Q3 2024 AVITA Medical Inc Earnings Call
Check out the full song at www.james,corbett.com
Speaker Change: Good day and thank you for standing by. Welcome to the AVIDA Medical, Inc. Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode.
Speaker Change: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone.
Speaker Change: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference call is being recorded.
Speaker Change: I would now like to hand the conference over to your first speaker today, Jessica Ekeberg. Please go ahead.
Jessica Ekeberg: Thank you, operator. Welcome to Aveda Medical's third quarter 2024 earnings call.
Jessica Ekeberg: Joining me on today's call are Jim Corbett, Chief Executive Officer, and David OToole, Chief Financial Officer. Today's earnings release and presentation are available on our website, www.avitamedical.com, under the Investor Relations section.
Jessica Ekeberg: Before we begin, I'd like to remind you that this call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Jessica Ekeberg: 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 Ekeberg: Please review our most recent filings with the SEC for comprehensive descriptions of the risk factors.
Speaker Change: 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, and good afternoon, everyone.
Jim Corbett: If you've been on our previous calls, you know I am passionate about Evita Medical. I'm especially excited to share our incredible third quarter results with you today.
Jim Corbett: We not only exceeded our second quarter record revenue, but also surpassed it by 29 percent.
achieving $19.5 million in commercial revenue during Q3.
Jim Corbett: This wasn't just about exceeding expectations, it was a breakthrough quarter that further strengthened our growth trajectory.
Jim Corbett: This quarter was critical for us to deliver strong revenue growth while advancing our strategic initiatives. To do this, we focused on converting our business to the ResellGo platform.
Jim Corbett: The move was essentially not only to support immediate revenue growth, but also to continue to lay the foundation for our long-term scalability.
Jim Corbett: This accelerated transition to Resell Go allows us to treat more patients and expand our market reach. In doing so, we fulfill our promise to provide the best possible patient care.
Now, let's start with a major milestone.
Jim Corbett: By the end of September we had successfully transitioned approximately 75% of our revenue base to Resell Go.
Jim Corbett: This is a huge achievement that speaks volumes about the execution capabilities of our team.
Jim Corbett: Moreover, we managed to do this within just four months of FDA approval, demonstrating our operational agility.
Jim Corbett: Our commitment to resale gold conversions was instrumental in driving Q3 commercial revenue growth, helping us hit our projected revenue guidance range of $19 million to $20 million.
Jim Corbett: However, this focus resulted in 23 new account conversions for full thickness skin defects versus our initial expectations of 40 to 50 accounts during the quarter.
Jim Corbett: The bigger picture is that we now have approximately 300 accounts across both burns and trauma centers for full thickness skin defects, which is more than double the number of accounts that we had a year ago.
Jim Corbett: Further, ResubGo will make closing new full-thickness skin defect accounts easier due to its enhanced features that significantly reduce the training burden for new accounts.
Jim Corbett: In Q4, a key focus will be capitalizing on the nearly 60 counts that are currently in the Value Analysis Committee process, commonly known as the VAC process.
Jim Corbett: With the groundwork laid over the last few months, we believe we can close between 30 and 40 of these new accounts in Q4, positioning us to hit our growth targets.
Jim Corbett: We expect these accounts to drive additional revenue over the next several quarters.
Jim Corbett: Now let's talk about why we fast-tracked Resell Go account conversions.
Jim Corbett: As I've said before, Reso Go is a game changer. It delivers significant workflow efficiencies.
Jim Corbett: shortens anesthesia time, reduces operating room time, and most importantly accelerates patient healing.
Jim Corbett: For hospitals, this means treating patients more effectively while reducing costs.
Jim Corbett: These benefits are reflected in our third quarter revenue as our burn business experienced robust growth.
Jim Corbett: We expect continued ResellGo adoption within both existing and new accounts, which will help us gain share in the burn market.
Jim Corbett: Today, we estimate that we hold approximately 20% of the burn market, but we see a clear path to doubling that share over time by focusing on Reselco's ability to optimize both patient care and hospital efficiency.
Jim Corbett: Let's turn to our product portfolio. First, let's discuss our Aveda medical-branded collagen-based dermal matrix that we have named Cohelix.
which will play a critical role in our growth strategy.
Jim Corbett: Let me take a moment to spell that out. C-O for collagen.
Jim Corbett: Heal, H-E-A-L, for its healing properties, and Y-X for its triple helix structure.
Jim Corbett: Although we had planned to begin cases in the fourth quarter, additional preparation was required for the FDA submission, which was submitted at the end of September. We expect a 90-day review period, implying clearance by year-end, setting the stage for a 2025 launch.
Jim Corbett: We plan to use Resell, Permioderm, and Cohelix together as a comprehensive treatment solution for full thickness wounds that not only improves patient care outcomes, but also streamlines the clinician experience.
Jim Corbett: For those participating on the call, please refer to slide number 5.
Jim Corbett: Here we illustrate a full thickness wound, which includes the use of a dermal matrix followed by delayed treatment with a split thickness skin graft plus re-cell in a two-stage procedure.
Jim Corbett: In the first stage, cohelix, represented by the green layer, promotes the generation of vascularized tissue, preparing the wound for grafting.
Jim Corbett: In the second stage, the light blue area represents a meshed, split-thickness skin graft with resell, providing definitive closure using significantly less skin compared to traditional autografting.
Finally, the purple layer, hermioderm, resell, optimized for protection and
Jim Corbett: Using this slide, let's walk through a typical course of treatment for a 10 to 20% total body surface area burn wound, demonstrating how our comprehensive solution transforms patient care and expands our business model.
Jim Corbett: In the first stage, 2,000 to 4,000 square centimeters of Cohelix will be applied to the wound bed.
Jim Corbett: Approximately 5 to 15 days later the dermal matrix is revascularized and the wound is graft ready and the second stage begins.
Jim Corbett: In the second stage, a split-thickness meshed autograft is placed over the newly generated tissue.
Next.
Jim Corbett: The clinician prepares the spray-on skin cell suspension with ReCell Go at the point of care.
Jim Corbett: Following this preparation, the spray-on skin cells are sprayed over the meshed autograft.
Jim Corbett: Lastly, permeaderm could then be applied over resale to protect the wound site which comes to a range of 1900 to 3840 square centimeters of permeaderm.
Jim Corbett: For this patient, in all, the treatment would typically include the use of one to two resale kits, one application of Permiderm, and one application of Cohelix.
For this single patient, the estimated average selling prices
Jim Corbett: range from $28,000 to $55,000 comparing to the current average selling price range of $8,500 to $17,500 for Resell and Permiderm.
Jim Corbett: This comprehensive solution not only dramatically changes our business model, it also expands our market potential. If we apply this average selling price to the $35,000
Jim Corbett: resale eligible cases in the burn market alone, it creates a total addressable market of nearly 1.5 billion dollars in the United States.
Let me take a moment to share our
Jim Corbett: Using a validated porcine preclinical model, we assessed matrix integration into the wound.
Jim Corbett: Skin graft to take and time to close against multiple controls and competitors.
Inner Findings
Jim Corbett: Cohelix demonstrated faster time to integration and had consistently high skin graft take results compared to other products on the market.
Jim Corbett: The ability to quickly generate robust vascularized tissue and skin graft early with pro helix
Jim Corbett: translates into significant benefits for the patient's healing profile, including shorter hospital stays and lower costs to treat.
Jim Corbett: Following FDA clearance of Cohelix, we plan to initiate a post-market clinical study to support this preclinical work.
Jim Corbett: This study will evaluate Cohelix in full thickness wounds, followed by treatment with a split thickness skin graft plus resale in a two-stage procedure, which is the current standard of care.
Jim Corbett: Clinical and health economic impact will be evaluated compared to other commercially available dermal matrices.
Jim Corbett: We expect to begin enrollment in this study in the first quarter of 2025. While there will be expenses tied to the study, those expenses will be principally borne during the first half of 2025.
Jim Corbett: We believe Cohelix will meaningfully enhance our market penetration and strengthen our competitive position in the burn market as well as the full thickness skin defect market.
Moving on to Resell Go Mini.
Jim Corbett: Designed for wounds up to 480 square centimeters compared to the standard resale kits 1,920 square centimeters, Resale Go Mini fills a gap in our market offering by allowing us to treat smaller wounds and expand our reach.
Jim Corbett: As a reminder, Resel Go Mini uses the same multi-use processing device as the standard Resel Go, but with a disposable cartridge optimized for smaller skin grafts, requiring less buffer and enzymes, and featuring three modified wells to hold these components.
Jim Corbett: This device remains on track for approval by year-end, with a launch expected in early 2025.
Jim Corbett: Turning to an update on our international expansion. We are making good progress on our efforts.
The third-party distribution agreements cover 14 countries.
We expected...
Jim Corbett: The CE mark in September. However, our notified body process for approval is taking longer than anticipated
Jim Corbett: We now expect to receive the CE mark by Q1 2025, allowing us to bring Resell Go to Europe and Australia in 2025. This expansion aligns with our strategy to offer Resell Go as an innovative wound care solution in these regions.
Before we get to the summary
Let me provide an update on vitiligo.
Jim Corbett: The Tone Study has been submitted to a major journal for publication, as has the Health Economics Study that we sponsored during the last year.
Jim Corbett: From these publications we will begin our payer activity and expect to have outcomes from that effort in terms of coverage policy by the end of 2025.
Jim Corbett: In summary, we have made remarkable strides this quarter and I'm confident we will continue to capitalize on this momentum all while delivering the best possible outcomes for both clinicians and patients.
Speaker Change: As we position Aveda Medical as a company able to address a broad continuum of wound care needs, we are poised to transform wound care and set new standards of care. With that, I'll now turn the call over to David to provide more details on our financial performance.
David OToole: Thank you, Jim. I want to echo Jim's enthusiasm. This was a fantastic quarter for us.
David OToole: We built on the success of our strong second quarter, outpacing that performance by 29%.
David OToole: This significant revenue achievement brings even greater clarity to our path to reach cash flow breakeven and gap profitability no later than the third quarter of 2025, which we have previously signaled.
David OToole: all without significantly growing our organization over the next 18 to 24 months.
David OToole: As you can see on slide 6, our strong revenue growth reflects the demand for Resell Go and the operational efficiencies we have built within our commercial operations.
David OToole: We expect this positive trajectory to continue into 2025 and beyond.
David OToole: While resale currently drives the majority of our revenue, we anticipate that Cohelix and Permioderm will become substantial revenue contributors over the coming quarters.
David OToole: Now, let me turn to our financial results to provide some details.
David OToole: Gross profit margin for the quarter was 83.7%, down slightly from 84.5% in the same period of 2023.
David OToole: The decrease was expected due to ongoing engineering and validation of the Resalgo Durable and Disposable Cartridge.
David OToole: However, this decline was temporary and we anticipate that our gross profit margin will be in the range of 85 to 86 percent for the full year 2024.
David OToole: Total operating expenses for the quarter were $30.2 million compared to $21.1 million in the same period in 2023.
David OToole: The increase in operating expenses is primarily attributable to an increase of $4.6 million in sales and marketing expenses.
David OToole: due to employee-related costs, including salaries and benefits, commissions and travel expense, collectively, as a result of expansion of the Commercial Sales Organization in the second quarter of 2023.
David OToole: and again in the first quarter of this year to support our growing commercial operations.
David OToole: G&A expenses increased by $3.5 million as a result of higher salaries and benefits and an increase in stock compensation, severance benefits, and professional fees.
partially offset by a decrease in other corporate expenses.
David OToole: Additionally, R&D costs increased by $1 million, which was primarily due to employee compensation costs of our Medical Science Liaison Team.
David OToole: Other income expense decreased by $1.7 million from income of $0.6 million in the prior period to an expense of $1.1 million in the current quarter.
David OToole: offset by $0.6 million in income related to our investing activities.
David OToole: Net loss for the third quarter was $16.2 million, or a loss of $0.62 per basic and diluted share, compared to a net loss of $8.7 million.
David OToole: or a loss of $0.34 per basic and diluted share in the same period in 2023.
David OToole: As of September 30th, we had cash, cash equivalents, and marketable securities of $44.4 million compared to $89.1 million as of December 31st, 2023.
David OToole: Note that Q3 marked our lowest net use of cash during this phase of commercial expansion coming in at the high single digit millions.
David OToole: Note that Q3 marked our lowest net use of cash during this phase of commercial expansion, coming in at the high single-digit millions.
David OToole: We expect this trend to continue with overall use of cash decreasing to the low single digit millions in Q4, as we move towards generating free cash flow in the second half of 2025.
David OToole: Turning briefly to our <unk> credit facility.
Turning briefly to our OrbitMed Credit Facility.
David OToole: As previously indicated we did not plan to draw down either of the two additional $25 million tranches available under the credit facility.
David OToole: As previously indicated, we did not plan to draw down either of the two additional $25 million tranches available under the credit facility.
David OToole: As such we initiated discussions with orbit med to terminate those tranches, which resulted in a mutual agreement to amend the credit facility.
David OToole: As such, we initiated discussions with OrbitMed to terminate those trenches, which resulted in a mutual agreement to amend the credit facility.
David OToole: Under the terms of the amendment, we formerly gave up our right to draw the 225 million tranches and.
David OToole: Under the terms of the amendment, we formally gave up our right to draw the two 25 million tranches.
David OToole: In return <unk> agreed to remove the trailing 12 month revenue covenant for the fourth quarter, which had been set at $67 5 million.
David OToole: The revenue covenants for subsequent quarters remain in effect with the first quarter 2025, trailing 12 month revenue covenant set at $75 million.
David OToole: Looking ahead for the fourth quarter of 2024, we expect commercial revenue to be in the range of $22 3 million to $24 3 million.
David OToole: Representing sequential growth of 14% to 25% over the third quarter.
David OToole: And approximately 58% to 72% growth compared to Q4 2023.
This revenue range aligns with our previously set annual guidance for 2024 of $68 million to $70 million.
David OToole: In closing we are confident that the success of resale go combined with the upcoming launches of co helix and resell go many as well as the expanded adoption of Permian Durham will allow us to deliver strong financial results and create lasting value for our share.
David OToole: Holders.
Speaker Change: With that I will turn the call back to the operator for your questions.
Speaker Change: Thank you.
Speaker Change: This time, we will conduct the question and answer session to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.
Speaker Change: Our first question.
Speaker Change: Comes from the line of Brooks O'neil of.
Speaker Change: Of Lake Street capital markets Brooks Your line is live.
Speaker Change: Thank you very much and good afternoon, everyone.
Speaker Change: Hi, I guess I wanted to ask you first about.
Speaker Change: What what youre seeing in the hospitals and your experience with the facts I heard you say you came up a bit short of expectations in terms of new approvals this quarter, but can you give us some color about.
Speaker Change: The process in general what Youre seeing in.
Speaker Change: When do you plan to adapt in any way to accelerate.
Speaker Change: Success through Vacs.
Speaker Change: So hey, Brooks good to hear from you.
Speaker Change: I think.
Speaker Change: We were emphasizing or something a little different I'll get to your answer to your question here.
Speaker Change: First.
Speaker Change: <unk>.
Speaker Change: We made a pivot during the quarter.
Speaker Change: For the purpose of accelerating.
Speaker Change: The conversions that are recycled platform because that.
Speaker Change: As.
Speaker Change: And a driver of adoption, okay. So deliberately focused on that and not own only one hospital required a back.
Speaker Change: Approval for our resale go so it was just not.
In that context back was on a path.
Speaker Change: Factor we.
Speaker Change: We do find the vacs in the full thickness segment, which has been.
Speaker Change: Upon reflection now looking back over a year.
Speaker Change: Youre in a quarter.
Speaker Change: We are finding that in nearly every case.
Speaker Change: Somewhere in the process.
Speaker Change: The Vac is wanting to see an evaluation case or more.
Speaker Change: So when we get at the driver of why vaccine in general have taken us longer than we anticipated at the beginning of the whole process of Europe and a quarter ago.
Speaker Change: That fact.
Speaker Change: So we've adapted to that.
Speaker Change: Now more proactive about being prepared for that eventuality, so they're either doing it as a precondition.
Speaker Change: Two of that submission.
Speaker Change: Our conditional approval or a follow up in some form or another.
Speaker Change: Also killed cases multiple procedures they want to see.
Speaker Change: So the fact that we had less than we expected.
Speaker Change: Actually a deliberate choice of sales time.
Speaker Change: So I hope I got your question contextualized in there somewhere.
Speaker Change: <unk>.
Speaker Change: You did that was very helpful. So.
Speaker Change: Just sort of.
Speaker Change: A slightly different way.
Speaker Change: Obviously, you had a major expansion of the sales organization.
Speaker Change: End of last year, beginning of this year and new sales leadership can you just comment about how you evaluate the performance of the sales team and the new sales leadership in terms of trying to drive long term growth for the company.
Speaker Change: So the first part of that answer calm evaluating it.
Speaker Change: As begins with 29 six consecutive quarter growth.
Speaker Change: I think the sales leadership team is developing really well under our new sales leader.
Speaker Change: We're executing a more effective manner.
Speaker Change: That kind of growth consecutive quarter is unusual and we still are expecting a strong Q4 as well so I'm really quite pleased with the progress there is more work to do as always but.
Speaker Change: Really the performance this last quarter was quite good.
Speaker Change: Great. Thank you very much I'll jump back in queue.
Speaker Change: Thanks Brooks.
Speaker Change: Okay.
Speaker Change: Thank you. Our next question comes from the line of Ross Osborne with Cantor Fitzgerald. Your line is now open.
Speaker Change: Ross Your line is now open.
Ross Osborne: Great. Thank you and sorry about that.
Speaker Change: Maybe following up on the prior question, but with regards to many how should we think about the adoption curve and 2025 from your learnings that we're getting now.
Ross Osborne: <unk> accounts.
Ross Osborne: Yes, Thanks, Ross well first of all.
Speaker Change: The full thickness cases than we did if you go back and you looked at our FDA study that we performed that gave us approval for that broad.
Speaker Change: Indication you would see that not one patient was over 500 square centimeters.
Speaker Change: And so when you have a device to treat 2000 square centimeters.
Speaker Change: Intellectually that creates a little bit of dismiss I think for US we think for the customer.
Speaker Change: So we developed many to get at that broader population of resell indications, where with better fit the patients need.
Speaker Change: And so I think on one hand, the market opportunity that we had increased ceding the introduction of many as this is fundamentally the same I think.
Speaker Change: Adoption will be.
Speaker Change: Sure.
A little bit quicker.
Speaker Change: With the concept that you're matching the resell use with the size of the book.
Speaker Change: Got it that makes perfect sense and then.
Speaker Change: Sticking with 2025, and a year, where we expect to see significant and incremental demand relative to share. How are you feeling about manufacturing capacity to meet that demand.
Speaker Change: Actually we feel terrific and in fact, we had a project underway that we completed during the quarter early part of quarter Gold project, Phoenix, which was to really revamp our whole manufacturing facility the facility Thats located in Ventura.
It was an older building and buy.
Speaker Change: Fundamentally reconstructing the work for the walls of the building inside because it was an older building.
Speaker Change: Our objective was to create tenex capacity expansion.
Speaker Change: With that project in which we did and we completed it. So we're feeling really good about our capacity we've been.
Speaker Change: We've expanded some of our engineering capabilities in that facility because.
Speaker Change: Manufacturing.
Speaker Change: Re cell processing device.
Speaker Change: It is a very different set of skills than what we needed before so we've increased our engineering talent inventory as well.
Speaker Change: Of course had to put up.
In sourcing the manufacturing of resale go we also created a service center, so that we could service.
Speaker Change: The durable.
Speaker Change: So we're feeling very comfortable about our capacity and we haven't had any supply shortages or anything close during a time when really we were expect we have been expanding our revenue quite quite quickly.
Speaker Change: Great Congrats on the progress and strong quarter.
Speaker Change: Thanks Ross.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from the line of Josh Jennings at TD Cowen Josh Your line is live.
Speaker Change: Hi, This is actually Eric on for Josh Thanks for taking the question and congrats.
Congrats on the nice quarter here.
Speaker Change: You are thinking about all the different growth drivers you have in the works currently I was hoping just to get your thoughts on around how you see things evolving over the next few quarters and ultimately in 'twenty five.
Speaker Change: In terms of where corporate growth may wind up I think if I look at street estimates right now.
Speaker Change: Showing some solid growth acceleration of 24 in like the 50% range.
Speaker Change: If you can I was just hoping to get your thoughts on how you think that step up.
Speaker Change: If you think that step up is appropriate there.
Speaker Change: Well at the moment, let me comment that in a different way if you don't mind because.
Speaker Change: Because we're not quite ready to give guidance for next year.
Speaker Change: Yes.
Speaker Change: We do have you are correct.
Speaker Change: What we have is we have resell goal, which is having a consequence of increasing.
Speaker Change: Usage of resell in the account we have resale go many first of the year.
Speaker Change: Permian Derm has now accumulated in the clinical evidence, where youll see that expand going into next year and co helix, which is a substantial market size will be doing a limited launch in clinical and clinical.
Speaker Change: Clinical data development during Q1 for full launch in Q2, you are talking about a lot.
Speaker Change: Water growth platform and when you add to it our answer.
Speaker Change: <unk> into the European Union and Australia.
Speaker Change: There is an abundant opportunity for growth for us So I think.
Speaker Change: The big outcome that we're focusing on is the Q3 Q3 crossover into profitability, which we havent guided on.
Speaker Change: I think.
Speaker Change: In combination of growing we're going to be doing so without adding.
Speaker Change: Very few very little operating expenses that are durable.
Speaker Change: Okay.
Speaker Change: Understood I appreciate that color and then maybe on co helix and Permian <unk>. There was a comment earlier in the call about those offerings, becoming substantial contributors in the coming quarters. I was just hoping get your thoughts on how you think that might impact gross margins going forward, particularly next year as you approach some of those profitability targets.
Speaker Change: Yes, that's a great question, so thinking about it this way.
Speaker Change: The gross profit on those product lines is less as a percentage.
Speaker Change: And then resell.
However, since we're not adding commensurate operating expenses.
Speaker Change: The operating margin contribution is substantial.
Speaker Change: So for example, with co helix.
Speaker Change: Okay.
Our use of co helix in the.
Speaker Change: 2000 square centimeter wound might be somewhere between 18 to 30, depending on Asps. So there's a broad range of possibilities after that we will be operating margin.
Speaker Change: So when you think about gross margin and think about it is.
Speaker Change: That is total gross margin and we're adding to its significantly with us.
Speaker Change: Products.
Speaker Change: That's very helpful. Thank you for the questions.
Speaker Change: One moment for our next question.
Speaker Change: Our next question.
Speaker Change: Comes from the line of Matthew O'brien with Piper Sandler Your line is live.
Speaker Change: Hi, This is <unk> on for Matt. Thank you for taking our question.
Speaker Change: Yes.
Speaker Change: I did touch on the guidance headed into Q4.
Speaker Change: I didn't think that it just more of a sizable step up from that.
Speaker Change: We thought this quarter. So can you just talk a little bit about.
Speaker Change: Kind of what the guidance makes and medium term.
Speaker Change: Well in Paris with Barrington.
Speaker Change: And what you're baking in there.
Speaker Change: Well.
Speaker Change: The step up actually from.
Speaker Change: Q2 to Q3 in absolute terms was in excess of $4 million right 15, 1% to 19 five almost.
Speaker Change: I, almost $4 $4 million and actually the step up in Q4, it's a little bit less because the guidance range is 23 to 24 three.
Speaker Change: As we've said it now.
Speaker Change: Now.
Speaker Change: Our strongest area of our business is burns and the one that benefits the most from resale go.
Speaker Change: Is the <unk> business because on average.
Speaker Change: Multiple resell devices are used in the average burn case and when you think about that.
Speaker Change: Yeah.
Following my thought here when you use resell the manual version.
Speaker Change: You would do it consecutively and it requires a fair bit of staff time, and we also Nintendo's cases too.
Speaker Change: Provide clinical support.
Speaker Change: When you use resale go.
Speaker Change: You actually.
Speaker Change: Can run to resell go devices simultaneously.
Speaker Change: And what happens in that case you.
Speaker Change: You reduce operating room time, we reduce anesthesia time.
Speaker Change: <unk> staff time, and you accelerate the time to begin healing for the patient.
Speaker Change: All of this six months.
Speaker Change: So what happens as we move into Q4 and beyond.
Speaker Change: The reasons I mentioned that we thought that we could imagine doubling our share of the 35000, a year resell eligible patients in the earnings and the <unk> market.
Speaker Change: As just for that reason and so full thickness will continue to develop fast for us because it's a new account adds.
Speaker Change: New procedures.
Speaker Change: And in the burn market, we get real leverage real fast they use one resale go.
Speaker Change: Typical full thickness case.
Speaker Change: Which is.
Unusually.
Speaker Change: A single retail unit.
Speaker Change: Device, where you use multiple with firms so.
Speaker Change: I believe we will grow faster in burns on a hospital level basis.
Speaker Change: Is that helpful.
Speaker Change: Okay.
Speaker Change: Yeah. That's helpful. Thank you and then just wanted to touch one more on that day Mark delay.
Speaker Change: What impact does that have on your growth expectations for next year.
Speaker Change: Not significant.
Speaker Change: If you just annualize our Q4, we're going to have a strong year next year.
Speaker Change: Particularly with us holding the head count line.
Speaker Change: So the international expectations those are all us entering new markets. So you can expect a lot of training will go on careful choice of <unk>.
Speaker Change: Patients that get treated.
Speaker Change: They are all third party distributors. So you have to work with them and get them prepared so although there is it going to be a little bit of a delay we don't have a high dependency.
Speaker Change: Say on the revenue to achieve our Q3 profitability goal.
Speaker Change: Thank you I appreciate that and then if we could sneak just one more.
Speaker Change: Im wondering if you could talk a little bit more about the rollout plans go many.
Patrick: And kind of I guess, just yeah, just late afternoon Patrick.
Patrick: So in the first instance.
Patrick: We're expecting it to re sogo many.
Patrick: To get approved.
Patrick: Okay.
Patrick: By year end.
Patrick: Our 180 days are for that because it's a PMA supplement.
Patrick: We then would be training during the first half of January we're having our sales meeting during that time and we will then roll out many during Q1.
Patrick: It will be targeted at the trauma centers, which is where the full thickness skin defect market is primarily.
Speaker Change: Or do those smaller.
Speaker Change: Wounds also in burn centers.
Speaker Change: The bigger population of accounts in cases is in.
Speaker Change: Some centers and we'll be rolling it out.
Speaker Change: Into those accounts and by that time, we will have added well over 200 accounts since we achieved full thickness.
Speaker Change: Approval last year, so I think that rollout will.
Speaker Change: We begin in the first quarter was second half of the first quarter in terms of.
Speaker Change: Practical utilization and it will be one of our growth drivers with if you think about our new product flow.
Our <unk> go platform during Q1, it'll be and its expansion mode because of the accounts have been already introduced two it will be adding many which uses the same.
Speaker Change: Processing device, which durable we have permitted German wealth co helix, So love up nice suite of new products to join in the resale go many.
Speaker Change: And of course Korea looks to Permian could use with those things.
Speaker Change: Rulings as well so.
Speaker Change: It's going to be a pretty exciting year for us next year.
Speaker Change: Great. Thanks, so much.
Speaker Change: Thank you as a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.
Please standby, while we compile the Q&A roster.
Speaker Change: Our next question comes from the line of John Hester of Bell Potter. Your line is now live.
John Hester: Good afternoon, Jim and Doug.
John Hester: Thanks for taking my call just wanted to ask you.
Speaker Change: I can focus on its post market approval study.
Speaker Change: For helix.
Speaker Change: As you know that.
Speaker Change: Extra cellular matrix categories, very well established.
Speaker Change: So can you tell us a little bit more about this trial what specific wounds.
Speaker Change: Oscar.
Speaker Change: Yes. Please.
Speaker Change: Thanks, John actually.
Speaker Change: Comment that any question a little bit differently in terms of what we want to accrue.
Speaker Change: What we're proving is the time.
Speaker Change: Ready to graft to some members two staged procedure.
Speaker Change: And.
Speaker Change: The time to close.
Speaker Change: And in our preclinical work and the <unk> model, we compared to helix too.
Speaker Change: The other major players, let's say, let's describe it that way.
Speaker Change: And.
Speaker Change: Measured those two parameters primarily.
Speaker Change: What we found is that helix.
Speaker Change: It gets ready to graft without infection.
Speaker Change: Let more rapidly than our anticipated competitors in terms of days two days faster and days faster for craft ready mix it days faster to close.
Speaker Change: These faster to close makes it a faster out of the hospital. So those are the three elements of what we are wanting to demonstrate improved.
Speaker Change: Fair enough.
Speaker Change: I would think.
Speaker Change: Trauma and burn to the primary targets that just following up on the other question about <unk>.
Speaker Change: <unk>.
Speaker Change: That something that you believe it will be appropriate for outpatient use because.
Speaker Change: <unk> for the same hasnt been.
Speaker Change: One way you've had great success historically.
Speaker Change: Okay.
Speaker Change: <unk>.
Speaker Change: Well ill patient it has been growing for us because.
Speaker Change: There is a good application for the full thickness in outpatient and the answer is yes.
Speaker Change: One of the reasons, we developed it and one of the benefits of the <unk> platform. So it will.
Speaker Change: Sub 480 square centimeter wounds do get trade treated often in the outpatient so it will it will help us or our competitive profile so to speak in terms of alternative treatments.
Speaker Change: And operation.
Speaker Change: Alright time.
Speaker Change: So we will see you next week. Thank you.
Speaker Change: Okay look forward to it.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from the line of Chris Khalaf MST access your line is live.
Speaker Change: Thank you Hi, Jim just.
Speaker Change: Just a quick question about seeing monarch, and how you're seeing the market in Europe.
Speaker Change: On solving.
Is there any preliminary feedback from distributors in Europe about the appetite for <unk>.
Speaker Change: Yes, yes, there is Chris.
Speaker Change: Chris It's a good question resale go.
Speaker Change: Is since it requires less training for the company and for the user.
Speaker Change: Our third party dispute distribution partners are quite looking forward to the results go now we are proceeding with early launches of.
Speaker Change: The manual version of <unk>.
Speaker Change: This quarter. However, we think the expansion will be.
Speaker Change: During the coming year.
Speaker Change: So retail go will really help you.
Speaker Change: Adoption curve for.
Speaker Change: We sell in Europe and in Australia.
Speaker Change: Thanks, and then just a related question in terms of the July and CE Mark clearance.
Speaker Change: What does that mean for timelines and launching the re sell gallons Europe next gene.
Speaker Change: We're in the final stage of review during this month Chris.
Speaker Change: And when you pass through the final stage of becomes.
Speaker Change: One to two months of administrative process versus a review process.
Speaker Change: So I think we will see resale go during Q1.
Speaker Change: Confident place to be we are expected to have this review. This review in November we had expected to be in August.
Speaker Change: As you know the MTR processes, a little bit overwhelmed and they just had great difficulty with the notified bodies getting all the work done that needs to be done in the industry. So we felt so to speak a little bit of a victim of that.
Speaker Change: Even though we've tried really hard to avoid it.
Understood understood and then just lastly, there's been a lot.
Speaker Change: Initiative.
Speaker Change: Changed around that.
Speaker Change: Pawn line previously.
Speaker Change: Put out.
Speaker Change: Well continue to remind others, who might be listening that.
Speaker Change: Vitiligo, we expect the two studies as I mentioned to be published.
Speaker Change: Accepted for publication by the end of this year and we published either late this year early next year those are foundational and getting <unk>.
Speaker Change: Commercial insurance policy, which we expect it will take us into the end of last part of third and fourth quarter of next year.
Speaker Change: We've not planned.
Speaker Change: Don't intend to guide to any significant level.
Speaker Change: <unk> revenue during 'twenty five.
Speaker Change: But rather think that it will be 26 event.
Speaker Change: No.
Speaker Change: That guidance has stayed the same but this time correct.
Speaker Change: That's all I had so you're next Michael Tsai look forward to it.
Michael Tsai: Thanks Shannon.
Speaker Change: Thank you that concludes our question and answer session I would now like to turn it over to Jim Corbett for closing remarks.
Jim Corbett: I want to thank all of you for listening and attending our call and hearing about our results, which we're really excited to share with you.
Jim Corbett: I look forward to engaging you again in one quarters time with the fourth quarter and the further.
Jim Corbett: Further progress we expect thank you very much.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
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