about the.
The fact that we are.
Deep Premier.
Wound treatment.
Is available in the world. So U S is a huge market, but so is Europe.
Australia, and Japan and in our view so that sequential growth that you have noted during the call. We I think David highlighted 40 to $42 51, and now we're expecting to grow between.
64% and 73 in the fourth quarter right. So.
The international for US would have been a different decision if we were doing it ourselves.
That would have required an additional cash investment.
Probably not go positive for three to five years doing it the way we are doing with established partners really leverages their local expertise and causes us in those markets to make a contribution margin that is positive.
And as one of the reasons why and during the February call, we're going to be.
Providing guidance on the quarter and 25 that will be profitable. So this is a contributor to it. So we're doing so without having to spend a lot of cash without having to add a lot of manpower, but where it's going to contribute from an operating margin point of view.
How we're thinking about that.
Our next question.
Our next question comes from Brooks O'neil with Lake Street Capital Markets. Brooks go ahead with your question.
Thank you very much and good afternoon guys congratulations.
Congratulations on the terrific results.
Couple of questions I guess ill start off Jim you were just talking about the accelerating adapt.
Adoption in the core burn market.
And I've always believed that your product is so superior to the current standard of care, we had a little surprising that penetration in the burn market was somewhere in the range of <unk>.
20%.
And I'm just curious what you're finding as adoption is.
Growing.
Why did it take some of these factors time to adopt it and what do you think you need to continue to penetrate that large bird market.
Yes, it's a good question Brooks I think there's two factors that are happening.
Resell is a.
First in category type products and those do take time some time in the early phase. So thats just one fact.
What has really changed the ballgame I think for us was as.
As you know the burn sales team and a full thickness sales team are the same sales team.
So what we've done is we've given those burn centers now and those sales territories are now smaller and geography smaller in revenue size and so they're not just selling full thickness theyre selling burns, where we already were selling burns, but we have.
Smaller call pattern, so I think thats really making the difference for us.
If you look backwards and say, maybe we should have invested heavier salesforce earlier, but certainly were getting the payoff of doing it now.
Great.
Second question I have.
In.
If you have thought about the significantly larger indication in the full thickness skin.
Skin graft area that goes beyond.
In jewelry.
Thank are generally treated in the.
Trauma centers is the burn centers and whatnot.
<unk> include the chronic.
Chronic full thickness.
The effect have you given a lot of thought to what it's going to take to penetrate the kinds of facilities.
Get to the guide of doctors, who treat chronic wounds.
We have done a fair bit of work in that.
That in mind, what we're thinking about though first because their patients are getting treated now some.
We're getting case reports of resell with.
A chronic wound for example, a venous leg ulcer or such.
What we note is.
Clinical.
Clinical data is what we're thinking about first.
As opposed to access and so we're in the process of assembling case studies, where we can we are we have a couple.
<unk> of early stage planning for some.
Specific indication clinical studies tumor decisions come to mind as another one that is quite large.
And so I think we're in the lead being the company that Aviva is which is we're going to focus on the consult of care that the physician is attempting to provide for their patient we're going to bring to them case examples clinical data examples small case series.
In some cases, we're planning some bigger studies and that's really how our sales team.
<unk> and that is in a very technical scientific and consultative manner. So that's what we're thinking about right now.
And it will certainly mean.
That we'll learn some new things.
Yeah.
Alright.
Great. Thank you very much and congratulations on the terrific quarter.
Thanks Brooks.
One moment for our next question.
Our next question comes from John Hester of Bell Potter John. Please go ahead with your question.
Good afternoon, Jim and David.
Doug just a couple of questions from me Jimmy.
Jim you just talked about some price strategies.
Prices in venous leg ulcers tumor excision.
That's encouraging what do you have you seen a trend emerging outflows the sorts of.
Liable.
The sorts of wounds that surgeons are initially using the expanded.
LIBOR indication.
Well.
By the way Europe early John.
Well Im a lot closer to the weekend than what you had James.
I appreciate that.
John I think trend is a little bit too strong of a word but they are coming to us with the cases.
In many cases, we've got some historical experiences from other parts of the world, where resale was used in earlier years, and we share with them, what we know and what we don't know.
And there's been a number of cases that.
That are quite unusual.
For example, Theres some sacral.
Skin grafts that essentially Bedsores, we've had a number of those get treated.
<unk> too strong, but certainly more than one.
It's happening.
So we're trying to get ourselves out ahead of that so we can act as a resource to our customer because it's clearly they're having trouble treating some of these chronic wounds and resell does appear to provide quite a benefit to many of those patients.
Okay.
Alright, well it sounds like it's still early days.
Just switching to Europe, obviously every selling price is going to be lower in Europe can you sort of give us any guidance there on what you.
Our.
Expecting for average selling price relative to the U S market and of course, you've got.
The distributor margin there as well soon.
That's right, we will have a lower realized sale price because of course the distributor.
We have a <unk>.
<unk> price sharing model with them.
However, you may.
Also recall that.
Our cost of manufacturing is very heavily fixed cost.
At the rate of our volume growth.
We're talking still an accelerated growth line as we go into Q4.
Which has been happening all year of 40 to $42 46 going to be 64% or better in Q4.
That is eating up the cost of goods problem. So we're still going to get a nice contribution margin, we will get a lower ASP.
That said it will it will.
Will contribute to our our march towards profitability.
So.
Some volume won't hurt us and we won't spend as much.
And just finally, a very last question.
David I notice the R&D expense dropped in the quarter, David relative to the.
Relative to the June quarter can you just.
Give some insight as to why that was the case.
Yes.
For the question John.
Really what that comes down to is we had a.
A slower enrollment.
For our tone study.
Which as in this quarter is accelerating because we are still planning to have that.
<unk> study fully enrolled by February.
But sequentially it really comes down to the fact that we didn't have as much of enrolment in the in the <unk> study.
Okay. Thank you.
That's all for me.
One moment for our next question.
The next question comes from Ryan Zimmerman with BT IAG Ryan go ahead with your question.
Hi, This is <unk> on for Brian Congrats on the quarter and thanks for taking the question.
So our blizzard with credit you guys noted that uptake of reselling key Brian are you were seeing strong uptake of retail and key Brennan cowens without adding new burn centers I was just wondering if this is a similar trend that youre seeing this quarter or if you're starting to see increased penetration within new accounts.
Well, yes, the point I was making actually during last quarter was that we had not added burn centers in over a year because we're in all of them virtually.
Virtually and.
So what we're seeing is.
<unk> in the burn centers, that's related to the full thickness launch half of those burn centers, our trauma centers and with a smaller sales territories, because we expanded the sales team a lot.
We are seeing both of both of those phenomenon, we're seeing penetration in burn centers.
Growing up as a consequence of a smaller sales territory.
We're also seeing an uptake in utilization of resell in the various and many full thickness skin defect indications. So it's a.
Where theres a burn center, there's a double opportunity for us.
Got it that's helpful. And then just a follow up on that so who are the early adopters that you guys are seeing for the full thickness indication is it mostly burn surgeons are you seeing dramas uptake or is it kind of a combination of everyone. Thank you for the question well.
For certain.
In terms of new users heavily dominated by trauma surgeons.
No.
Of course by definition merged surgeons, our trauma surgeons, but not all trauma surgeons or burn surgeons. If you can put that venn diagram together, so the new surgeons, we're adding principally our trauma surgeons.
And the but we're getting new indication utilization by burn surgeons.
We will now have a more open label.
No.
It is.
There's a lot of opportunity out there for us right now.
That's why we really expect this rate of growth issue to dominate the headlines here for our companies.
The boundaries of Av.
Of the coming quarter right, we're looking at 64% type growth, which will be our fourth consecutive acceleration.
Into another decile so.
We're really quite bullish at the moment.
Great. That's really helpful. Thanks for the questions.
One moment for our next question.
Sure.
Our next question comes from Ross Osborne of Cantor Fitzgerald Ross. Please go ahead with your question.
Hey, guys. Congrats on progress thanks for taking my questions maybe.
Maybe just for us on Opex now that you've had full thickness out for a handful of months how do you feel about the number of reps. You hired ahead of that expanded indication do you foresee the need to increase head count next year or no.
Sure.
Straightaway, Ross, we feel very good about the number we hired having said that.
When we foresee the average <unk>.
Territory size approaching $2 million, we will be expanding because that.
There is so much opportunity out there.
<unk> two.
Be traveling and had dinner with.
Some physicians and one of our <unk>.
Cts is which are they are commissioned but they are the.
Do a lot of the case coverage, we were in New Orleans in this particular room.
Good wrap of ours was talking about covering a case of consecutive days in Jackson, Mississippi, New Orleans, and Memphis. So we are far we are far from.
Being geographically populated.
I'm sure that during next year.
And you might recall in my comments.
During the script.
We do project next year will increase again, our commercial team.
Our final question.
The next question comes from Madeline Williams with Wilsons Madam. Please go ahead with your question.
Hi, David Thanks for taking my questions I, just wanted to ask you sort of mentioned that with the.
Label expanded label indication that there's sort of a longer I guess sales effort. There is that is that in regards instead of more.
Education for their use of trauma surgeons that you're bringing on in regards to the retail Dubai.
And then sort of an indirect way Merrill Lynch. If you think about it this way in the burn center was real straightforward. There's a head burn surgeon in every hospital you go right to that person what we find with full thickness is theres many constituents with many different indications and so when you go to the value analysis.
Committee.
Do you find yourself.
Being asked about many different indications. So there is what I would describe is a time element it slows us down a little bit, but it's benefited by the expanded opportunity. So does cut both ways.
Okay. That's helpful and then so I guess with the.
Keith will expectations I mean is there any sort of color as to what you expect for the rest of world.
I guess opportunity.
Does that sort of come through straight away or is it mainly just great scenario.
Tissue and or the full thickness and then.
I think for the fourth quarter were.
Really focused on what happens in the U S and full thickness Burns rest of the world will start to take some time to develop but it will become more meaningful as to 'twenty for Roseland.
Thank you and if I can just ask one final question in regards to <unk>.
You're obviously doing the studies now and partly the time study, but just sort of maybe a comment around what your expectations offset to the pricing.
Regards to vitiligo, and Rainbow Shannon and knowing that it's sometimes difficult to get those commercial payers that <unk> already started there is those conversation.
And I guess what has been the feedback if you have.
Well first it's a little bit early for us to answer those questions because you need the data from tone, you need to healthcare economics data that we're working on with the.
Healthcare economics firm, so you really need those inputs so with respect to <unk>.
Asps.
No.
What kind of adoption, we might expect I think we're good.
Good.
Nearly 18 months to 24 months away from being able to really give that.
Type of level of detail in terms of guidance.
Okay.
Great. Thanks for the answer.
Thank you.
This concludes the question and answer session.
You for your participation in today's conference. This does conclude the program you may now disconnect.
Okay.
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Okay.
Great.
Yes.
Okay.
Okay.
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Okay.
Okay.
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