Q4 2023 AVITA Medical Inc Earnings Call

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Operator: Good day, and thank you for standing by. Welcome to the AVITA Medical fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode.

Good day and thank you for standing by welcome to the Davita Medical fourth quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session. Please press star one one on your <unk>.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jessica Eckberg, Director of Investor Relations. Thank you, Operator. Welcome to AVITA Medical's fourth quarter and full year 2023 earnings call. Joining me on today's call are Jim Corbett, Chief Executive Officer, and David O'Toole, Chief Financial Officer. Today's earnings release is available on our website, www.avitamedical.com, under the Investor Relations section. 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. These 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 statement.

Allophone and wait for your name to be announced 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 speaker today Jessica Ekberg.

Director of Investor Relations.

Thank you operator, welcome to beta Medical's fourth quarter and full year 2023 earnings call. Joining me on today's call are Jim Corbett, Chief Executive Officer, and David O'toole, Chief Financial Officer. Today's earnings release is available on our website www.

That'd be the medical Dot com under the Investor Relations section.

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.

These 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.

Jessica Eckberg: Please review our most recent filings with the SEC, specifically the risk factors described in the Form 10-K for the year ended December 31, 2023, for additional information. Any forward-looking statements provided during this call are based on management's expectations as of today. I will now turn the call over to Jim for his comments. Thank you, Jessica.

Please review our most recent filings with the SEC specifically the risk factors described within the Form 10-K for the year ended December 31, 2023 for additional information.

Any forward looking statements provided during this call are based on management's expectations as of today I will now turn the call over to Jim for his comments.

Thank you Jessica.

Jim Corbett: Good afternoon, and thank you for joining us today. I will begin today's call by discussing our financial and business highlights for the fourth quarter and full year 2023, followed by an update on our priorities for 2024. Following this update, I will turn the call over to David, who will provide commentary on our 2023 financial performance and 2024 guidance before opening the call to Q&A. During the February 2023 conference call, I outlined our 2023 priorities, our growth strategy, and committed to providing quarterly and annual guidance. Additionally, I emphasize that 2023 would mark a significant turning point for AVITA Medical. A year in which we plan to transform our business by adding multiple new indications, dramatically increasing our growth trajectory. I'm pleased to report that we did just that.

Good afternoon, and thank you for joining us today.

I will begin today's call by discussing our financial and business highlights of the fourth quarter and full year 2023, followed.

Followed by an update on our priorities for 2024.

Following this update I will turn the call over to David who will provide commentary on our 2023 financial performance and 2024 guidance before opening the call to Q&A.

During the February 2023 conference call I outlined our 2023 priorities, our growth strategy and committed to providing quarterly and annual guidance.

Additionally, I emphasize that 2023 would mark a significant turning point for Vida medical a year in which we plan to transform our business by adding multiple new indications dramatically increase our growth trajectory I'm pleased to.

Report, we did just that.

Jim Corbett: We finished 2023 strong, delivering fourth-quarter commercial revenue of $14.1 million, representing growth of 50% over the same period in 2022. This performance highlights our sustained quarterly growth trajectory. For the full year of 2023, we closed with commercial revenue of $49.8 million, representing impressive growth of 46% over the prior year. This is a significant achievement reflecting the effectiveness of our strategic growth initiatives and initial launch of full thickness skin defects, which I will address shortly, shifting focus to our recent developments. On January 10th, we announced that we entered into an exclusive five-year distribution agreement with Statical Medical to commercialize Permioderm biosynthetic wound matrix in the United States. Permeaderm is a transparent, flexible dressing that is cleared by the FDA for use in the treatment of a wide range of wound types until healing is achieved.

We finished 2023 strong delivering fourth quarter commercial revenue of $14 1 million.

<unk> growth of 50% over the same period in 2022.

This performance highlights our sustained quarterly growth trajectory.

The full year of 2023, we closed with commercial revenue of $49 8 million.

Representing impressive growth of 46% over the prior year.

This is a significant achievement, reflecting the effectiveness of our strategic growth initiatives and initial launch a full thickness skin defects, which I will address shortly.

Shifting focus to our recent developments.

On January 10, we announced that we entered into an exclusive five year distribution agreement with <unk> medical to commercialize Permian Derm biosynthetic wound matrix in the United States.

<unk> is a transparent flexible dressing is cleared by the FDA for use in the treatment of a wide range of wound types until healing has achieved.

Jim Corbett: Permeaderm's high level of permeability and flexibility allows medical professionals to stretch it, giving them the ability to customize the porosity to meet the specific needs of the womb. This adjustability facilitates wound healing. Moreover, Hermiderm can be used alongside the treatment of many of our burn and full thickness skin defect cases to further aid in healing. The complementary nature of these two products and overlapping call points allows us to leverage our commercial organization to effectively integrate Hermeneuterm into our selling portfolio. Our commercial organization will launch Permiderm in March, and we will update you on this effort during our first quarter call after we have had some experience selling to our customers. The partnership marks the first step in our efforts aimed at expanding our portfolio of wound care products that will facilitate wound treatment. Moving on to our International Expansion Strategy. Last quarter, I unveiled our plans to expand into Australia and most of the European Union through a third-party distribution partnership. I'm happy to report that Polymatic, our first European distributor, completed its resale training and launched within Germany, Austria, and Switzerland in January as expected.

Permian <unk> high level of permeability and flexibility allow medical professionals to stretch it given the clinicians the ability to customize the porosity to meet the specific needs of the wound.

This suggests the ability to facilitate wound healing, Moreover, Permian or it can be used alongside the treatment of many of our burn and full thickness skin defect cases to further aid in healing.

A couple of mentoring nature of these two products, an overlapping call points allow us to leverage our commercial organization to effectively integrate <unk> into our selling portfolio.

Our commercial organization will launch primary term during March and we will update you on this effort during our first quarter call. After we have had some experience selling to our customers.

The partnership marks the first step in our efforts aimed at expanding our portfolio of wound care products that will facilitate wound treatment.

Moving on onto our international expansion strategy.

Last quarter I unveiled our plans to expand into Australia, and most of the European Union through third party distribution partnerships.

I am happy to report that <unk>, our first European distributor completed their resale training and launched within Germany, Austria and Switzerland in January as expected. We will continue to update you as we identify new distributor partnerships.

Turning to the PMA supplement for resale go we.

We have completed the in house testing that was necessary to fulfill the fda's request for additional information.

Jim Corbett: We will continue to update you as we identify new distributor partners. Turning to the PMA supplement for Resell Go, we have completed the in-house testing that was necessary to fulfill the FDA's request for additional information.

As previously stated we expect to submit a response.

FDA on February 28, 2024 with.

With the restart of the 180 day real time review, we plan to launch on May 31, 2024.

Jim Corbett: As previously stated, we expect to submit a response to the FDA on February 28, 2024. Then, with the restart of the 180-day real-time review, we plan to launch on May 31, 2024. Moving on to the manufacturing and assembly of Resul-GO. We mentioned during our last call that we made the strategic decision to bring the entire manufacturing and assembly process of both the durable and disposable components in-house at our Ventura facility. We will also be completing a service center for the durable goods that will be located in Ventura. We are on track to complete this transfer ahead of the May 31st launch of Resell Go. As part of the insourcing process, we have been renovating our Ventura facility to increase capacity by tenfold.

Moving on to the manufacturing and assembly of resale go.

We mentioned during our last call that we made the strategic decision to bring the entire manufacturing and assembly process.

The durable and disposable components in house to our Ventura facility.

We will also be completing a service center for the durable that will be located in Ventura.

We are on track to complete this transfer ahead of the May 31 launch of restock App.

As part of the in sourcing process, we have been renovating our Ventura facility to increase capacity by 10 fold. This expansion will allow also facilitate Permian <unk> distribution.

Our Ventura facility, serving as the hub for housing and distributing <unk> to our customers along with our other products.

As a result of this expansion, we will have ample space for manufacturing and assembly as well as physical distribution, ensuring efficient operations for the next five years that dislocation.

These renovations are being completed in phases throughout 2024 with the final phase scheduled for completion during the third quarter.

While we work to enhance our operational capabilities to fuel our growth. We are also focused on our next expansion of our commercial field organization.

Jim Corbett: This expansion will also facilitate permeaderm distribution, with our Ventura facility serving as the hub for housing and distributing Permiderm to our customers along with our other products. As a result of this expansion, we will have ample space for manufacturing and assembly, as well as physical distribution, ensuring efficient operations for the next five years. These renovations are being completed in phases throughout 2024, with the final phase scheduled for completion during the third quarter. As we work to enhance our operational capabilities to fuel our growth, we are also focused on the next expansion of our commercial field organization. Our primary objective during our first commercial organization expansion, which occurred in the early half of 2023, was aligning our sales strategy with our overall growth strategy by focusing on adoption and new cases for a new indication of full thickness skin defects. To achieve this, we strategically increased both our sales team from 30 to 70 people and our territories from 14 to 40 to maintain small sales territories and keep our growth rate high. Specifically, we aimed for our 40 territories to average under $2 million to facilitate effective coverage, penetration, and growth.

Our primary objective during our first commercial organization expansion, which occurred in the early half of 2023 was aligning our sales strategy with our overall growth strategy by focusing on adoption and new cases for a new indication of full thickness skin defects.

To achieve this we strategically increased both our sales team from 30 to 70 people in our territories from 14% to 40 to maintain small sales territories and keep our growth rate high.

Specifically.

We aimed for are 40 territories to average under $2 million to facilitate effective coverage penetration and growth.

We should be approaching the $2 million threshold during the latter half of 2024 and therefore, our plan is to expand our sales force and territories again to keep the focus on adoption and growth.

Moreover, an expanded sales force will allow us to intensify our efforts and the value analysis committee process, thereby maximizing our ability to capitalize on the expanded label or full thickness skin defects.

Consequently, we are adding 38, new positions to our commercial organization, which will bring our commercial organization to a total of 108, we expect our expanded field team be in place by April one.

With our current commercial field organization and our expanded sales force, we expect to add approximately 200, new accounts during 2024.

Jim Corbett: We should be approaching the $2 million threshold during the latter half of 2024. Therefore, our plan is to expand our sales force and territories again to keep the focus on adoption and growth. Moreover, an expanded sales force will allow us to intensify our efforts in the value analysis committee process, thereby maximizing our ability to capitalize on the expanded label of full fitness skin defects. Consequently, we are adding 38 new positions to our commercial organization, which will bring our commercial organization to a total of 108.

As we discussed during our third quarter call. The broadened scope of full thickness skin defects provides us with an opportunity to pursue many different applications for resale.

As part of this pursuit, we must access multiple physician specialties within a single facility to get value analysis Committee also noticed vac approval, resulting in a link to your sales process. We continue to affirm this expanded indication increases the patient population of resell.

<unk> by 10 times over the patient opportunity with Burns.

Jim Corbett: We expect our expanded set field team to be in place by April 1, with our current commercial field organization and our expanded sales force. We expect to add approximately 200 new accounts during 2024. As we discussed during our third quarter call, the broadened scope of full-thickness skin defects provides us with an opportunity to pursue many different applications for resale. However, as part of this pursuit, we must access multiple physician specialties within a single facility to get Value Analysis Committee, also known as VAC, approval, resulting in a lengthier sales process. We continue to affirm that this expanded indication increases the patient population of resale by 10 times over the patient opportunity to burn. In line with the expanded label of full thickness skin defects, we are in the design stage of developing ReCell Go Mini. ResellGo Mini is being designed to address smaller wounds, providing us with the opportunity to treat patients with less than 5% total body surface area affected. This device will have the same reusable durable as ResellGo, but it will have a different cartridge that accommodates a smaller donor skin sample.

In line with the expanded label of full thickness skin defects. We are in the design stage of developing resell go many.

We sell go many is being designed to address smaller wounds, providing us with the opportunity to treat patients with less than 5% total body surface area affected.

This device will have the same reusable durable as resale go we will have a different cartridge that accommodates a smaller donor skin sample.

We intend to submit a PMA supplement.

In order to achieve FDA approval by year end.

Now turning to the <unk> initiative and.

In January we completed enrollment of 109 patients and tone, our post market study.

Valuation re pigmentation and its impact on quality of life for vitiligo patients earlier than anticipated. Our initial six months follow up assessments are scheduled to begin in July the strength of the data. We collect that we are collecting we have extended the follow up period to include an additional assessment at 12 months post.

Treatment.

We expect to submit both this study and our separate health economic studies for publication by the end of 2024.

The study dates position us to begin commercial payer coverage discussions during the second quarter of 2025.

Subsequently.

We anticipate a phased rollout of commercial coverage on a regional basis.

The initial phase likely to begin in the fourth quarter of 2025 supported by an appropriately sized commercial organization as coverage is established throughout the United States.

Jim Corbett: We intend to submit a PMA supplement in order to achieve FDA approval by year-end. Now, turning to the Vitiligo Initiative. In January, we completed enrollment of 109 patients in TONE, our post-market study evaluating repigmentation and its impact on quality of life for vitiligo patients earlier than anticipated. Our initial six-month follow-up assessments are scheduled to begin in July.

Before turning the call over to David I would like to address our financial outlook.

Previously committed to communicating the quarter in which we achieved cash flow breakeven and GAAP profitability. We're pleased to report that we have established a path to achieve both milestones no later than the third quarter of 2025.

In closing 2023 marked an exciting inflection point for us and our dedication to innovation and growth continues we remain resolute in our commitment to unlocking shareholder value through increased adoption and sustained growth within our indications and expansion of our portfolio.

Jim Corbett: To strengthen the data that we are collecting, we have extended the follow-up period to include an additional assessment at 12 months post-treatment. We expect to submit both this study and our separate health economic study for publication by the end of 2024. The study dates position us to begin commercial payer coverage discussions during the second quarter of 2025.

I'll look forward to sharing further updates on our continued progress with that I'd like to turn the call over to David.

Thank you Jim we continue to deliver strong financial results.

In the three months ended December 31, 2023, our commercial revenue increased to $14 1 million $4 $7 million more than the $9 4 million in the same period in 2022.

Since Q1 of 2023, we have demonstrated sustained impressive commercial revenue growth rates of 40%, 42%, 51%, concluding the year with a Q4 growth up 50% compared to the same quarters in the prior year.

Jim Corbett: Subsequently, we anticipate a phased rollout of commercial coverage on a regional basis, with the initial phase likely to begin in the fourth quarter of 2025, supported by an appropriately sized commercial organization as coverage is established throughout the United States. Before turning the call over to David, I would like to address our financial outlook. I previously committed to communicating the quarter in which we achieve cash flow break even and gap profitability. We are pleased to report that we have established a path to achieve both milestones no later than the third quarter of 2025. In closing, 2023 marked an exciting inflection point for us, and our dedication to innovation and growth continued. We remain resolute in our commitment to unlocking shareholder value through increased adoption and sustained growth within our indications and expansion of our portfolio. I look forward to sharing further updates on our continued progress. With that, I'd like to turn the call over to David.

Our strong third and fourth quarter results were largely driven by three key factors.

First we were able to capitalize on our preexisting burn center accounts of which have also have trauma centers, enabling us to immediately market full thickness skin defects in those centers, thus boosting sales.

Second we have received <unk> approval on a number of new accounts and lastly, we continue to benefit from increased adoption in the burn market.

Gross profit margin for the quarter was 87, 3%.

<unk>, 286% in the same period in 2022.

This significant increase in gross margin was driven by the increase in sales and production of our products.

As we have discussed previously as production and sales increase we benefit from the fact that approximately 50% of our cost of goods sold is fixed.

Representing the cost of the facility in Ventura.

Total operating expenses for the quarter were $24 7 million compared to $15 million in the same period in 2022.

David O'Toole: Thank you, Jim. We continue to deliver strong financial results. In the three months ended December 31st, 2023, our commercial revenue increased to $14.1 million, $4.7 million more than the $9.4 million in the same period in 2022. Since Q1 of 2023, we have demonstrated sustained impressive commercial revenue growth rates of 40%, 42%, and 51%, concluding the year with a Q4 growth of 50% compared to the same quarters in the prior year. Our strong third and fourth quarter results were largely driven by three key factors.

The increase in operating expenses is primarily attributable to an increase of $2 4 million and G&A expenses related to stock based compensation and consulting expenses and employee related costs.

Additionally, we incurred an increase of $3 4 million and R&D costs, which was primarily due to employee compensation costs, including recruiting costs accelerated recruitment and third party costs associated with the tone study and costs associated within sourcing resale go production.

Two our terror facility.

Lastly, sales and marketing expense increased by $3 9 million, primarily due to employee related costs, including commissions travel and promotion expense as a result of the expansion of our commercial organization in the second quarter of 2023.

David O'Toole: First, we were able to capitalize on our pre-existing burn centers, of which half also have trauma, enabling us to immediately market full thickness skin defects in those centers, thus boosting sales. Second, we have received back approval on a number of new accounts. And lastly, we continue to benefit from increased adoption in the Burns Market. Gross profit margin for the quarter was 87.3% compared to 86% in the same period in 2022.

For the full year ended December 31, 2023, our commercial revenue increased by 46% to $49 8 million.

<unk> to $34 1 million in the same period in 2022.

The growth in commercial revenues was largely driven by deeper penetration within individual customer accounts, along with the launch of full thickness skin defects through our expanded commercial team.

David O'Toole: This significant increase in gross margin was driven by the increase in sales and production of our product. As we have discussed previously, as production and sales increase, we benefit from the fact that approximately 50% of our cost of goods sold is fixed, representing the cost of the facility in Ventura. Total operating expenses for the quarter were $24.7 million compared to $15 million in the same period in 2022.

The gross profit margin for the full year was 84, 5% compared to 82% in 2022.

The gross profit margin for the year was at the higher end of our full year guidance of 83% to 85%.

Total operating expenses were $86 4 million compared to $59 1 million in the same period in 2022.

David O'Toole: The increase in operating expenses is primarily attributable to an increase of $2.4 million in G&A expenses related to stock-based compensation, consulting expenses, and employee-related costs. Additionally, we incurred an increase of $3.4 million in R&D costs, which was primarily due to employee compensation costs, including recruiting costs, accelerated recruitment, and third-party costs associated with the Tone Study and costs associated with insourcing Resell Go production to our Ventura facility Lastly, sales and marketing expense increased by $3.9 million, primarily due to employee-related costs, including commissions, travel, and promotion expenses, as a result of the expansion of our commercial organization in the second quarter of 2023. For the full year ended December 31st, 2023, our commercial revenue increased by 46% and was 49.8, compared to $34.1 million in the same period in 2022. The growth in commercial revenues was largely driven by deeper penetration within individual customer accounts, along with the launch of full thickness skin defects through our expanded commercial activities. The gross profit margin for the full year was 84.5%, compared to 82% in 2022.

The increase in operating expenses is largely attributable to an increase of $15 4 million in sales and marketing costs. As a result of the expansion of our commercial organization in the first half of 2023.

Alongside this expansion G&A cost increased by $5 million due to the increased headcount and related salaries and benefits stock based compensation consulting fees and recruiting costs.

Lastly, R&D cost increased by $6 9 million, primarily driven by the cost of the <unk> study.

Final work and completion of the PMA supplement to the FDA in June of 2023 for resale go.

And employee related costs, including stock based compensation.

Net loss for the fourth quarter was $7 1 million or a loss of 28 per share compared to a net loss of $5 4 million or a loss of 21 per share.

In the same period in 2022.

Net loss for the full year 2023 was $35 4 million or a loss of $1 40 per share compared to a net loss of $26 7 million or a loss of $1 seven per share in the full year 2022.

As of December 31, we had cash cash equivalents in marketable securities of $89 1 million compared to $86 3 million as of December 31, 2022.

During our third quarter conference call I discussed the credit agreement, we entered into with OIBDA met on October 18th.

As a reminder, $40 million of the total $90 million debt facility was funded at closing.

As we have discussed previously we do not at this time foresee a need for either of the remaining $25 million trenches before they expire at the end of this year.

With our current cash balance of $89 1 million as of December 31.

And our expectations of reaching cash flow breakeven no later than the third quarter of 2025.

David O'Toole: The gross profit margin for the year was at the higher end of our full year guidance of 83% to 85%. Total operating expenses were $86.4 million compared to $59.1 million in the same period in 2022. The increase in operating expenses is largely attributable to an increase of $15.4 million in sales and marketing costs as a result of the expansion of our commercial organization in the first half of 2023. Additionally, alongside this expansion, G&A costs increased by $5 million due to the increased headcount and related salaries and benefits, stock-based compensation, consulting fees, and recruiting costs. Lastly, R&D costs increased by $6.9 million, primarily driven by the cost of the Tone Study, final work and completion of the PMA supplement to the FDA in June of 2023 for Resell Go, and employee-related costs, including stock-based compensation.

We are confident that we have sufficient cash reserves to achieve our goals.

Turning now to our 2024 guidance for the first quarter of 2024, we expect commercial revenues to be in the range of $14 8 million to $15 6 million.

This will this reflects a growth rate between 42% and 50% over the same period in 2023.

Our annual revenue guidance for 2024 is expected to be in the range of $78 five to $84 $5 million.

Which would reflect growth between 57% and 69% compared to the full year 2023.

Lastly, during the fourth quarter, we made the decision to reorganize our corporate structure and wind down our legacy foreign subsidiaries to improve the efficiency of our operating and reporting structure.

Due to the limited business operations of the foreign subsidiaries. The net impact of the restructuring was a $9 4 million foreign exchange gain were previously deferred unrealized cumulative translation adjustments in equity.

This $9 4 million noncash gain was recorded in other income and expense on the statement of operations.

We expect the restructuring to be completed no later than the third quarter of this year at which point our primary operating company a beta medical Americas LLC will be a wholly owned subsidiary of a beta Medical Inc, and no foreign subsidiaries will exist.

David O'Toole: The net loss for the fourth quarter was $7.1 million, or a loss of $0.28 per share, compared to a net loss of $5.4 million, or a loss of $0.21 per share, in the same period in 2020. The net loss for the full year, 2023, was $35.4 million, or a loss of $1.40 per share, compared to a net loss of $26.7 million, or a loss of $1.07 per share, in the full year, 2022.

With that we thank you for joining us and now I will turn the call back to the operator for your questions.

Thank you.

As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again one.

One moment for questions.

Our first question comes from Brooks O'neil with Lake Street Capital markets. You May proceed.

David O'Toole: As of December 31st, we had cash, cash equivalents, and marketable securities of $89.1 million, compared to $86.3 million as of December 31st, 2022. During our third quarter conference call, I discussed the credit agreement we entered into with OrbitMed on October 18th. As a reminder, $40 million of the total $90 million debt facility was funded at close to $40 million.

Good afternoon, guys congratulations on the terrific progress.

A couple of questions I.

I guess first I would love to get any color you can offer about the experience you are having with the with the hospital vac.

And then maybe you could just tell us a little bit about the experience you see if you get that approval.

Getting procedures performed by the surgeons in those hospitals.

Hey, Brooks, thanks very much.

So first let me describe the experience, we're having and it varies.

Very broadly speaking.

We have.

David O'Toole: As we have discussed previously, we do not, at this time, foresee a need for either of the remaining $25 million tranches before they expire at the end of this year. With our current cash balance of $89.1 million as of December 31st and our expectations of reaching cash flow breakeven no later than the third quarter of 2025. We are confident that we have sufficient cash reserves to achieve our goal. Turning now to our 2024 guidance, for the first quarter of 2024, we expect commercial revenues to be in the range of $14.8 million to $15.6 million. This reflects a growth rate between 42% and 50% over the same period in 2023. Our annual revenue guidance for 2024 is expected to be in the range of $78.5 to $84.5 million, which would reflect growth between 57% and 69% compared to the full year 2020.

Well over 100 hospitals in some stage of the Vac process.

What were <unk>.

Experiencing is.

Frankly, a longer cycle time related to the broader label so.

In most cases medium to involve three.

Three or four physician specialties.

And as many as 10 different indications.

Coarser commensurate DRG or reimbursement.

So the complexity.

Unfortunately, it's a little bit like a wave coming ashore.

A lot of them.

We've been at it now too.

Two quarters, so they are starting to splash ashore.

It's a good metaphor because everybody is happy when that happens.

But the experience we're having is it requires a more intense selling process and one of the reasons we.

Moved up during the year our sales expansion is so that we could take advantage.

In real time, and more rapidly that broader label because you've got the <unk> keep in mind that a patient level.

35000, resale eligible burn patients, but nearly 400000 resell eligible.

All thickness skin defect patients. So it's really worth it for us to penetrate these hospitals and we are getting experienced since then.

And cases that we haven't.

<unk> treated before and having very good clinical results. So we're really feeling very good about the progress we're making so during the year to answer to the obvious we expect to add approximately 200 new accounts.

David O'Toole: Lastly, during the fourth quarter, we made the decision to reorganize our corporate structure and wind down our legacy foreign subsidiaries to improve the efficiency of our operating and reporting structure. Due to the limited business operations of the foreign subsidiaries, the net impact of the restructuring was a $9.4 million foreign exchange gain for previously deferred, unrealized cumulative translation adjustments in equity. This $9.4 million non-cash gain was recorded as another income expense on the Statement of Operations.

Alright.

That's very helpful. So.

Perhaps.

We could just talk a little bit about any progress you feel youre, making capturing some of the incremental burn activity within the level, one and level two trauma centers you are beginning to call out.

Okay.

Well certainly we are that.

Our lead clinical data in our lead clinical experience commercially over the last few years.

We find them in the level, one trauma centers and.

The physicians Tim.

<unk> typically are.

We are well aware of resell because they go to burn meetings that they just were not reached by our sales coverage model in prior years. So we're getting progress in those in those instances.

Operator: We expect the restructuring to be completed no later than the third quarter of this year, at which point our primary operating company, AVITA Medical America, LLC, will be a wholly owned subsidiary of AVITA Medical, Inc., and no foreign subsidiaries will agree. With that, we thank you for joining us, and now I will turn the call back to the operator for your questions. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Much more to get because that that vac.

Becomes more complex right as I was describing earlier, so where we are but we are seeing those those cases.

Alright, let me just ask one more I appreciate all the color obviously last year you added substantial.

<unk> of the sales force.

Now we're embarking on a second expansion can you just talk a little bit about about.

Let's call it your experience with the first expansion and your confidence that you can find the right people to complete the second expansion.

Operator: One moment for questions. Our first question comes from Brooks O'Neill with Lake Street Capital Markets. You may proceed. Good afternoon, guys.

Well I can tell you.

On January 18th I was at our National sales meeting in Dallas, where we celebrated and did the very common awards for the sales team.

Jim Corbett: Congratulations on your progress. I have a couple of questions. I guess first, I would love to get any color you can offer about the experience you're having with the hospital VAC. And then maybe you could just tell us a little bit about the experience you see if you get VAC approval, getting procedures performed by the surgeons in those hospitals. Hey Brooks.

What was really impressive is how many of them have become really successful and have great momentum in their territories.

And at the same time.

Our experience has been that we.

Have the ability to really make the expansion happened rapidly because.

Because we are growing and we have a proprietary technology in.

Jim Corbett: Thanks very much. So, first, let me describe the experience we're having. And very broadly speaking, we have well over 100 hospitals in some stage of the back process. What we're experiencing is, frankly, a longer cycle time related to the broader label. So we're, in most cases, needing to involve three or four physician specialties and as many as 10 different indications and, of course, their commensurate DRG or reimbursement. So the complexity has, unfortunately, it's a little bit like a wave coming ashore. There are a lot of them, and we've been at it for two quarters now, so they are starting to splash ashore. And that's a good metaphor because everybody is happy when that happens.

It is.

Technology and company that for the sales Rep really creates a special opportunity.

Maybe we initiated the sales expansion after that national sales meeting and we expect to be complete hiring by the end of March.

So that is a indirect indicator of the demand that exists in the marketplace to come to work for a beta.

That's fantastic thanks for the color and congratulations on the terrific results.

Thanks Brooks.

Thank you.

One moment for questions.

Our next question comes from Josh Jennings with TD Cowen You May proceed.

Hi, This is Eric on for Josh Thanks for taking the question.

With guidance for 2024.

Yes.

Within guidance for 'twenty 'twenty four could you help us understand what youre, assuming for some of your different growth opportunities here.

Thinking of the launch of full thickness and resale go.

How much of the growth in 2024 do you think these opportunities with the California.

Well first of all our guidance anticipates growth of between 57% and 69% so a substantial growth.

Jim Corbett: But the experience we're having is that it requires a more intense selling process. And one of the reasons we moved up during the year, our sales expansion, is so that we could take advantage of, in real time and more rapidly, that broader label. Because you've got to, in one sense, keep in mind that on a patient level.

Resell go will essentially replace the resale manual system, so it's not quite that.

Quite very.

Very easy to separate them because we saw it go the durable.

Jim Corbett: 35,000 resale-eligible burn patients but nearly 400,000 resale-eligible full-thickness skin defect patients. So it's really worth it for us to penetrate these hospitals. And we're getting experience in cases that we haven't seen treated before and having very good clinical results. So we're really feeling very good about the progress we're making. So during the year, to answer the obvious question, we expect to add approximately 200 new accounts. Good. That's very helpful. So perhaps we could just talk a little bit about any progress you feel you're making in capturing some of the incremental burn activity within the Level 1 and Level 2 trauma centers you're beginning to call on. Well, certainly we are. That's our lead clinical data and our lead clinical experience commercially over the last few years. We find them in Level 1 trauma centers, and the physicians are typically well aware of Resell because they go to burn meetings.

Not actually create a sales dollar by itself the disposable that and set that goes with it that processes and disaggregated skin.

We'll replace the resale kit so from an assumption point of view it is really driven by resell penetration.

Into full thickness skin defects that is the really big growth area, we continue to gain share in core Byrne's business.

But in time that will become the minority of our total business relative to full thickness skin defects. So.

When we I mentioned earlier that we expect to add approximately 200, new accounts during the year.

The principal sales of those.

We'll all be not all but.

Vast majority of be full thickness skin defect cases, so thats.

Jim Corbett: They just were not reached by our sales coverage model in prior years. So we're making progress in those instances, and much more to get, as you cause that vacuum becomes more complex, right, as I was describing earlier. So we are, but we are seeing those cases.

The real driver is that helpful.

That is yes. Thank you for that color and then maybe thinking internationally.

Should we be thinking of contributions from Europe and your distribution partners. There is that a real drivers for 'twenty four or is that something that might take a little bit more time than maybe we should be thinking 2025. Thank you for the questions.

Jim Corbett: Great. Let me just ask one more question. I appreciate all the color.

Yes, well regarding international.

Jim Corbett: Obviously, last year you had a substantial expansion of the sales force, and now we're embarking on a second expansion. Can you just talk a little bit about, let's call it, your experience with the first expansion and your confidence that you can find the right people to complete the second expansion? Well, I can tell you that on January 18th, I was at our National Sales Meeting in Dallas, where we celebrated and gave out the very common awards for the sales team.

As we mentioned we've signed our.

First European distributor, which is.

Covering the countries of Germany, Austria, and Switzerland, the Companys polymeric.

Now they have been trained in.

<unk>.

Started their initial launch and have had initial cases.

We think that the volume will build through the year, though however, because just like any sophisticated market. These days.

Similar as in United States. They don't have exactly a Vac committee theres something equivalent, though so we'll be adding additional distributors in other European markets throughout the year. Our goal is to finish the year with Europe largely covered.

Jim Corbett: And what was really impressive was how many of them have become really successful and have great momentum in their territories, and at the same time, our experience has been that we have the ability to really make the expansion happen rapidly because, Because we are growing and we have a proprietary technology and it's a technology and company that, for the sales rep, really creates a special opportunity, we maybe initiated the sales expansion after that national sales meeting, and we expect to be completely hiring So that is an indirect indicator of the demand that exists in the marketplace for people to come work for AVITA. That's fantastic! Thanks for the color and congratulations on the terrific result.

We will be making contributions in projections as we get a little momentum behind us and understand the demand pattern, that's going to emerge from in this case, Germany, Austria, and Switzerland, and we will update our guidance in that.

In mind, but.

<unk> 24 will be the year to get the foundation in place of all our distribution partners and 25 will be where I think we see material revenue.

Jim Corbett: Thanks, Brooks. Thank you. One moment for questions. Our next question comes from Josh Jennings with TD Tau, and you may proceed. Hi, this is Eric Humphrey, Josh.

Okay. That's perfect. Thank you.

Thank you.

One moment for questions.

Our next question comes from Matthew O'brien with Piper Sandler You May proceed.

Operator: Thanks for taking the question. Within guidance for 2024, hi, within guidance for 2024, could you help us understand what you're assuming for some of your different growth opportunities here? Thinking about the launch of full thickness and resale go, how much of the growth in 2024 do you think these opportunities will account for? Well, first of all, our guidance anticipates growth of between 57% and 69%, so substantial growth. Resell Go will essentially replace the resale manual system. So it's not quite, it's not quite very, it's not very easy to separate them because ReCell Go, the durable, will not actually create a sales dollar by itself. The disposable and cassette that goes with it, that processes and disaggregates the skin, will replace the ReCell kit.

Is.

Jim Corbett: So from an assumption point of view, it is really driven by ReCell penetration into full thickness skin defects. That is a really big growth area. We continue to gain share in the core burns business, but in time, that will become a minority of our total business relative to full-thickness skin defects. When I mentioned earlier that we expect to add approximately 200 new accounts during the year, the principal sales of those will all be, not all, but a vast majority will be full thickness skin defect cases. So that's the real driver. Is that helpful? That is, yeah, thank you for that color. And then, maybe, thinking internationally, should we be thinking of contributions from Europe and your distribution partners there? Is that a real driver for 24?

Easier to do require less clinical support so.

There's no direct sales tied to resale go per se.

But.

The conversion of our business to using resale goes are delivery vehicle does reduce the training requirement for the customer and for our sales organization and inevitably will cause higher productivity.

So those are rather core assumptions in our in our model.

No. Thank you that that's helpful and and and I guess as a follow up can you talk about your strategy when it comes to fill in the bag with additional products specifically as it relates to aesthetical scientific and maybe any other products that you feel.

Vita will need down the road.

Yeah sure.

What our mission is is to help the patients and physicians that.

Use our products and have our products used on them and.

And with resell we have.

Jim Corbett: Is that something that might take a little bit more time? And maybe we should be thinking 2025. Thank you for the question, yes, well regarding international business, as we mentioned, we signed our first European distributor, which covers the countries of Germany, Austria, and Switzerland. The company is Polymatics. Now, they have been trained, and they've started their initial launch, and they have had initial cases. We think that the volume will build through the year, but, because just like any sophisticated market these days, similar to in the United States, they don't have exactly a VAC committee. They have something equivalent, though.

A real opportunity because we have a.

I'm very well proven at this point technology that does not have a direct competitor.

And we are in cases with these with these patients who have very significant injuries and wounds.

And there's other products that surround.

The use of resell that we can bring in support our customer with and help solve their clinical problems. So permanent dermis, an example of that.

The wound matrix, it's porous if see through it.

It is much more convenient to manage the wound with for example, it can be used in some cases in conjunction with resell and some in many cases ever used on its own. So it is it is a meaningful.

Jim Corbett: So, we'll be adding additional distributors in other European markets throughout the year. Our goal is to finish the year with Europe largely covered. We will be making contributions and projections as we get a little momentum behind us and understand the demand pattern that's going to emerge from, in this case, Germany, Austria, and Switzerland. And we will update our guidance with that in mind. But 2024 will be the year to get the foundation in place for all our distribution partners, and 2025 will be where I think we see material revenue. Okay, that's perfect.

From a technical point of view, it's a call point overlap of almost a.

A full venn diagram.

There are other products that are similar I think the.

Thermal scaffold is is a very important technology for us to invest in and we've been researching that field and expect that to find.

A suitable technology.

And to coming in the coming year.

So I think there may be.

The others that overlap this call point, an overlap this patient population in physician population and we are going to really develop our company into a broader wound care acute wound care company.

Jim Corbett: Thank you. Thank you. One moment for questions. Our next question comes from Matthew O'Brien with Piper Sandler. You may proceed. Hey, this is Phil on for Matt.

Thank you.

Thank you.

One moment for questions.

Our next question comes from Ross Osborne with Cantor Fitzgerald you May proceed.

Congrats on progress and thanks for taking our questions.

Operator: Thanks for taking our questions and congratulations on all the progress. I guess just for guidance, appreciating that guidance is back half-weighted. Do you expect an inflection as you start to knock down some of these VACs, or is it going to be more measured?

He just wanted me on <unk> when he had some some more time on the rationale for developing thats product and <unk>.

And may not be as attractive for smaller winds.

[noise] so resale go.

Thanks for the question was I understand what you're asking so let me walk you through.

Jim Corbett: Like it's just any color on cadence, as guidance implies, a re-acceleration of growth off more difficult. Well, actually, there are a couple drivers that the VAC approvals that we're receiving here in the first quarter and that we will receive in the second quarter will be more fully productive during the second half. So that's a reflection, and anytime you convert a new account, you get increased adoption over the coming year

So resale go replaces the manual resale kit and that resale kit COVID-19, 120 square square centimeters, which is about 10% tbs's.

What we find in full thickness.

Is that.

Oh.

Very significant portion of the patient cases the patients.

Have the physician tab excuse me.

Under 500 square centimeters.

It's very simple that to the customer to the surgeon.

Using a product it's designed for 10% Tvs's.

To treat some a wound that is under 5% tbs's.

Jim Corbett: We also are expecting, as you learned earlier, that Resell Go will launch on May 31st, and Resell Go will replace our manual resale and will make Cases easier to do, and require less clinical support. So there's no direct sales tied to ResellGo per se. But the conversion of our business to using ResellGo as our delivery vehicle does reduce the training requirement for the customer and for our sales organization and inevitably will cause higher productivity. So those are rather core assumptions in our model. No, thank you.

Doesn't quite make sense to them. It's it seems wasteful so what we what the reason will have resale. Many so resell many is merely a cassette.

That has.

Less tissue volume.

Then the resale go standard.

So they will both fit into the resale go durable and if you're treating a smaller wound you'll use resale many <unk>.

Treating a larger wound you'll use the resale go standard.

Is that helpful.

Yes very helpful. Thanks for all your questions.

Thank you.

One moment for questions.

Our next question comes from Ryan Zimmerman with BTG you May proceed.

Jim Corbett: That's helpful. And, I guess, as a follow-up, can you talk about your strategy when it comes to filling the bag with additional products, specifically as it relates to medical, scientific, and maybe any other products that you feel AVITA will need down the road? Yes, sure. Well, what our mission is to help the patients and physicians that, you know, use our products and have our products used on them. And with resale, we have a real opportunity because we have a very, at this point, technology that does not have a direct competitor. And we are in cases with these patients who have very significant injuries and wounds. And there are other products that surround the use of ReCell that we can bring and support our customers with and help solve their clinical problems. So, PermiDerm is an example of that. The wound matrix is porous, it's see-through, and it's much more convenient to manage the wound with, for example.

Good afternoon, thanks for taking the question.

They ran one one to ask.

About.

Assumption underpinning.

Your longterm profitability comment.

I know.

It's a little too early to guide for 25, but maybe help bridge us from here to there and kind of.

Either want the revenue level or or what the expense how the expenses kind of track in your mind to get there, especially in the context of adding all these raps again.

Just wanted to make sure investors understand your thinking there.

Well, we're not ready to give guidance for any of those elements for 25, but I can give you some directional thoughts.

On the revenue growth line.

50, 769% growth rate.

Our gross profit has been and will continue to be on the on the resale.

85%.

And so the revenue exit right you.

You can back into.

Pink.

The then you can calculate.

Jim Corbett: It can be used in some cases in conjunction with ReCell, and in many cases, it will be used on its own. So, it is meaningful; from a technical point of view, it's a call point overlap of almost a full Venn diagram. There are other products that are similar. I think the dermal scaffold is a very important technology for us to invest in, and we've been researching that field and expect to find a suitable technology in the coming year. So I think there are likely others that overlap this call point and overlap this patient population and physician population. And we are going to really develop our company into a broader acute wound care company. Thank you.

The profitability.

Into into Q3 year before 25.

I would say it depends very fundamentally maintaining a growth rate of greater than 50%.

First of all and so that means will accelerate and the our guidance with this case.

Not only are we.

Having a heavier revenue in the back half will have a bigger organization. So of course, we should.

And that growth rate's actually accelerating against the second half of last year.

So let.

That means that's the growth rate we go into 2025, so I think the.

Combination of growth rate.

Greater penetration into these new accounts with the larger sales footprint rim.

Remember it.

It only takes.

Five kids a month.

For a rep to breakeven in cost.

So we've just learned about that again from her we had learned it in the winter we had berms and we just learned it in the first two quarters of the full thickness launch just keep in mind that much bigger market we've.

Operator: One moment for questions. Our next question comes from Ross Osborne with Cantor Fitzgerald. You may proceed. Hey guys, congrats on the progress and thanks for taking the questions. Maybe just one for me on resale mini. Would you spend some more time on the rationale for developing this product and why resale go may not be as attractive for smaller women? So, we shall go. Thanks for the question, Ross. I understand what you're asking, so let me walk you through it.

We've only been in six months and by the time, we expand the Salesforce a second time will have only been in at nine months. So 2025 reflects penetration into that.

Very deep market a full thickness.

Is that helpful.

Yes, very helpful and I appreciate the caller there maybe just have.

Another question.

As you can.

Jim Corbett: So Resale Go replaces the manual resale kit, and that resale kit covered 1,920 square centimeters, which is about 10% of the TBSA. What we find in full thickness is that a very significant portion of the cases where the patients have the position tabs are under 500 square centimeters. And it's very simple that to the customer, to the surgeon, using a product that's designed for 10% TBSA to treat a wound that is under 5% TBSA doesn't quite make sense to them. It seems wasteful.

Giving your in the value analysis process right now with a lot of facilities with the manual recess manual resell system.

And then [laughter] excuse me behind that you're going to introduce the resale go system.

And <unk>.

Design is is one where you're not collecting revenue for the system itself. So you have the consumable component.

Just wondering how are you smoothing that process. So that there are no kind of air pocket. When you go in to try and switch out and maybe change the business model a little bit.

Jim Corbett: So the reason we'll have Resell Mini, so Resell Mini is merely a cassette that has less tissue volume than the ReCell Go standard cassette. So they'll both fit into the ReCell Go durable. And if you're treating a smaller wound, you'll use ReCell Mini. If you're treating a larger wound, you'll use the ReCell Go standard.

With resale go appreciating the benefit that offers but these are bureaucratic institutions that you're selling into an <unk>.

I just want to make sure that there's no.

No kind of impact as a result of that.

Yeah, it's really it's a really good thought.

The first principle the resale go launch is to make it easy for our customers.

Jim Corbett: This is Dead Helpful. Yes, very helpful. Thanks for sharing your question. Thank you. One moment for questions. Our next question comes from Ryan Zimmerman with BTIG. You may proceed. Good afternoon.

And for them to understand that to get resell the.

The <unk> the rez.

What we call the <unk> app to spray on skin to get it they will have to buy resell go cassettes.

Operator: Thanks for taking the question. I wanted to ask about the assumption kind of underpinning your long-term profitability comments. I know, you know, it's a little too early to guide for 25, but maybe help bridge us from here to there and kind of... either what the revenue levels are or what the expenses are, how the expenses kind of track in your mind to get there, especially in the context of adding all these reps again.

Since we're not building them for are charging them for making them make a cost commitment.

To the durable.

We believe that we're going to make it very easy for them to adopt.

Yeah.

Okay fair enough.

I appreciate that thank you.

Thank you.

One moment for questions.

Our next question comes from Chris cargoes with.

Misty access you May proceed.

Thank you.

<unk> can you hear me okay.

Again, good morning, Chris.

Okay.

To see the results congratulations I just wanted to pick up on.

Jim Corbett: Just want to make sure investors understand. Well, we're not ready to give guidance for any of those elements for 25, but I can give you some directional thoughts on the revenue growth line. 57 to 69 percent growth rate. Our gross profit has been and will continue to be on the resale. 85%.

Jason products <unk> currently you're done and just you mentioned Skype halls, and I imagine there are other adjacent soon is that you can look into how does that impact.

Thinking around the sounds false.

And how they're gonna balance different products coming online.

Jim Corbett: And so the revenue exit rate, you can back into, I think, and then you can calculate the profitability into Q3 or before. I'd say it depends, you know, very fundamentally on maintaining a growth rate of greater than 50 percent. First of all, and so that means we'll accelerate in our guidance. In this case, not only are we having heavier revenue in the back half, but we'll have a bigger organization, so of course we should, and that growth rate's actually accelerating against the second half of last year. So, that means that's the growth rate we go into in 2025. So I think the combination of growth rate, greater penetration into these new accounts, and a larger sales footprint. Remember. It only takes, and as you can see here, we have a couple of different types of procedures.

Soon as part of the question and the second part is.

Have any thoughts around taking those products into international markets.

Yes, so multiple questions there so with respect to the adjacent products.

These are products that all fit the following definition.

Are used on the same patients by the same.

Physicians.

And the same indications.

So our rep is rather uniquely positioned because resell is.

A brand with a <unk> with frankly, a bit of a halo that doesn't have a direct competitor.

The sales Rep has good access to the hospital and to our customer base.

So having other products that day of that our customer might need is.

Is is a real leverageable opportunity.

So we think that this is additive in terms of value add to our customer and additive and back to what we bring the hospital in terms of fewer vendors and additive to of course are results as a company.

Jim Corbett: We've got a hybrid procedure that includes a hybrid procedure where we have a hybrid procedure where you know, five kits a month for a rep to break even in cost. So we've just learned about that again from our burns, and we learned about it when we had burns, and we just learned about it in the first two quarters of the full thickness launch. Just keep in mind that much bigger market. We've only been in business for six months.

So.

The biosynthetic wound matrix of permanent germ.

But so many more applications and resell.

Jim Corbett: And we, by the time we expand Salesforce a second time, we'll have only been in it for nine months. So 2025 reflects penetration into that very deep market at full thickness. Is that helpful?

And often when we're selling resell we're promoting it or discussing possible uses of it with a doctor we might discuss several different patient indication pay.

Patient indications and different patients.

For a resale has chosen to be used on a patient.

All of those patients will be candidates for permute German this case, so it'll give our reps an opportunity to have many reasons to fulfill the needs of the customer now to your last question.

Jim Corbett: Yes. Caller is there. Maybe just ask, you know, another question.

Jim Corbett: As you, Given you're in the value analysis process right now with a lot of manual receival, manual receival. And then, excuse me, behind that, you know, you're going to introduce the resale ghost, and this design is one where you're not collecting revenue for the system itself, but you have the consumable component.

The Premier Jim relationship is is currently in the contract is a domestic U S agreement only.

And notwithstanding it's very.

It's built as a real partnership and the way we're structured in this relationship. So we expect to be with primary Durham for a lot of years.

Jim Corbett: I'm just wondering, you know, how are you smoothing that process so that there are no kind of air pockets when you go in to try and switch out and maybe change the business model a little bit? with Resell Go, appreciating the benefits it offers, but these are bureaucratic institutions that you're selling into, and I, you know, you just want to make sure that, you know, there's no kind of impact as a result. Yeah, it's really, it's a really good thought.

Right and that's very helpful and.

<unk> international with products lots of them you're done.

Thinking that why at this point.

We're not really thinking of much that way at this point.

Primarily because we are really in the nascent stage of our international strategy. We're just so early that the priority is to establish resell first and will be doing that and that will take some time. So I don't it isn't a priority to strengthen that portfolio in fact, what we're finding.

Jim Corbett: The first principle of the Resell Go launch is to make it easy for our customers and for them to understand that to get the res, the, you know, what we call the CVAP, the spray-on skin. To get it, they will have to buy resell go cassettes. So, since we're not billing them for, or charging them for, or making them make a cost commitment to the durable, we believe that we're going to make it very easy for them to adopt.

Is the distributors that we're considering.

Considering including the one we did sign with in Europe all have.

A broader portfolio already.

Which helps in the sale helps them sell read more resell so.

I think at the moment this is a domestic use strategy.

Alright sounds logical thanks for that thank you.

Jim Corbett: Yeah, okay, fair enough, and thank you. One moment for questions. Our next question comes from Chris Callios with MSP Access. He may proceed. Hi Jim, can you hear me okay?

Thanks, Chris.

Thank you.

One moment for questions.

Our next question comes from Madeline Williams with Wilson's you May proceed.

Hi, Jamie Hi, David Thanks for taking my question.

Jim Corbett: Again, good morning, Chris. Good to see the results; congratulations. I just wanted to pick up on adjacent products to the portfolio with Permioderm and you mentioned scaffolds, and I imagine there are other adjacencies that you can look into. How does that impact your thinking around the sales force and how they're going to balance different products coming online? My first part of the question, and the second part is, do you have any thoughts around taking those products into international markets? Yeah, so there are multiple questions there. So with respect to the adjacent product. These are products that all fit the following definition. They are used on the same patients by the same physician.

<unk> I guess.

<unk> <unk> <unk>, how much color do you get.

What about the crisis.

Perfect weather.

Can it be able to get that second half I'm, just taking into account the <unk> quarter guidance.

Mental and I think that's a good question I think we are largely through the consequence of the of the more constant <unk> more.

Complex.

<unk> analysis committee process, because we've started them and we continue to start more and they're coming out there.

The new accounts are coming coming out of the process and we're <unk> and we started new ones. So it's slow does that a little bit.

And the fourth quarter, but not much and we know what we what we do note that it is different and it is more complex, but what comes with that is a much bigger market with many more patient indications and many more.

Jim Corbett: And the same indication. So our rep is rather uniquely positioned because Resale is a brand with a bit, with frankly, a bit of a halo. It doesn't have a direct competitor.

Possible treatment, Canada, So I think right now.

Jim Corbett: The sales rep has good access to the hospital and to our customer base. So having other products that our customers might need is a real leverageable opportunity. So we think that this is additive in terms of value added to our customers, and additive, in fact, to what we bring to the hospital in terms of fewer vendors, and additive to, of course, our results as a company. So, uh, the biosynthetic wound matrix of permeaderm has so many more applications than resell. And often when we're selling resale or promoting it or discussing possible uses of it with a doctor, we might discuss several different patient indications, you know, patient indications and different patients before a resell is chosen to be used on a patient. But all of those patients will be candidates for permeaderm in this case. So it'll give our reps an opportunity to have many reasons to fulfill the needs of the customer. Now, to your last question, the Permioderm relationship is currently, and the contract is a domestic U.S. agreement only.

Probably after this call you won't hear much about <unk>.

Other than we are progressing really well and we're hitting our targets for.

For the year I mentioned that we expect to add nearly 200, new accounts for the year, So and we're on.

A good pace here in the first quarter to make that happen.

Yeah, Okay, that's great color and did you ever got so I guess and <unk>.

Translating that <unk>.

Cause I don't want to say it didn't utilizing.

More.

<unk> I should've already aware.

<unk> and <unk> and <unk> is the discussion intended the difference between <unk> already happening.

Well.

The difference between resell and resell go.

First of all the output of the two of them is the same but <unk>.

Since we don't have FTA approval, we're not discussing resale go with customers at this moment.

That we have to you have to wait for approval for I don't think that will be a big challenge for them. We've done private focus groups with them to talk about how we are going to introduce the product.

Jim Corbett: Notwithstanding, it's built as a real partnership in the way we're structured in this relationship, so we expect to be with Permioderm for a lot of years. Great, and that's very helpful. And in terms of going international with products like Fermioderm, are you thinking that way at this point? We're not really thinking that way at this point, primarily because we're really in the nascent stage of our international strategy. We're just so early that the priority is to establish resale first, and we'll be doing that, and that will take some time. So it isn't a priority to strengthen that portfolio.

It's going to be a.

Mmm.

I think the word is a wholesale conversion of our business model. So all customers will who want to use resell will do so with a resale go durable and use the result set.

So it'll be a conversion that we execute during Q3.

Okay.

That's very helpful. Thanks.

Thank you and as a reminder to ask a question. Please press star one one on your telephone.

One moment for questions.

Our next question comes from land Harrison with Bank of America, You May proceed.

Jim Corbett: In fact, what we're finding is the distributors that we're considering, including the one we did sign with in Europe, all have a broader portfolio already, which helps them sell more resales. So I think at the moment, this is a domestic US strategy. Sounds logical. Thanks for that. Thank you. Thanks, Chris.

Yeah good morning.

If I could come back T.

The conversations you're having about <unk> now you mentioned that it hasn't been launched yet, but if I think about rest of the world.

How familiar.

The rest of the World Sergent community familiar with resell currently as it is and how should we think about the rate of adoption that and then secondly, with the <unk> training.

Jim Corbett: Thank you. One moment for questions. Our next question comes from Madeline Williams with Wilson's. He may proceed. Hi Jim.

Did you also have been trained on resale culture that they're ready to go when the launch on occasion.

Jim Corbett: Hi David. Thanks for taking my question, in regards to going back to, I guess, the bottleneck with launching into the trauma centers. I mean, how much color do you get of, you know, what the process, the ongoing process is like, and, you know, whether you're going to be able to get that uplift in the second half, just, you know, taking into account the guidance that you've given for the first quarter and then, obviously, full year guidance? Well, Madeline, I think it's a good question.

Got it Okay, let me make sure I have that line them all up.

There is across Europe, and Australia and Japan.

I'd say.

Good to moderate.

Familiarity with resell already.

That said, we were not commercial and anywhere but Japan during this time.

So I think we're introducing resell into a market, where most are going to be new.

Now with respect to resale go in you and let's just take Europe for first.

Jim Corbett: I think we're largely through the consequence of the more consequence, the more complex, Value Analysis Committee process because we've started them and we continue to start more, and they're coming out. The new accounts are coming out of the process, and we started new ones. So it slowed us a little bit in the fourth quarter, but not much.

We are launching resell the.

It's called <unk> 1920, which is.

Standard system.

In Germany, Austria, and Switzerland, now and when resale go get it CE Mark through the M. D R, which we expect some time in the third quarter.

They will converge.

So some distributors and some customers.

Jim Corbett: But we do note that it is different, and it is more complex. But what comes with that is a much bigger market with many more patient indications and many more possible treatment candidates. So I think right now, probably after this call, you won't hear much about VAC other than we're progressing really well, and we're hitting our targets for the year. And I mentioned that we expect to add nearly 200 new accounts for the year. So, and we're on a good pace here in the first quarter to make that happen. Yes, okay, Carla. And just in regards to translating that access into sales, I mean, I know there's some crossover with the surgeons utilizing in both burns and then sort of more trauma surgeons, but are they, are they sort of already aware of being able to utilize resale, and you know, is the discussion in terms of Well, the difference between Resell and Resell Go... First of all, the output of the two of them is the same, but since we don't have FDA approval, we're not discussing Resell Go with customers at this moment, which we have to wait for approval on. I don't think that will be a big challenge for them.

In Europe, depending on when we signed a distributor <unk>.

May.

C resale for the first time in the resale go configuration.

And not have ever seen the original resell or not or not and have used it.

So.

I think it'll be a matter of timing on that level and no we didn't train <unk>.

That'll be something will do when the product is approved.

Great. Thank you and then if I think about Christ.

Magenta, obviously well for this cause you had a material improvement in Christ's margin.

I guess that you talked about for 2024.

85% gross margin.

Is there any reasoning why you don't think he could maintain that high watermark of 87% coming into 24, particularly given.

Volumes over that period.

Yeah. That's a good question. So first of all just to be precise.

I didn't exactly give guidance of 85.

We've been we've been operating in that territory is similar or my words [laughter].

And there is a resumption I'm emphasizing that.

Our margin with permanent germ will be 50%.

Not 85% so are on resell we will.

Likely be in at 85 range and you may have captured during the call.

That we're we're making some investments and our manufacturing operation rather substantial frankly and.

Jim Corbett: We've done private focus groups with them to talk about how we're going to introduce the product. It's going to be, I think the word is, a wholesale conversion of our business model. So all customers who want to use resale will do so with a resale go durable and use the resale set. So it'll be a conversion that we execute during Q3. Okay, that's very helpful

And the couple margin points makes it a little bit of.

It it does make a little difference when.

When you.

Completely rehab facility. So our cost structure has gone up a slight bit and on one hand and on the other hand, we will be introducing into our mixed gross profit.

Jim Corbett: Thanks. Thank you. And as a reminder, to ask a question, please press star one one on your telephone. One moment for questions. Our next question comes from Lyanne Harrison with Bank of America. You may proceed. Yeah, good morning Jim and David.

A 50% gross profit product.

Uh-huh.

Thank you and one last question for me.

On.

Friday and costs.

2023, we feel 43% and operating costs, which pretty much is in pace with your revenue growth over that period should we expect that again for 2024.

Operator: If I could come back to the conversations you're having about resale dough. I know you mentioned that it hasn't been launched yet, but if I think about the rest of the world... You know, how familiar?

Do you expect some operating leverage particularly towards the second half of 24.

That you mentioned you might get a celebration.

Yeah.

I want to have David jumping on this one.

Jim Corbett: is the rest of the world's surgeon, and what should we think about the rate of adolescence? And then, secondly, with the polymedics training, did you also have them trained on Resell Go so that they're ready to go when the launch occurs? Got it. Okay. Let me make sure I line them all up.

Yeah, we don't see that same sort of percentage in 2024.

We are expanding our sales force so from a sales expense standpoint, there will be an increase.

Jim Corbett: There is, across Europe, and Australia, and Japan, I'd say good to moderate, familiarity with Reshell already. That said, we were not commercial in anywhere but Japan during this time. So, I think we're introducing resale into a market where most are gonna be new. Now, with respect to Resell Go, and let's just take Europe for first. We are launching Resell, the It's called Resell 1920, which is the standard system in Germany, Austria, and Switzerland now, and when Reselco gets its CE mark through the MDR, which we expect sometime in the third quarter, they will convert.

But the R&D expense.

Is not going to increase by 43% again.

As well as G&A is not going to increase either so there will be leverage as you indicated as our revenue accelerates at the towards the end of the year in the second or the third and fourth quarter you will see.

Ah decrease as a percentage and operating expenses when compared to revenue.

Alright. Thank you very much that's all I had.

Thank you I would not like to turn the call back over to Jim Corbett for any closing remarks.

Well. Thank you very much to all of you for joining our call today.

Jim Corbett: So some distributors and some customers in Europe, depending on when we sign the distributor, may see Resell for the first time in the Resell Go configuration and not have ever seen the original Resell or not have used it. So I think it'll be a matter of timing on that level. And no, we didn't train polymedics on ResoGo.

We look forward to our next earnings call two announced our progress in Q1.

Looking forward to hearing from all of you soon thank you.

Thank you for your participation you may now disconnect.

Mmm.

[music].

Jim Corbett: That'll be something we'll do when the product is approved. Thank you. And then if I think about gross margins, so obviously, well, for this quarter, you had a material... I guess that you talked about for, for, Guided to 85. Is there any reason why you don't and that high water mark, given you are increasing your volume?

Jim Corbett: Yeah, it's a good question. So first of all, just to be precise. I didn't exactly give guidance of 85. We've been operating in that territory, were my words. And there's a reason I'm emphasizing that.

Jim Corbett: Our margin with Permiaderm will be 50%, not 85%. So, on resale, we will very likely be in that 85% range. And you may have noticed during the call that we're making some investments in our manufacturing operation, rather substantial, frankly. And that couple of margin points makes a little bit of a difference when you completely rehab the facility. So our cost structure has gone up a slight bit, and on the one hand, and on the other hand, we will be introducing into our mixed gross profit a 50% gross profit product. Thank you. And one last question. Is on, Operator?

Jim Corbett: So, in, and I'm going to be talking about the new new new new new new new new new new new new new new, Operator. Rep. We expect that. For more information, visit www. FEMA.gov, Tech, SUM, Operating Leverage, clearly towards the and might get accelerated. I'm going to have David jump in on this one.

David O'Toole: Yeah, we don't see that same sort of percentage in 2024 because we are expanding our sales force. So from a sales expense standpoint, there will be an increase. But the R&D expense is not going to increase by 43% again, and G&A is not going to increase either. So there will be leverage, as you indicated, as our revenue accelerates towards the end of the year in the third and fourth quarters, you will see a decrease as a percentage in operating expenses when compared to revenue. Thank you very much, that's all.

[music].

Operator: Thank you. I would now like to turn the call back over to Jim Corbett for any closing remarks. Well, thank you very much to all of you for joining our call today. We look forward to our next earnings call to announce our progress in Q1. Looking forward to hearing from all of you soon. Thank you. Thank you for your participation. You may now disconnect. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good day and thank you for standing by.

Operator: Welcome to the AVITA Medical fourth quarter 2023 earnings 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, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jessica Eckberg, Director of Investor Relations. Thank you, Operator. Welcome to AVITA Medical's fourth quarter and full year 2023 earnings call. Joining me on today's call are Jim Corbett, Chief Executive Officer, and David O'Toole, Chief Financial Officer. Today's earnings release is available on our website, www.avitamedical.com, under the Investor Relations section. 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. These 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 statement.

Jessica Eckberg: Please review our most recent filings with the SEC, specifically the risk factors described in the Form 10-K for the year ended December 31, 2023, for additional information. Any forward-looking statements provided during this call are based on management's expectations as of today. I will now turn the call over to Jim for his comments. Thank you, Jessica. Good afternoon, and thank you for joining us today.

Jim Corbett: I will begin today's call by discussing our financial and business highlights for the fourth quarter and full year 2023, followed by an update on our priorities for 2024. Following this update, I will turn the call over to David, who will provide commentary on our 2023 financial performance and 2024 guidance before opening the call to Q&A. During the February 2023 conference call, I outlined our 2023 priorities, our growth strategy, and committed to providing quarterly and annual guidance. Additionally, I emphasize that 2023 would mark a significant turning point for AVITA Medical. A year in which we plan to transform our business by multiple new indications dramatically increasing our growth trajectory. I'm pleased to report we did just that.

Good day and thank you for standing by welcome to the <unk> Vita Medical fourth quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session. Please press star one one on your telephone and wait for your name to be in.

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 speaker today Jessica Ekberg.

Jim Corbett: We finished 2023 strong, delivering fourth-quarter commercial revenue of $14.1 million, representing growth of 50% over the same period in 2022. This performance highlights our sustained quarterly growth trajectory. For the full year of 2023, we closed with commercial revenue of $49.8 million, representing impressive growth of 46% over the prior year. This is a significant achievement reflecting the effectiveness of our strategic growth initiatives and initial launch of full thickness skin defects, which I will address shortly, shifting focus to our recent developments. On January 10th, we announced that we entered into an exclusive five-year distribution agreement with Statical Medical to commercialize Permioderm biosynthetic wound matrix in the United States. Permiderm is a transparent, flexible dressing that is cleared by the FDA for use in the treatment of a wide range of wound types until healing is achieved.

Actor of Investor Relations.

Thank you operator, welcome to Veeva Medical's fourth quarter and full year 2023 earnings call. Joining me on today's call are Jim Corbett, Chief Executive Officer, and David O'toole, Chief Financial Officer. Today's earnings release is available on our website www.

That has been a medical dot com under the Investor Relations section.

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 1095. These.

These 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 our most recent filings with the SEC specifically the risk factors described within the Form 10-K for the year ended December 31, 2023 for additional information.

Any forward looking statements provided during this call are based on management's expectations as of today I will now turn the call over to Jim for his comments.

Thank you Jessica.

Jim Corbett: Permiderms' high level of permeability and flexibility allows medical professionals to stretch it, giving them the ability to customize the porosity to meet the specific needs of the womb. This adjustability facilitates wound healing. Moreover, Hermiderm can be used alongside the treatment of many of our burn and full thickness skin defect cases to further aid in healing. The complementary nature of these two products and overlapping call points allows us to leverage our commercial organization to effectively integrate Hermeneuterm into our selling portfolio. Our commercial organization will launch Permiderm in March, and we will update you on this effort during our first quarter call after we have had some experience selling to our customers. The partnership marks the first step in our efforts aimed at expanding our portfolio of wound care products that will facilitate wound treatment. Moving on to our international expansion strategy. Last quarter, I unveiled our plans to expand into Australia and most of the European Union through third-party distribution partnerships. I'm happy to report that polymatic is.

Good afternoon, and thank you for joining us today.

I will begin today's call by discussing our financial and business highlights of the fourth quarter and full year 2023.

Followed by an update on our priorities for 2024.

Following this update I will turn the call over to David who will provide commentary on our 2023 financial performance and 2024 guidance before opening the call to Q&A.

During the February 2023 conference call I outlined our 2023 priorities, our growth strategy and committed to providing quarterly and annual guidance.

Additionally, I emphasize that 2023 with Mark a significant turning point for review the medical a year in which we plan to transform our business by adding multiple new indications dramatically increase our growth trajectory.

Pleased to report we did just that.

We finished 2023 strong delivering fourth quarter commercial revenue of $14 1 million.

Representing growth of 50% over the same period in 2022.

This performance highlights our sustained quarterly growth trajectory.

For the full year of 2023, we closed with commercial revenue of $49 8 million.

Jim Corbett: Our first European distributor completed its resale training and launched Reshell Go in Germany, Austria, and Switzerland in January as expected. We will continue to update you as we identify new distributor partners. Turning to the PMA supplement for Reshell Go, we have completed the in-house testing that was necessary to fulfill the FDA's request for additional information.

Representing impressive growth of 46% over the prior year.

This is a significant achievement, reflecting the effectiveness of our strategic growth initiatives and initial launch of full thickness skin defects, which I'll address shortly.

Yes.

Shifting focus to our recent developments.

On January 10, we announced that we entered into an exclusive five year distribution agreement with <unk> medical to commercialize Permian Derm biosynthetic wound matrix in the United States.

Jim Corbett: As previously stated, we expect to submit a response to the FDA on February 28, 2024. Then, with the restart of the 180-day real-time review, we plan to launch on May 31, 2024. Moving on to the manufacturing and assembly of Resul-GO. We mentioned during our last call that we made the strategic decision to bring the entire manufacturing and assembly process of both the durable and disposable components in-house at our Ventura facility. We will also be completing a service center for the durable goods that will be located in Ventura. We are on track to complete this transfer ahead of the May 31st launch of Resell Go. As part of the insourcing process, we have been renovating our Ventura facility to increase capacity by tenfold. This expansion will also facilitate permeaderm distribution.

<unk> is a transparent flexible dressing is cleared by the FDA for use in the treatment of a wide range of wound types until healing has achieved.

Permian <unk> high level of permeability and flexibility allow medical professionals to stretch it given the clinicians the ability to customize the porosity to meet the specific needs of the wound.

This suggest stability facilitate wound healing. Moreover, Permian <unk> can be used alongside the treatment of many of our burn and full thickness skin defect cases to further aid in healing.

A couple of mentoring nature of these two products, an overlapping call points allow us to leverage our commercial organization to effectively integrate <unk> into our selling portfolio.

Our commercial organization will launch <unk> during March and we will update you on this effort during our first quarter call. After we have had some experience selling to our customers.

The partnership marks the first step in our efforts aimed at expanding our portfolio of wound care products that will facilitate wound treatment.

Jim Corbett: With our Ventura facility serving as the hub for housing and distributing Permiderm to our customers along with our other products, as a result of this expansion, we will have ample space for manufacturing and assembly, as well as physical distribution, ensuring efficient operations for the next five years. These renovations are being completed in phases throughout 2024, with the final phase scheduled for completion during the third quarter. As we work to enhance our operational capabilities to fuel our growth, we are also focused on the next expansion of our commercial field organization. Our primary objective during our first commercial organization expansion, which occurred in the early half of 2023, was aligning our sales strategy with our overall growth strategy by focusing on adoption and new cases for a new indication of full thickness skin defects. To achieve this, we strategically increased both our sales team from 30 to 70 people and our territories from 14 to 40 to maintain small sales territories and keep our growth rate high. Specifically, we aimed for our 40 territories to average under $2 million to facilitate effective coverage, penetration, and growth.

Moving on onto our international expansion strategy.

Last quarter I unveiled our plans to expand into Australia, and most of the European Union through third party distribution partnerships I'm.

I'm happy to report that <unk>, our first European distributor completed their resale training and launched within Germany, Austria and Switzerland in January as expected. We will continue to update you as we identify new distributor partnerships.

Turning to the PMA supplement for resale go.

We have completed the in house testing that was necessary to fulfill the fda's request for additional information.

As previously stated we expect to submit a response.

<unk>.

On February 28, 2024 with.

With the restart of the 180 day real time review, we plan to launch on May 31, 2024.

Moving on to the manufacturing and assembly of resale go.

We mentioned during our last call that we made the strategic decision to bring the entire manufacturing and assembly process.

The durable and disposable components in house to our Ventura facility.

We will also be completing a service center for the durable that will be located in Ventura.

We are on track to complete this transfer ahead of the May 31 launch of resale go.

As part of the in sourcing process, we have been renovating our Ventura facility to increase capacity by 10 fold. This expansion will allow also facilitate Permian <unk> distribution.

With our Ventura facilities, serving as the hub for housing and distributing <unk> to our customers along with our other products. As a result of this expansion, we will have ample space for manufacturing and assembly as well as physical distribution, ensuring efficient operations for the next five years of dislocation.

Jim Corbett: We should be approaching the $2 million threshold during the latter half of 2024. Therefore, our plan is to expand our sales force and territories again to keep the focus on adoption and growth. Moreover, an expanded sales force will allow us to intensify our efforts in the value analysis committee process, thereby maximizing our ability to capitalize on the expanded label of full-thickness skin defects. Consequently, we are adding 38 new positions to our commercial organization, which will bring our commercial organization to a total of 108.

These renovations are being completed in phases throughout 2024 with the final phase scheduled for completion during the third quarter.

While we work to enhance our operational capabilities to fuel our growth. We are also focused on our next expansion of our commercial field organization or.

Our primary objective during our first commercial organization expansion, which occurred in the early half of 2023 was aligning our sales strategy with our overall growth strategy by focusing on adoption and new cases for a new indication of full thickness skin defects.

Jim Corbett: We expect our expanded set field team to be in place by April 1, with our current commercial field organization and our expanded sales force. We expect to add approximately 200 new accounts during 2024. As we discussed during our third quarter call, the broadened scope of full thickness skin defects provides us with an opportunity to pursue many different applications for resale. However, as part of this pursuit, we must access multiple physician specialties within a single facility to get Value Analysis Committee, also known as VAC, approval, resulting in a lengthier sales process. We continue to affirm that this expanded indication increases the patient population of resale by 10 times over the patient opportunity to burn. In line with the expanded label of full thickness skin defects, we are in the design stage of developing ReCell Go Mini. ResellGo Mini is being designed to address smaller wounds, providing us with the opportunity to treat patients with less than 5% total body surface area.

To achieve this we strategically increased both our sales team from 30 to 70 people in our territories from 14% to 40 to maintain small sales territories and keep our growth rate high spin.

Specifically.

We aimed for are 40 territories to average under $2 million to facilitate effective coverage penetration and growth.

We should be approaching the $2 million threshold during the latter half of 2024 and therefore, our plan is to expand our sales force and territories again to keep the focus on adoption and growth.

Moreover, an expanded sales force will allow us to intensify our efforts and the value analysis committee process, thereby maximizing our ability to capitalize on the expanded label or full thickness skin defects.

Consequently, we are adding 38, new positions to our commercial organization, which will bring our commercial organization to a total of 108, we expect our expanded field team to be in place by April one.

With our current commercial field organization and our expanded sales force, we expect to add approximately 200, new accounts during 2024.

Jim Corbett: This device will have the same reusable, durable material as Resell Go. We'll have a different cartridge that accommodates a smaller donor skin sample. We intend to submit a PMA supplement in order to achieve FDA approval by year-end. Now, turning to the Vitiligo Initiative. In January, we completed enrollment of 109 patients in Tone, our post-market study evaluating repigmentation and its impact on the quality of life for AvitaLigo patients earlier than anticipated. Our initial six-month follow-up assessments are scheduled to begin in July.

As we discussed during our third quarter call. The broadened scope of full thickness skin defects provides us with an opportunity to pursue many different applications for resale.

As part of this pursuit, we must access multiple physician specialties within a single facility to get value analysis Committee also noticed vac approval, resulting in a link to your sales process. We continue to affirm this expanded indication increases the patient population of resell.

<unk> by 10 times over the patient opportunity with Burns.

In line with the expanded label of full thickness skin defects. We are in the design stage of developing resell go many.

Jim Corbett: To strengthen the data that we are collecting, we have extended the follow-up period to include an additional assessment at 12 months post-treatment. We expect to submit both this study and our separate health economic study for publication by the end of 2024. The study dates position us to begin commercial payer coverage discussions during the second quarter of 2025.

We sell go many is being designed to address smaller wounds, providing us with the opportunity to treat patients with less than 5% total body surface area affected.

This device will have the same reusable durable as resale go we'll have a different cartridge that accommodates a smaller donor skin sample.

We intend to submit a PMA supplement.

In order to achieve FDA approval by year end.

Now turning to the Vitiligo initiative and.

In January we completed enrollment of 109 patients in tone, our post market study evaluating re pigmentation and its impact on quality of life for vitiligo patients earlier than anticipated. Our initial six month follow up assessments are scheduled to begin in July the strength of the data.

Jim Corbett: Subsequently, we anticipate a phased rollout of commercial coverage on a regional basis, with the initial phase likely to begin in the fourth quarter of 2025, supported by an appropriately sized commercial organization as coverage is established throughout the United States. Before turning the call over to David, I would like to address our financial outlook. I previously committed to communicating the quarter in which we achieve cash flow breakeven and gap profitability. We are pleased to report that we have established a path to achieve both milestones no later than the third quarter of 2025. In closing, 2023 marked an exciting inflection point for us, and our dedication to innovation and growth continues. We remain resolute in our commitment to unlocking shareholder value through increased adoption and sustained growth within our indications and expansion of our portfolio. I look forward to sharing further updates on our continued progress. With that, I'd like to turn the call over to David.

We are that we are collecting we have extended the follow up period to include an additional assessment at 12 months post treatment.

We expect to submit both this study and our separate health economic studies for publication by the end of 2024.

The study dates position us to begin commercial payer coverage discussions during the second quarter of 2025.

Subsequently.

We anticipate a phased rollout of commercial coverage on a regional basis with the initial phase likely begin in the fourth quarter of 2025 supported by an appropriately sized commercial organization as coverage is established throughout the United States.

Before turning the call over to David I would like to address our financial outlook.

Previously committed to communicating the quarter in which we achieved cash flow breakeven and GAAP profitability. We're pleased to report that we have established a path to achieve both milestones no later than the third quarter of 2025.

In closing 2023 marked an exciting inflection point for us and our dedication to innovation and growth continues we remain resolute in our commitment to unlocking shareholder value through increased adoption and sustained growth within our indications and expansion of our portfolio.

David O'Toole: Thank you, Jim. We continue to deliver strong financial results. In the three months ended December 31st, 2023, our commercial revenue increased to $14.1 million, $4.7 million more than the $9.4 million in the same period in 2022. Since Q1 of 2023, we have demonstrated sustained impressive commercial revenue growth rates of 40%, 42%, and 51%, concluding the year with a Q4 growth of 50% compared to the same quarters in the prior year. Our strong third and fourth quarter results were largely driven by three key factors.

I will look forward to sharing further updates on our continued progress with that I'd like to turn the call over to David.

Thank you Jim we continue to deliver strong financial results.

In the three months ended December 31, 2023, our commercial revenue increased to $14 1 million $4 7 million more than the $9 4 million in the same period in 2022.

Since Q1 of 2023, we have demonstrated sustained impressive commercial revenue growth rates of 40%, 42%, 51%, concluding the year with a Q4 growth up 50% compared to the same quarters in the prior year.

Our strong third and fourth quarter results were largely driven by three key factors.

David O'Toole: First, we were able to capitalize on our pre-existing burn centers, of which half also have trauma, enabling us to immediately market full thickness skin defects in those centers, thus boosting sales. Second, we have received back approval on a number of new accounts. And lastly, we continue to benefit from increased adoption in the Burns market. Gross profit margin for the quarter was 87.3% compared to 86% in the same period in 2022.

First we were able to capitalize on our preexisting burn center accounts of which have also have trauma centers, enabling us to immediately market full thickness skin defects in those centers, thus boosting sales.

Second we have received <unk> approval on a number of new accounts and lastly, we continue to benefit from increased adoption in the burn market.

Gross profit margin for the quarter was 87, 3% compared to 86% in the same period in 2022.

David O'Toole: This significant increase in gross margin was driven by the increase in sales and production of our product. As we have discussed previously, as production and sales increase, we benefit from the fact that approximately 50% of our cost of goods sold is fixed, representing the cost of the facility in Ventura. Total operating expenses for the quarter were $24.7 million, compared to $15 million in the same period in 2022.

This significant increase in gross margin was driven by the increase in sales and production of our product.

As we have discussed previously as production and sales increase we benefit from the fact that approximately 50% of our cost of goods sold is fixed.

Presenting the cost of the facility in Ventura.

Total operating expenses for the quarter were $24 7 million compared to $15 million in the same period in 2022.

David O'Toole: The increase in operating expenses is primarily attributable to an increase of $2.4 million in G&A expenses related to stock-based compensation, consulting expenses, and employee-related costs. Additionally, we incurred an increase of $3.4 million in R&D costs, which was primarily due to employee compensation costs, including recruiting costs, accelerated recruitment, and third-party costs associated with the Tone Study and costs associated with insourcing ResellGo production to our Ventura facility Lastly, sales and marketing expense increased by $3.9 million, primarily due to employee-related costs, including commissions, travel, and promotion expenses, as a result of the expansion of our commercial organization in the second quarter of 2023. For the full year ended December 31st, 2023, our commercial revenue increased by 46%. 49.8, compared to $34.1 million in the same period in 2022. The growth in commercial revenues was largely driven by deeper penetration within individual customer accounts, along with the launch of full thickness skin defects through our expanded commercial channels. The gross profit margin for the full year was 84.5%, compared to 82% in 2022.

The increase in operating expenses is primarily attributable to an increase of $2 4 million and G&A expenses related to stock based compensation consulting expenses and employee related costs.

Additionally, we incurred an increase of $3 4 million and R&D costs, which was primarily due to employee compensation costs, including recruiting costs accelerated recruitment and third party costs associated with the <unk> study and costs associated within sourcing resale go production.

To our <unk> facility.

Lastly, sales and marketing expense increased by $3 9 million, primarily due to employee related costs, including commissions travel and promotion expense as a result of the expansion of our commercial organization in the second quarter of 2023.

For the full year ended December 31, 2023, our commercial revenue increased by 46% to $49 8 million compared to $34 1 million in the same period in 2022.

The growth in commercial revenues was largely driven by deeper penetration within individual customer accounts, along with the launch of full thickness skin defects through our expanded commercial team.

The gross profit margin for the full year was 84, 5% compared to 82% in 2022.

David O'Toole: The gross profit margin for the year was at the higher end of our full year guidance of 83% to 85%. Total operating expenses were $86.4 million compared to $59.1 million in the same period in 2022. The increase in operating expenses is largely attributable to an increase of $15.4 million in sales and marketing costs as a result of the expansion of our commercial organization in the first half of 2023. Additionally, alongside this expansion, G&A costs increased by $5 million due to the increased headcount and related salaries and benefits, stock-based compensation, consulting fees, and recruiting costs. Lastly, R&D costs increased by $6.9 million, primarily driven by the cost of the Tone Study, final work and completion of the PMA supplement to the FDA in June of 2023 for Resell Go, and employee-related costs, including stock-based competition.

The gross profit margin for the year was at the higher end of our full year guidance of 83% to 85%.

Total operating expenses were $86 4 million compared to $59 1 million in the same period in 2022.

The increase in operating expenses is largely attributable to an increase of $15 4 million in sales and marketing cost as a result of the expansion of our commercial organization in the first half of 2023.

Alongside this expansion G&A cost increased by $5 million due to the increased headcount and related salaries and benefits stock based compensation consulting fees and recruiting costs.

Lastly, R&D cost increased by $6 9 million, primarily driven by the cost of the tone study.

Final work and completion of the PMA supplement to the FDA in June of 2023 for resale go and employee related costs, including stock based compensation.

David O'Toole: The net loss for the fourth quarter was $7.1 million, or a loss of $0.28 per share, compared to a net loss of $5.4 million, or a loss of $0.21 per share, in the same period in 2020. The net loss for the full year 2023 was $35.4 million, for a loss of $1.40 per share compared to a net loss of $26.7 million, or a loss of $1.07 per share, in the full year 2022.

Net loss for the fourth quarter was $7 1 million or a loss of 28 per share compared to a net loss of $5 4 million or a loss of 21 per share in.

In the same period in 2022.

Net loss for the full year 2023 was $35 4 million or a loss of $1 40 per share compared to a net loss of $26 7 million or a loss of $1 seven per share in the full year 2022.

David O'Toole: As of December 31st, we had cash, cash equivalents, and marketable securities of $89.1 million, compared to $86.3 million as of December 31st, 2022. During our third quarter conference call, I discussed the credit agreement we entered into with OrbitMed on October 18th. As a reminder, $40 million of the total $90 million debt facility was funded at close to $40 million.

As of December 31, we had cash cash equivalents in marketable securities of $89 1 million compared to $86 3 million as of December 31, 2022.

During our third quarter conference call I discussed the credit agreement, we entered into with OIBDA met on October 18th.

As a reminder, $40 million of the total $90 million debt facility was funded at closing.

David O'Toole: As we have discussed previously, we do not, at this time, foresee a need for either of the remaining $25 million tranches before they expire at the end of this year. With our current cash balance of $89.1 million, as of December 31st, and our expectations of reaching cash flow breakeven no later than the third quarter of 2025. We are confident that we have sufficient cash reserves to achieve our goal. Turning now to our 2024 guidance, for the first quarter of 2024, we expect commercial revenues to be in the range of $14.8 million to $15.6 million. This reflects a growth rate between 42% and 50% over the same period in 2023. Our annual revenue guidance for 2024 is expected to be in the range of $78.5 to $84.5 million, which would reflect growth between 57% and 69% compared to the full year 2023.

As we have discussed previously we do not at this time foresee a need for either of the remaining $25 million trenches before they expire at the end of this year.

With our current cash balance of $89 1 million as of December 31.

And our expectations of reaching cash flow breakeven no later than the third quarter of 2025.

We are confident that we have sufficient cash reserves to achieve our goals.

Turning now to our 2024 guidance for the first quarter of 2024, we expect commercial revenues to be in the range of $14 8 million to $15 6 million.

This will this reflects a growth rate between 42% and 50% over the same period in 2023.

Our annual revenue guidance for 2024 is expected to be in the range of $78 five to $84 5 million.

Which would reflect growth between 57% and 69% compared to the full year 2023.

David O'Toole: Lastly, during the fourth quarter, we made the decision to reorganize our corporate structure and wind down our legacy foreign subsidiaries to improve the efficiency of our operating and reporting structure. Due to the limited business operations of the foreign subsidiaries, the net impact of the restructuring was a $9.4 million foreign exchange gain for previously deferred, unrealized, cumulative translation adjustments in equity. This $9.4 million non-cash gain was recorded in other income expense on the Statement of Operations.

Lastly, during the fourth quarter, we made the decision to reorganize our corporate structure and wind down our legacy foreign subsidiaries to improve the efficiency of our operating and reporting structure.

Due to the limited business operations of the foreign subsidiaries. The net impact of the restructuring was a $9 4 million foreign exchange gain were previously deferred unrealized cumulative translation adjustments in equity.

This $9 4 million non cash gain was recorded in other income and expense on the statement of operations.

David O'Toole: We expect the restructuring to be completed no later than the third quarter of this year, at which point our primary operating company, AVITA Medical America, LLC, will be a wholly owned subsidiary of AVITA Medical, Inc., and no foreign subsidiaries will exist. With that, we thank you for joining us, and now I will turn the call back to the operator for your questions. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

We expect the restructuring to be completed no later than the third quarter of this year at which point our primary operating company a beta medical Americas LLC will be a wholly owned subsidiary of a beta Medical Inc, and no foreign subsidiaries will exist.

With that we thank you for joining us and now I will turn the call back to the operator for your questions.

Thank you.

As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Operator: One moment for questions. Our first question comes from Brooks O'Neill with Lake Street Capital Markets. He may proceed. So, good afternoon, guys.

One moment for questions.

Our first question comes from Brooks O'neil with Lake Street Capital markets. You May proceed.

Good afternoon, guys congratulations on the terrific progress.

Jim Corbett: Congratulations on the terrific progress. I have a couple of questions. I guess first, I would love to get any color you can offer about the experience you're having with the hospital VAC.

A couple of questions I.

I guess first I would love to get any color you can offer about the experience you are having with the with the hospital Vac and.

Jim Corbett: And then maybe you could just tell us a little bit about the experience you see if you get VAC approval, getting procedures performed by the surgeons in those hospitals. Hey, Brooks, thanks very much. First, let me describe the experience we're having. And, very broadly speaking,

And then maybe you could just tell us a little bit about the <unk>.

Here in Q C. If you get that approval.

Getting procedures performed by the surgeons in those hospitals.

Hey, Brooks, thanks very much.

So first let me describe the.

Experienced where Kevin and very broadly speaking.

Jim Corbett: We have well over 100 hospitals in some stage of the back process. What we're experiencing is, frankly, a longer cycle time related to the broader label. So we're, in most cases, needing to involve three or four physician specialties and as many as 10 different indications and, of course, their commensurate DRG or reimbursement. So the complexity has, unfortunately, it's a little bit like a wave coming ashore. There are a lot of them, and we've been at it for two quarters now, so they are starting to splash ashore. And that's a good metaphor because everybody is happy when that happens.

We have.

Well over 100 hospitals in some stage of the back process.

What we are.

Experiencing is.

Frankly, a longer cycle time related to the broader label so.

In most cases needing to involve three.

Three or four physician specialties.

And as many as 10 different indications.

Coarser commensurate DRG or reimbursement.

So the complexity.

Unfortunately, it's a little bit like a wave coming ashore.

A lot of them.

We've been at it now too.

Two quarters. So they are starting to splash of shore and that's it.

It's a good metaphor because everybody is happy when that happens.

Jim Corbett: But the experience we're having is that it requires a more intense selling process. And one of the reasons we moved up during the year, our sales expansion, is so that we could take advantage of, in real time and more rapidly, that broader label. Because you've got to, in one sense, keep in mind that on a patient level.

But the experience we're having is it requires a more intense selling process and one of the reasons we.

Moved up during the year our sales expansion is so that we could take advantage.

In real time, and more rapidly that broader label because you've got it.

One keep in mind that our patient level.

Jim Corbett: 35,000 resale eligible burn patients but nearly 400,000 resale eligible full-thickness skin defect patients. So it's really worth it for us to penetrate these hospitals. And we're getting experience in cases that we haven't seen treated before and having very good clinical results. So we're really feeling very good about the progress we're making. So during the year, to answer the obvious question, we expect to add approximately 200 new accounts. Good. That's very helpful. So perhaps we could just talk a little bit about any progress you feel you're making in capturing some of the incremental burn activity within the level one and level two trauma centers you're beginning to call on. Well, certainly we are. That's our lead clinical data and our lead clinical experience commercially over the last few years. We find them in Level 1 trauma centers, and the physicians are typically well aware of ReCell because they go to burn meetings.

35000, resale eligible burn patients, but nearly 400000 resell eligible.

Full thickness skin defect patients. So it's really worth it for us to penetrate these hospitals and were getting experience.

And cases that we haven't.

Seen treated before and having very good clinical results. So we're really feeling very good about the progress we're making so during the year to answer the obvious we expect to add approximately 200 new accounts.

Alright.

Thats very helpful. So.

Perhaps.

We could just talk a little bit about any progress you feel youre, making capturing some of the incremental burn activity within the level, one and level two trauma centers you are beginning to call out.

Okay.

Well certainly we are that is our that's our lead clinical.

Clinical data in our lead clinical experience commercially over the last few years.

We find them in the level one trauma centers.

The physicians tip.

<unk> typically are well aware of resell because they go to burn meetings that they just were not reached by our sales coverage model in prior years. So we are getting progress in those.

Jim Corbett: They just were not reached by our sales coverage model in prior years. So we're making progress in those instances, and much more to get, as you cause that vacuum becomes more complex, right, as I was describing earlier. So we are, but we are seeing those cases.

Instances and much more to get because that that back.

Becomes more complex right as I was describing earlier, so where we are but we are seeing those those cases.

Jim Corbett: Great. Let me just ask one more question. I appreciate all the color.

Great. Let me just ask one more I appreciate all the color obviously last year you added substantial expansion of the sales force.

Jim Corbett: Obviously, last year, you had a substantial expansion of the sales force, and now we're embarking on a second expansion. Can you just talk a little bit about, let's call it, your experience with the first expansion and your confidence that you can find the right people to complete the second expansion? Well, I can tell you that on January 18th, I was at our National Sales Meeting in Dallas, where we celebrated and gave out the very common awards for the sales team.

And now we're embarking on a second expansion can you just talk a little bit about about it.

Let's call it your experience with the first expansion.

And your confidence that you can find the right people to complete the second expansion.

Well I can tell you.

On January 18th I was at our National sales meeting in Dallas, where we celebrated and did the very common awards for the sales team.

Jim Corbett: And what was really impressive was how many of them have become really successful and have great momentum in their territories, and at the same time, our experience has been that we have the ability to really make the expansion happen rapidly because because we are growing and we have a proprietary technology and it's a technology and company that, for the sales rep, really creates a special opportunity. We maybe initiated the sales expansion after that national sales meeting, and we expect to be completely hiring by So that is an indirect indicator of the demand that exists in the marketplace for people to come work for AVITA. That's fantastic! Thanks for the color, and congratulations on the terrific results.

What was really impressive is how many of them have become really successful and have great momentum in their territories.

And at the same time.

Our experience has been that we.

I have the ability to really make the expansion happened rapidly because.

Because we are growing and we have a proprietary technology in.

It's a technology and company that for the sales Rep really creates a special opportunity.

Maybe we initiated the sales expansion after that national sales meeting and we expect to be complete hiring by the end of March.

So that is a indirect indicator of the demand that exists in the marketplace to come to work for arena.

That's fantastic thanks for the color.

Congratulations on the terrific results.

Jim Corbett: Thanks, Brooks. Thank you. One moment for questions. Our next question comes from Josh Jennings with TD Tau, and you may proceed. Hi, this is Eric Humphrey, Josh.

Thanks Brooks.

Thank you.

One moment for questions.

Our next question comes from Josh Jennings with TD Cowen You May proceed.

Hi, This is Eric on for Josh Thanks for taking the question.

Operator: Thanks for taking the question. Within guidance for 2024, hi, within guidance for 2024, could you help us understand what you're assuming for some of your different growth opportunities here? thinking the launch of Full Thickness and Resow Go. How much of the growth in 2024 do you think these opportunities will account for? Well, first of all, our guidance anticipates growth of between 57% and 69%, so substantial growth. Resell go will essentially replace the resale manual system. So it's not quite, it's not quite very, it's not very easy to separate them because ReCell Go, the durable one, will not actually create a sales dollar by itself. The disposable and cassette that go with it, that processes and disaggregates the skin, will replace the ReCell kit.

With any guidance for 2024.

Yes.

Within guidance for 'twenty 'twenty four could you help us understand what you're assuming for some of your different growth opportunities here.

The launch of full thickness and resale go how.

How much of the growth in 2024 do you think these opportunities will account for it.

Well first of all our guidance anticipates growth of between 57% and 69% so substantial growth.

Resell go will essentially replace the resale manual system.

It's not.

It's quite it's not very easy to separate them because we saw it go that's durable will not actually create a sales dollar by itself the disposable that and set that goes with it that processes.

<unk> skin.

We'll replace the resale kit.

Jim Corbett: So from an assumption point of view, it is really driven by ReCell penetration into full thickness skin defects. That is a really big growth area. We continue to gain share in the core burns business, but in time, that will become a minority of our total business relative to full thickness skin defects. When I mentioned earlier that we expect to add approximately 200 new accounts during the year, the principal sales of those will all be, not all, but a vast majority will be full thickness skin defect cases. So, that's the real driver. Is that helpful? That is, yeah, thank you for that color. And then, maybe, thinking internationally, should we be thinking of contributions from Europe and your distribution partners there? Is that a real driver for 24?

So from an assumption point of view it is really driven by resell penetration.

Into full thickness skin defects that is the really big growth area, we continue to gain share in the core Byrne's business.

But in time that will become the minority of our total business relative to full thickness skin defects. So.

When we I mentioned earlier that we expect to add approximately 200, new accounts during the year.

The principal sales of those.

We'll all be not all but.

Vast majority of be full thickness skin defect cases, so that's.

The real driver is that helpful.

That is yes. Thank you for that color and then maybe thinking internationally.

Should we be thinking of contributions from Europe and your distribution partners. There is that a real driver for 'twenty four or is that something that might take a little bit more time, and maybe we should be thinking 2025. Thank you for the questions.

Jim Corbett: Is that something that might take a little bit more time? And maybe we should be thinking 2025? Thank you for the question. Yes. Well, regarding international business, as we mentioned, we've signed our first European distributor, which covers the countries of Germany, Austria, and Switzerland.

Yes, well regarding international.

As we mentioned we've signed our first European distributor, which is covering the countries of Germany, Austria, and Switzerland, the Companys polymeric.

Jim Corbett: The company is Polymatics. Now they have been trained, and they've started their initial launch and have had initial cases. We think that the volume will build through the year, though, because, just like any sophisticated market these days, similar to the United States, they don't have exactly a VAC committee. They have something equivalent, though.

Now they have been trained and they've done they've started their initial launch and has had initial cases.

We think that the volume will build through the year, though however, because just like.

Any sophisticated market these days.

Similar as in United States. They don't have exactly a Vac committee theres something equivalent though.

Jim Corbett: So we'll be adding additional distributors in other European markets throughout the year. Our goal is to finish the year with Europe largely covered. We will be making contributions and projections as we get a little momentum behind us and understand the demand pattern that's going to emerge from, in this case, Germany, Austria, and Switzerland. And we will update our guidance with that in mind. But 24 will be the year to get the foundation in place for all our distribution partners, and 25 will be where I think we see material revenue. Okay, that's perfect.

So we will be adding additional distributors in other European markets throughout the year. Our goal is to finish the year with Europe, largely covered we will be making contributions in projections as we get a little momentum behind us and understand the demand pattern, that's going to emerge from in this case, Germany, Austria and Switzerland.

And we will update our guidance in that.

That in mind, but.

24 will be the year to get the foundation in place of all our distribution partners.

And 25 will be where I think we see material revenue.

Okay. That's perfect. Thank you.

Jim Corbett: Thank you. Thank you. One moment for questions. Our next question comes from Matthew O'Brien with Piper Sandler. You may proceed. Hey, this is Phil on for Matt.

Thank you.

One moment for questions.

Our next question comes from Matthew O'brien with Piper Sandler You May proceed.

Hey, this is still on for Matt. Thanks for taking my questions and congrats on all the progress I guess just for starters on guidance.

Operator: Thanks for taking our questions and congrats on all the progress. I guess just for starters on guidance, appreciating that guidance is back half-weighted, do you expect an inflection as you start to knock down some of these VACs or is it gonna be more measured? Like it's just any color on cadence as guidance implies a re-acceleration of growth becoming more difficult.

Appreciating that guidance is back half weighted you expect an inflection as you start to knock down some of these backs or is it going to be more measured. So I guess, just any color on cadence as guidance implied a reacceleration of growth off more difficult comps.

Jim Corbett: Well, actually, there's a couple drivers that the back approvals that we're receiving here in the first quarter and that we will receive in the second quarter will be more fully productive during the second half, so that's a reflection and anytime you convert a new account, you get increased adoption over the coming year following, so that is it is incorporated. We also are expecting, as you learned earlier, that we shall go will launch on May 31st So there are no direct sales tied to Resale Go per se. But the conversion of our business to using Resell Go as our delivery vehicle does reduce the training requirement for the customer and for our sales organization and inevitably will cause higher productivity. So those are rather core assumptions in our model. No, thank you.

Well actually there's a couple of drivers.

<unk>.

Faq.

Approval that we're receiving here in first quarter and that we will receive in second quarter will be more fully productive during second half. So that's a.

<unk> and anytime you <unk>.

Converted new account you get increased adoption over over over the coming year. Following so that is incorporated we also are expecting as you learned earlier.

That resale go will launch.

May 31.

And resale go will replace our manual.

Emmanuel resell and will make.

Cases.

Easier to do require less clinical support so.

There is no direct sales tied to resale go per se.

The conversion of our business to using resell goes our delivery vehicle does reduce the training requirement for the customer and for our sales organization and inevitably will cause higher productivity.

So those are rather core assumptions in our in our model.

No. Thank you that's.

Jim Corbett: That's helpful. And I guess just a follow-up. Can you talk about your strategy when it comes to filling the bag with additional products, specifically as it relates to medical science and maybe any other products that you feel AVITA will need down the road?

That's helpful and then I guess as a follow up can you talk about your strategy when it comes to filling the bag with additional products specifically as it relates to medical scientific and maybe any other products that you feel.

Later, we will need down the road.

Jim Corbett: Yes, sure. Well, what our mission is to help the patients and physicians that, you know, use our products and have our products used on them. And with resale, we have a real opportunity because we have a very well-proven, at this point, technology that does not have a direct competitor. And we are in cases with these patients who have very significant injuries and wounds. And there are other products that surround the use of ReCell that we can bring and support our customers with and help solve their clinical problems. So, Permiaderm is an example of that. The wound matrix is porous, it's see-through, and it's much more convenient to manage the wound with, for example.

Yes sure.

Our mission is is to help the patients and physicians.

Use our products and have our products used on them.

And with resell, we have a real opportunity because we have a <unk>.

Very well proven at this point technology that does not have a direct competitor.

And we are in cases with these with these patients who have very significant injuries in wounds.

And there is other products that surround.

The use of resell that.

We can bring and support our customer with and help solve their clinical problems. So Permian <unk> is an example of that.

<unk>.

The wound matrix, it's porous have see through it it's much more convenient to manage the wound with for example, it can be used in some cases in conjunction with resell.

Jim Corbett: It can be used in some cases in conjunction with ReCell, and in many cases, it will be used on its own. So, it is meaningful; from a technical point of view, it's a call point overlap of almost a full Venn diagram. There are other products that are similar, but I think the dermal scaffold is a very important technology for us to invest in. And we've been researching that field and expect to find a suitable technology in the coming year. So I think there are likely others that overlap this call point and overlap this patient population and physician population. And we are going to really develop our company into a broader acute wound care company. Thank you. One moment for questions. Our next question comes from Ross Osborne with Cantor Fitzgerald. You may proceed. Hey guys, congrats on the progress and thanks for taking the questions. Maybe just one for me on Resell Many. Would you spend some more time on the rationale for developing this product and why Resell Go may not be as attractive for smaller women? So, we shall go.

In many cases it will be used on its own. So it is it is a meaningful.

From a technical point of view, it's a call point overlap of almost.

A full venn diagram.

There are other products that are similar I think the.

Dermal scaffold is a very important technology for us to invest in and we've been researching that field and expect that to find.

He is a suitable technology.

In the coming in the coming year.

So I think there are there may be there's likely others that overlap. This call point overlap this patient population and physician population and we are going to really develop our company into a broader wound care acute wound care company.

Thank you.

Thank you.

One moment for questions.

Our next question comes from Ross Osborne with Cantor Fitzgerald you May proceed.

Hey, guys congrats on the progress and thanks for taking the questions. Maybe just one for me on <unk> and some more time on the rationale for developing this product and why resell.

Sure.

It may not be as attractive for a smaller wins.

Jim Corbett: Thanks for the question, Ross. I understand what you're asking, so let me walk you through it. So Resell Go replaces the manual resale kit, and that resale kit covered 1920 square centimeters, which is about 10% TBSA. What we find in full thickness is that a very significant portion of the cases the patients have, the physician's abs, excuse me, are under 500 square centimeters. And it's very simple that to the customer, to the surgeon, using a product that's It seems wasteful.

So resale go.

Thanks for the question Ross I understand what you are asking so let me walk you through.

So resale go replaces the manual resale kit and that resale kit COVID-19, 120 square centimeters, which is about 10% TB assay.

What we find in full thickness.

Is that.

A very significant portion of their patient cases the patients.

The precision <unk> excuse me.

Under 500 square centimeters.

It's very simple debt to the customer to the surgeon.

Using a product that's designed for 10% <unk>.

To treat some of wound that is under 5% <unk>.

Doesn't quite make sense to them it seems wasteful.

Jim Corbett: So the reason we'll have Resell Mini, so Resell Mini is merely a cassette that has less tissue volume than the ReCell Go standard cassette. So they'll both fit into the ReCell Go durable. And if you're treating a smaller wound, you'll use ReCell Mini. If you're treating a larger wound, you'll use the ReCell Go standard. It was very helpful

What we the reason we'll have resell many so resale menus merely a cassette.

That has.

Less tissue volume.

Then the resale go standard.

So there are both fit into the resale go durable and if youre treating a smaller wound youll use resell many to treating a larger wounds you'll use the resale go standard.

Jim Corbett: Yes, very helpful. Thanks for sharing your question. Thank you. One moment for questions. Our next question comes from Ryan Zimmerman with BTIG. You may proceed. Good afternoon.

Is that helpful.

Yes, very helpful. Thanks for taking questions.

Thank you.

One moment for questions.

Our next question comes from Ryan Zimmerman with BTG you May proceed.

Jim Corbett: Thanks for taking the question. I wanted to ask about the assumption kind of underpinning your long term profitability comments. I know, you know, it's a little too early to guide for 25, but maybe help bridge us from here to there and kind of either what the revenue levels are or what the expenses are, you know, how the expenses kind of track in your mind to get there, especially in the context of adding all these reps again.

Good afternoon, thanks for taking the questions.

Hey, Brian one thing I wanted to ask.

About the assumptions kind of underpinning.

Your long term profitability comments.

I know.

It's a little too early to guide for 'twenty, five, but maybe help bridge us from here to there and kind of.

Either what the revenue levels.

Or what the expense how the expenses kind of track in your mind to get there, especially in the context of adding all these reps again.

Jim Corbett: Just want to make sure investors understand. Well, we're not ready to give guidance for any of those elements for 25, but I can give you some directional thoughts on the Revenue Growth Line. 57% to 69% growth rate. Our gross profit has been and will continue to be on resale. 85%.

Just wanted to make sure investors understand your thinking there.

Well, we're not ready to give guidance for any of those elements for 25, but I can give you some directional thoughts.

On the revenue growth line.

57% to 69% growth rate.

Our gross profit has been and will continue to be on on the resell.

85%.

Jim Corbett: And so the revenue exit rate, you can back into, I think, and then you can calculate the profitability into Q3 or before. I'd say it depends, you know, very fundamentally on maintaining a growth rate of greater than 50 percent. First of all, and so that means we'll accelerate in our guidance in this case, not only are we having heavier revenue in the back half, but we'll have a bigger organization, so of course we should, and that growth rate is actually accelerating against the second half of last year. So, that means that's the growth rate we go into in 2025.

And so the revenue exit rate you.

Can back into I think.

And.

Then you can calculate.

The profitability.

Into Q3 year before a 25.

I would say it depends very fundamentally maintaining a growth rate of greater than 50%.

First of all.

And so that means we will accelerate.

Our guidance for this case.

Not only are we.

Having a heavier revenue in the back half we will have a bigger organization. So of course, we should.

And that growth rate is actually accelerating against the second half of last year.

So let.

That means that the growth rate we go into 2025, so I think the.

Jim Corbett: So I think the combination of growth rate, greater penetration into these new accounts with the larger sales footprint. Remember. It only takes, you know, five kits a month for a rep to break even on cost.

<unk>.

Combination of growth rate.

Greater penetration into these new accounts with the larger sales footprint.

Remember it.

It only takes.

Sure.

Five kits a month.

For a.

Rep to breakeven in cost.

Jim Corbett: So we've just learned about that again from our research, we learned about it when we had burns, and we just learned about it in the first two quarters of the full thickness launch. Just keep in mind that much bigger market. We've only been in six months.

So we've just learned about that again.

<unk> learned it and the board and we had burns and we just learned it in the first two quarters of the full thickness launch because keep in mind.

The much bigger market.

We've only been in six months.

Jim Corbett: And we, by the time we expand Salesforce a second time, we'll have only been in it for nine months. So 2025 reflects penetration into that very deep market at full thickness. Is that helpful?

And we by the time, we expanded our sales force. The second time, we will have only been in at nine months. So 2025 reflects penetration into that.

Very deep market of full thickness.

Is that helpful. Yes, that's very helpful.

Jim Corbett: Yes. Caller is there. Maybe just ask, you know, another question.

I appreciate the color there maybe just asked.

Another question.

Jim Corbett: As you, Given you're in the value analysis process right now with a lot of manual receival, manual receival. And then, excuse me, behind that, you know, you're going to introduce the resale ghost, and this design is one where you're not collecting revenue for the system itself, but you have the consumable component.

As you.

Given your in the value analysis process right now with a lot of facilities with the manual reassess manual resell system.

And then excuse me behind that Youre going to introduce the resale go system.

And <unk>.

Design is one where you're not collecting revenue for the system itself, but you have the consumable component.

Jim Corbett: I'm just wondering, you know, how are you smoothing that process so that there are no kind of air pockets when you go in to try and switch out and maybe change the business model a little bit? with Resell Go, appreciating the benefit that it offers, but these are bureaucratic institutions that you're selling into, and I, you know, you just want to make sure that, you know, there's no kind of impact as a result. Yeah, it's really, it's a really good thought.

I'm just wondering how are you smoothing that process. So that there are no kind of air pocket. When you go in to try and switch out and maybe change the business model a little bit.

With resale go appreciating the benefit that offers but these are bureaucratic institutions that youre selling into.

Just wanted to make sure that.

No kind of impact as a result of that.

Yes, it's really it's a really good thought the first principle. The resale go launch is to make it easy for our customers.

Jim Corbett: The first principle of the Resell Go launch is to make it easy for our customers and for them to understand that to get the res, the, you know, what we call the CVAP, the spray-on skin. To get it, they will have to buy resell go cassettes. So, since we're not billing them for, or charging them for, or making them make a cost commitment to the durable, we believe that we're going to make it very easy for them to adopt.

And for them to understand that to get resell.

The rez.

He knows what we call the <unk> spray on skin to get it they will have to buy resell go assets.

So since we're not billing them for our charging them for or making them make a cost commitment to the durable.

We believe that we're going to make it very easy for them to adopt.

Yes, Okay fair enough.

Jim Corbett: Okay, fair enough, and thank you. One moment for questions. Our next question comes from Chris Callios with MSDX as to how he may proceed. Institute. Hi, Jim, can you hear me OK?

Appreciate that thank you.

Thank you.

One moment for questions.

Our next question comes from Chris Cargoes with MST access you May proceed.

Thank you.

Hi, Jim can you hear me okay.

Jim Corbett: Again, good morning, Chris. It's good to see the results. Congratulations. I just wanted to pick up on adjacent products to the portfolio with Permioderm. You mentioned scaffolds, and I imagine there are other adjacencies that you can look into.

Again, good morning, Chris.

Okay.

Good to see the results congratulations I just wanted to pick up on.

Adjacent products to the portfolio.

Let me add.

And just you mentioned Skype halls.

There are other adjacencies that you can look into how does that impact.

Jim Corbett: How does that impact your thinking around the sales force and how they're going to balance different products coming online? My first part of the question, and the second part is, do you have any thoughts around taking those products into international markets? Yes. So, there are multiple questions there. So, with respect to the adjacent product, these are products that all fit the following definition. They are used on the same patients by the same physician.

Youre thinking around the sales force.

And how is again balance different products coming online.

I wanted to just follow up question on the second part is do you have any thoughts around.

Taking those products into international markets.

Yes, so multiple questions there so with respect to the adjacent products.

These are products that all fit the following definition.

They are used on the same patients by the same physicians.

Jim Corbett: And the same indication. So our rep is rather uniquely positioned because Resale is a brand with, frankly, a bit of a halo. It doesn't have a direct competitor.

So and the same indications.

So our rep is rather uniquely positioned because resell is.

Brand with a bit with frankly, a bit of a halo it doesn't have a direct competitor.

Jim Corbett: The sales rep has good access to the hospital and to our customer base. So having other products that our customers might need is a real leverageable opportunity. So we think that this is additive in terms of value added to our customers and additive, in fact, to what we bring to the hospital in terms of fewer vendors and additive to, of course, our results as a company. So, the biosynthetic wound matrix of permeaderm has so many more applications than resale.

The sales Rep has good access to the hospital and to our customer base.

So having other products that they have that are customer might need as a real leverage well opportunity.

So we think that this is additive in terms of value add to our customer and additive in fact to what we bring the hospital in terms of fewer vendors and additive to of course, our results as a company.

So.

The biosynthetic wound matrix of Permian <unk> fits.

So many more applications and resell.

Jim Corbett: And often, when we're selling a resale, or promoting it, or discussing possible uses of it with a doctor, we might discuss several different patient indications, you know, patient indications and different patients before a resell is chosen to be used on a patient. But all of those patients will be candidates for permeaderm in this case. So it'll give our reps an opportunity to have many reasons to fulfill the needs of the customer. Now, to your last question, the Permioderm relationship is currently, and the contract is a domestic U.S. agreement only.

And often when we're selling resell we're promoting it or discussing possible uses of it with a doctor we might discuss several different patient indication.

Patient indications and different patients before a resale has chosen to be used on a patient.

But all of those patients will be candidates for Permian German this case.

It will give our reps an opportunity to have many reasons to fulfill the needs of the customer now to your last question.

Premier relationship is currently in the contract as a domestic U S agreement only.

Jim Corbett: Notwithstanding, it's built as a real partnership in the way we're structured in this relationship, so we expect to be with Permioderm for many years. Great, and that's very helpful. And in terms of going international with products like FermiAdern, are you thinking that way at this point?

Notwithstanding it's a very.

It's built as a real partnership and the way we're structured in this relationship. So we expect to be with permanent term for a lot of years.

Alright, Thats very helpful and in terms of going international with product slots and you're done.

Are you thinking that right at this point.

Jim Corbett: We're not really thinking that way at this point, primarily because we're really in the nascent stage of our international strategy. We're just so early that the priority is to establish retail first, and we'll be doing that, and that will take some time. So it isn't a priority to strengthen that portfolio.

We're not really thinking of much that way at this point, primarily because we're really in a nascent stage of our international strategy. We're just so early that the priority is to establish resell first and we'll be doing that and that will take some time. So I don't it isn't a priori.

To strengthen that portfolio in fact, what we're finding is the distributors that we're considering including the one we did sign with in Europe all have.

Jim Corbett: In fact, what we're finding is the distributors that we're considering, including the one we did sign with in Europe, all have a broader portfolio already, which helps them sell more resales. So I think at the moment, this is a domestic US strategy. Sounds logical. Thanks for that. Thank you. Thanks, Chris.

A broader portfolio already.

Which helps in that it helps them sell more results. So.

I think at the moment this is a domestic U S strategy.

Well sounds logical thanks, a lot. Thank you.

Thanks, Chris.

Jim Corbett: Thank you. One moment for questions. Our next question comes from Madeline Williams on Wilson's CMA Precise. Hi Jim.

Thank you.

One moment for questions.

Our next question goes from Madeleine Williams with Wilsons you May proceed.

Hi, David Hi, David Thanks for taking my question.

Jim Corbett: Hi David. Thanks for taking my question, in regards to going back to, I guess, the bottleneck with launching into the trauma centers. I mean, how much color do you get of, you know, what the process, the ongoing process is like, and, you know, whether you're going to be able to get that uplift in the second half, just, you know, taking into account the guidance that you've given for the first quarter and then, obviously, full year guidance? Well, Madeline, I think it's a good question. I think we're largely through the consequence of the more of the more consequent, the more complex.

Hi, Matt.

In regards to going back to I guess.

<unk> launching into the trauma.

How much color you can get.

Alright.

Part of that supply.

Yes.

Placed in second half.

Just taking into account the guidance given last quarter.

Your guidance.

Well I think it's a good question I think we're largely through the consequence of the more constant more.

Complex.

Jim Corbett: Value Analysis Committee process because we've started them, and we continue to start more, and they're coming out. The new accounts are coming out of the process, and we started new ones. So it slowed us a little bit in the fourth quarter, but not much.

Value analysis committee process, because we've started them and we continue to start more and theyre coming out there.

The new accounts are coming coming out of the process and.

We started new ones, so it's slowed us a little bit.

In the fourth quarter, but not much and we net but what we do note that it is different and it is more complex, but what comes with that is a much bigger market with much many more patient indications and many more.

Jim Corbett: But we do note that it is different, and it is more complex, but what comes with that is a much bigger market with many more patient indications and many more possible treatment candidates. So I think right now, probably after this call, you won't hear much about VAC other than we're progressing really well, and we're hitting our targets for the year. And I mentioned that we expect to add nearly 200 new accounts for the year. So, and we're on a good pace here in the first quarter to make that happen. Yes, okay, Carla, and just in regards to translating that access into sales, I mean, I know there's some crossover with the surgeons using both firms and then sort of more trauma surgeons, but are they, are they sort of already aware of being able to utilise Resell and you know, is the discussion in terms of the difference between Resell and Resell Go already happening? Well, the difference between Resell and Resell Go... First of all I don't think that will be a big challenge for them.

Possible treatment candidates, so I think right now.

Probably after this call you won't hear much about vac.

Other than we're progressing really well and we're hitting our targets for.

For the year I mentioned that we expect to add nearly 200, new accounts for the year, So and we're on a.

Good pace here in the first quarter to make that happen.

Yes, Okay, that's great color and just in regards to I guess then.

Translating that into sales.

I know, there's some cost side, but with the surgeons utilizing <unk>.

With more trauma surgeons.

Are they sort of already aware is being able to utilize.

And is the discussion in terms of the difference between Raytheon ratio Gary already happening.

Well.

The difference between retail and resale go.

First of all the output of the two of them is the same.

Since we don't have FDA approval, we're not discussing resale go with customers at this moment.

That we have to we have to wait for approval for I don't think that will be a big challenge for them. We've done private focus groups with them to talk about how we're going to introduce the product.

Jim Corbett: We've done private focus groups with them to talk about how we're going to introduce the product. It's going to be a Yes. I think the word is, a wholesale conversion of our business model. So all customers who want to use resale will do so with a resale go durable and use the resale set. So it'll be a conversion that we do during Q3. Okay, that's very helpful.

It's going to be a.

No.

I think the word as a wholesale conversion of our business model. So all customers who want to use resell, we'll do so with a resale go durable.

And use the resell.

So it will be a conversion that we execute during Q3.

Okay. Okay.

That's very helpful. Thanks.

Jim Corbett: Thanks. Thank you. And as a reminder, to ask a question, please press star one one on your telephone. One moment for questions. Our next question comes from Lyanne Harrison with Bank of America. You may proceed. Yeah, good morning Jim and David.

Thank you and as a reminder to ask a question. Please press star one on your telephone.

One moment for questions.

Our next question comes from Lyanne Harrison with Bank of America, You May proceed.

Yes, good morning, Jim and David if.

Jim Corbett: If I could come back to the conversations you're having about resale dough. I know you mentioned that it hasn't been launched yet. But if I think about the rest of the world, how familiar are the rest of the world's surgeons, and how should we think about the rate of... And then secondly, with the polymedics training, did you also have them trained on Resell Go so that they're ready to go when the launch occurs? Got it. Okay, let me make sure I line them all up.

If I could come back to.

The conversations you're having about Vishal I know you mentioned that it hasnt been launched yet, but if I think about rest of the world.

How familiar.

Is the rest of the world surgeon community familiar with resale currently as it is and how should we think about the rate of adoption there.

And then secondly, with the poly medics training.

Did you also have them trained on resale goes so that they're ready to go when the launch okay.

Got it Okay, let me make sure I line them all up.

Jim Corbett: There is, across Europe and Australia and Japan... I'd say good to moderate familiarity with Reshell already. That said, we were not commercial in anywhere but Japan during this time.

There is across Europe, and Australia and Japan.

I would say good to moderate.

Familiarity with resell already.

That said, we were not commercial and anywhere but Japan during this time.

Jim Corbett: So I think we're introducing resale into a market where most are gonna be new. Now, with respect to Resell Go, and let's just take Europe for the first. We are launching Resell, the It's called Resell 1920, which is the standard system in Germany, Austria, and Switzerland now, and when Reselco gets its CE mark through the MDR, which we expect sometime in the third quarter, they will

So I think we're in.

Producing resell into a market, where most are going to be new.

Now with respect to resale go.

And let's just take Europe for <unk>.

First.

We are launching resell the.

It's called resale 19, 'twenty, which is the.

The standard system.

In Germany, Austria, and Switzerland now.

And when resale go gets its CE mark through the MTR, which we expect sometime in the third quarter.

They will converge.

Jim Corbett: So some distributors and some customers in Europe, depending on when we sign the distributor, may see Resell for the first time in the Resell Go configuration and not have ever seen the original Resell or not have used it. So I think it'll be a matter of timing on that level. And no, we didn't train polymedics on ResoGo.

So some distributors in some customers.

In Europe, depending on when we signed the distributor may.

Hey.

C resell for the first time in the resale go configuration.

And not have ever seen the original resell or not or not have used.

We used it.

No.

I think it will be a matter of timing on that level and no. We didn't train polymeric on resale go.

Jim Corbett: That'll be something we'll do when the product is approved. Thank you. And then if I think about gross margins, so obviously, well, for this quarter, you had a material... I guess that you talked about for, for, Guider to 85.

That will be something we'll do when the product is approved.

Great. Thank you and then if I think about gross margins, obviously well for.

For this quarter, you had a material improvement in gross margin.

I guess you talked about for 2024.

You mentioned, you guided to 85% gross margin.

Jim Corbett: Thank you. Thank you. Is there any reason why you don't go to that high water mark, given you are increasing your volume? Yeah, it's a good question.

Is there any reasoning why you don't think you can maintain that high watermark of 87% going into 'twenty.

Typically given increasing your volumes over that period.

Yeah. It's a good question. So first of all just to be precise.

Jim Corbett: So first of all, just to be precise. I didn't exactly give guidance of 85. We've been operating in that territory, were my words. And there's a reason I'm emphasizing that.

I didn't exactly give guidance of 85.

We've been operating in that territory or my words.

And Theres, a reason I'm emphasizing that.

Jim Corbett: Our margin with Permeaderm will be 50%, not 85%. So on resale, we will very likely be in that 85% range. And you may have noticed during the call that we're making some investments in our manufacturing operation, rather substantial, frankly. And that couple of margin points makes a little bit of a difference when you and Laurie T. We have a new facility. Our cost structure has gone up a slight bit on the one hand. On the other hand, we will be introducing into our mixed gross profit a 50% gross profit product.

Our margin with.

Permian germ will be 50%.

Not 85% so are on resell we will.

Very likely be in that 85 range and you may have captured during the call that we were making some investments in our manufacturing operation rather substantial frankly.

And.

And that couple of margin points makes a little bit of it.

It does make it a little difference.

When you.

Completely rehab facility, so our cost structure has gone up.

<unk> pit and on one hand and on the other hand, we will be introducing it to our mixed gross profit a 50% gross profit product.

Jim Corbett: Thank you. And one last question, is on. Operator. So, in, Operator.

Okay, great. Thank you and one last question from me is your on op.

<unk> costs in 'twenty, two 'twenty, three we saw a 43% and operating cost which pretty much is in pace with your revenue growth over that period should we expect that again for 2020 full do you expect some operating leverage particularly towards the second half.

Operator: We expect that. For more information, visit www.fema.gov, Sticks Some Operating Level." They might get the celebration. I'm going to have David jump in on this one. Yeah, we don't see that same sort of percentage in 2024.

24.

Given that you mentioned you might get a celebration of revenues there.

I'm going to have David jump in on this one.

Yes, we don't see that same sort of percentage in 2024.

David O'Toole: We are expanding our sales force. So from a sales expense standpoint, there will be an increase. But the R&D expense is not going to increase by 43% again, and G&A is not going to increase either.

We are expanding our sales force so from a sales expense standpoint, there will be an increase but the R&D expense.

Is not going to increase by 43% again.

As well as G&A is not going to increase either so there will be leverage as you indicated as our revenue accelerates at the towards the end of the year in the second third and fourth quarter, you will see a decrease as a percentage and operating expenses when compared to.

David O'Toole: So there will be leverage, as you indicated, as our revenue accelerates towards the end of the year in the third and fourth quarters, you will see a decrease as a percentage in operating expenses when compared to revenue. Thank you very much. Thank you. I would now like to turn the call back over to Jim Corbett for any closing remarks. Well, thank you very much to all of you for joining our call today. We look forward to our next earnings call to announce our progress in Q1. I am looking forward to hearing from all of you soon. Thank you. Thank you for your participation. You may now disconnect.

Revenue.

Alright. Thank you very much that's all I had.

Thank you I would now like to turn the call back over to Jim Corbett for any closing remarks.

Well. Thank you very much to all of you for joining our call today, we look forward to our next earnings call.

Announced our progress in Q1.

Looking forward to hearing from all of you soon thank you.

Thank you for your participation you may now disconnect.