AVITA Therapeutics Provides Company Update and Preliminary Unaudited Results for the Fourth Quarter and Fiscal Year 2020
Preliminary Unaudited Results for Three Month Period Ended
With effect from
U.S. RECELL® System Sales:US$3.79M in the fourth quarter versus$3.78M in the third quarter, or an increase of 0.2%.-
To compare with the Company’s previously reported results (as reported under International Financial Reporting Standards (IFRS)):
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U.S. RECELL System sales wereUS$3.88M (A$5.95M ) in the fourth quarter versusUS$3.86M (A$5.81M ) in the third quarter, or an increase of 0.6% (2.4%).
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- Total global net revenue for the fourth quarter (unaudited):
US$3.88M in the fourth quarter, a decrease ofUS$0.06M or 1.6% over theUS$3.94M recognized during the previous quarter.-
To compare with the Company’s previously reported results (as reported under IFRS) fourth quarter net revenue was approximately
A$6.08M , versusA$5.96M in the third quarter, or an increase of 2.0%.
- Cash and Cash Equivalents:
- At the end of the fourth quarter, the Company had cash of approximately
US$73.84M , a decrease ofUS$5.92M or 7.4% over theUS$79.76M held at the end of previous quarter (inclusive of more thanUS$1M expended during the quarter on redomiciliation and preparation forU.S. GAAP compliance). - To compare with the Company’s previously reported results (as reported under IFRS) cash at the end of the fourth quarter was
A$107.02M , a decrease ofA$22.92M from theA$129.94M reported in the previous quarter, driven byA$14.28M attributable to the effect of movement in the exchange rates on cash, andA$8.64M in operating expenses.
- At the end of the fourth quarter, the Company had cash of approximately
- Commercial metrics:
- Estimated procedural volumes decreased by approximately 4% from the prior quarter.
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New accounts added – 8.
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Cumulative accounts with Value Analysis Committee (VAC) approval – 77.
“We are pleased with our fourth quarter results given the challenges and limited patient and facility access that we have experienced with the onset of the COVID-19 pandemic,” said Dr.
Preliminary Unaudited Results for the Full Year Ended
- Total consolidated sales:
- Fiscal year 2020 sales were approximately
US$14.32M , an increase ofUS$8.78M or 160% over theUS$5.45M recognized during the previous full year. -
To compare with the Company’s previously reported results (as reported under IFRS) fiscal 2020 sales were approximately
A$21.72M , an increase ofA$14.02M or 182% over theA$7.71M recognized during the previous full year.
- Fiscal year 2020 sales were approximately
U.S. RECELL System Sales:- Fiscal year 2020 sales were approximately
US$13.79M , an increase ofUS$9.39M or 213% over theUS$4.40M recognized during the previous full year. -
To compare with the Company’s previously reported results (as reported under IFRS) fiscal 2020 sales were approximately
A$21.03M , an increase ofA$14.82M or 238% over theA$6.21M recognized during the previous full year.
- Fiscal year 2020 sales were approximately
Company Update
Quarter Ended
During the fourth quarter we witnessed a wide degree of variability with both revenue and procedural volumes, together with an environment where our customers mandated highly restrictive access practices for our field force given the COVID-19 pandemic. Face-to-face interaction with our burn caregivers continues to be exclusively at “physician request” for case support within the operating theater only, and does not permit participation in the aftercare setting or otherwise enable clinical and business development, for example, to expand utilization of the RECELL System across different burns and users. Given the current state of affairs, we have no reason to believe that these measures, and our limited access, will change in the short term.
As previously stated, burn procedures are neither elective nor deferrable, however the rate of occurrence of these events is very dependent on broader economic activity and “people movement”. As such, we saw many of our customers initially experience reduced burn volumes due to the social distancing and shelter-in-place restrictions that have been implemented across the nation.
The reprioritization of hospital resources to support COVID-19 readiness meant that our April results were the lowest monthly revenue and procedural volumes seen this calendar year. Fortunately, as the quarter developed, the benefits of the RECELL System providing reduced hospital stays, and fewer and smaller surgeries, together with both a gradual uptick in burn incidence and hospitals (partially) reverting back from a COVID-19 centric focus, enabled a recovery of both revenue and procedural volume growth through May and June. As with many companies in the current pandemic environment, it is difficult to predict revenue and procedural volume over the coming months, but we are pleased with current utilization rates and our physician commitment.
BARDA
The Company continues to work with the
Future Market Opportunities
Set out below is an update on our various future market opportunities:
- Vitiligo
- On
June 2, 2020 the Company announced that it had submitted an Investigational Device Exemption (IDE) supplement with theU.S. Food and Drug Administration (FDA) for the initiation of a pivotal clinical trial to investigate the RECELL System for the treatment of vitiligo. -
On
July 1, 2020 , the FDA approved the IDE application for the pivotal study which is titled “A Prospective Multi-Arm Blinded-Evaluator Within-Subject Randomized Controlled Clinical Study to Investigate the Safety and Effectiveness of RECELL for Repigmentation of Stable Vitiligo.”-
The Company is continuing to work with FDA to finalize two (2) outstanding study design considerations and will provide further updates, including details regarding the study and initiation plan, over the next several weeks.
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The Company expects to commence enrollment in the vitiligo pivotal study in the second half of this calendar year.
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The Company continues to have a high degree of confidence that the RECELL System can be an effective therapeutic offering for patients with stable vitiligo. More than 1,000 patients have been treated with the RECELL System for vitiligo outside of
the United States , and to date there are eight (8) publications demonstrating the benefits of the RECELL System in vitiligo.
- On
- Outpatient (
Burn Market )- As previously disclosed, the Company is seeking incremental reimbursement, and FDA approval of our next generation “RECELL 2.0” (expected in the middle of 2021), to assist with market access in the outpatient hospital setting.
- Once we navigate through the above, our initial focus in the outpatient hospital setting will target our existing burn center customer base which has the highest outpatient volumes.
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By comparison, since
October 1, 2019 the Company has benefited from various reimbursement codes for patients admitted for burn treatment in the inpatient hospital setting (under the Hospital Inpatient Prospective Payment System (IPPS)), including the following:-
Medicare reimburses hospitals for inpatient services using MS-DRGs (Medicare Severity Diagnosis-Related Groups) (see MS-DRG 927, 928 and 929 for various types of burns (which are non-specific to the RECELL System)).
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Specific ICD-10-PCS code series describing our “cell suspension technique” for the use of the RECELL System (see the “OHR” codes within ICD-10-PCS). These procedure codes are assigned to the same DRGs for payment as other skin grafts.
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Current Procedural Terminology (CPT) for physicians to support reimbursement for physician rendered healthcare services.
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There is no procedure-specific CPT code for the RECELL System’s cell suspension autografting and so, per recommendations from the
American Burn Association , providers using the RECELL System are guided to the existing long-standing epidermal autografting codes (e.g. CPT code 151101 and 15115)2.
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In the outpatient setting, the Company has been seeking a New Technology Ambulatory Payment Classification (APC) under the Outpatient Prospective Payment System (OPPS) since late 2019. However, based on feedback from The
Centers for Medicare & Medicaid Services (CMS) and given recent changes to the OPPS payments system discussed below, the Company will now instead pursue aTransitional Pass -through Payment Application (TPT) to support separate additional Medicare payment for the RECELL System.-
CMS has advised the Company that the availability of the long-standing CPT code 15110 and CPT code 15115 (which providers may presently utilize in both the inpatient and outpatient hospital setting) excludes our ability to apply for a New Technology APC for use in the outpatient setting.
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On
January 1, 2020 , CMS implemented changes to the OPPS and ambulatory surgical centers (ASC) payment systems to permit medical devices, including the RECELL System, “that have received FDA marketing authorization and are part of the Breakthrough Devices Program [to] be approved [by CMS for TPT] through the quarterly [review] process” (as opposed to the typical annual review process).
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TPT was established by CMS to provide an alternative payment pathway for “transformative medical devices”. Similar to the New Technology APC, if approved CMS would create a new C code and would allow the RECELL System to be billed and paid separately in hospital outpatient facilities and ASCs.
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As a recipient of Breakthrough Device status,
AVITA Therapeutics will work with CMS through the next CMS scheduled quarterly review cycle and is hopeful of having a C code in place for the RECELL System onJanuary 1, 2021 (which should not change our current commercialization timeline for the outpatient hospital setting).
- As previously disclosed, the Company is seeking incremental reimbursement, and FDA approval of our next generation “RECELL 2.0” (expected in the middle of 2021), to assist with market access in the outpatient hospital setting.
- Existing Registration / Pivotal Clinical Studies
- As previously reported, prior to the onset of COVID-19, in late March the Company initiated two pivotal studies for (1) the treatment of pediatric scalds, and (2) soft tissue reconstruction.
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Enrollment of clinical studies across
the United States are largely paused at present and the Company’s enrollment of the aforementioned studies are accordingly largely on hold. -
The Company has enrolled three (3) patients in the pediatric scald study and one (1) patient in the soft tissue reconstruction study.
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The Company anticipates that enrollment will resume in the ensuing quarter.
Publications
Notable publications released during the quarter were as follows:
- “A Pilot Multi-Centre Prospective Randomised Controlled Trial of RECELL for the Treatment of Venous Leg Ulcers.” Hayes et al.
International Wound Journal . - “Impact of graft cell density and viability on repigmentation upon noncultured autologous cell suspension transplantation in vitiligo and piebaldism.” Uitentuis et al. Clinical and Experimental Dermatology.
Progress on the application has been delayed due to the COVID-19 pandemic and the associated State of Emergency declaration in
Other Updates
- Redomiciliation
- Redomiciliation of the Company from
Australia tothe United States was implemented onJune 29, 2020 with trading resuming on both the ASX (ticker: AVH) and NASDAQ (ticker: RCEL).
- Redomiciliation of the Company from
- Financial Reporting
- With the completion of redomiciliation to
the United States , the Company has transitioned toU.S. dollar denominated financial reporting prepared in accordance withU.S. GAAP. The Company expects to publish on the ASX and NASDAQ the Company’s results for the twelve (12) months endedJune 30, 2020 (i.e., annual report) in the last week of August (and submitted on Form 10-K as prescribed by theU.S. Securities and Exchange Commission ).
- With the completion of redomiciliation to
- Investor Conferences
- The Company will participate in the Morgan Stanley Virtual 18th Annual Global Healthcare Conference which is scheduled to take place in September. Further details will be provided closer to the date.
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The Company will participate in the
Cantor Global Healthcare Conference which is scheduled to take place in September. Further details will be provided closer to the date.
- The Company launched a new corporate website which can be found at www.avitamedical.com.
Authorized for release by the Chief Executive Officer of
ABOUT
AVITA Therapeutics’ first
In international markets, our products are marketed under the RECELL System brand to promote skin healing in a wide range of applications including burns, chronic wounds and aesthetics. The RECELL System is TGA-registered in
To learn more, visit www.avitamedical.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This letter includes forward-looking statements. These forward-looking statements generally can be identified by the use of words such as “anticipate,” “expect,” “intend,” “could,” “may,” “will,” “believe,” “estimate,” “look forward,” “forecast,” “goal,” “target,” “project,” “continue,” “outlook,” “guidance,” “future,” other words of similar meaning and the use of future dates. Forward-looking statements in this letter include, but are not limited to, statements concerning, among other things, our ongoing clinical trials and product development activities, regulatory approval of our products, the potential for future growth in our business, and our ability to achieve our key strategic, operational and financial goal. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Each forward- looking statement contained in this letter is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statement. Applicable risks and uncertainties include, among others, the timing of regulatory approvals of our products; physician acceptance, endorsement, and use of our products; failure to achieve the anticipated benefits from approval of our products; the effect of regulatory actions; product liability claims; risks associated with international operations and expansion; and other business effects, including the effects of industry, economic or political conditions outside of the company’s control. Investors should not place considerable reliance on the forward-looking statements contained in this letter. Investors are encouraged to read our publicly available filings for a discussion of these and other risks and uncertainties. The forward-looking statements in this letter speak only as of the date of this release, and we undertake no obligation to update or revise any of these statements.
1 CPT code 15110: Epidermal autograft, trunks, arms, legs; CPT code 15115: Epidermal autograft, face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and / or multiple digits.
2 It should be noted that the CPT code may be used in both the inpatient and the outpatient hospital setting.
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FOR FURTHER INFORMATION:
Phone +1 615 414 8668
christycurran@sambrown.com
O.U.S Media
Phone +61 (0)3 9620 3333
Mobile +61 (0)411 402 737
rudim@monsoon.com.au
Investors:
Phone +1 415 202 5678
caroline.corner@westwicke.com
Chief Financial Officer
Phone +1 661 367 9178
dmcintyre@avitamedical.com
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